Notes/Observations
Highly anticipated US CPI report being focal point of the week for investors and markets
Signs of stability in USTs and Bunds
Various European GDP releases in session highlighting better economic growth prospects (Germany mixed; Netherlands beat; Italy miss
Sweden Central Bank keeps policy steady and saw slow rate hikes initiated in 2nd half of 2018
Asia:
Japan Q4 Preliminary GDP data missed expectations but still registered its 8th consecutive quarter of growth (Q/Q: 0.1% v 0.2%e Annualized GDP Q/Q: 0.5% v 1.0%e)
Japan Economy Min Motegi: ‘Virtuous economic cycle’ starting to take hold with pick-up in private consumption (confirmed GDP grew for 8 quarters for the first time in 28 years)
New Zealand 1-Year Inflation Expectation Survey: 1.86% v 1.87% prior; 2-Year Inflation Expectations at 2.1% v 2.0% prior
China PBoC again skipped its Open Market Operation(OMO) for the 16th straight session
(SG) Monetary Authority of Singapore (MAS): Monetary policy stance remained unchanged; had not revised core or headline CPI forecasts since Oct
Europe:
Germany SPD Leader Schulz stepped down as party chairman (as speculated). Scheduled a SPD special party convention for April 22nd. Andrea Nahles nominated as SDP chair by executive board. Hamburg Mayor Scholz to take over as acting leader of Germany’s SPD party
France President Macron: in Europe’s interest that Barnier remained EU’s only Brexit negotiator
Israeli police said to find sufficient evidence to indict PM Netanyahu on corruption charges
Americas:
President Trump: reviewing all options over Sec 232 trade probe on steel and aluminum; looking at tariffs and/or quotas on steel and aluminum imports
Fed Chair Powell stated that Fed will remain alert to any financial stability risks
White House said to be considering nominating current head of Cleveland Fed’s Loretta Mester as Vice Chair of Federal Reserve Board
Canada NAFTA negotiator: NAFTA talks I’ve been a part of are ‘most unusual’; had seen fairly limited progress overall but quite close to completing some chapters, including customs and telecom
Energy:
Weekly API Oil Inventories: Crude: +3.9M v -1.1M prior
Economic Data:
(SE) Sweden Jan Maklarstatistik Housing Prices Y/Y: -1.0% v -2.0% prior; Apartment Prices Y/Y: -4.0% v -3.0% prior
(DE) Germany Q4 Preliminary GDP Q/Q: 0.6% v 0.6%e; Y/Y: 2.9% v 3.0%e; GDP NSA Y/Y: 2.3% v 2.2%e
(DE) Germany Jan Final CPI M/M: -0.7% v -0.7%e; Y/Y: 1.6% v 1.6%e
(DE) Germany Jan Final CPI EU Harmonized M/M: -0.7% v -1.0%e; Y/Y: 1.4% v 1.4%e
(RO) Romania Jan CPI M/M: 0.8% v 0.5%e; Y/Y: 4.3% v 3.9%e
(RO) Romania Q4 Advance GDP Q/Q: 0.6% v 1.2%e; Y/Y: 6.9% v 7.3%e
(FI) Finland Dec GDP Indicator WDA Y/Y: 3.6% v 4.3% prior
(FI) Finland Dec Final Retail Sales Volume Y/Y: 3.0% v 3.5% prelim
(TR) Turkey Dec Current Account Balance: -$7.7B v -$7.5Be
(TH) Thailand Central Bank (BOT) left Benchmark Interest Rate unchanged at 1.50% (as expected)
(CZ) Czech Jan CPI M/M: 0.6% v 0.7%e; Y/Y: 2.2% v 2.2%e
(HU) Hungary Q4 Preliminary GDP Q/Q: 1.3% v 1.1%e; Y/Y: 4.4% v 4.3%e
(SE) Sweden Central Bank (Riksbank) left Repo Rate unchanged at -0.50% (as expected); maintained its repo rate path outlook
(NL) Netherlands Q4 Preliminary GDP Q/Q: 0.8% v 0.7%e; Y/Y: 2.9% v 3.2%e
(NL) Netherlands Dec Trade Balance: €4.1B v €5.9B prior
(IT) Italy Q4 Preliminary GDP Q/Q: 0.3% v 0.4%e; Y/Y: 1.6% v 1.7%e
(PL) Poland Q4 Preliminary GDP Q/Q: 1.0% v 1.2%e; Y/Y: 5.1% v 5.2%e
(PT) Portugal Q4 Preliminary GDP Q/Q: 0.7% v 0.6%e; Y/Y: 2.4% v 2.3%e
(EU) Euro Zone Q4 Preliminary GDP (2nd reading) Q/Q: 0.6% v 0.6%e; Y/Y: 2.7% v 2.7%e
(EU) Euro Zone Dec Industrial Production M/M: 0.4% v 0.1%e; Y/Y: 5.2% v 4.2%e
Fixed Income Issuance:
(IN) India sold total INR140B vs. INR140B indicated in 3-month, 6-month and 12-month bills
(DK) Denmark sold DKK4.0B in 3-month Bills; Yield: -0.660% v -0.690% prior; bid-to-cover: 1.73x v 1.25x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.7% at 373.2, FTSE +0.7% at 7216, DAX +0.7% at 12286, CAC-40 +0.6% at 5139 , IBEX-35 +0.5% at 9693, FTSE MIB +0.2% at 22071 , SMI +0.9% at 8832, S&P 500 Futures -+0.4%]
Market Focal Points/Key Themes: European Indices trade higher across the board following a rebound in Wallstreet overnight and strength in futures this morning. Earnings picked up this morning with large financial names Credit Agricole and Credit Suisse reporting results, the latter trades higher on improved outlook. Plus500 outperforms after strong results and raising outlook, while Rexel trades over 7% higher following earnings. To the downside Galliford Try is a sharp decliner after announcing a capital raise alongside results, while ThyssenKrupp trades lower after mixed Q1 results. Looking ahead notable earners include Bunge, Groupon and Shire Pharma.
Movers
Materials [DSM [DSM.NL] +4.1% (Earnings), Boliden [BOL.SE] +3.3% (Earnings), ThyssenKrupp [TKA.DE] -1%(Earnings), Claraint [CLN.CH} -1% (Earnings)
Technology [ Rexel [RXL.FR] +9.0%(Earnings)]
Financials [Credit Suisse [CSGN.CH] +3.2% (Earnings), Plus 500 [PLUS.UK] +6% (Earnings), Credit Agricole [ACA.FR] -2.6% (Earnings), Hargreaves Services [HSP.UK] -2.5%(Earnings), Natixis [KN.FR] +1.1% (Earnings)]
Real Estate [Galifrod Try [GFRD.UK] -19%(Earnings, Capital raise)]
Speakers
Sweden Central Bank (Riksbank) policy statement noted that the prior Dec staff forecasts for the repo rate path was unchanged and indicated that slow repo rate rises were set to be initiated during the second half of this year. Stressed that was important not to raise the rate too early and was committed to stimulus to prevent inflation setback. Inflation forecast revised down slightly, primarily for 2018. From 2019 onwards, inflation was expected to be close to 2 per cent in 2019. Dep Gov Ohlsson did advocate a 25bps rate hike to -0.25%
Sweden Central Bank (Riksbank) Jansson post rate decision press conference: Short-term inflation forecast was down a bit and needed to secure that inflation development continued
ECB: Brexit banks should have trading and hedging capacity in the EU
SNB’s Zurbrugg: Not planning to issue any digital currency
Swiss govt: No additional taxes for systemically important banks
BOE Agents summary of business conditions: Growth in activity had held steady at a modest pace; pay growth had picked up
IMF: Brexit uncertainty will continue to weigh on UK growth
South Africa Parliament: Democratic Alliance (DA) leader Maimane (opposition): Motion to dissolve Parliament processed by Speaker
Israel PM Netanyahu: Coalition govt was stable; no plans for early election (***Reminder: Reports circulated that Israeli police had sufficient evidence to indict PM Netanyahu on corruption charges)
Thailand Central Bank policy statement noted that the decision to keep policy steady was unanimous. Reiterated view that monetary policy remained accommodative and ready to use policy to aid growth and stability. Inflation seen back into target in Q2 (**Note: YoY has been below the lower end of the 1.0-4.0% target range) while the growth outlook had improved further. Reiterated to closely monitor THB currency (Baht) price movements
China PBoC Q4 Monetary Policy Implementation Report reiterated pledge to maintain prudent and neutral monetary policy; to strengthening the fine-tuning of policy through the use of many tools
Currencies
USD was on soft footing ahead of key Jan CPI data for the US.
EUR/USD was steady at 1.2350 area as various European GDP data highlighted better economic growth prospects.
USD/JPY tested 106.85 overnight for 15-month lows. The pair came off its worst level to approach 107.50 just ahead of the NY session. Japanese officials reiterated that had no comments on forex levels
EUR/SEK moved off its worst levels in the after math of the Riksbank decision to keep its policy steady. The Staff forecasts cut its inflation outlook for the horizon period. Soma analyst still saw the 1st Riksbank rate hike in 2019 despite the central bank statement that hikes could occur in H2 2018. EUR/SEK at 9.9250 just ahead of the NY morning.
Political optimism that South Africa President Zuma would resign sent the ZAR currency to its best level since May 2015. South Africa: Democratic Alliance (DA) leader Maimane (opposition) stated that it motion to dissolve Parliament was processed by Speaker. USD/ZAR at 11.85 just ahead of the NY morning.
Fixed Income
Bund Futures trades up 2 ticks at 158.25 as futures gain on weak volumes. Upside targets 158.85, while a continued move lower targets the157.25 level.
Gilt futures trade at 121.07 up 9 ticks as the bearish trend remains intact. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.75 then 123.25.
Wednesday’s liquidity report showed Tuesday’s excess liquidity rose to €1.896T from €1.891T prior. Use of the marginal lending facility unchanged at €13M from €13M prior.
Corporate issuance saw 3 issuers raise $2.3B in the primary market
Looking Ahead
(PT) Bank of Portugal Reports Jan ECB financing to Portuguese Banks: No est v €22.4B prior
(NG) Nigeria Jan CPI Y/Y: 15.1%e v 15.4% prior
(AR) Argentina Central Bank (BCRA) Interest Rate Decision: Expected to leave 7-Day Repo Reference Rate unchanged at 27.25%
05:30 (DE) Germany to sell €1.5B in 2.5% July 2044 Bunds
05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2022 and 2028 bonds
06:00 (IE) Ireland Dec Property Prices M/M: No est v 1.1% prior; Y/Y: No est v 11.6% prior
06:00 (PT) Portugal Q4 Labour Costs Y/Y: No est v -1.1% prior
06:00 (ZA) South Africa Dec Retail Sales M/M: -0.1%e v +4.0% prior; Y/Y: 4.9%e v 8.2% prior
06:00 (RU) Russia to sell combined RUB44.3B in 2024 and 2033 OFZ Bonds
06:30 (CL) Chile Central Bank Traders Survey
06:45 (US) Daily Libor Fixing
07:00 (US) MBA Mortgage Applications w/e Feb 9th: No est v 0.7% prior
07:00 (CZ) Czech Central Bank to comment on CPI data
08:00 (HU) Hungary Central Bank (NBH) Jan Minutes
08:00 (RO) Romania Central Bank (NBR) Jan Minutes
08:05 (UK) Baltic Dry Bulk Index
08:30 (US) Jan CPI M/M: 0.3%e v 0.1% prior; Y/Y: 1.9%e v 2.1% prior
08:30 (US) Jan CPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 1.7%e v 1.8% prior
08:30 (US) Jan CPI Index NSA: 247.599e v 246.524 prior; CPI Core Index : No est v 254.426 prior
08:30 (US) Jan Advance Retail Sales M/M: 0.2%e v 0.4% prior; Retail Sales Ex Auto M/M: 0.5%e v 0.4% prior, Retail Sales Ex Auto and Gas: 0.3%e v 0.4% prior, Retail Sales Control Group: 0.4%e v 0.3% prior
08:30 (US) Jan Real Avg Weekly Earnings Y/Y: No est v 0.9% prior (revised from 0.7%); Real Avg Hourly Earning Y/Y: No est v 0.6% prior (revised from 0.4%)
08:30 (CA) Canada Jan Teranet/National Bank HPI M/M: No est v 0.2% prior; Y/Y: No est v 9.1% prior, HPI Index: No est v 217.49 prior
09:00 (BR) Brazil Central Bank Weekly Economists Survey
10:00 (US) Dec Business Inventories: 0.3%e v 0.4% prior
10:00 (CO) Colombia Dec Trade Balance: +$0.3Be v -$0.8B prior; Total Imports: $3.8Be v $4.0B prior
10:00 (CO) Colombia Dec Industrial Production Y/Y: -2.3%e v +0.3% prior
10:00 (CO) Colombia Dec Retail Sales Y/Y: -1.6%e v -1.2% prior
10:00 (US) Treasury Sec Mnuchin before House Ways & Means Committee on budget
10:30 (US) Weekly DOE Crude Oil Inventories
12:00 (CA) Canada to sell 5-Year Bonds
14:00 (AR) Argentina Jan National CPI M/M: 1.9%e v 3.1% prior
