Notes/Observations
- Major European Jan Preliminary PMI readings remain in expansion despite lockdown restrictions (Beat: Euro Zone, France; Misses: Germany, UK)
- UK economic data highlighted that coronavirus continued to weigh on the economy (retail sales missed while govt borrowing data rose to record levels).
- Italian politics remain in focus with as govt faces another vote in Parliament next week
Asia:
- apan Dec National CPI Y/Y: -1.2% v -1.3%e; CPI Ex-Fresh Food (core): -1.0% v -1.1%e
- Japan Jan Preliminary PMI Manufacturing: 49.7 v 50.0 prior (moved back into contraction)
- Australia Jan Preliminary PMI Manufacturing: 57.2 v 55.7 prior (8th month of expansion)
- Australia Dec Preliminary Retail Sales M/M: -4.2% v -1.5%e
- New Zealand Q4 CPI Q/Q: 0.5% v 0.2%e; Y/Y: 1.4% v 1.1%e
- China FX Regulator SAFE Spokeswoman Wang reiterated stance that govt to deepen reform and open up the FX Sector in 2021; Current CNY exchange rate was in reasonable and balanced range
Coronavirus:
- Total global cases 97.5M (+0.7% d/d); total deaths: 2.09M (+0.7% d/d)
Europe:
- EU Council President Michel stated that EU leaders had agreed that lockdown measures were necessary and might need to be strengthened
- EU’ Commission chief Von Der Leyen stated that the health situation across Europe was very serious and EU Commission was determined to provide more stability of vaccine delivery. Tells EU leaders the J&J vaccine application was due in Feb
- UK Ministers are seeking to close borders to foreigners. Ministers said to also consider a £500 payments for anyone who must self-isolate due to testing positive for Covid-19 under plans to reduce financial hardship spreading the virus (Payment could be limited to those who can’t work from home)
- UK Jan GfK Consumer Confidence: -28 v -30e
Americas:
- President Biden to speak before market close regarding the response to the economic crisis
- President Biden said to seek a 5-year renewal of nuclear arms treaty with Russia
- Treasury Sec-designate Yellen stated that did not intend to alter China tariffs until allies consulted, new approach needed for meaningful China pressure
- US Senate Republican Leader McConnell confirmed he proposed House present to the Senate the Trump
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.98% at 406.86, FTSE -0.58% at 6,676.63, DAX -0.85% at 13,789.00, CAC-40 -1.13% at 5,527.81, IBEX-35 -1.43% at 8,006.00, FTSE MIB -2.10% at 21,958.50, SMI -0.23% at 10,887.53, S&P 500 Futures -0.64%]
- Market Focal Points/Key Themes: European indices open broadly lower and trended to the downside as the session progressed; talk of covid restrictions and slower vaccine roll out weighs on risk appetite; better performing sectors include industrials and consumer discretionary; financials and materials leading to the downside; HSBC sells stake in Prisa; Elekta divests its ViewRay stake; earnings expected in the upcoming US session include Ally Financial, Regions Financial and Schlumberger
Equities
- Consumer discretionary: Remy Cointreau [RCO.FR] +1% (sales), Computacenter [CCC.UK] +3% (prelim earnings), Kainos Group [KNOS.UK] +19% (trading update), Cineworld [CINE.UK] -4% (New James Bond film postponed)
- Industrials: Siemens [SIE.DE] +5% (prelim earnings)
Speakers
- Italy PM Conte said to be considering the possibility of elections if he was unable to reassemble a workable majority in parliament
- EU Financial Services Commissioner McGuinness: No fixed timeline on equivalence
- ECB Survey of Professional Forecasters (SPF)cut its 2021 GDP growth from 5.7% to 4.4% (**Note: ECB Dec Staff Forecast is 3.9%) while raising the 2022 GDP growth from 2.4% to 3.7%. It cut 2021 HICP (EU Harmonized CPI) from 1.0% to 0.9% while maintaining 2022 HICP (EU Harmonized CPI) at 1.3%
- Japan Cabinet Office (Govt) Jan Economic Report maintained overall economic assessment that the domestic economy remained in a severe situation despite signs of improvement. Raised its view on capex and housing while cutting view on private consumption and business conditions
- Iran OPEC Gov Zamaninia stated that Iran had begun increasing its oil production. Markets would accommodate Iran’s maximum oil output
Currencies/Fixed Income
- EUR/USD was higher at 1.2180 as German data continued to highlight that current lockdown restriction were having less of an impact compared to last spring
- GBP/USD pair was lower in the session as dealers weighed concerns about extended lockdowns impact on market sentiment. Cable was weaker after UK Dec retail sales rose by less than expected and public sector borrowing reached a fresh record as coronavirus continued to weigh on the economy.
- Italian yields have moved higher over the past 24 hours on reports that Italy PM Conte was considering the possibility of elections if he was unable to reassemble a workable majority in parliament
- Overall Peripheral bonds yields were higher following the ECB rate decision on Thursday. Dealers noted Lagarde’s comment that ECB may not use the Pandemic Emergency Purchase Program in full
Economic data
- (UK) Dec Retail Sales (ex-auto/fuel) M/M: 0.4% v 1.0%e; Y/Y: 6.4% v 7.4%e
- (UK) Dec Retail Sales (including auto/fuel) M/M: 0.3% v 1.3%e; Y/Y: 2.9% v 4.0%e
- (US) Dec Public Finances (PSNCR): £40.6B v £23.6B prior; Net Borrowing: £33.4B v £31.4Be; Central Government NCR: £33.4B v £23.9B prior; PSNB (ex-banking groups): £34.1B v £32.0Be
- (NL) Netherlands Dec House Price Index M/M: -0.5% v +0.3% prior; Y/Y: 8.3% v 8.9% prior
- (MY) Malaysia Mid-Jan Foreign Reserves: $107.8B v $107.6B prior
- (CN) Weekly Shanghai copper inventories (SHFE): 67.3K v 73.7K tons prior
- (RU) Russia Narrow Money Supply w/e Jan 15th (RUB): 13.69T v 13.83T prior
- (TW) Taiwan Dec Unemployment Rate: 3.8% v 3.8%e
- (FR) France Jan Preliminary Manufacturing PMI: 51.5 v 50.5e (2nd straight expansion); Services PMI: 46.5 v 48.4e; Composite PMI: 47.0 v 49.0e
- (DE) Germany Jan Preliminary Manufacturing PMI: 57.0 v 57.2e (7th month of expansion); Services PMI: 46.8 v 45.0e; Composite PMI: 50.8 v 50.0e
- (EU) Euro Zone Jan Preliminary Manufacturing PMI: 54.7 v 54.4e (7th month of expansion); Services PMI: 45.0 v 44.5e; Composite PMI: 47.5 v 47.6e
- (IS) Iceland Dec Wage Index M/M: 0.2% v 0.4% prior; Y/Y: 7.2% v 7.3% prior
- (PL) Poland Dec Retail Sales M/M: 20.0% v 18.3%e; Y/Y: -0.8% v -1.4%e; Real Retail Sales Y/Y: -0.8% v -1.2%e
- (PL) Poland Dec PPI M/M: % v 0.2%e; Y/Y: % v -0.1%e
- (PL) Poland Dec Construction Output Y/Y: +3.4% v -1.1%e
- (UK) Jan Preliminary PMI Manufacturing: 52.9 v 53.6e (8th straight expansion); Services PMI: 38.8 v 45.0e; Composite PMI: 40.6 v 45.5e
Fixed income Issuance
- (ZA) South Africa sold total ZAR2.0B vs. ZAR2.0B indicated in I/L 2025, 2029 and 2050 bonds
Looking Ahead
- (EU) Daily ECB Liquidity Stats
- 06:00 (IE) Ireland Dec PPI M/M: No est v -2.8% prior; Y/Y: No est v -10.7% prior
- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£1.0B, £1.0B and £3.0B respectively)
- Sells £0.5B in 1-month bills; Avg Yield: % v -0.0155% prior; bid to cover: x v 5.55x prior
- Sells £2.0B in 3-month bills; Avg Yield: % v -0.0254% prior; bid to cover: x v 3.15x prior
- Sells £2.5B in 6-month bills; Avg Yield: % v -0.0124% prior; bid to cover: x v 2.24x prior
- To sell combined £B in 1-month, 3-month and 6-month Bills on Fri Jan 15th (£B, £B and £B respectively)
- Results: https://www.dmo.gov.uk/data/treasury-bills/
- 06:30 (CL) Chile Central Bank Traders Survey
- 06:30 (IN) India Weekly Forex Reserve w/e Jan 15th: No est v $586.1B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (CL) Chile Dec PPI M/M: No est v 0.6% prior
- 07:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (CA) Canada Nov Retail Sales M/M: 0.0%e v 0.4% prior; Retail Sales (ex-auto) M/M: 0.3%e v 0.0% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:45 (US) Jan Preliminary Markit Manufacturing PMI: 56.5e v 57.1 prior; Services PMI: 53.4e v 54.8 prior; Composite PMI: No est v 55.3 prior
- 10:00 (US) Dec Existing Home Sales: 6.56Me v 6.69M prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Weekly DOE Oil Inventories
- 11:00 (EU) Potential sovereign ratings after European close (Moody’s Cyprus, S&P Slovakia, Fitch Greece, EFSF, ESM)
- 13:00 (US) Weekly Baker Hughes Rig Count
- 14:45 (US) President Biden to speak on the response to the economic crisis
