Thu, May 26, 2022 @ 16:39 GMT
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Quiet Markets Continue as Year-End Holidays Approach

Notes/Observations

  • Continued holidays in overseas markets kept participation light (UK, Ireland, Australia, New Zealand and Canada off today).
  • Concern builds over rising restrictions from France to China in efforts to curb the spread of Covid-19
    Overall markets globally appear optimistic that the fallout from Omicron would be contained.
  • market participants await fresh news on the omicron variant and mulled its impact on the global economy.

Asia

  • Japan Nov Jobless Rate 2.8% v 2.7%e.
  • Japan Nov Preliminary Industrial Production beat expectations aided by easing global supply chain bottlenecks (M/M: 7.2% v 4.8%e (highest since 2013); Y/Y: 5.4% v 2.9%e.
  • China PBOC Open Market Operation (OMO) was the largest in 2 months: alloted CNY200B in 7-day reverse repos v CNY50B prior; Net inject: CNY190B v CNY40B prior.
  • China FX Regulator SAFE said to increase forex (FX) market monitoring in 2022. To step up risk prevention and control and promote cross-border investment of private equity investment funds.
  • China Evergrande faces two bond payments today in test of investor confidence (Company has ~$255M in bond coupon payments due on Dec 28th (Tues) [~$50.4M relates to Jun 2023 USD bond, ~$204.8M relates to Jun 2025 USD bond].

Europe

  • France PM Castex unveiled proposals to fight Omicron variant with measures to take effect Jan 15th if Parliament approved them. PM noted that Covid health pass to become vaccine pass with required vaccination; Negative test would no longer suffice to enter public places; Home working to become mandatory three days per week at least if possible.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

  • Indices [Stoxx600 +1.04% at 488.06, FTSE closed, DAX +0.72% at 15,948.82, CAC-40 +0.48% at 7,174.97, IBEX-35 +0.72% at 8,684.48, FTSE MIB +0.83% at 27,457.00, SMI +0.67% at 12,952.79, S&P 500 Futures +0.25%].
  • Market Focal Points/Key Themes: European indices started the day in general positive territory and stayed upbeat through the thin trading session; better performing sectors lead by industirals and materials; under performing sectors include consumer discretionary and financials; UK and Ireland closed for holiday; no major earnings expected during the upcoming US session.

Equities

  • Energy: Gazprom [GAZP.RU] +1% (Has not booked gas transit capacity for exports via the Yamal-Europe pipeline for 8th day in a row).
  • Technology: S&T AG [SANT.DE] +1.5% (responds to short-seller report).

Speakers

  • Poland Central Bank’s Lon wrote an Oped article that warned that too tight of monetary policy might cool future economic growth. He saw chance that CPI pressures to ease in early 2022. He added that could back a small rate hike in Jan.
  • China PBoC Gov Yi Gang reiterated view that country’s financial risks were overall controllable. Market expectations on certain property companies were improving and that the adjustment in property market to helped its development.

Currencies/Fixed Income

  • Some slight unwinding of safe-haven flows helped to soften bothe the USD and JPY currencies despite concerns over rising restrictions from France to China in efforts to curb the spread of Covid-19. The Overall take continued to see markets globally appear optimistic that the fallout from Omicron would be contained.
  • EUR/USD drifting slightly higher at test 1.1330 area. The USD still seen on firm legs on central bank divergence. Money markets currently pricing over a 50% odds for a first quarter-point rate hike by March and were close to fully pricing for three rate hikes by December 2022.
  • USD/JPY probing the 115 area.

Economic data

  • (ES) Spain Nov Adjusted Retail Sales Y/Y: +4.9 v -0.7% prior; Retail Sales (unadj) Y/Y: +5.9 v -2.5% prior.
  • (SE) Sweden Nov Trade Balance (SEK): 0.3B v 0.7B prior.
  • (SE) Sweden Nov Household Lending Y/Y: 6.6% v 6.6% prior.
  • (HK) Hong Kong Nov Trade Balance (HKD): -11.6B -35.0Be; Exports Y/Y: 25.0% v 18.0%e; Imports Y/Y: 18.3%e.

Fixed income Issuance

  • None seen.

Looking Ahead

  • (PT) Portugal Year-to-Date Budget Report.
  • 05:15 (CH) Switzerland to sell 12-month Bills.
  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
  • 05:30 (ZA) South Africa cancels weekly Bonds Auction.
  • 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
  • 06:45 (US) Daily Libor Fixing.
  • 07:00 (BR) Brazil Oct National Unemployment Rate: 12.3%e v 12.6% prior.
  • 07:30 (BR) Brazil Nov Total Outstanding Loans (BRL): 4.542Te v 4.497T prior; M/M: 1.4%e v 1.5% prior; Personal Loan Default Rate: No est v 4.3% prior.
  • 08:00 (UK) No Daily Baltic Dry Bulk Index this week.
  • 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
  • 08:55 (US) Weekly Redbook LFL Sales data.
  • 09:00 (US) Oct FHFA House Price Index M/M: 0.9%e v 0.9% prior.
  • 09:00 (US) Oct S&P/Case-Shiller House Price Index (20-City) M/M: 0.90%e v 0.96% prior; Y/Y: 18.60%e v 19.05% prior.
  • 09:00 (US) Oct S&P/Case-Shiller House Price Index (overall) Y/Y: No est v 19.51% prior.
  • 09:00 (EU) Weekly ECB Forex Reserves.
  • 09:00 (EU) ECB weekly QE bond buying update.
  • 10:00 (US) Dec Richmond Fed Manufacturing Index: 11e v 11 prior.
  • 10:00 (MX) Mexico Weekly International Reserve data.
  • 11:30 (US) Treasury to sell 52-Week Bills.
  • 13:00 (US) Treasury to sell 5-Year Notes.
  • 14:00 (AR) Argentina Oct Shop Center Sales Y/Y: No est v 307.0% prior; Supermarket Sales Y/Y: No est v 6.4% prior.
  • 16:00 (KR) South Korea Jan Business Manufacturing Survey: No est v 88 prior; Non-Manufacturing Survey: No est v 83 prior.
  • 16:30 (US) Weekly API Oil Inventories.
  • 19:01 (IE) Bank of Ireland Dec Economic Pulse: No est v 83.2 prior.
  • 23:00 (TH) Thailand Nov ISIC Manufacturing Production Index Y/Y: 2.8%e v 2.9% prior; Capacity Utilization: No est v 64.1% prior.
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