While market expectations of the timing of the first interest rate rise by the European Central Bank are unreasonably "hawkish," this has relatively little effect on the 10-year Bund yield, the said. "What matters is the terminal rate of the hiking cycle, and whether the term premium continues to fall, remains low, or rises," they said.
Euro credit risk premiums trade steady ahead of the ECB's rate decision Thursday, said UniCredit. "Besides the strong tone in equities, technical factors continue to play a supportive role and should alleviate the impact of inflation concerns on credit performance," analysts at the bank said.
The supply of new bonds remains very low and relates mainly to investment-grade issuance as high-yield bond sales dried up for almost a week now, they add.
Meanwhile, the ECB bought a net of EUR1.74 billion in corporate bonds in the week ending in Jan. 28, they said, citing official data.
Commodities:
Crude prices were little changed ahead of an OPEC+ meeting. The monthly meeting is likely to dominate focus for oil traders and prices.
No surprises are expected, however, with the group expected to stick to its plan of 400,000 barrels a day supply increases for March. A key concern, however, remains whether the group can actually meet those targets.
"It is becoming more and more evident that OPEC+ struggles to keep up with its increasing production quotas... The fact that most members of the OPEC+ group now struggle with production capacity being below production quotas makes it more difficult for OPEC+ to agree on acceleration in tapering of production cuts," DNB's Helge Andre Martinsen said.
Gold edged higher in early European trade and remains above the psychologically important $1,800 an ounce level, as dollar weakness spurred some buying in the yellow metal. A potential driver of gold this week is Friday's U.S. nonfarm payrolls, DailyFX.com said.
"A weaker-than-expected print could entice some gold buying, as it could be seen weakening the Fed's resolve to lift in March, even if just a little," it said. A potential Russian incursion against Ukraine would also boost prices of the safe-haven asset, it added.
Copper prices rose after Chile took initial steps which open the door to nationalizing some of the world's biggest copper and lithium mines. Three-month copper on the LME is up 1.2%.
A Chilean environmental committee approved the proposal--which would nationalize private miners--as part of efforts to draft a new constitution.
The measures are a while away from receiving approval, however, and will require two-thirds support from the country's assembly to become part of a draft charter that would need to be approved by a referendum. Chile is a major copper producer and has the largest reserves of copper and lithium.
EMEA HEADLINES
Eurozone Inflation Rises to Fresh Record, Against Expectations
The eurozone's inflation rate rose to a fresh record high in January, an unwelcome surprise for policy makers at the European Central Bank who have said they don't expect to raise their key interest rate this year.
As in the U.S., consumer-price inflation in the eurozone rose much more sharply in 2021 than policy makers had expected. The eurozone's annual rate of consumer-price inflation ended 2021 at 5%, then the highest on record and more than twice the ECB's target.
Activist Investors Take Aim at U.K. Inc.
U.S. and European activist investors are targeting some of the U.K.'s biggest publicly traded companies, taking advantage of slumping stock prices to push for company breakups and other changes.
Florida-based hedge fund Elliott Management Corp. is making waves at U.K. pharmaceutical giant GlaxoSmithKline PLC and SSE PLC, an electricity network and alternative energy provider. Daniel Loeb's Third Point LLC is calling for a breakup of Shell PLC. And Trian Fund Management LP, another well-known U.S. activist hedge fund, headed by Nelson Peltz, owns a stake in Unilever PLC, The Wall Street Journal reported last month.
Vodafone Group 3Q Performance in Line; On Track to Meet Fiscal 2022 Guidance
Vodafone Group PLC said Wednesday that third-quarter performance was in line with expectations and that it is on track to meet fiscal 2022 guidance.
The U.K.-based telecommunications company said that group service revenue growth for the period ended Dec. 31 was 2.7% on an organic basis, with growth in both Europe and Africa.
Novartis 4Q Earnings, Sales Rose; Increases Dividend
Novartis AG on Wednesday reported higher earnings and sales for the fourth quarter and raised its dividend for 2021, citing a good performance from its key growth drivers and benefits from the sale of its investment in Roche Holding AG.
Net income at the Swiss pharma major came in at $16.31 billion for the quarter up from $2.1 billion the previous year, benefiting from the sale of Novartis's stake in Roche.
Santander Expects Higher Profitability in 2022 After 4Q Profit Jumps
Banco Santander SA said it expects higher profitability this year after it beat its profit guidance for 2021 as earnings from the U.S. and the U.K. boosted the lender's recovery.
The Spanish bank, one of the eurozone's largest, said Wednesday that it expects a return on tangible equity--a key measure of profitability--of above 13% in 2022. The RoTE for 2021 stood at 11.96%, exceeding the 9%-10% target set for the year.
Glencore Backs 2022 Production Guidance After In-Line 2021
Glencore PLC on Wednesday reaffirmed guidance for 2022, and said that its operations in 2021 performed in line with expectations.
The Anglo-Swiss commodity mining and trading company said guidance for this year remains unchanged from the investor update in December.
Novo Nordisk Proposes $3.33 Bln Share Buyback After 4Q Earnings Beat
Danish pharmaceutical company Novo Nordisk AS Wednesday proposed a new share-buyback program of up to 22 billion Danish kroner ($3.33 billion) after posting a forecast-beating rise in fourth-quarter net profit amid strong demand for its diabetes care and obesity treatments.
Net profit rose to DKK10.89 billion from DKK9.32 billion, and above the DKK10.79 billion forecast by analysts in a FactSet poll.
Julius Baer's Shares Fall on Higher Costs, Smaller-Than-Expected Buyback
Shares in Julius Baer Gruppe AG fell Wednesday after the lender launched a smaller-than-expected share buyback program and incurred higher costs for 2021, despite also reporting the record levels of net profit.
The Swiss bank's adjusted operating costs rose 2% to 2.53 billion Swiss francs ($2.75 billion) on provisions and losses, which were higher than expected, Jefferies said. Excluding provisions and losses, adjusted operating expenses grew by 3% to CHF2.46 billion.
Swedbank Declares Special Dividend as 4Q Net Profit Beat
Swedbank AB on Wednesday reported a fourth-quarter net profit that slightly beat expectations and declared a special dividend.
Quarterly net profit rose to 4.84 billion Swedish kronor ($520.8 million) from SEK4.51 billion, while net interest income slipped 0.2% to SEK6.55 billion.
Telenor Raises Dividend, Expects Flat-to-Slightly-Higher Earnings This Year
Norwegian telecommunications provider Telenor ASA on Wednesday declared a higher full-year dividend, though it cautioned that top-line pressure in Asia remains because of intense competition and the impact from the pandemic, while full-year earnings are expected flat-to-slightly-higher on year.
The company posted a fourth-quarter net profit attributable to shareholders of 587 million kroner ($66.2 million), compared with NOK7.69 billion a year earlier, as earnings in the prior year were boosted by disposals.
Russia Confronts Ukraine With Upgraded Military Rebuilt After Soviet Collapse
REUTOV, Russia-When the Soviet Union collapsed in the early 1990s, an elite military supplier once called Design Bureau No. 52, known for making intercontinental ballistic missiles, fell on hard times. Military spending had dropped so sharply that the company was forced to make civilian products such as railway timetable boards.
Its problems were typical of Russia's depleted armed forces. Conscription had stopped in some places, desertions were on the rise and some officers were homeless as the government struggled to pay them. Military hardware was left to rust or was stripped for parts. Funding for new weapons design and technology was drained.
U.K. Retail Prices Rose at Nearly Double the Pace in January
U.K. retail prices grew at nearly double the pace in January as the previous month, according to the latest report by the British Retail Consortium and NielsenIQ.
Retail prices rose 1.5% on year in January after climbing 0.8% in December, marked by a significant increase in nonfood prices.
GLOBAL NEWS
Consumers Are Pivoting Spending to Services Like Dining and Travel
Americans responded to the pandemic with a dramatic shift in spending to goods from services. That now appears to be reversing and should gather steam as the Omicron wave of Covid-19 ebbs, economists say.
Consumers shopped more online in the pandemic, and changed what they bought. Unable to eat out or travel, and with both school and work going remote, they splurged more on things for the home such as furniture and computers. Several rounds of federal stimulus amplified that spending spree.
AI Could Cut Hiring Biases as Companies Make Push to Find Workers, Proponents Say
The use of artificial intelligence to aid in companies' sensitive decision making has long made U.S. regulators wary, particularly for its potential to supercharge human bias.
But as worker shortages prompt widespread recruitment pushes, AI proponents say the technology, far from being risky, could help companies make hiring decisions fairer-not just faster.
U.S. National Debt Exceeds $30 Trillion for First Time
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02-02-22 0651ET
