ECB dove says no need to wait until summer for rate cuts

EU mid-market uUpdate: UK’s Hays mentioned slowing hiring trends globally in Dec; ECB dove says no need to wait until summer for rate cuts.


– US futures and European indices lower in attempt to give back some of yesterday’s gains after Fed’s Bostic re-iterated, he sees two 25bps rate cuts in 2024, notably less than Fed futures which price >5 cuts. Next Fed speaker is Barr, today at 12:00 ET (17:00 GMT).

– European data was mixed, with UK BRC LFL sales miss weighing on FTSE100 and miss in German industrial production dragging down DAX. However, saw sturdy unemployment figures from Euro Zone, Italy and Swiss.

– Global recruitment giant Hays mentioned clear slowdown in December’s hiring trends in most of its markets; It noted hiring for permanent roles notably slowed, temporarily roles hiring also did not see its normal seasonal step-up in worker volumes during December.

– Samsung preannouncement miss on both top and bottom lines weigh on European chip names and some US semiconductor stocks premarket.

– Boeing issues multiplied after initial inspections by Alaska Air and United found loose bolts on problem plug doors on 737-Max9. Ryanair (Europe’s largest airline and single-type operator of 737NG and Max-10) CEO sees 737 reputational damage as a problem and notes aircraft delivery delays to impact results.

– Crypto run continued as several firms released S-1 filings of BTC ETFs yesterday.

– Asia closed higher with Nikkei225 outperforming +1.2%. EU indices are -1.5% to 0.0%. US futures are -0.3% to -0.4%. Gold +0.3%, DXY +0.1%; Commodity: Brent +1.9%, WTI +2.0%, TTF -2.2%; Crypto: BTC +6.4%, ETH +3.8%.


– Japan Dec Tokyo CPI Y/Y: 2.4% v 2.5%e; CPI (Ex-Fresh Food) Y/Y: 2.1% v 2.1%e.

– Japan Nov Household Spending Y/Y: -2.9% v -2.3%e.

– Australia Nov Retail Sales M/M: 2.0% v 1.2%e.

– Australia Nov Building Approvals M/M: +1.6% v -2.0%e.

– China PBOC Head of Monetary Policy Zou Lan pledged to use various monetary tools to increase credit, and to promote stabilization and decrease of financing costs. Would use reserve requirement and other tools to boost credit.

Global conflict/tensions

– US Sec of State Blinken reiterated stance that Houthi attacks in the Red Sea have to stop, there would be consequences.

– Saudi Arabia said to be among a number of Middle Eastern countries telling the West they back strikes against the Houthis in Yemen.

– Shipping company Maersk refuted reports that it had entered a deal on Red Sea passage [**Note: responded to ShippingWatch report that ‘some’ shipping firms entered into deals with the Houthis to avoid attacks].


– France’s PM Borne resigned, she will act as caretaker until new government was named. Move clearing the path for a cabinet reshuffle. Macron has previously pledged a new political initiative.

– UK Dec BRC Sales LFL Y/Y: 1.9% v 2.4%e v 2.6% prior.


– US Nov Consumer Credit: $23.9B v $9.0Be v $5.1B prior.

– Fed’s Bowman (voter, hawk) stated that Policy appeared to be sufficiently restrictive to hit 2%. Rate cuts were eventually warranted as inflation declined.

– Fed’s Bostic (voter) noted that inflation had come down more than he expected and has placed the Fed in a very strong position. Reiterated expectation of two 25bps rate cuts appropriate by the end of the year. The outlook was now not for inflation to rebound, but the Fed still needed to pay attention.

Speakers/fixed income/FX/commodities/erratum


Indices [Stoxx600 -0.26% at 476.92, FTSE -0.03% at 7,691.67, DAX -0.13% at 16,694.92, CAC-40 -0.08% at 7,444.62, IBEX-35 -1.41% at 10,065.50, FTSE MIB -0.05% at 30,554.00, SMI -0.10% at 11,219.60, S&P 500 Futures -0.30%].

Market focal points/key themes: European indices open mixed with a modest upward bias that quickly faded through the early part of the session with most bourses trading marginally in the red after a the first few hours of trading; better performing sectors include health care and energy; while underperforming sectors are led by materials and real estate; Spanish IBEX-35 underperforming other European indices as Grifols trades down over 40% following short seller report; GSK acquires Aiolos Bio; reportedly Novartis in late-stage talks to acquire Cytokinetics; focus on US trade balance later in the day; earnings expected in the upcoming US session include TD Synnex.


– Consumer discretionary: Hays [HAS.UK] -15.5% (mentions clear slowdown in Dec hiring trends in most of its markets; Notes hiring for permanent roles notably slowed, temporarily roles hiring also did not see its normal seasonal step-up in worker volumes during Dec).

– Energy: TGS [TGS.NO] -15.5% (trading update), PGS [PGS.NO] -13.5% (trading update).

– Financials: Jupiter Fund Management [JUP.UK] -12.5% (trading update).

– Healthcare: MaxCyte [MXCT.UK] +6.5% (prelim Q4), Grifols [GRF.ES] -45.0% (Gotham City research piece), Novartis [NOVN.CH] +1.0% (reportedly Novartis in late stage talks to acquire Cytokinetics).

– Industrials: BASF [BAS.DE] -2.5% (analyst downgrade).

– Technology: Infineon [IFX.DE] -2.0%, STMicroelectronics [STM.FR] -2.0% (Samsung pre-announcement).


– ECB’s Centeno (Portugal) stated that easing of monetary policy was approaching. Would likely decide when to cut rates sooner than previously thought until recently. Do not have to wait until May to make decisions.

– Iran Supreme Leader Khamenei stated that would find out who was behind terrorist attack in Kerman.

Currencies/fixed income

– USD was steady in quiet trading on Tuesday. Dealers noted that the greenback faced headwinds on expectations the Fed would commence on rate cuts this year. Focus on US CPI data on Thursday which would likely provide further clarity on how much room the Fed has to ease rates this year.

– EUR/USD at 1.0940 by mid-session. ECB member Centeno moving towards market expectations on ECB rate cut hinting that it could occur in spring.

– USD/JPY back below 144 level despite Tokyo Dec CPI slowing to 2.1% and cemented that the BOJ would likely hold steady at its upcoming Jan rate decision.

– On the crypto space bitcoin hovered near its strongest level since April 2022 on growing anticipation of imminent approvals of spot bitcoin exchange-traded funds (ETF)

Economic data

– (NL) Netherlands Nov Consumer Spending Y/Y: +0.3 v -0.2% prior.

– (CH) Swiss Dec Unemployment Rate: 2.3% v 2.3%e; Unemployment Rate (seasonally adj): 2.3% v 2.2%e.

– (DE) Germany Nov Industrial Production M/M: -0.7% v 0.3%e; Y/Y: -4.8% v -4.0%e.

– (DK) Denmark Nov Current Account (DKK): 30.5B v 20.3B prior; Trade Balance (ex-shipping): 7.4B v 4.9B prior.

– (SE) Sweden Dec Budget Balance (SEK): -100.0B v +29.0B prior.

– (HU) Hungary Nov Industrial Production M/M: -2.3% v -0.5% prior; Y/Y: -5.6% v -1.4%e.

 (FR) France Nov Trade Balance: -€5.9B v -€8.5B prior; Current Account: -€2.8B v -€2.4B prior.

– (CZ) Czech Dec Unemployment Rate: 3.7% v 3.7%e.

– (CH) Swiss Dec Foreign Currency Reserves (CHF): 653.7B v 642.4B prior.

– (TW) Taiwan Dec Trade Balance: $11.1B v $9.0Be; Exports Y/Y: 11.8% v 5.6%e; Imports Y/Y: -6.5% v -7.0%e.

– (IT) Italy Nov Unemployment Rate: 7.5% v 7.8%e (record low).

– (CZ) Czech Dec International Reserves: $147.4B v $142.5B prior.

– (EU) Euro Zone Nov Unemployment Rate: 6.4% v 6.5%e (record low).

– (BE) Belgium Nov Unemployment Rate: 5.6% v 5.6% prior.

Fixed income issuance

– (ID) Indonesia sold total IDR vs. IDR target in Islamic bills and bonds (sukuk).

– (DE) German State of North Rhine Westphalia (NRW) to sell EUR-denominated 3.4% 2073bonds; guidance seen +103bps to mid-sw.

– (IT) Italy Debt Agency (Tesoro) opened its book to sell new 7-year and 30-year BTP bonds via syndicate.

– To sell new Feb 2031 BTP bonds; guidance seen +8bps to BTPs.

– To sell Oct 2053 BTP bonds; guidance seen +23bps to BTPs.

– (BE) Belgium Debt Agency (BDA) opened its book to sell EUR-denominated 10-year OLO bond via syndicate; guidance seen +26bps to mid-swaps.

– (NL) Netherlands Debt Agency (DSTA) sold €2.08B vs. €2.0-2.5B indicated range in 2.5% Jan 2030 DSL Bonds; Avg Yield: 2.334% v 2.950% prior.

– (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2040, 2044 and 2048 bonds.

– (ES) Spain Debt Agency (Tesoro) sold total €5.06B vs. €4.5-5.5B indicated in 6-month and 12-month bills.

– (UK) DMO sold £2.25B in 4.75% Oct 2043 Gilts; Avg Yield: 4.391% v 4.6357% syndicate; bid-to-cover: 3.62x; Tail: 0.2bps.

– (AT) Austria Debt Agency (AFFA) sold total €2.01B vs. €2.01B indicated in 2033 and 2053 RAGB Bonds.

Looking ahead

– (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 5.75%.

– 05:25 (EU) Daily ECB Liquidity Stats.

– 05:30 (CH) Switzerland to sell 3-month Bills.

– 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

– 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills.

– 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

– 06:00 (US) Dec NFIB Small Business Optimism Index: 91.0e v 90.6 prior.

– 06:00 (IE) Ireland Nov Retail Sales Volume M/M: No est v -0.5% prior (revised from -0.4%); Y/Y: No est v -0.2% prior.

– 06:00 (IE) Ireland Nov Industrial Production M/M: No est v -7.0% prior; Y/Y: No est v -31.4% prior.

– 06:00 (PT) Portugal Nov Trade Balance: No est v -€2.9B prior.

– 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month bills.

– 07:00 (MX) Mexico Dec CPI M/M: 0.7%e v 0.6% prior; Y/Y: 4.6%e v 4.3% prior.

– 07:00 (MX) Mexico Dec CPI Core M/M: 0.5%e v 0.3% prior; Y/Y: 5.1%e v 5.3% prior.

– 07:00 (MX) Mexico Dec Vehicle Production: No est v 329.4K prior; Vehicle Exports: No est v 281.3K prior.

– 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

– 08:00 (UK) Daily Baltic Dry Bulk Index.

– 08:30 (US) Nov Trade Balance: -$65.0Be v -$64.3B prior.

– 08:30 (CA) Canada Nov Int’l Merchandise Trade (CAD): 2.2Be v 3.0B prior.

– 08:30 (CA) Canada Nov Building Permits M/M: -1.5%e v +2.3% prior.

– 08:55 (US) Weekly Redbook LFL Sales data.

– (CO) Colombia Dec Consumer Confidence: No est v -20.9 prior.

– 12:00 (US) Fed’s Barr.

– 12:30 (FR) ECB’s Villeroy (France).

– 13:00 (US) Treasury to sell 3-Year Notes.

– 16:30 (US) Weekly API Oil Inventories.

– 18:00 (KR) South Korea Dec Unemployment Rate: 2.9%e v 2.8% prior.

– 18:00 (CO) Colombia Dec CPI M/M: 0.5%e v 0.5% prior; Y/Y: 9.5%e v 10.2% prior.

– 18:00 (CO) Colombia Dec CPI Core M/M: 0.6%e v 0.7% prior; Y/Y: 10.3%e v 10.6% prior.

– 18:30 (JP) Japan Nov Labor Cash Earnings Y/Y: 1.5%e v 1.5% prior; Real Cash Earnings Y/Y: -2.0%e v -2.3% prior.

– 19:00 (NZ) New Zealand Dec ANZ Commodity Price M/M: No est v -1.3% prior.

– 19:30 (AU) Australia Nov CPI Y/Y: 4.5%e v 4.9% prior.

– 19:30 (AU) Australia Q3 Job Vacancies Q/Q: No est v -8.9% prior.

– 20:00 (PH) Philippines Nov Trade Balance: -$4.1Be v -$4.2B prior; Exports Y/Y: -12.7%e v -17.5% prior; Imports Y/Y: -4.2%e v -4.4% prior.

– 20:30 (KR) Bank of Korea (BOK) to sell 1-year Monetary Stabilization Bonds (MSBs).

– 21:35 (CN) China to sell 3-year and 7-year Upsized Bonds.

– 21:35 (CN) China to sell 3-month Bills.

– 22:00 (KR) South Korea Dec Total Bank Lending to Household (KRW): No est v 1091.9T prior.

– 22:00 (TH) Thailand to sell combined THB38B in 2029 and 2055 bonds.

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

Leave a Reply

Your email address will not be published. Required fields are marked *