E Markets: Immoral

What Happened?

  • Australia December NAB business confidence flat at 3 – better than 2 expected – but business conditions fell to 2 from 11 – weakest since Sep 2014. This was the biggest drop since 2008. NAB noted the drop was broad-based with declines in trading, profits and employment across industries and regions. 
  • French January consumer confidence bounces to 91 from revised 86 – better than 89 expected. The December revised lower from 87 and the long-term average at 100 tempers the result. Price outlooks continue to drop while unemployment fears are rising. 
  • Spanish 4Q unemployment rate 14.45% after 14.6% - as expected. It remained the lowest jobless rate since the fourth quarter of 2008. Among regions, the lowest rates were recorded in País Vasco (9.6 percent), Cantabria (9.7 percent) and Comunidad Foral de Navarra (10 percent) and the highest in Extremadura (23.1 percent), Andalucía (21.3 percent) and Canarias (20 percent). In Catalonia, jobless rate was 11.8 percent and in Madrid 11.5 percent.

Market Recap:

Equities: The S&P 500 futures -0.05% after falling 0.78% yesterday. The Stoxx Europe 600 is up 0.7% gaining from a flat open while the MSCI Asia Pacific fell 0.1% - Japan rallied sharply to finish up 0.1%after the TOPIX was off 0.9%.

  • Japan Nikkei up 0.08% to 20,664.64
  • Korea Kospi up 0.28% to 2,183.36
  • Hong Kong Hang Seng off 0.16% to 27,531.68
  • China Shanghai Composite off 0.10% to 2,594.25
  • Australia ASX off 0.53% to 5,939.50
  • India NSE50 off 0.09% to 10,652.20
  • UK FTSE so far up 1.3% to 6,838
  • German DAX so far up 0.1% to 11,223
  • French CAC40 so far up 0.6% to 4,918
  • Italian FTSE so far up 0.1% to 19,619

Fixed Income: Modest risk-on in EU with little news and focus on Brexit/US FOMC and politics. Nevertheless, weaker economic data and ongoing China growth fears are driving inflation outlooks lower and supporting bonds with the 5Y/5Y breakeven in Europe now 1.5059% - lowest since Oct 2016.  German 10-year Bund yields up 1bps to 0.21%, France OATs flat at 0.61%, UK Gilts off 4bps to 1.26% while periphery mixed with Italy up 2bps to 2.65%, Spain flat at 1.22%, Greece off 1bps to 4.05% and Portugal flat at 1.67%.

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