EUROZONE DATA: A Tepid Bounce For Retail Sales
Jan-09 10:00
Eurozone retail trade volumes printed below consensus at 0.1% M/M in November (vs 0.3% consensus) although it followed an upward revised -0.3% in October (initial -0.5%). On an annual basis, volumes rose 1.2% Y/Y after 2.1% Y/Y in October (revised up from 1.9%) for its lowest rate since July 2024.
- The monthly sequential improvement came from a bounce in fuel sales whilst growth in food, drinks & tobacco softened slightly. Non-food products fell further, by the same pace as in October. Specifically:
- Non-food products (Ex Fuel) fell by 0.6% M/M for the second consecutive month.
- Food, drinks and tobacco sales rose a marginal 0.1% M/M (down from 0.2% in October).
- Automotive fuel retail trade increased 0.8% M/M (after -0.4% in October) - the highest M/M change since August 2024.
- From the largest Eurozone members: Germany and Spain both recorded a fall in sales for the second consecutive month printing -0.6% M/M (down from -0.3% and -0.1% in October) and Belgium also recorded its second successive negative print with -2.4% M/M (after -1.7% in October). Netherlands saw retail trade fall 0.1% M/M (up from -0.2% prior) and the third consecutive monthly fall. In contrast, France retail trade increased 0.3% M/M after two months of negative sales. Note Italy retail sales will be published tomorrow.
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US TSYS: US Tnotes finds support at the 23.6% Retracement
Dec-10 09:53
- US Tnotes is also finding some support at the very short term 23.6% retracement of the Nov/Dec fall in Yield, this was at 4.2144%, printed a 4.2147% high so far (at 111.01 in Futures).
- The outperformance in the bounce in Bund futures has now pushed the Tnotes/Bund spread wider, but by just 1.1bp, and still well within this Month's range.
- Looking at the US 10yr Yield, 4.25% should coincide 110.26.
GERMAN DATA: IFO Price Expectations Fell in November
Dec-10 09:50
IFO price expectations for Germany fell in November, with decreasing values in consumer services which can be interpreted as a good sign re fading stickiness in that category:
- "Price expectations in the consumer-related service sectors continued to decline, falling to 15.8 points, down from 18.5 points in October. This is the lowest level since March 2021 and only slightly higher than the average balance in the years 2005 to 2019 (14.6 points)" Note that that comes amid overall softer services momentum recently.
- Overall, "ifo price expectations fell slightly to 15.6 points in November, down from 16.0 points in October. This is due primarily to the manufacturing industry and service providers."
- However, details in other categories were mixed: "Price expectations in retail rose to 26.4 points, up from 21.9 points in October. Food and beverages in particular saw a sharp rise to 50.8 points, up from 39.7 points in October."
- IFO expect the inflation rate to remain above 2% in the coming months on the back of a number of special effects towards the beginning of 2025. "The increase in the CO2 price for gasoline, heating oil and gas alone, as well as the price increase for the Deutschlandticket, postage and private health insurance, will raise inflation by 0.3 percentage points"
FOREX: Clustered DXY Resistance Could Come into Play on Strong CPI Read
Dec-10 09:44
- EUR/USD spot rates succumbing to the pressure of the uptick in US yields (as we note above, there's been little newsflow and no headline driver for the modest moves), putting spot through yesterday's lows and within range of 1.0517, the 38.2% retracement for the upleg off the cycle low from mid-November, and next major support.
- Volumes show participation today just below average for this time of day - although at their strongest for the session so far on the latest step lower. This will likely remain the case headed into the US CPI print Wednesday - with today's schedule particularly quiet.
- EUR overnight vols have today crested just above 14 points - so below the prevailing levels seen pre-NFP last week (through which markets printed an 80 pip range ahead of the Friday cut). With tomorrow's print the last of the year and likely directly influencing next week's rate decision (a 25bps cut is over 80% implied in futures), an outside-of-consensus print will test the sustainability of the USD Index's stabilisation above December lows.
- While a stronger print may not rule out a December rate cut, the implications for 2025 rate guidance, as well as the latest set of FOMC quarterly projections, will keep key clustered resistance in the USD Index at 106.720-745 in consideration, a break above which brings the post-election highs back into question.
