-ECB’s Weidmann (El Mundo): ECB should set a date to end bond purchases; prospects for the evolution of px correspond to a return of inflation to a level sufficient to maintain the stability of prices; level of NPLs is impeding plans to establish a bloc-wide deposit insurance programme (EDIS)
-Merkel: think we can manage to form a coalition; there is a lot of work ahead of us but am optimistic (NB. Govt scheduled 5-days of talks to see if enough common ground is there for a “grand coalition” (NB. Aiming to finish talks by Thursday, if enough common ground then SPD leaders would ask a party convention on Jan 21 to back full negotiations on policy blueprint for Govt)
-SPD’s Schulz: will not draw any red lines, going into prelim coalition talks with a constructive attitude; 5 days of talks will be enough; all sides are ready to modernise Germany
-Italy Eco Min Padoan (Corriere): could be political stalemate after general elections; coalition between Italy’s main left and right wing parties cannot be ruled out if there is no clear winner; economy isn’t growing fast enough but recovery will pick up; there could be new German elections
-El Espanol/SocioMetrica (surge in support for Ciudadanos following strong turnout in Catalan elections): PP 24.1% (=97 seats, vs 137 in 2016 general election); Ciudadanos 23.9% (=86 seats, vs 32); Socialists 22.5% (=89 seats, vs 85); Unidos Podemos 16.2% (=49 seats vs 71)
-PM May: will be making changes to ministerial team soon, following the forced resignation of her deputy Damian Green in December; believes Trump is committed to best interests of US, will be visiting Britain (no details added); hopes to have details on Brexit timetable by late March; UK wants its own FTA with EU
-Sunday Times Political Ed: PM May will make changes to cabinet on Monday, not expected to affect Foreign, Finance, Interior or Brexit Ministers; expected to announce new First Sec of State after Damien Green forced resignation
-Telegraph Sources: UK PM May to appoint a Cabinet Min for no Brexit deal in her reshuffle which starts today; the new min is likely to be based in Dept for Exiting European Union alongside Brexit Sec Davis & will provide regular updates on prep for leaving the EU without a trade deal
-VISA: UK Dec Consumer Spending: -1.0% y/y vs -0.9% in Nov; first Dec drop since 2012; FY17 Consumer Spending -0.3% y/y, first FY fall since 2012
-Deloitte CFO Survey: UK largest companies see increased dangers from Brexit, focused on cost control; domestic risks remain large
-Fed’s Mester: Fed should only adjust rates to deal with fin instability as a last resort; should rely primarily on regulations and supervision; mon pol should not be given a third objective of fin stability
-Fed’s Williams: sees about three hikes in 2018; economy is doing great, not concerned about near-term infl jump; Fed is well positioned to tighten policy either faster or slower if data surprises; tax cuts should have modest positive effect on GDP; expects unemp to drop to 3.7% this year (below Fed consensus); expects economy to be in a very good place 2y from now
-White House Chief Economist: the Fed won’t need to pick up the pace of its planned interest rate increases in response to the tax overhaul legislation; the administration’s computer modelling of economic effects of the tax plan result in interest rates that “aren’t inconsistent with the Fed’s current guidance”
-China FX Regulator SAFE: will keep FX reserves and international BoP ‘balanced and stable’ in 2018
-China end-Dec FX Reserves +$20.67bn m/m; end-Dec FX reserves $3.14trn vs $3.119trn at end-Nov (11th consec monthly increase)
-Shanghai Sec Journal (cites PBOC adviser): Yuan will likely stabilise around 6.6 vs USD in longer term; currently no pressure to depreciate the yuan; not necessary to increase deposit and lending rates in the real economy; expects factors that are currently causing the yuan to strengthen will gradually recede
-PBOC’s Research Bureau Dep Head (China Daily): there is room for an increase in interest rates in the S/T, citing faster factory PX & higher industrial profits in the last year; PBOC will assess both inflation & FX rates before adjusting interest rates; higher rates will help squeeze asset bubbles & restrain debt expansion; sees yuan to be basically stable
-PBOC: skipped OMOs for 11th consecutive trading day as liquidity levels in banking system were “relatively high”
-Xinhua: China launched $4.63bn investment fund to boost services trade industry as part of effort to improve foreign trade structure
-Japan PM Abe: cannot say now whether Govt can declare end to deflation this year, but will work with BoJ to ensure early end to deflation; BoJ’s Kuroda is meeting my expectations in boosting economy; want him to keep up efforts, but undecided on next BoJ Gov
Geopolitics/Oil:
-Trump: talks between NK and SK are a result of his pressure; hope it works out; would absolutely be willing to talk to Kim Jong Un on the phone under right conditions; reiterates that Mexico will pay for border wall “in some way”