Awaiting more data on US inflation (PPI later in the session)



– The focus remains on inflation data (US Dec PPI due in session).

– The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC) reported strong fourth-quarter results and provided future forecasts that beat analysts’ expectations.


– The Japanese government expects to achieve a primary balance surplus in FY26 (one year earlier than expected) due to higher growth.

– Covid closures at several Chinese ports are causing congestion in the Port of Shanghai.

– The US ambassador to the UN has proposed additional sanctions against North Korea.

– TSMC reported Q4 (NT$) Net 166.2B vs. 142.8B y/y; Op 182.8B versus 157.1B a/a; Rev 438.2B v 361.5B y/y; Long-term target Rev CAGR is targeting 10-15% over the next few years.


– The UK Upper House lawmaker’s statement noted that the Central Bank’s digital currency for wholesale use would need further consideration.

– Scottish Conservative leader Douglas Ross has called on PM Johnson to step down (*8Reminder: PM Johnson took responsibility for the May 2020 rally which breached virus restrictions at the time).


– Fed vice-chairman nominee Brainard prepared remarks ahead of Senate testimony and noted that the pandemic continues to pose challenges; Slowing too high inflation was the Fed’s most important task.

– Fed Harker (non-voting 2022) says open to more than 3 rate hikes in 2022, would support further tightening if very bad inflation worsens.

– Fed Bullard (voter 2022, hawk): four rate hikes in 2022 now seem likely; The March hike is very likely in a context of high inflation.

Speakers/Fixed Income/FX/Commodities/Erratum


clues [Stoxx600 -0.09% at 485.74, FTSE -0.03% at 7,549.12, DAX -0.11% at 15,993.40, CAC-40 -0.034% at 7,212.59, IBEX-35 +0.31% at 8,797.73, FTSE MIB +0.15% at 27,757.00, SMI +0.38% at 12,624.80, S&P 500 Futures -0.01%].

Market Focal Points/Key Themes: European indices opened with a bearish bias and failed to gain direction as the day progressed; top performers include technology and materials; while sectors leading the decline include Health Care and Consumer Discretionary; Countryside, M&S and Wood bands hang out on the FTSE; Updates from Adler Group on sale of portfolio to KKR; Premier Miton won’t buy River & Mercanitle; Partners Group acquires North Star; earnings expected in the upcoming US session include Delta.


Consumer Discretionary: Asos [ASC.UK] +9% (commercial update), Marks & Spencer [MS.UK] -6% (commercial update), Khaki [PSN.UK] -3% (trade update).

Consumer Staples: Tesco [TSCO.UK] -1.5% (commercial update; Christmas sales), Suedzucker SA [SZU.DE] -1% (earnings).

Manufacturers: John Wood Group [WG.UK] +14% (trade update).

Technology: ASML Holding [ASML.NL] +2% (analyst action; TSMC results), STMicroelectronics [STM.FR] +2% (TSMC results).


ECB Economic Bulletin noted that the Omicron virus variant is likely to induce greater global growth volatility, but its exact impact is uncertain. Supply bottlenecks and rising commodity prices continued to weigh on near-term global growth prospects.

Mann from BOE said 2022 would bring divergence on inflation action.

Quarterly Bank of England Liabilities/Credit Conditions Surveys. Lenders reported that the availability of secured credit to households increased in the three months to the end of November 2021. The availability of unsecured credit to households increased in the fourth quarter and is expected to increase in the first quarter.

UK Trade Sec Trevelyan said it was looking to double its trade with India by 2030.

SNB noted that it had successfully used digital currency to settle transactions involving five commercial banks.

Central Bank of Norway (Norges) fourth quarter bank lending survey noted that business credit demand was unchanged in the fourth quarter and that banks recorded slightly higher lending rates in the first quarter.

German Industrial Association (BDI) recorded German GDP growth of 3.5% in 2022. Companies could face another year of ‘stop-and-go’ activity due to the pandemic, but further calls to introduce a Vaccine warrants were considered a last resort.

Peskov, Russian government spokesman noted that talks with the United States and NATO this week broke down, disagreements on fundamental issues. Expects a written response to its security proposals in the coming days and reiterated its position that the Nord Stream 2 pipeline was a commercial project.

India Trade Min Goyal said it was considering accelerating the interim trade deal.

Currency/Fixed Income

– The USD retraced some of its recent strength following Wednesday’s CPI data. Markets seemed relieved that the acceleration in inflation did not even exceed the 39-year high of 7.0%. The greenback was at a 2-month low against a basket of currencies as participants appeared to reassess their expectations for rate hikes beyond this year. Dealers now believed the Fed would begin rate hikes in March and then begin trimming the balance sheet later in the year. I didn’t see the inflation readings as too urgent a change from an already hawkish Fed.

– EUR/USD at 1.1470 at mid-session, with GBP/USD moving above the 1.3740 area. USD/JPY fell to test 114.50.

Economic data

– (SE) Sweden Dec. PES Unemployment rate: % against 3.5% previously.

– (SE) Sweden Nov Maklarstatistik House prices Y/Y: 13% vs. 14% before; Apartment prices Y/Y: 7% vs. 6% before.

– (TR) Turkey Nov Industrial Production M/M: 3.3% vs. 0.5%e; Y/Y: 11.4% versus 8.0%e.

– (CZ) Czech Nov Retail Sales Y/Y: 9.9% vs. 6.4%e; Retail sales (excluding autos) Y/Y: 13.2% vs. 11.8%e.

– (HU) The Central Bank of Hungary leaves the one-week deposit rate unchanged at 4.00% (**Note: 2nd consecutive week of stable rates).

– (IT) Italy Nov Industrial Production M/M: 1.9% vs. 0.4%e; Y/Y: 6.3% vs. 3.7%e; Industrial production NSA (unadj) Y/Y: +6.3% vs. -1.2% before.

– (CZ) Balance of the Czech November current account (CZK): -6.0 B against -9.0 Be.

– (GR) Greece Dec CPI Y/Y: 5.1% vs. 4.8% before; Harmonized EU CPI Y/Y: 4.4% vs. 4.0% before.

Issuance of fixed income securities

– (THAT IS TO SAY) Irish Debt Agency (NTMA) opened its portfolio to sell new 10-year bonds via a syndicate; guidance view +3bps at mid-swaps.

– (CY) Cyprus opened its portfolio to sell 10-year bonds through a syndicate; guidance view +75bps at mid-swaps.

(IT) The Italian debt agency (Tesoro) sold a total of 7.0 billion euros against 6.0 to 7.0 billion euros in the indicated range of 3- and 7-year BTP bonds .

Look forward

– 05:25 (EU) Daily ECB liquidity statistics.

– 05:30 (ES) De Guindos of the ECB (Spain).

– 05:30 (HU) The Hungarian Debt Agency (AKK) will sell bonds.

– 06:00 (ZA) South Africa Nov Power generation Y/Y: No east v -3.4% before; Electricity consumption Y/Y: No est v -3.6% before.

– 06:00 (IL) Israel’s December trade balance: no est v – $3.8 billion ahead.

– 06:45 (US) Libor daily fixing.

– 07:00 (BR) Brazil Nov IBGE Services Volume M/M: +0.1%ev -1.2% before; Y/Y: 6.7%ev 7.5% before.

– 08:00 (PL) Poland November current account balance: -€1.5 vs. -€1.8B before; Trade balance: -0.6 billion euros against -0.8 billion euros previously; Exports: 26.6 billion euros against 25.0 billion euros previously; Imports: 27.5 billion euros against 25.8 billion euros previously.

– 08:00 (RU) Gold and foreign exchange reserve of Russia with December 31: no est against 630.5 billion dollars previously.

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

08:30 (US) Dec PPI Final Demand M/M: 0.4%ev 0.8% before; Y/Y: 9.8%ev 9.6% before.

– 08:30 (US) Dec PPI (excluding power/energy) M/M: 0.5%ev 0.7% before; Y/Y: 8.0%ev 7.7% before.

– 08:30 (US) Dec PPI (excluding food/energy/trading) M/M: 0.4%ev 0.7% before; Y/Y: 6.9%ev 6.9% before.

08:30 (United States) Initial claims for unemployment insurance: 200Ke against 207K before; Continuing claims: 1.73 M against 1.754 M before.

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

– 08:30 (US) Revisions: Philadelphia Fed Manufacturing Survey.

– 09:30 (NL) Elderson of the ECB (Netherlands).

– 10:30 a.m. (US) Weekly EIA Natural Gas Inventories.

– 12:00 (US) Fed’s Barkin discusses economic outlook.

– 12:00 (CA) Canada will sell 2-year tickets.

– 1:00 p.m. (US) Evans of the Fed.

– 1:00 p.m. (US) The Treasury will sell 30-year bonds.

– 2:00 p.m. (AR) Argentina December National CPI M/M: 4.1%ev 2.5% before; Y/Y: 51.5%ev 51.2% before.

– 18:50 (JP) Japan Dec PPI M/M: 0.3%ev 0.6% before; Y/Y: 8.8%ev 9.0% before.

– 19:30 (AU) Australia Nov Home Loan Value M/M: +0.4%ev -2.5% prior.

8:00 p.m. (KR) Bank of Korea (BoK) interest rate decision: The 7-day repo rate is expected to rise 25 basis points to 1.25%.

– 22:30 (JP) Japan will sell 3-month bills.

– 22:35 (JP) Japan will sell 20-year JGB bonds.


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