***Economic Data***- (EU) ECB: €1.4B borrowed in overnight loan facility v €1.9B prior; parked in deposit facility (fresh record high) vs. €455.3B prior
- (IT) ECB Dec funding to Italian banks m/m: €210B v €153B prior
- (ZA) South Africa Dec Net Reserves: $47.9Bv $48.6B prior; Gross Reserves: $48.9B v $48.8Be
- (CH) Swiss Dec Unemployment Rate: 3.3% v 3.2%e v 3.1% prior; Unemployment Rate Seasonally Adj: 3.1 v 3.1%e
- (DE) Germany Nov Current Account: €14.3B v €11.0Be; Trade Balance: €16.2B v €12.0Be; Exports M/M:+2.5% v +0.5%e; Imports M/M: -0.4% v +0.5%e
- (FR) France Nov Trade Balance: -€4.4B v -€6.0Be
- (CZ) Czech Dec CPI M/M: 0.4% v 0.5%e; Y/Y: 2,4% v 2.5%e
- (CZ) Czech Dec Unemployment Rate: 8.6% v 8.5%e
- (CZ) Czech Nov Retail Sales Y/Y: +0.5% v -1.0%e
- (DK) Denmark Nov Current Account (DKK): 12.6B v 9.1Be; Trade Balance (ex-shipping): 7.1B v 7.0Be
- (HU) Hungary Nov Preliminary Trade Balance: €666.0M v €790.0Me
- (TU) Turkey Nov Industrial Production WDA M/M: -2.5% v +4.2% prior; Y/Y: 7.2% v 7.4% prior; Industrial Production NSA Y/Y: 8.4% v 10.0%e
- (TW) Taiwan Dec Total Trade Balance: 2.3B v $2.7Be; Total Exports Y/Y: 0.6 v 3.7%e; Total Imports Y/Y: -2.7 v -1.0%e
- (CH) Swiss Nov Real Retail Sales Y/Y: +1.8% v +0.2%e
- (SE) Sweden Nov Service Production M/M: 0.1% v 0.0%e; Y/Y: 2.6% v 2.3%e
- (NO) Norway Nov Credit Indicator Growth Y/Y: 6.6% v 6.8%e
- (SG) Singapore Dec Foreign Reserves: $237.7B v $241.0B prior
- (EU) Euro Zone Jan Sentix Investor Confidence: -21.2 v -24.0 prior
- (GR) Greece Nov Industrial Production Y/Y: -7.8% v -12.3% prior
- (BR) Brazil Dec FGV Inflation IGP-DI: % v -0.2%e v -0.2% prior
Fixed Income:
- (NO) Norway sold NOK6.0B vs. NOK6.0B indicated in 6.5% 2013 Bonds; Yield 1.390%
- (SO) Slovakia Debt Agency (ARDAL) sold €237.1M in 3-month Bills, Avg Yield 1.4313% v 1.8010 prior; bid-to-cover: 2.04x vs. 2.09x prior
- (HU) Hungary Debt Agency (AKK) sold HUF40B vs. HUF40B targeted in 6-Week Bills; Avg Yield 7.77% v 7.34% prior; Bid-to-cover: 3.71x
- (DE) Germany sold €3.9B in 6-month Bubills; avg yield -0.122% v +0.0005% prior; Bid-to-cover: 1.8x v 3.8x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Moody's: Spain Fiscal Slippage In 2011 Is Credit Negative
- Germany Chancellor Merkel to meet French President Sarkozy later today and then INF chief Lagarde on Tuesday
Equities:
FTSE 100 flat at 5648, DAX -0.30% at 6041, CAC-40 +0.10% at 3141, IBEX 35 +0.90% at 8365, FTSE MIB flat at 14,652, SMI -0.10% at 6007
- European shares edged higher ahead of the Merkozy meeting today in Berlin. The two leaders are expected to discuss the future of the Eurozone and markets are up with optimism that the leaders will pave the way to a solution and prepare for next summit of January 30th.
- Individual shares traded mixed during the session. Unicredit [UCG.IT] fell in the red before the shares were halted and resumed trading again, lower by 7% as investors are monitoring and trading bank's capital increase. Glaxosmithkline [GSK.UK] also traded lower after reporting mixed clinical results for its Relovair asthma drug. BMW [BMW.DE] rose after reporting record high vehicle sales for 2011.
Speakers:
- IMF Chief Lagarde commented that Europe might avoid recession in 2012 as she saw reasons to be more upbeat about the region's prospects
- China Vice Commerce Minister Zhong Shan reiterated that China faced a more difficult trading environment in 2012 but would maintain trade policies. China would implement targeted measures to maintain trade with the US and Japan, while expanding the share of exports to emerging markets
- China Xinhua commentary piece stated that the European common currency would not collapse despite the current situation
- German Fin Min Schauble urged faster progress was needed for Greece in its negotiations with the IMF
- Czech Central Bank Gov Singer commented that Greece should quit the euro-zone and devalue its new currency unless Europe was willing to give "massive" funding to the country
- Italy PM Monti reiterated that there would be no new austerity plan, that the measures already announced were enough
to guarantee the country will reach its economic targets
- Investor George Soros commented that Europe was in a more serious situation at this time compare to the 2008 crisis
- Spain's Budget Min was said to be planning to meet with regional governments this week regarding the deficits of the regions.
- Swiss Government Official commented that Switzerland Unemployment Rate would rise to 3.9% by end of 2012 compared to the 3.3% rate registered in December
- EU Steel Industry Association (EUROFER) was said to have filed anti-subsidy complaint regarding Chinese steel products
- EU Commission commented that Hungary needed to recover HUF64B in illegal state aid paid to Malev Airlines for the 2007-10 period
- UAE Oil Min commented that oil prices between $85-95 was good for country's investments and noted that the IPIC pipeline bypassing the Strait of Hormuz seen operational within six months with capacity between 1.5-1.8M bpd
- Philippines Central Bank Gov Tetangco commented that he saw monetary easing in Q1 2012 period (Move would follow two hikes in 2011). The governor was confident of manageable inflation in the coming months and would continue to monitor negative developments overseas and its possible impact on domestic prices
- EU plans to sell bonds through the EFSM; guidance seen 130-140bps over mid-swaps
Currencies:
- Bearish sentiment for the Euro seemed a bit overdone ahead of the key Merkel-Sarkozy meeting later today. The most recent CFTC data showed that euro short positions hit record highs as the EUR/USD hit 16 month lows while EUR/JPY was at 12-year lows. The session saw a mild reprieve for the Euro. The pair tested 1.2785 as the NY morning approached
- Overall the USD was a touch weaker against the major pairs in a move regarded as consolidation following the gains after the US payroll data release last week.
Political/ In the Papers:
- According to a survey of 14 bank economists, Germany is already in recession. There are expectations the economy contracted in the fourth quarter, and that the pace of the contraction may speed up in the first quarter. Germany is due to issue 2011 GDP data on Wednesday.
- Data from the Confederation of British Industry (CBI) indicated that fourth quarter business volumes in the UK financial sector grew at its fastest pace since 2007. The industry was supported by higher equity prices and bond market transactions. CBI added that it has concerns about the 2012 outlook for financial services due to the EU debt crisis.
- Britain's PM Cameron was said to have moved away from plans to remove the 50% income tax rate until at least 2015. The Telegraph noted that the decision to cancel the planned elimination of the tax rate comes amid political hurdles and rising tax revenues attributed to the tax rate. UK Chancellor Osborne is expected to disclose in the March Budget that a decision to maintain the top tax rate until 2015 remains under review.
- The Irish Independent reported that Ireland Q4 house prices are down 8%, and down 18% for the 2011. According to Daft.ie, for 2011 prices dropped 18%. House prices are down over 50% from the boom of 2007, with suggestion that an additional 15-20% fall may be possible based on the theory that a home is worth 15 times what somebody would pay for it in rent over a year.
- German Social Democrats have indicated that they will work with Chancellor Angela Merkel to find a consensus candidate for the German presidency. As a reminder, President Wulff is facing calls to resign for allegedly taking a low-interest loan arranged by the wife of a businessman during his tenure as minister president in the state of Lower Saxony.
- Greek bondholders were reported to be prepared to accept higher losses, as negotiations are to continue this week.
***Looking Ahead***
- (EU) EU to price 30-year bonds (guidance was around 130bps over mid-swaps)
- 6:00 (FR) France PM Fillon makes New Year's vows in Paris
- 6:00 (DE) Germany Nov Industrial Production M/M: -0.5%e v +0.8% prior; Y/Y: 4.0%e v 4.1% prior
- 6:00 (PT) Portugal Nov Trade Balance: No est -€932M prior
- 6:00 (ZA) South Africa Electricity Consumption Y/Y: No est v -0.8% prior; Electricity Production Y/Y: No est v -1.4% prior
- 6:00 (IS) Israel to sell 2014, 2016, 2022 and 2042 Bonds
- 6:00 (PL) Poland to sell up to PLN2.0B in 12-month Bills
- 6:30 (CL) Chile Dec Trade Balance: $750.0Me v $657.0M prior;
- 6:30 (CL) Chile Dec Copper Exports: No est v $3.7B prior
- 7:30 (DE) German Chancellor Merkel and France President Sarkozy hold Talks in Berlin
- 7:45 (EU) EU President Van Rompuy
- 8:30 (CA) Canada Nov Building Permits M/M: -3.0%e v +11.9% prior
- 9:00 (MX) Mexico Dec Consumer Prices M/M: No est v 1.1% prior; Y/Y: No est v 3.5% prior; CPI Core M/M: No est v 0.3% prior
- 9:00 (FR) France Debt Agency to sell up to €7.7B in 3-month, 6-month and 12-month Bills
- 9:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 9:30 (EU) ECB announces weekly settlements in its Govt Bond Buying Program (SMP)
- 9:45 (UK) BOE to buy £1.7B in 2015-2020 Gilts in reverse auction
- 10:00 (HU) Hungary Dec YTD Budget Balance (HUF): No est v -1.248T
- 10:30 (CA) Canada Q4 Business Outlook Future Sales: 10.0e v 6.0 prior; BoC Senior Loan Officer Survey: No est v -26.9 prior
- 10:30 (DE) German Chancellor Merkel holds Speech on demographics at Cologne Congress
- 11:30 (US) Treasury to sell $29B in 3-Month and $27B in 6-Month Bills
- 12:00 (EU) EU Parliament's Buzek speaks at Press Club Brussels
- 12:30 (DE) German Chancellor Merkel attends IHK Chamber of Commerce Event in Dusseldorf
- 12:40 (US) Fed's Lockhart to speak on economy in Atlanta
- 15:00 (US) Nov Consumer Credit: $7.0Be v $7.7B prior
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