Awaiting US Inflation Data For Clues On Forthcoming Monetary Tightening By The Fed

Notes/Observations

• UK Oct GDP data misses consensus as the economy expands at a weak pace.
• BOE 12-month inflation expectation survey of 3.2% registers its highest level since Aug 2019.
• Focus on US CPI data for Nov which could cement the course of interest rate rises next year.

Asia

• Japan Nov PPI data registered its highest annual pace since 1981 Y/Y: 9.0% v 8.5%e).
• Japan PM Kishida noted that the restart of travel subsidies was dependent on coronavirus situation. Needed to watch downside risks to economy with an eye to supply constraints/ semiconductor chip shortage. Reiterated that would not be changing sales rate tax at this time.
• Japan Fin Min Suzuki noted it was important to follow up on implementation on increase wages together with country’s growth strategy.
• China PBOC set the Yuan reference rate at 6.3702 v 6.3498 prior; (Note: market was expecting the mid-point to be at 6.3499). The weaker fixing was seen as a signal that PBoC had a limit to its tolerance for the yuan’s recent advance by setting its reference rate at a weaker-than-expected level).
• China PBOC might launch additional FX intervention measures and reintroduce the counter-cyclical factor in setting the daily reference rate for the yuan (CNY). PBoC could also seek to slow capital inflows.

Europe

• PM Johnson said to be facing the biggest rebellion of his premiership as Tory MPs are furious over the latest Plan B rules with Some MPs said to be considering sending letters of no confidence in the Prime Minister.
• UK Govt said to deny any Friday (Dec 10th) deadline in row over EU fishing (Reminder: EU was said to have told UK that they must resolve the fishing license issue by Dec 10th. France said not get the remaining 104 fishing licenses that it had demanded. France had set a deadline of Friday for the UK to show good will or would retaliate with port blockades and litigation.

Americas

• Senate Majority Leader Schumer (D-NY) stated that debt limit increase would be passed before Dec 15th.
• Senate had the votes to pass fast track plan on raising the debt ceiling; the final vote was 59 to 35; President Biden was now expected to sign the measure.
• Bank of Canada (BOC) and Finance Ministry said to plan to keep inflation target at 2% in framework renewal.
• Bank of Canada (BOC) Dep Gov Gravelle noted that longer global supply chain disruptions would increase the likelihood of inflation remaining above its control range.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.38% at 475.16, FTSE -0.14% at 7,311.30, DAX -0.29% at 15,595.69, CAC-40 -0.31% at 6,986.34, IBEX-35 -0.25% at 8,378.50, FTSE MIB -0.20% at 26,765.00, SMI -0.57% at 12,536.21, S&P 500 Futures +0.27%].
• Market Focal Points/Key Themes: European indices open lower across the board and stayed in the red as the session wore on; better performing sectors include health care and consumer discretionary; while those leading to the downside include technology and utilities; automotive subsector dragged down by Daimler; Daimler Truck Holding opens for trade; Swiss Re sells its elipsLife to Swiss Life; Lucas Bols raises funds to acquire Tequila Partida; no major corporate earnings expected during the upcoming US session.

Equities

• Consumer discretionary: Associated British Foods [ABF.UK] +1% (trading update), Accel Group [ACCEL.NL] +14% (trading update).
• Healthcare: Bayer [BAYN.DE] +2% (said to win second verdict), bioMerieux [BIM.FR] +1.5% (raises outlook).
• Industrials: Daimler [DAI.DE] -16%, Daimler Truck [DTG.DE] +8 (Daimler Truck spin-off).

Speakers

• France European Affairs Min Beaune stated that it would ask the EU Commission to announce litigation if fishing issue with UK were not resolved by Friday, Dec 10th. Noted that around 100 licenses were still missing.
• UK Chancellor of the Exchequer Sunak (Fin Min) stated after monthly GDP data that had always acknowledged that recovery could face some bumps in the road. Early actions taken meant UK was well placed to keep economy on track.
• Czech Central Bank (CNB) Gov Rusnok stated that there was expectations of more rate hikes to come. Rates to exceed 3.00% and stay above that level for some time (**Note: 2-Week Repurchase Rate currently at 2.75%).
• Poland Central Bank member Kochalski stated that CPI should return to target in late 2023.
• Hungary PM Orban stated that Constitutional Court expected to rule on govt motion challenging supremacy of EU law on Friday, Dec 10th.
• Hungary Top Court stated that Govt could override EU ruling in limited cases.

Currencies/Fixed Income

• USD was basically steady in a quiet EU session. Focus remained on the upcoming US CPI data for Nov which could cement the course of interest rate rises next year.
• Policy divergence among the largest central banks has been the main driver for the USD recent strength. The upcoming BOE, BOJ and ECB meeting next week to take into account the combination of higher inflation and their possible responses and the spread of the Omicron variant.
• EUR/USD holding below the 1.13 level.
• GBP/USD was softer amid broad dollar strength. Sterling also weaker as domestic headwinds continued to grow.
• TRY currency (Lira) tested aboves 13.95 level per US dollar (new record low).

Economic data

• (NL) Netherlands Oct Manufacturing Production M/M: 1.1 v 1.0% prior; Y/Y: 9.9 v 10.9% prior; Industrial Sales Y/Y: 17.2 v 13.8% prior.
• (FI) Finland Oct Industrial Production M/M: 0.2% v 0.7% prior; Y/Y: 5.5% v 6.7% prior.
• (DE) Germany Nov Final CPI M/M: -0.2% v -0.2% prelim; Y/Y: 5.2% v 5.2% prelim (confirmed highest annual pace since 1993 reunification).
• (DE) Germany Nov Final CPI EU Harmonized M/M: 0.3% v 0.3% prelim; Y/Y: 6.0% v 6.0% prelim.
• (UK) Oct GDP M/M: 0.1% v 0.4%e; GDP 3M/3M: 0.9% v 1.0%e.
• (UK) Oct Industrial Production M/M: -0.6% v +0.1%e; Y/Y: 1.4% v 2.2%e.
• (UK) Oct Manufacturing Production M/M: 0.0% v 0.2%e; Y/Y: 1.3% v 1.6%e.
• (UK) Oct Construction Output M/M: -1.8% v +0.2%e; Y/Y: 3.3% v 5.4%e.
• (UK) Oct Index of Services M/M: % v 0.4%e; 3M/3M: % v 1.2%e.
• (UK) Oct Visible Trade Balance: -£13.9B v -£14.4Be; Overall Trade Balance: -£2.0B v -£2.4Be; Trade Balance Non EU: -£8.6B v -£9.1B prior.
• (DK) Denmark Nov CPI M/M:0.3 % v 0.9% prior; Y/Y: 3.4% v 3.0% prior.
• (DK) Denmark Nov CPI EU Harmonized M/M: 0.4% v 1.0% prior; Y/Y: 3.8% v 3.2% prior.
• (NO) Norway Nov CPI M/M: 0.8% v 0.3%e; Y/Y: 5.1% v 4.6%e.
• (NO) Norway Nov CPI Underlying M/M: 0.1% v 0.0%e; Y/Y: 1.3% v 1.2%e.
• (NO) Norway Nov PPI (including oi)l M/M: 3.0% v 6.2% prior; Y/Y: 58.6% v 60.8% prior.
• (TR) Turkey Central Bank Dec TCMB Expected Inflation Survey: Next 12-Month Outlook: 21.4% v 15.6% prior.
• (TR) Turkey Oct Unemployment Rate: 11.2% v 11.4% prior.
• (CN) Weekly Shanghai copper inventories (SHFE): 41.4K v 36.1K tons prior.
• (ES) Spain Oct Industrial Production M/M: -0.4% v +0.3%e; Y/Y: -0.9% v +0.9%e; Industrial Output NSA (unadj) Y/Y: -3.3% v +0.9% prior.
• (ES) Spain Q3 INE House Price Index Q/Q: 2.1% v 2.4% prior; Y/Y: 4.2% v 3.3% prior.
• (RU) Russia Narrow Money Supply w/e Dec 3rd (RUB): T v 14.24T prior.
• (CZ) Czech Nov CPI M/M: 0.2% v 0.3%e; Y/Y:6.0% v 6.0%e (highest annual pace since Oct 2008).
• (CZ) Czech Oct Export Price Index Y/Y: 7.5% v 7.5% prior; Import Price Index Y/Y: 9.9% v 8.8% prior.
• (AT) Austria Oct Industrial Production M/M: -0.2% v -0.7% prior; Y/Y: 3.3% v 4.8% prior.
• (IT) Italy Oct Industrial Production M/M: -0.6% v +0.3%e; Y/Y: 2.0% v 3.3%e; Industrial Production NSA (unadj) Y/Y: -1.1% v +4.6% prior.
• (UK) BoE/Kantar Dec Inflation (quarterly release) Inflation: Next 12 Months: 3.2% v 2.7% prior (highest since Aug 2019).
• (IT) Bank of Italy (BOI) Banks and Money Monthly Statistics: Oct Gross Non-performing Loans (NPLs): €46.1B v €44.7B prior.
• (GR) Greece Nov CPI Y/Y: 4.8% v 3.4% prior; CPI EU Harmonized Y/Y: 4.0% v 2.8% prior.
• (GR) Greece Oct Industrial Production Y/Y: 16.5% v 9.7% prior.

Fixed income Issuance

• (IN) India sold total INR vs.INR240B indicated in 2023, 2026, 2035 and 2051 bonds.
• (ZA) South Africa sold total ZAR1.2B vs. ZAR1.2B indicated in I/L 2033, 2046 and 2050 Bonds.
• (IT) Italy Debt Agency (Tesoro) sold €6.0B vs. €6.0B indicated in 12-month Bills; Avg Yield: -0.467% v -0.533% prior; Bid-to-cover: 1.29x v 1.53x prior.

Looking ahead

• (MX) Mexico Nov Nominal Wages: No est v 4.1% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 06:00 (PT) Portugal Oct Trade Balance: No est v -€1.7B prior.
• 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).
• 06:30 (CL) Chile Central Bank Economist Survey.
• 06:30 (IN) India Weekly Forex Reserve w/e Dec 3rd: No est v $637.7B prior.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (IN) India announces upcoming bill issuance (held on Wed.
• 07:00 (IN) India Oct Industrial Production Y/Y: 3.7%e v 3.1% prior.
• 07:00 (IS) Iceland Nov Unemployment Rate: No est v 4.9% prior.
• 07:00 (MX) Mexico Oct Industrial Production M/M: +0.8%e v -1.4% prior; Y/Y: 1.8%e v 1.6% prior; Manufacturing Production Y/Y: +1.0%e v -0.4% prior.
• 07:00 (BR) Brazil Nov IBGE Inflation IPCA M/M: 1.1%e v 1.3% prior; Y/Y: 10.9%e v 10.7% prior.
• 07:00 (CZ) Czech Central Bank to comment on CPI data.
• 08:00 (PL) Poland Central Bank (NBP) Dec Minutes.
• 08:00 (RU) Russia Oct Trade Balance: $18.0Be v $20.0B prior; Exports: $46.7Be v $45.6B prior; Imports: $26.4Be v $B25.6B prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming bond issuance.
• 08:30 (US) Nov CPI M/M: 0.7%e v 0.9% prior; Y/Y: 6.8%e v 6.2% prior.
• 08:30 (US) Nov CPI (ex-food/energy) M/M: 0.5%e v 0.6% prior; Y/Y: 4.9%e v 4.6% prior.
• 08:30 (US) Nov CPI Index NSA: 278.111e v 276.589 prior; CPI Core Index SA: 283.453e v 281.695 prior.
• 08:30 (US) Nov Real Avg Hourly Earning Y/Y: No est v -1.2% prior; Real Avg Weekly Earnings Y/Y: No est v -1.6% prior.
• 08:30 (CA) Canada Q3 Capacity Utilization Rate: 83.0%e v 82.0% prior.
• 10:00 (US) Dec Preliminary University of Michigan Confidence: 68.0e v 67.4 prior.
• 10:00 (CO) Colombia Oct Exports: $3.8Be v $3.6B prior.
• 11:00 (EU) Potential sovereign ratings after European close(Moody’s on Netherlands and Austria sovereign rating; S&P on Slovenia sovereign rating; Fitch on UK, Spain and Czech Republic sovereign rating; Canadian rating agency DBRS on Slovenia sovereign rating).
• 13:00 (US) Weekly Baker Hughes Rig Count.
• 14:00 (US) Nov Monthly Budget Statement: -$193.0Be v -$165.1B prior.