Notes/Observations
- UK election today with voters go to the polls that will either pave the way for Brexit under PM Johnson or propel Britain toward another referendum that could ultimately reverse the decision to leave the EU
- President Trump said to hold ‘high stakes’ meeting with senior advisers on upcoming Dec 15th tariff decision on $160B in Chinese goods
Asia:
- China’s Central Economic Work Conference is expected to end later today, government official confirmed 2020 GDP growth might be targeted at 6.0%
- China expected US to delay planned Dec 15th tariffs and they were in communication daily on Phase 1 trade deal, focus thought to be on reducing the rate of existing tariffs
Americas:
- Fed left interest rates unchanged (as expected) and signaled it would stay on hold through 2020; Powell stated that he would want to see persistent rise in inflation before hiking rates again
- President Trump likely to meet with his advisers on Thursday (Dec 12th) to discuss the scheduled levying of additional tariffs on $160B in China goods on Dec 15th. Senior trade advisers were expected to present divergent views but the final decision will be up to Trump. Officials said to have circulated talking points downplaying the repercussions such a tariff hike would have on the US economy
- Brazil Central Bank (BCB) cut Selic Target Rate by 50bps to 4.50% (as expected)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
- Market Focal Points/Key Themes: European indices in the green following indices in Asia mixed and higher US futures. Dixons Carphone up on earnings and Superdry down as company warned of considerable risk in peak holiday trading period. Likewise, Kvaerner shares tank on earnings and lowered FY20 revenue outlook. Reflecting trading updates, Ocado, Serco and Balfour Beatty shares higher and PZ Cussons lower. Costain dives 16% after profit warning reflecting adverse judgement of contract dispute. Notable earners today include Ciena.
Equities
- Indices [Stoxx600 % at #, FTSE % at #, DAX +0.42% at 13,202.19, CAC-40 +0.36% at 5,881.75, IBEX-35 +0.24% at 9,415.00, FTSE MIB +0.58% at 23,288.97, SMI +0.18% at 10,424.50, S&P 500 Futures +0.19%]
- Consumer discretionary: Ocado [OCDO.UK] +2.5% (trading update), Superdry [SDRY.UK] -5% (earnings), Metro [B4B.DE] -1% (earnings)
- Energy: G3 Exploration [G3E.UK] +64% (court ruling)
- Financials: Serco Group [SRP.UK] +2% (trading update)
- Industrials: Duerr [DUE.DE] +5% (analyst action), Balfour Beauty [BBY.UK] +3.5% (trading update), Costain [COST.UK] -15% (trading update)
Speakers
- SNB Policy statement reiterated that its expansionary monetary policy continued to be necessary given the inflation outlook. Reiterated view that did not see inflation above the 2% level during the forecast horizon. SNB rReiterated that the Swiss franc was highly valued and it remained prepared to intervene in markets if needed. Expected momentum to remain modest in the short-term. Saw imbalances persisting on mortgages and real estate markets with risks of reversal . To regularly assess counter-cyclical buffers
- SNB Jordan post rate decision press conference stated that its easy monetary policy to increase medium term growth and inflation outlook. Inflation expectations seen between 0-2%. He stressed that the benefits of negative rates outweighed the costs noting that the CHF currency (Franc) would rapidly appreciate without negative rates
- France Fin Min Le Maire called for unions to return to negotiating table. Retirement age could be negotiable on some aspects (including the plan to raise the retirement age to 64); not far from common ground with some unions
- Swiss Govt SECO Dec Economic Forecasts raised its 2019 GDP growth from 0.8% to 0.9% while maintaining 2020 GDP outlook at 1.7%. Swiss cut its 2019 CPI forecast from 0.5% to 0.4% and cut 2020 CPI from 0.4% to 0.1%
- Japan Government said to be planning to issue ¥2.23T in deficit-covering to fill tax revenue gap
- Philippines Central Bank (BSP) Policy Statement saw benign inflation path and inside target for both 2020 and 2021. Slowing global economy to help cool prices. CPI risks hinged on oil and food prices. Domestic growth seen sustained by govt spending
- IEA Nov Monthly Oil Report maintained 2019 global oil demand growth forecast at 1.0M bpd and maintained 2020 global oil demand growth at 1.2Mbpd. OPEC+ production cuts would not prevent surplus in 2020 and noted that oil inventories could build by 700K bpd in Q1
Currencies/Fixed Income
- USD was steady after Wednesday’s losses after the FOMC after keeping rates steady and signaled a long pause to come.
- GBP/USD at 8-month highs above the 1.3200 level as markets expect the Conservatives to win a majority in today’s UK general election. Key resistance remains at the 1.36 level
- EUR/USD above the 1.11 level with focus on ECB’s rate decision under the helm of Lagarde. Overall markets believed Lagarde’s policy message might not deviate too much from Draghi, but key ECB members could have a greater influence on policy. ECB was expected to leave its stimulus measures unchanged, and reaffirmed its forward guidance
Economic Data
- (SE) Sweden Nov PES Unemployment Rate: 3.9% v 3.8% prior
- (FI) Finland Oct Final Retail Sales Volume Y/Y: 3.3% v 2.5% prelim
- (DE) Germany Nov Final CPI M/M: -0.8% v -0.8%e; Y/Y: 1.1% v 1.1%e
- (DE) Germany Nov Final CPI EU Harmonized M/M: -0.8% v -0.8%e; Y/Y: 1.2% v 1.2%e
- (CH) Swiss Nov Producer & Import Prices M/M: -0.4% v -0.1%e; Y/Y: -2.5% v -2.3%e
- (FR) France Nov Final CPI M/M: 0.1% v 0.1%e; Y/Y: 1.0% v 1.0%e; CPI (ex-tobacco index): 103.92 v 103.91e
- (FR) France Nov Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.2% v 1.2%e
- (PH) Philippines Central Bank (BSP) left the Overnight Borrowing Rate unchanged at 4.00% (as expected)
- (CH) Swiss National Bank (SNB) left the Sight Deposit Interest Rate unchanged at -0.75% and Policy Rate unchanged at -0.75% (as expected)
- (SE) Sweden Nov Unemployment Rate: 6.8% v 6.3%e; Unemployment Rate (Seasoinally Adj): 7.3% v 6.8%e; Unemployment Rate Trend: 6.9% v 6.9% prior
- (ZA) South Africa Oct Total Mining Production M/M: 1.0% v 0.2%e; Y/Y: -2.9% v -2.6%e; Gold Production Y/Y: -1.2% v -2.5% prior; Platinum Production Y/Y: -4.8% v -4.2% prior
- (ZA) South Africa Nov PPI M/M: -0.3% v +0.2%e; Y/Y: 2.3% v 2.9%e
- (EU) Euro Zone Oct Industrial Production M/M: -0.5% v -0.5%e; Y/Y: -2.2% v -2.4%e
Fixed Income Issuance
- (SE) Sweden sold SEK500M vs SEK500M in Dec Inflation-Linked 2027 Bonds; Avg Yield: -1.8366 v -1.9311% prior; Bid-to-cover: 2.64x v 1.72x prior
Looking Ahead
- 05:30 (ZA) South Africa Q3 Non-Farm Payrolls Q/Q: -0.1%e v 0.0% prior; Y/Y: No est v 1.4% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
- 06:00 (IE) Ireland Nov CPI M/M: No est v -0.3% prior; Y/Y: No est v 0.7% prior
- 06:00 (IE) Ireland Nov CPI M/M: No est v -0.2% prior; Y/Y: No est v 0.6% prior
- 06:00 (IE) Ireland Oct Property Prices M/M: No est v 0.1% prior; Y/Y: No est v 1.1% prior
- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 150bps to 12.50
- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to cut Key Rate by 50bps to 14.50%
- 07:00 (IN) India Nov CPI Y/Y: 5.3%e v 4.6% prior
- 07:00 (IN) India Oct Industrial Production Y/Y: -5.0%e v -4.3% prior
- 07:00 (MX) Mexico Oct Industrial Production M/M: -1.2%e v 0.0% prior; Y/Y: -1.9%e v -1.8% prior; Manufacturing Production Y/Y: -0.8%e v +0.8% prior
- 07:45 (EU) ECB Interest Rate Decision: Expected to leave Main 7-Day Refinancing Rate unchanged at 0.00%; Expected to leave Marginal Lending Facility unchanged at 0.25%; Expected to leave Deposit Facility Rate unchanged at -0.50%
- 08:00 (RU) Russia Q3 Preliminary GDP (2nd reading) Y/Y: 1.7%e v 1.7% advance
- 08:00 (RU) Russia Oct Trade Balance: $14.5Be v $14.1B prior; Exports: $34.9Be v $35.0B priior; Imports: $21.0Be v $20.9B prior
- 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 6th: No est v $542.2B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Nov PPI Final Demand M/M: 0.2%e v 0.4% prior; Y/Y: 1.3%e v 1.1% prior
- 08:30 (US) Nov PPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 1.7%e v 1.6% prior
- 08:30 (US) Nov PPI Ex Food, Energy, Trade M/M: 0.2%e v 0.1% prior; Y/Y: No est v 1.5% prior
- 08:30 (US) Initial Jobless Claims: 214Ke v K203 prior; Continuing Claims: 1.68Me v 1.693M prior
- 08:30 (CA) Canada Oct New Housing Price Index M/M: No est v 0.2% prior; Y/Y: 0.0%e v -0.1% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:30 (EU) ECB chief Lagarde post rate decision press conference
- (EU) EU Leaders begin 2-day summit
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:30 (US) Treasury to sell 4-week and 8-week bills
- 12:00 (US) Fed Reports Q3 Financial Accounts: Household Change in Net Worth: No est v $1.830T prior
- 13:00 (US) Treasury to sell 30-year bonds
- 14:00 (AR) Argentina Nov National CPI M/M: 4.0%e v 3.3% prior; Y/Y: No est v 50.5% prior
- 16:00 (KR) South Korea Nov Export Price Index M/M: No est v -1.9% prior; Y/Y: No est v -7.3% prior
- 16:00 (KR) South Korea Nov Import Price Index M/M: No est v -5.7% prior; Y/Y: No est v -2.1% prior
- 16:30 (NZ) New Zealand Nov Manufacturing PMI: No est v 52.6 prior
- 17:00 (UK) General election exit poll
- 18:00 (PER) Peru Central Bank (BRCP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 2.25%
- 18:50 (JP) Japan Q4 Tankan Large Manufacturing Index: 3e v 5 prior; Outlook Survey: 3e v 2 prior
- 18:50 (JP) Japan Q4 Tankan Large Non-Manufacturing Index: 16e v 21 prior; Outlook Survey: 16e v 15 prior
- 18:50 (JP) Japan Q4 Tankan Small Manufacturing Index: -7e v -4 prior; Outlook Survey: -8e v -9 prior
- 18:50 (JP) Japan Q4 Tankan Small Non-Manufacturing Index: 4e v 10 prior; Outlook Survey: 3e v 1 prior
- 20:10 (JP) BOJ Outright Bond Purchase operation; to buy 1-3-year; 3-5-year and 5~10-year maturities
- 22:30 (JP) Japan to sell 3-Month Bills
- 23:30 (JP) Japan Oct Final Industrial Production M/M: No est v-4.2% prelim; Industrial Production Y/Y: No est v -7.4% prelim; Capacity Utilization M/M: No est v 1.0% prior
