Quiet Session Ahead Of A Rash Of Rate Decisions Later In The Week

Notes/Observations

• Brexit uncertainty continues to resurface
• Quiet session in terms of data but awaiting a rash of rate decisions over the coming days (approx. a dozen) which included FOMC, BOE, SNB and BOJ.

Asia:

• RBA Dec Minutes: Reiterates stance to keep size of bond purchase program under review; Most recent policy package has been working as expected
• China Nov Industrial Production Y/Y: 7.0% v 7.0%e
• China Nov Retail Sales Y/Y: 5.0% v 5.0%e
• China Nov Surveyed Jobless Rate: 5.2% v 5.2%e

Europe:

• Recent press reports cited renewed optimism about achieving a Brexit deal after a shift on Level Playing Field (LPF) playing field from both sides in Brexit negotiations
• BBC’s Kuenssberg: “After cheerier mood on Brexit, UK now denying there has been significant progress”

Americas:

• President-elect Joe Biden wins Electoral College vote to become the 46th President of the United States, cementing his victory over Trump
• Sen Majority Leader McConnell: Time for GOP, Democrats to find consensus on Covid relief aid’
• Speaker Pelosi Spokesperson: Told Treasury Sec Mnuchin that unresolved items on Omnibus spending bill could be resolved easily
• Attorney General William Barr resigned, effective Dec. 23rd

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.14% 392.40, FTSE +0.15% at 6,541.35, DAX +0.70% at 13,316.30, CAC-40 +0.48% at 5,554.20, IBEX-35 -0.32% at 8,115.00, FTSE MIB +0.12% at 21,786.50, SMI -0.11% at 10,362.03, S&P 500 Futures +0.59%]
• Market Focal Points/Key Themes: European indices open lower modestly lower but later traded mixed; lack of risk appetite attributed to rising covid cases across Europe; better performing sectors include materials and industrials; sectors among those leading to the downside consumer discretionary and utilities; The Netherland announces further lockdowns; JD Sports acquires Shoe Palace; Dbay withdraws offer for Telit; no major earnings expected during upcoming US session

Equities

• Consumer discretionary: Metro AG [B4B.DE] +6% (earnings), H&M [HMB.SE] -3% (sales), Inditex [ITX.SE] -2% (earnings)
• Financials: Shaftesbury [SHB.UK] -5% (earnings)
• Industrials: Ceconomy [CEC.DE] +26% (earnings; acquisition; reorganization), Symrise [SY1.DE] -2% (hacking incident), Royal Boskalis Westminster [BOKA.NL] +20% (project), Chemring Group [CHG.UK] +15% (earnings)

Speakers

• ECB’s Rehn (Finland) reiterated stance that accommodative financing conditions to continue. Reiterated Council stance that had no FX target but did monitor its impact on growth and inflation closely. Pandemic Bond Fund (PEPP) had proven its effectiveness and that size of PEPP envelope was not a target but a ceiling
• ECB’s Vasiliauskas (Lithuania): Hard lockdown in Germany to impact region
• PM Johnson’s Office issued a statement that PM to visit India in January to help increase trade relationship. Invited India, South Korea and Australia to the 2021 G-7 Summit
• Swiss Dec SECO Economic Forecasts raised 2020 GDP from -3.8% to -3.3% while cutting 2021 GDP growth from 3.8% to 3.2%. SECO also maintained its 2020 CPI forecast at -0.7% while raising 2021 CPI from -0.1% to +0.1%
• Swiss KOF Institute Winter Economic Forecast raised 2020 GDP growth from -3.6% to -3.5% while maintaining 2021 GDP growth at 3.2%. It set 2022 GDP growth at 2.6%
• Bank of Korea (BOK) Nov Minutes saw members note it was necessary to consider expanding assets purchases and that an accommodative policy was needed for a considerable period. Needed to closely monitor FX volatility and did express concern about large increase in household debt
• Japan Econ Min Nishimura commented on impact from new stimulus package and growth outlook. Saw stimulus increasing FY20/21 (current fiscal year) by 0.5% and by 2.5% in FY21/22 and by 0.6% in fiscal year onwards
• Japan Ministry of Finance (MOF) detailed its 3rd extra budget and bond issuance with the 3rd Extra budget at ¥15.4T. MOF confirmed FY20/21 Tax revenues at ¥55.1T vs. ¥63.5T y/y. To increases new bond issuance for current fiscal year by extra ¥22.4T with total FY20/21 bond issuance at ¥263.1& (record level). To issue ¥18.5T of debt-covering JGB for extra budget
• Japan Fin Min Aso stated that would submit extra budget to next year’s Parliament and look to pass it asap. Needed continued reforms in both spending and income
• IEA Monthly Oil Report maintained its 2020 global oil demand contraction at-8.8M bpd while cutting 2021 global oil demand growth from 5.8M bpd to 5.7M bpd

Currencies/Fixed Income

• USD was steady after recent weakness attributed to stimulus progress in Congress and recent approval and distribution of Covid-19 vaccines
• EUR/USD holding around its 2 ½ year highs as dealers looked past the virus restrictions in the region to betting that the European recovery fund package would lift the regions’ economies. Pair near the April 20218 highs
• GBP was softer as some of the euphoria of a potential Brexit agreement wore off. GBP/USD tested below the 1.33 handle after BBC political correspondent downplayed reports of any significant progress on key issues
• A rash of rate decision to occur over the coming days (approx. a dozen) which included FOMC, BOE, SNB and BOJ.

Economic Data

• (FI) Finland Oct GDP Indicator Y/Y: -1.9% v -2.1% prior
• (UK) Nov Jobless Claims Change: +64.3K v -64.1K prior; Claimant Count Rate: 7.4% v 7.2% prior
• (UK) Oct Average Weekly Earnings 3M/Y: 2.7% v 2.2%e; Weekly Earnings (ex-bonus) 3M/Y: 2.8% v 2.6%
• (UK) Oct ILO Unemployment Rate: 4.9% v 5.1%e; Employment Change 3M/3M: -143K v -250Ke
• (ZA) South Africa Oct Leading Indicator: 108.6 v 105.3 prior
• (DK) Denmark Nov PPI M/M: +0.6% v -1.2% prior; Y/Y: -2.6% v -2.9% prior
• (NO) Norway Nov Trade Balance (NOK): 0.2B v 2.6B prior
• (CH) Swiss Nov Producer & Import Prices M/M: -0.1% v 0.0% prior; Y/Y: -2.7% v -2.9% prior
• (FR) France Nov Final CPI M/M: 0.2% v 0.2%e; Y/Y: 0.2% v 0.2%e; CPI (Ex-Tobacco) Index: 103.86 v 103.87e
• (FR) France Nov Final CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 0.2% v 0.2%e
• (ES) Spain Oct House transactions Y/Y: -13.3% v -1.1% prior
• (TR) Turkey Nov Central Gov’t Budget Balance (TRY): +13.4B v -4.9B prior
• (IT) Italy Nov Final CPI M/M: -0.1% v -0.1% prelim; Y/Y: -0.2% v -0.2% prior; CPI Index (ex-tobacco): 102.0 v 102.0 prior
• (IT) Italy Nov Final CPI EU Harmonized M/M: 0.0% v 0.0% prelim; Y/Y: -0.3% v –0.3% prelim
• (PL) Poland Nov Final CPI M/M: 0.1% v 0.0% prelim; Y/Y: 3.0% v 3.0% prelim
• (IT) Italy Oct General Government Debt: €2.587T v €2.584T prior
• (ZA) South Africa Nov PPI M/M: 0.0% v -0.2%e; Y/Y: 3.0% v 2.8%e
• (IT) Italy Oct Total Trade Balance: €7.5B v €5.9B prior; Trade Balance EU: €0.2B v €0.6B prior
• (NG) Nigeria Nov CPI Y/Y: 14.9% v 14.9%e

Fixed income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €B vs. €0.5-1.5B indicated range in 3-month and 9-month bills
• (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2026, 2030 and 2048 bonds

Looking Ahead

• 05:30 (ZA) South Africa Q3 Non-Farm Payrolls Q/Q: No est v -6.4% prior; Y/Y: No est v -6.6% prior
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month bills
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 06:00 (IE) Ireland Oct Trade Balance: No est v €7.5B prior
• 06:00 (BR) Brazil Central Bank (BCB) Dec COPOM Minutes
• 06:00 (BR) Brazil Dec FGV Inflation IGP-10 M/M: 2.0%e v 3.5% prior
• 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.60%; Expected to leave Overnight Deposit Rate unchanged at -0.05%
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (RU) Russia announcement on upcoming OFZ bonds issuance (held on Wed)
• 08:15 (CA) Canada Nov Annualized Housing Starts: 220.0Ke v 214.9K units prior
• 08:30 (US) Dec Empire Manufacturing: 6.9e v 6.3 prior
• 08:30 (US) Nov Import Price Index M/M: +0.3%e v -0.1% prior; Y/Y: -0.9%e v -1.0% prior; Import Price Index (ex-petroleum) M/M: 0.2%e v 0.0% prior
• 08:30 (US) Nov Export Price Index M/M: 0.2%e v 0.2% prior; Y/Y: No est v -1.6% prior
• 08:30 (CA) Canada Oct Manufacturing Sales M/M: 0.6%e v 1.5% prior
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (CA) Canada Nov Existing Home Sales M/M: No est v -0.7% prior
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (HU) Hungary Central Bank Gov post rate decision statement
• 09:00 (IE) ECB’s Lane (Ireland, chief economist)
• 09:15 (US) Nov Industrial Production M/M: 0.3%e v 1.1% prior; Capacity Utilization: 73.0%e v 72.8% prior; Manufacturing Production: 0.4%e v 1.0% prior
• 10:00 (PE) Peru Nov Unemployment Rate: No est v 16.4% prior
• 10:00 (PE) Peru Oct Economic Activity Index (Monthly GDP) Y/Y: No est v -6.9% prior
• 10:00 (MX) Mexico Weekly International Reserve data
• 11:00 (RU) Russia Nov Industrial Production Y/Y: -4.9%e v -5.9% prior
• 11:30 (IL) Israel Nov CPI M/M: -0.3%e v +0.3% prior; Y/Y: -0.7%e v -0.8% prior
• 11:30 (US) Treasury to sell 1-month and 3-month CMB
• 14:00 (AR) Argentina Nov National CPI M/M: 3.6%e v 3.8% prior; Y/Y: 36.3%e v 37.2% prior
• 14:30 (CA) Bank of Canada (BOC) Macklem speech
• 16:00 (US) Oct Net Long-term TIC Flows: No est v $108.9B prior; Total Net TIC Flows: No est v -$79.9B prior
• 16:00 (KR) South Korea Nov Export Price Index M/M: No est v -2.6% porior; Y/YU: No est v -6.4% prior
• 16:00 (KR) South Korea Nov Import Price Index M/M: No est v -2.6% prior; Y/Y: No est v -11.6% prior
• 16:30 (US) Weekly API Oil Inventories
• 16:45 (NZ) New Zealand Q3 YTD Current Account Balance (NZD): -3.9Be v +1.8B prior; Current Account to GDP Ratio: -0.8%e v -1.9% prior
• 17:00 (AU) Australia Dec Preliminary PMI Manufacturing: No est v 55.8 prior; PMI Services: No est v 55.1 prior; PMI Composite: No est v 54.9 prior
• 18:00 (KR) South Korea Nov Unemployment Rate: 4.2%e v 4.2% prior
• 18:30 (AU) Australia Nov Leading Index M/M: No est v 0.1% prior
• 18:50 (JP) Japan Nov Trade Balance: ¥522.5Be v ¥871.7B prior (revised from ¥872.9B); Adjusted Trade Balance: ¥545.7Be v ¥314.3B prior; Exports Y/Y: +0.5%e v -0.2% prior; Imports Y/Y: -9.5%e v -13.3% prior
• 19:00 (NZ) New Zealand Govt bi-annual Fiscal, Economic Update
• 19:30 (JP) Japan Dec Preliminary PMI Manufacturing: No est v 49.0 prior; PMI Services: No est v 47.8 prior; PMI Composite: No est v 48.1 prior
• 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years; 5~10 Years
• 20:30 (KR) Bank of Korea to sell KRW2.0T in 2-Year Bonds
• 21:35 (CN) China to sell 1-year and 10-year Upsized Bonds
• 22:00 (TH) Thailand to sell and 2024 and 2042 Bonds
• 22:30 (JP) Japan to sell 12-month bills
• 23:30 (TW) Taiwan to sell TWD 40B in 2-Year Certificates of Depositis (NCD)