Notes/Observations
- Sentiment aided by need for reduced safe havens as higher as oil prices recover and as participants awaited the FOMC policy announcement with optimism
- Continued optimism of various economies making preparations to ease lockdown measures
- German Apr headline inflation decelerated marginally from month ago levels mainly the result of the continuing decline in oil and energy prices
Asia:
- Australia Q1 CPI Q/Q: 0.3% v 0.2%e; Y/Y: 2.2% v 1.9%e
- China said to begin the National People’s Congress (NPC) on May 22nd (in line with speculation of late May), political consultative body to begin annual sessions on May 21st
Coronavirus:
- Total Global cases 3,116,680 (+2.5%); Total deaths 217.2k (+2.9%)
- Reports circulated of a potential vaccine for Covid-19 had shown promising results in animal testing; 6 monkeys given the vaccine & then exposed to the virus for 28 days did not catch it; a vaccine could see mass prod by Serum Institute in India within month
Europe:
- Fitch cuts Italy sovereign rating one notch to BBB- from BBB (lowest level of investment grade); outlook Stable
Americas:
- President Trump confirmed to sign order to keep US meat plants open during coronavirus pandemic. Wanted ‘sanctuary city’ policies adjusted in return for helping US states amid coronavirus
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.32% at 341.70, FTSE +0.89% at 6,011.40, DAX +0.35% at 10,833.40, CAC-40 +0.15% at 4,576.65, IBEX-35 +1.21% at 6,919.00, FTSE MIB +0.77% at 17,812.50, SMI -0.43% at 9,846.81, S&P 500 Futures +1.00%]
- Market Focal Points/Key Themes: European indices open mixed, retreated slightly before pairing losses during the morning session; healthcare and consumer discretionary among underperformers; best performing secotrs include energy and financials; Swiss FinMin opposed to releasing debt break; focus on US GDP figures; upcoming earnings expected in the US session include General Electric, GlaxoSmithKline, Boeing and Spotify.
Equities
- Consumer discretionary:IAG [IAG.UK] -4% (prelim earnings), Next [NXT.UK] -2% (trading update), HelloFresh [HFG.DE] -1% (analyst action)
- Financials: Barclays [BARC.UK] +5% (earnings), Deutsche Bank [DBK.DE] +1% (final earnings)
- Healthcare: AstraZeneca [AZN.UK] +1% (earnings)
- Industrials: Airbus [AIR.FR] +0.5% (earnings), Volkswagen [VOW3.DE] +1% (final earnings)
- Technology: WPP plc [WPP.UK] +3.5% (earnings), AMS [AMS.CH] +16% (earnings)
Speakers
- Sweden Central Bank (Riksbank) Dep Gov Breman stated that the central bank was doing everything possible to mitigate effects on the economy. Reiterated stance that had room to cut rates further and could also take other policy action (**Note: in-line with April policy statement)
- Swiss Fin Min Maurer: 2020 budget deficit seen between CHF30-50B; opposed to loosening of debt break. Believed that future money paid by SNB to government should be used to pay down debts run up during coronavirus pandemic
- Poland govt announced easing of lockdown measures. To reopen hotels from Monday May 4th; reopen shopping mall from Monday, May 4th (**Note: with some limits) and reopen nurseries and kindergarten from Wed, May 6th
- South Africa said to be planning to reopen schools from Wed, May 6th
- Japan PM Abe stated that it must prepare for a protracted fight against the coronavirus and stressed that t would be impossible to host 2021 Summer Olympics unless outbreak was contained
- China City of Beijing said to lower its emergence response level from level I to level II; effective from Thursday, Apr 30th
- Russia Energy Min Novak: Non-OPEC+ countries to cut production by 10M bpd. In contact with US to formalize the production cut. Domestic Russian oil companies to cut production by 19% compared to Feb levels
Currencies/Fixed Income
- USD remained on soft footing but contained in recent ranges as markets prepared for the global economy to reopen in coming weeks.
- EUR/USD higher by 0.4% at 1.0870. Various German States reported April CPI data that beat expectations of the composite reading (due out later today) and only mildly softer from March levels.
- USD/JPY lower by 0.4% at 106.50 area. Japanese markets were closed for holiday
- Italian yield were approx 10bps higher in the session after a surprise downgrade of Italy’s credit rating by Fitch Ratings in an out-of-schedule move added to pressure on Italian government bonds ahead of its coming auction (**Note: The scheduled issuance went off without any hitches). The move for the time being had little repercussions elsewhere as analysts noted that the stable outlook could ease fears of a move to non-investment grade
Economic Data
- (NL) Netherlands Apr Producer Confidence Index: -28.7 v +0.2 prior
- (DE) Germany Mar Import Price Index M/M: -3.5% v -2.5%e; Y/Y: -5.5% v -3.8%e
- (DE) Germany Apr CPI Saxony M/M: 0.4% v 0.1% prior; Y/Y: 1.1% v 1.6% prior
- (ES) Spain Feb Total Mortgage Lending Y/Y: +29.1% v -1.9% prior; House Mortgage Approvals Y/Y: 16.1% v 6.1% prior
- (ES) Spain Mar Adjusted Retail Sales Y/Y: -14.1% v -4.0%e; Retail Sales (unadj) Y/Y: -14.3% v +5.5% prior
- (TR) Turkey Apr Economic Confidence: 51.3 v 91.8 prior
- (HU) Hungary Mar PPI M/M: +0.5% v -0.2% prior; Y/Y: 4.3% v 3.8% prior
- (SE) Sweden Mar Household Lending Y/Y: 5.2% v 5.1% prior
- (SE) Sweden Feb Non-Manual Workers Wages Y/Y: 3.1% v 2.8% prior
- (EU) Euro Zone Mar M3 Money Supply Y/Y: 7.5% v 5.5%e
- (DE) Germany Apr CPI Brandenburg M/M: 0.6% v 0.2% prior; Y/Y: 1.2% v 1.4% prior
- (DE) Germany Apr CPI Hesse M/M: +0.5% v -0.3% prior; Y/Y: 0.8% v 1.2% prior
- (DE) Germany Apr CPI Bavaria M/M: 0.5% v 0.0% prior; Y/Y: 0.9% v 1.2% prior
- (IT) Italy Mar PPI M/M: -1.3% v -0.6% prior; Y/Y: -4.9% v -3.8% prior
- (CH) Swiss Apr Credit Suisse Expectations Survey: +12.7 v -45.8 prior
- (DE) Germany Apr CPI North Rhine Westphalia M/M: 0.3% v 0.0% prior; Y/Y: 0.8% v 1.4% prior
- (PT) Portugal Apr Consumer Confidence Index: -21.0 v -9.9 prior; Economic Climate Indicator: -0.7 v +1.9 prior
- (DE) Germany Apr CPI Baden Wuerttemberg M/M: 0.4% v 0.1% prior; Y/Y: 0.9% v 1.4% prior
- (EU) Euro Zone Apr Economic Confidence: 67.0 v 73.1e; Industrial Confidence: -30.4 v -25.0e; Services Confidence: -35.0 v -27.0e; Consumer Confidence (final reading): -22.7 v -22.7 advance
- (BE) Belgium Q1 Preliminary GDP Q/Q: -3.9% v +0.5% prior; Y/Y: -2.8% v +1.3%
- (IS) Iceland Apr CPI M/M: 0.5% v 0.2% prior; Y/Y: 2.2% v 2.1% prior
- (IT) Italy Mar Hourly Wages M/M: 0.1% v 0.0% prior; Y/Y: 0.7% v 0.6% prior
Fixed Income Issuance
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.375% Aug 2030 bonds; Avg Yield: 0.740% v 0.800% prior; Bid-to-cover: 4.21x v 3.87x prior
- (UK) DMO sold £3.0B in 2.75% Sept 2024 Gilts; Avg Yield: 0.103% v 1.662% prior; Bid-to-cover: 2.79x v 1.58x prior; Tail: 0.3bps vs. 0.2bps prior (last held on Jan 6th 201)
- (IT) Italy Debt Agency (Tesoro) sold total €5.25B vs. €4.25-5.25B indicated in 5-year and 10-year BTP bonds
- Sold €1.5B vs. €1.0-1.5B indicated range in 0.60% Jun 2026 BTP bonds; Avg Yield: 1.36% v 0.80% prior; Bid-to-cover: 1.79x v 1.43x prior
- Sold €3.75B vs. €3.25-3.75B indicated range in 0.95% Aug 2030 BTP; Avg Yield: 1.78% v 1.48% prior; Bid-to-cover: .31x v 1.33x prior
- (IT) Italy Debt Agency (Tesoro) sold €745M vs. €500-750M indicated range in 1.1% Oct 2024 CCTeu (Floating Rate bonds); Avg Yield: 1.38% v 2.32% prior; Bid-to-cover: 1.68x v 1.62x prior
Looking Ahead
- (BE) Belgium Apr CPI M/M: No est v -0.2% prior; Y/Y: No est v 0.6% prior
- 05:30 (EU) ECB allotment in 3-month LTRO operation
- 05:30 (DE) Germany to sell €4.0B in 0.00% Feb 2030 Bunds
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (RU) Russia to sell OFZ bonds (if held)
- 06:00 (PT) Portugal Mar Retail Sales M/M: No est v 3.0% prior; Y/Y: No est v 8.1% prior
- 06:30 (UK) DMO to sell £2.0B in 1.75% Jan 2049 Gilts
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Apr 24th: No est v -0.3% prior
- 07:00 (BR) Brazil Apr FGV Inflation IGPM M/M: 0.8%e v 1.2% prior; Y/Y: 6.7%e v 6.8% prior
- 07:00 (UK) Weekly PM Question time in House
- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
- 08:00 (DE) Germany Apr Preliminary CPI M/M: 0.1%e v 0.1% prior; Y/Y: 0.7%e v 1.4% prior
- 08:00 (DE) Germany Apr Preliminary CPI EU Harmonized M/M: 0.1%e v 0.1% prior; Y/Y: 0.5%e v 1.3% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Q1 Advance GDP Annualized Q/Q: -4.0%e v +2.1% prior; Personal Consumption: -3.6%e v +1.8% prior
- 08:30 (US) Q1 Advance GDP Price Index: 1.0%e v 1.3% prior; Core PCE Q/Q: 1.7%e v 1.3% prior
- 08:30 (CA) Canada Feb Intl Securities Transactions (CAD): No est v 17.0B prior
- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
- 09:30 (BR) Brazil Mar Central Govt Budget Balance (BRL): -26.0Be v -25.9B prior
- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
- 10:00 (US) Mar Pending Home Sales M/M: -13.6%e v +2.4% prior; Y/Y: -7.6%e v +11.5% prior
- 10:30 (US) Weekly DOE Oil Inventories
- 14:00 (US) FOMC Interest Rate Decision: expected to leave Interest Rate Range unchanged between 0.00-0.25% range ; expected to leave Interest Rate on Excess Reserves (IEOR) unchanged at 0.10%
- 14:30 (US) Fed Gov Powell post rate decision press conference
- 18:00 (NZ) New Zealand Government 9-Month Financial Statements
- 19:50 (JP) Japan Mar Retail Sales M/M: -4.5%e v 0.5% prior (revised from 0.6%) prior; Y/Y: -4.7%e v -1.6% prior (revised from -1.7%)
- 19:50 (JP) Japan Mar Dept. Store, Supermarket Sales Y/Y: -8.2%e v +0.2% prior
- 19:50 (JP) Japan Mar Preliminary Industrial Production M/M: -5.0%e v -0.3% prior; Y/Y: -7.4%e v -5.7% prior
- 21:00 (NZ) New Zealand Apr Final ANZ Business Confidence: No est v -73.1 prelim; Activity Outlook: No est v -61.2 prelim
- 21:00 (CN) China Apr Manufacturing PMI (Govt Official): 51.0e v 52.0 prior; Non-manufacturing PMI: 52.5e v 52.3 prior; Composite PMI : No est v 53.0 prior
- 21:30 (AU) Australia Q1 Import Price Index Q/Q: 1.0%e v 0.7% prior; Export Price Index Q/Q: +3.0%e v -5.2% prior
- 21:30 (AU) Australia Mar Private Sector Credit M/M: 0.3%e v 0.4% prior; Y/Y: 2.8%e v 2.8% prior
- 22:00 (SG) Singapore Mar M2 Money Supply /Y: No est v 6.3% prior; M1 Money Supply /Y: No est v 6.9% prior
