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Friday, December 12

12th Dec - Eyes turning to FOMC

Previously on MoreLiver’s:

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Greek Presidential Election: Leaders raise fears over euro membershipvoxeurop

TLTRO spoils Christmas holidays at the ECB Bruegel

France drifts into deflation as ECB 'pea-shooter' falls shortThe Telegraph
The Bank of Italy warns that any further falls in prices at this stage could have 'extremely grave consequences for economies with very high public debt levels'

Employment up by 0.2% in the euro area and by 0.3% in the EU28 – Eurostat
Industrial production up by 0.1% in both euro area and EU28 – Eurostat

FOMC preview: Expect a more hawkish FedNordea
At next week’s meeting the Fed is likely to appear somewhat more hawkish. Thus, we expect that the central bank will drop its assessment that the first rate hike is still a “considerable time” away. In addition, we expect a more hawkish dot plot. An outcome in line with our expectations should flatten the USD curve and pave the way for the EUR/USD testing the crucial 1.2220-50 level once more.

Merrill and Nomura: FOMC PreviewCalculated Risk

Likely unlikelies 2015: The Fed hike cycle – the long waiting game to continue?Nordea
Patience is a virtue, and one that is and has been needed on US rates. The Fed stands likely to hike in 2015, but for investors the question is not only whether rates will increase, but if they’ll beat the forwards. Paying in short swaps has been a steady loser over the past 1½ years, and the roll against remains strong. We favor longer exposure. We argue that the Fed might be delayed further due to lack of inflation pressure, a cautious bias, and considerations regarding market volatility.

Data Supportive of Fed PlansTim Duy’s Fed Watch
I would like a journalist to press Yellen on her interpretation of the 5-year, 5-year forward breakeven measure of inflation expectations. Does she see this measure as important or too noisy to be used as a policy metric?  What is her preferred metric?

Preliminary December Consumer Sentiment increases to 93.8 – Calculated Risk
Confidence Surges to New Post-Recession High – WSJ

Japan: Abenomics gets a second chanceNordea
Japan’s general election on Sunday is likely to extend Shinzo Abe’s premiership for four more years. The market has priced in a landslide victory to the ruling coalition, so no market reaction is expected. Abe needs to allocate more political capital to structural reforms if he does not want Abenomics to be remembered as an expensive failure.

China: industrial production remains weak but domestic demand stabilisingDanske Bank

Daily Central BanksWSJ
Hilsenrath’s Take: How to Size-Up a Mixed U.S. Record on Deleveraging * WSJ Survey: Economists Stick to Mid-2015 Fed Rate Hike View * Fed Finds Americans’ Wealth Dips Amid Stock Volatility * Bank of Canada Chief Warns on Impact Of Financial Reform, Oil Prices * Chinese Banks Step Up Lending to Offset Slowing Growth

Daily MacroWSJ
Oil prices are once again front and center for markets today, with prices dropping below $60 a barrel after the International Energy Agency produced a pessimistic assessment of the outlook for world crude demand. The worrying thing about this report from the IEA – and others earlier this week from the U.S. EIA and OPEC – is that it underscores the demand component of the oil price rout.

Danske DailyDanske Bank

Nordea MorningNordea

FI Eye-Opener: What more could you possible need?Nordea
German 10-year yield with new lows again – longer US yields fail to rise. Greek yields continue to surge higher, while Greek equities hit hard. Some profit taking ahead in core bonds today. Euro-area inflation expectations hitting new lows. Oil prices down. Chinese economic data mixed. Not nearly enough – QE coming. US economy continues to do well – House narrowly passes spending bill. Norges Bank cuts, while Russia hikes, due to plunging oil prices. Possible French downgrade ahead

Dollar Consolidates as Oil Slide ContinuesMarc to Market

Crude Drops, Yields Slump, Futures Tumble

From the floorTradingFloor
WTI crude heads below $60/barrel as prices plunge 20% since Opec meeting * Shale discount to WTI sees West Canadian Select at the $40/b mark * Market shakeout at margins making Chapter 11 announcements more likely * EURNOK 1-month atm offering "long value", says Norup * Hansen says watch XAUEUR as it gets close to breaking €1,000/oz level * Hardy makes USDJPY trade call ahead of Japanese election

Global: has the Fed's unprinting been impacting markets?Nordea
The Fed’s test-driving of various facilities has led to a sharp drop in excess liquidity in recent months, something we’ve nick-named Quantitative Tightening. This may have been one driver of dollar strength and disinflationary markets this autumn. If the Fed finds a way to control money market rates without absorbing as much liquidity, markets would “only” have to deal with a Fed seemingly dead-set on hiking rates by the middle of 2015

FX 2015, now with more hyperboleFT

2015 Outlook: Global BanksMoody’s
Economic challenges and regulatory reforms continue to test stability (free reg. required)

Alhainen öljyn hinta saa keskuspankin laskemaan Norjassa ja nostamaan Venäjällä | Isompi, muttei kuitenkaan riittävä | USA:n vähittäismyynti hyvässä vedossa

Yhteiskuntasopimus ja Saariselän sheriffitElina Lepomäki / US

Sisäpiirikirja kertoo Venäjän johtamisesta valhesirkuksellaVerkkouutiset
Kremlin valtaotteen synnyttämisen nähnyt brittituottaja kertoo uskomattomia tarinoita Venäjän johtamisesta tositelevisiona.

Nyt yskii vähittäiskauppa pahasti – Kesko ja Stockmann huikeassa alamäessäVerkkouutiset

”Hallituksen talouspolitiikka väärillä urilla, Suomelle laadittava kansallinen pelastusohjelma”PS