Trading with point and figure

- Busy day for data has Eurozone GDP & EC Confidence surveys, German CPI,
UK lending and US Consumer Confidence; leak of UK govt Brexit assessment
accompanies Carney testimony to House of Lords; Trump State of the Union
tonight; more corporate earnings and Italy bond sales

- Eurozone GDP: no surprises likely, solid momentum going into 2018, but
labour market and price/wage indicators far more important for ECB

- Germany CPI: usual seasonal m/m dip set to leave y/y unchanged

- UK Credit: trend slowing, though forecast implies December y/y uptick

- US Consumer Confidence: seen rebounding modestly, very high by any
historical standard

- Chart: US 10 yr yield 1980 to 2018

..........................................................................

********************
** EVENTS PREVIEW **
********************

The Eurozone tops the day's agenda via way of French, Spanish and Eurozone Q4 provisional GDP, EC Confidence surveys and Germany provisional January CPI, along with some ECB speak from the rather hawkish Mersch and the month end BTP auction (3-yr, 7-yr and long). That said there is plenty on offer elsewhere, with the UK looking to the latest Credit and Mortgage lending data, Carney's testimony to the House of Lords Economic Affairs Committee. But the talking point in the UK will inevitably be http://bzfd.it/2BBu2B6 . 'Across the pond' the US has Consumer Confidence, Case Shiller House Prices ahead of Trump's State of the Union address tonight, which is expected to be another Davos type teleprompter speech. Poland (with an expected 4.5% y/y) and Mexico (with a solid 0.7% q/q, but a rather lame 1.6% y/y) also publish GDP data. Today's run of corporate earnings is likely to see Banco Santander and SAP, AMD, Corning, HCA, McDonald's and Pfizer among the headline grabbers. A close eye will continue to need to be on the insidious rise in govt bond yields, with the US 10-yr breaching the key 30-year downtrend line - see chart.

** Eurozone - Q4 GDP **
- While this provisional report is always rather sketchy, based on just 6 countries official estimates and partial data from elsewhere, the fact that we have already had the estimate for German 2017 GDP, and the French GDP was in line with forecasts at 0.6% q/q 2.4% y/y, and Spain too at 0.7% q/q, implies little risk of an outlier when the Eurozone estimate is published, with the consensus looking for a repeat 0.6% q/q, which would edge the y/y rate up to 2.7% from Q3's 2.6%. As with France's 1.9% y/y for 2017, this would be the best outturn since 2011, and also signal solid momentum going into 2018. But as has been well documented, the stronger growth momentum is still some distance away from pushing up inflation to the ECB's target (see also below), Unemployment may be falling but remains quite high, above all Underemployment rate at 17.3%, and thus wage growth remains unsurprisingly subdued.

** Germany - January provisional CPI **
- January typically sees a reversal of all of December's seasonal price rises, and this year is not expected to be any different with the projected -0.6% m/m reversing December's rise, and leaving the y/y rate at 1.7% (HICP 1.6%). In the detail, food and airfares are likely to weigh on the headline, but see some offset from Utility prices and recreation/culture prices. The implied core measure will also liekly be subdued at 1.4%.

** U.K. - Dec Consumer Credit / Mortgage Approvals **
- Consumer Credit growth has clearly started to decelerate, with November seeing a fall to 9.1% y/y from 9.5% (and the 3-mth annualized rate dropped to 8.5%). However if the consensus for an unchanged £1.4 Bln is correct, December will see a bounce given that January 2017 saw a smaller £1.06 Bln increase, though this is likely to prove to be a blip. Mortgage Approvals are expected to drop further to 63.5K, which would be the lowest since the post referendum slide in July/August 2016, and echoes last week's UK Finance Mortgage Approvals.

** U.S.A. - January Consumer Confidence **
- Consumer Confidence is expected to rebound to 123.0, after dropping from a 17 year high of 128.6 in November to 122.1 in December, with strong labour demand and rising equity markets expected to offset any drag from a modest rise in gasoline prices and mortgage rates. Indeed December's setback masked a rise in the Present Situation index to a new high at 156.6 vs. November 154.9, and a barely discernible in the Labour Differential (Jobs Plentiful minus Hard to Get) from a cyclical high of 20.7 to 20.5; this element will also be watched for clues ahead of Friday's official labour data.

from Marc Ostwald
 
Not enough patience with that trade but got a few errands to run. Back later.

Sent from my Moto G (4) using Tapatalk
 
Dax updtated

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