HomeContributorsFundamental AnalysisDemocrats Appear To Win Control Of The US Senate

Democrats Appear To Win Control Of The US Senate

Notes/Observations

  • Markets await Georgia State Senate races results; likelihood the Democrats may have won control of the US Senate following two runoff elections in the state of Georgia (won one seat in the runoff elections while another race remained too close to call)
  • Major European Dec Final PMI Services readings revised lower (Beats: Spain; Misses: Euro Zone, France, Germany, Italy and UK)

Asia:

  • China Dec Caixin PMI Services registered its 8th consecutive expansion (56.3 v 57.9e)
  • Japan Dec Final PMI Services: 47.7 v 47.2 prelim (confirms 11th straight contraction)
  • Australia Dec Final PMI Services: 57.0 v 57.4 prelim (confirms 4th month of expansion)

Coronavirus:

  • Total global cases 86.4M (+0.9% d/d); total deaths: 1.87M (+0.9% d/d)

Americas:

  • Treasury Sec Mnuchin said to disagree with reversal of de-listing of Chinese telecom stocks (Reminder: On Jan 4th NYSE announced that it would no longer planning to de-list Chinese listed telecom companies)
  • S&P Dow Jones Indices stated that it would not be removing the American depository receipts of China Mobile, China Telecom & China Unicom Hong Kong

Energy:

  • OPEC+ confirmed it reached deal to broadly hold output levels steady in Feb; to raise production by 75K in Feb and another 75K in March (Note: Russia allowed to boost output by 70K bpd in Feb, Kazakhstan allowed to boost output by 10K bpd in Feb)
  • Saudi Energy Min stated that would cut 1M bpd oil unilaterally in Feb and March as a preemptive measure. Oil production to be ~8.125M b/d from Feb 1st (Note: Saudis did not discuss voluntary cuts with any other producer beforehand)
  • Weekly API Crude Oil Inventories: -1.7M v -4.8M prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.66% at 403.60, FTSE +1.43% at 6,706.79, DAX +0.88% at #, CAC-40 +0.75% at 5,606.22, IBEX-35 +1.56% at 8,221.00, FTSE MIB +1.09% at 22,439.50, SMI +0.02% at 10,696.38, S&P 500 Futures -0.20%]
  • Market Focal Points/Key Themes: European indices open generally higher (SMI notable exception) and remained in the green as the session progressed; among sectors leading to the upside are financials and energy; healthcare and real estate sectors among few in the red; multiple European bourses closed for holiday, including Italy, Austria and Sweden; energy stocks higher after OPEC+ cuts production plans; focus on release of FOMC minutes; earnings expected in the upcoming US session Greenbrier

Equities

  • Consumer discretionary: Sligro Food Group [SLIGR.NL] +3% (sales), LVMH [MC.FR] +1% (Tiffany sales), Auto Trader [AUTO.UK] -2% (trading update)
  • Healthcare: Pixium Vision [PIX.FR[ +54% (merger)
  • Industrials: Informa [INF.UK] +2% (guidance)

Speakers

  • Thailand Central Bank (BOT): Domestic economy might underperform in both 2021 and 2022
  • China PBoC commented from its Annual Work Conference reiterated stance to continue financial support for small and medium size companies (SMEs) –
  • China Foreign Ministry spokesperson Hua Chunying reiterated support for Hong Kong Authorities following recent arrests of protesters; US action on Chinese payment apps was ‘abusive’
  • Iran Revolutionary Guard Corp Official commented on the US noting that they could take revenge inside your ‘house’

Currencies/Fixed Income

  • USD remained on soft footing as the likelihood the Democrats had won control of the US Senate following two runoff elections in the state of Georgia. USD index at its lowest level since March 2018 as unwinding of safe-haven flows continued. Dealers noted that a democratic sweep would be a “big risk-on development” as it would lead to increased fiscal stimulus.
  • EUR/USD tested the 1.2345 level for its highest reading in almost three years. EUR capped by some softness in various PMI Services data released in the session. The 1.24 level remains a pivotal long-term pivot point for price action in the pair.
  • US 10-year govt bond yield tests the 1.00% level for the 1st time since March

Economic Data

  • (NO) Norway Nov Credit Indicator Growth Y/Y: 4.7 v 4.5% prior
  • (UK) Dec Official Reserves Changes: $3.0B v $1.0B prior
  • (ZA) South Africa Dec PMI (whole economy): 50.2 v 50.3 prior (3rd straight expansion)
  • (FR) France Dec Preliminary CPI M/M: 0.2% v 0.4%e; Y/Y: 0.0% v 0.2%e
  • (FR) France Dec Preliminary CPI EU Harmonized M/M: 0.2% v 0.5%e; Y/Y: 0.0% v 0.2%e
  • (FR) France Dec Consumer Confidence: 95 v 91e
  • (DE) Germany Dec CPI Saxony M/M: +0.5% v -0.7% prior; Y/Y: 0.0% v 0.1% prior
  • (CZ) Czech Nov Trade Balance (CZK): 32.2B v 30.8Be
  • (HU) Hungary Nov PPI M/M: 0.0% v 0.7% prior; Y/Y: 5.5% v 5.9% prior
  • (HU) Hungary Oct Average Gross wages Y/Y: 8.8% v 8.7%e
  • (ES) Spain Dec Services PMI: 48.0 v 44.6e(5th straight contraction); Composite PMI: 48.7 v 45.6e
  • (TW) Taiwan Dec Foreign Reserves: $529.9B v $513.4B prior (record monthly rise)
  • (NG) Nigeria Dec Dec PMI: 51.8 v 50.9 prior (6th month of expansion)
  • (IT) Italy Dec Services PMI: 39.7 v 45.0e (4th month of contraction); Composite PMI: 43.0 v 47.5e
  • (FR) France Dec Final PMI Services: 49.1 v 49.2e(confirmed 4th straight contraction); PMI Composite: 49.5 v 49.6e
  • (DE) Germany Dec Final PMI Services: 47.0 v 47.7e (confirmed 3rd straight contraction); PMI Composite: 52.0 v 52.5e
  • (EU) Euro Zone Dec Final PMI Services: 46.4 v 47.3e (confirmed 4th straight contraction);; PMI Composite: 49.1 v 49.8e
  • (DE) Germany Dec CPI Brandenburg M/M: +0.7% v -0.9% prior; Y/Y: -0.1% v -0.2% prior
  • (DE) Germany Dec CPI Hesse M/M: +0.6% v -0.8% prior; Y/Y: -0.5% v -0.6% prior
  • (UK) Dec New Car Registrations Y/Y: -10.9% v -27.4% prior
  • (DE) Germany CPI North Rhine Westphalia M/M: +0.5 v -0.8% prior; Y/Y: -0.4 v -0.4% prior
  • (UK) Dec Final PMI Services: 49,4 v 49.9e; PMI Composite: 50.4 v 50.7e
  • (EU) Euro Zone Nov PPI M/M: 0.4% v 0.2%e; Y/Y: -1.9% v -2.0%e

Fixed income Issuance

  • (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills
  • (DK) Denmark sold total DKK4.94B in 2022 and 2029 DGB bonds
  • (UK) DMO sold £3.0B in 0.25% July 2031 Gilts; Avg Yield: 0.332% v 0.432% prior; bid-to-cover: 2.87x v 2.72x prior; Tail: 0.2bps v 0.1bps prior

Looking Ahead

  • (US) Congress meets to count electoral votes and declare winner of Presidential election
  • (DE) Germany Dec CPI Bavaria M/M: No est v -0.8% prior; Y/Y: No est v -0.2% prior
  • 05:30 (DE) Germany to sell €5.0B in new 0.0% Feb 2031 bunds
  • 06:00 (IE) Ireland Dec Unemployment Rate: No est v 7.5% prior
  • 07:00 (US) MBA Mortgage Applications w/e Jan 1st: No est v 0.8% prior
  • 07:00 (MX) Mexico Dec Vehicle Domestic Sales: No est v 95.5K prior
  • 07:00 (UK) Weekly PM Question time in House
  • 08:00 (BR) Brazil Dec PMI Services: No est v 50.9 prior; PMI Composite: No est v 53.8 prior
  • 08:00 (DE) Germany Dec Preliminary CPI M/M: +0.6%e v -0.8% prior; Y/Y: -0.2%e v -0.3% prior
  • 08:00 (DE) Germany Dec Preliminary CPI EU Harmonized M/M: +0.7%e v -1.0% prior; Y/Y: -0.6%e v -0.7% prior
  • 08:15 (US) Dec ADP Employment Change: +75Ke v +307K prior
  • 09:00 (EU) Weekly ECB Forex Reserves
  • 09:00 (UK) BOE Gov Bailey in Parliament
  • 09:45 (US) Dec Final Markit PMI Services: 55.3e v 55.3 prelim; PMI Composite: No est v 55.7e prelim
  • 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (7-20 years)
  • 10:00 (US) Nov Factory Orders: 0.7%e v 1.0% prior; Factory Orders (ex-transportation): No est v 1.0% prior
  • 10:00 (US) Nov Final Durable Goods Orders: 0.9e v 0,9% prelim; Durables (ex-transportation): 0.4%e v 0.4% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.4% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.4% prelim
  • 14:00 (US) FOMC Dec Minutes
  • 18:30 (JP) Japan Nov Labor Cash Earnings Y/Y: -0.9%e v -0.7% prior (revised from -0.8%); Real Cash Earnings Y/Y: +0.2%e v -0.1% prior (revised from -0.2%)
  • 19:30 (AU) Australia Nov Building Approvals M/M: 2.0%e v 3.8% prior
  • 19:30 (AU) Australia Nov Private Sector Houses M/M: 2.0%e v 3.1% prior
  • 19:30 (AU) Australia Nov Trade Balance: A$6.5Be v A$7.5B prior; Exports M/M: -2%e v +5% prior; Imports M/M: 3%e v 1% prior
  • 22:30 (JP) Japan to sell 6-month bills

 

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