UK CPI At Decade High Ahead Of BOE Rate Decision On Thurs, Awaiting The FOMC

Notes/Observations

• UK Nov CPI above target for the 4th straight month and at decade high ahead of Thurs BOE rate decision.
• Awaiting over a dozen rate decisions in the coming 48 hours; highlighted by Fed.

Asia

• China Nov Retail Sales Y/Y: 3.9% v 4.7%e.
• China Nov Industrial Production Y/Y: 3.8% v 3.7%e.
• China Nov YTD Fixed Urban Assets Y/Y: 5.2% v 5.4%e.
• China Nov Surveyed Jobless Rate: 5.0% v 4.9%e.
• China Nov New Home Prices registered its 3rd straight decline (YoY: -0.3% v -0.3% prior.
• China PBoC conducted its 1-year Medium Term Lending (MLP) with rate maintained at 2.95% for the 20th consecutive time.
• Japan PM Kishida stated that Japan’s use of overstated construction data had been used in GDP calculation.
• US expected to add additional China companies (including DJI) to Investment Blacklist.

Europe

• ECB projections continued to show inflation below 2% target for both 2023 and 2024 period.
• France Stats Agency (Insee) raised its 2021 GDP growth forecast from 6.25% to 6.7%. It saw the domestic economy expanding by 0.4% in Q1 2022, and 0.5% in Q2.
• UK MPs voted 441 to 41 in favor to expand use of face coverings; voted 369 to 126 in favor of covid passes for some venues and large events (as expected) Note: nearly 100 Conservative MPs voted against plans for Covid passes and some of them openly questioned his future.

Americas

• US Senator voted 50-49 to raise the debt ceiling by $2.5T; bill will now be sent to the House.
• Houses passed bill that would ban all imports from the Chinese region of Xinjiang unless the US government determines that the products were not produced with forced labor. Bill heads to the Senate.

Energy

• Weekly API Crude Oil Inventories: -0.8M v -3.1M prior.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.26% at 470.76, FTSE -0.44% at 7,186.79, DAX +0.28% at 15,496.65, CAC-40 +0.45% at 6,932.16, IBEX-35 -0.60% at 8,328.47, FTSE MIB +0.42% at 26,667.00, SMI +0.42% at 12,463.96, S&P 500 Futures 0.00%].
• Market Focal Points/Key Themes: European indices open with a trend towards the upside; sectors leading to upside include technology, industrials; consumer energy; focus in FOMC meeting and EU Summit later in the day.

Equities

• Consumer discretionary: H&M [HMB.SE] -2% (sales), Cineworld [CINE.UK] -26% (court verdict), Currys [CURY.UK] -11% (earnings), Inditex [ITX.ES] -3% (earnings).
• Financials: Generali [G.IT] +1% (CMD).
• Healthcare: Sanofi [SAN.FR] +1%, GSK [GSK.UK] -1% (vaccine data).
• Utilities: Veolia Environnement [VE.FR] +1.5% (EU approves acquisition of Suez).

Speakers

• German Chancellor Scholz presented his 1st speech in Parliament and stated that the country had no time to lose in govt challenges. Pledge to overcome the pandemic and was still targeting 30M vaccinations by end-2021.
• Italy PM Draghi stated that was prepared to provide more funds to limit household energy bills. To spend €3.8B to help consumers with poser bills. Uncertainty meant expansionary fiscal policy was still needed. EU should continue discussing the possibility of joint strategic stockpiling of gas.
• EU Commission President Von Der Leyen stated that Russia was choosing an aggressive stance; prepared for an expansion of sanctions against the country.
• Austria WIFO Institute (think tank) Quarterly Economic Forecasts cut the 2021 GDP growth forecast from 4.4% to 4.1% while raising the 2022 GDP growth from 4.8% to 5.2%.
• South African High Court ruled medical parole of former president Jacob Zuma was not lawful and that he should return to prison.

Currencies/Fixed income

• FX market was generally range bound ahead of the numerous rate decisions over the coming two days.
• USD was steady with focus on the Fed rate decision later today. Market awaiting to see id the FOMC reinforces growing market expectations for earlier rate rises next year. Key focus is whether the Fed does accelerate tapering of their bond buying program and whether policymakers bring forward their projections for interest rate rises (aka “dot plot”).
• EUR/USD steady at 1.1270 area ahead of Thursday’s ECB policy decision. The ECB likely to maintain its dovish stance as reports circulated that ECB Staff projections would continue to show inflation below 2% target for both 2023 and 2024 period. Focus will be on QE and when the PEPP ends and how any adjustment to the conventional APP QE program.
• GBP/USD was slightly higher at 1.3265following the decade high CPI data. The Thursday BOE rate decision is a live one with the market roughly spilt 50-50 on whether the MPC will pull the trigger with a 15bps rate hike. The Omicron virus variant was a new risk that could delay any policy action.

Economic data

• (FI) Finland Oct Final Retail Sales Volume Y/Y: +1.6% v -0.9% prelim.
• (FI) Finland Oct GDP Indicator Y/Y: 4.3% v 5.5% prior.
• (UK) Nov CPI M/M: 0.7% v 0.4%e; Y/Y: 5.1% v 4.8%e (4th month above target and highest annual pace since Sept 2011); CPI Core Y/Y: 4.0% v 3.7%e; CPIH Y/Y: 4.6% v 4.4%e.
• (UK) Nov RPI M/M: 0.7% v 0.3%e; Y/Y: 7.1% v 6.7%e; RPI-X (ex-mortgage interest payments) Y/Y: 7.2% v 6.8%e; Retail Price Index: 314.3 v 313.0e.
• (UK) Nov PPI Input M/M: 1.0% v 0.5%e; Y/Y: 14.3% v 13.2%e.
• (UK) Nov PPI Output M/M: 0.9% v 0.6%e; Y/Y: 9.1% v 8.2%e.
• (NO) Norway Nov Trade Balance (NOK): 78.7B v 83.6B prior.
• (ZA) South Africa Oct Leading Indicator: 125.2 v 125.0 prior.
• (FR) France Nov Final CPI M/M: 0.4% v 0.4% prelim; Y/Y: 2.8% v 2.8% prelim; CPI Index: # v 106.82e.
• (FR) France Nov Final CPI EU Harmonized M/M: 0.4% v 0.4% prelim; Y/Y: 3.4% v 3.4% prelim.
• (ES) Spain Nov Final CPI M/M: 0.3% v 0.4% prelim; Y/Y: 5.5% v 5.6% prelim.
• (ES) Spain Nov Final CPI EU Harmonized M/M: 0.2% v 0.3% prelim; Y/Y: 5.5% v 5.6% prelim.
• (ES) Spain Nov CPI Core M/M: 0.6% v 0.3%e; Y/Y: 1.7% v 1.5%e.
• (TR) Turkey Nov Central Gov’t Budget Balance (TRY): +32.0B v -17.4B prior.
• (ZA) South Africa Nov CPI M/M: 0.5% v 0.5%e; Y/Y: 5.5% v 5.5%e (9th straight reading within target band).
• (ZA) South Africa Nov CPI Core M/M: 0.1% v 0.1%e; Y/Y: 3.3% v 3.3%e.
• (PL) Poland Nov Final CPI M/M: 1.0% v 1.0% prelim; Y/Y: 7.8% v 7.7% prelim (8th month above target and highest since 2001).
• (IT) Italy Nov Final CPI M/M: 0.6% v 0.7% prelim; Y/Y: 3.7% v 3.8% prelim.
• (IT) Italy Nov Final CPI EU Harmonized M/M: 0.7% v 0.8% prelim; Y/Y: 3.9% v 4.0% prelim; CPI Index (ex-tobacco): 105.7 v 105.1 prior.
• (UK) Oct ONS House Price Index Y/Y: 10.2% v 11.2%e.
• (IT) Italy Oct General Government Debt: €2.710T v €2.706T prior.
• (ZA) South Africa Nov PPI M/M: 1.4% v 0.7%e; Y/Y: 9.6% v 8.7%e.
• (ZA) South Africa Q3 Non-Farm Payrolls Q/Q: +0.6% v -1.6%e; Y/Y: 0.5% v 0.7% prior.
• (GR) Greece Oct Unemployment Rate: % v 13.0% prior.

Fixed income issuance

• (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.
• (DK) Denmark sold total DKK1.2B in 3-month, 6-month, 9-month and 12-month Bills.

Looking ahead

• (NG) Nigeria Nov CPI Y/Y: 15.3%e v 16.0% prior.
• (PE) Peru Oct Economic Activity Index (Monthly GDP) Y/Y: 5.9%e v 9.7% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) switch auction.
• 06:00 (IE) Ireland Oct Trade Balance: No est v €5.7B prior.
• 06:00 (IE) Ireland Oct Property Prices M/M: No est v 1.6% prior; Y/Y: No est v 12.4% prior.
• 06:00 (BR) Brazil Dec FGV Inflation M/M: -0.5%e v +1.2% prior.
• 06:00 (EU) EU Commission to sell 3-month and 6-month Bills.
• 06:00 (RU) Russia combined RUB50B in 2029 and 2036 OFZ Bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (US) MBA Mortgage Applications w/e Dec 10th: No est v 2.0% prior.
• 07:00 (BR) Brazil Oct Economic Activity Index (Monthly GDP) M/M: -0.2%e v -0.3% prior; Y/Y: -0.4%e v +1.5% prior.
• 07:00 (UK) Weekly PM Question time in House.
• 07:00 (CL) Chile Central Bank (BCCh) Monetary Policy Report.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:15 (CA) Canada Nov Annualized Housing Starts: 235.0Ke v 236.6K prior.
• 08:30 (US) Dec Empire Manufacturing Index: 25.0e v 30.9 prior.
• 08:30 (US) Nov Advance Retail Sales M/M: 0.8%e v 1.7% prior; Retail Sales (ex-auto) M/M: 0.9%e v 1.7% prior; Retail Sales (ex-auto/gas): 0.8%e v 1.4% prior; Retail Sales (control group): 0.8%e v 1.6% prior.
• 08:30 (US) Nov Import Price Index M/M: 0.7%e v 1.2% prior; Y/Y: 11.5%e v 10.7% prior; Import Price Index (ex-petroleum) M/M: 0.4%e v 0.5% prior.
• 08:30 (US) Nov Export Price Index M/M: 0.5%e v 1.5% prior; Y/Y: No est v 18.0% prior.
• 08:30 (CA) Canada Nov CPI M/M: 0.2%e v 0.7% prior; Y/Y: 4.7%e v 4.7% prior; Consumer Price Index: 144.2e v 143.9 prior; CPI Core- Common Y/Y: 1.9%e v 1.8% prior; CPI Core- Median Y/Y: 2.9%e v 2.9% prior; CPI Core- Trim Y/Y: 3.3%e v 3.3% prior.
• 08:30 (CA) Canada Oct Manufacturing Sales M/M: +4.1%e v -3.0% prior.
• 09:00 (CA) Canada Nov Existing Home Sales M/M: -0.1%e v +8.6% prior.
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (7-20 years).
• 10:00 (US) Dec NAHB Housing Market Index: 84e v 83 prior.
• 10:00 (US) Oct Business Inventories: 1.1%e v 0.7% prior.
• 10:00 (CO) Colombia Oct Manufacturing Production Y/Y: 13.0%e v 15.5% prior; Industrial Production Y/Y: No est v 13.7% prior.
• 10:00 (CO) Colombia Oct Retail Sales Y/Y: 13.5%e v 15.3%prior.
• 10:00 (PE) Peru Nov Unemployment Rate: No est v 9.6% prior.
• 10:30 (US) Weekly DOE Oil Inventories.
• 11:00 (RU) Russia Q3 Preliminary GDP (2nd reading) Y/Y: 4.4%e v 4.3% prior.
• 11:30 (IL) Israel Nov CPI M/M: 0.0%e v +0.1% prior; Y/Y: 2.5%e v 2.3% prior.
• 14:00 (US) FOMC Interest Rate Decision: Expected to leave Interest Rates unchanged between 0.00-0.25% range; Expected to leave Interest on Reserve Balances Rate (IOER) unchanged at 0.15%.
• 14:30 (US) Fed Chair Powell post rate decision press conference.
• 16:00 (US) Oct Total Net TIC Flows: No est v -$26.8B prior; Net Long-term TIC Flows: No est v $26.3B prior.
• 16:45 (NZ) New Zealand Q3 GDP Q/Q: -4.1%e v +2.8% prior; Y/Y: -1.4%e v +17.4% prior.
• 17:00 (AU) Australia Dec Preliminary Manufacturing PMI: No est v 59.2 prior.
• 18:00 (AU) RBA Hearns.
• 18:30 (AU) RBA Gov Lowe.
• 18:50 (JP) Japan Nov Trade Balance: -¥600.3B v -¥68.5B prior (revised from -¥67.4B); Adjusted Trade Balance: -¥320.8Be v -¥320.8B prior; Exports Y/Y: 21.0%e v 9.4% prior; Imports Y/Y: 40.0%e v 26.7% prior.
• 19:00 (AU) Australia Dec Consumer Inflation Expectation Survey: No est v 4.6% prior.
• 19:30 (AU) Reserve Bank of Australia (RBA) Bulletin.
• 19:30 (AU) Australia Nov Net Employment Change: +200.0Ke v -46.3K prior; Unemployment Rate: 5.0%e v 5.2% prior; Full Time Employment Change: No est v -40.4K prior; Part Time Employment Change: No est v -5.9K prior; Participation Rate: 65.5%e v 64.7% prior.
• 19:30 (JP Japan Dec Preliminary PMI Manufacturing: No est v 54.5 prior; PMI Services: No est v 53.0 prior; PMI Composite: No est v 53.3 prior.