With the wind down of the record 2014 trading slump now in its final days (although judging by volumes throughout the year one may have a difficult time noticing just when the holidays began and ended), the already entertaining zero-liquidity market moves are sure to provide further amusement today in the context of the US economic data bonanza on deck, which includes Durable Goods, GDP, Personal Income and Spending, Richmond Fed, UMich, and New Home Sales. Beat or miss, all of the above are guaranteed to send the S&P to higher recorder highs because in the multiple-expansion euphoria blow-off top phase nobody cares about such trivia as fundamentals or the economy, especially when Japan and Germany are about to monetize all of their gross issuance [14]. Just remember to occasionally keep an eye on the preferred rigging correlation pairs: the USDJPY and the VIX, whose every illiquid jerk will be followed by Citadel & NYFed's algos tic for tic.
As we enter further into the festive period, things are particularly quiet from a European perspective with most EU indices trading in the green with the exception of the FTSE MIB and IBEX who trade relatively unchanged amid a lack of pertinent newsflow. The main outlier in Europe is the Athens stock exchange which trades lower with losses of just under 2% ahead of the second round of voting in the Greek Presidential elections. Today we saw that Stavros Dimas is unable to secure the required 200 votes for a majority in the second presidential vote round, getting just 168 of the 200 votes needed. And now we await the third round of votes where the threshold will be lowered to 180. If Dimas fall short of this level then it will trigger snap elections which would favour the anti-euro far-left Syriza party.
Bulletin Headline Summary from Bloomberg and RanSquawk
- FX markets remain tentative with GBP the underperformer following the weak UK final Y/Y GDP reading (2.6% vs. Exp. 3.0%)
- Treasuries steady as week’s auctions continue with $13b 2Y FRN and $35b 5Y notes; latter yield 1.675% in WI trading vs 1.595% in Nov.; 1.80% award at Sept. auction was highest since May 2011.
- U.K. GDP rose 0.7% in 3Q as consumers drove a seventh straight quarter of growth as the euro-area slump held back exports and investment plunged
- ECB Governing Council member Ardo Hansson says in interview with Sueddeutsche Zeitung that the ECB sees risk of losses on government debt purchases, prefers ECB buy corporates rather than sovereigns
- Greek Prime Minister Antonis Samaras failed in his second effort to get lawmaker backing for his nominee for president and avert snap general elections
- Russian lawmakers pushed through a bill to aid banks, one day after the central bank announced its biggest bailout of a retail lender since the ruble’s collapse began
- China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries, including Russia, Argentina and Venezuela
- Chinese President Xi Jinping’s decision to investigate his predecessor’s top aide for corruption marks the downfall of the remaining “tiger” in a group that Communist Party cadres termed the “New Gang of Four”
- New York City mayor Bill de Blasio is trying to heal rifts with police who accuse him of fostering an environment that contributed to the killing of two officers
- Sovereign yields mostly lower. Asian stocks mixed, European stocks gain, U.S. equity-index futures higher. Brent crude and gold higher, copper lower
- Looking ahead, today sees the release of Canadian & US GDPs, US
Durable Goods Orders, Univ. of Michigan Confidence, New Home Sales and
Personal Income as well as the outcome of the second round of Greek
Presidential elections.
US Economic Datas
- 8:30am: Durable Goods Orders, Nov., est. 3.0% (prior 0.4%, revised 0.3%)
- Durables Ex Transportation, Nov., est. 1% (prior -0.9%, revised -1.1%)
- Cap Goods Orders Nondef Ex Air, Nov., est. 1% (prior -1.3, revised -1.6%)
- Cap Goods Shipments Nondef Ex Air, Nov., est. 1.3% (prior -0.4%, revised -0.7%)
- 8:30am: GDP Annualized q/q, 3Q, est. 4.3% (prior 3.9%)
- Personal Consumption, 3Q, est. 2.5% (prior 2.2%)
- GDP Price Index, 3Q, est. 1.4% (prior 1.4%)
- Core PCE q/q, 3Q, est. 1.4% (prior 1.4%)
- 9:00am: FHFA House Price Index m/m, Oct., est. 0.3% (prior 0.0%)
- 9:55am: Univ. of Michigan Confidence, Dec. final, est. 93.5 (prior 93.8)
- 10:00am: Richmond Fed Manufact. Index, Dec., est. 7 (prior 4)
- 10:00am: New Home Sales, Nov., est. 460k (prior 458k)
- New Home Sales m/m, Nov., est. 0.4% (prior 0.7%)
- 10:00am: Personal Income, Nov., est. 0.5% (prior 0.2%)
- Personal Spending, Nov., est. 0.5% (prior 0.2%)
- PCE Deflator m/m, Nov., est. -0.2% (prior 0.1%)
- PCE Deflator y/y, Nov., est. 1.2% (prior 1.4%)
- PCE Core m/m, Nov., est. 0.1% (prior 0.2%)
- PCE Core y/y, Nov., est. 1.5% (prior 1.6%)
- 1:00pm: U.S. to sell $35b 5Y notes
FX markets remain relatively subdued with the USD-index residing in modest negative territory (-0.14%) and most major pairs trading in a relatively rangebound manner. AUD saw a bout of underperformance overnight after coming under pressure led by heavy selling in AUD/JPY following a break below the 100DMA seen at 97.30, with AUD/USD now below 0.8100, for the first time since August 6th 2010. However, AUD has since pulled away from its worst levels. Elsewhere, Russian state companies are to sell USD 1bln a day to prop RUB, according to Kommersant. In terms of levels to look out for today, at 1.5600 in GBP/USD there is a USD 1.3bln option expiry due to roll off at the 10am NY cut. Finally, GBP/USD saw a fast-money move lower of around 40 pips following the weaker than expected final UK Y/Y GDP reading (2.6% vs. Exp. 3.0%).
In energy markets, both WTI and Brent crude futures trade in positive territory after WTI spiked higher over 1% in a 1min interval to a high of USD 56.85/bbl, following a volume surge. Elsewhere, in metals markets spot gold traded with gains overnight on a mild rebound from yesterday’s losses where the precious metal declined by almost 2%. Elsewhere, copper prices remained near yesterday’s lows where prices declined amid continued concerns of slowing demand from China.
