Intraday Market Thoughts

Awaiting UK CPI, German ZEW

by Kyle Morrison
Dec 13, 2011 9:12

UK CPI next, German ZEW expected to fall further, Spain to issue t-bills, after 8 banks put on downgrade watch. Tuesday's Premium Intermarket Insights follow ahead of the US session.

Todays inflation numbers will also be closely scrutinised for evidence that price pressures in the UK economy are beginning to subside, however it looks likely to be a long drawn out process with November inflation predicted to drop back to 4.8% from 5% in October. Retail prices, however are expected to remain above 5% at 5.1%, still down slightly from 5.4%.

The EU-UK spat became secondary to the a more fundamental issue in FXa warning by Fitch and the OECD on UK & Eurozone growth. Fitch downgraded its UK growth forecast for 2012 from 1.2% to 0.7% while the OECD leading indicator fell once again in October to 98.6, below its long term average of 100.

Due in Germany is the latest ZEW survey with expectations for another poor number of -56, down from -55.2 in November. The current situations index is also expected to slip back from 34 to 31.

Spanish bond yields have started once more to edge up towards the 6% ahead of todays auction of t-bills. Spain will sell 3.25m 12 month, and 4.25m 18 month T-Bills. The EFSF is also looking to sell 2bn of 91 day T-Bills.

The new Spanish parliament gathers for the first time since the new PM Rajoy was elected last month, with speculation that the new government could well go down the Irish route by setting up a bad bank of toxic assets. Last nights announcement by Moodys to put eight Spanish banks on review for a downgrade as well as removing systemic support for subordinated debt, could well open up that discussion for further debate.

Tuesday's Intermarket Insights follow ahead of the US session; For direct access to the latest edition, click here: Non-subscribers can click here:

In the US we look set to find out if Black Friday had an unduly positive effect on the retail sales numbers for November, followed by the FOMC decision at 19:15 GMT.


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