HomeContributorsFundamental AnalysisRisk Appetite Getting Fresh Tailwinds As Omicron Fears Seemed Overblown

Risk Appetite Getting Fresh Tailwinds As Omicron Fears Seemed Overblown


  • Risk appetite finds tailwinds as signs Omicron concerns are overdone.
  • Germany Oct Industrial Production data beats expectations and offers a glimmer of hope for the country and region.
  • Germany Dec ZEW Survey mixed but hope did fade for much stronger growth in next 6 months.
  • Euro Zone Q3 Final GDP revised higher.


  • RBA left Cash Rate Target unchanged at 0.10% (as expected). To continue buying govt securities at a rate of A$4B/week until at least mid Feb 2022. Reiterated forward guidance that would not increase the cash rate until actual inflation was sustainably within the 2.0-3.0% target range. Omicron virus strain is a new source of uncertainty, but it is not expected to derail the recovery.
  • China Nov Trade Balance: $71.7B v $82.1Be; Exports Y/Y: 22.0% v 19.8%e; Imports Y/Y: 31.7% v 22.0%e.


  • Hungary Central Bank Dep Gov Virag stated that inflation to peak above ~7.0% in Nov, but decline would be slow starting in H2 2022. Determined to defeat inflation, no matter how long the road was ahead.


  • President Biden said to be considering options for potential Russia invasion of Ukraine, including cutting Russia off of SWIFT payment system and restrictions on Russian bond trading.
  • Senate Minority Leader McConnell (R-KY): Will probably end up supporting reappointing Jerome Powell as Fed Chair.
  • Congressional leaders are contemplating tying the US Defense Authorization Act to increasing the debt ceiling in order to win bipartisan support.

Speakers/Fixed income/FX/Commodities/Erratum


  • Indices [Stoxx600 +1.85% at 477.38, FTSE +1.14% at 7,314.63, DAX +2.05% at 15,695.48, CAC-40 +2.12% at 7,011.26, IBEX-35 +0.95% at 8,519.60, FTSE MIB +1.53% at 26,903.00, SMI +0.84% at 12,479.05, S&P 500 Futures +1.18%].
  • Market Focal Points/Key Themes: European indices open higher across the board and advanced further into the green as the session progressed; dwindling concern over omicron cited as source of surge in risk-on sentiment; better performing sectors led by technology and materials; while underperforming sectors include telecom and utilities; oil and gas subsector supported by increased crude prices; UK’s CMA has competition concerns with Veolia-Suez merger; Liontrust buys Majedie; Stellantis announces semiconductor development partnership with Foxconn, to invest in software development in cars; earnings expected during the upcoming US session include Conn’s, Designer Brands and AutoZone.


  • Consumer discretionary: PageGroup [PAGE.UK] +4% (trading update), Greenyard [GREEN.BE] +3% (CMD), Ashtead [AHT.UK] +3% (earnings).
  • Consumer staples: British American Tobacco [BATS.UK] +2% (trading update).
  • Healthcare: Glaxosmithkline [GSK.UK] +1.5% (antibody cocktail works against Omicron), AstraZeneca [AZN.UK] -2% (agreement with Ionis).
  • Industrials: Stellantis [STLA.NL] +2% (CMD), Ferguson [FERG.UK] +5% (earnings).


  • ECB’s Enria (SSM chief) noted that the EU credit risk remained high and would continue to push banking sector to correctly classify loans and timely recognize deteriorating asset quality. MPLs in sectors more vulnerable to impact of pandemic had started to increase. ECB to increase attention to excessive yield search risks.
  • Incoming German Chancellor Scholz stated that tackling the pandemic would demand all our strength.
  • Austria Chancellor Nehammer stated that would continue lockdown for unvaccinated people after general lockdown ends on Sunday, Dec 12th.
  • EU Economic Commissioner Gentiloni (Italy) stated that recovery remained underway but headwinds had been mounting.
  • German Health Min Spahn stated that did not expect travel restrictions within the EU. Important that EU treated vaccinated, unvaccinated people differently.

Currencies/Fixed Income

  • Risk on appetite helped to push bond yields higher as markets re-evaluated the Omicron variant and now believed the concerns over its economic impact were overdone. The USD was former aided by rising yields.
  • EUR/USD drifted to 1-week lows with the pair testing 1.1253 in the session. Germany Dec ZEW Survey was mixed but hope did fade as seen in the ZEW survey for much stronger growth in next 6 months due to the pandemic.
  • GBP/USD moved off its recent lows but faced headwinds after various analysts now believed BOE would hold off on raising interest rates at its December 16th meeting. Cable trading at 1.3260 by mid-session.

Economic data

  • (NL) Netherlands Nov CPI M/M: 0.9 v 1.3% prior; Y/Y: 5.2 v 3.4% prior.
  • (NL) Netherlands Nov CPI EU Harmonized M/M: 0.8 v 1.6% prior; Y/Y: 5.9 v 3.7% prior.
  • (ZA) South Africa Nov Gross Reserves: $57.6B v $57.5B prior; Net Reserves: $55.2B v $55.2Be.
  • (CH) Swiss Nov Unemployment Rate: 2.5% v 2.6%e; Unemployment Rate (seasonally adj: 2.5% v 2.6%e.
  • (UK) Nov Halifax House Price Index M/M: 1.0% v 0.9% prior; Y/Y: 8.2% v 8.1% prior.
  • (DE) Germany Oct Industrial Production M/M: 2.8% v 1.0%e; Y/Y: -0.6% v -2.9%e.
  • (NO) Norway Oct Industrial Production M/M: -5.3% v +3.3% prior; Y/Y: 6.9% v 7.9% prior.
  • (NO) Norway Oct Manufacturing Production M/M: -0.9% v +0.6% prior; Y/Y: 1.9% v 3.6% prior.
  • (DK) Denmark Oct Industrial Production M/M: +2.6% v -6.2% prior.
  • (RO) Romania Q3 Preliminary GDP Q/Q: 0.4% v 0.3% advance; Y/Y: 7.4% v 7.2% advance.
  • (MY) Malaysia end-Nov Foreign Reserves: $116.7B v $116.5B prior.
  • (FR) France Oct Trade Balance: -€7.5B v -€6.9Be.
  • (FR) France Oct Current Account Balance: -€2.6B v -€2.8B prior.
  • (CH) Swiss Nov Foreign Currency Reserves (CHF): 1.006T v 1.012T prior.
  • (CZ) Czech Oct National Trade Balance (CZK): -18.2B v -14.5Be.
  • (CZ) Czech Oct Industrial Output Y/Y: -7,4% v -6.4%e; Construction Output Y/Y: 3.7% v 3.0% prior.
  • (HU) Hungary Oct Industrial Production M/M: +0.3% v -0.3% prior; Y/Y: -2.7% v -2.0%e.
  • (TW) Taiwan Nov CPI Y/Y: 2.8% v 2.6%e; CPI Core Y/Y: 1.5% v 1.4%e; WPI Y/Y: 14.2% v 15.1% prior.
  • (TW) Taiwan Nov Trade Balance: $5.7B v $5.4Be; Exports Y/Y: 30.2% v 22.8%e; Imports Y/Y: 33.8% v 24.5%e.
  • (CN) China Nov Foreign Reserves: $3.224T v $3.205Te.
  • (SE) Sweden Oct GDP Indicator M/M: 1.2%% v 0.3%e; Y/Y: 4.8% v 3.3% prior.
  • (SE) Sweden Oct Private Sector Production M/M: 1.5% v 1.9% prior; Y/Y: 6.4% v 5.0% prior.
  • (SE) Sweden Oct Industrial Orders M/M: +4.9% v -2.1% prior; Y/Y: 6.8% v 1.4% prior.
  • (SE) Sweden Oct Industry Production Value Y/Y: 3.7% v 3.5% prior; Service Production Value Y/Y: 7.8% v 6.0% prior.
  • (SE) Sweden Oct Household Consumption M/M: 0.8% v 0.1% prior; Y/Y: 5.5% v 4.6% prior.
  • (SE) Sweden Nov Budget Balance (SEK): 37.6B v 3.3B prior.
  • (NO) Norway Nov Region Output Survey (past 3-months): 1.46 v 1.79 prior; Output Survey (next 6-months): 0.95 v 1.65 prior.
  • (IS) Iceland Nov Preliminary Trade Balance (ISK): -28.6B v -12.8B prior.
  • (SG) Singapore Nov Foreign Reserves: $413.0B v $419.0B prior.
  • (ZA) South Africa GDP Q/Q: -1.5% v -1.0%e; Y/Y: 2.9% v 3.8%e.
  • (EU) Euro Zone Q3 Final GDP Q/Q: 2.2% v 2.2% prelim; Y/Y: 3.9% v 3.7% prelim.
  • (EU) Euro Zone Q3 Household Consumption Q/Q: 4.1% v 3.6%e; Govt Expenditures Q/Q: 0.3% v 0.7%e; Gross Fixed Capital Q/Q: -0.9% v +0.6%e.
  • (EU) Euro Zone Q3 Final Employment Q/Q: 0.9% v 0.9% prelim; Y/Y: 2.1% v 2.0% prelim.
  • (DE) Germany Dec ZEW Current Situation Survey: -7.4 v +5.7e; Expectations Survey: 29.9 v 25.4e.
  • (EU) Euro Zone Dec ZEW Expectations Survey: 26.8 v 25.9 prior.

Fixed income Issuance

  • (NL) Netherlands Debt Agency (DSTA) sold €2.1B vs. €1.5-3.0B indicated in 2.0% July 2024 DSL Bonds; Avg Yield:-0.688 % v 0.895% prior (Nov 25th 2014).
  • (ES) Spain Debt Agency (Tesoro) sold total €4.53B vs. €4.0-5.0B indicated range in 6-month and 12-month Bills.
  • (ZA) South Africa to sold total ZAR3.9B vs. ZAR3.9B indicated in 2032, 2040 and 2048 bonds.
  • (UK) DMO sold £1.5B in 1.25% July 2051 Gilts; Avg Yield: 0.871% v 1.332% prior; bid-to-cover: 2.42x v 2.05x prior; Tail: 1.0bps v 1.1bps prior.

Looking ahead

  • (IL) Israel Nov Foreign Currency Balance: No est v $207.5B prior.
  • (MX) Citibanamex Survey of Economists.
  • (CO) Colombia Nov Consumer Confidence Index: No est v -1.3 prior.
  • 05:15 (CH) Switzerland to sell 3-month Bills.
  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
  • 05:30 (DE) Germany to sell €4.0B in 0.0% Dec 2023 Schatz.
  • 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month bills.
  • 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
  • 06:00 (BR) Brazil Nov FGV Inflation IGP-DI M/M: -0.5%e v +1.6% prior; Y/Y: 17.3%e v 21.0% prior.
  • 06:00 (CL) Chile Nov CPI M/M: 0.5%e v 1.3% prior; Y/Y: 6.6%e v 6.0% prior.
  • 06:00 (CL) Chile Nov Trade Balance: No est v -$0.4B prior; Total Exports: No est v $7.8B prior; Total Imports: No est v $8.1B prior; Copper Exports: No est v $4.5B prior.
  • 06:00 (CL) Chile Nov International Reserves: No est v $55.0B prior.
  • 06:30 (EU) ESM to sell €1.5B in 3-month Bills.
  • 06:45 (US) Daily Libor Fixing.
  • 07:00 (TR) Turkey to s Bonds.
  • 07:00 (MX) Mexico Sept Gross Fixed Investment: 11.2%e v 13.9% prior.
  • 08:00 (PL) Poland Nov Official Reserves: No est v $167.8B prior.
  • 08:00 (RU) Russia Nov Official Reserve Assets: No est v $624.2B prior.
  • 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
  • 08:30 (US) Q3 Final Nonfarm Productivity: -4.9%e v -5.0% prelim; Unit Labor Costs: 8.3%e v 8.3% prelim.
  • 08:30 (US) Oct Trade Balance: -$66.9Be v -$80.9B prior.
  • 08:30 (CA) Canada Oct Int’l Merchandise Trade (CAD): 2.1Be v 1.9B prior.
  • 08:55 (US) Weekly Redbook LFL Sales data.
  • 09:00 (EU) Weekly ECB Forex Reserves.
  • 09:00 (EU) ECB weekly QE bond buying update.
  • 09:30 (TR) Turkey Nov Cash Budget Balance (TRY): No est v -5.2B prior.
  • 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (20+ years).
  • 10:00 (MX) Mexico Weekly International Reserve data.
  • 10:00 (CA) Canada Nov Ivey Purchasing Managers Index (seasonally adj): No est v 59.3 prior; PMI (unadj): No est v 61.2 prior.
  • 13:00 (US) Treasury to sell 3-year note.
  • 15:00 (US) Oct Consumer Credit: $25.0Be v $29.9B prior.
  • 16:30 (US) Weekly API Oil Inventories.
  • 18:50 (JP) Japan Nov Bank Lending Y/Y: No est v 0.9% prior; Bank Lending (ex-trusts) Y/Y: No est v 0.8% prior.
  • 18:50 (JP) Japan Oct Current Account Balance: ¥1.275Te v ¥1.034T prior; Adjusted Current Account: ¥999.2Be v ¥762.7B prior; Trade Balance (BoP Basis): +¥128.8Be v -¥229.9B prior.
  • 18:50 (JP) Japan Q3 Final GDP Q/Q: -0.8%e v -0.8% prelim; Y/Y: -3.1%e v -3.0% prelim; GDP Nominal Q/Q: -0.6%e v -0.6% prelim.
  • 22:00 (CN) China to sell 2-year and 5-year Upsize Bonds.
  • 23:30 (IN) India Central Bank (RBI) interest Rate Decision: Expected to leave Repurchase Rate unchanged at 4.00%; Expected to leave Reverse Repo Rate unchanged at 3.35%; To maintain Cash Reserve Ratio (CRR) at 4.00%.


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