MNI US OPEN: High Euro Inflation Print Ahead Of US Jobs Report

PREVIEW: Primary Dealer NFP Estimates

EZ DEC FLASH HICP +0.4% M/M; +5.0% Y/Y; NOV +4.9% Y/Y

Eurozone Inflation Climbs To Fresh Euro-Era High

EZ DEC FLASH HICP +0.4% M/M; +5.0% Y/Y; NOV +4.9% Y/Y

EZ DEC FLASH CORE HICP +0.4% M/M; +2.6% Y/Y; NOV +2.6% Y/Y

• Flash data for Eurozone harmonised inflation remained above market forecasts, once again breaking euro-era records.
• Headline inflation increased marginally to +5.0% y/y in the flash reading for December, above the forecast of +4.8% y/y which had expected a dampening from +4.9% y/y in November. On the month, flash HICP was at +0.4%, once again marginally above expectations.
• The core flash estimate also outpaced the forecast of +2.5% y/y, coming in at +2.6% y/y and remaining unchanged from the November reading.
• In the December estimate, energy prices remained the key driver, hitting +26.0% y/y, albeit weakening slightly from +27.5% y/y in November.
• Food, alcohol and tobacco rose 3.2% in December (2.2% November), industrial goods by +2.9% (2.4% in November) and services by 2.4% (lessening from 2.7% in November).

MNI: FRANCE NOV IP -0.4% M/M, -0.5% Y/Y; OCT 0.9% M/M

French IP dips below expectations

FRANCE NOV IP -0.4% M/M, -0.5% Y/Y; OCT 0.9% M/M

• French industrial production came in almost one point below market expectations, dipping to -0.4% m/m (+0.5% m/m expected) in November from October's reading of +0.9% m/m.
• On the year, French IP failed to extend the recovery, remaining at the October level of -0.5% y/y in November (+0.6% y/y expected).
• Since the onset of the pandemic in February 2020, French manufacturing and IP has seen substantial declines of -5.8% and -5.0% respectively.
• Transport production (except automobiles) fell sharply (-4.6% in November, compared to +0.8% in October) as well as other transport equipment (-13.1% in November, +12.9% in October).

MNI: GERMANY NOV IND PROD -0.2% M/M, -2.4% Y/Y; OCT +2.4%r M/M

MNI: BAVARIA DEC CPI +0.4% M/M, +5.4% Y/Y; NOV +5.3% Y/Y

BADEN-W DEC CPI +0.6% M/M, +5.0% Y/Y; NOV +4.9% Y/Y

FIXED INCOME: Gilts and GGBs the movers ahead of payrolls

Core fixed income is fairly subdued ahead of the US employment report due later today. Treasuries and Bunds trade within yesterday's ranges.

• Gilts are underperforming on the day, with 10-year yields hitting their highest levels since October 2021, albeit on little new news.
• Peripheral spreads across the Eurozone are all wider this morning, led by Greek spreads which are 13.2bp wider on the day relative to 10-year Bunds. There doesn't seem to be an obvious driver, with market contacts pointing to potential Greek issuance over the next couple of weeks. This seems like a bit of an outsized move to us, as Greece nearly always issues a new benchmark in January but with low liquidity this seems to be the only obvious driver.
• Payrolls are, of course, the main event of the day. See our preview here.
• TY1 futures are up 0-2+ today at 128-19+ with 10y UST yields up 0.3bp at 1.726% and 2y yields up 0.4bp at 0.872%.
• Bund futures are down -0.03 today at 170.31 with 10y Bund yields up 0.1bp at -0.104% and Schatz yields up 0.4bp at -0.604%.
• Gilt futures are down -0.03 today at 123.24 with 10y yields down -0.4bp at 1.151% and 2y yields down -1.1bp at 0.794%.

FOREX: Greenback Sits Flat-to-Lower Ahead of NFP

• The greenback sits flat-to-lower ahead of the NY crossover, with most major pairs trading inside their recent ranges. This has favoured EUR/USD, which has climbed back above the 1.13 handle, while GBP/USD is north of 1.3550.
• The EUR/CHF chart stands out slightly, with the cross extending the rally off the week's low to narrow the gap with the 50-dma of 1.0452. This level was last crossed at the end of August last year, and a rise through here could signal a reversal from the solid downtrend posted across Q4 2021.
• AUD/USD has shown below yesterday's lows, but losses are more muted as markets watch sizeable option expiries rolling off today at $0.7160 (A$2.4bln).
• The strongest currency so far Friday is NOK, which is benefiting from the steepening of the crude futures curve, which has put the active Brent crude price at the highest levels since October.
• The December jobs data takes focus going forward, with markets expecting 447k jobs to have been added over the month. This is seen pressing the unemployment rate 0.1ppts lower to 4.1%. MNI preview here: https://roar-assets-auto.rbl.ms/documents/13381/US...

EQUITIES: Mixed Ahead Of Payrolls, With Energy And Tech Leading

• Asian stocks closed weaker (with the exception of Hong Kong): Japan's NIKKEI closed down 9.31 pts or -0.03% at 28478.56 and the TOPIX ended 1.33 pts lower or -0.07% at 1995.68. China's SHANGHAI closed down 6.536 pts or -0.18% at 3579.543 and the HANG SENG ended 420.52 pts higher or +1.82% at 23493.38
• European equities are a little weaker, with energy and tech stocks outperforming: the German Dax down 44.09 pts or -0.27% at 16012.04, FTSE 100 up 4.86 pts or +0.07% at 7457.81, CAC 40 down 9.53 pts or -0.13% at 7238.81 and Euro Stoxx 50 down 2.4 pts or -0.06% at 4322.77.
• U.S. futures are edging higher ahead of the December payrolls report, with the Dow Jones mini up 58 pts or +0.16% at 36181, S&P 500 mini up 8.25 pts or +0.18% at 4695.75, NASDAQ mini up 17 pts or +0.11% at 15776.

COMMODITIES: Oil Higher With Kazakh Output Disruption Eyed

• WTI Crude up $0.8 or +1.01% at $80.16
• Natural Gas up $0.06 or +1.52% at $3.87
• Gold spot up $0.94 or +0.05% at $1792.21
• Copper up $3 or +0.69% at $438.45
• Silver up $0.01 or +0.02% at $22.2138
• Platinum up $5.06 or +0.52% at $975.1