UK DATA: "Holidays" the main inflation surprise - a more detailed look at CPI
Note that the collection date was 12 November as expected (but not certain) - which has led to positive base effects for core goods (which came in even higher than expected however). This is evident in categories like clothing which added 0.06ppt to headline CPI and "games, toys and hobbies" adding 0.04ppt. Some of this may be offset in the December print.
- Core was in line with the MNI median, but a tenth below the Bloomberg consensus.
- Air fares knocked -0.08ppt from headline CPI and package holidays a further -0.02ppt, accommodation also knocked off -0.01ppt. So together "holidays" contributed -0.11ppt to headline CPI - and around double to services CPI. We think this is the main surprise here.
- Restaurants and cafes knocked -0.03ppt off headline CPI too.
- Cultural services contributed +0.05ppt to headline CPI, second-hand cars (which we have discussed a lot) contributed +0.04ppt.
- Tobacco contributed +0.06ppt - expected and due to duty increase coming in a month earlier than last year - so this should reverse for December.
- "Fuels and lubricants" contributed +0.09ppt which was broadly in line with expectations.
- Food contributed positively to headline CPI again (+0.02ppt).
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BTP TECHS: (Z4) Resistance At The 50-Day EMA Has Been Pierced
- RES 4: 122.62 High Oct 1 and a key resistance
- RES 3: 121.50 76.4% retracement of the Oct 1 - Nov 7 bear leg
- RES 2: 120.81 61.8% retracement of the Oct 1 - Nov 7 bear leg
- RES 1: 120.69 High Nov 15
- PRICE: 120.47 @ Close Nov 15
- SUP 1: 119.12/117.88 Low Nov 13 / 7 and the bear trigger
- SUP 2: 117.70 61.8% retracement of the Jun 11 - Oct 1 bull cycle
- SUP 3: 117.34 Low Jul 26
- SUP 4: 116.54 76.4% retracement of the Jun 11 - Oct 1 bull cycle
BTP futures traded higher last week. Despite the latest bounce, the contract maintains a bearish tone. A resumption of the downtrend would refocus attention on 117.70, a Fibonacci retracement point. Initial support to watch is 119.12, the Nov 13 low. 120.25, the 50-day EMA, has been pierced, a clear break of the average would cancel the bearish threat. This would open 121.50, a Fibonacci retracement point.
RATINGS: S&P Move Ireland & South Africa To Positive Outlooks
Sovereign rating reviews of note from after hours on Friday include:
- Fitch affirmed Ireland at AA; Outlook Stable
- Fitch affirmed Latvia at A-; Outlook revised to Stable from Positive
- S&P affirmed Ireland at AA; Outlook revised to Positive
- S&P affirmed South Africa at BB-; Outlook revised to Positive
- Morningstar DBRS confirmed the United Kingdom at AA, Stable Trend
EUROZONE ISSUANCE: EGB Supply - W/C 18 November (2/2)
- On Thursday, Spain will hold a Obli/Green Obli auction. On offer will be the 3.10% Jul-31 Obli (ISIN: ES0000012N43), the 4.20% Jan-37 Obli (ISIN: ES0000012932) and the 1.00% Jul-42 Green Obli (ISIN: ES0000012J07). The auction size will be confirmed on Monday.
- Also, on Thursday, France will hold its final MT OAT auction of the year with a slightly smaller size of E9-11bln. On offer will be on-the-run 2.50% Sep-27 OAT (ISIN: FR001400NBC6), the 0.75% Nov-28 OAT (ISIN: FR0013341682), the on-the-run 2.75% Feb-30 OAT (ISIN: FR001400PM68) and the 0% Nov-30 OAT (ISIN: FR0013516549).
- To conclude the week on Thursday, France will return to the market to hold an IL OATs auction for E1.50-2.25bln. On offer will be the 3.15% Jul-32 OATei (ISIN: FR0000188799), the 0.60% Jul-34 OATei (ISIN: FR001400JI88), the 1.80% Jul-40 OATei (ISIN: FR0010447367) and the 0.10% Mar-36 OATi (ISIN: FR0013524014).
NOMINAL FLOWS: The week ahead sees no redemptions. Coupon payments for the week total E0.4bln, of which E0.3bln are Italian. This leaves estimated net flows for the week at positive E31.3bln versus negative E1.2bln last week.
