Market movers today
A quiet day in terms of economic data, euro area November flash consumer confidence will be released in the afternoon.
Consensus expects the National Bank of Hungary to maintain its policy rates unchanged at the monetary policy meeting today.
Overnight, we expect the Reserve Bank of New Zealand (RBNZ) to hike its policy rate by 75bp, market remains split between 50 and 75bp with around 66 basis points priced in.
Today, we will also have ECB’s Holzmann and Rehn as well as Fed’s Mester, Bullard and George on the wires.
The 60 second overview
Inflation: German PPI inflation declined to 34.5% in October from 45.8%, more than expected. The big drop was due to energy and PPI for intermediate goods also eased, however, less positive dynamic for PPI for consumer goods, which is still trending up, especially due to non-durables.
Spanish mortgage relief: The Spanish government will approve mortgage relief measures including extension of loan repayments for up to seven years for more than one million vulnerable households and middle-class families. Around three-quarters of the population are homeowners, with most opting for floating-rate mortgages, which leaves many exposed to increasing interest rates.
Equities: Equities lower yesterday without any clear drivers for lack of appetite. However, looking at the sector performance it shows a rather big discrepancy between the cyclicals and defensives. Consumer staples leading the defensive universe higher while consumer discretionary leading cyclicals lower. Energy sector also lower yesterday but that could have been a lot worse if the Saudi Arabian energy minister had not been out denying a story about an oil output increase. In US Dow -0.1%, S&P 500 -0.4%, Nasdaq -1.1% and Russell 2000 -0.6%. Asian markets are mostly higher this morning and the same goes for both European and US futures.
FI: The inversion of the US and European yield curves continue on the back of comments from Federal Reserve officials that want to keep hiking until inflation is under control although others are indicating a slowing pace of the hikes. The slowing pace was also on ECB Centeno’s agenda when he mentioned yesterday that conditions are in place for a rate hike of less than 75bp.
FX: The start to the week has been dominated by USD strength with EUR/USD approaching the 1.02 level. HUF and JPY have traded on the back-foot amid both yields moving back higher while commodity FX had a volatile session driven by oil fluctuations. EUR/NOK and EUR/SEK remain broadly unchanged compared to Friday’s close.
Credit: Yesterday was slightly downbeat with iTraxx main 1bp wider to 95.6bp and iTraxx Xover 3.6bp wider to 477.1bp. In spite of the muted sentiment, the primary market started the week on a strong footing with several new prints in the EUR benchmark arena.
