Awaiting key US inflation data on Thursday

(TradeTheNews.com Staff)

Notes/Observations

– EU equities are mildly higher as markets wait for US Dec CPI on Thurs. Recent MoM estimates have been revised lower.

– ECB’s Holzmann and Villeroy hawkish comments on further rate hikes but Villeroy is optimistic about growth by stating France will avoid a hard landing.

– Oil and metals push higher on China’s economic reopening. European Nat Gas is lower due to milder-than-expected weather.

– Asia closed mixed with Nikkei225 outperforming at +1.0%. EU indices are +0.2-0.8%. US futures are +0.2%. Gold +0.7%, DXY 0.0%; Commodity: Brent +0.5%, WTI +0.4%, TTF -4.0%, Silver +1.7%, Copper +1.1%, Platinum +1.8%; Crypto: BTC +1.2%, ETH +0.4%.

Asia

– Australia Nov CPI Y/Y: 7.4% v 7.2%e.

– Australia Nov Retail Sales M/M: 1.4% v 0.6%e.

– BOJ Quarterly Survey: 85.0% of households now expect an increase in prices in 1 year (prior to 85.7%).

– Japan govt official Saito (AKA Mr. JGB): Interest rates remain low but the current situation will not last indefinitely.

– Former BOJ Board member Shirai stated that excessive USD strength is likely to be corrected; US interest rates falling, did not expect much more Yen weakness.

Europe

– ECB’s Centeno (Portugal) reiterates its stance that rates were close to peaking if no further external shocks.

– France govt to raise the minimum retirement age to 64 by 2030, gradually raising it starting in Sept 2023.

– French unions plan strike actions starting Jan 19th to protest govt pension reforms.

Americas

– Fed’s Bowman stated that was seeking compelling signs inflation has peaked and had a lot more work to do to lower inflation.

– President Biden asked Treasury Sec Yellen to stay in her post ahead of some expected turnover in the cabinet.

Energy

– Weekly API Crude Oil Inventories: +14.9M v +3.3M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.55% at 448.16, FTSE +0.64% at 7,743.80, DAX +0.80% at 14,892.95, CAC-40 +0.70% at 6,917.86, IBEX-35 +0.15% at 8,725.76, FTSE MIB +0.22% at 25,420.00, SMI +0.54% at 11,222.10, S&P 500 Futures +0.21%].

Market Focal Points/Key Themes: European indices open higher across the board; Materials and real estate sectors among those leading the way into the green; lagging sectors include financials and consumer discretionary; Thales denies interest in Atos’ Evidian spin-off; earnings expected in the upcoming US session include KB Home.

Equities

– Consumer discretionary: PageGroup [PAGE.UK] +3.0% (Q4 trading update), JD Sports Fashion [JD.UK] +5.5% (trading update), Reach plc [RCH.UK] -21.5% (trading update), J Sainsbury [SBRY.UK] -2.0% (trading update), Shop Apotheke Europe [SAE.DE] -1.5% (prelim Q4 rev misses estimates).

– Energy: Hurricane Energy [HUR.UK] +1.0% (FY22 trading update – rev beat and initial FY23 production guidance), Vestas Wind Systems [VWS.DK] +5.0% (analyst action – Jefferies raised to buy).

– Materials: Ferrexpo [FXPO.UK] -0.5% (reports Q4 production), Lanxess [LXS.DE] +2.5% (analyst action – Morgan Stanley raised to overweight).

– Healthcare: Bayer [BAYN.DE] +2.0% (post-close – activist Bluebell has built a stake and will push for a spinoff of Bayer crop sciences unit).

– Industrials: Barratt Developments [BDEV.UK] -1.0% (trading update), Airbus [AIR.FR] -1.0% (post-close – reports FY22 deliveries).

– Technology: TeamViewer [TMV.DE] +3.5% (reports Q4 billings), DarkTrace [DARK.UK] -13% (H1 trading update – cuts FY23 rev, raises adj EBITDA margin).

Speakers

– ECB’s Holzmann (Austria) reiterates its stance that rates will need to rise significantly to reach levels that are sufficiently restrictive for a timely return to the 2% inflation target. ECB determination would not change until core inflation eases.

– ECB’s Villeroy (France) stated that the ECB needed to be pragmatic on the pace of rate hikes. France’s economy avoided a scenario of a hard landing and saw inflation peaking in H1.

– German VDMA Engineering association: Nov orders -14% y/y. Domestic Orders: -7% y/y and Foreign Orders: 17% y/y.

– Russia to restart buying FX via Chinese yuan (CNY) purchases from Jan 13th to fill National Well.

– Philippines Central Bank Gov Medalla stated that was too early to suggest a pause in the tightening cycle. Unlikely would not do anything at the upcoming two meetings and saw rate hikes comprising of smaller magnitude.

– China Commerce Ministry (MOFCOM) stated that it would continue to impose anti-subsidy tariffs on distillers’ dry grain solvent (DDGS) imported from the US (**Insight: Measures were adopted back in 2017 and are scheduled to expire on Jan 11th (today).

– China Commerce Ministry (MOFCOM) stated that it encouraged banks to offer Chinese yuan (CNY) loans overseas.

Currencies/fixed income

– FX markets continued to talk about terminal rates and just high they could be given the sticky core inflation readings lately. Fed Chair Powell did not give any policy clues during a panel discussion in Stockholm on Tuesday. Focus turning to upcoming US CPI data on Thursday. Dealers noted that another soft core CPI would encourage markets to continue to shift pricing for the Fed’s February meeting.

Economic data

– (TR) Turkey Nov Current Account Balance: =$3.7B v -$4.0Be.

– (ES) Spain Nov Industrial Production M/M: -0.7% v -0.4%e; Y/Y: -1.1% v +0.1%e; Industrial Output NSA (unadj) Y/Y: -1.8% v 2.1% prior.

– (CZ) Czech Dec CPI M/M: 0.0% v 0.4%e; Y/Y: 15.8% v 16.2%e.

– (CZ) Czech Nov Export Price Index Y/Y: 9.8% v 11.4% prior; Import Price Index Y/Y: 11.4% v 14.4% prior.

– (IT) Italy Nov Retail Sales M/M: +0.8% v -0.3%e; Y/Y: 4.4% v 1.2% prior.

– (IT) Bank of Italy Releases Banks and Money Monthly Statistics: Dec Gross Non-performing Loans (NPLs): €34.0B v €34.7B prior.

– (HU) Hungary Dec YTD Budget Balance (HUF): -4.753T v -3.466T prior.

Fixed income issuance

– (IN) India sold total INR300B vs. INR300B in 3-month, 6-month and 12-month bills.

– (DK) Denmark sold a total of DKK500M in 3-month and 6-month Bills.

– (IT) Italy Debt Agency (Tesoro) sold €7.0B vs. €7.0B indicated in 12-month Bills; Avg Yield: 3.086% v 2.669% prior; Bid-to-cover: 1.39x v 1.42x prior.

– (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 2.125% May 2032 Bonds; Avg Yield: 3.04% v 3.24% prior; bid-to-cover: 2.90x v 3.20x prior.

– (SE) Sweden sold SEK15.0B vs. SEK15.0B indicated in 3-month Bills; Avg Yield: 2.6059% v 1.8376% prior; Bid-to-cover: 1.38x v 1.93x prior.

Looking ahead

– (CO) Colombia Dec Consumer Confidence: -26.4e v -24.8 prior.

– 05:15 (CH) Switzerland to sell 2030, 2035, and 2049 Bonds.

– 05:25 (EU) Daily ECB Liquidity Stats.

– 05:30 (DE) Germany to sell €5.0B in new 2.3% Feb 2033 Bunds.

– 06:00 (IE) Ireland Dec Unemployment Rate: No est v 4.4% prior.

– 06:00 (PT) Portugal Dec Final CPI M/M: No est v -0.3% prelim; Y/Y: No est v 9.6% prelim.

– 06:00 (PT) Portugal Dec Final CPI EU Harmonized M/M: No est v -0.4% prelim; Y/Y: No est v 9.8% prelim.

– 06:00 Czech Republic to sell Bonds.

– 06:00 (RU) Russia OFZ Bond auction (if any).

– 06:45 (US) Daily Libor Fixing.

– 07:00 (US) MBA Mortgage Applications w/e Jan 6th: No est v -10.3% prior.

– 07:00 (MX) Mexico Nov Industrial Production M/M: -0.3%e v +0.4% prior; Y/Y: 2.8%e v 3.1% prior; Manufacturing Production Y/Y: 4.8%e v 5.3% prior.

– 07:00 (BR) Brazil Nov Retail Sales M/M: -0.3%e v +0.4% prior; Y/Y: 1.9%e v 2.7% prior.

– 07:00 (BR) Brazil Nov Broad Retail Sales M/M: 0.p0%e v 0.5% prior; Y/Y: -0.7%e v +0.3% prior.

– 07:00 (UK) Weekly PM Question time in House.

– 08:00 (UK) Daily Baltic Dry Bulk Index.

– 09:00 (FI) ECB’s Rehn (Finland).

– 10:30 (US) Weekly DOE Oil Inventories.

– 11:30 (US) Treasury to sell 17-Week Bills.

– 12:00 (CA) Canada to sell 5-Year Bonds.

– 13:00 (US) Treasury to sell 10-Year Notes Reopening.

– 14:00 (AR) Argentina Nov Capacity Utilization: No est v 66.7% prior.

– 14:15 (ES) ECB’s De Cos (Spain).

– 16:45 (NZ) New Zealand Nov Building Permits M/M: No est v -10.7% prior.

– 18:30 (AU) Australia to sell a combined A$3.0B in 3-month, 6-month, and 12-month bills.

– 18:50 (JP) Japan Nov BoP Current Account: +¥481.0Be v -¥64.1B prior; Adj Current Account: +¥657.5Be v -¥609.4B prior; Trade Balance (BOP): -¥1.620Te v -¥1.875T prior.

– 18:50 (JP) Japan Dec Bank Lending Y/Y: No est v 2.7% prior; Bank Lending (ex-trusts) Y/Y: No est v 3.0% prior.

– 19:30 (AU) Australia Nov Trade Balance (A$): 11.3Be v 12.2B prior; Exports M/M: No est v -1% prior; Imports M/M: No est v -1% prior.

– 20:30 (CN) China Dec CPI M/M: No est v -0.2% prior; Y/Y: 1.8%e v 1.6% prior; PPI Y/Y: -0.1%e v -1.3% prior.

– 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years and 25 Years~ maturities.

– 21:00 (JP) Japan Dec Tokyo Avg Office Vacancies: No est v 6.4% prior.

– 22:00 (TH) Thailand Dec Consumer Confidence: No est v 47.9 prior; Economic Confidence: No est v 42.0 prior.

– 22:00 (KR) South Korea Dec Total Household Lending (KRW): No est v 1.058T prior.

– 23:30 (TW) Taiwan to sell NT$30B in 5-Year Bonds.

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