Notes/Observations
- Focus remains on focusing on developments regarding Omicron; risk appetite trying to find fresh feet believing the virus has more bark than bite. Nonetheless Omicron variant threatening to force new restrictions.
- UK Q3 Final GDP revision mixed but show economy recovered from the pandemic faster than previously thought.
Asia
- BOJ Oct Meeting Minutes (2 decisions ago) noted that it discussed weak yen impact on economy; To continue to maintain favorable monetary policy until hitting 2.0% CPI target.
- Japan Govt said to be looking at a FY22/23 Budget of ~¥107.6T (Note: refers to the next fiscal year).
Coronavirus
- Israel government advisory panel of health experts recommends giving the 4th booster shot.
- South Korea Ministry Joint Statement: Coronavirus resurgence adding burden to economy; Korea faces economic uncertainties to stabilize prices.
- Portugal PM Costa announced new Covid measures with work from home becoming mandatory on Dec 25th; Bars and nightclubs to close starting Dec 25th.
- Germany govt announced new covid restrictions that would begin after Christmas. To limits private gatherings to 10 people, closed nightclubs nationwide and large events like soccer matches to be held without an in-person audience, restrictions to go into effect nationwide on Dec 28th.
- President Biden stated that the US was not going back to March of 2020 in terms of lockdowns; Called on Americans to get vaccinated. Had more resources now to keep schools open.
Americas
- Mexico Central Bank (Banxico) Gov De Leon (outgoing) noted that Rate hikes showed commitment to bringing inflation back to 3.0% target. Its Baseline scenario saw CPI elevated for 2022 but with it declining near end of year or beginning 2023.
Energy
- Weekly API Crude Oil Inventories: -3.7M v -0.8M prior.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 +1.46% at 474.20, FTSE -0.13% at 7,287.56, DAX +0.04% at 15,454.35, CAC-40 +0.03% at 6,967.11, IBEX-35 +0.37% at 8,418.81, FTSE MIB -0.23% at 26,593.00, SMI -0.42% at 12,629.61, S&P 500 Futures -0.20%].
- Market Focal Points/Key Themes: European indices open modestly higher but later traded mixed; sectors among those trending higher are technology and materials; while sectors trending lower include financias and industrials; Delivery Hero to scale down German operations; Maersk buys LF Logistics; Wizz Air acquires 15 Gatwick slots from NAS; Novartis acquires Gyroscope Therapeutics; earnings expected during the upcoming US session include CarMax, Cintas and Paychex.
Equities
- Consumer discretionary: Delivery Hero [DHER.DE] +5% (divestments), Camellia [CAM.UK] +6% (trading update).
- Healthcare: Avacta [AVCT.UK] +19% (receives CE mark), Astrazeneca [AZN.UK] -1% (to develop Omicron-specific vaccine; Walter Reed Army researchers said to expect to announce that human trials show success against Omicron and future COVID-19 strains).
- Industrials: Maersk [MAERSKB.DK] +1% (acquisition).
Speakers
- ECB’s Schnabel (Germany) stated that Council knows that inflation would be elevated for a certain period but would decline over the course of 2022. Inflation amplifying factors likely to ease in 2022 but saw upside risks to projections. ECB monitoring wage developments very closely.
- ECB’s Holzmann (Austria) noted that there was differing views within ECB Council on upside risks to inflation.
- Italy PM Draghi noted that the govt had fulfilled all commitments for EU Recovery Funds; prepared to support economy if growth slowed down. Could raise rates in 2022 under an extreme condition.
- UK Govt scientists said to conclude that those stricken with Omicron virus variant would be less likely to become severely ill compared to the Delta strain. Omicron might not be mild enough to avoid a large number of hospitalizations.
- Austria Central Bank (ONB) updated its outlook and noted that Q4 GDP could contract due to lockdown measures.
- Russia’s Yamal-Europe pipeline said to be running in reverse for a 2nd straight day. Flows at the Mallnow metering point on the German-Polish border were going east from Germany into Poland.
- Turkey President Erdogan noted that speculative financial games tried to bring the country down but pledge it would emerge victorious from the economic battle. Reiterated view that would not allow the country to be crushed by interest rates and inflation.
- Russia Foreign Min Lavrov saw the US response to its recent security proposals as “businesslike” and was ready to consider US proposals.
- Russia govt spokesperson Peskov: US willingness to hold security talks is positive; would like to see US proposals on issues.
- Thailand Central Bank (BOT) Policy Statement noted that the decision to keep policy steady was unanimous. Monetary policy to remain accommodative. Reiterated view to focus on economic recovery and that fiscal measures should support recovery. Omicron virus variant was a key risk to outlook and would impact economy in early 2022. Reiterated stance that was prepared to use all tools as appropriate and also closely monitor the THB currency (Baht).
Currencies/Fixed income
- USD was relative steady in quiet trading on Wed. Dealers noted that weeks on either side of Christmas were typically low in volatility for currencies.
- The pause in volatility to allow market participants to process key central bank decision from earlier in the month.
- GBP/USD was drifting higher as UK Q3 GDP suggested that the economy had recovered from the pandemic faster than previously thought. Cable approaching 1.33 by mid-day.
- TRY currency (Lira) remained steady after a bout of volatile and record lows. USD/TRY at 12.55 by mid-session.
Economic data
- (FI) Finland Nov Preliminary Retail Sales Volume Y/Y: -1.9% v +1.6% prior.
- (UK) Q3 Final GDP Q/Q: 1.1% v 1.3% prelim; Y/Y: 6.8% v 6.6% prelim.
- (UK) Q3 Final Private Consumption Q/Q: 2.7% v 2.0% prelim; Government Spending Q/Q: -0.5% v +0.9% prelim; Gross Fixed Capital Formation Q/Q: -0.9% v +0.8% prelim; Exports Q/Q: -3.5% v -1.9% prelim; Imports Q/Q: 1.1% v 2.5% prelim.
- (UK) Q3 Final Total Business Investment Q/Q: -2.5% v +0.4% prelim; Y/Y: 2.6% v 0.8% prelim.
- (UK) Q3 Current Account Balance: -£24.4B v -£15.6Be.
- (TH) Thailand Central Bank (BoT) left Benchmark Interest Rate unchanged at 0.50% (as expected).
- (MY) Malaysia mid-Dec Foreign Reserves: $116.3B v $116.7B prior.
- (FR) France Nov PPI M/M: 3.5% v 2.9% prior; Y/Y: 17.4% v 15.2% prior.
- (TW) Taiwan Nov Unemployment Rate: 3.7% v 3.8%e.
- (HU) Hungary Oct Final Trade Balance: -€0.3B v -€0.3B prelim.
- (ES) Spain Oct Total Mortgage Lending Y/Y: 30.3% v 57.9% prior; House Mortgage Approvals Y/Y: 27.9% v 57.7% prior.
- (ES) Spain PPI M/M: 1.8% v 6.1% prior; Y/Y: 33.1% v 32.0% prior.
- (SE) Sweden Nov Retail Sales M/M: 0.9% v 0.4% prior; Y/Y: 6.0% v 5.2% prior.
- (SE) Sweden Nov PPI M/M: 1.3% v 0.1% prior; Y/Y: 18.1% v 16.8% prior.
- (SE) Sweden Oct Non-Manual Workers Wages Y/Y: 3.0% v 3.1% prior.
- (PL) Poland Dec Consumer Confidence: -27.3 v -24.5e.
Fixed income issuance
- (IN) India sold total INR200B vs. INR200Bindicated in 3-month, 6-month and 12-month bills.
- (SE) Sweden sold SEK10.0B vs. SEK10B indicated in 3-month Bills; Avg Yield: -0.4582% v -0.4381% prior; bid-to-cover: 1.59x v 1.49x prior.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 06:00 (IE) Ireland Nov PPI M/M: No est v 0.2% prior; Y/Y: No est v -2.6% prior.
- 06:00 (IL) Israel Oct manufacturing Production M/M: No est v -0.2% prior.
- 06:00 (CA) Canada Nov CFIB Business Barometer: No est v 62.2 prior.
- 06:00 (BR) Brazil Dec FGV Consumer Confidence: No est v 74.9 prior.
- 06:00 (RU) Russia to sell combined RUB40B in 2031 and 2041 OFZ bonds.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (US) MBA Mortgage Applications w/e Dec 17th: No est v -4.0% prior.
- 07:00 (MX) Mexico Oct Retail Sales M/M: 0.5%e v 0.2% prior; Y/Y: 5.8%e v 5.9% prior.
- 07:00 (UK) Weekly PM Question time in House.
- 07:30 (BR) Brazil Nov Current Account Balance: -$6.2Be v -$4.5B prior; Foreign Direct Investment (FDI): $3.8Be v $2.5B prior.
- 07:30 (IS) Iceland to sell 3-month and 6-month Bills.
- 08:00 (PL) Poland Nov M3 Money Supply M/M: 0.8%e v 1.1% prior; Y/Y: 9.0%e v 8.6% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Q3 GDP Annualized (3rd reading) Q/Q: 2.1%e v 2.1% prelim; Personal Consumption: 1.7%e v 1.7% prelim.
- 08:30 (US) Q3 GDP Price Index: 5.9%e v 5.9% prelim ; Core PCE Q/Q: No est v 4.5% prelim.
- 08:30 (US) Nov Chicago Fed National Activity Index: 0.40e v 0.76 prior.
- 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to raise 2-Week Repurchase Rate by 75bps to 3.50%.
- 10:00 Czech Central Bank (CNB) Gov Rusuk post rate decision press conference.
- 10:00 (US) Dec Consumer Confidence: 111.0e v 109.5 prior.
- 10:00 (US) Nov Existing Home Sales: 6.53Me v 6.34M prior.
- 10:30 (US) Weekly DOE Oil Inventories.
- 11:00 (RU) Russia Nov Industrial Production Y/Y: 5.8%e v 7.1% prior.
- 11:00 (RU) Russia Nov PPI M/M: 0.6%e v 0.4% prior; Y/Y: 27.0%e v 27.5% prior.
- 11:00 (RU) Russia Q4 Consumer Confidence Index: No est v -19 prior.
- 19:01 (IE) Ireland Dec Consumer Confidence Index: No est v 83.1 prior.
- 20:00 (CN) China Nov Swift Global Payments (CNY): No est v 1.85% prior.
