- Digesting Japan Trade, China Property Prices, awaiting German Ifo and
US Services PMI along with Yellen speech; China bond woes also in
focus
- Germany Ifo: modest further gain expected, some upside risks given
other anecdotal evidence
- US Services: seen rising to 1-yr high as post-election optimism
bounce continues
- Charts: China 10-yr Bond Future, WTI Oil, Iron Ore, Copper
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** EVENTS PREVIEW **
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While markets will certainly be in holiday mode, there are a couple of items on the data and events calendar which may register on their radar, starting with the overnight Japanese Trade Balance and China Property Prices, before moving onto Germany's IfO Business Climate and US flash Services PMI. Meanwhile on the policy side of the equation, PM May's statement on last week's EU Summit and Yellen's speech on the US labour market will top the schedule. After a mixed though solid set of PMIs, today's Ifo Business Climate is projected to post a modest rise to 110.6 after a stronger than expected 110.4 in November, thus continuing to signal that the post US election optimism continues to reach beyond the confines of the USA, with the US flash Services PMI also seen extending its recent gains to 55.2 from 54.6, with risks to the upside if the run of better than or much better than recent surveys is anything to go by. As for the Japanese Trade data, while this was better than forecast, this was certainly not a function of the recent JPY fall (which may start to offer some benefits from Q2), and the fact remains that exports still fell modestly in value terms, though the volume measure posted an encouraging 7.4% y/y rise, while imports remain sharply negative, even if lower oil prices account or a very significant part of the fall. Yellen's speech on the state of the US labour market should in theory offer few fresh insights relative to last week's press conference, though it will be interesting to see if she makes any probably indirect comments on the impact of some of Mr Trump's policies on the labour markets, if enacted. Outside of these items, a close eye will continue to be kept on China's ailing bond markets, which again turned south today despite the end of week stabilizing measures; and the industrial metals also requires a watchful eye, as Iron Ore and Copper turn lower, with similar moves seen in Aluminium and Nickel, perhaps signalling emerging doubts about the 'Trump bump' that the sector has benefited from.
from Marc Ostwald
