- Risk aversion flows continue to reverberate after fresh signs that global economic growth was slowing
- German Mar IFO data handily beats expectations
- Brexit focus on looming meaningful vote 3 and may move onto to indicative votes either voluntarily or forced upon the government
- Speculation that PM May was close to being toppled with a caretaker PM on Brexit
- All eyes on USTR Lighthizer and Treasury Secy Mnuchin trip to China for further talks on Thursday and Friday
- US Attorney Gen Barr said that Special Counsel Robert Mueller found no evidence of Trump colluding with Russia; report did fail to exonerate President Trump on obstruction of justice
Asia:
- US said to note China initial offer related to digital trade was not sufficient; trade talks due to be held in China later this week. After making the initial offer, China said to have retracted the offer following demands by the US for stronger pledges. China had yet to offer meaningful concessions related to the easing of curbs on technology companies
- China PBoC Gov Yi Gang affirmed PBoC has basically exited from regular forex market intervention. Reiterated China would push yuan reforms, enhance yuan (CNY) exchange rate flexibility.
- Thailand Palang Pracharat party (backed by military) said to be ahead in the first election since 2014 coup
Europe:
- 11 Cabinet Ministers have confirmed they want to replace PM May with her Deputy David Lidington; her behavior is being called into question. Lidington is described as a loyalist that has operated behind the scenes to break the parliamentary deadlock
- UK Chancellor of the Exchequer Hammond (Fin Min): UK must find a way to leave the EU but replacing PM May would not help; second referendum was a perfectly coherent proposition which deserves to be considered
- PM May was said to be considering the following Brexit options: Single market, FTA customs union, revoking Article 50, 2nd referendum, PM May’s deal, no deal Brexit
- ECB’s Rehn (Finland): Euro zone growth had slowed down significantly and we must be worried; Brexit is the biggest threat to Euro Zone in the short term
- S&P affirmed Spain sovereign rating at A-; outlook Positive
Americas:
- US Attorney General Barr released special counsel Mueller report findings: Found no collusion with Russia on 2016 Presidential elections but fell short of calling him innocent; identified two Russian influences
- Fed Evans (dove, voter): Don’t expect interest rate increase until H2 2020, wanted to see more inflation; Would take action if inflation undershoots
- Fed’s Bostic (dove, non-voter): “patient” did not mean the Fed won’t move rates if necessary. Open minded about rate policy, could move rates up or down; would be comfortable raising rates if the data suggested the economy was overheating
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.62% at 373.70, FTSE -0.48% at 7,173.25, DAX -0.17% at 11,346.04, CAC-40 -0.49% at 5,243.98, IBEX-35 -0.35% at 9,167.48, FTSE MIB +0.04% at 21,087.50, SMI -0.37% at 9,284.50, S&P 500 Futures -0.25%]
- Market Focal Points/Key Themes: European Indices trade mostly lower across the board following on from weakness in the US on Friday and continued weakness in the futures. as well as weaker Asian Indices. The Dax outperforms creeping into positive territory following stronger IFO data in Germany. On the corporate front Shares of IFG Group rises over 40% after a takeover offer from SaintMichelCo and earnings; Inmarsat rises a further 8% after Triton Bidco confirmed a $7.21/shr cash offer. Elsewhere Convatec rises on the announcement of a new CEO, Fiat gains in Italy after press reports its open to mergers, while Genus declines on the stepping down of its CEO. Onn the earnings front Brady rises on positive earnings, with Microgen also gaining, while Quixant, Majestic Wines and Ebiquity among the declines on earnings. Looking ahead notable earners include Winnebago Industries and Cheetah Mobile among others.
Equities
- Consumer discretionary: LVMH [MC.FR] -1%, Hermes [RMS.FR] -2% (Tiffany’s earnings), Scout24 [G24.DE] n/c (earnings), Majestic Wine [WINE.UK] -8% (tarding update; transformation plan)
- Utilities: Pennon Group [PNN.UK] -0.5% (trading update)
- Energy: Pantheon Resources [PANR.UK] +26% (earnings)
- Financials: IFG Group [IFP.UK] +43% (earnings; to be acquired)
- Healthcare: Bayer [BAYN.DE] -2.5% (analyst action), PharmaMar [PHM.ES] +3% (study met primary endpoint)
- Industrials: Fiat Chrysler [FCA.IT] +2% (Reportedly Peugeot approached Fiat about a combination earlier this year but talks have ended)
- Technology: Convatec [CTEC.UK] +3% (appoints CEO; Chairman to retire)
- Telecom: Inmarsat [ISA.UK] +8% (confirms acquisition)
Speakers
- ECB’s Hansson (Estonia): Reiterates Euro-Area slowdown may continue in the medium term. Expected TLTRO-3 terms to be a bit less generous
- UK PM May said to have told Brexitiers during Chequers meeting that she would quit if they vote for her Brexit deal
- UK Trade Secretary Fox: Brexit options have been limited for some time (PM May’s deal, no-deal or no Brexit). Not clear if Tory voters want to change PM; real debate was about future UK ties to EU. No point on voting again on existing deal if it had no chance of passing
- Fed Evans (dove, voter): Policy to be data dependent; downside risks were larger than positive risks. Fed’s patient status was warranted with policy being about risk management. Might have to ease if economic activity softened more than expected. Rate increase would be justified if Growth was at potential
- German IFO Economists commented that the outlook in Manufacturing worsened in March. Global economy was not providing any support for Germany
- Turkey President Erdogan reiterated stance that those in finance sector who buy foreign currencies on the expectation of a TRY currency (Lira) decline would pay ‘very heavy price’
- Turkey Central Bank: To closely monitor volatility and unhealthy price formation. Determined to build up FX Reserves
- Turkey Central Bank Gov Cetinkaya: Committed to bring CPI down to single digits. Main policy was to maintain strong reserves; best to focus on medium term trends
- Bank of Korea (BOK) Gov Lee: Downside risk to economy was growing; might consider policy shift if slowdown became clear
- OPEC+ formally cancels April meeting (as expected)
Currencies/Fixed Income
- USD remained a tad firmer as risk aversion flows continued to reverberate after fresh signs that global economic growth was slowing.
- GBP/USD off its worst levels of the session. Brexit focus was on the looming meaningful vote 3 (if occurs) and could move onto to indicative votes either voluntarily or forced upon the government. Lots of weekend speculation that PM May was close to being toppled with a caretaker PM on Brexit. Numerous Cabinet officials played down such reports. UK government’s cabinet meeting later today to be of keen interest.
- German IFO data provided a reprieve for the Euro and Bunds as it came in better than expected. EUR/USD little changed at 1.1320 area and the German 10-year Bunds a tad less negative.
- All eyes on USTR Lighthizer and Treasury Secy Mnuchin trip to China for further talks on Thursday and Friday.
Economic Data
- (FI) Finland Feb PPI M/M: 0.1% v 0.1% prior; Y/Y: 3.0% v 3.2% prior
- (TR) Turkey Mar Real Sector Confidence (Seasonally Adj): 99.3 v 96.9 prior; Real Sector Confidence NSA (unadj): 102.1 v 97.2 prior
- (TR) Turkey Mar Capacity Utilization: 74.3% v 74.0% prior
- (HU) Hungary Q4 Current Account: No est v -€0.1Be v +€0.2B prior
- (TW) Taiwan Feb Industrial Production Y/Y: -1.8% v -1.7%e
- (ES) Spain Feb PPI M/M: 0.2 v 0.1% prior; Y/Y: 1.9 v 1.7% prior
- (CZ) Czech Mar Consumer Confidence Index: 2.3 v 4.0 prior; Business Confidence: 14.7 v 15.9 prior; Composite Confidence (Consumer & Business): 12.2 v 13.5 prior
- (AT) Austria Jan Industrial Production M/M 1.9% v 1.3% prior; Y/Y: 8.2% v 4.4% prior
- (DE) Germany Mar IFO Business Climate Survey: 99.6 v 98.5e; Current Assessment: 103.8 v 102.9e; Expectations Survey: 95.6 v 94.0
- (CH) Swiss Weekly Total Sight Deposits (CHF): 575.9B v 576.0B prior; Domestic Sight Deposits: 489.3B v 488.6B prior
- (PL) Poland Feb Unemployment Rate: 6.1% v 6.1%e
Fixed Income Issuance
- None seen
Looking Ahead
- (UR) Ukraine Central Bank Minutes
- 06:00 (US) Fed’s Harker (hawk, non-voter) in London on Economic Outlook
- 06:00 (EU) Daily Euribor Fixing
- 06:00 (LT) Lithuania to sell Bonds
- 06:30 (DE) Germany to sell €2.0B in 3-month BuBills
- 07:00 (PT) Portugal House Price Index
- 07:00 (IL) Israel Feb Unemployment Rate: No est v 4.3% prior
- 07:00 (RO) Romania to sell RON200M in 3.65% 2031 Bonds
- 07:00 (IL) Israel to sell 2021, 2023, 2026 and 2028 bonds
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:45 (US) Daily Libor Fixing
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:30 (US) Feb Chicago Fed National Activity Index: -0.25e v -0.43 prior
- 09:00 (UK) Baltic Bulk Index
- 09:30 (BR) Brazil Feb Current Account Balance: -$1.3Be v -$6.6B prior; Foreign Direct Investment (FDI): $7.0Be v $5.9B prior
- 10:00 (MX) Mexico Jan IGAE Economic Activity Index (Monthly GD) Y/Y: 1.1%e v 0.0% prior
- 10:00 (BE) Belgium Mar Business Confidence: -2.0e v -1.7 prior
- 10:00 (FR) France Debt Agency (AFT) to sell combined €3.6-4.8B in 3-month. 6-month and 12-month Bills
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 16:30 (AU) RBA’s Ellis in Sydney
- 13:00 (BR) Brazil Feb Total Formal Job Creation: +87.5Ke v +34.3K prior
