Notes/Observations
- Focus on ECB policy decision as further easing measures are anticipated. General Council members have been very specific” in recent weeks regarding what more can be expected
- Optimism that EU leaders will approve the bloc’s 7-year budget at summit
- Brussels fail to bridge ‘large gaps”; Sunday is new Brexit deadline; Brexit chief negotiators Frost and Barnier will continue talks in Brussels on Thurs, Dec 10th
- UK Oct GDP data beat expectations but slows from month ago level before heading into lockdown
Asia:
- Japan Q4 BSI Survey Improved sequentially (Large All Industry Q/Q: 11.6 v 2.0 prior; Large Manufacturers Q/Q: 21.6 v 0.1 prior)
- S&P Dow Jones Indices stated that it would remove A-shares, H-shares and ADRs of 10 companies including Hikvision and Semiconductor Manufacturing International Corp from all equity indices prior to the market open on Dec 21st
Coronaviurs:
- Total global cases: 68.9M (+1.0% d/d); total deaths: 1.57M (+0.9% d/d)
Europe:
- EU Commission chief’s Von der Leyen: confirms position with UK remains far apart; we will come to decision by end of weekend, teams should immediately reconvene
- PM Johnson: Acknowledges [Brexit] situation is difficult; Will not leave any route to fair deal is left untested. Reiterates govt stance that deal must respect Independence and Sovereignty of the UK
- EU regulations announce that large tech firms whose platforms with >45M users would be required to take more responsibility for policing the internet or face fines of up to 6% of turnover
Americas:
- House passed a week-long stop gap bill to keep the government open through Dec 18th. Bill heads to Senate and then to President Trump.
- President-elect Biden reportedly has chosen Katherine Tai to be US Trade Representative
- Biden Administration to conduct ‘broad’ review of the Treasury Department sanctions programs; Biden is expected to revisit the budget, staff and sanctions approaches of the Trump administration
- Dow Jones Indices announced it would remove A-shares, H-shares and ADRs of 10 from all equity indices prior to the market open on Dec 21st (companies (including Hikvision and Semiconductor Manufacturing International Corp)
- Brazil Central Bank (BCB) left the Selic Target Rate unchanged at 2.00% (as expected) for its 3rd straight pause in the prior easing cycle.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 0.00% 394.90, FTSE +0.52% at 6,598.24, DAX +0.08% at 13,350.38, CAC-40 +0.33% at 5,565.23, IBEX-35 +0.06% at 8,240.00, FTSE MIB +0.24% at 22,022.50, SMI +0.40% 10,471.50, S&P 500 Futures +0.15%]
- Market Focal Points/Key Themes: European indices trade slightly higher with FTSE outperforming other indices on extended Brexit talks deadline to Sunday after dinner of Johnson and Von der Leyen yesterday. In corporate news, TUI reported full-year earnings admitting sharp decline in its financials. On M&A front, Electrocomponents provided trading update after announcing several acqusitions and following placement. Applegreen in UK rise over 40% on potential offer to be acquired. Looking forward, today’s US earners include Oracle, lululemon athletica, Broadcom, Costco and Ciena Corp.
Equities
- Consumer discretionary: DS Smith [SMDS.UK] +1% (earnings), Ocado Group [OCDO.UK] -5% (earnings), TUI Group [TUI1.DE] -4% (earnings)
- Industrials: Elementis [ELM.UK] -9% (no offer)
- Information Technology: Spectris [SXS.UK] +1.5% (divestments), cyan [CYR.DE] +9% (partnership), Electrocomponents [ECM.UK] +3% (trading update; acquisitions; placement)
- Materials: Applegreen [APGN.UK] +42% (potential offer)
Speakers
- EU Commission chief’s Von der Leyen stated Need to be prepared for a no-deal outcome on Jan. 1st; reiterates that negotiations are still ongoing on Brexit
- UK Foreign Sec Raab stated that could not rule out Brexit talks continuing after Sunday. EU had hardened its stance on Level Playing Field
- EU official McGuinness (financial stability and capital markets) stated that she saw one glimmer of hope in recent statement made on Wed; believed Brexit talks will go down to the wire. Could have a breakthrough but there was no certainty as Level Playing Field remained the key issue
- France European Affairs Junior Min Beaune: Britain’s might require visas for stays longer than 3 months in EU but issue still being negotiated
- EU Commission said to propose contingency measures for no-deal Brexit outcome which included 6-month road connectivity regulation; reciprocal continued access to EU/UK waters and 12-month fisheries legal framework
- Netherlands PM Rutte stated that he was neutral on EU budget-rule of law compromise
- Hungary PM Chief Cabinet official stated that there was a chance of a budget deal at today’s EU Leader Summit as proposal for agreement contained all the guarantees that was important to us. There would not be any rule of law procedures before 2023. To find out if any of the frugal member States block the draft agreement on EU budget and Recovery Fund
- Bank of Italy (BOI) Monthly Report `Money and Banks’: Oct Gross Non-Performing Loans (NPLs) at €64.8B v €65.1B m/m
- China Foreign Ministry spokesperson Hua Chunying announced reciprocal sanctions to target members of US Congress and revoking visa exemption treatment for US diplomatic passport holders visiting Hong Kong, Macau
Currencies/Fixed Income
- Markets awaited key events after a slow start to the trading week.
- GBP/USD was drifting lower after UK PM John and EU Commission chief Von Der Leyen failed to bridge ‘large gaps. The leaders putting Sunday as new Brexit deadline. Brexit chief negotiators Frost and Barnier would continue talks and reassess the situation on Dec 13th to decide if things could move forward. UK Oct GDP data beat expectations but slowed from month ago level before heading into lockdown
- EUR/USD was holding below the 1.21 level ahead of the ECB policy decision. Markets are expecting further easing measures from the central bank. General Council members had been very specific in recent weeks regarding what more could be expected
Economic Data
- (NL) Netherlands Oct Manufacturing Production M/M: +2.0 v -0.3% prior; Y/Y: -3.7 v -6.6% prior; Industrial Sales Y/Y: No est v -5.4% prior
- (FI) Finland Oct Industrial Production M/M: +1.5% v -2.0% prior; Y/Y: -2.2% v -5.8% prior
- (UK) Oct Monthly GDP M/M: 0.4% v 0.0%e; GDP 3M/3M: 10.2% v 10.1%e
- (UK) Oct Industrial Production M/M: 1.3% v 0.3%e; Y/Y: -5.5% v -6.4%e
- (UK) Oct Manufacturing Production M/M: 1.7% v 0.3%e; Y/Y: -7.1% v -8.4%e
- (UK) Oct Construction Output M/M: 1.0% v 1.1%e; Y/Y: -7.4% v -7.4%e
- (UK) Oct Index of Services M/M: 0.2% v 0.3%e; 3M/3M: 9.7% v 9.7%e
- (UK) Oct Visible Trade Balance: -£12.0B v -£9.6Be; Overall Trade Balance: -£1.7B v -£0.2Be; Trade Balance Non EU: -£4.5B v -£1.4Be
- (NO) Norway Nov CPI M/M: -0.7% v +0.1%e; Y/Y: 0.7% v 1.7%e
- (NO) Norway Nov CPI Underlying M/M: -0.4% v +0.1% prior; Y/Y: 2.9% v 3.3%e
- (NO) Norway Nov PPI M/M: 4.5% v 4.1% prior; Y/Y: -3.4% v -6.0% prior
- (DK) Denmark Nov CPI M/M: -0.1% v +0.2% prior; Y/Y: 0.5% v 0.4%e
- (DK) Denmark Nov CPI EU Harmonized M/M: -0.2% v +0.3% prior; Y/Y: 0.4% v 0.3% prior
- (TR) Turkey Sept Unemployment Rate: 12.7% v 13.2% prior
- (FR) France Oct Industrial Production M/M: 1.6% v 0.4%e; Y/Y: -4.2% v -5.5%e
- (FR) France Oct Manufacturing Production M/M: 0.5% v 0.5%e; Y/Y: -5.7% v -5.5%e
- (ES) Spain Q3 INE House Price Index Q/Q: 1.1% v 0.1% prior; Y/Y: 1.7% v 2.1% prior
- (CZ) Czech Nov CPI M/M: 0.0% v 0.1%e; Y/Y: 2.7% v 2.8%e
- (CZ) Czech Oct Export Price Index Y/Y: 3.2% v 0.9% prior; Import Price Index Y/Y: +0.6% v -1.3% prior
- (SE) Sweden Nov CPI M/M: 0.0% v 0.0%e; Y/Y: 0.2% v 0.2%e; CPI Level: 337.00 v 336.85e
- (SE) Sweden Nov CPIF M/M: 0.0% v 0.0%e; Y/Y: 0.2% v 0.1%e
- (SE) Sweden Nov CPIF (ex-energy) M/M: 0.0% v 0.0%e; Y/Y: 1.1% v 1.1%e
- (SE) Sweden Oct Household Consumption M/M: 0.1% v 0.6% prior; Y/Y: -4.3% v -3.8% prior
- (ZA) South Africa Q3 Current Account Balance (ZAR): 297B v 198Be (largest surplus in over 4 decades); Current Account to GDP Ratio: 5.9% v 3.6%e
- (ZA) South Africa Oct Total Mining Production M/M: -0.3% v +1.5%e; Y/Y: -6.3% v -4.7%e; Gold Production Y/Y: -3.9% v -1.1% prior; Platinum Production Y/Y: +2.4% v -0.4% prior
- (GR) Greece Sept Unemployment Rate: 16.1% v 16.5% prior
- (GR) Greece Nov CPI Y/Y: -2.1% v -1.8% prior; CPI EU Harmonized Y/Y: -2.1% v -2.0% prior
- (GR) Greece Oct Industrial Production Y/Y: -3.7% v -2.1% prior
Fixed income Issuance
- (ES) Spain Debt Agency (Tesoro) sold €921M vs. €0.5-1.5B indicated range in 1.25% Oct 2030 SPGB; Avg Yield: -0.027% v +0.224% prior; Bid-to-cover: 3.05x v 3.16x prior
- (ES) Spain Debt Agency (Tesoro) sold € vs €250-750M indicated range in 0.65% Nov 2027 Inflation-linked bonds (SPGBei); Real Yield: -1.135% v -0.784% prior; Bid-to-cover: 1.92x v 1.74x prior
- (SE) Sweden sold total SEK1.0B vs. SEK1.0B indicated in I/L 2027 and 2030 Bonds
- (IT) Italy Debt Agency (Tesoro) sold total €B vs. €4.75-5.75B indicated range in 3-year and 7-year BTP Bonds
- Sold €2.75B vs. €2.25-2.75B indicated in 0.00% Jan 2024 BTP; Avg Yield: -0.30% v -0.19% prior; Bid-to-cover: 1.41x v 1.41x prior
- Sold 3.0€B vs. €2.5-3.0B indicated range in 0.95% Sept 2027 BTP; Avg Yield: 0.19% v 0.35% prior; Bid-to-cover: 1.40x v 1.58x prior
- (IE) Ireland Debt Agency (NTMA) to sold €750M vs. €750M indicated in 6-month Bills; Avg Yield: -0.607% v -0.50% prior; Bid-to-cover: 2.63x v 2.19x prior
Looking Ahead
- (EU) EU Leaders begin 2-day Summit
- 05:30 (ZA) South Africa Oct Manufacturing Production M/M: 1.9%e v 3.2% prior; Y/Y: -5.1%e v -2.6% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds
- 05:50 (HU) Hungary Central Bank weekly One-Week Deposit Tender
- 06:00 (IE) Ireland Nov CPI M/M: No est v -0.6% prior; Y/Y: No est v -1.5% prior
- 06:00 (IE) Ireland Nov CPI EU Harmonized M/M: No est v -0.5% prior; Y/Y: No est v -1.5% prior
- 06:00 (PT) Portugal Oct Trade Balance: No est v -€1.1B prior
- 06:00 (IL) Israel Nov Consumer Confidence: No est v 43 prior
- 06:30 (CL) Chile Central Bank Economists Survey
- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: expected to leave Key Rate unchanged at 6.00%
- 07:00 (BR) Brazil Oct Retail Sales M/M: 0.2%e v 0.6% prior; Y/Y: 7.0%e v 7.3% prior
- 07:00 (BR) Brazil Oct Broad Retail Sales M/M: 1.4%e v 1.2% prior; Y/Y: 4.5%e v 7.4% prior
- 07:45 (EU) ECB Interest Rate Decision: Expected to leave Main Refinancing Rate unchanged at 0.00%; Expected to leave Marginal Lending Facility unchanged at 0.25%; Expected to leave Deposit Facility Rate unchanged at -0.50% (only question now is what form it will take – likely Extension to PEPP, TLTRO)
- 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 4th: No est v $583.2B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Nov CPI M/M: 0.1%e v 0.0% prior; Y/Y: 1.1%e v 1.2% prior
- 08:30 (US) Nov CPI (ex-food/energy) M/M: 0.1%e v 0.0% prior; Y/Y: 1.5%e v 1.6% prior
- 08:30 (US) Nov CPI Index NSA: 260.087e v 260.388 prior’ CPI Core Index SA: 269.601e v 269.296 prior
- 08:30 (US) Initial Jobless Claims: 725Ke v 712K prior; Continuing Claims: 5.21Me v 5.520M prior
- 08:30 (US) Nov Real Avg Weekly Earnings Y/Y: No est v 4.4% prior; Real Avg Hourly Earning Y/Y: No est v 3.2% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:30 (EU) ECB chief Lagarde past rate decision press conference
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 12:00 (US) Q3 Financial Accounts Household Change in Net Worth: No est v $7.607T prior
- 13:00 (US) Treasury to sell 30-year bonds
- 14:00 (US) Nov Monthly Budget Statement: -$200.0Be v -$284.0B prior
- (MX) Mexico Nov Nominal Wages: No est v 4.0% prior
- (MX) Mexico Nov ANTAD Same-Store Sales Y/Y: No est v 2.8% prior
- 16:30 (NZ) New Zealand Nov Manufacturing PMI: No est v 51.7 prior
- 16:45 NZ) New Zealand Nov Food Prices M/M: No est v -1.0% prior
- 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: expected to leave Reference Rate unchanged at 0.25%
- 22:00 (CN) China to sell 30-year Upsized Government Bond
- 22:30 (JP) Japan to sell 3-Month Bills
- 23:00 (MY) Malaysia Oct Industrial Production Y/Y: 0.2%e v 1.0% prior; Manufacturing Sales Value Y/Y: No est v 3.7% prior
- 23:30 (TW) Taiwan to sell TWD30 B in 10-year Bonds
