Notes/Observations
Asia:
China 19th Central Committee to discuss changes to the constitution in January, sparking chatter Xi could have an extended term as President
China Finance Ministry (MOF): Profits reinvestment by foreign firms to be temporarily exempted from provisional income tax
BoJ releases summary of opinions of Dec meeting which reiterated stance that appropriate for BoJ to continue current easy policy. As it had a long way to achieve 2% inflation target.
Japan Nov Preliminary Industrial Production M/M: 0.6% v 0.5%e; Y/Y: 3.7% v 3.6%e – South Korea Nov Industrial Production M/M: 0.2% v 1.3%e; Y/Y: -1.6% v 0.0%e
Bank of Korea (BoK) annual monetary strategy for 2018: 2018 monetary policy to remain accommodative
Europe:
EU officials indicate that UK Brexit minister may have been "sidelined"; EU negotiator Barnier has been dealing directly with another UK official
France Nov Net Change in Jobseekers: -29.5K v +8.0K prior
Americas:
President Trump legal team reportedly plans to attack former National Security Adviser Flynn’s credibility
US Commerce Dept. issues final ruling on aircraft subsidies in Canada: Says subsidies were provided on some of Canada’s aircraft exports
Energy:
Weekly API Oil Inventories: Crude: -6M v -5.2M prior
Economic Data:
(RU) Russia Dec Manufacturing PMI: 52.0 v 52.0e
(TR) Turkey Dec Economic Confidence: 95.0 v 97.9 prior
(FI) Finland Nov House Price Index M/M: -1.0% v -0.2% prior; Y/Y: 0.1% v 0.5% prior
(NO) Norway Nov Retail Sales W/Auto Fuel M/M: 2.1% v 1.0%e
(CN) China Q3 Final Current Account: $40.5B v $37.1B prelim
(SE) Sweden Nov Trade Balance (SEK): -3.0B v -3.1B prior
(HK) Hong Kong Nov Trade Balance (HKD): -39.7B v -41.6Be, Exports Y/Y: 7.8% v 6.0%e; Imports Y/Y: 8.6% v 8.2%e
(AT) Austria Dec Manufacturing PMI: 64.3 v 61.9 prior
(UK) Nov BBA Loans for House Purchases: 39.5K v 40.4K prior
(BR) Brazil Dec FGV Inflation IGPM M/M: 0.9% v 0.9%e; Y/Y: -0.5% v -0.5%e
Fixed Income Issuance:
(IT) Italy Debt Agency (Tesoro) sold total €4.91B vs. €3.5-5.0B indicated range in 5-year and 10-year BTP Bonds
Sold €2.41B vs. €2.0-2.5B indicated range in 0.9% Aug 2022 BTP bonds; Avg Yield: 0.60% v 0.58% prior; Bid-to-cover: 1.74x v 1.53x prior
Sold €1.5B vs. €1.0-1.5B indicated range in 2.05% Aug 2027 BTP bonds; Avg Yield: 1.86% v 1.73% prior; Bid-to-cover: 1.82x v 1.65x prior
Sold €1.0B vs. €0.5-1.0B indicated range in 2.2% Aug 2027 BTP bonds; Avg Yield: 1.83% v 1.86% prior; Bid-to-cover: 2.21.919x v 1.43x prior
(IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Apr 2025 CCTeu (Floating Rate bond); Avg Yield: 0.48% v 0.46% prior; Bid-to-cover: 1.68x v 1.60x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 -0.2% at 3,544, FTSE flat at 7,620, DAX -0.1% at 13,057, CAC-40 -0.1% at 5,366, IBEX-35 -0.3% at 10,133, FTSE MIB +0.1% at 22,217, SMI -01% at 9,423, S&P 500 Futures +0.1%]
Market focal points/key themes: European markets open largely lower but adjusted to trade largely mixed as the session progressed; year-end trading remains light in final full trading day of the year; UK initial exception to downward trend; commodity prices continue to support materials stocks; energy stocks outperforming on higher oil prices ahead of US energy data; attention on US jobless data later in the session
Equities
Consumer discretionary [Ceconomy CEC.DE +2.5% (death of major shareholder)]
Financials [Banco BPM BAMI.IT +3.6% (outlook)]
Healthcare [MDxHealth MDXHH.BE -10.1% (cuts outlook), Nanobiotix NANO.FR +7.9% (continuation following IND acceptance)]
Speakers
(EU) ECB Economic Bulletin: Underlying inflation expected to gradually pick-up; region economic expansion is solid and broad-based (in-line with Draghi Dec press conference)
Germany Wisemen Bofinger noted that Chancellor Merkel should quickly agree on a coalition with SPD as a failure would be negative for the domestic economy. Next 3-4 months would be fine without a govt but needed stability in the long term
Turkey President Chief Adviser Ertem: 2018 GDP growth between 6.0-7.0% will not trigger inflation. Either a rapid rise or decline in TRY currency (Lira) would be negative. USD/TRY pair seen ending 2017 around 3.80 level; no sudden appreciation of USD expected in 2018
FX Regulator SAFE: Sound domestic economy backs stable foreign debt growth
Currencies
USD continued limping into year-end on a soft tone. Dealer continue to assess possible trends for 2018 noting that monetary policy convergence could weigh on the USD in 2018 as central banks other than the Fed had begun moving away from monetary stimulus, or started to raise interest rates. The USD having its worst year against the major G10 currencies in over a decade.
EUR/USD at 1-month highs and holding above the 1.1930 area with the greenback annual performance in the pair the worst since 2003.
Fixed Income
Bund futures trades at 161.84 down 52 ticks trading back below the 162 handle in light trade on mixed European Equity markets. The shorter end leads futures lower with the Shatz yield approaching 5bp up on the day. 10 Year yields approach 0.4%, with a reversal targeting day high at 162.36.
Thursdays liquidity report showed Wednesday’s excess liquidity at €1.796T. Use of the marginal lending facility fell to €216M from €275M prior.
Looking Ahead
(ES) Spain Nov YTD Budget Balance: No est v -€12.9B prior
(EG) Egypt Central Bank Interest Rate Decision:
06:45 (US) Daily Libor Fixing
07:30 (BR) Brazil Nov Primary Budget Balance (BRL): -6.0Be v +4.8B prior; Nominal Budget Balance: -41.4Be v -30.5B prior, Net Debt to GDP: 51.2%e v 50.7 prior
08:00 (RU) Russia Gold and Forex Reserve w/e Dec 22nd: No est v $430.3B prior
08:30 (US) Initial Jobless Claims: 240Ke v 245K prior; Continuing Claims: 1.90Me v 1.932M prior
08:30 (US) Nov Advance Goods Trade Balance: -$67.9Be v -$68.1B prior (revised from -$68.3B)
08:30 (US) Nov Preliminary Wholesale Inventories M/M: +0.3%e v -0.5% prior, Retail Inventories M/M: No est v -0.1% prior ECB Forex
09:45 (US) Dec Chicago Purchasing Manager: 62.0e v 63.9 prior
10:00 (MX) Mexico Central Bank (Banxico) Dec Minutes
10:00 (CO) Colombia Nov National Unemployment Rate: No est v 8.6% prior, Urban Unemployment Rate: 9.1%e v 9.5% prior
10:30 (US) Weekly EIA Natural Gas Inventories
11:00 (US) Weekly DOE Crude Oil Inventories
13:00 (US) Treasury to sell 7-Year Notes
14:00 (CO) Colombia Central Bank Dec Minutes
14:00 (AR) Argentina Nov Industrial Production Y/Y: 2.8%e v 4.4% prior; Construction Activity Y/Y: No est v 25.3% prior
