EUROZONE DATA: Another Pullback In Consumer Confidence In December
Dec-20 2024 15:07
Eurozone flash December consumer confidence was weaker than expected at -14.5 (vs -14.0 cons, -13.8 prior). This was the second consecutive pullback in the series from a multi-year high of -12.5 in October.
- The ECB still expects private consumption to spearhead the economic recovery in 2025, “supported by robust labour compensation growth on the back of rising wages and falling inflation”.
- However, the ECB’s 2025 and 2026 consumption growth projections were revised lower in December (2025: 1.3% vs 1.4% prior; 2026: 1.3% vs 1.5% prior), “on account of a reassessment of the speed at which the saving ratio is expected to normalise from its current elevated levels.”
- Bloomberg consensus currently sees consumption growth at 1.2% in 2025 and 1.4% in 2026.
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BONDS: Europe Pi Positioning Update: Gilts Long Headed Into Roll
Nov-20 2024 14:56
As the Gilt Dec/Mar roll slowly starts picking up (first notice is Nov 28), MNI Pi shows Gilt futures positioning as "long" as of Tuesday's trade.
- That's more or less where it's been since mid-September, though trade has been indicative of long reduction in the most recent week.
- Eurex contracts, which roll later (first notice/last trade Dec 6), are showing mixed positioning: German contracts are short across the board with the exception of Schatz at "long". Meanwhile BTP structural positioning is "very long", with OAT "flat".
- Trade in the most recent week was mixed, with some long reduction and short cover, though also some long-setting. See table.
EUR: EURUSD Holds Weekly Lows around 1.0525, For Now
Nov-20 2024 14:48
- Knee-jerk reaction briefly takes EURUSD down to 1.0525, closely matching both the Monday & Tuesday lows, the latter also triggered by similar Russia/Ukraine headlines during yesterday’s European session.
- The single currency continues to struggle above the breakdown point at 1.06 and we pointed out earlier today that most recent price action appears to be a bear flag for the pair, a bearish continuation pattern which underpins the dominant downtrend.
- Short-term focus remains on the 1.0497 post-election lows, ahead of the 2023 lows at 1.0448.
- Given yesterday’s strong bounce for major equity indices, greenback sentiment make take its cues from broader sentiment, with close attention on upcoming NVIDIA earnings. For the Eurozone, a quiet data calendar on Thursday will be followed by Friday’s release of flash PMIs, significant given the tariff-related growth concerns and political developments in Germany.
UKRAINE: Reports-Ukraine Fires Anglo-French Storm Shadow Missiles Into Russia
Nov-20 2024 14:35
Reports hitting wires claiming that Ukraine has fired up to 12 Anglo-French Storm Shadow long-range missiles into Russia. This comes just a day after Ukraine for the first time fired US-made ATACMS missiles into the Bryansk oblast of Russia. Mikey Smith at The Mirror posts on X: "MOD not commenting on reports of Storm Shadow missile fragments being found across the border in Russia."
- Following US President Joe Biden allowing Ukraine to use its ATACMS, there has been focus on whether the UK and French gov'ts would do the same (having gained the requisite sign-off from the US first due to Storm Shadows utilising US software).
- A rhetorically aggressive Russian response to the developments, including an update to its nuclear doctrine, has seen geopolitical tensions rise. However, with each escalation in Western support for Ukraine (tanks, jets, missiles) there has been a vocal response from Russia but little that suggests direct Russia-NATO conflict is likely.
- With the US, UK, and France (apparently) all now giving permission for Kyiv to fire missiles far into Russia, the actions of the German gov't will gain prominence. Chancellor Olaf Scholz has so far refused to allow Ukraine to use German-made Taurus missiles to hit Russia. Scholz says "We must not be linked in any way or at any place with the targets that this system achieves," but his stance has garnered criticism from the opposition and coalition allies.
- The RUSI think tank notes some of the issues surrounding the use of long-range missiles, what benefits it could bring Ukraine, and the risks to the West.
