- Markets bide time ahead of Fed; expected to raise rates
- Netherlands begin voting in election testing anti-establishment mood
- UK Jan wage data misses expectations and below month ago levels
Overnight:
Asia:
- China Premier Li stated that ties between China and US keep moving forward and was optimistic about ties. One-China policy was foundation of China-US relations. Trade war with China would hurt US companies and did not wish for such a scenario. 6.5% GDP target was not low and not easy to meet. China faced "relatively large " employment pressure this year as the number of college graduates would hit record high of 7.95M
Europe:
- EU officials said to consider June 20th meeting to authorize Brexit talks. Considering forcing UK to wait until June for formal terms of Brexit to begin, reducing the time PM May has to negotiate a deal
- Scottish First Min Sturgeon (SNP): Might attempt to join European Free Trade Association (EFTA) instead of staying in EU after vote for independence
- YouGov Times survey showed 57% of Scotland voters want to stay in the UK; 43% want to be independent
- ECB’s Nouy (SSM chief): Greece bank situation had noticeably and substantially improved in last two years but NPLs remained a major challenge
- France presidential candidate Fillon reportedly placed under formal investigation over diversion of public finances in relation to jobs for family members investigation (as suspected)
Energy:
- Weekly API Oil Inventories: Crude: -0.5M v +11.6M prior (first draw in 3 weeks)
Economic data
- (FR) France Feb Final CPI EU Harmonized M/M: 0.2% v 0.1%e; Y/Y: 1.4% v 1.4%e, CPI Ex-Tobacco Index: 100.5 v 100.5e
- (CH) Swiss Feb Producer & Import Prices M/M: -0.2% v 0.4%e; Y/Y: 1.3% v 1.8%e
- (IS) Iceland Central Bank (Sedabanki) left its 7-Day Term Deposit Rate at 5.00%
- (UK) Feb Jobless Claims Change: -11.3K v -41.4K prior; Claimant Count Rate: 2.1% v 2.2% prior
- (UK) Jan Average Weekly Earnings 3M/Y: 2.2% v 2.4%e; Weekly Earnings (ex Bonus) 3M/Y: 2.3% v 2.5%e
- (UK) Jan ILO Unemployment Rate 3M/3M: 4.7% v 4.8%e
**Fixed Income Issuance:
- (IN) India sold total INR100B vs. INR100B indicated in 3-month and 12-month Bills
- (DK) Denmark sold total DKK1.26B in 3-month and 6-month Bills
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
**Index snapshot (as of 09:40 GMT)**
Indices [Stoxx50 +0.4% at 3,411, FTSE +0.3% at 7,378, DAX +0.1% at 12,004, CAC-40 +0.2% at 4,985, IBEX-35 +0.7% at 9,970, FTSE MIB +0.7% at 19,667, SMI +0.2% at 8,680, S&P 500 Futures +0.2%]
Market Focal Points/Key Themes: European equity indices are trading higher as market participants await results of the Dutch election as well as the Fed’s policy decision due later today; Banking stocks generally higher across the board with the peripheral lender weighted FTSE MIB and IBEX outperforming as a result; Energy, commodity and mining stocks also trading higher as copper and oil prices trade higher intraday; shares of Hikma Pharmaceuticals leading the gains in the FTSE 100 after releasing its FY16 results.
Upcoming scheduled US earnings (pre-market) include Concordia Healthcare, Siteone Landscape Supply, Titan International, and Verso Corp.
Equities (as of 09:30 GMT)
- Consumer Discretionary: [Dufry DUFN.CH +2.6% (FY16 results), Hennes & Mauritz HMB.SE -4.8% (Feb sales), Inditex ITX.ES -1.2% (FY16 results), Robert Walters RWA.UK +3.8% (FY16 results)]
- Consumer Staples: [Sixt SIX2.DE -0.5% (FY16 results)]
- Financials: [Munich Re MUV2.DE -1.6% (outlook, share buyback)]
- Healthcare: [Hikma Pharmaceuticals HIK.UK +7.4% (FY16 results)]
- Industrials: [BASF BAS.DE +0.4% (raises prices globally for antioxidants & light stabilizers by 10%), Polymetal POLY.UK +0.9% (FY16 results)]
- Technology: [Tecan Group TECN.CH -6.9% (FY16 results)]
- Utilities: [Ascopiave ASC.IT +2.0% (FY16 results), E.On EOAN.DE -2.8% (FY16 results, cuts workforce)]
Speakers
- ECB’s Praet(Belgium) reiterated Council view that needed to build sufficient confidence that inflation will converge to medium-term target
- UK Brexit Min Davis stated that was expecting Queens approval on Article 50 law (royal assent) on Thursday, Mar 16th. Govt had not done any economic assessment of impact of NOT reaching a Brexit agreement. Could be upside to no deal with EU; not as frightening as people think
- EU’s Tusk reiterated view that Euro Area economy is improving. Carefully preparing for Brexit negotiations; would try to keep EU and UK close after Brexit
- EU’s Juncker: Unemployment was falling but region was not out of the economic crisis just yet
- Iceland Central Bank stated that it was too early to predict impact of the end of capital controls. To continue to mitigate short-term volatility (**Note: lifter capital controls earlier this week after 8 years)
- BOE Shadow MPC: BoE should prepare the ground for a possible rate hike in the minutes of their next meeting
- Denmark Central Bank raised its 2017 and 2018 GDP growth forecasts
- IEA Mar Monthly Report maintained its 2017 global oil demand growth forecast at 1.4M bpd. Opec production was higher in Feb from 32.06M to 32.0M; compliance of 91% v 90% m/m. OECD oil inventories at 3.03B barrels, +48M barrels (1st rise in six months). It noted that oil market needed time to re-balance as January inventories rise
Currencies
- USD was softer ahead of Fed rate decision where expectations are for another 25bps hike.
- The GBP/USD saw some pre-European action as the pair popped up to test above 1.2250 level. Pair moved off 7-week lows to hit a 1-week high. Dealers saw no news for the move other than buy-stops being elected. One excuse was a report by the Shadow MPC that the BoE should prepare the ground for a possible rate hike in the minutes of their next meeting (tomorrow).
- EUR/USD slightly higher in quiet trade at 1.0630 while USD/JPY was steady in the mid-114 neighborhood.
**Fixed Income:
- Bund futures trade at 159.79 up 24 ticks continuing to bounce from 158.73 lows made yesterday with 2s10s flattening on better demand for longer dated bonds. Continued upside targets 160.20 followed by 160.66. Support lies at yesterday low at 158.73 followed by 158.40.
- Gilt futures trade at 126.39 up 13 ticks trading near highs supported by weaker Avg weekly earnings data out of the UK.. Support moves to 125.75 then 125.57 with further weakness eyeing 125.24. Resistance remains at 126.38 then 126.87 followed by 127.35. Short Sterling futures trade virtually flat across the strp with Jun17Jun18 spread remaining at 17/18bp.
- Wednesday liquidity report showed Tuesday’s excess liquidity rose to €1.373T a rise of €2B from €1.371T prior. Use of the marginal lending facility rose to €976M from €620M prior.
- Corporate issuance after a strong start to the week issuance grinding to a halt yesterday as issuers remain sidelined ahead of the FOMC rate meeting this evening. Today is expected to remain quiet ahead of the Fed decision.
Looking Ahead
- (CO) Colombia Feb Consumer Confidence Index: -26.0e v -30.2 prior
- OPEC workshop in Vienna
- 05:50 (EU) ECB allotment in 7-day USD Liquidity Tender at fixed % vs. $915M prior (recd 2 bids)
- 06:00 (EU) Euro Zone Q4 Employment Q/Q: No est v 0.2% prior; Y/Y: No est v 1.2% prior
- 06:00 (ZA) South Africa Q1 Business Confidence: No est v 38 prior
- 06:00 (IT) Italy Feb Final CPI (Including Tobacco) M/M: No est v 0.3% prelim; Y/Y: No est v 1.5% prelim
- 06:00 (IT) Italy Feb Final CPI EU Harmonized M/M: No est v 0.2% prelim; Y/Y: No est v 1.5% prelim, CPI FOI Index Ex Tobacco: No est v 100.6 prior
- 06:00 (EU) Daily Euribor Fixing
- 06:00 (GR) Greece Debt Agency (PDMA) to sell €1.0B in 13-Week Bills
- 06:00 (SE) Sweden to sell Bills – 06:00 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:30 (DE) Germany to sell €1.0B in 2.5% Aug 2046 Bunds
- 06:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.5B in 6-month and 12-month Bills
- 07:00 (US) MBA Mortgage Applications w/e Mar 10th: No est v 3.3% prior
- 07:00 (BR) Brazil Mar FGV Inflation IGP-10 M/M: 0.2%e v 0.1% prior
- 07:00 (ZA) South Africa Jan Retail Sales M/M: +0.2%e v -2.3% prior; Y/Y: 1.1%e v 0.9% prior
- 07:00 (IE) Ireland Feb CPI M/M: No est -0.5% prior; Y/Y: No est v 0.3% prior
- 07:00 (IE) Ireland Feb CPI EU Harmonized M/M: +0.5%e -0.5% prior; Y/Y: 0.4%e v 0.2% prior
- 07:00 (RU) Russia to sell combined RUB45B in 2022 and 2033 OFZ bonds
- 07:45 (US) Daily Libor Fixing
- 08:00 (UK) PM May weekly question time in House of Commons
- 08:00 (FI) Finland govt responds to no-confidence motions
- 08:30 (US) Mar Empire Manufacturing: 15.0e v 18.7 prior
- 08:30 (US) Feb CPI M/M: 0.0%e v 0.6% prior; Y/Y: 2.7%e v 2.5% prior
- 08:30 (US) CPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 2.2%e v 2.3% prior
- 08:30 (US) Feb CPI Index NSA: 243.416e v 242.839 prior; CPI Core Index SA: 251.155e v 250.783 prior
- 08:30 (US) Feb Advance Retail Sales M/M: 0.1%e v 0.4% prior; Retail Sales Ex Auto M/M: 0.1%e v 0.8% prior, Retail Sales Ex Auto and Gas: 0.2%e v 0.7% prior, Retail Sales Control Group: 0.2%e v 0.4% prior
- 08:30 (US) Feb Real Avg Weekly Earnings Y/Y: No est v -0.5% prior (revised from -0.6%), Real Avg Hourly Earning Y/Y: No est v 0.1% prior (revised from 0.0%)
- 09:00 (US) The Federal Open Market Committee (FOMC) begins final day of policy meeting
- 09:00 (HU) Hungary Central Bank (NBH) Feb Minutes
- 09:00 (PL) Poland Feb CPI Core M/M: 0.1%e v 0.1% prior; Y/Y: 0.4%e v 0.0% prior
- 09:00 (CA) Canada Feb Existing Home Sales M/M: No est v -1.3% prior
- 09:15 (UK) Baltic Dry Bulk Index – 09:45 (IT) ECB’s Visco in Milan
- 10:00 (US) Mar NAHB Housing Market Index: 65e v 65 prior
- 10:00 (US) Jan Business Inventories: 0.3%e v 0.4% prior
- 10:00 (BE) Belgium Jan Trade Balance: No est v €0.1B prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 10:50 (UK) BoE conducts reverse Gilt auction (7-15 years)
- 11:00 (PE) Peru Feb Unemployment Rate: 7.5%e v 7.2% prior
- 11:00 (PE) Peru Jan Economic Activity Index (Monthly GDP) Y/Y: 4.5%e v 3.2% prior (revised from 3.3%)
- 12:00 (NG) Nigeria to sell 2021, 2027 and 2036 Bonds
- 12:30 (IL) Israel Feb CPI M/M: -0.2%e v -0.2% prior; Y/Y: 0.2%e v 0.1% prior
- 14:00 (US) FOMC Interest Rate Decision: Expected to Raise Fed Funds Target Range to 0.75-1.00%
- 16:00 (US) Jan Total Net TIC Flows: No est v -$42.8B prior; Net Long-term TIC Flows: No est v -$12.9B prior
