Upcoming US CPI to pave the way on Valentines Day

Notes/Observations

- Major catalyst for day and week, US CPI at 08:30 ET (13:30 GMT), current headline consensus at 0.5% MoM and 6.2% YoY.

- UK employment and wage data stronger than predicted. Private-sector wage growth rose to 7.3%, higher than BOE’s forecast, giving the BOE a green light for 4.5% terminal rate (currently at 4.0%); Opposingly, total hours worked declined, providing an angle for maintaining 4.0% bank rate.

- Overnight, Japan Govt confirmed to propose Kazuo Ueda as new BOJ Gov, in line with recent press reports.

- EU macro themes revolve around Russia/Ukraine war, the upcoming anniversary on Feb 24th with heightened Russian offensive and fighter jet support from European allies. Following Ukraine Pres Zelenskiy’s press tour to request jets, German resistance continued with Defense Min Pistorius noting that air defense is more important than jets. Russia continues to pressure Moldova (non-NATO member).

-On fiscal policy, EU Commissioner Gentiloni doubled down on re-activation of EU fiscal policy rules, which received agreement from Ireland but friction from Germany on concerns that such proposals would water down fiscal discipline in the single currency area.

- Asia closed mixed with Nikkei225 outperforming at +0.6%. EU indices are modestly higher +0.2-0.5%. US futures are +0.1-0.2%. Gold +0.5%, DXY -0.4%; Commodity: Brent -0.9%, WTI -1.3%, TTF -4.2%; Crypto: BTC +1.0%, ETH +2.0%.

Asia

- Japan PM Kishida formally nominated Ueda as next BOJ Gov.

- Japan Q4 Preliminary GDP Q/Q: 0.2% v 0.5%e; Annualized Q/Q: 0.6% v 2.0%e.

- New Zealand Q1 Inflation Expectation Survey (2-year outlook): 3.3% v 3.6% prior.

Americas

- President Biden expected to name Fed Vice Chair Brainard as his top economic adviser; announcement expected by as early as Tues.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.39% at 463.80, FTSE +0.45% at 7,983.14, DAX +0.24% at 15,434.55, CAC-40 +0.47% at 7,242.32, IBEX-35 +0.48% at 9,254.22, FTSE MIB +0.44% at 27,558.00, SMI +0.47% at 11,262.10, S&P 500 Futures +0.02%].

Market Focal Points/Key Themes: European indices open higher across the board and advanced into the green through the early hours of the session; all sectors start the day in the green; sectors leading the way into the green include telecom and real estate; while industrials and materials sectors struggled to gain traction; reportedly activist investor pushing Brenntag to divest its Specialties unit; Peugeot and Concordia agree on simpliefied offer fro Rothschild; focus on release of US CPI figures later in the day earnings expected in the upcoming US session include Airbnb, Carrefour, Coca-Cola and Marriott.

Equities

- Consumer discretionary: TUI [TUI1.DE] +2.5% (reports Q1 - affirms FY23 guidance), Ceconomy [CEC.DE] -5.5% (earnings), Delivery Hero [DHER.DE] -4.0% (issues convertible bonds - post close).

- Financials: Plus500 [PLUS.UK] +1.5% (earnings), Amigo Holdings [AMGO.UK] +56.0% (avoids fine).

- Healthcare: Basilea [BSLN.CH] +5.5% (reports FY22 - guides initial FY23).

- Industrials: Thyssenkrupp [TKA.DE] -6.5% (reports Q1; affirmed outlook), Norma Group [NOEJ.DE] +16.0% (reports FY22), Brenntag [BNR.DE] +2.0% (Activist investor Engine Capital call on Brenntag to prioritize a separation of its Specialties unit), Rheinmetall [RHM.DE] +1.0% (order for Ukraine), Michelin [ML.FR] -1.0% (reports FY22 - guides initial FY23 - post close), MTU Aero Engines [MTX.DE] -2.5% (reports Q4).

- Materials: Norsk Hydro [NHY.NO] -3.5% (reports Q4 - misses estimates).

Speakers

- Germany Fin Min Lindner stated that it could not back EU Commission fiscal-rule proposals and stressed that modifications were necessary.

- Ireland Fin Min McGrath stated that was positive about EU Commission's fiscal rule proposals.

- French Fin Min Le Maire stated that the govt was sticking to goal of full employment by 2027; Reiterated more sanctions to come on Russia in next few months.

- UK Chancellor of the Exchequer (Fin Min) Hunt commented that unemployment remaining near record lows was a good sign of resilience in the economy.

- NATO Sec Gen Stoltenberg stated that there was ongoing discussion on fighter jets for Ukraine.

- Japan Chief Cabinet Sec Matsuno stated that monetary policy was up to BOJ to decide; Hoped for appropriate policy management.

- UAE Energy Min Mazrouei stated that the US SPR release would not shock the market; Reiterated that was committed to OPEC+ agreement lasting until end 2023.

Currencies/fixed income

- Focus was on upcoming US CPI data fo clues on the Fed’s rate path. Jan CPI was expected to post a 1-year low aided by methodology changes affecting components. Currently the market was pricing US interest rates to peak at around 5.2% in July.

- GBP/USD was higher to test 1.2170 in the session after hourly wage data suggested that it saw little signs that wage growth has peaked. BOE still seen raising the Bank Rate by 25bps at the March meeting.

- USD/JPY back below the 132 level after Japan govt formally nominated Ueda as the next BOJ gov. Former Japan top currency diplomat Sakakibara ('Mr Yen') noted that the selection could make BoJ rates by Q4 2023 with USD/JPY moving towards the 120 area.

Economic data

- (IN) India Jan Wholesale Prices (WPI) Y/Y: 4.7% v 4.5%e.

- (SE) Sweden Jan PES Unemployment Rate: 3.1 v 3.1% prior.

- (NO) Norway Q1 Consumer Confidence: -36.5 v -36.8 prior.

- (FI) Finland Dec GDP Indicator Y/Y: 0.2 v 0.4% prior.

- (FI) Finland Dec Final Retail Sales Volume Y/Y: -6.1% v -6.1% prelim.

- (FR) France Q4 ILO Unemployment Rate: 7.2% v 7.3%e; Mainland Unemployment Rate: 7.0% v 7.1%e.

- (UK) Jan Jobless Claims Change: -12.9K b -3.27K prior; Claimant Count Rate: 3.9% v 3.9% prior.

- (UK) Dec Average Weekly Earnings 3M/Y: 5.9% v 6.2%e; Weekly Earnings (ex-Bonus) 3M/Y: 6.7% v 6.5%e.

- (UK) Dec ILO Unemployment Rate: 3.7% v 3.7%e; Employment Change 3M/3M: +74K v +43Ke.

- (UK) Q4 Preliminary Output Per Hour Y/Y: -0.1% v +1.0% prior.

- (DE) Germany Jan Wholesale Price Index M/M: +0.2% v -1.6% prior; Y/Y: 10.6% v 12.8% prior.

- (RO) Romania Jan CPI M/M: 0.3% v 0.9%e v 0.4% prior; Y/Y: 15.1% v 15.8%e.

- (RO) Romania Q4 Advance GDP (1st of 3 readings) Q/Q: 1.1% v 1.0%e; Y/Y: 4.6% v 4.0%e.

- (CH) Swiss Jan Producer & Import Prices M/M: +0.7% v -0.7% prior; Y/Y: 3.3% v 3.2% prior.

- (HU) Hungary Q4 Preliminary GDP Q/Q: Q/Q: -0.4% v -1.0%e; Y/Y: 0.4% v 1.2%e (**Note: moves into technical recession).

- (NL) Netherlands Q4 Preliminary GDP Q/Q: 0.6% v 0.1%e; Y/Y: 3.0% v 3.1% prior.

- (NL) Netherlands Dec Trade Balance: €5.1B v €4.0B prior.

- (NL) Netherlands Dec Consumer Spending Y/Y: 9.9% v 2.3% prior.

- (PL) Poland Q4 Preliminary GDP Q/Q: -2.4% v -0.5%e; Y/Y: 2.0% v 2.2%e.

- (EU) Euro Zone Q4 Preliminary GDP (2nd of 3 readings) Q/Q: 0.1% v 0.1% advance; Y/Y: 1.9% v 1.9% advance.

- (EU) Euro Zone Q4 Preliminary Employment Q/Q: 0.4% v 0.3% prior; Y/Y: 1.5% v 1.8% prior.

- (CY) Cyprus Q4 Preliminary GDP Q/Q: 1.1% v 1.3% prior; Y/Y: 4.6% v 5.5% prior.

Fixed income issuance

- (ID) Indonesia sold total IDR20.0T vs. IDR23.0T target in bills and bonds.

- (EU) European Union opened it’s to sell EUR-denominated 2029 and 2042 bonds via syndicate.

- (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2030, 2032 and 2035 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €1.959B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.

- (UK) DMO sold £3.0B in 3.25% Jan 2033 Gilts; Avg Yield: 3.527% v 3.697% prior; bid-to-cover: 2.36x v 2.77x prior; Tail: 1.1bps v 0.7bps prior.

- (IT Italy Debt Agency (BTP) sold total €8.5B vs. €7.0-8.5B indicated range in 3-year, 7-year and 15-year BTP Bonds.

- Sold €3.5B vs. €3.0-3.5B indicated range in 3.50% Jan 2026 BTP; Avg Yield: 3.37% v 3.26% prior; bid-to-cover: 1.50x v 1.52x prior.

- Sold €3.5B vs. €3.0-3.5B indicated range in 3.85% Dec 2029 BTP; Avg Yield: 3.80% v 3.77% prior; Bid-to-cover: 1.37x v 1.41x prior.

- Sold €1.5B vs. €1.0-1.5B indicated range in 3.25% Mar 2038 BTP; Avg Yield: 4.28% v 4.82% prior, bid-to-cover: 1.55x v 1.58x prior.

Looking ahead

- (EU) European Finance Ministers (Ecofin).

- OPEC Monthly Oil Report (MOMR).

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (PL) Poland to sell 2025, 2027, 2033 bonds (5 tranches).

- 06:00 (US) Jan NFIB Small Business Optimism Index: 91.0e v 89.8 prior.

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month bills.

- Sells €B vs. €1.0B indicated in 6-month bills; Avg Yield: % v 2.74% prior; Bid-to-cover: x v 1.47x prior (Jan 10th 2023).

- Sells €B vs. €1.0B indicated in 9-month bills; Avg Yield: % v 2.95% prior; Bid-to-cover: x v 1.13x prior (Jan 10th 2023).

- 06:30 (CL) Chile Central Bank Traders Survey.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Jan CPI M/M: 0.5%e v 0.1% prior (revised from -0.1%); Y/Y: 6.2%e v 6.5% prior.

- 08:30 (US) Jan CPI (ex-food/energy) M/M: 0.4%e v 0.4% prior (revised from 0.3%); Y/Y: 5.5%e v 5.7% prior.

- 08:30 (US) Jan CPI Index NSA: 298.710e v 296.797 prior; CPI Core (seasonally adj): 301.618e v 300.974 prior.

- 08:30 (US) Jan Real Avg Hourly Earning Y/Y: No est v -1.5% prior (revised from-1.7%); Real Avg Weekly Earnings Y/Y: No est v -2.6% prior (revised from -3.1%).

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (SE) Sweden Central Bank (Riksbank) Gov Thedeen.

- 10:00 (CO) Colombia Dec Manufacturing Production Y/Y: 3.2%e v 4.5% prior; Industrial Production Y/Y: No est v 2.5% prior.

- 10:00 (CO) Colombia Dec Retail Sales Y/Y: 0.9%e v 1.7% prior.

- 10:00 (CO) Colombia Dec Trade Balance: -$0.9Be v -$1.1B prior; Imports: $5.7Be v $6.0B prior.

- 11:00 (US) Fed’s Logan.

- 11:00 (CA) Canada to sell 3-month, 6-month and 12-month bills.

- 11:30 (US) Fed’s Harker.

- 14:00 (AR) Argentina Jan National CPI M/M: 5.5%e v 5.1% prior; Y/Y: No est v 94.8% prior.

- 14:05 (US) Fed’s Williams.

- 16:00 (KR) South Korea Jan Import Price Index M/M: No est v -6.2% prior; Y/Y: No est v 9.1% prior.

- 16:00 (KR) South Korea Jan Export Price Index M/M: No est v -6.0% prior; Y/Y: No est v 3.1% prior.

- 16:30 (US) Weekly API Oil Inventories.

- 18:00 (KR) South Korea Jan Unemployment Rate: No est v 3.3% prior.

- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years, 10~25Years and over 25 Years.

- 20:30 (KR) Bank of Korea to sell KRW1.5T in 3-Year Bonds.

- 22:00 (TH) Thailand to sell THB6.0B in 2072 Bonds; Avg Yield: % v 4.2266% prior; bid-to-cover: x v 3.12x prior (Dec 21st 2022).

- 23:30 (JP) Japan Dec Tertiary Industry Index M/M: No est v -0.2% prior.