India reports December WPI Monday, which is expected to rise 3.50% y/y vs. 3.15% in November. December CPI came in slightly lower than expected at 3.41% y/y, and so there are some downside risks to WPI. RBI next meetsFebruary 8 and it will be a tough call since the impact of the November demonetization is still being felt in the economy.
What events and releases will impact trading in the week starting Jan 16th.
- ECB interest rate statement. Thursday 7:45 AM ET/1245 GMT. ECB Draghi press conference to follow at 8:30 AM ET/1330 GMT. The ECB will meet next week and announce that rates will remain unchanged. The last meeting the ECB moved increase the types of bonds that could be purchased for QE purposes (read German notes). That included bonds with yields below the -0.4% deposit rate. In addition, they lowered the maturity requirement to one-year from two- years (read German notes). However, they also reduced the amount of QE purchases from 80B Euro to 60B Euro until the end of December. There will be no change in policy, nor change in QE. So the focus will be squarely on the comments from Draghi during his traditional prepared statement and then Q&A. Will he sway more toward the hawkish Germans or keep committed to the the same path..
- Bank of Canada rate statement. Wednesday at 10 AM ET/1500 GMT. Press conference at 11:15 AM ET. The bank will also release its quarterly Monetary Policy Report (MPR) at 10 AM ET. Stephen Poloz and Senior Deputy Gov. Carolyn Wilkens will give a statement and hold a press conference. The rate is expected to remain unchanged at 0.5%. In their last MPR, they saw 2017 CPI at 1.9% and core CPI at 1.7%. That was down from earlier projections of 2.1% and 2.0% respectively. For GDP they estimate growth of 2.2% (up from 2.1%).
- US CPI/Core CPI. Wednesday at 8:30 AM ET/1330 GMT. The US will release consumer price data for December with expectations for MoM rising by 0.3% (vs. +0.2% last month). The Ex Food and energy is expected to increase by +0.2% (vs +0.2% last). The YoY numbers are expected to rise to 2.1% from 1.7% and 2.2% from 2.1%. The core YoY ended 2015 at 2.1% with the high extending to 2.3% in Feb and again in August
- Australia employment change. Wednesday at 7:30 PM ET/Thrusday 0030 GMT. The Australian employment report is expected to show employment change of 10.0K vs 39.1K last month. The gain last month was well above the estimate of 17.5K. The unemployment rate did move higher to 5.7% last month from 5.6%. The estimate is for the rate to remain at 5.7%. Last month full time employment rose by 39.3K. The part time employment fell by -0.2K.
- UK Retail sales. Friday at 4:30 AM ET/0930 GMT. The November retail sales in the UK are expected to to dip by -0.1% vs. +0.2% estimate last month. Ex auto fuel a larger -0.4% decline is forecast. The YoY changes are expected to show healthy 7.2% and 7.5% gains respectively.
Feeling “humiliated” by events since demonetisation, RBI employees today wrote to Governor Urjit Patel protesting against operational “mismanagement” in the exercise and Government impinging its autonomy by appointing an official for currency coordination.
In a letter, they said autonomy and image of RBI has been “dented beyond repair” due to mismanagement and termed appointment of a senior Finance Ministry official as a “blatant encroachment” of its exclusive turf of currency management.
“An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained,” the United Forum of Reserve Bank Officers and Employees said in the letter addressed to Patel.
Commenting on “mismanagement” since November 8, when note ban was announced, and the criticism from different quarters, the letter said, “It’s (RBI’s) autonomy and image have been dented beyond repair.”
At least two of the four signatories — Samir Ghosh of All India Reserve Bank Employees Association and Suryakant Mahadik of All India Reserve Bank Workers Federation — confirmed the letter. The other signatories are C M Paulsil of All India Reserve Bank Officers Association and R N Vatsa of RBI Officers Association.
The forum represents over 18,000 employees of the RBI across the ranks, Ghosh said.
ECB minutes from the Dec 2016 governing council meeting
- A few members couldn’t support either of QE options
- A few preferred a QE extension of 6months at €80bn
- Praet & Coeure preferred extending for 9m at €60bn
- Political and economic uncertainty remained high
- Eurozone wage bargaining pressures could pick up
First, as Bloomberg reported, in addition to Draghi and Renzi, the extensive cyber-spying operation targeted more than 18,000 e-mail accounts, according to a court document. The aptly named operation “Eye Pyramid” (more on that shortly) revealed cyber-spying of institutions, state agencies, professionals, political figures and business people lasting for years, Italian police said in an e-mailed statement Tuesday.
Police said two people were arrested: a nuclear engineer and his sister, both living in Rome “and well-known in Roman financial circles.”
The two were Giulio Occhionero, 45, and his sister Francesca Maria Occhionero, 48, who were charged with stealing state secrets and illegal hacking. Lawyers representing the two could not be immediately reached. According to the complaint, the alleged hackers acted “with the aim of making a profit for themselves or for others.”
The suspects’ arrest warrant issued by Rome pre-trial Judge Maria Paola Tomaselli states that Draghi’s e-mail at the Bank of Italy was hacked in the summer of 2016. Draghi served as governor of the Italian central bank from 2005 to 2011. An e-mail account belonging to Renzi was also hacked, the document says.
The suspects tried to obtain confidential and sensitive data, especially on banks, at the ECB in Frankfurt and at the Bank of Italy in Rome, according to a person familiar with the investigation, speaking on the condition of not being identified by name. As Bloomberg add, “the two arrested are suspected of obtaining information on national security, serious illegal access to a computer system and illicit interception of computer communications in an investigation led by Rome prosecutors, an Italian police statement said.”
Stocks ended mixed Thursday as retailers dominated the news with Macy’s and Kohl’s both plunging following weak holiday-season reports that led the chains to cut their profit forecasts.
Still, the Nasdaq composite’s modest gain of 11 points, or 0.2%, was enough to notch a new all-time high. Settling at at 5487.94, it topped the old record by half a point.
The Dow Jones industrial average finished down 43 points, a 0.2% decline to 19,899.29. Losing 0.1% was the S&P 500, which settled at 2269 even.
nvestors were also focusing on upcoming U.S. jobs data following the publication of the minutes to the Federal Reserve’s last board meeting.
Private U.S. companies added 153,000 jobs in December, according to payroll processor ADP. That total was a bit lower than analysts expected and slightly slower than the pace of hiring for the rest of 2016. The government will issue its own hiring report on Friday.
Highlights of the Minutes of the Dec 14 FOMC meeting
The Fed hiked rates by 0.25% at this meeting
Highlights of the Minutes:
- Almost all officials saw upside risks to growth on expectations fiscal policies will be more expansionary under Trump
- About half of policymakers incorporated those assumptions into forecasts
- Many saw increased chance of faster rate hike pace due to higher risk of sizeable undershooting of longer-run normal unemployment rate leading to higher inflation
- Policymakers emphasized their considerable uncertainties on timing, size and composition of legislative and spending changes
- Almost all members saw unemployment rate running below longer-term normal level
- Generally agreed o continue to closely monitor inflation
- Full text
There is never as much detail or conviction in the Minutes as market-watchers hope for. This is the closest thing there is to guidance:
“At this meeting, members continued to expect that, with gradual adjustments in the stance of monetary policy, inflation would rise to the Committee’s 2 percent objective over the medium term as the transitory effects of past declines in energy prices and non-energy import prices dissipated and the labor market strengthened further. This view was reinforced by the rise in inflation in recent months and by recent increases in inflation compensation. Against this backdrop and in light of the current shortfall in inflation from 2 percent, members agreed that they would continue to closely monitor actual and expected progress toward the Committee’s inflation goal.”
The knee-jerk reaction in the FX market was disappointment and the US dollar fell 30 pips but it quickly rebounded back to unchanged.
On the election, here is what the Minutes said:
Stocks climbed Wednesday as Wall Street posted a second straight day of gains in the new year and the Dow once again approached the 20,000 milestone.
The Dow Jones industrial average ended up 60 points, or 0.3%, to 19,942.16. The blue-chip index rose has come close to topping 20,000 several times in recent weeks but each time it gets near has pulled back. The Standard & Poor’s 500 index rose 0.6% and the Nasdaq composite index gained 0.9%. Both the S&P 500 and Nasdaq are near their record closing highs.
Stocks maintained their gains following the release of the minutes from the latest Federal Reserve meeting that provided clues to why policymakers raised interest rates in December for only the second time since 2006 and forecast three rate hikes in 2017 instead of the two moves previously anticipated.
Fed officials said they might have to raise interest rates faster than anticipated to prevent rapidly falling unemployment and President-elect Donald Trump’s proposed fiscal stimulus from fueling excessive inflation, according to minutes of the Fed’s December 13-14 meeting.
Benchmark U.S. crude was up 1.8% to $53.24 a barrel in New York. It lost $1.39 on Tuesday.
As noted yesterday, for the first time in three years, and only the second time in history, bitcoin rose above $1,000 in Yuan-denominated Chinese trading, however it was limited to the lower side of this “round number” psychological barrier in US trading, as BTC flirted with $999.99 for most of the day on the popular Coinbase exchange, without crossing it.
Overnight, however, Chinese demand proved too great and US markets had no choice but to arb the difference. So with Bitcoin trading in China at an implied price of over $1,050 at this moment, bitcoin finally soared above $1,000 in the US as well, trading just around $1,024 on Coinbase as of this moment.