Notes/Observations
- EU pandemic concerns over a 3rd wave hampering risk appetite.
- Container ship Ever Green partially floated fro Suez Canal. To take approx 1 week to remove backlog of ships.
- Various banks comments in the aftermath of Archegos Capital liquation (Nomura and Credit Suisse with significant losses, GS, DK limited compared to others.
- US economic data this week include ADP private payrolls data and Friday’s release of nonfarm payroll.
Asia:
- BOJ Summary of Opinions: BOJ Must heighten transparency of policy by clarifying band at which it allows long term yields to fluctuate. Desirable to give long term yields flexibility to move by up to 25bps around target yield.
- China and Iran signed a 25 year economic and strategic cooperation deal called “Comprehensive Strategic Partnership”; it focused on boosting private sector collaborations.
- Australia JobKeeper program ended on Sunday, March 28th; the Treasury estimates 150K jobs could be lost with the end of the program.
Coronavirus:
- Total global cases 127.1M (+1.3% vs. Fri); total deaths: 2.78M (+1.0% vs Fri).
- German Chancellor Merkel called on states in Germany to abide by lockdown rules as COVID cases continued to climb. She threatened to assert federal control over measures to stem the Covid-19 pandemic.
- EU Commissioner: We will block exports of Covid-19 vaccine if company fails to deliver doses bought by region on time.
- Britain said to be close to getting vaccine deal with the EU that will remove the threat of them cutting off supplies.
- Osaka, Japan Gov planning to ask Govt for COVID measures.
- Russian President Putin said to expect Russian population to develop herd immunity to Covid-19 by end of summer.
Europe:
- ECB’s Lane (Ireland, chief economist) stated that it was essential that the ECB acted as a stabilizing force and needed to boost confidence by committing to the preservation of favorable financing conditions.
- Bank of England said to be clamping down on lenders who were relocating operations or jobs to EU after Brexit.
- UK Federation of Small Business Survey: More than 20% of small UK exporters have temporarily halted sales to the EU.
Americas:
- USTR Tai reiterated stance that US was not ready to lift tariffs on Chinese imports in the near future but could be open to trade negotiations with Beijing.
Energy:
- Stuck Suez Canal tanker “Ever Given” had been successfully refloated. Tugboats have been deployed in effort to straighten ship to reopen canal.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 +0.1% at #, FTSE -0.33% at 6,718.68, DAX +0.21% at 14,779.75, CAC-40 +0.17% at 5,999.19, IBEX-35 -0.41% at 8,463.00, FTSE MIB -0.15% at 24,357.50, SMI -0.27% at 11,086.50, S&P 500 Futures -0.61%]
- Market Focal Points/Key Themes: European indices open mixed with an upward bias, but failed to establish a direction later in the session; uneven covid news keeps markets unbalanced, with UK moving to reopen, while Chancellor Merkel threatens federal intervention to keep states following mitigation rules; better performing sectors include technology and materials; sectors underperforming include financials and energy ; banking sector dragged down by potential losses over US hedge fund stock unwind; industrials supported as stranded ship in Suez freed, with backlog of ships expected to take up to a week to clear; Israel closed for holiday; Cazoo to go public through SPAC in the US; Klovern receives takeover offer from Corem; Masmovil to take over Euskaltel; reportedly deal close for Air France bailout; rumors of Allianz lookng to compete with Chubb’s offer for HIG; focus on fallout from Archegos Capital forced deleveraging; no major equities events scheduled for the upcoming US session.
Equities
- Consumer discretionary: AJ Bell [AJB.UK] +1.5% (trading update).
- Financials: Klovern [KLOV.SE] +12% (offer), Credit Suisse [CSGN.CH] -14% (exiting positions after US hedge fund default), Deutsche Bank [DBK.DE] -5% (Exec: Losses seen as more limited from unwinding of hedge fund Arcgegos liquidation compared to other banks).
- Technology: Euskaltel [EKT.ES] +16% (to be acquired).
Speakers
- ECB’s De Cos (Spain) Reiterates Council stance that was vital to maintain its accommodative policy stance.
- France Fin Min Le Maire reiterated stance that 2021 GDP growth could be 6.0%. No plans to tax French savings. Confirmed about to conclude EU deal on Air France in coming days.
- EU Economic Institutes (IFO, Insee and ISAE) commented on Euro Area outlook and saw Q1 GDP -0.4% and Q2 GDP +1.5%..
- Turkey Central Bank (CBRT) Gov Kavcioglu replied to written questions that a rate cut in Apr was not guaranteed.
- Suez Canal Authority stated that it aimed for ships to resume crossing canal on Monday (Mar 29th) and it could take one week to fully clear canal corridor.
Currencies/Fixed Income
- EUR/USD remained below the 1.18 level in quiet trade as the week became just potentially posting its biggest monthly drop since mid-2019. Elevated coronavirus infections and additional lockdown measures continued to provide headwinds for the pair. Focus to remain on the virus situation in Europe and whether lockdowns could slow rising case numbers. The widening interest rate differentials between German and US yields cited as another factor with the spread between 10-year debt widening to 200 bps from 150 bps at the start of the year.
- GBP/USD was higher mainly to cross effects as EUR/GBP pair fell to 1-year lows. Analysts noted that UK-EU gap in terms of recovery expectations could send EUR/GBP below key support of 0.8500 in the coming days,
Economic data
- (FI) Finland Mar Consumer Confidence: -3.0 v -0.8 prior; Business Confidence: +3 v -3 prior.
- (HU) Hungary Jan Final Trade Balance: €0.9B v €0.8B prelim.
- (AT) Austria Mar Manufacturing PMI: 63.4 v 58.3 prior (9th straight expansion and highest since Dec 2017).
- (CH) Swiss weekly Total Sight Deposits (CHF): 702.7 v 702.9B prior; Domestic Sight Deposits: 630.0Bv 628.7B prior.
- (UK) Feb Net Consumer Credit: -€1.2B v -£2.4B prior; Net Lending: €5.2B v £5.0Be.
- (UK) Feb Mortgage Approvals: 87.7K v 95.0Ke.
- (UK) Feb M4 Money Supply M/M: 0.8% v 0.7% prior; Y/Y: 13.6% v 13.3% prior; M4 (ex-IOFCs) Annualized: 9.7% 13.0% prior.
Fixed income Issuance
- (GH) Ghana to sell USD-denominated 2025, 2029, 2034 and 2042 bonds.
Looking Ahead
- (EU) Daily ECB Liquidity Stats.
- 06:00 (IE) Ireland Feb Retail Sales Volume M/M: No est v -21.8% prior; Y/Y: No est v -14.1% prior.
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
- 06:00 (RO) Romania to sell RON300M in 4.75% 2034 Bonds.
- 06:45 (US) Daily Libor Fixing.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
- 08:30 (BR) Brazil Feb Total Outstanding Loans (BRL): No est v 4.020T prior; M/M: No est v 0.0% prior; Personal Loan Default Rate: No est v 4.1% prior.
- 09:00 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills.
- 09:45 (EU) ECB weekly QE bond buying update.
- 10:30 (US) Mar Dallas Fed Manufacturing Activity Index: 14.5e v 17.2 prior.
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
- 17:45 (NZ) New Zealand Feb Building Permits M/M: No est v 2.1% prior.
- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 110.4 prior.
- 19:01 (UK) Mar Lloyds Business Barometer: No est v 2 prior
- 19:30 (JP) Japan Feb Jobless Rate: 3.0%e v 2.9% prior; Job-To-Applicant Ratio: 1.10xe v 1.10x prior.
- 19:50 (JP) Japan Feb Retail Sales M/M: +0.8%e v -1.7% prior (revised from -0.5%); Y/Y: -2.8%e v -2.4% prior.
- 19:50 (JP) Japan Feb Dept. Store, Supermarket Sales Y/Y: -4.2%e v -7.2% prior.
- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills.
- 23:35 (JP) Japan to sell 2-Year JGB Bonds.
