Calm markets continue as end-of-year holidays approach
Remarks / Observations
– Continued holidays in overseas markets reduced participation (UK, Ireland, Australia, New Zealand and Canada today).
– Concern grows over increasing restrictions from France to China in efforts to curb the spread of Covid-19
Overall, the markets appear optimistic that Omicron’s fallout will be contained.
– market participants are waiting for fresh news on the omicron variant and are considering its impact on the global economy.
– Japan Nov Unemployment rate 2.8% against 2.7% e.
– Japan’s preliminary industrial production in November exceeded expectations thanks to the easing of bottlenecks in the global supply chain (M / M: 7.2% vs. 4.8% e (highest since 2013); Y / Y: 5.4% against 2.9% e.
– China PBOC Open Market Operation (OMO) was the largest in 2 months: CNY 200 billion allocated as part of a 7-day repurchase agreement against CNY 50 billion previously; Net injection: CNY190B against CNY40B before.
– China’s foreign exchange regulator SAFE has announced that it will increase oversight of the foreign exchange market (FX) in 2022. Strengthen risk prevention and control and promote cross-border investment by private equity funds.
– China Evergrande faces two bond payments today to test investor confidence (the company has around $ 255 million in bond coupon payments due on December 28 (Tuesday) [~$50.4M relates to Jun 2023 USD bond, ~$204.8M relates to Jun 2025 USD bond].
– French Prime Minister Castex has unveiled proposals to tackle the Omicron variant with measures that will take effect on January 15 if parliament approves them. The PM noted that the Covid health pass would become a vaccine pass with compulsory vaccination; The negative test would no longer be sufficient to enter public places; Homework will become compulsory three days a week at least if possible.
Speakers / Fixed income / FX / Commodities / Erratum
Indices [Stoxx600 +1.04% at 488.06, FTSE closed, DAX +0.72% at 15,948.82, CAC-40 +0.48% at 7,174.97, IBEX-35 +0.72% at 8,684.48, FTSE MIB +0.83% at 27,457.00, SMI +0.67% at 12,952.79, S&P 500 Futures +0.25%].
Market focal points / Key themes: European indices started the day in broadly positive territory and remained bullish throughout the narrow trading session; the most efficient sectors led by manufacturers and materials; underperforming sectors include consumer discretionary and financials; UK and Ireland closed for holidays; no major profit is expected during the next US session.
– Energy: Gazprom [GAZP.RU] + 1% (Did not reserve gas transit capacity for export via the Yamal-Europe pipeline for the 8th consecutive day).
– Technology: S&T AG [SANT.DE] + 1.5% (responds to the short sellers report).
– Lon of the Central Bank of Poland wrote an Oped article that warned that overly tight monetary policy could slow future economic growth. He saw a chance that CPI pressures would ease in early 2022. He added that this could support a small rate hike in January.
– China PBoC Gouv Yi Gang reiterated view that the country’s financial risks were broadly controllable. Market expectations for certain real estate companies were improving and the adjustment of the real estate market contributed to its development.
Currencies / Fixed Income
– A slight unwinding of safe-haven flows helped soften the USD and JPY currencies despite concerns over increasing restrictions from France to China in efforts to curb the spread of Covid-19. The global grip continued to see global markets appearing optimistic that the fallout from Omicron would be contained.
– EUR / USD drifts slightly higher in the 1.1330 test zone. The USD remains on firm feet on central bank divergence. Money markets are currently pricing above 50% for a first quarter point rate hike by March and were on track to fully price three rate hikes by December 2022.
– USD / JPY probing the 115 area.
– (ES) Spain Retail sales adjusted in November Y / Y: +4.9 vs. -0.7% previously; Retail sales (unadj) Y / Y: +5.9 v -2.5% previously.
– (SE) Sweden Nov. Trade balance (SEK): 0.3 billion against 0.7 billion previously.
– (SE) Sweden Nov Loans to households Y / Y: 6.6% against 6.6% previously.
– (HK) Hong Kong November trade balance (HKD): -11.6B -35.0Be; Y / Y exports: 25.0% against 18.0% e; Y / Y imports: 18.3% e.
Issue of fixed income securities
– None seen.
– (PT) Cumulative budgetary report for Portugal.
– 5.15 am (CH) Switzerland sells 12-month Vouchers.
– 5:25 am (EU) Daily liquidity statistics from the ECB.
– 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month vouchers.
– 5:30 am (ZA) South Africa cancels weekly bond auction.
– 5:30 a.m. (EU) ECB award as part of the 7-day Main Refinancing Call (MRO).
– 6:45 am (US) Correction of the daily Libor.
– 07:00 (BR) Brazil Oct National unemployment rate: 12.3% ev 12.6% before.
– 07:30 (BR) Brazil Nov. Total outstanding loans (BRL): 4.542Te against 4.497T previously; M / M: 1.4% ev 1.5% before; Default rate for personal loans: none is v 4.3% before.
– 08h00 (UK) No daily Baltic Dry Bulk index this week.
– 08:00 (UK) Announcement from Russia on the next OFZ bond issue (held on Wednesday).
– 08:55 (US) Weekly Redbook LFL sales data.
– 09h00 (United States) October FHFA House Price Index M / M: 0.9% ev 0.9% before.
– 9:00 am (US) Oct S & P / Case-Shiller Home Price Index (20-City) M / M: 0.90% ev 0.96% before; Y / Y: 18.60% compared to 19.05% before.
– 9:00 am (US) Oct S & P / Case-Shiller Home Price Index (global) Y / Y: not estimated vs. 19.51% before.
– 09h00 (EU) Weekly foreign exchange reserves of the ECB.
– 09h00 (EU) Weekly update of the ECB’s QE bond purchases.
– 10:00 a.m. (United States) Dec. Richmond Fed manufacturing index: 11th against 11 before.
– 10h00 (MX) Mexico Weekly data from the international reserve.
– 11:30 am (US) The Treasury will sell 52 week bills.
– 1:00 p.m. (US) The Treasury will sell 5-year notes.
– 2:00 p.m. (AR) Argentina Oct. Sales of the Y / Y shopping center: No est v 307.0% before; Sales of Y / Y supermarkets: No against 6.4% before.
– 4:00 p.m. (KR) South Korea January Business Manufacturing Survey: No is v 88 before; Non-manufacturing survey: No is v 83 before.
– 4:30 p.m. (US) Weekly API oil inventories.
– 19:01 (IE) Bank of Ireland Dec Economic Pulse: No is v 83.2 before.
– 23h00 (TH) Thailand Nov ISIC Manufacturing production index Y / Y: 2.8% ev 2.9% before; Capacity Usage: No is 64.1% v before.