Notes/Observations
Asia:
Japan LDP Moriyama: Finance Ministry (MOF) admits that the related Moritomo land sale documents were altered. PM Abe’s Wife, Akie Abe, said to be among the names of those deleted from the MOF documents (**Note: Moritomo involved the sale of certain state-owned land at a discount)
MOF Official: there were alterations on 62 out of 78 pages related to controversial land sale
Japan Fin Min: no intention to resign over alterations in land sale document
China Commerce Min Zhong Shan: Any trade war with the United States will only bring disaster to the world economy; China does not want a trade war and will not initiate one
Australia PM Turnbull confirmed that Australia would be exempt from the US tariffs on steel and aluminum
Europe:
Bank for International Settlements (BIS) March 2018 Quarterly Review: Central banks should continue to normalize policy
ECB’s Draghi and German Bundesbank members said to expect to back Ireland’s Lane for the post of chief economist at the ECB when it comes up for renewal next year
‘No-deal’ Brexit, companies in the UK and EU could face £58B in extra annual costs. EU 27 countries (outside of the UK) will have to pay £31B/year in tariff and non-tariff barriers. In return, exporters in the UK may also have to pay £27B/year to the EU
UK consumer spending suffers weakest start since 2012 as British consumers tightened their belts – Visa. Inflation-adjusted consumer spending in February was 1.1 percent lower than a year earlier, after a 1.2 percent decline in January.
Americas:
Fed’s Bullard (dove, non-voter) reiterated 4 interest rate hikes in 2018 could slow the economy
North Korea Kim Jung-un and US President Trump likely to meet in border truce village of Panmunjom for May meeting
Energy:
Iran Oil Minister Zanganeh said OPEC could agree in June to begin reducing oil output cuts in 2019. Wanted OPEC to attempt to keep oil prices near $60/bbl to contain shale producers
Economic Data:
(NL) Netherlands Jan Manufacturing Production M/M: -0.4% v 0.8% prior; Y/Y: 7.1% v 5.6% prior, Industrial Sales Y/Y: 5.5 v 0.9% prior
(JP) Japan Feb Preliminary Machine Tool Orders Y/Y: 39.5% v 48.8% prior
(DK) Denmark Jan Current Account (DKK): 9,4 v 14.28B prior; Trade Balance: 6.0B v 6.1B prior
(DK) Denmark Feb CPI M/M: 0.7% v 0.8%e; Y/Y: 0.6% v 0.7%e
(DK) Denmark Feb CPI EU Harmonized M/M: 0.6% v 0.7%e; Y/Y: 0.5% v 0.6%e
(TR) Turkey Jan Current Account Balance: -$7.1B v -$6.9Be
(SE) Sweden Mar SEB Housing Price Indicator: +4 v -7 prior
Fixed Income Issuance:
None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.4% at 379.6, FTSE fat at 7225, DAX +0.8% at 12440, CAC-40 +0.3% at 5289, IBEX-35 0.5% at 9737, FTSE MIB +0.3% at 22813 , SMI +0.5% at 8979, S&P 500 Futures +0.4%]
Market Focal Points/Key Themes: European Indices trade mostly higher across the board tracking strong gains in Wallstreet overnight and positive futures this morning following a strong Feb NFP reading. The Dax outperforms this morning after EON reached agreement to acquire Innogy stake from RWE, with Innogy trading over 10% higher. Elsewhere GKN trades higher after receiving a final increased offer from Melrose. In earnings news Aryzta, Bavarian Nordic trade lower after results, while Clarkson trades higher. Sixt trades higher after announces a special dividend, while Air France also outperforms after press reports on interest to acquire Air India.
Movers
Consumer Discretionary [ Arzyta [ARYN.CH] -2.9% (Earnings), Air France [AF.FR] +2.7% (consortium reportedly considering Air India acquisition)]
Industrials [GKN [GKN.UK] +1.1% (Raised offer from Melrose), Leonardo [LDO.IT] +1.2%, Hochtief [HOT.DE] +1.2% (Consortium contract win)]
Energy [EON [EOAN.DE] +5.2%, Innogy [IGY.DE] +13%, RWE [RWE.DE] +8.5% (EON to acquire RWE’s Innogy stake), EDF [EDF.FR] +1.0% (Reportedly final agreement for sale of 6 EPR’s in India may complete by year end)]
Speakers
ECB’s Coeure (France) reiterated view that inflation is yet at the point where they want it to be for the Euro Zone; growth is strong and robust. Growth is too dependent on monetary policy at this time
Norway Finance Ministry: 2018 GDP growth already above trend and saw it picking up over the coming two years
Norway PM Solberg: Good economic times demanded moderation in the budget. Too much spending could push the NOK currency (Krona) stronger
Poland Central Bank March Staff Projections cut its 2018 CPI from 2.3% to 2.1% while maintaining the 2019 CPI at 2.7%. It set 2020 CPI at 3.0%. Raises 2018 GDP growth from 3.6% to 4.2% and 2019GDP growth from 3.3% to 3.8% and set 2020 GDP growth at 3.6%
Japan PM Abe stated that he wanted Finance Minister Aso to take responsibility for Moritomo land investigation. The PM added the he felt responsible and apologized to the people
Indonesia Finance Min Indrawati: To curb budget deficit at a safe level. To monitor exchange rates and oil prices
Canada Fin Min Morneau: Wanted existing trade relationship with UK to be the framework for its future ties with the country after Brexit
Currencies
USD was marginally softer in quiet trading on Monday.
EUR/USD in the mid-point of its 2018 4 big figure range as dealers have the impression that the ECB was in no rush to hike rates once it potentially stopped its QE-related balance sheet expansion in September. Pair at 1.2330 just ahead of the NY morning.
GBP/USD was firmer as analysts now forecasted its expectations for Gilt issuance of £98.2B for current fiscal year (was £115.1B back in Nov statement) as the Chancellor of the Exchequer prepared to announce the smallest deficit in a decade during his Spring Statement on Tuesday. GBP/USD trying to edge back towards the 1.39 area.
USD/JPY was slightly lower as global risk appetite seemed to have new legs. The JPY managed to shrugged off a scandal simmering within Japan on a land transaction. Finance Ministry (MOF) admitted that the related Moritomo land sale documents were altered. PM Abe’s wife said to be among the names of those deleted from the MOF documents. Pair in the mid-part of the 106 handle ahead of the NY morning.
Fixed Income
Bund Futures trade 4 ticks higher at 157.09 trading in a tight range on a quiet start to the week. Upside targets 157.50, while a return lower targets the 155.75 level.
Gilt futures trade at 122.31 up 3 ticks as markets prepare for Gov’ts half-yearly update on public finances. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.85 then 123.35.
Monday’s liquidity report showed Friday’s excess liquidity rose to €1.898T from €1.886T prior. Use of the marginal lending facility stayed steady €0M.
Looking Ahead
(IL) Israel Central Bank (BOI) Feb Minutes
(MX) Mexico Feb ANTAD Same-Store Sales Y/Y: No est v 3.9% prior
06:00 (GR) Greece Jan Industrial Production Y/Y: No est v 0.2% prior
06:00 (IT) Bank of Italy (BOI) Publishes ‘2017 Households Income and Wealth’ Report
06:00 (EU) Daily Euribor Fixing
06:00 (IT) Italy Debt Agency (Tesoro) to sell €6.5B in 12-month Bills
06:30 (DE) Germany to sell €2.0B in 6-Month BuBills
07:00 (PT) Portugal Jan Trade Balance: No est v -€1.4B prior
07:00 (PT) Portugal Feb Final CPI M/M: No est v -0.7% prelim; Y/Y: No est v 0.6% prelim
07:00 (PT) Portugal Feb Final CPI EU Harmonized M/M: No est v -0.6% prelim; Y/Y: No est v 0.7% prelim
07:25 (BR) Brazil Central Bank Weekly Economists Survey
07:30 (CL) Chile Central Bank Economists Survey
07:45 (US) Daily Libor Fixing
08:00 (IN) India Feb CPI Y/Y: 4.7%e v 5.1% prior
08:00 (IN) India Jan Industrial Production Y/Y: 6.4%e v 7.1% prior
09:00 (IN) India announces details of upcoming bond sale (held on Fridays)
09:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
09:05 (UK) Baltic Dry Bulk Index
09:55 (FR) France Debt Agency(AFT) to sell combined €6.0-7.2B in 3-month, 6-month and 12-month BTF Bills
10:00 (EU) Euro area finance ministers (Eurogroup) meet in Brussels
10:30 (EU) ECB announces Covered-Bond Purchases
10:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
10:45 (UK) BOE back back 3-7-year Gilts
11:30 (US) Treasury to sell 3-Month and 6-Month Bills
11:30 (US) Treasury to sell 3-Year Notes
12:00 (IS) Iceland Feb International Reserves (ISK): No est v 671B prior
13:00 (US) Treasury to sell 10-Year Notes Reopening
14:00 (US) Feb Monthly Budget Statement: -$216.0Be v $49.2B prior
