Market movers today
- Today is another slow day on the data front after solid Chinese figures ticked in this morning.
- We expect the National Bank of Hungary to leave interest rates unchanged at a policy meeting today.
- The EU and the UK have decided to keep on talking and we will follow the Brexit negotiations closely. Yesterday, the EU’s Brexit negotiator Michel Barnier called the next few days critical.
The 60 second overview
Macro. We have more strong data out of China this morning confirming the strong economic recovery there. Industrial production increased 7% y/y in November, the highest pace in 20 months. Also, retail sales had a strong month, up 5% compared to November last year, not least reflecting a successful annual e-commerce shopping festival, the largest and most popular annual global shopping festival in the world.
Vaccines. In the US, the vaccine campaign kicked off yesterday, as the COVID-19 death toll passed 300,000.
Equities: Equities started the week on a mixed note as risk appetite slipped during the late hours of the US trading session. Asia and Europe booked some solid gains while the US ended mixed after opening higher. Sectors were also mixed but growth outperformed led by tech and Consumer Discretionary, while Energy was yesterday’s big underperformer, losing 2.1%. Uncertainty crept higher and with the VIX index close to 25.
Asian markets are broadly in the red this morning. Futures in Europe are lower, while US futures are flat.
FI: Global bond yields rose yesterday as the vaccine is being rolled out and despite rising infection levels and more lockdowns. The long-end German government yield curve rose 2-3bp, while US Treasuries initially rose some 4bp before falling back below 90bp.
ECB PEPP holdings rose some EUR18.7bn last week, which is in line with our projections. The ECB will not be buying after Friday, 18 December, and will resume buying on 4 January. This is similar to previous years, when it closed QE ahead of Christmas and New Year.
FX: USD erased gains and GBP, SEK and NOK benefitted on the back of better risk sentiment and renewed Brexit optimism. NOK was one of the top performers, as it also benefitted from the higher oil price. EUR/SEK tested 10.20 and EUR/NOK 10.60.
Credit: Sentiment improved in credit markets yesterday, where iTraxx Xover tightened to 259bp (-7bp) and Main to 49bp (-1bp). HY bonds tightened 2bp, while IG were unchanged.
