Notes/Observations
- Italy PM Conte to tender resignation to President; move seen as maneuver for a chance to form a third coalition
- PBOC withdrew liquidity as adviser warned on asset bubbles; China Repo rate jumps to highest point for over a year
- Markets eyeing US stimulus talks after Biden said he is open to negotiation on elements of his package following pushback from lawmakers.
Asia:
- BOJ Dec Meeting Minutes (2 meetings ago): Many members agreed that it was appropriate to assess various measures, such as asset purchases and the conduct of yield curve control. Members concurred BOJ will ease without hesitation if necessary and will closely monitor impact of Covid-19
- China PBoC Advisor Ma Jun said to have proposed dropping GDP target permanently; stabilizing job market and controlling inflation should be the major goals of China’s macroeconomic policy
- China reportedly looking to buy more US soybeans as the Brazil crop delays have continued
- Rates rise in China amid PBOC unexpected cash drain; CNY280B of reverse repos due to mature on Wed (Jan 27th); PBOC advisor commented on concerns over potential asset bubbles and outflows
- China official did not expect COVID outbreak to lead to production shutdown
- China to conduct military exercises in the South China Sea this week
- South Korea Q4 Preliminary GDP beats consensus (Q/Q: 1.1% v 0.9%e; Y/Y: -1.4% v -1.6%e)
Coronavirus:
- Total global cases 99.7M (+0.5% d/d); total deaths: 2.14M (+0.5% d/d)
- Astrazeneca [AZN.UK] responded to press report on its vaccine efficacy noting that the claim that efficacy was as low as 8% in older adults was completely incorrect
Europe:
- Italy PM Conte would offer resignation on Tuesday (Jan 26th); hopes to win mandate from Pres Mattarella to form a new govt
- France Finance Min Le Maire noted that a decision on lockdown would be a challenge to reach the 2021 GDP growth target of 6.0%
- EU told Pfizer and other drug firms they need to get its permission before exporting vaccines to Britain over concerns about supply. Raises fears that Pfizer’s supply to Britain, which is made in Belgium, could be disrupted
Americas:
- Janet Yellen confirmed by US Senate to be Treasury Secretary
- Germany govt spokesperson: Chancellor Merkel and President Biden agreed in phone call that COVID can only be overcome with close international cooperation; to strengthen transatlantic cooperation
- Senate Majority Schumer (D-NY): Will try to pass President Biden Coronavirus bill using reconciliation if Republicans block legislation
- Senate Minority Leader (R-KY) McConnell: Will reach power sharing agreement after Democrat Filibuster assurances; Looking forward to power sharing agreement
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.65% at 407.78, FTSE +0.47% at 6,670.35, DAX +1.37% at 13,831.00, CAC-40 +0.86% at 5,519.26, IBEX-35 +0.92% at 7,968.00, FTSE MIB +0.61% at 21,869.50, SMI +0.41% at 10,970.50, S&P 500 Futures -0.20%]
- Market Focal Points/Key Themes: European indices open mixed but later moved to trade broadly in the green; telecom and materials sectors among better performers; industrials and health care sectors among underperformers; Ireland extends lockdown measures until March; IFM offers to take stake in Naturgy; JD Sports confirms looking for more funding options; Rolls Royce cuts outlook for flying hours; Nokia moving higher on reddit board speculation; UBS announces share buyback; earnings expected in the upcoming US session include General Electric, LVMH, Visa and Autoliv
Equities
- Consumer discretionary: JD Sports Fashion [JD.UK] -2% (confirms looking for capital raise)
- Energy: Engie [ENGI.FR] +8% (JV)
- Financials: UBS [UBSG.CH] +3% (earnings; buyback)
- Healthcare: Novartis [NOVN.CH] -2% (earnings), GeNeuro [GNRO.FR] +28% (receives grant), Indivior [INDV.UK] +13% (settlement)
- Industrials: Rolls-Royce Holdings [RR.UK] -10% (trading update)
Speakers
- Italy PM Conte to meet President Mattarella to tender his resignation (as speculated)
- Czech Central Bank (CNB) Gov Rusnok stated that MPC was considering up to two rate hikes in 2021
- BOJ Gov Kuroda stated in his Parliament that he felt responsible for not achieving the price target; had done the utmost in monetary easing
- China PBoC Gov Yi Gang stated that the domestic economy was becoming more consumption driven. Monetary policy to continue to support the economy; would not exit prematurely. Saw 2021 growth around potential
Currencies/Fixed Income
- USD held on to most recent gains. Markets continued to eye US stimulus talks after Biden said he was open to negotiation on elements of his package following pushback from lawmakers. Recent strength in greenback aid by concerns the US fiscal package mighty be delayed
- EUR/USD trading around the 1.2130 area. Focus remained on Italian politics as PM Conte was set to resign in a tactic to forge a new govt rather than move into elections. The risk of the tactic leaving open the possibility of snap elections.
- GBP/USD at 1.3650 area despite better UK unemployment data. Dealers noted that furloughed workers in the UK who received support via the government’s furlough program are considered employed. Sentiment noted that jobless rate could rise toward the 6-7% region if support was removed before all sectors are fully reopen
Economic data
- (UK) Dec Jobless Claims Change: +7.0K v +38.1K prior; Claimant Count Rate: 7.4% v 7.3% prior
- (UK) Nov Average Weekly Earnings 3M/Y: 3.6% v 2.9%e; Weekly Earnings (ex-bonus) 3M/Y: 3.6% v 3.2%e
- (UK) Nov ILO Unemployment Rate: 5.0% v 5.1%e; Employment Change 3M/3M: -88K v -104Ke
- (DK) Denmark Dec Retail Sales M/M: -7.7% v -3.0% prior; Y/Y: 1.0% v 6.2% prior
- (ES) Spain Dec PPI M/M: 1.0% v 0.9% prior; Y/Y: -1.4% v -2.8% prior
- (SE) Sweden Dec PPI M/M: 1.2% v 0.2% prior; Y/Y: -2.7% v -4.4% prior
- (HK) Hong Kong Dec Trade Balance (HKD): -45.7B v -25.5Be; Exports Y/Y: 11.7% v 8.4%e; Imports Y/Y: 14.1% v 8.0%e
- (IS) Iceland Jan CPI M/M: -0.1% v +0.2% prior; Y/Y: 4.3% v 3.6% prior
Fixed income Issuance
- (ID) Indonesia sold total IDR9.0T vs. IDR14.0T target in Islamic bills and Bonds (Sukuk)
- (EU) European Union opened book to sell EUR-denominated 7-year and 30-year SURE bonds via syndicate; To sell 7-year bonds; guidance seen -13bps to mid-swaps; To sell Nov 2050 bonds; guidance seen +7bps to mid-swaps
- (SA) Saudi Arabia to sell USD-denominated 12-year and 40-year bonds
- (NL) Netherlands Debt Agency (DSTA) sold €2.71B vs. €2.0-3.0B indicated range in 0.25% July 2025 DSL Bonds; Avg Yield: -0.721% v +0.642% prior (Nov 24th 2020)
- (UK) DMO sold £2.5B in 0.625% July 2035 Gilts; Avg Yield: 0.614% v 0.512% prior; bid-to-cover: 2.66x v 2.95x prior; Tails: 0.2bps v 0.0bps prior
- (IT) Italy Debt Agency (Tesoro) sold €3.0B vs. €2.5-3.0B indicated range in Sept 2022 CTZ Bonds; Avg Yield: -0.277% v -0.369% prior; bid-to-cover: 1.46x v 1.77x prior
- (IT) Italy Debt Agency (Tesoro) sold €1.0b vs. €0.75-1.0B indicated range in 0.65% May 2026 I/L Bonds (BTPei); Real Yield: -0.62% v -0.15% prior; bid-to-cover: 1.65x v 1.55x prior
Looking Ahead
- (NG) Nigeria Central Bank Interest Rate: Expected to leave Interest Rates unchanged at 11.50% (no set time)
- (ZA) South Africa to sell combined ZAR6.6B in 2026, 2030 and 2048 bonds
- (EU) Daily ECB Liquidity Stats
- 05:15 (CH) Switzerland to sell 3-month Bills
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 06:00 (UK) Jan CBI Retailing Reported Sales: -33e v -3 prior; Total Distribution Sales: -25e v -2 prior
- 06:00 (BR) Brazil Jan FGV Construction Costs M/M: 0.9%e v 0.9% prior
- 06:00 (BR) Brazil Jan FGV Consumer Confidence: No est v 90.4 prior
- 06:00 (BR) Brazil Central Bank (BCB) Jan Minutes
- 06:30 (UK) DMO to sell £1.75B in 0.625% Oct 2050 Gilts
- 07:00 (MX) Mexico Nov Retail Sales M/M: +1.8%e v -1.4% prior; Y/Y: -6.2%e v -7.1% prior
- 07:00 (BR) Brazil Mid-Jan IBGE Inflation IPCA-15 M/M: 0.8%e v 1.1% prior; Y/Y: 4.3%e v 4.2% prior
- 08:00 (PL) Poland Dec M3 Money Supply M/M: 1.6%e v 0.5% prior; Y/Y: 16.3%e v 16.1% prior
- 08:00 (HU) Hungary Central Bank (MMB) Interest Rate Decision: expected to leave Base Rate unchanged at 0.60%; Expected to leave Overnight Deposit Rate unchanged at -0.05%
- 08:00 IMF updates its World Economic Outlook (WEO)
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (US) Nov FHFA House Price Index M/M: 0.8%e v 1.5% prior
- 09:00 (US) Nov S&P/Case-shiller House Price Index (20-City) M/M: 1.00%e v 1.61% prior; Y/Y: 8.85%e v 7.95% prior; House Price Index (HPI): No est v 235.77 prior
- 09:00 Nov S&P/Case-shiller House Price Index (overall) YoY: 8.85%e v 8.41% prior; HPI: No est v 229.93prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (HU) Hungary Central Bank Gov Matolcsy post rate decision press conference
- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (over 20-years)
- 10:00 (US) Jan Consumer Confidence: 89.0e v 88.6 prior
- 10:00 (US) Jan Richmond Fed Manufacturing: 19e v 19 prior
- 10:00 (MX) Mexico Weekly International Reserve data
- 11:00 (RU) Russia Dec PPI M/M: 0.7%e v 1.0% prior; Y/Y: 3.9%e v 2.4% prior
- 11:00 (EU) ECB’s Centeno (Portugal) on Panel
- 11:30 (US) Treasury to sell 52-Week Bills
- 13:00 (US) Treasury to sell 5-Year Notes
- 14:00 (AR) Argentina Dec Trade Balance: No est v $0.3B prior
- 14:00 (AR) Argentina Nov Economic Activity Index (Monthly GDP) M/M: No est v 1.9% prior; Y/Y: No est v -7.4% prior
- 16:00 (KR) South Korea Jan Consumer Confidence: No est v 89.8 prior
- 16:30 (US) Weekly API Oil Inventories
- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 108.7 prior
- 18:30 (AU) Australia Dec Leading Index M/M: No est v 0.5% prior
- 19:01 (UK) Jan BRC Shop Price Index Y/Y: No est v -1.8% prior
- 19:30 (AU) Australia Q4 CPI Q/Q: 0.7%e v 1.6% prior; Y/Y: 0.7%e v 0.7% prior
- 19:30 (AU) Australia Dec Business Confidence: No est v 12 prior; Business Conditions: No est v 9 prior
- 20:00 (PH) Philippines Dec Trade Balance: -$1.8Be v -$1.7B prior; Exports Y/Y: 2.7%e v 3.0% prior; Imports Y/Y: -11.7%e v -18.9% prior
- 20:10 (JP) BOJ Outright Bond Purchase Operation for 3~5 Years; 1~3 Years and 10~25 Years maturities
- 20:30 (CN) China Dec Industrial Profits Y/Y: No est v 15.5% prior
- 22:30 (TH) Thailand Dec ISIC Manufacturing Production Index Y/Y: -0.4%e v +0.4% prior; Capacity Utilization: No est v 64.8 prior
