HomeContributorsFundamental AnalysisFocus Remains On Inflation Data And Pandemic News

Focus Remains On Inflation Data And Pandemic News


  • ECB council members said to be willing to make clear that QE bond purchases to continue until at least end-2022 to play down rate hike bets.
  • Fitch cut Chinese property developer Evergrande [3333.HK] ratings to ‘restrictive default’ ahead of planned restructuring; PBoC stated that Evergrande should be dealt with in a market oriented way.
  • Focus on US inflation data (CPI on Friday).


  • China Nov CPI missed consensus but rising at its fastest pace since August 2020 (Y/Y: 2.3% v 2.5%e); PPI moved off its recnt 25-year highs (Y/Y: 12.9% v 12.1%e).
  • China PBOC set the Yuan reference rate at 6.3498 v 6.3677 prior (Note: PBOC was expected to set yuan mid-point at 6.3452 and markets believe the PBoC had signaled a limit to its tolerance for the yuan’s recent advance by setting its reference rate at a weaker-than-expected level.
  • BOK monetary policy report noted it would adjust the extent of its loose monetary policy stance “appropriately” in consideration of inflation the pandemic and monetary policy directions of major economies.


  • ECB’s Schnabel (Germany) noted that benefits seen from the ECB’s bond-buying were fading. Policy was inflating asset prices and creating risks of financial instability.
  • PM Johnson confirmed that UK moved to its ‘Plan B’ as the country was experiencing rapid growth of Omicron cases. Could not assume Omicron was less severe than previous variants at this point.
  • UK govt said to be threatened to impose more duties on US goods if Trump era tariffs on steel and aluminum are not lifted. UK Trade Min Trevelyan had invited US Commerce Sec Raimondo to UK for Jan Meeting on Steel and Aluminum tariff issue.


  • House Speaker Pelosi stated that the House would be putting forward bills to ‘shine light’ on China human rights issues.
  • House passed a bill that will put new restrictions on imports from Xinjiang by US Customs to ensure that goods produced through forced labor by Uyghurs, Kazakhs, Kyrgyz and members of other minority groups will not be purchased or sold in the US.
  • Brazil Central Bank (BCB) raised its Selic Rate Target by 150bps to 9.25% (as expected) for its 7th straight rate hike in the current tightening cycle. Saw another 150bps rate hike in Feb. Baseline scenario and balance of risks indicated it was appropriate for interest rate hike cycle to advance significantly into restrictive territory.

Speakers/Fixed income/FX/Commodities/Erratum


  • Indices [Stoxx600 +0.17% at 478.18, FTSE -0.03% at 7,335.50, DAX -0.05% at 15,678.65, CAC-40 +0.16% at 7,025.49, IBEX-35 -0.13% at 8,467.12, FTSE MIB +0.37% at 26,851.00, SMI -0.02% at 12,595.10, S&P 500 Futures -0.22%].
  • Market Focal Points/Key Themes: European indices open generally mixed with a bias to the upside, but largely failed to gain direction as the day wore on; better performing sectors include consumer discretionary and materials; while those trending to the downside include financials and energy; Stern looking to sell mobility unit; Wolters Kluwer agrees to sell it’s French and Spanish legal unit; earnings expected during the upcoming US session include Oracle, Broadcom and Costco.


  • Consumer discretionary: Stern Groep [STRN.NL] +23% (divestment discussions), Watches of Switzerland [WOSG.UK] +2% (earnings), Go-Ahead [GOG.UK] -21% (delays results), Dr. Martens [DOCS.UK] -3% (earnings).
  • Energy: Neste [NESTE.FI] -4% (CEO, President resigns).
  • Healthcare: Astrazeneca [AZN.UK] +1% (COVID-19 antibody approved in US).
  • Industrials: Balfour Beatty [BBY.UK] +2% (trading update), Rolls-Royce [RR.UK] -4% (trading update).


  • ECB said to plan for a temporary increase in the APP bond buying (conventional QE) scheme that would still significantly reduce overall debt purchases after PEPP program ends. Some council members said to be willing to make clear that purchases would continue until at least end-2022 to play down rate hike bets.
  • Swiss Govt updated its Economic Forecasts which raised 2021 GDP growth forecast from 3.2% to 3.3% while cutting the 2022 GDP growth outlook from 3.4% to 3.0%. It also raised both 2021 and 2022 CPI forecasts.
  • German Dep Fin Min Toncar stated that Germany to adhere to strict budget rules in the post pandemic environment.
  • Hungary Central Bank again raised its One-Week Deposit Rate by 20bps to 3.30% (4th straight weekly hike).
  • China PBoC Gov Yi Gang stated that Evergrande [3333.HK] should be dealt with in a market oriented way.
  • Fitch cut Chinese property developer Evergrande [3333.HK] ratings to ‘restrictive default’.
  • US govt said to move to tighten Iran sanctions enforcement efforts; To send top delegation to UAE to meet banks over potential Iran sanctions.

Currencies/Fixed Income

  • USD holding steady in quiet trade on Thursday. Nov CPI expected to hit a 40-year high and keep Fed tightening expectations intact despite the Omicron virus variant. Dealers noted that higher interest rates in the US and widening interest rate differentials with respect to the rest of the world continued to be the main driver in FX.
  • EUR/USD drifted from session highs after reports circulated that ECB council members would make clear that QE bond purchases to continue until at least end-2022 to play down rate hike bets.
  • GBP/USD continued to hover around the 1.32 area as fresh UK coronavirus restrictions weighed on the economic outlook in Britain.

Economic data

  • (DE) Germany Oct Current Account Balance: €15.4B v €17.0Be; Trade Balance: €12.8B v €14.3Be; Exports M/M: 4.1% v 0.8%e; Imports M/M: 5.0% v 0.4%e.
  • (NO) Norway Oct Overall GDP M/M: -1.8% v +2.3% prior; GDP Mainland M/M: 0.0% v 0.4%e.
  • (DK) Denmark Oct Current Account Balance (DKK): 20.5B v 18.2B prior; Trade Balance: 3.4B v 2.6B prior.
  • (TH) Thailand end-Nov Foreign Reserves: $242.6B v $246.1B prior.
  • (HU) Hungary Oct Preliminary Trade Balance: -€0.3B v -€0.1B prior.
  • (CN) China Nov Aggregate Financing (CNY): 2.610T v 2.696Te v 1.590T prior.
  • (CN) China Nov New Yuan Loans (CNY): 1.270T v 1.555Te.
  • (CN) China Nov M2 Money Supply Y/Y: 8.5% v 8.7%e; M1 Money Supply Y/Y: 2.5%e; M0 Money Supply Y/Y: % v 6.2% prior.
  • (ZA) South Africa Q3 Current Account Balance (ZAR): 226B v 259Be; Current Account to GDP Ratio: 3.6% v 3.9%e.
  • (ZA) South Africa Oct Total Mining Production M/M: 3.4% v 2.2%e; Y/Y: +2.1% v -1.0%e; Gold Production Y/Y: -3.5% v -5.6% prior; Platinum Production Y/Y: +24.0% v -7.5% prior.

Fixed income Issuance

  • None seen.

Looking ahead

  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.
  • 06:00 (IE) Ireland Nov CPI M/M: No est v 0.7% prior; Y/Y: No est v 5.1% prior.
  • 06:00 (IE) Ireland Nov CPI EU Harmonized M/M: No est v 0.8% prior; Y/Y: No est v 5.1% prior.
  • 06:00 (IE) Ireland Oct Industrial Production M/M: No est v 3.5% prior; Y/Y: No est v 44.6% prior.
  • 06:00 (ZA) South Africa Oct Manufacturing Production M/M: 0.5%e v 3.8% prior; Y/Y: -1.6%e v +1.3% prior.
  • 06:30 (CL) Chile Central Bank Bi-monthly Traders Survey.
  • 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to raise Key Rate by 50bps to 9.00%.
  • 07:00 (MX) Mexico Nov CPI M/M: 1.0%e v 0.8% prior; Y/Y: 7.2%e v 6.2% prior; CPI Core M/M: 0.3%e v 0.5% prior.
  • 07:00 (BR) Brazil CONAB Crop Report.
  • 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 3rd: No est v $619.8B prior.
  • 08:00 (UK) Daily Baltic Dry Bulk Index.
  • 08:30 (US) Initial Jobless Claims: 220Ke v 222K prior; Continuing Claims: 1.91Me v 1.956M prior.
  • 08:30 (UR) Ukraine Nov CPI M/M: 0.9%e v 0.9% prior; Y/Y: 10.6%e v 10.9% prior.
  • 08:30 (US) Weekly USDA Net Export Sales.
  • 10:00 (US) Oct Final Wholesale Inventories M/M: 2.2%e v 2.2% prelim; Wholesale Trade Sales M/M: 1.0%e v 1.1% prior.
  • 10:30 (US) Weekly EIA Natural Gas Inventories.
  • 12:00 (US) Q3 Financial Account Household Change in Net Worth: No est v $5.849T prior.
  • 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report.
  • 13:00 (US) Treasury to sell 30-year bond.
  • 14:00 (AR) Argentina Oct Industrial Production Y/Y: No est v 10.1% prior; Construction Activity Y/Y: No est v 12.4% prior.
  • 16:30 (NZ) New Zealand Nov Manufacturing PMI: No est v 54.3 prior.
  • 16:45 (NZ) New Zealand Nov Total Card Spending M/M: No est v 9.5% prior; Retail Card Spending M/M: No est v 10.1% prior.
  • 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to raise Reference Rate by 50bps to 2.50%.
  • 18:50 (JP) Japan Nov PPI M/M: 0.4%e v 1.2% prior; Y/Y: 8.5%e v 8.0% prior.
  • 20:00 (PH) Philippines Oct Trade Balance: -$3.8Be v -$4.0B prior; Exports Y/Y: 7.1%e v 6.3% prior; Imports Y/Y: 28.3%e v 24.8% prior.
  • 22:00 (CN) China to sell 30-year Upsize Bond.
  • 23:00 (MY) Malaysia Oct Industrial Production Y/Y: 3.7%e v 2.5% prior; Manufacturing Sales Value Y/Y: No est v 11.6% prior.
  • 23:30 (TW) Taiwan to sell NT$30B in 10-year Bonds.
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