Bond Issuance Continues At A Steady Clip

Notes/Observations

• Growing optimism around declining Covid-19 cases and the increasing likelihood that US to pass a large stimulus bill
• Italian 10-year BTP yield at record low as overall the sentiment showing that the former ECB chief Draghi could be a game-changer for Italian politics
• China new yuan loans at a record level ahead of lunar new year holiday

Asia:

• PBoC Q4 Monetary Policy Report reiterated stance to keep prudent monetary policy flexible and precise; To prioritize stability and not make sharp turns in policy; To enhance flexibility of Yuan exchange rate
• RBNZ Dep Gov Bascand stated that would reinstate mortgage lending restrictions, effective March 1st- G7 finance ministers to meet on Friday (Feb 12th) to discuss Emerging Market debt and implementation of digital taxes and central bank digital currencies

Europe:

• ECB chief Lagarde reiterated view that resurgent virus, and curbs were significant downside risk and stressed that an accommodative monetary policy stance remained essential
• EU said to plan to reject UK call for a 2-year extension of Northern Ireland grace periods

Americas:

• Fed’s Mester (FOMC voter) stated that policy to be accommodative for a very long time because the economy needed it
• House Ways and Means Committee released details of COVID plan: Comprised half of $1.9T COVID relief package, would extend unemployment insurance to Aug 29th
• House Democrats proposed a $1.4K payments for people making $75k or married couples earning $150k, increased from the earlier proposed $50k & $100k respectfully

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.34% at 409.40, FTSE -0.05% at 6,520.55, DAX -0.05% at 5,683.08, CAC-40 % at #, IBEX-35 -1.03% at 8,134.00, FTSE MIB -0.52% at 23,301.50, SMI -0.25% at 10,752.00, S&P 500 Futures -0.10%]
• Market Focal Points/Key Themes: European indices open mixed and later slipped to trade in the red; better performing sectors include energy and consumer discretionary; utilities and materials sectors among underperformers; Rpximus to take MTN and Swisscom’s stakes in BICS; reportedly Qiagen considering merger with Quidel; earnings expected in the upcoming US session include Lyft, Nokian Renkaat, Cisco and Twitter

Equities

• Consumer discretionary: Ocado [OCDO.UK] -1.5% (earnings), TUI [TUI1.DE] -1% (earnings)
• Energy: Total {FP.FR] +1% (earnings)
• Financials: Randstad Holding [RAND.NL] +3% (earnings)
• Healthcare: Qiagen [QIA.DE] +1% (potential merger)
• Technology: AMS [AMS.CH] -7% (earnings)

Speakers

• Bank of Italy (BOI) Monthly Report `Money and Banks’: Dec Non-performing Loans (NPLs): €51.6B v €62.6B prior
• Romania Central Bank official Csaba noted that 2021 GDP seen around 3.0%. Continued to watch the effects from prior rate cuts
• German Association of Chambers of Trade and Industry (DIHK) stated that trade and cooperation agreement with UK could only partially offset negative effects
• BOJ said to be reluctant to abandon its EFT buying target at its March review as perception would be viewed as dialing back on stimulus
• China President Xi stressed in a speech that needed cooperation with central and Eastern Europe and looked to expand imports for CEE countries

Currencies/Fixed Income

• USD maintained a soft tone as focus remained on the US stimulus package currently in Congress. Greenback weighed upon as the House and Senate edge closer to a $1.9T new stimulus package
• EUR/USD drifted back towards the 1.21 level as analysts believed the pair’s recent weakness was only temporary.
• Italy 10-year BTP yield fell to a record low of 0.50% as market showedg confidence in Draghi to be able form a new government for Italy. Overall the sentiment is that the former ECB chief could be a game-changer for Italian politics

Economic data

• (NO) Norway Q1 Consumer Confidence: -5.1 v -9.2 prior
• (DE) Germany Dec Current Account Balance: €28.2B v €23.3Be; Trade Balance: €14.8B v €14.0Be; Exports M/M: +0.1% v -0.6%e; Imports M/M: -0.1% v -2.0%e
• (FR) Bank of France Jan Industrial (Business) Sentiment: 98 v 98e
• (CN) China Jan Aggregate Financing (CNY): 5.170T v 4.60Te
• (CN) China Jan New Yuan Loans (CNY): 3.580T v 3.50%e (record high)
• (CN) China Jan M2 Money Supply Y/Y: 9.4% v 10.0%e; M1 Money Supply Y/Y: 14.7 v 8.6% prior; M0 Money Supply Y/Y: -3.9% v +9.2% prior
• (CZ) Czech Jan International Reserves: $164.6B v $166.1Bprior
• (IT) Italy Dec Industrial Production M/M: -0.2% v +0.3%e; Y/Y: -2.0% v -1.4%e; Industrial Production NSA (unadj): Y/Y: +1.0% v -1.2% prior
• (GR) Greece Dec Industrial Production Y/Y: 3.3% v 8.6% prior

Fixed income Issuance

• (ID) Indonesia sold total IDR12.0T in Islamic bills and bonds (sukuk)
• (ES) Spain Debt Agency (Tesoro) opened its book to sell EUR-denominated 50-year bond via syndicate; guidance seen 15bps to SPGBs with order book over £37B
• (NL) Netherlands Debt Agency (DSTA) opened its book to sell €4.0-6.0B in new 0.00% 2031 DSL bond; Spread seen +12 to +15bps with order book over €15.0B
• (UK) DMO opened its book to sell 0.125% Mar 2051 inflation-linked Gilt (UKTi) via syndicate; guidance seen +2.75 bps to UKTi; order book over £19.5B
• (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2032, 2037 and 2044 bonds
• (ES) Spain Debt Agency (Tesoro) sold total €6.67B vs. €6.0-7.0B indicated range in 6-month and 12-month bills

Looking Ahead

• 05:10 (EU) Daily ECB Liquidity Stats
• 05:15 (CH) Switzerland to sell 3-month Bills
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
• 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.8-2.2B in 3-month and 12-month bills
• 05:30 (DE) Germany to sell €1.5B in new 0.1% Apr 2033 inflation-linked Bonds (Bundei)
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €157.0M with 8 bids recd)
• 06:00 (PT) Portugal Dec Trade Balance: No est v -€0.9B prior
• 06:00 (US) Jan NFIB Small Business Optimism Index: 97.5e v 95.9 prior
• 06:00 (BR) Brazil Feb IGP-M Inflation (1st Preview): 1.8%e v 1.9% prior
• 06:00 (FI) Finland to sell €2.0B in 6-month and 9-month Bills
• 06:30 (EU) ESM to sell €1.1B in 12-Month Bills
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Jan CPI M/M: 0.8%e v 0.4% prior; Y/Y: 3.5%e v 3.2% prior; CPI Core M/M: 0.2%e v 0.6% prior
• 07:00 (BR) Brazil Jan IBGE Inflation IPCA M/M: 0.3%e v 1.4% prior; Y/Y: 4.6%e v 4.5% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:30 (UR) Ukraine Jan CPI M/M: 1.5%e v 0.9% prior; Y/Y: 6.3%e v 5.0% prior
• 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (over 20-years)
• 10:00 (US) Dec JOLTS Job Openings: 6.400Me v 6.527M prior
• 10:00 (IE) ECB’s Lane (Ireland, chief economist)
• 13:00 (US) Treasury to sell 3-Year Notes
• 15:50 (AU) RBA’s Jones
• 16:30 (US) Weekly API Oil Inventories
• 18:00 (KR) South Korea Jan Unemployment Rate: 4.5%e v 4.6% prior
• 18:50 (JP) Japan Jan PPI M/M: 0.4%e v 0.5% prior; Y/Y: -1.6%e v -2.0% prior
• 19:01 (UK) Jan RICS House Price Index: 60%e v 65% prior
• 20:30 (CN) China Jan CPI Y/Y: 0.0%e v +0.2% prior; PPI Y/Y: +0.3%e v -0.4% prior
• 21:00 (JP) Japan Jan Tokyo Avg Office Vacancies: No est v 4.49 prior
• 22:00 (ID) Indonesia Q4 Current Account Balance: $1.3Be v $1.0B prior