German Jan CPI misses consensus

Notes/observations

-European equities climb and bond yields fall as German preliminary Jan CPI came in cooler than expected, as market bets on peak inflation and rate path changes.

-Sweden Central Bank hikes by 50bps as expected, raises rate policy path staff projections and reiterates economic downturn is likely this year.

-BOE members testify in UK Parliament and reiterate focus to bring inflation down; Note seeing 1st round effects and no 2nd round effects as of yet.

-Earnings seasons in full force as Credit Suisse posts biggest loss since 2008.

-Upcoming US earnings in premarket expected from: BAX, BWA, DUK, HII, K, MAS, PEP, PM, SEE, SPGI, THC, TPR, TRI and TU.

-Asia closed mixed with Hang Seng outperforming at +1.7%. EU indices are +0.3-1.4%. US futures are +0.8-1.2%. Gold +0.1%, DXY -0.4%; Commodity: Brent +0.2%, WTI +0.2%, TTF -3.1%; Crypto: BTC -2.0%, ETH -2.3%.

Asia

- Japan's LDP is said to be divided if PM Kishida seeks BOJ pivot.

- Australia govt said to remove cameras made in China from its Defense Dept.

Europe

- ECB's Kazaks (Slovenia): No reason to pause or stop hikes after March.

- UK Jan RICS Housing Balance: -47% v -45%e [lowest since Apr 2009].

Americas

- Fed's Waller (voter) stated that he needed to see continued moderation in inflation before his outlook changed.

- Fed's Kashkari (voter) stated that saw no evidence rate hikes were affecting labor market, needed to do more to get labor market under control.

- Treasury Sec Yellen stated that inflation remained elevated, but seeing encouraging signs that supply and demand mismatches were easing.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.82% at 463.22, FTSE % at #, DAX +1.13% at 15,586.65, CAC-40 +1.13% at 7,199.97, IBEX-35 +0.36% at 9,260.15, FTSE MIB +1.02% at 27,438.00, SMI +0.24% at 11,303.90, S&P 500 Futures +0.77%].

Market Focal Points/Key Themes: European indices open higher across the board and advanced through the early part of the session; sectors leading the way higher are industrials and health care; lagging sectors include materials and financials; further speculation that First Abu Dhabi Bank looking to takeover Standard Chartered; earnings expected during the upcoming US session include Paypal, Pepsico, BorgWarner, Buzzi Unicem, and AbbVie.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] -8.5% (reports Q4 - misses estimates).

- Consumer staples: Unilever [UNA.NL] +1.0% (reports FY22 - beats estimates), British American Tobacco [BATS.UK] -5.5% (earnings), Watches of Switzerland [WOSG.UK] -13.0% (Q3 trading update).

- Financials: Credit Suisse [CSGN.CH] -5.0% (reports Q4 - misses estimates), Credit Agricole [ACA.FR] +5.0% (reports Q4 - beats estimates), DNB [DNB.NO] +1.0% (reports Q4), Zurich Insurance [ZURN.CH] -1.0% (earnings), KBC Groep [KBC.BE] +4.0% (reports Q4).

- Healthcare: AstraZeneca [AZN.UK] +4.5% (reports Q4 - EPS beat/provides FY23 guidance).

- Industrials: Siemens [SIE.DE] +6.5% (earnings), Volvo Cars [VOLCARB.SE] +1.0% (earnings), Vinci [DG.FR] +2.0% (reports FY22), GN Store Nord [GN.DK] -16.0% (reports FY22), OCI [OCI.NL] -1.0% (analyst action - cut to neutral at CitiGroup).

- Technology: Legrand [LR.FR] +7.5% (reports FY22 - beats estimates/announces €500M buyback).

- Materials: ArcelorMittal [MT.NL] +1.0% (reports Q4), K+S AG [SDF.DE] +1.0% (analyst action - raised to neutral at CitiGroup).

Speakers

- ECB's Villeroy (France) reiterated stance that French inflation to peak from mid-2023, could even peak before Jun. Believed that the French economy could avoid a recession.

- ECB's Kazaks (Slovenia) reiterated stance that rates needed to keep rising after Mar, but too soon to say how fast or how.

- BOE Gov Bailey testified that he expected inflation to come down rapidly in 2023. Labor market remained very tight.

- BOE’s Pill (Chief economist) testified that saw no room for complacency and would be watchful for signs of greater persistence in inflationary pressures. Anticipated an extended period of weakness in domestic economic activity.

- BOE’s Haskel testified that MPC to remain alert to persistent inflation signs; would act forcefully if necessary. Saw considerable upside risks to CPI Staff Projections.

- German Association of Chambers of Trade and Industry (DIHK) raised its growth forecast and now saw 2023 GDP flat compared to a prior 3.0% contraction.

- Sweden Central Bank (Riksbank) Policy Statement noted that it was likely to continue raising the policy rate later this spring. To begin selling govt bonds at a faster pace in April. Future decisions to be data dependent. Stressed that If SEK currency (krona) remained weak, it would be more difficult to return to inflation target.

- Sweden Central Bank updated its Staff Projections which cut 2023 CPIF from 5.7% to 5.5% while raising the 2024 CPIF from 1.5% to 1.9% (below target). Riksbank cut the 2023 Avg GDPgrowth from -1.0% to -1.1% (larger contraction) and also cut the 2024 Avg GDP growth from 1.0% to 0.9%.

- Sweden Central Bank (Riksbank) Gov Thedeen post rate decision press conference stressed that inflation must turn clearly lower this year.

- China’s Commerce Ministry (MOFCOM) stated that govt would welcome Treasury Sec Yellen to visit to the country. Reiterates stance that willing to work with Australia for better cooperation.

- China Defense Ministry official confirmed it had rejected a US request for Defense Minister call citing inappropriate atmosphere. Called the recent downing of Chinese balloon as irresponsible.

Currencies/Fixed Income

- EUR/USD at 1.0750 area even though German Jan Preliminary CPI came in below consensus and continued to move away from recent cycle highs; dealers noted the reading still needed decisive and robust action by the ECB as it implied that there would be an upward revision in Euro Zone Inflation reading.

- EUR/SEK moved lower as Riksbank took a more hawkish stance in combating inflation. Cross moved from 11.32 to test below 11.20 as a upward rived rate path.

Economic data

- (NL) Netherlands Jan Final CPI M/M: -1.4% v +0.5% prior; Y/Y: 7.6% v 7.6% prelim.

- (NL) Netherlands Jan Final EU Harmonized M/M: -1.9% v -1.9% prelim; Y/Y: 8.4% v 8.4% prelim.

- (DE) Germany Jan Preliminary CPI M/M: 1.0% v 1.0%e; Y/Y: 8.7% v 8.9%e.

- (DE) Germany Jan Preliminary CPI EU Harmonized M/M: 0.5% v 1.3%e; Y/Y: 9.2% v 10.0%e.

- (FR) France Q4 Wages Q/Q: 0.6% v 1.0% prior.

- (TW) Taiwan Jan CPI Y/Y: 3.0% v 2.7%e; Core CPI Y/Y: 3.0% v 2.9%e; PPI Y/Y: 5.6% v 6.3% prior.

- (SE) Sweden Central Bank (Riksbank) raised the Repo Rate by 50bps to 3.00% (as expected).

- (ZA) South Africa Dec Total Mining Production M/M: +1.2% v -1.2%e; Y/Y: -3.5% v -5.2%e; Gold Production Y/Y: -3.3% v -4.6% prior; Platinum Production Y/Y: -5.3% v -22.0% prior.

- (IT) Bank of Italy Releases Banks and Money Monthly Statistics: Jan Gross Non-performing Loans (NPLs): €30.2B v €34.0B prior.

Fixed income issuance

- (IN) India sold total INR80B vs. INR80B indicated in 2028 and 2033 green bonds.

Looking ahead

- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 7.00%.

- (EU) European Council meeting (ECB chief Lagarde in attendance).

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 06:00 (ZA) South Africa Dec Manufacturing Production M/M: -0.8%e v +2.0% prior; Y/Y: -3.6%e v -1.1% prior.

- 06:00 (PT) Portugal Dec Trade Balance: No est v -€2.4B prior.

- 06:00 (CZ) Czech Republic to sell Bills.

- 06:00 (RO) Romania to sell combined RON800M in 2024 and 2031 bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (MX) Mexico Jan CPI M/M: 0.7%e v 0.4% prior; Y/Y: 7.9%e v 7.8% prior.

- 07:00 (MX) Mexico Jan CPI Core M/M: 0.7%e v 0.7% prior; Y/Y: 8.4%e v 8.4% prior.

- 07:00 (BR) Brazil Jan IBGE Inflation IPCA M/M: 0.6%e v 0.6% prior; Y/Y: 5.8%e v 5.8% prior.

- 07:00 (BR) Brazil Dec Retail Sales M/M: -0.7%e v -0.6% prior; Y/Y: 2.7%e v 1.5% prior.

- 07:00 (BR) Brazil Dec Broad Retail Sales M/M: +0.8%e v -0.6% prior; Y/Y: +0.2%e v -1.4% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 3rd: No est v $597.7B prior.

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

- 08:30 (US) Initial Jobless Claims: 190Ke v 183K prior; Continuing Claims: 1.66Me v 1.655M prior.

- 08:30 (UR) Ukraine Jan CPI M/M: 1.6%e v 0.7% prior; Y/Y: 26.8%e v 26.6% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (PL) Poland Central Bank (NBP) Gov Glapinski post rate decision press conference.

- 09:45 (UK) BOE Gilt sale operation.

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

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (ZA) South Africa President State-of-the-Nation Address.

- 12:00 (DE) ECB's Nagel (Germany).

- 13:00 (ES) ECB’s De Guindos (Spain).

- 13:00 (ES) ECB's De Cos (Spain).

- 13:00 US) Treasury to sell 30-Year Bonds.

- 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to raise Overnight Rate by 25bps to 10.75%.

- 16:30 (NZ) New Zealand Jan Manufacturing PMI: No est v 47.2 prior.

- 16:45 (NZ) New Zealand Jan Total Card Spending M/M: No est v -1.2% prior; Retail Card Spending M/M: No est v -2.5% prior.

- 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to raise Reference Rate by 25bps to 8.00%.

- 18:50 (JP) Japan Jan PPI (CGPI) M/M: 0.3%e v 0.5% prior; Y/Y: 9.7%e v 10.2% prior.

- 19:00 (AU) Australia to sell A$500M in 2.25% 2028 Bonds.

- 19:30 (AU) RBA-Statement on Monetary Policy (SOMP).

- 20:30 (CN) China Jan CPI M/M: No est v 0.0% prior; Y/Y: 2.2%e v 1.8% prior; PPI Y/Y: -0.5%e v -0.7% prior.

- 21:30 (KR) South Korea to sell KRW100B in 10-year Bonds.

- 21:35 (CN) China to sell 2052 Bonds.

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

- 23:00 (MY) Malaysia Q4 GDP Q/Q: -2.1%e v +1.9% prior; Y/Y: 6.8%e v 14.2% prior; GDP Annual Y/Y: 8.6%e v 3.1% prior.

- 23:00 (MY) Malaysia Q4 Current Account (MYR): 13.3Be v 14.1B prior.