Equities Consolidate as Bitcoin Tumbles ahead of the Holidays

Equity markets are relatively stable as traders appear to be focusing on the huge decline in bitcoin which tumbled Friday below 13,000 an had dropped nearly 35% since hitting a high of 19.7K in mid-December. EGB yields are split as ECB asset purchases were halted for the quieter festive season, and the election outcome in Catalonia failed to clear the future of the independent region. The renewed majority for Separatists saw the Spanish IBEX decline more than 1% amid a wider sell off in Eurozone stock markets, while the FTSE 100 managed to hang on to a small gain, after reaching record highs yesterday. The EUR/USD whipsawed initially moving lower by bouncing back to the unchanged mark ahead of the long holiday weekend.

German import price inflation accelerated to 2.7% year over year in November, from 2.6% year over year in the previous month. the data were in line with our forecast, but a tad above consensus, as higher energy price inflation lifted the annual rate. Without oil prices would have risen just 0.2% month over month and 1.2% year over year, so despite the uptick in the headline rate something for Draghi to argue with as underlying inflation remains modest, although in the three months trend rate the reading excluding energy turned positive for the first time since May.

German Consumer Confidence Improved

German GfK consumer confidence improves to 10.8 in the projected January reading. The breakdown for November, when confidence held steady at 10.7 showed an improvement in business cycle expectations, but more importantly income expectations, but despite this the willingness to buy declined slightly as the willingness to save turned less negative. Still overall a positive number that suggests consumptions will continue to underpin overall growth, as the labor market continues to improve, and wage growth picks up.

UK GDP was unrevised at 0.4% quarter over quarter growth in the third and final release for Q3 growth data, matching the median forecast, though the year over year figure was revised up to 1.7% growth from the 1.5% expansion previously estimated. Growth for 2016 was also revised up by 0.1 percentage point. The Q3 current account, meanwhile, came with a deficit of GBP 22.8 billion, worse than expected while the deficit in the previous quarter was revised to GBP 25.8 billion from GBP 23.2 billion. The unexpected upward revision in year over year growth saw the pound gain about 20 pips versus the dollar.