SocGen's central scenario on asset purchases sees close to EUR100 billion unused in the ECB's Pandemic Emergency Purchase Programme by March 2022, which could be used to "stabilize" eurozone government bond markets, if needed.
However, such measures aren't sufficient to prevent continuing widening bias on spreads, it said, targeting a 10-year BTP-Bund yield spread of 140-150 basis points in 1H 2022 and 170 basis points in 2H 2022; the current level is 134 bps, according to Tradeweb.
Commodities:
Oil prices edged higher, stabilizing after a drop driven by renewed concerns about the Omicron variant. Brent is heading for its biggest weekly advance since August having rallied on the back of signs Omicron might not put as much of a dent in oil demand as first seemed to be the case.
Traders and analysts remain on edge about potential travel disruption, particularly because the oil market was expected to swing into over supply in the first quarter of 2022 even before Omicron's arrival.
"Demand will decline for seasonal reasons while supply will increase noticeably," said Commerzbank analyst Carsten Fritsch.
Gold edged lower ahead of upcoming U.S. inflation data.
EMEA HEADLINES
Bayer Wins Second Roundup Cancer Case in California
Bayer AG said Thursday that a jury in California found that its weedkiller Roundup wasn't the cause of a woman's cancer.
The result is the second trial victory the German pharmaceutical-and-chemical conglomerate has had for its glyphosate pesticide, after a jury in Los Angeles ruled in Bayer's favor for the first time in October. Bayer lost its first three cases involving Roundup.
AB Foods Sees Improved Performance Ahead as Primark Sales Strengthen
Associated British Foods PLC said Friday that fashion retailer Primark's performance since the fiscal 2021 year ended on Sept. 18 has been ahead of expectations thanks to stronger like-for-like sales when compared with the latest quarter.
The British conglomerate said its performance across grocery, sugar, ingredients and agriculture has also been in line with views, which will help it achieve its current views of closing the first half and fiscal 2022 as a whole with adjusted operating profit and adjusted earnings per share growth.
Anglo American Expects Costs to Rise Again in 2022
Anglo American PLC expects costs to increase further in 2022 and reaffirmed its full-year guidance for 2021.
The FTSE 100 mining company said Friday that it expects unit costs to increase by 4% next year, after rising 10% on a currency-neutral basis in 2021 due to inflation and production slowdowns.
Vantage Towers Confident in Mid-Term Goals After Long-Term Contract Win
Vantage Towers AG said late on Thursday that it has won a long-term contract with 1&1 AG, and that it is confident it can hit the upper end of its mid-term targets.
The European mobile-towers company said the agreement will give 1&1 access to up to 5,000 existing sites in Germany, enabling it to launch its 5G network.
German Inflation Rises at Fastest Pace in Almost 30 Years
German consumer prices rose strongly in November, posting their highest reading since June 1992 and confirming preliminary data, statistics office Destatis said Friday.
Consumer prices rose 5.2% on year measured by national standards, and they rose 6.0% on year by European Union-harmonized standards, both in line with forecasts.
Sky-High Vaccination Rates and Zero Taxes Make Dubai a Pandemic Boomtown
DUBAI-This city-state of skyscrapers and Persian Gulf beaches is emerging as a pandemic boomtown, drawing in the ultrarich, entrepreneurs and tourists with open-border policies, high levels of vaccination and low Covid-19 infection rates.
This year, thousands of millionaires have relocated to the city and the wider United Arab Emirates, drawn by zero income tax and relatively relaxed pandemic restrictions. The city's bars, restaurants and hotels are packed, real-estate prices have surged, workers are returning to offices, and the Expo 2020 world fair is reeling in foreign tourists.
Biden Preps Allies for Talks With Kremlin on Russian Troop Buildup
WASHINGTON-President Biden laid the groundwork Thursday for talks with Moscow to de-escalate the crisis over the massing of Russian forces near the Ukrainian border.
The negotiations, which Mr. Biden said a day earlier could include some North Atlantic Treaty Organization members and Russia, promise to be difficult for the Biden administration. Russian President Vladimir Putin is demanding not only U.S. concessions on Ukraine but also revisions in the post-Cold War order in Europe.
Pfizer-BioNTech Covid-19 Booster Authorized for 16- and 17-Year-Olds
U.S. health regulators cleared the Covid-19 booster from Pfizer Inc. and partner BioNTech SE for use in 16- and 17-year-olds, widening eligibility as the worrisome Omicron variant spreads around the world.
The Food and Drug Administration decision permits the teenagers to receive a third dose of the shot at least six months after their primary vaccination series.
VW's CEO Survives Labor Dispute but With Diminished Role
BERLIN-Volkswagen AG's besieged chief executive has survived a monthslong battle with labor leaders but he will now lead Europe's biggest auto maker on a shorter leash, raising questions about how fast and how far he can push through the electric transformation he started at the company.
VW's supervisory board Thursday approved a compromise to end the conflict between Herbert Diess and powerful labor leaders at the company who had sought his ouster.
U.A.E. Shut Down China Facility Under U.S. Pressure, Emirates Says
WASHINGTON-The United Arab Emirates recently ordered work halted on a Chinese facility in the country after American officials argued that Beijing intended to use the site for military purposes, a top U.A.E. official said Thursday.
Anwar Gargash, a diplomatic adviser to the U.A.E.'s leadership, said the Emirates ordered work stopped at the site at Washington's behest. The U.A.E., he said, didn't believe the facility was intended for military or security uses.
Credit Suisse Chairman Breaks Swiss Quarantine Rules
António Horta-Osório exhorted Credit Suisse Group AG employees to be better at managing risks and following the rules when he joined the Swiss bank in April after a string of scandals.
The chairman got caught up in his own misconduct earlier this month, breaking quarantine in Switzerland with a plane ride out of the country. Mr. Horta-Osório said the breach was unintentional and has reported it to health authorities and to Switzerland's financial regulator. He apologized and said it wouldn't happen again.
GLOBAL NEWS
U.S. to Bar Investment in Chinese AI Giant, Considers Banning Key Exports to Top Chip Maker
U.S. officials plan to ban American investment in Chinese artificial intelligence giant SenseTime Group Inc. and are looking to block China's largest chip maker from buying U.S. manufacturing tools, in a broadening Biden administration effort against Chinese technology firms.
SenseTime, a leading developer of facial recognition technology, on Friday will be placed on a Treasury Department blacklist of Chinese companies that support China's military, people familiar with the matter said.
Oil Price Swings Scramble Inflation Outlook
A loss of momentum in oil markets has prompted investors and traders to dial down bets on how fast inflation will run in the coming years.
After rising for much of 2021 on the back of a recovery in economic activity, oil prices have stalled since late fall. Among the catalysts: President Biden said the U.S. and other big energy consumers would release crude from strategic reserves to tame fuel prices. Travel restrictions designed to contain the Omicron variant of coronavirus then cut demand for jet fuel.
Derby's Take: As Fed Meeting Looms, Yield Curve Offers Complicated Message
As the Federal Reserve heads toward a pivotal policy meeting next week, the bond market's yield curve is throwing out some tricky signals.
Since early October, the difference between two-year and 10-year Treasury notes has narrowed considerably in what is called a flattening of the yield curve. This trend kicked in about a month ahead of the Fed announcing it would start dialing back stimulus by slowing the pace of its bond-buying stimulus effort.
Senate Clears Key Hurdle for Debt-Ceiling Increase to Avert Default
WASHINGTON-The Senate overcame the biggest hurdle to raising the debt ceiling Thursday, with more than a dozen Republicans joining Democrats to help clear legislation crafted to avert a government default.
The Senate advanced the bill 64-36 in the critical procedural vote early in the afternoon, drawing the support of 14 Republicans to top the required 60-vote threshold. Hours later, the Senate voted 59-35 on final passage, which required just a simple majority.
China Pushes Back Against Yuan Rally
The yuan has soared to multiyear highs against the dollar and other major currencies, reflecting strong demand for China's exports and its financial assets, and prompting some pushback from the country's central bank.
The surge is unusual because it comes while the dollar is also gaining ground. That contrasts with a previous rally in 2018, which partly reflected broader weakness in the U.S. currency.
As China's Economy Falters, the Rest of World Looks Resilient
Chinese history plays out in cycles, or so goes the well-worn cliché. Whether or not that is true, it is undeniable that five years after the last major downturn, the specter of another Chinese property crash-and associated financial turbulence-is once again tormenting global markets.
(MORE TO FOLLOW) Dow Jones Newswires
12-10-21 0629ET
