Notes/Observations
German Dec Unemployment Claims Rate hits a record low of 5.5%
Asia:
PBOC: skips OMOs for 8th day citing current bank liquidity as relatively high (**Note: reports circulated that PBOC may resume open market operations (OMO) in H2 of Jan)
Survey of analysts expects China to raise money market rates 3 times by 5bps each time during 2018. PBoC expected to make modest increases in money-market rates in 2018 as it aims to keep up the pressure on deleveraging and prevent too much divergence with U.S. policy. Analysts did not forecast any change to the benchmark rate
North Korea Official: Kim Jong Un has given order to open boarder hotline between the Koreas at 06:30GMT to discuss inter-Korean dialogue
Europe:
ECB’s Nowotny (Austria): End of is within sight this year if the euro area economy continues to grow strongly
UK reportedly considering joining the Trans Pacific Partnership (TPP) following Brexit
Americas:
President Trump: North Korean Leader Kim Jong Un just stated that the "Nuclear Button is on his desk at all times." Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!
Sen Hatch (R-UT): plans to retire from the Senate at the end of term (**Note: Former GOP presidential candidate Mitt Romney was said to plan to seek Hatch’s seat if Hatch retired; Romney has been a sharp critic of Pres Trump at times)
Economic Data:
(NO) Norway Oct AKU Unemployment Rate: 4.0% v 4.0%e
(TR) Turkey Dec CPI M/M: 0.7% v 0.6%e; Y/Y: 11.9% v 11.9%e; CPI Core Index Y/Y: 12.3% v 12.1% prior
(ES) Spain Dec Net Unemployment M/M: -61.5K v -58.9Ke
(CH) Swiss Dec PMI Manufacturing: 65.2 v 64.5e
(HK) Hong Kong Nov Retail Sales Value Y/Y: 7.5% v 4.2%e; Retail Sales Volume Y/Y: 6.9% v 3.9%e
(DE) Germany Dec Unemployment Change: -29K v -13Ke; Unemployment Claims Rate: 5.5% v 5.5%e (record)
(DE) Germany CPI Brandenburg M/M: 0.6% v 0.4% prior; Y/Y: 1.5% v 1.6% prior
(UK) Dec Construction PMI: 52.2 v 53.0e (3rd month of expansion)
Fixed Income Issuance:
(IE) Ireland Debt Agency (NTMA) opened its book to sell May 2028 IGB bond; guidance seen +3bps to mid-swaps; order book over €10B
(ID) Indonesia sold total IDR25.5T vs.IDR17.0T target in 5-year, 10-year and 20-year bonds
(IN) India sold total INR140B vs. INR140B indicated in 3-month, 6-month and 12-month bills
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.3% at 389.4 , FTSE flat at 7648 , DAX +0.4% at 12920, CAC-40 +0.2% at 5299 , IBEX-35 +0.2% at 10097, FTSE MIB -0.1% at 21812 , SMI +0.4% at 9417, S&P 500 Futures +0.2%]
Market Focal Points/Key Themes: European Indices trade higher across the board following on from the momentum seen in Wallstreet overnight. The Dax and Cac lead the gainers recovering from declines seen yesterday, aided by a slight pullback in the Euro. In the UK the retail sector outperforms after Next reported Q4 ahead of expectations as well as lifting its full year outlook. Next shares trade sharply higher, with M&S, Boohoo and Asos all trading up in sympathy. Plus500 also outperforms after guiding full year results ahead of consensus. In the healthcare space Addex Therapeutics trades over 15% higher after a partnership with Indivior, while Novartis is slightly higher after Kisqali received FDA breakthrough therapy designation.
Equities
Consumer Discretionary [Next [NXT.UK] +7% (Q4 update), M&S [MKS.UK] +1.5% (Sympathy with Next), Staffline [STAF.UK] -2% (Trading update), Ryanair [RYA.UK] +1.1% (Dec metrics)]
Financials [Plus500 [PLUS.UK] +15% (Trading update)]
Healthcare [Addex Therapeutics [ADXN.CH] +16% (partnership with Indivior), Basilea [BSLN.CH] +4% (Start of phase 1 study)]
Speakers
UK Trade Sec Fox: Would be foolish not to look at all trade options; joining TPP was not a priority. Wanted continuity of EU trade deals following Brexit
Sweden Fin Min Andersson reiterated govt view of not expecting any major drama in housing prices but did scope for stimulus in event of any crisis
Czech Central Bank Dec Minutes: Vote was not unanimous to keep policy steady; Most MPC members saw it more appropriate to raise rates gradually. Members Hampl and Benda voted for rate hike. Timing for further steps were conditional on evolution of all key macroeconomic variables including the CZK currency rate. Would be useful to have new forecasts before making further rate hike decision
China PBoC said top have held meeting to regulate Bitcoin mining power use
Currencies
USD trying to recover some of its recent losses against the major pairs.
EUR/USD unable to break above the 1.21 handle despite ECB’s Nowotny suggesting the ECB may end its QE operations in 2018 should the economy stay strong. Dealers were turing optimistic that the current EUR rally could test the pivotal 1.24 area.
Both the SEK and NOK currencies were firmer as Nordic central banks could bring forward their own tightening approach
Asian currencies continue to exhibit strength in the new year. Thai Baht (THB) hits strongest level since April 2015; PBoC set yuan (CNY) at strongest since May 2016; Taiwan Dollar (TWD) continues to trade at over 4-year highs
Fixed Income
Bund Futures trade up 6 ticks at 161.40 bouncing off a low of 161.20 as the euro tests a 3-year high. A continued move below 161.00 low targets 160.71 then 160.45, with a continued rebound targeting 161.86.
Gilt futures trade at 124.37 down 23 ticks off the session lows. Continued upside eyeing 124.75 then 125.25. Downside targets include 123.25 then 122.75.
Wednesday’s liquidity report showed Tuesday’s excess liquidity rose to €1.789T from €1.758T prior. Use of the marginal lending facility rose to €317M from €299M prior.
Corporate issuance saw a total $7B come to market, headlined by Berkshire Energy, GM financial, Santander and BNP.
Looking Ahead
(ZA) South Africa Dec Naamsa Vehicle Sales Y/Y: No est v 7.2% prior
(RO) Romania Dec International Reserves: No est v $36.7B prior
05.30 (UK) Weekly John Lewis LFL sales data
06:00 (CZ) Czech Republic to sell bonds – 06:45 (US) Daily Libor Fixing
07:00 (US) MBA Mortgage Applications w/e Dec 29th: No est v -4.9% prior (2-weeks worth of data)
07:00 (CL) Chile Nov Retail Sales Y/Y: 3.6%e v 3.7% prior; Commercial Activity Y/Y: No est v 6.0% prior
(US) Dec Wards Total Vehicle Sales: 17.35Me v 17.40M prior; Domestic Vehicle Sales: 13.38Me v 13.46M prior
07:45 (US) Weekly Goldman Economist Chain Store Sales
08:00 (PL) Poland Dec Preliminary CPI: M/M: 0.3%e v 0.5% prior; Y/Y: 2.1%e v 2.5% prior
08:00 (CZ) Czech Dec Budget Balance (CZK): No est v -11.6B prior
08:00 (SG) Singapore Dec Purchasing Managers Index (PMI): No est v 52.9 prior; Electronic Sector Index: No est v 53.5 prior
08:05 (UK) Baltic Dry Bulk Index
08:30 (BR) Weekly Brazil currency flow data
08:55 (US) Weekly Redbook Sales
09:00 (EU) Weekly ECB Forex Reserves
09:30 (BR) Brazil Weekly Currency Flow data
10:00 (US) Dec ISM Manufacturing: 58.2e v 58.2 prior; Prices Paid: 64.5e v 65.5 prior
10:00 (US) Nov Construction Spending M/M: 0.5%e v 1.4% prior
10:00 (DK) Denmark Dec Foreign Reserves (DKK): 464.2Be v 464.2B prior
10:00 (CO) Colombia Nov Exports: $3.2Be v $3.1B prior
10:00 (MX) Mexico weekly International Reserves data
14:00 (US) FOMC Dec 13th Meeting Minutes
16:30 (US) Weekly API Oil Inventories: Crude
