Notes/Observations
Plethora of central bank decisions later this week.
Asia:
China Nov CPI M/M: 0.0% v 0.1% prior; Y/Y: 1.7%vV 1.8%e
China said to be considering delaying asset-management product rules to end of 2020 (**Note: On Dec 7th reports circulated that 10 Chinese banks pushed back on new asset management rules in closed meeting. Banks noted that rules on breaking implicit guarantee could trigger liquidity risk, increase market volatility. Requested to extend transition period to 3 years
Japan Govt expected to upgrade its FY18/19 GDP forecast of 1.4% to ~2% with an expanding global economy seen boosting exports and capital investment expected to remain firm
Europe:
Michael Gove (Environment Min) and Boris Johnson (Foreign Min) to insist that PM May presses for a hard Brexit when Britain begins trade negotiations. Stance would be payback for their support for her deal last week
UK British Chamber of Commerce (BCC) Quarterly Economic Outlook: Trimmed growth forecast for 2017 thru 2019 citing continued uncertainty over Brexit
La Vanguardia poll on Catalan Regional elections: Pro-independence parties seen gaining 66-67 seats compared to 72 seats in prior regional ballot (held in 2015)
Energy:
UAE Energy Min Al Mazrouei: Next year will be better for oil market; OPEC/nOPEC plan to announce exit strategy from supply cuts in June does not mean we will exit in June
Kuwait Oil Min Almarzooq: production cuts may end before 2019 if the market re-balances by June next year
Economic Data:
(NO) Norway Nov CPI M/M: 0.1%0.2%e; Y/Y: 1.1% v 1.2%e
(NO) Norway Nov CPI Underlying (ATE) M/M: -0.3% v 0.0%e; Y/Y: 1.0% v 1.2%e
(TR) Turkey Q3 GDP Q/Q: 1.1% v 1.8%e; Y/Y: 11.1% v 8.5%e
(TR) Turkey Oct Current Account: -$3.8B v -$4.1Be
(DK) Denmark Nov CPI M/M: -0.3% v -0.1%e; Y/Y: 1.3% v 1.5%e
(DK) Denmark Nov CPI EU Harmonized M/M: -0.3% v -0.1%e; Y/Y: 1.3% v 1.5%e
(FR) Bank of France Nov Business Sentiment: 106 v 107e
(CZ) Czech Nov CPI M/M: 0.1% v 0.1%e; Y/Y: 2.6% v 2.7%e (12th straight reading at or above the central bank’s target)
(IT) Italy Oct Retail Sales M/M: -1.0% V 0.0%e; Y/Y: -2.1% v 3.1% prior
(CN) China Nov Aggregate Financing (CNY) 1.600T v 1.225Te
(CN) China Nov M2 Money Supply Y/Y: 9.1% v 8.9%e
(CN) China Nov New Yuan Loans (CNY): 1.12T v 800Be
(BR) Brazil Dec IGP-M Inflation (1st Preview): 0.7% v 0.7%e
Fixed Income Issuance:
(SE) Sweden sold SEK2.33B in 0.25% I/L 2022 bond; Avg Yield: -2.0678%
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 flat at 389.3, FTSE +0.6% at 7438, DAX +0.1% at 13162, CAC-40 flat at 5400, IBEX-35 -0.2% at 10306, FTSE MIB -0.2% at 22736, SMI flat at 9322 , S&P 500 Futures +0.1%]
Market Focal Points/Key Themes: European Indices trade mixed this morning with notable strength in the FTSE100 trading higher by over 0.5%. European Indices are off the highs after initial strength following on from a positive session in Asia. Shares of Steinhoff has seen a rebound after heavy losses in the past few sessions after Chairman is in talks with lenders to seek a standstill on a €1.5B margin loan, as well as appointing an international advisory team. In the Healthcare space Argenx, PharmaMar and Mereo Biopharma trade higher after positive trial results, while Hollywood Bowl trades sharply higher after strong Full year results. In the M&A Space Apollo partner and Archer Daniels reportedly look to bid for Unilever’s spread business, whilst Apple is said to be nearing a deal to acquire music app developer Shazam.
Equities
Consumer discretionary [ Steinhoff [SNH.ZA] +20% (Appoints international advisory team), Hollywood Bowl [BOWL.UK] +9.5% (Earnings)]
Financials: [ Investec [INVP.UK] +3% (comments on exposure to Steinhoff)]
Healthcare: [ Argenx [ARGX.BE] +16% (Reports positive topline results from Phase 2 proof-of-concept trial of ARGX-113 (efgartigimod) in generalized myasthenia gravis), Pharmar [PHM.MAC] +18% (Positive results from Admyre Phae III pivotal trial), Mereo Biopharma [MPH.UK] +4% (Positive trial data)]
Speakers
ECB’s Nowotny (Austria): ECB must be careful in unwinding low interest rates
ECB’s Nouy (SSM chief): NPL rules may be final a month or two later, large majority of euro countries support NPL plans
UK Brexit Minister Davis: Could avoid hard border with Ireland whatever the outcome of Brexit trade talks. Brexit transition might last 21 months
Poland Central Bank’s Sura: No reason to change rate stance based upon data. Saw 2017 GDP growth above 4.5%
China Foreign Min Wang: China, India and Russia to deepen economic and strategic relations –
Currencies
FX markets were quiet ahead of a plethora of rate decisions on Thursday. Within the G10 there are BOE. Norges and SNB on Thursday. In Emerging markets there will be Indonesia, Philippines, Turkey, Colombia, Mexico and Chile deciding on rates
Fixed Income
Bund futures trade 163.50 up 4 ticks, holding up comfortably and near the December highs. Continued downward pressure sees 162.10 followed by 161.50. A reversal targets 163.75 then 164.33.
Gilt futures trade at 125.55 up 46 ticks, sliding amid PM May’s Brexit truce is under pressure. Continued upside eyeing 125.75 then 126.35. Downside targets include 124.25 then 123.75.
Monday’s liquidity report showed Friday’s use of the marginal lending facility fell to €135M from €146M prior.
Looking Ahead
(RU) Russia Q3 Preliminary GDP (2nd reading) Y/Y: 1.8%e v 1.8% advance reading
(IL) Israel Central Bank (BOI) Nov Minutes
(MX) Mexico Nov ANTAD Same-Store Sales Y/Y: No est v 2.1% prior
05:25 (BR) Brazil Central Bank Weekly Economists Survey
05:30 (NL) Netherlands Debt Agency (DSTA) to sell Bills
06:00 (IL) Israel Nov Consumer Confidence: No est v 128 prior
06:00 (PT) Portugal Oct Trade Balance: No est v -€1.2B prior
06:30 (TR) Turkey TCMB Survey of Expectations
06:45 (US) Daily Libor Fixing
08:00 (PL) Poland Nov Final CPI M/M: No est v 0.5% prelim; Y/Y: No est v 2.5% prelim
08:05 (UK) Baltic Dry Bulk Index
08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week
08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
08:30 (CH) Swiss Government Question Time in Parliament
08:55 (FR) France Debt Agency (AFT) to sell combined €5.2-6.4B in 3-month, 6-month and 12-month BTF Bills
09:30 (EU) ECB announces Covered-Bond Purchases
09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
10:00 (US) Oct Oct JOLTS Job Openings: No est v 6.093M prior
11:30 (US) Treasuries to sell to 3-month and 6-month bills
13:00 (US) Treasuries to sell 3-Year Notes
13:00 (US) Treasuries to sell 10-Year Notes Reopening
16:00 (US) Weekly Crop Progress Report
