EU GDP data miss consensus – Focus on ECB rate decision

EU mid-market update: EU GDP data miss consensus; focus on ECB rate decision; Meta/Microsoft optimism on Capex spending plans helps US futures.

Notes/observations

- Various EU Q4 GDP readings come in below consensus; Focus on ECB rate decision and rate path towards its terminal rate.

- Reassuring comments from Microsoft and Meta regarding Capex plans, largely unaffected by emergence of Deepseek, and still strong optimism on US-made AI models helping US futures. Tesla shares also bounced after initial reaction to quarterly results, as investors stay excited about its Cybercab robotaxi production plans and unchanged timeline on more affordable vehicle release.

-Cybersecurity agency Wiz Research said it found a massive amount of sensitive data from DeepSeek exposed to the open internet; It reportedly allows full control over database operations, including the ability to access internal data.

-On the EU earnings front, shares of Deutsche Bank trade lower after results missing estimates and raising cost-to-income target; STMicro shares also sharply lower on weak next quarter’s outlook; Shares of oil giant Shell slightly higher after it raised the dividend and provided Capex look alongside quarterly numbers; Other names reported overnight include Nokia, Swatch, Roche, Sanofi, H&M, ABB and Electrolux.

-Pres Trump criticized Fed Chair Powell once again following FOMC decision by saying that Fed failed to stop the problem they created with inflation. Trump promised to solve the issue by “unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing”.

- American Air's subsidiary American Eagle Flight No. 5342, a Bombardier CRJ700 regional jet, carrying 60 passengers and four crew members, and a Black Hawk helicopter collided in midair near Reagan National Airport near Washington, D.C.

Asia

- New Zealand Dec Trade Balance (NZD): +0.2B v -0.4B prior.

- New Zealand Jan ANZ Business Confidence: 54.4 v 62.3 prior.

- Australia Q4 Import Price Index Q/Q: +0.2% v -1.4% prior; Export Price Index Q/Q: +3.6% v -4.3% prior.

Americas

- FOMC left Target Range unchanged between 4.25-4.50% (as expected). Statement noted that risks to achieving employment and inflation goals were "roughly in balance" (**Note: Fed redacted reference to inflation making progress toward goal).

- Fed Chair Powell post rate decision press conference noted Inflation had moved much closer to goal, somewhat elevated; Labor market conditions had cooled and remain solid.

- Brazil Central Bank (BCB) raised the Selic Target Rate by 100bps to 13.25% (as expected). Statement noted that decision to hike by 100bps was unanimous. Anticipate further adjustment of the same magnitude in the next meeting if the scenario evolved as expected. Beyond the next meeting, committee reinforces that total magnitude of tightening cycle will be determined by its commitment to reaching the inflation target.

- Bank of Canada (BOC) Gov Macklem noted that CAD currency movement had not constrained us thus far; Further CAD weakness would be taken into account on future rate decisions.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.36% at 536.18, FTSE +0.14% at 8,569.70, DAX +0.22% at 21,670.75, CAC-40 +0.35% at 7,900.15, IBEX-35 +0.52% at 12,339.33, FTSE MIB +0.01% at 36,376.00, SMI +0.15% at 12,548.00, S&P 500 Futures +0.39%].

Market focal points/key themes: European indices open higher across the board and remained upbeat through the early part of the session; cautious optimism on earnings ahead of ECB rate decision later in the day; better performing sectors include industrials and technology; lagging sectors include consumer discretionary and telecom; Mowi increases stake in Nova Sea; Serco acquires Northrop Grumman’s mission training and satellite ground network unit; earnings expected in the upcoming US session include UPS, Apple, Visa, Mastercard and Thermo Fisher.

Equities

- Consumer discretionary: Swatch [UHR.CH] -6.0% (earnings), H&M [HMB.SE] -3.0% (earnings; Jan sales update), Electrolux [ELUXB.SE] -7.5% (earnings; no dividend proposed), Wizz Air [WIZZ.UK] -12.0% (earnings).

- Energy: Shell [SHEL.UK] +1.0% (earnings; raises dividend).

- Financials: BBVA [BBVA.ES] +2.0% (earnings; Sabadell bid is few weeks from approval), Generali [G.IT] +0.5% (targets), Deutsche Bank [DBK.DE] -4.0% (earnings miss; raises cost-income target) - Healthcare: Roche [ROG.CH] +1.0% (earnings).
Industrials: ABB [AABN.CH] +2.5% (earnings), Hapag-Lloyd [HLAG.DE] +1.0% (prelim results).

- Telecom: Nokia [NOKIA.FI] +2.0% (earnings), BT Group [BT.A.UK] -3.0% (earnings).

Speakers

- UK Chancellor of the Exchequer (Fin Min) Reeves stated that she wanted spades in the ground on Heathrow this parliament.

- Sweden Central Bank (Riksbank) Breman stated that conditions for inflation to remain low and stable were very good.

- BOJ’s Dep Gov Himino reiterated Board view that to raise rates if outlook realized; Still some distance for Japan to enter world of positive real interest rates.

- Philippines Fin Min Recto stated that lower inflation provided room for lower interest rates.

- Thailand Central Bank (BOT) Gov Sethaput stated that its current monetary policy was appropriate. No signs of deflation. BOT had no fixed level on THB currency (Baht) but concerned over FX volatility.

Currencies/fixed income

- USD was steady within recent ranges in a data-filled EU session. Focus on the upcoming US Q4 GDP reading where it was expected to confirm solid economic growth in the quarter.

- EUR/USD drifted lower after various EU Q4 GDP readings came below consensus (France, Germany and Italy all missed expectations). Focus turns to the ECB policy decision later today where a 25bps cut is almost a ‘done’ deal. ECB likely to maintain its data-dependent, meeting-by-meeting approach. Recent indicators had pointed to weak growth and Euro zone policymakers have sounded more confident inflation would move towards the 2% target by the middle of the year. Analysts see next cut in March, with most predicting a total of 100bps of easing this year with terminal rate is seen most commonly at 2.00%.

- GBP/USD remain soft despite recent assurances by UK govt official and BOE members to help restore confidence in the economy.

- USD/JPY moved lower during the Asian session and was steady during the EU morning. Pair at 155.35 area. BOJ’s Dep Gov Himino stayed on script and reiterated Board view that would raise rates if outlook realized.

- EU bond yields moved lower as various EU GDP readings missed consensus. German 10-year Bund yield at 2.52% (lower by over 5bps) while the UK 10-year Gilt yield at 4.57% (lower by almost 5bps).

Economic data

- (NL) Netherlands Jan Producer Confidence: -1.6 v -1.6 prior.

- (ZA) South Africa Dec M3 Money Supply Y/Y: 6.7% v 7.8% prior; Private Sector Credit Y/Y: 3.8% v 4.1%e.

- (FR) France Q4 Preliminary GDP Q/Q: -0.1% v 0.0%e; Y/Y: 0.7% v 0.8%e.

- (FR) France Dec Consumer Spending M/M: 0.7% v 0.1%e; Y/Y: 0.9% v 0.2%e.

- (DE) Germany Dec Import Price Index M/M: 0.4% v 0.5%e; Y/Y: 2.0% v 1.9%e.

- (CH) Swiss Dec Trade Balance (CHF): 3.5B v 6.1B prior; Real Exports M/M: +5.1% v -7.7% prior; Real Imports M/M: +4.5% v -2.5% prior; Watch Exports Y/Y: -5.4% v -3.1% prior.

- (SE) Sweden Dec Retail Sales M/M: 2.9% v 0.4%e; Y/Y: 5.6% v 1.4% prior.

- (SE) Sweden Nov Non-Manual Workers’ Wages Y/Y: 4.2% v 4.3% prior.

- (NO) Norway Dec Credit Indicator Growth Y/Y:3.3 % v 3.6% prior.

- (DK) Denmark Dec Unemployment Rate: 2.6% v 2.6% prior; Gross Unemployment Rate: 2.9% v 2.9% prior.

- (TR) Turkey Jan Economic Confidence: 99.7 v 98.9 prior.

- (HU) Hungary Q4 Preliminary GDP Q/Q: 0.5% v 0.5%e; Y/Y: 0.4% v 0.1%e.

- (HU) Hungary Nov Final Trade Balance: €0.8B v €0.7B prelim.

- (ES) Spain Jan Preliminary CPI M/M: +0.2% v -0.1%e; Y/Y: 3.0% v 2.9%e; CPI Core Y/Y: 2.4% v 2.5%e.

- (ES) Spain Jan Preliminary CPI EU Harmonized M/M: -0.1% v -0.3%e; Y/Y: 2.9% v 2.8%e.

- (CH) Swiss Jan KOF Leading Indicator: 101.6 v 100.2e.

- (AT) Austria Q4 GDP Q/Q: 0.0% v -0.1% prior; Y/Y: -0.2% v -0.8% prior.

- (AT) Austria Dec PPI M/M: 0.3% v 0.4% prior; Y/Y: -1.1% v -2.0% prior.

- (SE) Sweden Jan Consumer Confidence: 99.1 v 96.7 prior; Manufacturing Confidence : 94.8 v 96.5 prior; Economic Tendency Survey: #97.7v 97.5 prior.

- (DE) Germany Q4 Preliminary GDP Q/Q: -0.2% v -0.1%e; Y/Y: -0.2% v 0.0%e; GDP NSA (unadj) Y/Y: -0.4% v -0.3%e.

- (IT) Italy Q4 Preliminary GDP Q/Q: 0.0% v 0.1%e; Y/Y: 0.5% v 0.6%e.

- (IS) Iceland Jan CPI M/M: -0.3% v +0.4% prior; Y/Y: 4.6% v 4.8% prior.

- (PL) Poland 2024 Annual GDP Y/Y: 2.9% v 2.8%e.

- (UK) Dec Net Consumer Credit: £1.0B v £1.0Be; Net Lending: £3.6B v £2.6Be.

- (UK) Dec Mortgage Approvals: 66.5K v 65.0Ke.

- (UK) Dec M4 Money Supply M/M:0.1 % v 0.0% prior; Y/Y: 2.5% v 3.0% prior; M4 (ex-IOFCs) 3-month Annualized: 3.8% v 3.7% prior.

- (PT) Portugal Q4 Preliminary GDP Q/Q: 1.5% v 0.4%e; Y/Y: 2.7% v 2.0% prior.

- (PT) Portugal Jan Consumer Confidence: -15.1 v -15.0 prior; Economic Climate Indicator: 2.8 v 2.7 prior.

- (ZA) South Africa Dec PPI M/M: 0.2% v 0.2%e; Y/Y: 0.7% v 0.8%e.

- (EU) Euro Zone Q4 Advance GDP (1st of 3 readings) Q/Q: 0.0% v 0.1%e; Y/Y: 0.9% v 1.0%e.

- (EU) Euro Zone Jan Economic Confidence: 95.2 v 94.1e; Industrial Confidence: -12.9 v -13.7e; Services Confidence: 6.6 v 6.0e; Consumer Confidence (final): -14.2 v -14,2 advance.

- (EU) Euro Zone Dec Unemployment Rate: 6.3% v 6.3%e.

- (BE) Belgium Dec Unemployment Rate: 5.8% v 5.8% prior.

- (IT) Italy Dec Unemployment Rate: 6.2% v 5.7%e.

- (GR) Greece Dec Unemployment Rate: 9.4% v 9.5% prior.

Fixed income issuance

- (ID) Indonesia sold total IDR10.0T vs. IDR10.0T target in Islamic bills and bonds (sukuk).

- (DK) Denmark sold total DKK240M in 3-month and 6-month bills.

- (UK) DMO sold €1.5B in 0.125% Nov 2026 Gilts via tender; Avg Yield: 3.88% v 3.996% prior; bid-to-cover: 5.34x v 4.31x prior.

- (IT) Italy Debt Agency (Tesoro) sold total €6.25B vs. €5.0-6.25B indicated range in 5-year and 10-year BTP Bonds.

- Sold €2.75B vs. €2.5-2.75B indicated range in 3.00% Oct 2029 BTP bonds; Avg Yield: 2.95% v 2.79% prior; Bid-to-cover: 1.64x v 1.58x prior.

- Sold €2.0B vs. €1.5-2.0B indicated range in 3.85% Feb 2035 BTP bonds; Avg Yield: 3.60% v 3.39% prior; bid-to-cover: 1.85x v 1.63x prior.

- Sold €1.5B vs. €1.0-1.5B indicated range in 3.35% Mar 2035 BTP bonds; Avg Yield: 3.57% v 3.19% prior; bid-to-cover: 1.99x v 2.10x prior.

- (IT) Italy Debt Agency (Tesoro) sold €2.75B vs. €2.25-2.75B indicated range in Apr 2033 Floating Rate Bonds (CCTeu); Real Yield: 4.11% v 4.19% prior; bid-to-cover: 1.58x v 1.62x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Jan CPI M/M: No est v 0.4% prior; Y/Y: No est v 3.2% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IT) Italy Nov Industrial Sales M/M: No est v 0.5% prior; Y/Y: No est v -5.3% prior.

- 06:00 (BR) Brazil Jan FGV Inflation IGPM M/M: 0.2%e v 0.9% prior; Y/Y: 6.7%e v 6.5% prior.

- 06:00 (CA) Canada Jan CFIB Business Barometer: No est v 56.4 prior.

- 06:00 (RO) Romania to sell combined RON800M in 2026 and 2032 bonds.

- 07:00 (MX) Mexico Q4 Preliminary GDP Q/Q: -0.2%e v +1.1% prior; Y/Y: 1.0%e v 1.6% prior.

- 07:00 (ZA) South Africa Dec Budget Balance (ZAR): No est v -4.5B prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Jan 24th: No est v $609.7B prior.

- 08:00 (BR) Brazil Dec Total Formal Job Creation: -405.4Ke v +106.6K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest Rates by 25bps to 7.50%.

- 08:15 (EU) ECB Interest Rate Decision: Expected to cut Key Rates by 25bps; Expected to cut Deposit Rate by 25bps to 2.75%; Expected to cut Main 7-Day Refinancing Rate by 25bps to 2.90%; Expected to cut Marginal Lending Facility by 25bps to 3.15%.

- 08:30 (US) Q4 Advance GDP Annualized (1st of 3 readings) Q/Q: 2.7%e v 3.1% prior; Personal Consumption: 3.2%e v 3.7% prior.

- 08:30 (US) Q4 Advance GDP Price Index: 2.5%e v 1.9% prior; Core PCE Price Index Q/Q: 2.5%e v 2.2% prior.

- 08:30 (US) Initial Jobless Claims: 225Ke v 223K prior; Continuing Claims: 1.90Me v 1.899M prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 08:45 (EU) ECB chief Lagarde post rate decision press conference.

- 10:00 (US) Dec Pending Home Sales M/M: 0.1%e v 2.2% prior; Y/Y: 4.2%e v 5.6% prior.

- 10:00 (CO) Colombia Nov Trade Balance: -$1.3Be v -$1.1B prior; Total Imports: $5.8Be v $5.7B prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:30 (BR) Brazil Dec Central Govt Budget Balance (BRL): +20.5Be v -4.5B prior.

- 12:30 (MX) Mexico Dec Public Balance (MXN): No est v -1.153T prior.

- 16:00 (NZ) New Zealand Jan ANZ Consumer Confidence: No est v 100.2 prior.

- 18:30 (JP) Japan Dec Jobless Rate: 2.5%e v 2.5% prior; Job-To-Applicant Ratio: 1.25e v 1.25 prior.

- 18:30 (JP) Japan Jan Tokyo CPI Y/Y: 3.0%e v 3.1% prior (revised from 3.0%); CPI (ex-fresh food) Y/Y: 2.5%e v 2.4% prior; CPI (ex-fresh food and energy) Y/Y: 1.9%e v 1.8% prior.

- 18:50 (JP) Japan Dec Retail Sales M/M: -0.1%e v 1.9% prior (revised from 1.8%); Y/Y: 3.2%e v 2.8% prior; Dept. Store, Supermarket Sales Y/Y: No est v 3.5% prior.

- 18:50 (JP) Japan Dec Preliminary Industrial Production M/M: +0.2%e v -2.2% prior; Y/Y: -2.2%e v -2.7% prior.

- 19:01 (UK) Jan Lloyds Business Barometer: No est v 39 prior; Own Price Expectations: No est v 62 prior.

- 19:30 (AU) Australia Q4 PPI Q/Q: No est v 1.0% prior; Y/Y: No est v 3.9% prior.

- 19:30 (AU) Australia Dec Private Sector Credit M/M: 0.5%e v 0.5% prior; Y/Y: No est v 6.2% prior.

- 21:00 (SG) Singapore Dec M2 Money Supply Y/Y: No est v 5.5% prior; M1 Money Supply Y/Y: No est v 7.1% prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 22:35 (JP) Japan to sell 2-year JGB Bonds.

- 23:00 (TH) Thailand Dec ISIC Manufacturing Production Y/Y: -0.5%e v -3.6% prior; Capacity Utilization: No est v 57.6% prior.