French CPI inflation slowed less than expected, Euro Area employment picture continues to improve

Notes/Observations

- France Jan CPI above expectations as energy costs surged; ECB likely to be willing to wait for further evidence on inflation before starting to remove the continuing accommodation.

- Germany Dec Retail sales miss while unemployment continued to improve.

- Employment also improve elsewhere in EU (Italy and Euro Zone).

- Major Jan PMI Manufacturing data was mixed but remaining in expansion (Beats: Spain; Misses: Germany, Euro Zone, Italy, UK; In-line: France)- US Corporate earnings season continues: Companies due to report during the NY morning include ArcBest, Franklin Resources, Broadridge Financial, Catalent, loanDepot, Lennox International, Manpower, Pitney Bowes, PulteGroup, Pentair, Sirius XM, Scotts Miracle-Gro, Sensata Technologies, Stanley Black & Decker, UPS, Exxon.

Asia

- RBA keeps Cash target Rate unchanged at 0.10% (as expected) and ends its A$4.0B/week bond purchase program (as speculated). Initial market take was on the dovish side as RBA did not imply a near term increase in interest rates.

- Japan Jan Final PMI Manufacturing confirmed its 12th consecutive expansion and highest since Feb 2014 (55.4 v 54.6 prelim).

- Australia Jan Final PMI Manufacturing confirmed 20th month of expansion (55.1 v 55.3 prelim).

- India Jan PMI Manufacturing registered its 7th month of expansion (54.0 v 55.5 prior).

- Australia Dec Retail Sales M/M: -4.4% v -2.0%e (largest decline since Apr 2020); Q/Q: 0.0% v 8.5%e.

- Japan Dec Jobless rate 2.7% v 2.8%e.

Europe

- SNB's Jordan stated that saw no sign of a Swiss wage-price cycle; Inflation that remained stubbornly above 2% would lead to policy tightening. Inflation was more or less at a peak and would begin to recede (Note: Dec CPI YoY was 1.5%).

- EU's Dombrovskis stated that the EU Commission to approve €1.2B of financial aid to Ukraine. Nord stream 2 is put on pause, we are studying if it is in compliance with EU's energy policy.

Americas

- Fed's Bostic (non-voter, hawk) noted that a 50bps hike was not his preferred policy action for March meeting; Still had three rate hikes penciled in for 2022 but still a lot of data ahead.

- Fed's George (FOMC voter, hawk) stated that might be appropriate to move earlier on balance sheet changes; More aggressive balance sheet moves could allow for shallower path for policy rate. Current very accommodative stance of monetary policy was out of sync with the economic outlook.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +1.06% at 473.86, FTSE +0.93% at 7,533.15, DAX +0.74% at 15,585.85, CAC-40 +0.82% at 7,056.69, IBEX-35 +1.06% at 8,703.79, FTSE MIB +1.07% at 27,102.00, SMI +0.88% at 12,334.80, S&P 500 Futures -0.19%].

Market Focal Points/Key Themes: European indices open higher across the board and stayed upbeat as the session progressed; all sectors start the day in the green; sectors among those leading to the upside are consumer discretionary and industrials; slower to rise sectors include telecom and health care; SIG Combibloc acquires Sholle; GB Group acquires Cloudcheck; focus on OPEC ministerial meeting later today, ahead of full meeting tomorrow; earnings in the upcoming US session include UPS, ExxonMobil, General Motors and Starbucks.

Equities

- Consumer discretionary: Joules Group [JOUL.UK] -41% (trading update).

- Financials: UBS [UBSG.CH] +6% (earnings; buyback).

- Materials: Johnson Matthey [JMAT.UK] -1% (raises prices).

- Industrials: Siemens [SIE.DE] +1.5% (large order).

- Technology: Siltronic AG [WAF.DE] +2% (deal with GlobalWafers terminated).

- Telecom: Tele2 [TEL2A.SE] -3% (earnings; raises dividend).

Speakers

- ECB Q1 Lending Survey noted that credit standards tightened slightly for firms and remained unchanged for housing loans. Banks continued to hold overall benign view of firm credit risks.

- UK Dep PM Raab stated that PM Johnson had addressed all the questions in the Grey Report; PM would deal with the situation in Downing Street.

- EU's Dombrovskis stated that region was preparing massive sanction package against Russia and would impact EU economy’ all EU members agree on the strategy.

- Belgium PM De Croo announced it would cut VAT rate on electricity from 21% to 6% and plan on a onetime €100 rebate on electricity.

- Sweden Central Bank (RiksbanK) Gov Ingves reiterated view that inflation (ex-energy) was below the 2% target (**Reminder: Dec CPIF (ex-energy) YoY: 1.7% v 1.8%e).

- Sweden Debt Agency chief stated that was time to carefully dismantle the general economic support measures.

- South Africa Fin Godongwana stated that planned to raise ZAR 630B in markets in 2022. Noted that the country could meet its debt obligations at this time but needed to change debt course.

- Germany HDE Retail Association forecasted 2022 nominal sales +3%.

- India Fin Min Sitharaman Budget speech maintained the FY21/22 (current fiscal year) GDP growth at 9.2% and noted the country was in a strong position to withstand challenges. Budget to lay the foundations of the economy for the next 25 years and could create 6M new jobs with infrastructure and logistics being key areas. Budget speech raised the current year fiscal deficit to 6.9% to GDP compared to the target of 6.8%. It projected the FY22/23 (next fiscal year) fiscal deficit of 6.4% to GDP. To introduce digital currency (digital rupee) by RBI in FY22/23. To have tax rules for virtual digital assets; transfers at 30% and to also tax crypto gifts as well. India FY22/23 gross borrowing seen at INR14.95T (record level).

Currencies/Fixed income

- Risk-on appetite helped to soften the USD against the major pairs.

- EUR/USD above 1.1260 with focus on ECB policy decision on Thursday where the central bank is expected to maintain its patience. Money markets however area currently betting on 25bps of hikes in December. Surprisingly high inflation readings for January in Germany, France and Spain over the past two session were adding to the headache for the central bank. Dealers also noted that Italy PM Draghi staying on in his position strengthens the hand of EU fiscal reformists.

Economic data

- (RU) Russia Jan PMI Manufacturing: 51.8 v 51.0e (4th straight expansion).

- (DE) Germany Dec Retail Sales M/M: -5.5% v -1.4%e; Y/Y: 0.0% v 3.4%e.

- (UK) Jan Nationwide House Price Index M/M: 0.8% v 0.6%e; Y/Y: 11.2% v 10.9%e.

- (TR) Turkey Jan PMI Manufacturing: 50.5 v 52.1 prior (8th month of expansion).

- (CH) Swiss Dec Real Retail Sales Y/Y: -0.4% v +5.3% prior.

- (SE) Sweden Jan PMI Manufacturing: 62.4 v 62.1 prior (20th month of expansion).

- (TH) Thailand Jan Business Sentiment Index: 47.2 v 49.0 prior.

- (FR) France Jan Preliminary CPI M/M: +0.3% v -0.2%e; Y/Y: 2.9% v 2.5%e.

- (FR) France Jan Preliminary CPI EU Harmonized M/M: +0.1% v -0.2%e; Y/Y: 3.3% v 2.9%e.

- (CH) Swiss Q1 Seco Consumer Confidence: -3.6 v +3.0e.

- (NL) Netherlands Jan Manufacturing PMI: 60.1 v 58.5e (18th straight expansion).

- (PL) Poland Jan PMI Manufacturing: 54.5 v 56.1e (19th straight expansion).

- (HU Hungary Jan Manufacturing PMI: 50.7 v 59.5e (10th straight expansion).

- (HU) Hungary Nov Final Trade Balance: €0.1B v €0.1B prelim.

- (CZ) Czech Q4 Advance GDP Q/Q: 0.9% v 0.2%e; Y/Y: 3.6% v 2.9%e.

- (ES) Spain Jan Manufacturing PMI: 56.2 v 56.0e (12th month of expansion).

- (CH) Swiss Jan PMI Manufacturing: 63.8 v 64.0e (18th straight expansion).

- (CZ) Czech Republic Jan PMI Manufacturing: 59.0 v 60.5e (17th straight expansion).

- (NG) Nigeria Jan PMI Manufacturing: 53.7v 56.4 prior.

- (IT) Italy Jan PMI Manufacturing: 58.3 v 61.2e (19th month of expansion and lowest reading since Feb 2021).

- (FR) France Jan Final PMI Manufacturing: 55.5 v 55.5 prelim (confirmed 14th month of expansion).

- (DE) Germany Jan Unemployment Change: -48.0K v -6.0Ke; Unemployment Claims Rate: 5.1% v 5.2%e.

- (DE) Germany Jan Final PMI Manufacturing: 59.8 v 60.5 prelim (confirmed 19th month of expansion).

- (EU) Euro Zone Jan Final PMI Manufacturing: 58.7 v 59.0 prelim (confirmed 19th month of expansion).

- (GR) Greece Jan Manufacturing PMI 57.9 v 59.0 prior (11th month of expansion).

- (NO) Norway Jan PMI Manufacturing: 56.5 v 58.0 prior (17th month of expansion).

- (ZA) South Africa Jan Manufacturing PMI: 57.1 v 54.1 prior (6th month of expansion).

- (IT) Italy Dec Unemployment Rate: 9.1% v 9.2%e.

- (UK) Jan Final PMI Manufacturing: 57.3 v 56.9 prelim (confirmed 20th straight expansion).

- (UK) Dec Net Consumer Credit: £0.8B v £0.4Be; Net Lending: £3.6B v £3.5Be.

- (UK) Dec Mortgage Approvals: 71.0K v 66.0Ke.

- (UK) Dec M4 Money Supply M/M: 0.1% v 0.7% prior; Y/Y: 6.4% v 7.0% prior; M4 (ex-IOFCs) 3M Annualized: 4.4% v 7.0% prior.

- (EU) Euro Zone Dec Unemployment Rate: 7.0% v 7.1%e.

- (BE) Belgium Dec Unemployment Rate: 5.7% v 5.9% prior.

- (DK) Denmark Jan Danish PMI Survey: 60.9 v 63.9 prior (11th straight expansion).

Fixed income issuance

- (ZA) South Africa sold total ZAR vs. ZAR3.9B in 2032, 2040 and 2048 bonds.

Looking ahead

- OPEC+ JMMC meeting.

- (IT) Italy Jan Budget Balance: No est v -€3.0B prior.

- (ZA) South Africa Jan Naamsa Vehicle Sales Y/Y: No est v -3.5% prior.

- (US) Jan Vehicle Sales data during session.

- (RO) Romania Jan International Reserves: No est v $45.8B prior.

- 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 (DE) Germany to sell €6.0B in 0% new Mar 2024 Schatz.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month Bills.

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

- 06:00 (PT) Portugal Dec Industrial Production M/M: No est v 1.2% prior; Y/Y: No est v 0.2% prior.

- 06:30 (CL) Chile Dec Economic Activity Index (Monthly GDP) M/M: No est v 0.3% prior; Y/Y: 10.3%e v 14.3% prior.

- 06:30 (EU) ESM to sell €1.5B in 3-month Bills; Avg Yield: % v -0.67% prior; Bid-to-cover: x v 6.5x prior 4th 2022).

- 06:45 (US) Daily Libor Fixing.

- 08:00 (CZ) Czech Jan Budget Balance (CZK): No est v -419.7B prior.

- 08:00 (BR) Brazil Jan Manufacturing PMI: No est v 49.8 prior.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- (ZA) South Africa Jan Naamsa Vehicle Sales Y/Y: No est v -3.5% prior.

- 08:30 (CA) Canada Nov GDP M/M: 0.4%e v 0.8% prior; Y/Y: 3.6%e v 3.8% prior.

- 08:30 (CA) Canada Dec MLI Leading Indicator M/M: No est v -0.2% prior.

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

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (EU) ECB weekly QE bond buying update.

- 09:30 (CA) Canada Jan Manufacturing PMI: No est v 56.5 prior.

- 09:45 (US) Jan Final Markit PMI Manufacturing: 55.0e v 55.0 prelim.

- 10:00 (US) Dec Construction Spending M/M: 0.6%e v 0.4% prior.

- 10:00 (US) Jan ISM Jan Manufacturing: 57.5e v 58.7 prior; Prices Paid: 67.0e v 68.2 prior.

- 10:00 (US) Dec JOLTS Job Openings: 10.300Me v 10.562M prior.

- 10:00 (MX) Mexico Dec Total Remittances: $4.8Be v $4,7B prior.

- 10:00 (MX) Mexico Central Bank Economists Survey.

- 10:00 (CO) Colombia Jan PMI Manufacturing: No est v 53.1 prior.

- 10:00 (PE) Peru Jan CPI M/M: 0.3%e v 0.8% prior; Y/Y: 6.0%e v 6.4% prior.

- 10:30 (MX) Mexico Jan PMI Manufacturing: No est v 49.4 prior.

- 12:00 (IT) Italy Jan New Car Registrations Y/Y: No est v -27.5% prior.

- 13:00 (BR) Brazil Jan Trade Balance: -$0.5Be v +$3.9B prior; Total Exports: $19.6Be v $24.4B prior; Total Imports: $20.3Be v $20.4B prior.

- 13:00 (MX) Mexico Jan IMEF Manufacturing Index: No est v 52.6 prior; Non-Manufacturing Index: No est v 52.6 prior.

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

- 16:45 (NZ) New Zealand Q4 Unemployment Rate: 3.3%e v 3.4% prior.

- 16:45 (NZ) New Zealand Q4 Employment Change Q/Q: 0.4%e v 2.0% prior; Y/Y: 3.8%e v 4.3% prior (revised from 4.2%).

- 18:50 (JP) Japan end-Jan Monetary Base Y/Y: No est v 8.3% prior.

- 19:30 (ID) Indonesia Jan PMI Manufacturing: No est v 53.5prior.

- 19:30 (PH) Philippines Jan PMI Manufacturing: No est v 51.8 prior.

- 20:10 (JP) BOJ bond buying operation in 1-3year and 3-5-year maturities.

- 20:30 (AU) RBA Gov Lowe.

- 23:00 (ID) Indonesia Jan CPI M/M: 0.6%e v 0.6% prior; Y/Y: 2.2%e v 1.9% prior; Core CPI Y/Y: 1.7%e v 1.6% prior.

- 23:00 (TH) Thailand to sell THB20B in 2031 bonds.