Danske Daily

Following a calm session US equity markets ended the trade at close to the same levels as Friday. The last week of the year is traditionally the slowest market week of the year, and so far this year seems to be no different.

US bond yields are also little changed from Friday, which leaves 2- and 5-year yields at their highest since October. The 10-year yields are trading at 1.89% this morning.

In the FX market, the price action has also been muted, with EUR/USD range trading just above 1.30.

It is generally risk off in Asian markets this morning, as investors seem to be taking a cautious stance ahead of year-end. Nikkei is down by 0.2% and Hang Seng by 0.7%.

In a session without market-moving news, FT’s main story is on the record use of the ECB deposit facility. Banks placed just above EUR410bn over Christmas in the deposit facility. The high deposit is most likely linked to the 3-year LTRO, suggesting that much of the liquidity provided by the ECB has not yet been used by the banks.

In Japan a number of downbeat economic data have been released overnight. Industrial production dropped 2.6% in November. Part of the explanation is probably that Japanese manufacturers’ supply chain has been hit relatively hard by the flooding in Thailand. Hence, some recovery should be expected in December. Retail sales fell 2.1% in November and consumer price ex. fresh food decreased to -0.2% y/y. The unemployment rate remained unchanged at 4.5% in November.

Global Daily

Italy will sell zero coupon treasury bills in maturities up to two years today.
These should go well, especially following the substantial rise of liquidity in the system after last week’s LTROs. Tomorrow’s auction in the 3- and 10-year segments are likely to attract more attention, see also FT story.

On the data front, we have a thin global calendar today. For investors with a focus on EUR/CHF it is worth keeping an eye on the Swiss KOF leading indicator. In Sweden data on household lending and retail sales for November should provide information about Q4 growth. Household lending has been slowing down continuously over the past year to a y/y rate of 5.5% in October. The number might not appear very weak in itself, but represents the slowest rate registered since the late 1990s. Retailers claim that turnover has not been this bad for many years. Unusually warm weather has added to the problems, so November might turn out to be another poor month, showing declining sales volumes.