Eurozone retail sales fell in November, down 0.3% m/m with declines across all major segments apart from automotive fuel. On an annual basis sales were down more than 1% with declines of 1.5% in France and 2.4% in Germany. However, there was an improvement in economic confidence in the Eurozone for December to 96.4 on the index from 93.8 a month earlier. Industrial confidence also improved although it remained overall negative.
Factory orders in Germany disappointed for November, rising by just 0.3% /m and falling short of an expected 1% m/m gain. On an annual basis factory orders extended their slump, recording five consecutive months of contraction. Metal production was the principal contributor to the decline in November while automobile production did recover, recording a 4.7% increase m/m. Exports, however, improved much more than expected and recorded a 3.7% increase m/m after a small decline a month earlier.
Today’s Economic Data and Events
- 11:00 GE Industrial production m/m Nov: forecast 0.3%
- 14:00 EC Unemployment rate Nov: forecast 6.5%
Fixed Income
- US Treasuries pushed moderately higher overnight, spurred on by a drop in spot crude prices. Yields on the 2yr UST closed near flat at 4.3746% after the 2yr pared some gains from earlier in the session. The 10yr yield closed about 1bps lower at 4.0305%.
- Fed governor Michelle Bowman said that it will “eventually become appropriate” to cut rates as inflation falls closer to target levels but also noted that inflation was “not yet at that point.” Bowman said that she would “remain cautious” on the stance of monetary policy to avoid reigniting inflation.
- Saudi Arabia sold USD 12bn of bonds in a three-tranche deal. A USD 3.25bn 6yr priced at +90, a USD 4bn 10yr priced at +110 and a USD 4.75bn 30yr priced at +170.
FX
- Currency markets were relatively muted overnight though with a broadly weaker performance for the US dollar. EURUSD added a bit less than 0.1% to close at 1.095 while GBPUSD showed stronger moves, adding 0.2% to 1.2748. USDJPY closed lower by 0.3% at 144.23.
- In commodity currencies CAD, AUD and NZD all rallied by about 0.1% against the US dollar.
Equities
- Equity markets opened in the green overnight with the S&P 500 index adding 1.4% while the Dow Jones rallied 0.6% and the NASDAQ was up a robust 2.2%. European markets were also broadly positive with the EuroStoxx index adding 0.5% and the FTSE edging up slightly.
- Asian markets have begun trading today on a stronger footing with the Nikkei up almost 1.5% while the Hang Seng has rallied by 0.6%.
- Regional markets had a mixed session overnight with the DFM pushing up slightly while the ADX added about 0.6%. The Tadawul closed lower by 0.3%.
Commodities
- Oil markets sank overnight as the fundamental picture looks increasingly soft. Brent futures fell 3.3% to USD 76.12/b, their lowest level so far this year, while WTI dropped more than 4% to USD 70.77/b. Saudi Aramco cut their official selling prices by a wider level than had been expected, particularly to Asian destinations.
