German Jan CPI data hovering near ECB target
Notes/Observations
German CPI data mixed in session but edging closer to 2% ECB target
Monetary policy in focus as BOJ, Fed and BoE meet this week
Trump immigration policy dampens risk appetite
Overnight:
Asia:
Japan Dec Retail Sales registered its biggest decline in 10 months Y/Y: -1.7% v -0.5%e)
Europe:
ECB’s Visco eeiterates ECB must keep highly accommodative monetary policy and saw interest rates at current levels well beyond QE horizon;Reiterated view of not seeing any sign of inversion in euro area core inflation- Germany Social Democrat Party (SPD) said to have nominated former European Parliament President Martin Schulz as its candidate to challenge Chancellor Merkel in the Sept elections
French Socialist Party primary elections picked Benoit Hanon over former PM Manuel Valls for upcoming April elections
IMF report on Greece expects its public debt and financing needs to be "explosive" unless EU eases its burde
Americas:
US President Trump follows through on campaign promised and signs executive order on immigration banning US entry by citizens of Iraq, Syria, Iran, Sudan, Libya, Somalia or Yemen, as well as a 120-day suspension of the US refugee program
Economic data
(NL) Netherlands Jan Producer Confidence: 6.0 v 4.7 prior
(NO) Norway Q4 Industrial Confidence: 0 (flat) v -1e – (NO) Norway Dec Retail Sales W/Auto Fuel M/M: -2.1% v -0.1%e
(TR) Turkey Jan Economic Confidence: No est v 70.5 prior
(DE) Germany Jan CPI Saxony M/M: -0.5% v +0.9% prior; Y/Y: 2.3% v 1.8% prior
(ES) Spain Q4 Preliminary GDP Q/Q: 0.7% v 0.7%e; Y/Y: 3.0% v 3.0%e
(CH) Swiss Jan KOF Leading Indicator: 101.7 v 102.9e
(AT) Austria Jan Manufacturing PMI: 57.3 v 56.3 prior (highest reading since Mar 2011)
(DE) Germany Jan CPI Brandenburg M/M: -0.7% v +0.7% prior; Y/Y: 1.7% v 1.7% prior
(DE) Germany Jan CPI Hesse M/M: -0.5% v +0.9% prior; Y/Y: 2.4% v 1.9% prior
(DE) Germany Jan CPI Bavaria M/M: -0.8% v +0.7% prior; Y/Y: 1.7% v 1.7% prior
(PT) Portugal Jan Consumer Confidence: -6.2 v -8.2 prior; Economic Climate Indicator: 1.2 v 1.1 prior
(DE) Germany Jan CPI North Rhine Westphalia M/M: -0.6% v 0.9% prior; Y/Y: 2.1% v 1.9% prior
05:00 (EU) Euro Zone Jan Business Climate Indicator: ## v 0.80e; Consumer Confidence (Final): ## v -4.9e
(BR) Brazil Jan FGV Inflation IGPM M/M: 0.6% v 0.7%e; Y/Y: 6.7% v 6.7%e
Fixed Income Issuance:
(DK) Denmark sold total DKK2.2B in 1-month and 6-month Bills
(IT) Italy Debt Agency (Tesoro) sold total €6.75B vs.l €5.75-6.75B indicated range in 5-year and 10-year BTP bonds
Sold €2.75B vs €2.25-2.75B indicated in 0.35% Nov 2021 BTP; Avg Yield: 0.92% v 0.54% prior; Bid-to-cover: 1.32x v 1.33x prior
Sold €4.0B vs €3.5-4.0B indicated in 2.2% June 2027 BTP; Avg Yield: 2.37% v 1.77% prior; Bid-to-cover: 1.29x v 1.42x prior
(IT) Italy Debt Agency (Tesoro) sold total €2.25B vs. €1.75-2.25B indicated in Feb 2024 CCTeu (Floating Rate Bond); Avg Yield 0.73% v 0.58% prior; Bid-to-cover: 1.43x v 1.45x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Indices [Stoxx50 -0.9% at 3,273, FTSE -0.9% at 7,121, DAX -0.8% at 11,724, CAC-40 -1.0% at 4,791, IBEX-35 -1.0% at 9,413, FTSE MIB -2.2% at 18,907, SMI -0.7% at 8,320, S&P 500 Futures -0.3%]
Market Focal Points/Key Themes: European equity indices are trading sharply lower led by banking stocks across the board with the Italian FTSE MIB and Spanish IBEX the notable underperformers as a result; Energy, commodity and mining stocks generally lower but mixed in the FTSE 100 as copper trades slightly lower with oil trading higher; shares of Vodafone the notable gainer in the index after confirming in discussions with the Aditya Birla Group about an all share merger of Vodafone India and Idea Celluar.
Upcoming scheduled US earnings (pre-market) include Alliance Holdings, Affiliated Managers Group, Alliance Resource Partners, Booz Allen Hamilton, and Enterprise Products Partners.
Equities (as of 09:50 GMT)
Consumer Discretionary: [WS Atkins ATK.UK +4.7% (Approached by CH2M for a $4B merger), Flybe Group FLYB.UK +1.1% (Q3/Q4 results)]
Financials: [Bankia BKIA.ES +0.2% (Q4 results)]
Healthcare: [Sartorius Stedim Biotech DIM.FR -2.6% (FY16 results)]
Industrials: [Gurit Holdings GUR.CH -1.2% (prelim FY16 results)]
Technology: [Sartorius SRT.DE -1.5% (FY16 results), SDL Plc SDL.UK +1.1% (to sell Fredhopper for £25M cash), Sopheon SPE.UK +12.6% (trading update), Wirecard WDI.DE -0.9% (prelim Q4 results)]
Telecom: [Vodafone VOD.UK +2.9% (Confirms in discussions with the Aditya Birla Group about an all share merger of Vodafone India and Idea Celluar)]
Speakers
ESM spokeperson: Greece public debt is manageable if agreed upon reforms are implemented
Japan PM Abe: Too early to discuss who should succeed BOJ Gov Kuroda (**Note: terms ends in Apr 2018)
Thailand Finance Ministry raised 2017 GDP growth forecast from 3.4% to 3.6% and saw the central bank keeping interest rates unchanged over the course of the year at 1.50%
Currencies
USD was initially softer during Asian session over on concerns US travel restrictions could translate into investors withdrawing funds from the US. The USD was also hindered Weaker-than-expected US GDP from Friday. The greenback was off its worst levels as European session progressed and mixed overall against the major pairs. EUR/USD was holding below the 1.07 level while USD/JPY hovered in the mid-114 area. – GBP/USD was softer for its 3rd straight session ahead of this week’s BOE, Fed policy decisions
Fixed Income:
Bund futures trade at 161.61 down 23 ticks with yields jumping on the back of German CPI nearing the 2% target. Continued downside targets 161.19 followed by 160.80. A reversal higher targets 162.49 then 163.01 followed by 163.38.
Gilt futures trade at 123.11 down 22 ticks ticks fading some the rebound seen Friday afternoon, despite weaker Equity markets in Europe. Support moves to 122.60, 122.23 then Dec low at 122.08. Resistance moves to 123.42 followed by 123.62, then 124.13 to close the gap. Short Sterling futures trade flat with Jun17Jun18 remaining steady at 28/29bp.
Monday’s liquidity report showed Friday’s excess liquidity rose to €1.265T up €6B from €1.259T prior. Use of the marginal lending facility rose to €183M from €31M prior.
Corporate issuance saw $23.7B come to market last week via 28 tranches which was light of the $30B analysts estimates, however January issuance of $144.6B was a record for a January and the 5th busiest month of all time. European issuance saw a heavy €53.9B come to market via 30 issuers and 36 tranches, mainly comprised of SSA deals as France, Luxembourg and the UK all came to market. Issuance peaked on Tuesday when €27.7B prices marking the busiest day in 3 years.
Looking Ahead
(DE) Germany Jan CPI Baden Wuerttemberg M/M: No est v 0.7% prior; Y/Y: No est v 1.6% prior
(BE) Belgium Jan CPI M/M: No est v 0.1% prior; Y/Y: No est v 2.0% prior
05:25 (BR) Brazil Central Bank Weekly Economists Survey
06:00 (PT) Portugal Dec Retail Sales M/M: No est v -1.3% prior; Y/Y: No est v 4.3% prior
06:00 (PT) Portugal Dec Industrial Production M/M: No est v -0.8% prior; Y/Y: No est v 1.6% prior
06:45 (US) Daily Libor Fixing
07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
07:00 (ZA) South Africa Dec Budget Balance (ZAR): No est v -16.3B prior
07:00 (CL) Chile Dec Total Copper Production: No est v 480.0K prior
07:00 (CL) Chile Dec Manufacturing Production Y/Y: -1.3%e v -2.1% prior; Industrial Production Y/Y: -0.7%e v -1.4% prior
07:00 (CL) Chile Dec Retail Sales Y/Y: 4.9%e v 5.0% prior
08:00 (DE) Germany Jan Preliminary CPI M/M: -0.6%e v +0.7% prior; Y/Y: 2.0%e v 1.7% prior
08:00 (DE) Germany Jan Preliminary CPI EU Harmonized M/M: -0.7%e v +1.0% prior; Y/Y: 2.0%e v 1.7% prior
08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions in week
08:15 (UK) Baltic Dry Bulk Index
08:30 (US) Dec Personal Income: 0.4%e 0.0% prior; Personal Spending: 0.5%e v 0.2% prior; Real Personal Spending: 0.3%e v 0.1% prior
08:30 (US) Dec PCE Deflator M/M: 0.3%e 0.0% prior; Y/Y: 1.8%e v 1.4% prior
08:30 (US) Dec PCE Core M/M: 0.1%e v 0.0% prior; Y/Y: 1.7%e v 1.6% prior
08:50 (FR) France Debt Agency (AFT) to sell €5.3-6.5B in 3-month, 6-month and 12-month Bills
09:00 (BE) Belgium Q4 Preliminary GDP Q/Q: No est v 0.2% prior; Y/Y: No est v 1.3% prior
09:30 (EU) ECB announces Covered-Bond Purchases
09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
09:50 (UK) Bank of England Bond Buying Operation (APF Gilt purchase operation between 3-7 years)
10:00 (US) Dec Pending Home Sales M/M: +1.5%e v -2.5% prior; Y/Y: No est v 1.4% prior
10:30 (US) Jan Dallas Fed Manufacturing Activity: 15.5e v 15.5 prior
11:30 (US) Treasury to sell 3-Month and 6-Month Bills
