Notes/Observations
- Major European PMI Services mixed (Beats: Spain, Italy; Misses: France, Germany, Euro Zone, UK).
- Turkish inflation accelerated for a sixth straight month to a 3-year high.
- Optimism over booster shots helps to overcome fears over Omicron’s impact; current cases appear to have displayed mild symptoms.
- Fed talk overnight was undeniably hawkish; Focus on US payroll data that could clear the path for an earlier rate hike by the Fed.
Asia
- China Nov Caixin PMI Services registered its 3rd month of expansion (52.1 v 53.0e).
- Australia Nov Final PMI Services confirmed its 2nd consecutive expansion (55.7 v 55.0 prelim.
- Japan Nov Final PMI Services: confirmed it 2nd straight month of expansion (53.0 v 52.1 prelim.
- Kaisa Group [1638.HK] confirmed exchange offer has lapsed on existing $400M in 6.5% notes to mature Dec 7th; No guarantee of meeting repayment obligations.
Coronavirus
- Booster jabs said to “massively” strengthen the body’s defenses against Covid and raised hopes of strong protection from the Omicron variant.
- New Lancet Study gave suggestion that most current coronavirus vaccines would work as booster shots; it was too early for researchers to determine the impact of boosters versus the new Omicron variant.
Europe
- Incoming German Chancellor Scholz said to be favoring Joachim Nagel to run Germany’s Bundesbank.
- France said to pledge that it would push for a new EU-UK agreement for reallocating migrants after it took the presidency of the EU next year. France PM Castex rejected the idea of joint patrols in the English channel.
- US official noted that delay in US-UK trade deal was not linked to British threats to suspend parts of the Brexit agreement dealing with Northern Ireland.
Americas
- Senate passed the short term funding bill funding the Govt through Feb 18th; the final vote was 69 to 28 (averts shutdown for now).
- Fed’s Mester (non-voter, hawk) noted that the Omicron variant threatened to stroke US Inflation; Had to entertain risk that persistently high numbers of inflation could become embedded. Reiterates would support 1 hike in 2022, and 2 may be appropriate.
- Fed’s Daly (non-voter, dove) noted that might be time to start crafting a plan to raise rates to combat inflation,
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 +0.17% at 466.24, FTSE +0.24% at 7,146.00, DAX +0.28% at 15,302.00, CAC-40 +0.27% at 6,813.83, IBEX-35 +0.47% at 8,339.56, FTSE MIB +0.48% at 26,130.00, SMI +0.04% at 12,182.79, S&P 500 Futures 0.00%].
Equities
- European indices opened higher across the board but retraced some of the gains as the session progressed; sectors among those trending higher include energy and materials; while laggard sectors include consumer discretionary and technology; in corporate news, German financial giant Allianz provided mid-term targets durign its investor day and trading down slightly higher; Dassault Aviation in Paris trading sharply higher after announcement of contract with UAE which said to be a multibillion deal; healthcare firm SOBI Swedish Orphan Biovitrum trades lower over 20% after bidding company withdrew its offer; earnings expected during the upcoming US session include Big Lots and Genesco.
- Consumer discretionary: Evolution AB [EVO.SE] +7% (buyback), Bureau Veritas [BVI.FR] -4% (CMD targets).
- Financials: Allianz [ALV.DE] +1.5% (CMD targets).
- Healthcare: SOBI Swedish Orphan Biovitrum [SOBI.SE] -24% (Agnafit Bidco withdraws offer for SOBI).
- Industrials: Dassault Aviation [AM.FR] +9% (contract with UAE).
Speakers
- ECB chief Lagarde stressed that the Omicron variant showed that vaccinations must be stepped upped. economic impact to depend on measures. ECB to be alert but could take confidence from the past. Another wave of pandemic was included in ECB’s adverse scenario and currently remained within that range. Saw inflation profile looking like a hump and reiterated stance that inflation to decline during 2022. She added that ECB was attentive to currency movements.
- ECB’s Knot (hawk, Netherlands): Reiterates ECB council stance that inflation is largely temporary phenomenon.
- Italy Stats Agency (Istat) Economic Forecast raised both 2021 and 2022 GDP growth outlook. Raised 2021 GDP growth forecasts from 4.7% to 6.3% and raised the 2022 GDP growth from 4.4% to 4.7%.
- Germany Public Health RKI Institute chief Wieler stated that infection numbers were not easing and added that the Omicron variant could be more transmissible.
- Chile Fin Min Cerda stated that expected a fast economic recovery during 2022 with GDP seen between 3.0-4.0% range.
- BOJ said to see new Omicron variant as potential reason to keep COVID aid.
Currencies/Fixed Income
- USD was a tad firmer in the session as dealers noted some optimism over booster shots to help overcome fears over Omicron’s impact. Greenback also aided by more ‘hawkish’ Fed talk recently. Focus on US payroll data due out later today that could clear the path for an earlier rate hike by the Fed.
- EUR/USD holding below the 1.13 handle during the session. ECB speak continued to downplay the recent pickup in inflation and discount the chances of a rate hike in 2022.
- USD/JPY at 113.30 area in quiet trade.
Economic data
- (RU) Russia Nov PMI Services: 47.1 v 49.5e; PMI Composite: 48.4 v 49.5 prior.
- (TR) Turkey Nov CPI M/M: 3.5% v 3.0%e; Y/Y: 21.4% v 20.7%e; CPI Core Index Y/Y: 17.6% v 17.5%e.
- (TR) Turkey Nov PPI M/M: 10.0% v 6.0%e; Y/Y: 54.6% v 49.0%e.
- (ZA) South Africa Nov PMI (whole economy): 51.7 v 49.0e (moved into expansion).
- (SE) Sweden Nov PMI Services: 68.7 v 68.0 prior (18th month of expansion); PMI Composite: 67.2 v 66.9 prior.
- (TH) Thailand end-Nov Foreign Reserves: $244.5B v $246.1B prior.
- (CN) Weekly Shanghai copper inventories (SHFE): 36.1K v 41.9K tons prior.
- FR) France Oct Industrial Production M/M: 0.9% v 0.6%e; Y/Y: -0.5% v -0.4%e.
- (FR) France Oct Manufacturing Production M/M: 0.9% v 0.8%e; Y/Y: +0.1% v -0.5%e.
- (FR) France Oct YTD Budget Balance: -€171.6B v -€175.1B prior.
- (RU) Russia Narrow Money Supply w/e Nov 26th (RUB): 14.24T v 14.35T prior.
- (HU) Hungary Oct Retail Sales Y/Y: 5.7% v 4.7%e.
- (ES) Spain Nov Services PMI: 59.8 v 58.6e (8th month of expansion); Composite PMI: 58.3 v 57.5e.
- (IT) Italy Nov Services PMI: 55.9 v 54.5e (7th month of expansion); Composite PMI: 57.6 v 55.9e.
- (FR) France Nov Final PMI Services: 57.4 v 58.2 prelim (confirmed 8th straight expansion); PMI Composite: 56.1 v 56.3 prelim.
- (DE) Germany Services Nov Final PMI Services: 52.7 v 53.4 prelim (confirmed 7th month of expansion); PMI Composite: 52.2 v 52.8 prelim.
- (EU) Euro Zone Nov Final PMI Services: 55.9 v 56.6 prelim (confirmed 8th month of expansion); PMI Composite: 55.4 v 55.8 prelim.
- (NO) Norway Nov Unemployment Rate: 2.1% v 2.1%e.
- (UK) Nov Final PMI Services: 58.5 v 58.6 prelim(confirmed 8th month of expansion); PMI Composite: 57.6 v 57.7 prelim.
- (UK) Nov Official Reserves Changes: -$1.4B v -$0.1B.
- (EU) Euro Zone Oct Retail Sales M/M: 0.2% v 0.3%e; Y/Y: 1.4% v 1.4%e.
Fixed income Issuance
- (IN) India sold INR240B vs. INR240B indicated in 2028, 2031 and 2061 bonds.
- (ZA) South Africa sold total ZAR vs. ZAR1.2B indicated in I/L 2029, 2046 and 2050 Bonds.
Looking Ahead
- (ZA) South Africa to sell combined ZAR1.2B indicated in I/L 2029, 2046 and 2050 Bonds.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 06:00 (IE) Ireland Q3 GDP Q/Q: No est v 6.3% prior; Y/Y: No est v 21.6% prior.
- 06:00 (IE) Ireland Q3 Current Account Balance: No est v €15.0B prior.
- 06:00 (IE) Ireland Nov Live Register Monthly Change: No est v +2.8K prior; Live Register Level: No est v 170.1K prior.
- 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).
- 06:00 (UK) BOE’s Saunders.
- 06:30 (IN) India Weekly Forex Reserve w/e Nov 26th: No est v $640.4B prior.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (BR) Brazil Oct Industrial Production M/M: +0.8%e v -0.4% prior; Y/Y: -5.0%e v -3.9% prior.
- 07:00 (IN) India announces upcoming bill issuance (held on Wed).
- 08:00 (BR) Brazil Nov PMI Services: No est v 54.9 prior; PMI Composite: No est v 53.4 prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Nov Change in Nonfarm Payrolls: +550Ke v +531K prior; Change in Private Payrolls: +525Ke v +604K prior; Change in Manufacturing Payrolls: +45Ke v +60K prior.
- 08:30 (US) Nov Unemployment Rate: 4.5%e v 4.6% prior; Underemployment Rate: No est v 8.3% prior; Labor Force Participation Rate: 61.7%e v 61.6% prior.
- 08:30 (US) Nov Average Hourly Earnings M/M: 0.4%e v 0.4% prior; Y/Y: 5.0%e v 4.9% prior; Average Weekly Hours: 34.7e v 34.7 prior.
- 08:30 (CA) Canada Nov Net Change in Employment: +37.5Ke v +31.2K prior; Unemployment Rate: 6.6%e v 6.7% prior; Full Time Employment Change: No est v.
- +36.4K prior; Part Time Employment Change: No est v -5.2K prior; Participation Rate: 65.4%e v 65.3% prior; Hourly Wage Rate: No est v 2.1% prior.
- 08:30 (CA) Canada Q3 Labor Productivity Q/Q: -0.6%e v +0.6% prior.
- 09:15 (US) Fed’s Bullard.
- 09:45 (US) Nov Final Markit PMI Services: 57.0e v 57.0 prelim; PMI Composite: No est v 56.5 prelim.
- 10:00 (US) Nov ISM Services Index: 65.0e v 66.7 prior.
- 10:00 (US) Oct Factory Orders: 0.5%e v 0.2% prior; Factory Orders (ex-transportation: 0.6%e v 0.7% prior.
- 10:00 (US) Oct Final Durable Goods Orders: -0.5%e v -0.5% prelim; Durables (ex-transportation): No est v 0.5% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.6% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.3% prelim.
- 10:00 (CO) Colombia Oct Exports: $3.8Be v $3.6B prior.
- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Russia and Turkey sovereign rating; Fitch on Italy, Russia, Sweden and Slovenia sovereign ratings; Canadian rating agency DBRS on Germany sovereign rating.
- 11:00 (EU) Potential sovereign ratings after European close.
- 13:00 (US) Weekly Baker Hughes Rig Count.
Weekend
- 12:00 (CO) Colombia Nov CPI M/M: 0.2%e v 0.0% prior; Y/Y: 5.0%e v 4.6% prior.
- 12:00 (CO) Colombia Nov CPI Core M/M: No est v -0.2% prior; Y/Y: No est v 2.9% prior.
