Risk appetite continues to find favorable winds

Remarks / Observations

– Risk appetite is improving following gains in equity markets in the United States and most of the region.

– France Dec. CPI stable but remains high at the end of 202; The ratings that may have pushed the main number higher in the past six months are now fading.

Asia

– China Dec Caixin PMI Manufacturing: 50.9 V 50.0E (the highest since June).

– Japan Dec. Final manufacturing PMI: 54.3 vs. 54.2 preliminary (confirms the 11th consecutive expansion).

– Australia Dec Final PMI Manufacturing: 57.7 v 57.4 prelim (confirms 19th month of expansion, lowest since September).

– BOJ Governor Kuroda reiterated his stance to closely monitor the market and economy nationally and internationally, would continue to take appropriate policy action while carefully assessing the economy and financial markets.

– BOK Gov Lee noted that the spread of the coronavirus variant is the greatest risk to economic recovery.

– China PBOC Open Market Operation (OMO) saw a net liquidity drain of CNY260B (included in the prior injection of CNY90B).

– The Chinese Cyberspace Administration has released a revised set of Internet security rules that will come into effect on February 15. Require security checks before IT companies conduct overseas IPOs. Platforms with over 1 million users must undergo a security review before listing their actions overseas.

– Canton R&F [2777.HK] debt exchange deadline.

-Evergande [3333.HK] resumption of trade. The company will continue to actively communicate with creditors, confirming receipt of an administrative penalty related to 39 buildings.

Coronavirus

– Germany has relaxed omicron travel restrictions for the UK and South Africa.

Americas

– Sarah Raskin said she was the preferred choice for the Fed supervisory position.

– The White House is reportedly likely to appoint former research economist Philip Jefferson to the Fed’s board of governors.

Energy

– Opec + will meet to decide on policy for February. Delegates said they saw no need to change the current plan to ease the 400,000 bpd cuts.

– OPEC Sec Gen-elect al-Ghais said that a top priority was to support the continuation of the OPEC + cooperation agreement until 2023. The agreement was important for the stability and balance of the oil markets.

Speakers / Fixed income / FX / Commodities / Erratum

Actions

Indices [Stoxx600 +1.07% at 493.04, FTSE +1.18% at 7,471.58, DAX +0.38 at 16,081.08, CAC-40 +0.96% at 7,286.71, IBEX-35 +0.33% at 8,789.97, FTSE MIB +0.31% at 27,816.00, SMI -0.19% at 12,914.40, S&P 500 Futures +0.22%].

Market focal points / Key themes: European indices opened higher in all areas and remained positive throughout the session (the notable exception of the SMI trading slightly lower); all sectors start the day in the green; better performing sectors led by consumer discretionary and energy; among the slowest growing sectors are materials and healthcare; the oil and gas sub-sector supported by rising gas prices across Europe; CGG sells its physical asset storage unit to Oasis; focus on the OPEC + meeting later today; no significant profit is expected during the next US session.

Actions

Consumer discretionary: Wizz Air [WIZZ.UK] + 10% (metric).

Consumer Products: Macfarlane [MACF.UK] + 2% (disposal).

Health: Novartis [NOVN.CH] + 1% (patent regulation), Sanofi [SAN.FR] -1.5%, Valneva [VLA.FR] -9% (Sanofi vaccine sales target).

Loudspeakers

France End Min The Mayor reiterated that the government saw 2022 GDP growth at 4.0%.

Currencies / Fixed Income

– The USD was supported by the recent surge in yields but left its best level at mid-session. The US 10-year yield broke the 1.60% level for the first time since the emergence of the omicron variant. Markets continue to bet on a growing belief that the Fed will start raising interest rates in 2022.

– USD / JPY to 5 year high helped by rising US yields.

– GBP / USD came out of session lows to move closer to the 1.35 area.

Economic data

(DE) Germany Nov. Retail sales M / M: + 0.6% v -0.3% e; Y / Y: -0.2% against -3.1% e.

(CH) Dec. Swiss CPI H / M: -0.1% against -0.1% e; Y / Y: 1.5% against 1.5% e; CPI Core Y / Y: 0.8% vs. 0.8% e.

– (CH) Swiss Dec CPI EU Harmonisé M / M: 0.0% against -0.1% previously; Y / Y: 1.3% against 1.5% previously.

– (TH) Business sentiment index in Thailand in December: 49.0 against 48.4 previously.

(FR) France Dec. Preliminary CPI H / M: 0.2% against 0.3% e; Y / Y: 2.8% against 2.9% e.

– (FR) France Dec Harmonized EU preliminary CPI H / M: 0.2% v 0.4% e; Y / Y: 3.4% vs. 3.5% e.

– (ES) Net change in unemployment in Spain in December: -76.8K versus -74.4K before (10th consecutive monthly decline).

– (HU) Hungary Oct. Average gross wages Y / Y: 8.5% against 9.3%.

(DE) Germany Dec. Net change in unemployment: -23.0K against -15.0Ke previously; Unemployment claim rate: 5.2% versus 5.3% e.

(United Kingdom) Dec. Final manufacturing PMI: 57.9 vs. 57.6e (confirmed 19th consecutive expansion).

(United Kingdom) Net consumer credit in November: £ 1.2m versus £ 0.8; Net loan: £ 3.7 billion compared to £ 3.1.

(UK) mortgage approvals in November: 67.0K vs. 66.0Ke.

– (United Kingdom) Nov M4 Money supply M / M: 0.7% against 0.6% previously; Y / Y: 6.9% against 7.0% previously; M4 (ex-IOFC) annualized: 6.9% against 6.7% previously.

Issue of fixed income securities

– (IDENTIFIER) Indonesia total sold IDR25.0T against target IDR25.0T in bills and bonds.

Look ahead

(PL) Central Bank of Poland (NBP) decision on interest rates: Expected to increase base rate by 50bp to 2.25%.

OPEC + monthly oil meeting.

– 5:25 am (EU) Daily liquidity statistics from the ECB.

– 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month vouchers.

05:30 (DE) Germany to sell 5.0 billion euros in 0% Dec. 2023 Schatz.

– 05:30 (BE) Belgium Debt Agency (BDA) to sell 2.0 billion euros combined in 3-month and 6-month invoices.

– 5:30 a.m. (EU) ECB award as part of the 7-day Main Refinancing Call (MRO).

– 6:30 a.m. (EU) ESM sells 1.5 billion euros in 3-month bonds.

– 6:45 am (US) Correction of the daily Libor.

– 08:00 (SG) Singapore Dec Purchasing Managers Index (PMI): No est v 50.6 before.

– 08h00 (UK) Daily Baltic Dry Bulk Index.

– 08:00 (UK) Announcement from Russia on the next OFZ bond issue (held on Wednesday).

– 08:30 (CA) Canada Nov. Leading indicator MLI M / M: No est v 0.2% before.

– 08:30 (CA) Canada Nov Prices of industrial products M / M: 0.8% ev 1.3% before; Commodity price index M / M: 0.0% ev 4.8% before.

– 08:55 (US) Weekly Redbook LFL sales data.

– 09:30 (CA) Canada Dec. Manufacturer’s PMI: not version 57.2 before.

10:00 a.m. (US) Dec. ISM manufacturing: 60.2 ev 61.1 before; Prices paid: 79.3 ev 82.4 before.

10:00 (US) Nov JOLTS Jobs: 11.100Me v 11.033M before.

– 11h00 (DK) Denmark Dec Foreign reserves (DKK): No est v 481.5B prior.

– 4:00 p.m. (KR) South Korea Foreign reserves in December: no estimate against 463.9 billion dollars previously.

– 4:30 p.m. (US) Weekly API oil inventories.

– 6:50 p.m. (JP) Japan at the end of December Monetary base: No est v 660.4T before.

– 7:30 p.m. (HK) Hong Kong Dec. PMI (whole economy): no est v 52.6 before.

– 7:30 p.m. (SG) Singapore Dec. PMI (whole economy): no est v 52.0 before.

– 8:00 p.m. (PH) Philippines Dec. CPI Y / Y: 4.1% ev 4.2% before.

– 20:01 (IE) Ireland Dec. PMI services: No is v 59.3 before; Composite PMI: No earlier version than 59.3.

– 10:30 p.m. (TH) Thailand Dec. CPI H / M: none is against 0.3% before; Y / Y: No is v 2.7% before; CPI Core M / M: no estimate of 0.3% previously.

– 10:30 p.m. (JP) Japan will sell 3-month coupons.

10:35 p.m. (JP) Japan will sell 10-year JGB bonds.

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