Major Euro Area PMI Manufacturing Data Hints Of Stabilization In Region

Notes/Observations

• Major Euro Area PMI Manufacturing data hints of stabilization in region
• Risk appetite continued to muster momentum aided by a RRR from PBoC
• President Trump says phase-1 trade signing ceremony to take place on Jan 14th (Note: no confirmation from China yet)

Asia:

• China Dec Caixin PMI Manufacturing registered its 5th month of expansion (51.5 v 51.6e)
• China PBOC cut its Reserve Requirement Ratio (RRR) by 50bps for all banks to 12.50% and noted that the cut was aimed at supporting the economy. The RRR cut is said to release ~CNY800B in liquidity
• China PBOC: Monetary policy should be flexible to maintain liquidity; will comprehensively use multiple monetary tools; To keep yuan exchange rate balanced and stable
• South Korea Dec Trade Balance $2.0B v $3.5Be. Exports declined for the 13th consecutive decline but fell at its smallest pace since April)
• BOK Gov Lee stated that he might not replace all 4 board members when their terms ended at end of April; CPI and GDP to improve in 2020, but don’t expect a drastic recovery; still had room with interest rates
• Singapore Q4 Advance GDP saw its slowest annual pace of the decade (Q/Q: 0.1% v 0.4%e; Y/Y: 0.8% v 0.8%e)
• North Korea Leader Kim: US would ‘suffer helplessly’ if it continued to delay; World to witness new strategic weapon. Talks with U.S. would be prolonged due to Washington’s ‘gangster-like’ demands. To take action, not allow US to take advantage of dialogue
• Europe/Mideast:-IMF issued its Q3 Currency Composition of Official Foreign Exchange Reserves (COFER) report. USD riose from 61.5% to 61.8%; EUR fell from 20.4% to 20.1%. CNY little changed at 2%
• Supporters of Iranian-backed Iraqi paramilitary groups who stormed the U.S. Embassy’s perimeter and hurled rocks in two days of protests withdrew on Wednesday after Washington dispatched extra troops and threatened reprisals against Tehran

Americas:

• President Trump said he would sign Phase 1 deal with China on Jan 15th. To begin phase 2 talks soon and they could complete negotiations

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +1.0% at 419.9, FTSE +1.0% at 7617, DAX +0.8% at 13356, CAC-40 +1.3% at 6058, IBEX-35 +1.5% at 9690, FTSE MIB +1.2% at 23784, SMI closed, S&P 500 Futures +0.6%]

Market Focal Points/Key Themes:

• European indices in the green following mixed Asian indices and higher US futures.
• Airbus trading higher after press reports yesterday that the company exceeded its own goal of 863 jet deliveries in 2019. Tullow Oil shares dive 7% after disappointing drilling results from
• Carapa-1 well in Guyana were disclosed. Italgas up after being awarded a 12-year gas service concession. Innate Pharma rallying on European Medicines Agency regulatory filing acceptance for Lumoxitim, while IVS gains as Finlav take 18% stake.

Equities

• Energy: Lekoil [LEK.UK] +17% (secures funding), Tullow Oil [TLW.UK] -6% (well results), G3 Exploration [G3E.UK] -8% (postpones FY results)
• Industrials: Airbus [AIR.FR] +3.5% (beats deliveries target)

Speakers

• France Transportation Min Borne: Govt priority is to have a balanced pension system
• Iraq Oil Ministry spokesperson: Dec oil exports at 3.43M bpd
• China Foreign Ministry spokesperson Geng Shuang had no comment on trade deal signing with US

Currencies/ Fixed Income

• USD began the new year recovering some of its recent losses but overall conviction seemed to be lacking.
• EUR/USD hovering around the 1.12 area. Dealers noted that major Euro Area PMI Manufacturing data released in the session hinted of stabilization appearing in region.
• GBP/USD was retracing multi-month highs. Parliament will debate UK PM Johnson’s Brexit deal when they return from holiday break on jan 7th.
• USD/JPY held above the key 108.50 hourly support last week with 109.70 still viewed as the pivotal resistance in the pair.

Economic Data

• (TR) Turkey Dec PMI Manufacturing: 49.5 v 49.5 prior
• (SE) Sweden Dec PMI Manufacturing Dec: 47.1 v 45.6e (4th straight contraction)
• (TH) Thailand Dec Business Sentiment Index: 45.1 v 47.4 prior
• (NL) Netherlands Dec Manufacturing PMI: 48.3 v 49.4e (2nd consecutive month of contraction and lowest reading since Apr 2013)
• (NO) Norway Dec PMI Manufacturing: 55.5 v 53.3e (5th month of expansion)
• (HU) Hungary Dec Manufacturing PMI: 53.9 v 52.8e (48th month of expansion)
• (PL) Poland Dec PMI Manufacturing: 48.0 v 47.0e (14th month of contraction)
• (ES) Spain Dec PMI Manufacturing: 47.4 v 47.0e (7th month of contraction)
• (CZ) Czech Republic Dec PMI Manufacturing: 43.6 v 43.7e (13th month of contraction)
• (SE) Sweden Nov Household Lending Y/Y: 5.0% v 5.0% prior
• (IT) Italy Dec Manufacturing PMI: 46.2 v 47.2e (14th straight month of contraction and lowest reading since Apr 2013)
• (FR) France Dec Final Manufacturing PMI: 50.4 v 50.3e(confirms 5th month of expansion)
• (DE) Germany Dec Final Manufacturing PMI: 43.7 v 43.4e(confirms 12th straight contraction)
• (EU) Euro Zone Dec Final Manufacturing PMI: 46.3 v 45.9e (confirms 11th straight contraction)
• (GR) Greece Dec Manufacturing PMI: 53.9 v 54.1 prior (31st month of expansion)
• (UK) Dec PMI Manufacturing: 47.5v 47.6e (confirms 8th straight month of contraction)
• (DK) Denmark Dec PMI Survey: 50.7 v 53.0 prior

Fixed Income Issuance

• None seen

Looking Ahead

• (AR) Argentina Dec Government Tax Revenue (ARS): No est v 474.9B prior
• (IT) Italy Dec Budget Balance: No est v €1.3B prior
• (BR) Brazil Dec Vehicle Sales: No est v 242.3K prior
• 06:00 (PT) Portugal Dec CPI M/M: No est v -0.1% prior; Y/Y: No est v 0.3% prior
• 06:00 (PT) Portugal Dec CPI EU Harmonized M/M: No est v -0.7% prior; Y/Y: No est v 0.2% prior
• 06:00 (PT) Portugal Dec Consumer Confidence Index: No est v -6.9 prior; Economic Climate Indicator: No est v 2.1 prior
• 06:30 (CL) Chile Nov Economic Activity Index (Monthly GDP) M/M: +0.7%e v -5.4% prior; Y/Y: -3.7%e v -3.4% prior; Economic Activity (ex-mining) Y/Y: No est v -4.0% prior
• 08:00 (BR) Brazil Dec PMI Manufacturing: No est v 52.9 prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Initial Jobless Claims: 220Ke v 222K prior; Continuing Claims: 1.68Me v 1.719M prior
• 08:30 (CA) Canada Nov MLI Leading Indicator M/M: No est v 0.4% prior
• 09:30 (CA) Canada Dec Manufacturing PMI: No est v 51.4 prior
• 09:45 (US) Dec Final Markit Manufacturing PMI: 52.5e v 52.5 prelim
• 10:00 (CO) Colombia Dec PMI Manufacturing: No est v 52.9 prior
• 10:30 (MX) Mexico Dec PMI Manufacturing: No est v 48.0 prior
• 11:30 (US) Treasury to sell 4-Week and 8-WeekBills
• 12:00 (IT) Italy Dec New Car Registrations Y/Y: No est v 2.2% prior
• 13:00 (BR) Brazil Dec Trade Balance: $4.3Be v $3.4B prior; Total Exports: $17.7Be v $17.6B prior; Total Imports: $13.2Be v $14.2B prior
• 16:30 (US) Weekly API Oil Inventories
• 19:01 (UK) Dec BRC Shop Price Index Y/Y: -0.5%e v -0.5% prior