About us 
Notes/observations
– Falling equities corresponding with rising US dollar, which has been given momentum from Fed Waller hawkish commentary and geopolitical tensions in the Red Sea.
– BOE rate cut expectations were also dialed down after an upside surprise to UK Dec inflation.
– Abundance of ECB speakers heavily downplayed market pricing of rate cuts, uniformly chanting a similar stance. Chief Lagarde let slip that an ECB cut is likely by summer.
– Overnight, China Q4 GDP and Dec Retail Sales missed expectations. Substantial weakness seen from Hang Seng and Kospi.
– Asia closed lower with Hang Seng under-performing -3.7%. EU indices are -0.4% to -1.6%. US futures are -0.4% to -0.6%. Gold -0.2%, DXY 0.0%; Commodity: Brent -1.9%, WTI -2.1%, TTF -2.9%; Crypto: BTC -0.5%, ETH +0.2%.
Asia
– China Q4 GDP Q/Q: 1.0% v 1.1%e; Y/Y: 5.2% v 5.2%e.
– China Dec Industrial Production Y/Y: 6.8% v 6.8%e.
– China Dec YTD Fixed Urban Assets Y/Y: 3.0%.
– China Dec YTD Property Investment Y/Y:-9.6% v -9.5%e.
– China Dec Retail Sales Y/Y: 7.4% v 8.0%e.
– China Dec Surveyed Jobless Rate: 5.1% v 5.0% prior; Youth Unemployment Rate (16–24-year-olds): 14.9% v 21.3% prior record level as methodology update.
– China National Bureau of Statistics (NBS) reiterated stance to enhance economic vitality and prevent risks. Domestic economy faced more favorable conditions than challenges in 2024. Does face complex external environment, insufficient demand in 2024.
Europe
– ECB’s Muller (Estonia, hawk) noted that market expectations for 2024 ECB rate cuts were aggressive. Euro zone wage growth was not in line with the inflation target.
– ECB’s Simkus (Lithuania) stated that was far less optimistic than markets on rate cuts, wage data was going to be very important.
Americas
– Fed’s Waller (voter, hawk) stated that would be able to cut the policy rate this year as long as inflation did not rebound or stay high; No reason to move as quickly, to cut as rapidly as in the past; Policy path must be ‘carefully calibrated, not rushed’.
– US Senate stopgap funding bill said to avert govt shutdown on Saturday won enough votes to clear first procedural hurdle; Voting continues.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -1.12% at 467.74, FTSE -1.66% at 7,432.75, DAX -0.95% at 16,414.12, CAC-40 -1.10% at 7,316.48, IBEX-35 -1.17% at 9,876.72, FTSE MIB -0.91% at 30,061.00, SMI -0.99% at 11,118.30, S&P 500 Futures -0.40%]
Market focal points/key themes: European indices opened lower across the board amid broad global repricing of rate cuts expectations; sectors leading the way into the red include industrials, tech and consumer discretionary; shares of Just Eat Takeaway.com in London erased earlier gains to trade little changed following trading update; shares of shipping giant Hapag-Lloyd trade lower few percent following Maersk and COSCO comments on Red Sea disruptions; Telecom Italia shares in Milan slightly higher following Italian govt’s approval of KKR’s acquisition offer for its network grid; earnings expected in the upcoming US session include Charles Schwab, US Bancorp, Prologis, Citizens Financial, Discover Financial Services and Alcoa.
Equities
– Consumer discretionary: Just Eat Takeaway.com [JET.UK] +0.5% (trading update).
– Healthcare: Pixium Vision [ALPIX.FR] +24.0% (postponement of the decision on the adoption of a sale plan).
– Industrials: Hapag-Lloyd [HPAG.DE] -1.5% (operational cooperation with Maersk; COSCO and Maersk comments), Meyer Burger Technology [MBTN.CH] -28.0% (strategic alternatives), Diploma [DPLM.UK] -2.0% (trading update), Antofagasta [ANTO.UK] -3.5% (production).
– Telecom: Telecom Italia [TIT.IT] +1.5% (Italian govt approves KKR’s €18.8B offer to acquire its network grid), Pearson [PSON.UK] -2.5% (trading update).
Speakers
– ECB Chief Lagarde noted that too optimistic markets did not help ECB inflation fight; Inflation was not where ECB wanted it to be. ECB had reached peak rates barring any major shock. Watching wages, profit margins, energy and supply chains; 2nd round effects would be a cause for concerns.
– ECB’s Knot (Netherlands) noted that market were getting ahead of themselves on rate cuts.
– ECB Villeroy (France) noted that it was premature to say when ECB would cut rates in 2024; job of monetary policy was not done yet.
– ECB Vasle (Slovenia, hawk) noted that his rate expectations significantly differed to market ones; absolutely premature to expect rate cut at start of Q2 2024.
– UK Chancellor of the Exchequer (Fin Min) Hunt stated that inflation did not fall in a straight line; govt plan was working and should stick with it.
– EU Commission Chief Von der Leyen stated that was working on reforms to prepare for +30 EU members and to present the plans in Feb.
– Sweden Central Bank (Riksbank) Breman stated that probably no need to raise interest rates further.
– Hungary Central Bank Dep Gov Virag stated that had room for 100bps rate cuts at upcoming meeting. Base Rate could fall to 6.00-7.00% area by mid-2024 (**Note: currently at 10.75%).
– IMF Dep Managing Dir Gopinath noted that markets were being a little bit exuberant a still seeing stickiness in inflation.
– Indonesia Central Bank Policy Statement noted that the decision to keep rate steady was consistent with pro-stability monetary focus to ensure FX stability and CPI to stay within target range during 2024.
– OPEC Sec Gen Al Ghais noted that oil demand would defy predictions of a peak.
Currencies/fixed income
– Major central bankers continued to dial back market expectations of imminent rate cuts during the H1 of 2024.
– USD was initially firmer after Tuesday comments from Fed’s Waller after he pushed back on market expectation of rate cuts. However, hotter UK CPI data and various ECB speak on need to keep rates higher for longer saw the greenback move of pre-EU opening level highs.
– EUR/USD at 1.0860 as ECB members Lagarde, Villeroy, Knot and Vasle all played down market optimism on rate cut prospects.
– GBP/USD jump over 50 pips after Dec CPI data came in above expectations and higher from month-ago levels. UK 10-year Gilt yield jumped higher by almost 10bps afterwards to test 3.87%.
Economic data
– (UK) Dec CPI M/M: 0.4% v 0.2%e; Y/Y: 4.0% v 3.8%e; CPI Core Y/Y: 5.1% v 4.9%e; CPI Services Y/Y: 6.4% v 6.1%e; CPIH Y/Y: 4.2% v 4.0%e.
– (UK) Dec RPI M/M: 0.5% v 0.4%e; Y/Y: 5.1% v 5.1%e; RPI-X (ex-mortgage interest payments) Y/Y: 4.0% v 3.9%e; Retail Price Index: 379.0 v 378.7e.
– (UK) Dec PPI Input M/M: -1.2% v -0.6%e; Y/Y: -2.8% v -1.9%e.
– (UK) Dec PPI Output M/M: -0.6% v -0.2%e; Y/Y: 0.1% v 0.4%e.
– (ID) Indonesia Central Bank (BI) left the BI Rate unchanged at 6.00%; as expected.
– (FR) France Nov YTD Budget Balance: -€198.0B v -€177.7B prior.
– (CZ) Czech Dec PPI Industrial M/M: -0.5% v -0.2%e; Y/Y: 1.4% v 1.6%e.
– (AT) Austria Dec Final CPI M/M: 0.4% v 0.4% prelim; Y/Y: 5.6% v 5.6% prelim.
– (UK) Nov ONS House Price Index Y/Y: -2.1% v -1.3% prior.
– (EU) Euro Zone Dec Final CPI Y/Y: 2.9% v 2.9% advance; CPI Core Y/Y: 3.4% v 3.4% advance; CPI M/M: 0.2% v 0.2% advance.
Fixed income issuance
– (IN) India sold total INR270B vs. INR270B indicated in 3-month, 6-month and 12-month bills.
– (FI) Finland opened its book to sell EUR-denominated 30-year bonds via syndicate; guidance seen +58bps to mid-swaps.
– (DK) Denmark sold total DKK0M (nil) in 3-month and 6-month Bills; rejected all bids.
– (SE) Sweden sold SEK3.0B vs. SEK3.0B indicated in 1.75% Nov 2033 Bonds; Avg Yield: 2.2194% v 2.3783% prior, bid-to-cover: 5.71x v 2.85x prior.
– (NO) Norway sold total NOK3.0B vs. NOK3.0B indicated in 2027 and 2033 Bonds.
Looking ahead
– OPEC Monthly Oil Report.
– 05:25 (EU) Daily ECB Liquidity Stats.
– 05:30 (DE) Germany to sell combined €2.0B in 2052, 2053 Bunds.
– 05:30 (GR) Greece Debt Agency (PDMA) to sell 3.875% Jun 2028 GGB bonds.
– 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.75-2.0B in 6-month and 12-month Bills.
– 06:00 (ZA) South Africa Nov Retail Sales M/M: +1.1%e v -1.2% prior; Y/Y: -1.1%e v -2.5% prior.
– 06:00 (BR) Brazil Jan FGV Inflation IGP-10 M/M: 0.5%e v 0.6% prior; Y/Y: No est v -3.3% prior.
– 06:00 (EU) EU Commission to sell combined €2.5B in 3-month and 6-month bills.
– 06:00 (RU) Russia to sell OFZ Bonds (2 tranches).
– 06:30 (UK) DMO to sell £3.75B in 4.625% Jan 2034 Gilts.
– 06:30 (EU) ECB’s Vujcic (Croatia).
– 07:00 (US) MBA Mortgage Applications w/e Jan 12th: No est v 9.9% prior.
– 07:00 (BR) Brazil Nov Retail Sales M/M: +0.1%e v -0.3% prior; Y/Y: 2.0%e v 0.2% prior.
– 07:00 (BR) Brazil Nov Broad Retail Sales M/M: +0.6%e v -0.4% prior; Y/Y: 2.5%e v 2.5% prior.
– 07:00 (UK) Weekly PM Question time in House.
– 07:15 (NL) ECB’s Knot (Netherlands).
– 08:00 (RU) Russia Nov Trade Balance: No est v $9.4B prior; Exports: No est v $32.9B prior (revised from $33.0B); Imports: No est v $23.5B prior.
– 08:00 (UK) Daily Baltic Dry Bulk Index.
– 08:30 (US) Dec Advance Retail Sales M/M: 0.4%e v 0.3% prior; Retail Sales (ex-auto) M/M: 0.2%e v 0.2% prior; Retail Sales (ex-auto/gas): 0.3%e v 0.6% prior; Retail Sales (control group): 0.2%e v 0.4% prior.
– 08:30 (US) Dec Import Price Index M/M: -0.5%e v -0.4% prior; Y/Y: -2.0%e v -1.4% prior; Import Price Index (ex-petroleum) M/M: 0.0%e v 0.2% prior.
– 08:30 (US) Dec Export Price Index M/M: -0.7%e v -0.9% prior; Y/Y: -0.7%e v -5.2% prior.
– 08:30 (US) Jan New York Fed Services Business Index: No est v -14.6 prior.
– 08:30 (CA) Canada Nov Int’l Securities Transactions (CAD): No est v -15.8B prior.
– 08:30 (CA) Canada Dec Industrial Product Price M/M: -0.5%e v -0.4% prior; Raw Materials Price Index M/M: -1.6%e v -4.2% prior.
– 08:55 (US) Weekly Redbook LFL Sales data.
– 09:00 (US) Fed’s Barr.
– 09:00 (US) Fed’s Bowman.
– 09:15 (US) Dec Industrial Production M/M: 0.0%e v 0.2% prior; Capacity Utilization: 78.7%e v 78.8% prior; Manufacturing Production: 0.0%e v 0.3% prior.
– 10:00 (US) Nov Business Inventories: -0.1%e v -0.1% prior.
– 10:00 (US) Jan NAHB Housing Market Index: 39e v 37 prior.
– 10:00 (CO) Colombia Nov Manufacturing Production Y/Y: -5.7%e v -5.9% prior; Industrial Production Y/Y: -2.0%e v -2.2% prior.
– 10:00 (CO) Colombia Nov Retail Sales Y/Y: -6.0%e v -11.0% prior.
– 10:15 (EU) ECB chief Lagarde at Davos.
– 11:30 (US) Treasury to sell 17-Week Bills.
– 13:00 (US) Treasury to sell 20-Year Bond Reopening.
– 13:30 (DE) ECB’s Nagel (Germany) at Davos.
– 14:00 (US) Fed Beige Book.
– 14:00 (US) Fed Beige Book.
– 15:00 (US) Fed’s Williams.
– 16:30 (US) Weekly API Oil Inventories.
– 16:45 (NZ) New Zealand Dec Food Prices M/M: No est v -0.2% prior.
– 18:50 (JP) Japan Nov Core Machine Orders M/M: -0.8%e v+ 0.7% prior; Y/Y: +0.1%e v -2.2% prior.
– 19:00 (AU) Australia Jan Consumer Inflation Expectations: No est v 4.5% prior.
– 19:01 (UK) Dec RICS House Price Balance: No est v -43% prior.
– 19:30 (AU) Australia Dec Employment Change: +15.0Ke v +61.5K prior; Unemployment Rate: 3.9%e v 3.9% prior; Full Time Employment Change: No est v 57.0K prior; Part Time Employment Change: No est v 4.5K prior; Participation Rate: 67.1%e v 67.2K prior.
– 20:00 (CN) China Dec Swift Global Payments (CNY): No est v 4.6% prior.
– 22:30 (JP) Japan to Sell 12-Month Bills.
– 22:35 (JP) Japan to sell 20-Year JGB Bonds.
– 23:30 (JP) Japan Nov Final Industrial Production M/M: No est v -0.9% prelim; Y/Y: No est v -1.4% prelim; Capacity Utilization M/M: No est v 1.5% prior.
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