German Retail Sales Beats Estimates, UK Announces Fresh Support For Businesses, Focus On US Senate Races In Georgia

Notes/Observations

• German Nov Retail Sales beats expectations as consumers spend through pandemic
• Plethora issuance of sovereign and corporate debt to kick off the new year
• State of Georgia will hold two Senate runoff elections Tues to determine who controls the US Senate; greater chance of blue wave stemming from elections

Asia:

• PBOC set the official yuan midpoint at 6.4760, (1% firmer than the previous fix, the biggest change since 2005)

Coronavirus:

• Total cases 85.6M (+0.6% d/d); total deaths: 1.85M (+0.5% d/d)
• Japan govt said to consider declaring a month-long COVID emergency as soon as Thursday (Jan 7th)

Europe:

• UK PM Johnson confirmed another national COVID lockdown starting Tuesday, Jan 5th

Americas:

• Treasury Department posts guidance on China Military Companies: Says US persons are not required to divest their holdings in publicly traded securities of the Communist Chinese military companies identified in the Annex to E.O. 13959 by January 11, 2021
• NYSE said it no longer plans to delist China’s big three telecom companies in a U-turn from previous decision to comply with a U.S. executive order
• Fed Bostic (dove, non-voter): Recalibration of US central bank asset purchases could come in short order if COVID vaccine and economic recovery take hold, new stimulus package will help avoid some of the worst outcomes, but still watching for vulnerabilities
• Fed’s Mester (FOMC voter): Monetary policy will need to remain highly accommodative for “quite some time”; Near term outlook to remain weak as virus surges; Medium range outlook to show considerable improvement
• Pres-elect Biden: Electing Democrats in Georgia will put an end to the block on the $2,000 stimulus checks; that money will go out the door immediately

Energy:

• OPEC+ said to be discussing extending meeting into tomorrow (Tues, Jan 5th). Russia wants to increase oil production while Saudi Arabia and others warned that markets remain fragile

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 0.00% at 401.70, FTSE +0.47% at 6,602.55, DAX -0.15% at 13,706.25, CAC-40 -0.03% at 5,587.49, IBEX-35 +0.06% at 8,104.00, FTSE MIB -0.14% at 22,284.50, SMI +0.12% at #, S&P 500 Futures +0.17%]
• Market Focal Points/Key Themes: European indices open modestly lower but turned to trade mixed later in the session; concern over slower than anticipated vaccine deliveries in Europe a theme in the session; better performing sectors include technology and energy; financials and real estate sectors among underperformers; Sweden early close due to holiday; UK enters national lockdown; Dufry enters collaboration in China; reportedly Telefonica looking to accelarate its exit from Latin America; LafargeHolcim reportedly looking tion acquiring building products unit of Bridgetone; US carmakers expected to report fourth quarter sales in upcoming American session

Equities

• Consumer discretionary: Next [NXT.UK] +8% (trading update), EasyJet [EZJ.UK] -2% (review flights schedule due to new UK restrictions), WM Morrison Supermarkets [MRW.UK] -1% (trading update)
• Technology: Softcat [SCT.UK] +9% (trading update), Dialog Semiconductor [DLG.DE] +4% (raises outlook)

Speakers

• UK Chancellor of the Exchequer Sunak (Fin Min) announced £4.6B in new lockdown grants for businesses. Measures to help sustain jobs through pandemic
• Italy PM Conti could agree to govt changes to end potential political crisis (**Reminder: recent reports circulated that Italy govt coalition partner Renzi was threatening to bring down the govt over PM Conte’s plans to revive the economy)

Currencies/Fixed Income

• Weaker USD appeared to be offsetting concerns about fresh coronavirus lockdowns around the globe. Markets are bracing for Tuesday’s runoff elections in Georgia that would determine who controls the US Senate. A potential blue wave providing more stimulus hopes. President-elect Biden stated that electing Democrats in Georgia would put an end to the block on the $2,000 stimulus checks
• Ireland, Italy and Slovenia opened their books to be the first countries in the Euro Zone to embark on syndicated bond launches at the beginning of the year. January is traditionally the high season for new bond launches

Economic Data

• (DE) Germany Nov Retail Sales M/M: +1.9% v -2.0%e; Y/Y: 5.6% v 4.0%e
• (CH) Swiss Dec CPI M/M: -0.1% v +0.1%e; Y/Y: -0.8% v -0.7%e; CPI Core Y/Y: -0.4% v -0.2%e
• (CH) Swiss Dec CPI EU Harmonized M/M: +0.1% v -0.4% prior; Y/Y: -1.0% v -0.8% prior
• (ES) Spain Dec Net Unemployment Change: +36.8K v +25.3K prior
• (HU) Hungary Nov Unemployment Rate: 4.4% v 4.5%e
• (EU) Daily ECB Liquidity Stats
• (DE) Germany Dec Net Unemployment Change: -37.0K v +10.0Ke; Unemployment Claims Rate: 6.1% v 6.2%e
• (EU) Euro Zone Nov M3 Money Supply Y/Y: 11.0% v 10.6%e

Fixed income Issuance

• (IT) Italy Debt Agency (Tesoro) opened its book to sell EUR-denominate Mar 2037 BTP; guidance seen +13bps to mid-swaps
• (IE) Ireland Debt Agency (NTMA) opened its book to sell EUR-denominate Oct 2031 bonds; guidance seen +1bps to mid-swaps
• (SI) Slovenia opened its book to sell EUR-denominated 10-year and 30-year bonds
• (EU) European Investment Bank (EIB) to sell USD-denominated 5-year bonds; guidance seen +5bps to mid-swaps
• (ID) Indonesia sold total IDR41.0T vs. IDR35.0T target in bills and bonds
• (ID) Indonesia opened book to sell EUR-denominated 12-year bond vis syndicate; guidance seen +175bps to mid-swaps

Looking Ahead

• (US) Dec Vehicle Sales data in session
• 05:15 (CH) Switzerland to sell 3-month Bills
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
• 05:30 (DE) Germany to sell €6.0B in 0.0% Dec 2022 Schatz
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 6-month bills
• 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 13-week bills
• 06:30 (EU) ESM to sell €1.5B in 3-month bills
• 07:00 (TR) Turkey to sell 2025 and 2027 bonds
• 07:00 (BR) Brazil Nov PPI Manufacturing M/M: No est v 3.0% prior; Y/Y: No est v 17.5% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (CA) Canada Nov Industrial Product Price M/M: No est v -0.4% prior; Raw Materials Price Index M/M: No est v 0.5% prior
• 08:30 (CA) Canada Nov MLI Leading Indicator M/M: No est v 2.7% prior
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:45 (US) Nov ISM New York: No est v 44.2 prior
• 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (over 20-years)
• 10:00 (US) Dec ISM Manufacturing: 56.6e v 57.5 prior; Prices Paid: No est v 65.4 prior
• 10:00 (CZ) Czech Dec Budget Balance (CZK): No est v -341.5B prior
• 10:00 (MX) Mexico Weekly International Reserve data
• 11:00 (DK) Denmark Dec Foreign Reserves (DKK): No est v 456.4B prior
• 11:00 (NZ) New Zealand Dec House Prices Y/Y: No est v 9.2% prior
• 15:45 (US) Fed’s Evans
• 15:45 (US) Fed’s Williams
• 16:00 (KR) South Korea Dec Foreign Reserves: No est v $436.4B prior
• 16:30 (US) Weekly API Oil Inventories
• 17:00 (AU) Australia Dec Final PMI Services: No est v 57.4 prelim; PMI Composite: No est v 57.0 prelim
• 19:00 (CO) Colombia Dec CPI M/M: +0.2%e v -0.2% prior; Y/Y: 1.4%e v 1.5% prior
• 19:00 (CO) Colombia Dec CPI Core M/M: No est v -0.2% prior; Y/Y: No est v 1.0% prior
• 19:01 (UK) Dec BRC Shop Price Index Y/Y: No est v -1.8% prior
• 19:30 (SG) Singapore PMI (Whole economy): No est v 46.7 prior
• 19:30 (HK) Hong Kong Dec PMI (Whole economy): No est v 50.1 prior
• 19:30 (JP Japan Dec Final PMI Services: No est v 47.2 prelim; PMI Composite: No est v 48.0 prelim
• 20:01 (IE) Ireland Dec PMI Services: No est v 45.4 prior; PMI Composite: No est v 47.7 prior
• 20:45 (CN) China Dec Caixin PMI Services: 58.0e v 57.8 prior; PMI Composite: No est v 57.5 prior
• 22:00 (CN) China to sell 2-year and 5-year Upsized Government Bond