China PBoC resumes issuing Reverse Repos after 6-day halt
Overnight:
Asia:
Japan Preliminary Q4 GDP data missed expectations (Q/Q: 0.2% v 0.3%e; Y/Y: 1.0% v 1.1%e) but still registered its 4th straight quarterly growth and confirmed domestic economy remains on track
Japan-US leader summit did not see the Trump administration raise trade issues with Japan or criticize the weak yen
North Korea fired a ballistic missile off its east coast on Sunday morning;First such test since President Trump took office; UN Security Council meeting possible Feb 14th in response
China PBoC resumes issuing Reverse Repos after 6-day halt
Europe:
Swiss voters rejected govt-approved corporate tax overhaul plan by 59% to 41% margin. Results were binding, meaning parliament must come up with a new tax reform plan
France Econ Min Sapin reiterated calls for Germany to increase investment spending. Brushed aside US criticism that Germany exploited an "undervalued" euro to fuel its exports
UK Jan consumer spending (adj for inflation) hit a 5-month low (Y/Y: 0.4% v 2.5% prior)
EU’s Juncker: Greece’s third aid program is "on a shaky ground in the sense that we don’t see how the IMF could manage this problem"
Spain PM Rajoy re-elected as the leader of the ruling conservative Popular Party (PP) for the 4th term
Americas:
(US) White House advisor Stephen Miller: Administration considering different options after immigration ban decision in the appeals court, including drafting a new executive order
Energy:
Russia Energy Min Novak: To decide in April or May whether to extend oil cut agreement past June 30th. Will meet with Saudi energy minister to discuss the situation in March at conference in Houston
Economic data
(DE) Germany Jan Wholesale sales M/M: 0.8% v 1.2% prior; Y/Y: 4.0% v 2.8% prior
(SE) Sweden Jan PES Unemployment Rate: 4.1% v 4.1% prior
Fixed Income Issuance:
None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +0.4% at 3285, FTSE flat at 7259 , DAX +0.5% at 11731, CAC-40 +0.6% at 4857, IBEX-35 +0.3% at 9405, FTSE MIB +0.5% at 18947, SMI flat at 8454, S&P 500 Futures +0.1%]
Equities
Industrials: [SAAB SAABB.SE -5.4% (Q4 results)]
Financials: [ Lokn Store LOK.UK +2% (Trading update), RBS RBS.UK +1% ( declines media speculation that it was layoff 15,000 positions)]
Technology: [EGSolutions EGS.UK +19% (Trading update and Master services agreement signed), Rexel RXL.FR +1% (Earnings)]
Healthcare: [Stada Arzneimittel SAZ.DE +14% {Cinven makes €3.6B approach), Ipsen IPN.FR +1% (Acquisition of portfolio from Sanofi)]
Speakers
ECB’s Villeroy (France) reiterated Council view that Euro is a solid currency
France Fin Min Sapin: ECB does not target exchange rate to achieve trade or competitive policy advantages
Spain PM Rajoy: Not going to trigger early elections and would negotiate budget with Socialists and Basques
EU Commission said to have asked Italy to approve plans to cut 2017 budget deficit by €3.4B by Feb 22nd to avoid risk of an infraction procedure
Portugal Debt Agency (IGCP) chief Casalinho: Portuguese 10-year yields at about 4.2% are historically normal
Kuwait Oil Min Al-Marzouk noted that OPEC compliance from Nov agreement on production cuts at 92%
Currencies
IN FX the focus was shifting to US President Trump’s plan to overhaul business taxes after he refrained from criticizing Japan’s currency policy during Prime Minister Abe’s two-day visit
The USD/JPY pair hit a 2-week higher after Japan-US leader summit did not see the Trump administration raise trade issues with Japan or criticize the weak yen. The pair tested 114.16 in Asia before retreating towards the 113.70 area.
The EUR/USD held its key support at the 1.06 level (50-day mvg avg) for the time being and little changed in its overall price action at 1.0645 area. Dealers have been noting that technical momentum would likely to rise on the break of 1.0600 area on a sustained basis
The GBP/USD was holding ahead of the 1.25 level with some key data out of the UK this week (CPI on Tuesday, Jobless claims on Wed). Dealers remained caution that data could start to show bigger signs of weakness ahead of the March trigger of Article 50 for the Brexit process.
Fixed Income:
Bund futures trade at 163.75 down 16 ticks continuing to fade from highs made last week as Equities continue their ascent. A move back higher continues to target 164.13 followed by 164.46, 164.94 followed by 165.29. Support remains at 163.44 followed by 162.92.
Gilt futures trade at 125.47 down 13 ticks following the fall Bunds in relatively quite trade with futures trading at 3 day lows. Resistance remains at 126.28 followed by 126.70. A continued move down targets 124.91 followed by 124.46. Short Sterling futures trade flat to down 1 bp with Jun17Jun18 remaining at 18/19bp
Monday’s liquidity report showed Friday’s excess liquidity falls to €1.330T down €4B from €1.334T prior. Use of the marginal lending facility rose to €590M from €337M prior.
Political/In the Papers: – Former Italy PM Renzi to trigger a leadership contest at a meeting of his ruling Democratic Party (PD) which could delay the early election he has been pushing for since he was toppled as PM last year
Frank-Walter Steinmeier is elected as Germany’s President
Looking Ahead
(US) President Trump with Canada PM Trudaeu in Washington
05:25 (BR) Brazil Central Bank Weekly Economists Survey
05:30 (DE) Germany to sell €2.0B 6-month BuBills
06:00 (IL) Israel Jan Trade Balance: No est v -$1.6B prior
06:00 (IL) Israel to sell Bonds
06:30 (IS) Iceland to sell Bills
06:30 (TR) Turkey Central Bank TCMC Survey of Expectations
06:45 (US) Daily Libor Fixing
07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
07:00 (IN) India Jan CPI Y/Y: 3.2%e v 3.4% prior
07:05 OPEC Monthly Report
08:00 (PL) Poland Dec Current Account: -€0.7Be v -€0.4B prior; Trade Balance: -€0.3Be v +€0.1B prior
08:00 (PL) Poland Jan CPI M/M: 0.4%e v 0.7% prior; Y/Y: 1.7%e v 1.7%e v 0.8% prior
08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week
08:15 (UK) Baltic Dry Bulk Index
08:50 (FR) France Debt Agency (AFT) to sell €5.6-6.8B in 3-month, 6-month and 12-month Bills
09:30 (EU) ECB announces Covered-Bond Purchases
09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
09:50 (UK) Bank of England Bond Buying Operation (APF Gilt purchase operation between 3-7 years)
11:30 (US) Treasury to sell 3-Month and 6-Month Bills
