Notes/Observations
- Weakness in tech sector prompting continued risk aversion flows
Asia:
- Japan and US to hold leader talks on April 17-18th to discuss strategy before proposed meeting between US/North Korea leaders
- North Korea leader Kim stated that his country was willing to hold dialogue with USA . Denuclearization could be resolved provided South Korea and the US respond with “goodwill, create an atmosphere of peace and stability while taking progressive and synchronous measures for the realization of peace.
- Japan PM Abe: Reiterates view that Govt to raise the sales tax to 10% as planned; would consider another delay if a financial crisis-level shock came
- Bank of Japan (BOJ) Gov Kuroda reiterated to continue with powerful easing, had taken appropriate policy at the right time
- China said to draft guidelines to increase imports. US trade measures would not have a big impact on overall Chinese trade situation. Reiterates that China might retaliate if tensions escalate
- China said to be preparing retaliatory tariffs on US imports and deal a “heavy blow” to Washington that aggressively threatened a trade war
Europe:
- EU Commission in Brussels said to be considering taking €56B from ECB profits to plug budget hole after Brexit
- UK govt said to be offering a hard border resolution imminently regarding Ireland. Officials in Ireland are said to have been told to expect the new plan in the near-term and have been promised concrete details on what the alternative plans the UK govt has.
Americas:
- Fed’s Bostic (FOMC voter, dove): sympathetic towards adopting price level targeting as a new Fed framework. Wants to stick to 2% inflation target but as an avg rate over time rather than a fixed goal
Energy:
- Weekly API Oil Inventories: Crude: +5.3M v -2.7M prior
Economic Data:
- (DE) Germany Apr GfK Consumer Confidence (beat): 10.9 v 10.7e
- (NO) Norway Feb Retail Sales W/Auto Fuel M/M: -0.6% v +0.5%e
- (FI) Finland Feb House Price Index M/M: +0.6% v -0.7% prior; Y/Y: 0.9% v 0.7% prior
- (FR) France Mar Consumer Confidence: 100 v 100e
- (ES) Spain Feb Adj Retail Sales Y/Y: 1.9% v 2.0%e; Retail Sales (unadj) Y/Y: 2.2% v 2.4% prior
- (HU) Hungary Feb Unemployment Rate: 3.8% v 3.9%e
- (TH) Thailand Central Bank (BOT) left its Benchmark Interest Rate unchanged at 1.50%; as expected
- (SE) Sweden Feb Retail Sales M/M: 0.3% v 0.3%e; Y/Y: 1.5% v 1.5%e
- (CH) Swiss Mar Credit Suisse Expectations Survey: 16.7 v 25.8 prior
- (AT) Austria Mar Manufacturing PMI: 58.0 v 59.2 prior (26th month of expansion)
- (IT) Italy Jan Industrial Sales M/M: -2.8% v +2.5% prior; Y/Y: 5.3% v 7.4% prior
- (IT) Italy Jan Industrial Orders M/M: -4.5% v +4.6% prior; Y/Y: 9.6% v 4.1% prior
- (NO) Norway Central Bank (Norges) Apr Daily FX Purchases (NOK): -800MM v -800Me
- (ES) Spain Jan Current Account: -€0.5B v +€2.6B prior
Fixed Income Issuance:
- (FR) France Debt Agency (AFT) opened its book to sell EUR-denominated July 2036 Inflation-linked Bond (Oatei); guidance seen high 20bps area
- (EU) ECB allotted $5.01B in 7-day USD Liquidity Tender at fixed 2.15% vs $79M prior
- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 3-month Bills; Avg Yield: -0.8596% v -0.7221% prior; bid-to-cover: 3.46x v 3.17x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -1.3% at 362.8, FTSE -1.1% at 6924, DAX -1.7% at 11772, CAC-40 -1.5% at 5040, IBEX-35 -1.2% at 9364, FTSE MIB -1.3% at 21935 , SMI -1.2% at 8534, S&P 500 Futures -0.3%]
- Market Focal Points/Key Themes: European Indices trade lower across the board continuing the volatility which has been observed in the past few sessions following a selloff in the Tech Sector overnight. On the corporate front Fincantieri underperforms following results, with SMA Solar, Hamburger Hafen und Logistik and Evotec other names trading lower following results. Whilst Hilton Foods Group and DFS trade higher after full year results. Looking ahead notable earners include Blackberry, Walgreen Boots Alliance and UniFirst.
Movers
- Consumer Discretionary [ DFS [DFS.UK] +7.4% (Earnings) ]
- Consumer Staples [Hiltonfoods Group [HFG.UK] +3.6% (Earnings)]
- Industrials [Fincantieri [FCT.IT] -10.4% (Earnings), HHFA [HHFA.DE] -9.6% (Earnings)
- Heatlthcare [ Evotec [EVT.DE} -1.4% (Earnings) ]
- Financial [ Deutsche Bank [DBK.DE] -1.8% (Reportedly board split over CEO)]
- Energy [SMA Solar [S92.DE] -4.9% (Earnings) ]
Speakers
- BOE Agents Summary of Business Conditions: Robust growth in goods exports had tightened capacity and, together with improving profit margins, strengthened investment intentions in manufacturing slightly. Recruitment difficulties remained a primary concern, though the impact on pay growth had been limited. Some evidence of financial distress in retail and leisure, reflecting weak consumer spending growth.
- Swiss KOF Institute Spring Economic Forecast raised both 2018 and 2019 GDP growth forecasts and 2018 inflation from 0.5% to 0.7%. Swiss economy was currently on an upward trajectory
- Thailand Central Bank (BOT) Policy Statement noted that the vote to keep rate unchanged was 6-1. Reiterated view that monetary policy should remain accommodative and saw FX volatility continuing. Forecasted both 2018 and 2019 GDP growth at 4.1% and cut 2018 Headline CPI from 1.1% to 1.0% and Core CPI from 0.8% to 0.7%
- Bank of Japan (BOJ) Gov Kuroda reiterated view that not in situation where would need to buy US treasuries (**Note: BoJ law has the central bank forbidden from buying foreign bonds for the purpose of influencing FX rates)
- China President Xi Jinping to visit South Korea Mar 29-30th
- China National Development and Reform Commission (NDRC): To promote further connect in capital markets with Hong Kong
- Malaysia Central bank: 2018 monetary policy report raised its 2018 GDP growth from 5.0-5.5% range to 5.5-6.0%. Saw 2018 Inflation lower between 2.0-3.0% range vs. 3.7% in 2017
- Iraq Oil Min Al-Luaibi reiterated view that Iraq would not deviate from any OPEC decision on crude supply. To decide by end-2018 whether to keep oil production cuts
- OPEC said to be looking for long-term cooperation with non-Opec members (in-line with recent Saudi comments)
Currencies
- EUR/USD hovering around the 1.24 area ahead of some key European inflation data in coming sessions. Analysts note that EMU inflation has not made it easy for ECB to begin its normalization process. A few ECB members (Praet and Liikanen) have cautioned against premature ECB tightening. The German March preliminary CPI data will be released on Thursday and France on Friday. The Advance Euro Zone CPI set for release next week.
- The GBP/USD continued to fail to hold gains above the 1.42 level. Initial GBP strength stemmed from reports that UK was to offer a hard border resolution imminently, with details beyond just the so-called backstop plan. GBP/USD little changed at 1.4160
- Safe-haven flows failed to prop up the JPY currency with focus on some de-escalation of Korean Peninsula tensions. North Korea leader Kim stated that his country was willing to hold dialogue with USA . Denuclearization could be resolved
Fixed Income
- Bund Futures trade 16 ticks higher at 159.54 as bund near levels that may trigger shorts. Upside targets 159.75, while a return lower targets the158.25 level.
- Gilt futures trade at 122.57 up 43 ticks as month-end hot spots outperform. Support continues stands at 121.25 then 120.85, with upside resistance at 123.35 then 123.85.
- Wednesday’s liquidity report showed Tuesday’s excess liquidity fell to €1.789T from €1.802T prior. Use of the marginal lending facility increased from €105M to €110M.
- Corporate issuance saw 6 issuers raise $4.5B in the primary market
Looking Ahead
- (IT) Italy Debt Agency (Tesoro) to sell €4.5-5.5B in 5-year and 10-year BTP Bonds
- (IT) Italy Debt Agency (Tesoro) to sell €1.5-2.0B in Apr 2025 Floating rate Note (CCTeu)
- (MX) Mexico Feb YTD Budget Balance (MXN): No est v -20.4B prior
- (BR) Brazil Mar CNI Consumer Confidence: No est v 102.7 prior
- (PT) Bank of Portugal update on Economic Forecasts
- 05:30 (EU) ECB allotment in 3-month LTRO operation
- 06:00 (UK) Mar CBI Retailing Reported Sales: 7e v 8 prior, Total Distribution: No est v 14 prior
- 06:00 (IE) Ireland Feb Retail Sales Volume M/M: No est v -0.6% prior; Y/Y: No est v 1.3% prior
- 06:00 (RU) Russia to sell combined RUB30B in 2024 and 2034 OFZ bonds – 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Mar FGV Inflation IGPM M/M: 0.6%e v 0.1% prior; Y/Y: +0.2%e v -0.4% prior
- 07:00 (US) MBA Mortgage Applications w/e Aug Mar 23rd: No est v -1.1% prior
- 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) Q4 Final GDP Annualized Q/Q: 2.7%e v 2.5% prelim; Personal Consumption: 3.8%e v 3.8% prelim
- 08:30 (US) Q4 Final GDP Price Index: 2.3%e v 2.3% prelim; Core PCE Q/Q: 1.9%e v 1.9% prelim
- 08:30 (US) Feb Advance Goods Trade Balance: -$74.2Be v -$75.3B prior (revised from -$74.4B)
- 08:30 (US) Feb Preliminary Wholesale Inventories M/M: 0.5%e v 0.8% prior, Retail Inventories M/M: No est v 0.8% prior
- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave Interest Rates unchanged at 6.75%
- 09:30 (BR) Brazil Feb Nominal Budget Balance (BRL): -46.1Be v +18.6B prior; Primary Budget Balance: -18.0Be v +46.9B prior
- 09:45 (UK) BOE to buy £1.22B in in APF Gilt purchase operation (7-15-years)
- 10:00 (US) Feb Pending Home Sales M/M: +2.0%e v -4.7% prior; Y/Y: No est v -1.7% prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (MX) Mexico Feb Net Outstanding Loans (MXN): No est v 4.031T prior
- 11:00 (CO) Colombia Feb National Unemployment Rate: No est v 11.8% prior; Urban Unemployment Rate: 11.4%e v 13.4% prior
- 11:30 (US) Treasury to sell 2-Year Floating Rate Notes Reopening
- 12:00 (US) Fed’s Bostoc (2018 voter, dove) in Atlanta
- 13:00 (US) Treasury to sell 7-Year Notes
- 15:00 (US) Feb Agriculture Prices Received: No est v 0.2% prior
- 15:00 (AR) Argentina Jan Economic Activity Index (Monthly GDP) M/M: No est v 0.6% prior; Y/Y: 2.5%e v 2.0% prior
- 15:00 (AR) Argentina Feb Industrial Production Y/Y: 7.6%e v 2.6% prior, Construction Activity Y/Y: No est v 19.0% prior
