MNI US OPEN - Slow Start to CPI Week

NEWS:

FED (WSJ): Richmond Fed's Barkin Says a March Rate Rise Is Conceivable
Federal Reserve Bank of Richmond President Thomas Barkin said Friday he supports the central bank's hawkish outlook for monetary policy and is open to raising interest rates when its bond buying stimulus effort winds down. "I'm very supportive of what we did in December," Mr. Barkin said in a Wall Street Journal interview, referring to the decision at the Federal Open Market Committee meeting last month to accelerate the Fed's draw down of its asset purchases.

ECB (MNI): UK Wage Pressures Narrower Than US - ECB Study
Both the US and UK are experiencing labour shortages as they recover from the Covid-19 pandemic, a study produced for the ECB's latest Economic Bulletin notes. But while in the US labour demand is outpacing supply, leading to broadening wage pressures, signs of increased labour market tightness in the UK, coupled with a slow recovery in employment and participation, mean wage pressures are currently limited to specific sectors. These are most obvious in professional and business services, and in sectors that previously relied on low-skilled migrant labour, such as construction, leisure and hospitality.

UK (The Times): Most hospitals are getting through Omicron without tipping into crisis, NHS chiefs believe, as confidence grows among ministers that further Covid restrictions will be avoided. There is increasing optimism that hospital admissions in London have peaked and that frontline NHS services will be able to cope with the variant in most of the rest of the country.

UK (The Times): The economy will receive a much-needed boost from business investment this year with a record proportion of finance directors ready to prioritise funds for expansion, a survey says. Thirty-seven per cent of chief financial officers surveyed by Deloitte said that increasing capital expenditure, the money used to buy fixed assets such as land, machinery or buildings, was a priority for 2022. It is the highest figure recorded by the accounting firm in its quarterly survey since it first asked the question in 2009.

UK (MNI): Johnson's Conservatives Make Gains In Latest Poll, But Labour Still In Front
Latest opinion polling from YouGov shows Prime Minister Boris Johnson and his centre-right Conservative Party gaining back some ground lost during a disastrous December for the PM and the gov't. However, the main opposition centre-left Labour Party remain ahead and its leader Sir Keir Starmer retains the position as most preferred PM.

CHINA (MNI): The People's Bank of China (PBOC) injected CNY10 billion via seven-day reverse repos with the rate unchanged at 2.2% on Monday. This operation has injected net CNY10 billion as no reverse repos maturing today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said onits website.

DATA

MNI: EZ NOV UNEMPLOYMENT RATE 7.2%; OCT 7.3%

MNI: AUSTRALIA NOV DWELLING APPROVALS +3.6% M/M, -7.7% Y/Y

FOREX: USD/CAD Breaks Key Support, Opens Losses Toward 1.26

• Currency markets are generally rangebound, with the greenback mid-table and the single currency slightly underperforming. EUR/USD has pulled lower from the late Friday highs of 1.1365, and now sits at the midpoint of last week's range.
• USD/CAD is the standout, breaking lower still, with the pair now through both the 100-dma support at 1.2627 as well as the Dec31 low of 1.2621. This narrows the gap with key support at 1.2608, the Dec 8 low.
• Commodity-tied currencies are generally firmer, with NOK also trading well despite a moderation in oil prices headed through the Monday open. This puts USD/NOK lower for a second session and further below the 50-dma of 8.8641.
• The data and speaker slate is typically muted for a Monday, with just US wholesale inventories/trade sales numbers due. There are no central bank speakers of note.

BOND SUMMARY: Unwinding the exuberant start

After an exuberant start to the European session following on from a risk-on Asian session, core fixed income has now largely reversed some of the gains seen this morning.

• There have not been too many noteworthy headlines to drive the reversal. Just as we were typing Fed's Barkin said that a March rate hike is "conceivable."
• Volumes remain subdued as the market looks ahead to US CPI on Wednesday.
• TY1 futures are down -0-3 today at 128-06+ with 10y UST yields up 1.3bp at 1.777% and 2y yields up 0.4bp at 0.868%.
• Bund futures are up 0.07 today at 170.07 with 10y Bund yields down -0.3bp at -0.89% and Schatz yields up 1.0bp at -0.589%.
• Gilt futures are down -0.02 today at 123.00 with 10y yields down -0.1bp at 1.176% and 2y yields unch at 0.819%.

EQUITIES: Mixed markets across the Atlantic

• China's SHANGHAI closed up 13.976 pts or +0.39% at 3593.519 and the HANG SENG ended 253.16 pts higher or +1.08% at 23746.54
• German Dax down 19.9 pts or -0.12% at 15936.11, FTSE 100 down 3.69 pts or -0.05% at 7483.71, CAC 40 down 8.27 pts or -0.11% at 7219.1 and Euro Stoxx 50 down 5.88 pts or -0.14% at 4301.73.
• Dow Jones mini up 39 pts or +0.11% at 36139, S&P 500 mini up 5.75 pts or +0.12% at 4673, NASDAQ mini up 15.75 pts or +0.1% at 15594.75.

COMMODITIES: Natgas the big divergent mover

• WTI Crude up $0.44 or +0.56% at $79.34
• Natural Gas (NYM) up $0.21 or +5.36% at $4.126
• Natural Gas (ICE Dutch TTF) down $1.67 or -1.9% at $86.5
• Gold spot up $0.69 or +0.04% at $1797.
• Copper up $0.1 or +0.02% at $441.1
• Silver up $0.05 or +0.21% at $22.4109
• Platinum down $0.47 or -0.05% at $961.7