Unwinding of safe-haven plays continues into 2021

Notes/Observations

- Various PMI Manufacturing readings prompting optimism on global recovery

- European PMI data mostly softer but remaining in expansion territory (Beats: UK; Misses: Euro Zone, Germany, Italy, Spain; In-line: France)

- Coming weeks could remain challenging on the virus front

Asia:

- China Dec Caixin PMI Manufacturing registered its 8th month of expansion (53.0 V 54.7e)

- Japan Dec Final PMI Manufacturing registered its 1st non-contraction in 19 readings (50.0 v 49.7 prelim)

- Australia Dec Final PMI Manufacturing confirmed its 7th month in expansion (55.7 v 56.0 prelim)

- South Korea Dec PMI Manufacturing registered its 3rd month of expansion (52.9 v 52.9 prior)

- Singapore Q4 Advance GDP beat expectations (Q/Q: 2.1% v 1.3%e; Y/Y: -3.8% v -4.7%e)

- China stated that it would take action against US de-listing of its telecom firms

Coronavirus:

- Total global cases 85.1M; total deaths at 1.84M

- Germany poised to extend coronavirus lockdown’

- England could be back in lockdown by the middle of January, prompting fears that it could be kept in lockdown until at least Easter

- Britain said to target tens of millions of vaccinations in next three months

- France brought forward its nightly COVID curfew from 20h to 18h in more than a dozen regions
US coronavirus death toll tops 350K with another surge anticipated

Europe:

- Italy govt coalition partner Renzi said to be threatening to bring down the govt over PM Conte’s plans to revive the economy

Brexit:

- UK House of Commons backed UK’s post Brexit trade deal last week (vote was 521-73)

Americas:

- Early voting ended with record 3M Georgia voters for US Senate runoff elections

- Nancy Pelosi was re-elected Speaker of the House (vote was 216 -209)

- President Trump was recorded telling Georgia’s Sec of State Brad Raffensperger to find enough votes to overturn the 2020 election result; Mr Raffensperger replied Georgia’s results were correct

Energy:

- OPEC+ Sec Gen Barkindo: We are ready to adjust plans for a gradual increase in oil output by 2M bpd in the coming months, based on market conditions

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +1.26% at 405.30, FTSE +2.83% at 6,643.35, DAX +1.38% at 13,908.20, CAC-40 +1.87% at 5,654.93, IBEX-35 +1.45% at 8,191.00, FTSE MIB +0.80% at 22,410.50, SMI +0.75% at 10,783.91, S&P 500 Futures +0.61%]

Market Focal Points/Key Themes: European indices open broadly higher and continued into the green as the session progressed (FTSE 100 best performer); sectors leading to the upside include consumer discretionary and materials; financial and real estate sectors among underperformers; reportedly UK and Germany looking to increase restrictions to stop spread of covid; Entain rejects takeover offer from MGM Resorts; reportedly ACS looking to sel renewable assets in Latin America; no major events expected in upcoming US session

Equities

- Consumer discretionary: Entain [ENT.UK] +24% (confirms proposal), TUI [TUI1.DE] +5% (CEO interview)

- Technology: Meyer Burger Technology [MBTN.CH] +14% (funding), YIT [YIT.FI] -3% (cuts outlook)

Speakers

- Greece PM Mitsotakis said to reshuffle Cabinet with Staikouras keeping his position as Finance Minister

- Poland Central Bank's Lon stated that keeping interest rates steady was the base case scenario but a cut remained an option in 2021

- China Foreign Ministry spokesperson Wang Wenbin reiterated stance that it opposed delisting of China companies, US was politicizing trade issues. Stressed that delisting of companies violated international trade laws

- Iran said to have resume production of 20% enriched uranium

- OPEC+ JMMC technical meeting said not to have support of oil production increase from Feb

Currencies/Fixed Income

- USD began the new year on soft footing as safe-haven flows unwound from the recent US stimulus agreement and the Brexit trade deal. Dealers also noted that the upcoming FOMC minutes should offer more detail on discussions about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year. Fed’s policymaking panel said to be tilted even more dovish in 2021. The new rotation puts Chicago Fed’s Evans taking over for Cleveland’s Mester

- EUR/USD approaching the 1.23 area despite the major PMI Manufacturing readings missing expectations. Overall markets continue to express optimism on a global recovery. Much of the bad news was overlook as lockdowns would likely be extended across much of Europe as virus cases remained high.

- GBP/USD stayed in the 1.36 area as lockdowns were likely to be tightened further given the substantial rise in cases

Economic Data

- (TR) Turkey Dec PMI Manufacturing: 50.8 v 51.4 prior (7th straight expansion)

- (TR) Turkey Dec CPI M/M: 1.3% v 0.9%e; Y/Y: 14.6% v 14.2%e; CPI Core Index Y/Y: 14.3% v 13.7%e

- (TR) Turkey Dec PPI M/M: 2.4% v 4.1% prior; Y/Y: 25.2% v 22.1%e

- (TH) Thailand Dec Business Sentiment Index: 46.8 v 47.7 prior

- (SE) Sweden Dec PMI Manufacturing: 64.9 v 59.8 prior

- (NL) Netherlands Dec Manufacturing PMI: 58.2 v 55.0e (5th straight expansion and highest since Sept 2018)

- (HU) Hungary Dec Manufacturing PMI: 51.1 v 52.9e (3rd straight expansion)

- (PL) Poland Dec PMI Manufacturing: 51.7 v 51.3e (5th straight expansion)

- (ES) Spain Dec Manufacturing PMI: 51.0 v 52.5e (moved back into expansion)

- (CH) Swiss Dec PMI Manufacturing: 58.0 v 54.3e (5th straight expansion)

- (CZ) Czech Dec Republic PMI Manufacturing: 57.0 v 54.3e (4th straight expansion)

- (HK) Hong Kong Nov Retail Sales Value Y/Y: -4.0% v -7.5%e; Retail Sales Volume Y/Y: -4.7% v -8.1%e

- (IT) Italy Dec Manufacturing PMI: 52.8 v 53.5e (6th month of expansion)

- (FR) France Dec Final Manufacturing PMI: 51.1 v 51.1e (confirmed move back into expansion)

- (EU) Euro Zone Dec Final Manufacturing PMI: 55.2 v 55 (confirmed 6th month of expansion and highest since Feb 2018)

- (EU) Euro Zone Dec Final Manufacturing PMI: 55.2 v 55.5e (confirmed 6th month of expansion and highest since May 2018)

- (GR) Greece Dec Manufacturing PMI: 46.9 v 42.3 prior (3rd straight contraction)

- (NO) Norway Dec PMI Manufacturing: 51.9 v 52.5e (4th straight expansion)

- (CH) Swiss Weekly Total Sight Deposits (CHF):702.7 B v 703.9B prior; Domestic Sight Deposits: 631.5B v 632.3B prior

- (UK) Dec Final Manufacturing PMI: 57.5 v 57.3e (confirmed 7th straight expansion and highest reading since Nov 2017)

- (UK) Nov Net Consumer Credit: -£1.5B v -£1.3Be; Net Lending: £5.7B v £4.4Be

- (UK) Nov Mortgage Approvals: 105.0K v 83.5Ke (highest since 2007)

- (UK) Nov M4 Money Supply M/M: 0.8% v 0.7% prior; Y/Y: 12.8% v 12.9% prior; M4 Ex IOFCs 3M Annualized: 12.9% v 7.4% prior

- (DK) Denmark Dec PMI Survey: 41.9 v 47.0 prior

Fixed income Issuance

- None seen

Looking Ahead

- OPEC+ ministerial / JMMC meetings

- (RO) Romania Dec International Reserves: No est v $38.4B prior

- 05:30 (DE) Germany to sell 6-month Bubills

- 06:00 (PT) Portugal Dec Consumer Confidence Index: No est v -26.9 prior; Economic Climate Indicator: No est v -0.1 prior

- 06:00 (PT) Portugal Dec Preliminary CPI M/M: No est v -0.3% prior; Y/Y: No est v -0.2% prior

- 06:00 (PT) Portugal Dec Preliminary CPI EU Harmonized M/M: No estv -0.5% prior; Y/Y: No est v -0.4% prior

- 06:00 (IL) Israel to sell bonds

- 06:25 (BR) Brazil Central Bank Weekly Survey in inflation, growth and rates

- 06:30 (CL) Chile Nov Economic Activity Index (Monthly GDP M/M: +2.0%e v -0.5% prior; Y/Y: +0.2%e v -1.2% prior; Economic Activity YoY (ex-mining): No est v -1.5% prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (TR) Turkey to sell bonds

- 08:00 (BR) Brazil Dec PMI Manufacturing: No est v 64.0 prior

- 08:00 (SG) Singapore Dec Purchasing Managers Index (PMI): No est v 50.4 prior; Electronics Sector Index: No est v 51.1 prior

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance (bonds)

- 09:00 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%

- 09:30 (CA) Canada Dec Manufacturing PMI: No est v 55.8 prior

- 09:45 (US) Dec Final Markit Manufacturing PMI: 56.3e b 56.5 prelim

- 09:45 (EU) ECB weekly QE bond buying update

- 10:00 (US) Nov Construction Spending M/M: 1.0%e v 1.3% prior

- 10:00 (CO) Colombia Dec PMI Manufacturing: No est v 52.1 prior

- 10:00 (MX) Mexico Nov Total Remittances: $3.3Be v $3.6B prior

- 10:00 (US) Fed’s Evans on AEA Panel

- 10:30 (MX) Mexico Dec Manufacturing PMI: No est v 43.7 prior

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills

- 12:00 (IT) Italy Dec New Car Registrations Y/Y: No est v -8.3% prior

- 13:00 (MX) Mexico Dec IMEF Manufacturing Index: No est v 48.5 prior; Non-Manufacturing Index: No est v 49.5 prior

- 18:50 (JP) Japan End-Dec Monetary Base: No est v ¥605.9T prior

- 19:30 (AU) Australia Dec ANZ Job Advertisements M/M: No est v 13.9% prior

-22:30 (TH) Thailand Dec CPI M/M: 0.0%e v 0.0% prior; Y/Y: -0.4%e v -0.4% prior; CPI Core Y/Y: 0.2%e v 0.2% prior

- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills

- 22:35 (JP) Japan to sell 10-Year JGB Bonds