Notes/Observations
European Stock rally struggles as Pres Trump nears his first major legislative victory -Sweden, Thailand keep rates on hold
Catalonia Parliamentary polls show the contest between pro-secessionist and unionist parties is too close to call
Asia:
Thailand kept interest rates unchanged as expected
China reiterates will maintain prudent and neutral monetary policy, to boost imports for balanced trade, to cut import tariffs for some products
Europe:
Swedish Central Bank keeps rates unchanged, ends QE program, but maintains heavy presence in bond markets
BoE agents summary of business conditions pointed to continued modest growth in spending over the coming year; Recruitment difficulties had intensified and were above normal in a range of activities
IMF sees UK economy growing 1.8% in 2018, notes Brexit weighing on UK domestic demand
Reportedly the Bank of England (BoE) expected to say EU banks to be allowed to operate in the UK ‘as normal’ following Brexit, offering wholesale finance would operate under existing rules, even in a no-deal scenario
Americas:
US Senate votes to pass Republican Tax legislation with the final vote 51 to 48, with the House to take the final vote later today.
Economic Data:
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED (ends QE program, but maintains heavy presence in bond markets)
(DE) Germany Nov PPI M/M: 0.1% v 0.2%e; Y/Y: 2.5% v 2.6%e
(EU) Euro Zone Oct Current Account (Seasonally Adj): €30.8B v €39.2B prior; Current Account NSA (unadj): €35.9B v €43.2B prior
(IT) Italy Oct Current Account: €6.5B v €4.3B prior
Fixed Income Issuance:
None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 -0.1% at at 390.5, FTSE -0.1% at 7536, DAX -0.1% at 13207, CAC-40 -0.2% at 5373, IBEX-35 -0.7% at 10164, FTSE MIB -0.3% at 2222199, SMI -0.1% at 9392 , S&P 500 Futures +0.3%]
Market Focal Points/Key Themes: European trade mostly lower rebounding from the session lows, with Asian Indices mixed and US futures pointing to a higher open following the US Senate vote to pass the Republican tax legislation. Corporate news flow has been quiet, however shares of Stada outperform after announcing domination and profit and loss transfer agreement. Elsewhere Dufry trades higher after Paul Singer builds over 5% stake; Low and Bonar trades sharply lower after adjusting its outlook and the stepping down of its CEO; Drax trades almost 5% lower after cutting its EBITDA outlook. Looking ahead notable earners include General Mills and Blackberry.
Equities
Consumer Discretionary [Dufry [DUFN.CH] +3% (Paul E. Singer discloses ~5.6% stake), Low & Bonar [LWB.UK] -19% (Trading update: Guides FY17 adj PBT £30-31M; CEO Brett Simpson resigns; Names Trudy Schoolenberg interim CEO)]
Healthcare [Stada Arzneimittel [SAZ.DE] +9% (Domination and profit and loss transfer agreement pursuant to sections 291 et seqq.)]
Industrials [Fenner [FENR.UK] -6% (Names Brett Simpson as new CEO)]
Energy [Genel Energy [GENL.UK] +3% (Refinancing of GENEL01 approved by bondholders’ meeting), Drax Group [DRX.UK] -4% (Cuts EBITDA outlook)]
Speakers
IMF: Brexit is weighing on UK domestic demand; Economy seen growing 1.8% in 2018
(ID) Indonesia Fin Min Indrawati: Sees Q4 GDP growth at 5.1%
(SE) Sweden Central Bank (Riksbank) Gov Ingves reiterates Sweden still needs expansionary monetary policy
Currencies
EUR/SEK crown surges briefly as Riksbank leaves rate path unchanged
GBP/USD cable trades steady ahead of PM May’s interrogation on Brexit by some of the most senior and powerful MPs in the Commons.
Fixed Income
Bund futures trade 162.35 down 15 ticks, as expectations that the Trump administration’s tax reforms would pass through congress. Upside sees 162.75 then 163.25. A reversal targets 161.50 then 160.38.
Gilt futures trade at 125.47 down 23 ticks near the mid-point for the 2017 trading range. Continued upside eyeing 126.75 then 127.25. Downside targets include 125.25 then 124.75.
Wednesday’s liquidity report showed Tuesday’s use of the marginal lending facility rose to €203M from €133M prior.
Corporate issuance – Primary expected to close for the year
Looking Ahead
06:00 (UK) Dec CBI Retailing Reported Sales: 20e v 26 prior; Total Distribution: No est v 30 prior
07:00 (US) MBA Mortgage Applications w/e Dec 15th: No est v -2.3% prior
07:30 (BR) Brazil Nov Current Account: -$1.8Be v -$0.3B prior; Foreign Direct Investment (FDI): $4.3Be v $8.2B prior
08:05 (UK) Baltic Dry Bulk Index
08:30 (CA) Canada Oct Wholesale Trade Sales M/M: +0.5%e v -1.2% prior
09:00 (BE) Belgium Dec Business Confidence: 2.0e v 1.6 prior
09:00 (MX) Mexico Q3 Aggregate Supply and Demand Y/Y: 1.8%e v 2.6% prior
09:00 (MX) Mexico Oct Retail Sales M/M: -0.1%e v -0.3% prior; Y/Y: -1.0%e v -0.3% prior
10:00 (US) Nov Existing Home Sales: 5.53Me v 5.48M prior
10:30 (US) Weekly DOE Crude Oil Inventories
14:00 (AR) Argentina Q3 GDP Q/Q: No est v 0.7% prior; Y/Y: 4.3%e v 2.7% prior
16:45 (NZ) New Zealand Q3 GDP Q/Q: 0.6%e v 0.8% prior; Y/Y: 2.4%e v 2.5% prior
16:45 (NZ) New Zealand Nov Net Migration: No est v 5.6K prior
