Notes/Observations
Global equities find some interim support while volatility remains elevated
Inflation data key focus in week with UK CPI on Tuesday and US CPI on Wed
Asia:
Japan government said to consider promoting current BoJ Exec Dir Amamiya to the position of Deputy Gov (**Note: currently the Executive Director of the BoJ’s Monetary Affairs Dept)
On Feb 9th reports circulated that Japan govt was set to reappoint Kuroda as Gov of BOJ to a new 5-year term (as expected)
China PBoC: Skips Open Market Operation (OMO) for the 13th straight session
Europe:
ECB’s Nowotny (Austria) reiterated concern about attempts by the US to politically influence the exchange rate as it was a theme addressed at Davos and to be discussed again at the upcoming G20 summit. There would be a need for the ECB to hike rates in the foreseeable future
ECB’s Visco (Italy): ECB to be patient in pursuit of its inflation target; it has been difficult to push up inflation expectations. FX volatility was a major risk to the inflation outlook
BoE Chief Economist Haldane reiterated BoE is in ‘no rush’ to raise interest rates
PM May will deliver a major speech within the next three weeks outlining the future relationship Britain wants to have with the EU
Fitch affirmed Germany sovereign rating at AAA; outlook stable
Fitch affirmed Finland sovereign rating at AA+; outlook stable
Fitch affirmed Czech Republic sovereign rating at A+; outlook positive
Canadian rating agency DBRS affirms Netherlands sovereign rating at AAA, stable trend
Americas:
White House Budget said to project return to 3% growth with low inflation and borrowing costs in 2018 with growth rising to 3.2% in 2019
OMB Head Mulvaney commented ahead of US budget release: Budget to seek $3.0T cut in deficit over 10 years. Sought $18B for ‘border wall and $17B to deal with opioid epidemic.
New York Fed Nowcast: raised Q1 GDP from 3.2% to 3.3% with positive surprises from imports and exports data accounted for most of the increase.
Energy:
Weekly Baker Hughes US Rig Count: 975 v 946 w/w (+3.1%) (most rigs added in a week since Jan 2017)
Economic Data:
(DK) Denmark Jan CPI M/M: -0.3% v -0.1%e; Y/Y: 0.7% v 0.9%e
(DK) Denmark Jan CPI EU Harmonized M/M: -0.3% v -0.1%e; Y/Y: 0.6% v 0.9%e
(SE) Sweden Jan PES Unemployment Rate: 4.0% v 4.1% prior
(SE) Sweden Feb Housing Price Indicator: -7 v -13 prior
(CH) Swiss Jan CPI M/M: -0.1% v -0.2%e; Y/Y: 0.7% v 0.8%e
(CH) Swiss Jan CPI EU Harmonized M/M: -0.5% v +0.2% prior; Y/Y: 0.8% v 1.1% prior
(CN) China Jan Aggregate Financing (CNY): 3.060T v 3.150Te
(CN) China Jan New Yuan Loans (CNY): 2.900T v 2.050Te
(CN) China Jan M2 Money Supply YoY: 8.6% v 8.2%e; M1 Money Supply YoY: 15.0% v 13.5%e, M0 Money Supply YoY: -13.8% v +4.2%e
Fixed Income Issuance:
(IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 12-month Bills; Avg yield: -0.401% v -0.420% prior; Bid-to-cover: 1.49x v 1.41x prior
(NO) Norway sold NOK4.0B vs. NOK4.0B in 3-month bills; Avg Yield: 0.50% v 0.43% prior; Bid-to-cover: 2.02x v 2.43x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +1.5% at 374.1, FTSE +1.2% at 7181, DAX +1.9% at 12336, CAC-40 +1.5% at 5153 , IBEX-35 +1.5% at 9785, FTSE MIB +1.1% at 22404 , SMI +1.8% at 8831, S&P 500 Futures +1.2%]
Market Focal Points/Key Themes: European Indices trade sharply higher across the board following on from a sharp rebound on Wall Street Friday, positive Asian markets as well as higher US futures this morning. Corporate news was headlined by earnings from Heineken which trades lower after missing sales forecasts with other notable earners including Comet Group, Puma and Carl Zeiss. On the M&A front potential bid interest for TDC has pushed shares higher while Faroe Petroleum trades highers after selling an interest in Fenja Development. Looking ahead to the US morning notable earners include Loews Corp and First Data.
Movers
Consumer Discretionary [ Heineken [HEIA.NL] -3.3% (Earnings)]
Consumer Staples [Carl Zeiss Meditec [AFX.DE] -0.1% (Earnings), Sixt [SIX2.DE] +4.2% (Outlook), Ladbrokes Coral [LCL.UK] +1.1% (Trading update)]
Materials [ Acacia Mining [ACA.UK] -9.0% (Earnings)]
Healthcare [ SES [SESG.FR] -5.6% (CEO and CFO change), Comet Group [COTN.CH] +1.6% (Prelim results)]
Energy [Faroe Petroleum [FPM.UK] +6.8% (Sells 17.5% working interest in Fenja Dev)]
Financials [Icade [ICAD.FR] +1.9% (Earnings)]
Telecom [TDC [TDC.DK] +6% (Approached by potential bidder)]
Speakers
BOE’s Vlieghe (dove):Domestic economy ready for slightly higher interest rates (in-line with Feb MPC statement)
Currencies
A quiet FX session ahead of some key inflation data later in the week (UK Jan CPI on Tuesday and US Jan CPI data on Wed). The recent pick up in global bond yields has been led from the US side. Market also anticipating President Trump’s budget and details on his infrastructure plan. Dealers noted that the US fiscal deterioration comes at a time when the labor market was near full employment and signs of wage inflation were emerging
EUR/USD was higher by 0.3% in the session but holding below the 1.23 handle. ECB’s Nowotny (Austria) reiterated the concern about attempts by the US to politically influence the exchange rate.
GBP/USD was marginally higher but only in the mid-1.38 area despite that the BOE had turned more rate bullish last week. Dealers putting more weight on Brexit concerns as UK previously admitted that the growth potential of the economy had declined
USD/JPY steady as Japanese participants were off for holiday.
Fixed Income
Bund Futures trades down 35 ticks at 157.66 as the bearish trend remains intact. Upside targets 158.85, while a continued move lower targets the157.25 level.
Gilt futures trade at 120.88 down 55 ticks, ahead of tomorrow’s UK CPI data. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.75 then 123.25.
Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.899T from €1.901T prior. Use of the marginal lending facility falls to €3M from €80M prior.
Corporate issuance saw the primary market finish last week with ~$19B sold.
Looking Ahead
(PE) Peru Dec Trade Balance: No est v $0.6B prior
(MX) Mexico Jan ANTAD Same-Store Sales Y/Y: No est v 5.4% prior – OPEC Monthly Report
(US) President Trump expected to release his 2019 budget proposal and infrastructure details
05:30 (DE) Germany to sell €3.0B in 6-Month BuBills
06:00 (PL) Portugal Jan CPI M/M: No est v 0.0% prior; Y/Y: No est v 1.5% prior
06:00 (PL) Portugal Jan CPI EU Harmonized M/M: No est v -0.2% prior; Y/Y: No est v 1.6% prior
06:00 (IL) Israel Jan Consumer Confidence: No est v 128 prior
06:00 (TR) Turkey to sell 2023 and 2028 bonds
06:30 (CL) Chile Central Bank Economists Survey
06:45 (US) Daily Libor Fixing
07:00 (IN) India Jan CPI Y/Y: 5.1%e v 5.2% prior
07:00 (IN) India Dec Industrial Production Y/Y: 6.1%e v 8.4% prior
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)
08:05 (UK) Baltic Dry Bulk Index
08:55 (FR) France Debt Agency (AFT) to sell combined 4.9-6.1B 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
11:30 (US) Treasury to sell 3-Month and 6-Month Bills
11:00 (IS) Iceland Jan International Reserves (ISK): No est v 686B prior
12:30 (CO) Colombia Central Bank Quarterly Inflation Report
14:00 (US) Jan Monthly Budget Statement: $51.0Be v -$23.2B prior
. The recent pick up in global bond yields has been led from the US side. Market also anticipating President Trump’s budget and details on his infrastructure plan. Dealers noted that the US fiscal deterioration comes at a time when the labor market was near full employment and signs of wage inflation were emerging){kind=link}