Thu, Jan 27, 2022 @ 14:49 GMT
HomeContributorsFundamental AnalysisOlaf Scholz Formally Approved As Chancellor Of Germany

Olaf Scholz Formally Approved As Chancellor Of Germany


  • EU session quiet (Note: public holiday in Austria, Italy, Malta, Portugal and Spain for Immaculate Conception but markets are open.
  • German Parliament formally votes to approve Olaf Scholz as Chancellor.
  • Risk appetite holding on to sentiment as indications of a milder course of Omicron virus infections coupled with hope of vaccine treatment offering a shield.
  • No breakthrough was found in the Putin/Biden talks.


  • Japan Q3 Final GDP Q/Q: -0.9% v -0.8% prelim; Y/Y: -3.6% v -3.0% prelim.
  • BOJ Amamiya stated that saw no need to modify its massive monetary stimulus program with inflation well below 2.0% target.
  • India Central Bank (RBI) leaves Repurchase Rate unchanged at 4.00% (as expected). Decision to keep rates steady was unanimous (6-0) and maintained its accommodative policy stance (vote was 5-1). Continued policy support warranted for durable recovery. Inflation broadly aligned with targets; prints likely to be higher for rest of year.


  • Africa Health Resource Institute noted that a study showed 40-fold reduction in neutralization capacity of Pfizer vaccines against Omicron variant; Some protection did remain. Vaccines still likely protected against severe disease.
  • World Health Org Dr Mike Ryan noted that there was no sign Omicron would be better at evading vaccines than other variants. Initial data suggested Omicron did not make people sicker than the Delta and other strains. “If anything, the direction is towards less severity”.


  • UK Govt said to be considering a work from home plan (due to Omicron variant) for Christmas and New Years and any economic impact that may have.
  • Bank of France (National Central Bank) saw Q4 q/q growth less than 0.75% as service sector staffing difficulties and supply chain issues worsened.
  • Russian govt spokesperson noted that Putin told President Biden that he sought a reliable legally binding guarantee ruling out NATO’s eastwards expansion.


  • White House spokesperson noted that Biden imparted deep concerns over Russia’s actions in Ukraine in meeting with President Putin. Reiterated stance that US would respond with strong economic measures if situation escalated. Biden and Putin also spoke about ransomware and Iran. White House also noted that it hads an understanding with Germany about shutting down the Nord Stream 2 natural gas pipeline if Russia invaded Ukraine.
  • Senate Democrats, Republicans stated that they had reached deal to avert another debt ceiling crisis. Senate Min Leader McConnell stated that was confident with this particular procedure, coupled with the avoidance of Medicare cuts, would achieve enough Republican support to clear the 60-vote threshold.
  • House of Representatives passed bill to make passing debt limit bill quicker; the final vote was 222 to 212.


  • Weekly API Crude Oil Inventories: -3.1M v -0.7M prior.

Speakers/Fixed income/FX/Commodities/Erratum


  • Indices [Stoxx600 +0.10% at 480.66, FTSE +0.29% at 7,361.38, DAX -0.37% at 15,755.69, CAC-40 -0.18% at 7,052.98, IBEX-35 -0.56% at 8,510.93, FTSE MIB -0.46% at 27,013.00, SMI +0.83% at 12,617.60, S&P 500 Futures +0.19%].
  • Market Focal Points/Key Themes: European indices open mixed with a downward bias, failing to gain direction as the session wore on; better performing sectors include heath care and consumer discretionary; to the downside, among the leading sectors are technology and materials; oil and gas subsector weighed on by modest pullback in crude prices; travel subsector dragged by disappointing results from TUI; AF Gruppen to take majority stake in Stenseth; Securitas buys Stanley Blak & Decker’s security unit; Clinigen to be acquired by Triton; Sampo completes takeover of Hastings; Nestle cuts stake in L’Oreal; corporate events expected during the upcoming US session include earnings Campbell Soup and investor presentation by Brown-Forman.


  • Consumer discretionary: Securitas AB [SECUB.SE] +2% (acquisition), HelloFresh [HFG.DE] -6% (outlook), TUI [TUI.UK] -4% (earnings).
  • Consumer staples: Clas Ohlson [CLASB.SE] +14% (earnings).
  • Financials: Berkeley Group Holdings [BKG.DE] +5% (earnings).
  • Healthcare: Clinigen Group [CLIN.UK] +10% (recommends offer), Valneva [VLA.FR] +7% (vaccine order).
  • Materials: Umicore [UMI.BE] -5% (JV with Volkswagen).


  • ECB’s De Guindos (Spain) reiterated Council view that higher inflation could last longer than previously thought but saw no evidence of 2nd round effects. Did not believe that new Omicron virus variant will derail recovery.
  • Bank of France Gov Villeroy raised 2021 GDP growth forecast from 6.3% to 6.7%. French inflation should fall below 2% by end-2022.
  • ECB’s Rehn (Finland) stated that uncertainty was exceptionally high for policy normalization. Sometimes was best to exhibit patience in making decisions.
  • ECB’s Kazaks (Latvia) reiterated Council view that inflation seen moving back to the 2% target. Would need more stimulus only if Omicron variant really hurt growth. PEPP should end in March as planned.
  • Sweden Central Bank (Riksbank) Jansson stated that division of roles between fiscal and monetary policy might need changing. Country had good prerequisites for allowing fiscal policy to play a more active role. Had hard time seeing a rate hike at the end of the forecast horizon due to inflation picture. Could believe inflation could rise to 4.0-4.5% but needed to see if such move could be long-lasting.
  • Russia Central Bank Zabotkin (Monetary Policy Chief) stated that would consider a wide range of rate option on Dec meeting, but 25bps move was unlikely.
  • Czech Central Bank’s Holub (chief economist) stated that was prepared to continue with rate hikes.
  • Turkey President Erdogan reiterated stance that he absolutely did not believe in high interest rates. Reiterated stance that would bring down both inflation and exchange rate via low interest rates. Claimed that stockpiling was to blame for high inflation; threatens more punishment for hoarders. To reverse the speculative attack on the TRY currency (Lira).

Currencies/Fixed Income

  • USD hold on to most gains despite the recent pick-up in risk appetite. Dealers noted that safe-haven appeal being replaced on policy divergence factors. Th higher interest rates in the US and widening interest rate differentials with respect to the rest of the world in driving the FX market
  • EUR/USD steady at 1.1280 area with USD/JPY holding above 113.50.

Economic data

  • (SE) Sweden Oct Maklarstatistik Housing Prices Y/Y: 14% v 15% prior; Apartment Prices Y/Y: 6% v 7% prior.
  • FR) France Q3 Final Private Sector Payrolls Q/Q: 0.5% v 0.5% prelim; Total Payrolls: 0.4% v 0.5%e.
  • (FI) Finland Oct Preliminary Trade Balance: -€0.6B v +€0.1B prior.
  • (HU) Hungary Nov CPI M/M: 0.7% v 0.6%e v 1.1% prior; Y/Y: 7.4% v 7.3%e (8th month above target range and highest in almost a decade).
  • (CZ) Czech Nov Unemployment Rate: 3.3% v 3.4% prior.
  • (CZ) Czech Nov International Reserves: $171.0B v $172.8B prior.
  • (ZA) South Africa Nov Sacci Business Confidence: 92.8.

Fixed income Issuance

  • (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.
  • (DK) Denmark sold total DKK2.14B in 2024 and 2031 DGB Bonds.
  • (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3% Mar 2024 bonds; Avg Yield: 1.17% v 0.85% prior; Bid-to-cover: 4.72x v 4.78x prior.
  • (SE) Sweden sold total SEK20B vs. SEK20B indicated in 3-month and 12-month Bills.

Looking ahead

  • (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to raise Base Rate by 50bps to 1.75%.
  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 05:30 (DE) Germany to sell €3.0B in in 0.0% Aug 2031 Bunds.
  • 05:30 (HU) Hungary Debt Agency (AKK) switch auction.
  • 06:00 (RU) Russia to sell RUB30B in July 2031 OFZ Bond.
  • 06:00 (ZA) South Africa Oct Retail Sales M/M: 0.8%e v 5.1% prior; Y/Y: 1.9%e v 2.1% prior.
  • 06:30 (ES) ECB’s De Guindos (Spain).
  • 06:45 (US) Daily Libor Fixing.
  • 07:00 (US) MBA Mortgage Applications w/e Dec 3rd: No est v -7.2% prior.
  • 07:00 (BR) Brazil Oct Retail Sales M/M: +0.6%e v -1.3% prior; Y/Y: -6.2%e v -5.5% prior.
  • 07:00 (BR) Brazil Oct Broad Retail Sales M/M: -0.2%e v -1.1% prior; Y/Y: -6.1%e v -4.2% prior.
  • 07:00 (UK) Weekly PM Question time in House.
  • 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (7-20 years).
  • 10:00 (CA) Bank of Canada (BOC) interest Rate Decision: expected to leave Interest Rates unchanged at 0.25%.
  • 10:00 (US) Oct JOLTS Job Openings: 10.469Me v 10.44M prior.
  • 10:30 (US) Weekly DOE Oil Inventories.
  • 11:00 (RU) Russia Nov CPI M/M: 1.0%e v 1.1% prior; Y/Y: 8.4%e v 8.1% prior.
  • 11:00 (RU) Russia Nov CPI Core M/M: 0.9%e v 0.9% prior; Y/Y: 8.4%e v 8.0% prior.
  • 13:00 (US) Treasury to sell 10-year note.
  • 16:00 (NZ) New Zealand Nov Heavy Truckometer Index M/M: No est v 1.0% prior.
  • 16:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise Selic Rate Target by 150bps to 9.25%.
  • 16:45 (NZ) New Zealand Q3 Manufacturing Activity Q/Q: No est v 3.9% prior.
  • 17:00 (AU) RBA Gov Lowe.
  • 18:50 (JP) Japan Q4 BSI Large Manufacturing Q/Q: No est v 7 prior; Large All Industry Index Q/Q: 5.0e v 3.3 prior.
  • 18:50 (JP) Japan Nov M2 Money Supply Y/Y: 4.1%e v 4.2% prior; M3 Money Supply Y/Y: 3.7%e v 3.7% prior.
  • 19:01 (UK) Nov RICS House Price Balance: 70%e v 70% prior.
  • 20:30 (CN) China Nov CPI Y/Y: 2.5%e v 1.5% prior; PPI Y/Y: 12.1%e v 13.5% prior.
  • 22:00 (TH) Thailand Nov Consumer Confidence: No est v 43.9 prior; Economic Confidence: No est v 37.8 prior.


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