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Most Of The Markets Across Europe Remain Shut On For Boxing Day Holiday, Political Developments In Washington Remain A Focus

Notes/Observations

  • Most of the markets across Europe remain shut on for Boxing Day holiday
  • No Christmas Break for the correction; equities still reeling from the not-as-dovish-as-hoped Fed decision from last Wednesday; S&P 500 entered a bear market
  • Mood expected to be cautious following recent heavy sell-off across the globe amid rising concerns about growth and trade war jitters
  • Political developments in Washington remain a focus

Asia:

  • China PBoC adviser Sheng Songcheng: China would not resort to large scale monetary stimulus in 2019 as doing so would risk re-heating the property market. Saw room to further cut the reserve requirement ratios (RRR) but not likely to lower the benchmark interest rates
  • BOJ Gov Kuroda: Must seek most appropriate policy while balancing benefits and costs of policy; affirmed BOJ to do upmost to reach price target
  • BoJ Oct meeting minutes reiterated that most members shared view momentum toward achieving 2% inflation was being maintained. Showed a divide over the effects of easing, while the minutes from the bond market group showed they want to see BOJ accelerate JGB purchase reduction
  • Bank of Korea (BOK) annual monetary report kept its open ended inflation (CPI) target unchanged at 2.0% for both 2019 and 2020 period; to review every 2-years; to keep accomodative monetary stance to prop up the economic recovery

Americas:

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  • President Donald Trump dug in and said lawmakers must approve funding for his border wall if they hope to end the government shutdown, a sign the impasse may not be quickly resolved when Congress returns to session after the holidays
  • Mastercard Spending Pulse: Total U.S. retail sales (ex-autos) +5.1% between Nov. 1 and Dec. 24 from a year earlier; strongest level in 6 years

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Speakers

  • Thailand Finance Ministry spokesperson Pisit Puapan stated that it expected Q4 GDP growth to be higher than Q3’s pace. Noted that overall 2018 GDP growth target of 4.5% is dependent upon spending and tourism

Currencies/Fixed Income

  • USD was steady in quiet trade on Dec 26th but remained vulnerable due to the US federal government partial shutdown and President Trump’s hostile stance towards the Federal Reserve chairman. US bond yields have declined amid the recent equity rout, including a steep sell-off in oil which has sent money into safe-haven assets

Economic Data

  • (ES) Spain Nov PPI M/M: -1.0% v 0.0% prior; Y/Y: 3.0% v 4.6% prior

Fixed Income Issuance

  • (IN) India sold total INR150B vs. INR150B indicated in 3-month, 6-month and 12-month bills

Looking Ahead

  • 06:30 (TR) Turkey Dec Real Sector Confidence (Seasonally Adj): No est v 96.8 prior; Real Sector Confidence NSA: No est v 92.8 prior
  • 06:30 (TR) Turkey Dec Capacity Utilization: No est v 74.1% prior
  • 07:00 (RU) Russia to sell OFZ bonds
  • 09:00 (US) Oct S&P Case-Shiller 20-City M/M: 0.30%e v 0.33% prior; Y/Y: 4.75%e v 5.15% prior; House Price Index (HPI): No est v 213.76 prior
  • 09:00 (US) Oct S&P Case-Shiller (overall) Y/Y: No est v 5.51% prior; Overall HPI Index: No est v 205.82 prior
  • 09:30 (BR) Brazil weekly Currency Flow data
  • 10:00 (US) Dec Richmond Fed Manufacturing Index: 15e v 14 prior
  • 10:00 (MX) Mexico weekly International Reserve data
  • 11:30 (BR) Brazil Nov Total Federal Debt (BRL): No est v 3.8T prior
  • 13:00 (US) Treasury to sell 5-Year Notes
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