LOOK AHEAD: Friday Data Calendar: Retail Sales, Import/Export Prices, Fed Speak

• Stocks retreat from this morning's post-PPI data highs, extending modestly lower ahead midday with Health Care and Communication Services sectors underperforming.
• Stocks and Treasury futures enjoyed a brief knee-jerk rally after this morning's PPI inflation measures for December came out lower than expected. Risk retreated as further investigation into the data showed PCE components were on the soft side with the notable exception of airfares, which typically jump in December.
• Currently, the DJIA trades down 89.09 points (-0.21%) at 42205.84, S&P E-Minis down 20.25 points (-0.34%) at 5853.5, Nasdaq down 92.7 points (-0.5%) at 18994.25.
• Pharmaceuticals weighed on the Health Care sector in the first half: Eli Lilly -7.21% after phase 1 trials of it's weight loss drug were terminated, Charles River Labs -5.72%, Regeneron Pharmaceuticals -2.64%.
• Interactive media and entertainment shares weighed on the Communication Services sector: Meta -2.60% amid reports of staff reductions of lowest 5% performers, Paramount Global -1.21%, Netflix -1.04%.
• On the positive side, Utilities and Materials sectors outperformed in the first half. Independent power and electricity providers rebounded after Monday's selling: Vistra +4.91%, Constellation Energy +3.09%, NRG Energy +2.42%. Chemicals continued to support the Materials sector for the second day running: Celanese +5.11%, Eastman +2.09%, Air Products & Chemicals +1.65%.
• Reminder, the next round of quarterly earnings kicks off this week with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 15-16.

The Wall Street Journal reports that President-elect Donald Trump is preparing a set of energy-related executive orders, to sign upon his inauguration on January 20, that would unwind Biden administration rules on offshore/onshore drilling on federal lands, tailpipe emissions, and LNG exports approval. 

• The Journal notes: “Trump’s transition team has discussed his second-term intentions with some in the oil industry, according to industry lobbyists. The plans are fluid and could change.”
• Trump spokeswoman Karoline Leavitt said: “The American people can bank on President Trump using his executive power on day one to deliver on the promises he made to them on the campaign trail. When he takes office, President Trump will make America energy dominant again.”
• According to the Journal, one of Trump’s first moves, “will be the creation of a national energy council overseeing U.S. oil, natural gas and electric power policy,” led by Interior Secretary nominee Doug Burgum and Energy Secretary nominee Chris Wright. 
• Trump is also “widely expected to withdraw the U.S. from the Paris climate accord, as he did in his first term, potentially through an executive order in his first days in office.”
• It is unclear if Trump has sufficient executive authority to reverse all Biden-era rules, particularly the ban on offshore oil and gas exploration. During his first term, Trump tried to reverse an Obama-era rule enacted via the same 1953 law. At that time, Trump’s bid was struck down by the courts, who determined that only Congress could unwind the rule. 

OI data suggests short setting dominated through the Euribor greens on Monday, with only limited pockets of net long cover seen in that area of the strip. Net long cover then dominated in the blues.

• Euribor futures largely tracked movements in USD counterparts yesterday, with the markets continuing to digest Friday’s NFP release.
• ECB speakers (Lane, Rehn and Vujcic) added little new to the policy debate.
• OI data indicates that net short setting dominated for three consecutive sessions in Z5, H6 and M6 contracts as of Monday.