EU CONSUMER CYCLICALS: Levi: 4Q Results

The Riksbank's December meeting minutes are here

Thedeen: Comments suggest he is very comfortable with the currency policy setting barring significant surprises/deviations from forecasts. Even if the policy rate forecast is increased in the year ahead due to the strong recovery, it does not necessarily constitute a clear hike signal given subdued inflation pressures.

• “Today, my own sensitivity to short-term variations in the behaviour of individual variables has decreased; confidence in the forecasts has simply increased. Going forward, this allows us to feel slightly more confident about our chosen course. In this sense, monetary policy becomes less data-dependent and more forward-looking”
• “That said, we will, as always, adjust monetary policy if the outlook for inflation and the economy changes in any significant way”
• “As there are plenty of spare economic resources in Sweden, it is difficult to see that we would raise the policy rate in the near term even if the recovery were to be unexpectedly rapid, given that inflation risks remain subdued. However, it would then probably be justified to change the forecast for the policy rate by increasing the probability of increases further ahead.”
• “Under what conditions could we conceivably cut the policy rate next year? As I see it today, such a measure may be particularly relevant if both the economy and inflationary pressures next year are unexpectedly weak.”…. “If, on the other hand, the economy continues to strengthen in much the same way as we and other forecasters expect, then it is more difficult to see circumstances that would justify cuts in the policy rate”
• “The steeper yield curve is something we need to monitor closely going forward, both its causes and its implications for monetary policy.”

• RES 4: $87.355 - 4.382 proj of the Oct 28 - Nov 13 - 21 price swing
• RES 3: $86.065 - 4.236 proj of the Oct 28 - Nov 13 - 21 price swing
• RES 2: $84.008 - High Dec 29 and the bull trigger
• RES 1: $77.275 - 50.0% retracement of the Dec 29 high / low range  
• PRICE: $74.247 @ 08:31 GMT Dec 30
• SUP 1: $70.543 Low Dec 29  
• SUP 2: $65.310 - 20-day EMA    
• SUP 3: $58.099 - 50-day EMA 
• SUP 4: $56.496 - Low Dec 4 

Trend signals in Silver remain bullish  and the volatile session yesterday that included a sharp pullback, appears corrective for now. Note that the trend is overbought and a deeper retracement would allow this condition to unwind. The first important support to watch lies at $65.310, the Dec 29 low. On the upside, the bull trigger is at $84.008, Monday’s high. A break of this level would confirm a resumption of the uptrend.

Gilt futures trade either side of late Monday levels but stick to a contained 16-tick range around the open, last -7 at 91.21 with core global FI markets off Monday highs.

• Our technical analyst notes that recent price action highlights the Dec 16 low (90.50), and the Nov 27 high (91.93) as the important short-term directional triggers.
• Yields essentially unchanged across the curve, with 10s oscillating either side of 4.50% in recent weeks (4.49% last).
• GBP STIRs also essentially unchanged, with BoE-dated OIS fully discounting the next 25bp rate cut come the end of the June MPC (albeit with 21bp of easing priced through April) and 39bp of cuts priced through November. Terminal rate pricing steady around 3.35%.
• SONIA futures +0.5 to -1.0.
• Little of note on the UK calendar between now and the new year. Final manufacturing PMI data due on Friday.