Euro Zone Dec CPI confirmed at 5.0% for record high since euro currency launch

Notes/Observations

- Various central banks keep policy steady in session (Norges, Malaysia, Indonesia).

- Indonesia Central Bank sends 1st hint of policy normalization with planned RRR hikes.

- Euro Zone Dec CPI confirmed at record high since the Euro launch.

Asia

- Japan Dec Trade Balance: ¥582.4B v ¥787.6Be; Exports Y/Y: 17.5% v 15.9%e; Imports Y/Y: 41.1% v 43.0%e.

- Australia Dec Employment Change: +64.8K v +60.0Ke; Unemployment Rate: 4.2% v 4.5%e; better data putting pressure on RBA to scrap its bond-buying program and bring forward interest-rate increases.

- China PBoC Monthly LPR Rate Setting cuts rates (cuts 1-Year by 10bps and cuts 5-year by 5bps to 3.70% and 4.60% respectively.

- China Securities Journal again speculated that China PBOC expected to cut Reverse Repo Rate (RRR) in Q1 to assist the economy.

- China was said to be drafting rules to make it easier for property developers to use pre-sale funds in escrow accounts, and could release the rules during the end of Jan.

Europe

- UK Tory 1922 Committee said to be looking at the possibility of cutting the minimum time between votes of no-confidence from a year to six months. Tory MPs said to be waiting for the results of the investigation into Downing Street covid parties. There was growing fears that the Grey report would be more critical of Johnson than expected.

Americas

- President Biden noted that trade advisers were working on Chinese tariffs, uncertain when tariffs could be lifted, not in a place yet to do so. Moving towards a time when COVID won't disrupt daily life but we're not there yet. Concerned possible Ukraine-Russia conflict could get out of hand; Only thing worse than an intended war was an unintended war. Russian banks would not be able to deal in dollars if it invaded Ukraine; Putin and I have no problem understanding one another.

- Senate Republicans blocked the Democratic election reform Bill from coming to a final vote on Wed. Vote was 52-48) Manchin and Sinema joining the Republicans in opposition.

Energy

- Weekly API Crude Oil Inventories: +1.4M v -1.1M prior.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.19% at 479.98, FTSE -0.19% at 7,575.05, DAX -0.12% at 15,790.19, CAC-40 -0.48% at 7,138.69, IBEX-35 -0.13% at 8,763.08, FTSE MIB +0.10% at 27,398.00, SMI -0.21% at 12,499.98, S&P 500 Futures +0.38%].

Market Focal Points/Key Themes: European indices open generally higher but later turned around to trade mostly red; better performing sectors include consumer discretionary and technology; while sectors among those trending downwards were financials and energy; earnings expected during the upcoming US session include Regions Financial, Travelers’, American Airlines and Netflix.

Equities

- Consumer discretionary: Associated British Foods [ABF.UK] -2% (trading update), Deliveroo [ROO.UK] +3% (trading update), Puma [PUM.DE] +1.5% (earnings), Superdry [SDRY.UK] +7% (earnings).

- Healthcare: Unilever [UNA.NL] +1.5%, GlaxoSmithKline [GSK] -2% (Unilver said to not increase offer for GSK's unit), Valneva [VLA.FR] +20% (vaccine data).

- Industrials: Thyssenkrupp [TKA.DE] +2% (large order), Sandvik [SAND.SE] +0.5% (earnings), Alstom [ALO.FR] -3% (earnings).

Speakers

- ECB chief Lagarde reiterated stance that prices should stabilize in 2022 and then gradually decline during the course of the year. Saw 2022 inflation at 3.2% (in-line with recent Staff Projections). Reiterated ECB to respond to inflation if data required it; Saw no reason to act in the same way as Fed. EU fiscal rules would change and noted that the rising sovereign debt rates were signaling an improving economy.

- ECB's De Cos (Spain) reiterated Council view that was unlikely to raise rates in 2022.

- Russia govt spokesperson stated that did not rule out conversation between President Putin and Biden. Noted some positive signs of NATO willingness to discuss some security issues but not the ones that are fundamentally important to Moscow.

- US State Dept official noted that Blinken intended to debunk comments from Russia regarding NATO and who was posing a threat to whom.

- Norway Central Bank (Norges) Policy Statement reiterated its forward guidance that rates would likely to be raised in March. Concerned with risk of a potential rise in domestic prices and wage inflation due to capacity constraints and persistent global price pressures.

- Japan PM Kishida reiterates to leave monetary policy decisions to BOJ. Needed economic recovery before addressing fiscal issues. No plans to change consumption (sales) tax at this time.

- Malaysia Central Bank Policy Statement noted that the monetary policy stance was appropriate and accommodative. Maintained its 2021 GDP growth between 3.0-4.0% range and added that growth to gain further momentum in 2022. Saw underlying inflation edging higher as economic activity normalized. Saw 2022 Headline inflation as moderate as base effect dissipated and core inflation also as modest. Inflation outlook was subject to commodity prices.

- Indonesia Central Bank Policy Statement noted that the decision to keep policy steady was consistent with need to maintain inflation and financial market stability. Monetary policy in 2022 would be directed at maintaining stability with other tools to support GDP growth. To strengthen accommodative macroprudential policy by giving banking sector incentives to lend to priority sector. To raise the Reserve Requirement Ratio (RRR)) by 150bps to 5.0%; effective Mar 1st and another 50bps to 6.0% from Sept 1st.

- Indonesia Central Bank Gov Warjiyo pre-rate decision press conference saw domestic economy growing faster in 2022. IDR currency (Rupiah) remaining stable and reflecting fundamentals; FX under control amid uncertainty. To normalize liquidity conditions in 2022.

- Indonesia Central Bank updated its Staff Projections which maintained 2022 GDP growth between 4.7-.5.5% range and maintained 2021 CPI between 2.0-4.0% range.

- China Commerce Ministry (MOFCOM) reiterated stance that removing tariffs were beneficial to the US and China.

Currencies/Fixed income

- USD was a touch softer in quiet trade on Thursday as US Treasury yields paused. Overall dealers have fully priced in a rate hike in March and a total four in all for 2022.

- AUD/USD at 0.7230 area. Dealers noted that the recent Australian employment report reinforced expectations that the RBA could decide to bring an immediate end to the QE bond buying program at its next policy meeting in early February.

Economic data

- (DE) Germany Dec PPI M/M: 5.0% v 0.8%e; Y/Y: 24.2% v 19.3%e.

- (NO) Norway Q4 Industrial Confidence: 8.6 v 8.8 prior.

- (MA) Malaysia Central Bank (BNM) left Overnight Policy Rate unchanged at 1.75% (as expected).

- (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo Rate unchanged at 3.50% (as expected).

- (FR) France Jan Business Confidence: 107 v v109e; Manufacturing Confidence: 112 v 112e; Production Outlook Indicator: 13 v 22e; Own-Company Production Outlook: 23 v 26 prior.

- (FR) France Jan Business Survey Overall Demand: 20 v 20 prior.

- (AT) Austria Dec Final CPI M/M: 0.6% v 0.6% prelim; Y/Y: 4.3% v 4.3% prelim.

- (ES) Spain Nov House transactions Y/Y: 24.4% v 22.2% prior.

- (TW) Taiwan Dec Export Orders Y/Y: 12.1% v 7.3%e (22nd straight month of increases).

- (HK) Hong Kong Dec CPI Composite Y/Y: 2.4% v 2.5%e.

- (HU) Hungary Central Bank leaves One Week Deposit Rate unchanged at 4.00% **Note: 3rd straight week of steady rates).

- (ES) Spain Nov Trade Balance: -€4.2B v -€3.4B prior.

- (NO) Norway Central Bank (Norges) left Deposit Rates unchanged at 0.50% (as expected).

- (PL) Poland Jan Consumer Confidence: -29.2 v -28.5e.

- (EU) Euro Zone Dec Final CPI Y/Y: 5.0% v 5.0% advance; CPI Core Y/Y: 2.6% v 2.6% advance; CPI M/M: 0.4% v 0.4% advance.

- (CY) Cyprus Dec CPI Harmonized M/M: -0.3% v +0.1% prior; Y/Y: 4.8% v 4.7% prior.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €4.72B vs. €4.0-5.0B indicated range in 2027, 2030 and 2040 bonds.

- Sold €2.157B in 0.00% Jan 2027 SPGB bonds; Avg Yield: +0.088% v -0.114% prior; bid-to-cover: 1.63x v 1.62x prior.

- Sold €1.386B in 0.50% Apr 2030 SPGB bonds; Avg Yield: 0.429% v 0.550% prior; bid-to-cover: 1.91x v 1.44x prior.

- Sold €1.177B in 1.20% Oct 2040 SPGB bonds; Avg Yield: 1.210% v 1.144% prior, bid-to-cover: 1.73x v 1.68x prior.

- (FR) France Debt Agency (AFT) sold total €10.497B vs. €9.5-10.5B indicated range in 2025, 2027 and 2028 Bonds.

- Sold 4.397€B in 0.00% Feb 2025 Oat; Avg Yield: -0.35% v -0.50% prior; Bid-to-cover: 3.25x v 2.83x prior.

- Sold €3.962B in 0.00% Feb 2027 Oat; Avg Yield: -0.15% v -0.37% prior; bid-to-cover: 2.32x v 2.56x prior.

- Sold €2.138B in 0.75% Nov 2028 Oat; Avg Yield: -0.01% v -0.30% prior; Bid-to-cover: 2.92x v 2.73x prior.

- (SE) Sweden sold total SEK750M in I/L 2030 and 2039 Bonds.

Looking ahead

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:50 (FR) France Debt Agency (AFT) to sell €1.25-1.75B in Inflation-linked bonds (Oatei).

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 14.00%.

- 06:00 (IL) Israel Nov Manufacturing Production M/M: No est v 0.7% prior.

- 06:55 (US) Daily Libor Fixing.

- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: expected to raise Key Rate by 50bps to 9.50%.

- 07:00 (MX) Mexico Dec Unemployment Rate NSA (unadj): 3.4%e v 3.7% prior; Unemployment Rate (Seasonally adj): No est v 3.8% prior.

- (MX) Mexico Dec Nominal Wages: No est v 5.1% prior.

- 07:30 (EU) ECB Publishes Account of December 2021 Policy Meeting (Minutes).

- 08:00 (RU) Russia Gold and Forex Reserve w/e Jan 14th: No est v $630.5B prior.

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

- 08:30 (US) Jan Philadelphia Fed Business Outlook: 19.0e v 15.4 prior.

- 08:30 (US) Initial Jobless Claims: 225Ke v 230K prior; Continuing Claims: 1.56Me v 1.559M prior.

- 10:00 (US) Dec Existing Home Sales: 6.44Me v 6.46M prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Weekly DOE Oil Inventories.

- 12:00 (CA) Canada to sell 3-year notes.

- 13:00 (US) Treasury to sell 10-year TIPS.

- 14:00 (AR) Argentina Dec Trade Balance: No est v $0.4B prior.

- 16:30 (NZ) New Zealand Dec Manufacturing PMI: No est v 50.6 prior.

- 16:45 (NZ) New Zealand Nov Net Migration: No est v 0.8K prior.

- 18:30 (JP) Japan Dec National CPI Y/Y: 0.9%e v 0.6% prior; CPI Ex-fresh food (core)Y/Y: 0.6%e v 0.5% prior; CPI Ex-fresh food/energy (core-core)Y/Y: -0.6%e v -0.6% prior.

- 19:00 (KR) South Korea Jan 1-20th Exports Y/Y: No est v 20.0% prior; Imports Y/Y: No est v 42.1% prior.

- 19:01 (UK) Jan GfK Consumer Confidence: -15e v -15 prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 22:30 (TH) Thailand Dec Customs Trade Balance: $0.8Be v $1.0B prior; Exports Y/Y: 16.4%e v 24.7% prior[p1] ; Imports Y/Y: 18.2%e v 20.5% prior.

- 23:00 (MY) Malaysia Dec CPI Y/Y: 3.1%e v 3.3% prior.