MNI US OPEN - Eyes on Stockholm as CB Symposium Underway

NEWS

GERMANY (MNI): German Insolvencies Sen Rising This Year - IWH

Insolvencies in Germany ticked to their highest level seen through 2022 in December, the latest Leibniz Institute for Economic Research Halle (IWH) figures show [in German], but were still below the average rate recorded between 2015 and 2019. The number of partnerships and corporations going bust last month was 879, up from 808 the previous month and 23% higher than the same period in 2021, with the largest 10% of insolvencies affecting some 9,000 jobs.

FRANCE (MNI): PM Borne to Announce Pension Reform Proposals, Risks Major Backlash

Later today Prime Minister Elisabeth Borne is set to announce the Macron administration's plans for major pensions reform today in a move that could spark notable industrial and social unrest. France has one of the industrialised world's most generous pension systems, and it has been an aim of President Emmanuel Macron to reform the programme in order to reduce the sizeable deficit generated by the system.

CHINA (MNI): Tax Relief to Support Small Businesses - Finance Ministry

Authorities in China have announced VAT reduction and exemption policies to support small scale businesses, according to Yicai.com. The Ministry of Finance State Administration said from January 1, small scale firms with monthly sales of less than CNY100,000 will be exempted from VAT in 2023. Any tax paid prior to the new policy can be claimed back retrospectively, the ministry said.

AUSTRALIA (MNI): RBA Inflation Fight Aided by Increased Migration

Revised labour force estimates have provided some marginal comfort to the Reserve Bank of Australia around the supply of workers and the prospects for wage-push inflation, despite recent jobs data being stronger than expected by monetary policymakers, MNI understands.

EUROZONE (MNI): Goldman GDP Upgrade Underlines Expectations Have Likely Bottomed

Coming into 2023, consensus looks for a recession in the eurozone, with varying degrees of recovery thereafter - the BBG median forecast for Q/Q GDP is -0.4% in each of Q4 2022 and Q1 2023, before picking up slightly in the following quarters.

Goldman Sachs is one of the first to buck the trend, upgrading their growth forecast for Q1 2023 to +0.1% from -0.4% (their tracking estimate for Q4 2022 is -0.2%). Additionally, they now see growth in Q2 (+0.1% vs -0.1% prior) and Q3 (+0.1% vs flat prior), for a +0.6% growth forecast for all of 2023. In other words, they've rescinded their call for a technical recession.

DATA

FRANCE NOV MANUFACTURING OUTPUT +2.4% M/M, +4.2% Y/Y (MNI)
FRANCE NOV INDUSTRIAL PRODUCTION +2% M/M, +0.7% Y/Y (MNI)

NORWAY DEC CPI +0.1% M/M, +5.9% Y/Y (MNI)
NORWAY DEC CORE CPI +0.4% M/M, +5.8% Y/Y (MNI)

CHINA END-DEC M2 +11.8% Y/Y VS MEDIAN +12.3% Y/Y (MNI)
CHINA DEC NEW LOANS CNY 1.40 TRLN VS MEDIAN CNY1.20 TRLN (MNI)
CHINA DEC TSF CNY1.31 TRLN VS MEDIAN CNY1.85 TLN (MNI)

JAPAN DATA (MNI): Japan's Dec Tokyo CPI Rises 4%; Highest Since 1982

• JAPAN DEC TOKYO CORE CPI +4.0% Y/Y; NOV +3.6%
• JAPAN DEC TOKYO CORE-CORE CPI +2.7% Y/Y; NOV +2.5%
• JAPAN NOV HOUSEHOLD SPENDING -1.2% Y/Y; OCT +1.2%
• JAPAN NOV HOUSEHOLD SPENDING -0.9% M/M; OCT +1.1%

The year-on-year rise in Tokyo core inflation rate accelerated to 4% in December from November’s 3.6%, indicating that nationwide core CPI will likely rise to near 4% in December compared to 3.7% in November, data from the Ministry of Internal Affairs and Communications showed on Tuesday.

AUSTRALIA (MNI): Aussie Household Spending Slows as Rate Hikes Bite

The Reserve Bank of Australia rate hikes have taken heat out of household spending, which fell for a third consecutive month in November, according to the Australian Bureau of Statistics. Household spending increased 11.4% y/y in November, down from 20.9% in October. The pace of spending peaked at 29.2% in August.

FX SUMMARY: Currencies Pick Up Where They Left Off

• Currency markets have picked up where they left off on Monday, with EUR/USD holding above the 1.07 handle well ahead of the NY crossover. Overnight developments have been muted, with the main development of the week remaining the USD's step lower on Monday as well as the bullish break for European equities posted ahead of the close.
• A strong recovery extended Monday in EURUSD, confirming the end of the recentcorrective pullback. The bull trigger at the Dec 15 high at 1.0735, has been cleared and this confirms a resumption of the uptrend. The break higher maintains the bullish price sequence of higher highs and higher lows and note that MA studies are in a bull-mode position. The focus is on 1.0787, the May 30, 2022 high.
• CNH sits slightly lower on an intraday basis, but USD/CNH managed a lower low during Asia-Pac hours. This put the pair at new multi-month lows of 6.7589. 6.7359 sits as next support, the Aug 15 2022 low.
• Tier one data releases remain few and far between, keeping focus on central bank speak. The Riksbank hold a day-long conference on the topic of central bank independence, with Fed's Powell, BoE's Bailey, ECB's Schnabel, BoC'S Macklem and others all due to appear.
• The relevance of their comments on near-term policy remains to be seen, with market focus still on Thursday's US CPI release and the incoming raft of US corporate earnings reports.

BOND SUMMARY: Yields Higher With Supply, Cenbank Speakers In Focus

Global core FI is slightly weaker in early Tuesday trade, with Bunds underperforming Tsys and Gilts. Focus is on supply and central bank communications.

• German yields have drifted higher most of the morning, with UK and US yields up but off session highs. Periphery EGB spreads are mostly wider.
• Most attention in Tuesday's session is on a Riksbank event that's just gotten underway and is running most of the day, with a heavy set of global central bank speakers due including Fed's Powell.
• While the data docket is relatively quiet, Tuesday's European issuance slate is packed, with supply from the Netherlands, Austria, UK, Belgium, Latvia, and Italy.
• USD corporate sales continue apace meanwhile, and $40B 3Y Note will kick off Tsy coupon issuance for 2023.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.7bps at 2.649%, 5-Yr is up 5.1bps at 2.317%, 10-Yr is up 4.8bps at 2.276%, and 30-Yr is up 4.3bps at 2.223%.
• UK: The 2-Yr yield is up 2bps at 3.465%, 5-Yr is up 2.1bps at 3.467%, 10-Yr is up 3.6bps at 3.562%, and 30-Yr is up 4.3bps at 3.988%.
• Italian BTP spread up 1.8bps at 197.6bps / Spanish up 0.4bps at 104.9bps

EQUITIES: Eurostoxx Futures Clear 4043.0 Bull Trigger, Opens 4100.0 Handle

EUROSTOXX 50 futures traded higher Monday, extending the recent climb. The contract has cleared resistance at 4043.00, the Dec 13 high and a bull trigger. The clear breach of this hurdle represents a key short-term bullish development and paves the way for gains towards the 4100.00 handle. Moving average studies are in a bull-mode condition, reinforcing the current positive trend condition. Initial support lies at 3912.60, the 20-day EMA. S&P E-Minis traded higher Monday but failed to hold on to the session high and closed at the day low. Key resistance at 3917.35, the 50-day EMA, has been breached. A continuation higher and a clear break of this EMA would suggest potential for a stronger recovery and highlight a possible reversal that would open 4000.00 next. On the downside, a break lower would confirm a resumption of the downtrend - the bear trigger is 3788.50, the Dec 22 low.

• Japan's NIKKEI closed higher by 201.71 pts or +0.78% at 26175.56 and the TOPIX ended 5.12 pts higher or +0.27% at 1880.88.
• Elsewhere, in China the SHANGHAI closed lower by 6.577 pts or -0.21% at 3169.507 and the HANG SENG ended 56.88 pts lower or -0.27% at 21331.46.
• Across Europe, Germany's DAX trades lower by 89.72 pts or -0.61% at 14702.2, FTSE 100 lower by 24.22 pts or -0.31% at 7700.24, CAC 40 down 44.68 pts or -0.65% at 6862.68 and Euro Stoxx 50 down 23.26 pts or -0.57% at 4045.36.
• Dow Jones mini down 104 pts or -0.31% at 33566, S&P 500 mini down 8 pts or -0.2% at 3905.75, NASDAQ mini down 15.5 pts or -0.14% at 11169.75.

COMMODITIES: Monday Price Action Extends Current Gold Uptrend

WTI futures failed to hold on to yesterday’s gains. A bearish theme remains intact following the sell-off on Jan 3 and 4. Key support and the bear trigger lies at $70.31, the Dec 9 low. A break of this level would confirm a resumption of the broader downtrend and maintain a bearish price sequence of lower lows and lower highs. This would open $68.19, a Fibonacci projection. On the upside, key resistance is at $81.50, the Jan 3 high. Trend conditions in Gold remain bullish and the yellow metal traded higher Monday, starting the week on a firm note and extending the current uptrend. The move higher maintains the positive price sequence of higher highs and higher lows and note that moving average studies are in a bull mode position - reflecting the current trend condition. The focus is on $1896.5, a Fibonacci retracement. On the downside, support to watch lies at $1825.2, Jan 5 low.

• WTI Crude down $0.38 or -0.51% at $74.25
• Natural Gas down $0.17 or -4.27% at $3.741
• Gold spot up $3.73 or +0.2% at $1875.71
• Copper down $1.5 or -0.37% at $401.05
• Silver down $0.07 or -0.31% at $23.5874
• Platinum down $1.65 or -0.15% at $1080.56