Notes/Observations
- UK two main political parties still trying to reach a new Brexit deal this week ahead of a EU Leader summit
- Oil prices remain firm as continued fighting in Libya sparks supply concerns
- China’s Mar Foreign Reserves rise for the 5th straight month; gold buying also continued
- Markets will be looking ahead at central bank events due later in the week (ECB decision and FOMC Minutes on Wed), as well as any updates on Brexit.
Asia:
- China said to be pressured by US to give up ‘developing country’ status believe it is important to global trade to keep this status
- Chinese state media: China and US made progress in the latest round of trade talks. Discussed draft agreement text on issues such as IP rights, technology transfer, trade balance, non-tariff measures, services, agriculture, and an implementation system. Talks to continue on the remaining issues.
- China Mar Foreign Reserves: $3.099T v $3.100Te (5th consecutive increase and a 7-month high); gold holding rise for the 4th straight month
- China Mar New Yuan Loans (CNY): 885.8B v 1.225Te
- China Mar M2 Money Supply Y/Y: 8.0% v 8.2%e
Europe:
- PM May: Now have a stark choice — leave the EU with a deal or do not leave at all
- Govt is drawing up legal language that would guarantee that Parliament would have the final say on Brexit deal with Brussels
- Labour spokesperson: disappointed that the government had not offered real change or compromise. Urged the PM to come forward with genuine changes to her deal in an effort to find an alternative that could win support in Parliament
- Labour Shadow AG Chakrabarti: So far PM May had not moved an inch on her Brexit red lines
- Some Conservative MPs warn PM May that they will attempt to replace her within weeks if the UK is forced to participate in EU elections
- UK Parliament Leader Leadsom: another Brexit referendum would be the ‘ultimate betrayal’
Americas:
- White House: Talks with China’s Liu this week were productive; made progress on numerous key issues, but still significant work left to do in trade talks. To stay in contact with China on trade issues – Analysts speculate that it is increasingly unlikely the Congress will pass the revised NAFTA agreement before 2020 election due to opposition from Democrats and unions to labor provisions
Energy:
- Weekly Baker Hughes Rig Count 1,025 v 1,006 w/w (+1.9% w/w) (first rise in 7 weeks)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.24% at 387.30, FTSE % at #, DAX -0.41% at 11,960.99, CAC-40 -0.14% at 5,468.38, IBEX-35 -0.72% at 9,442.20, FTSE MIB -0.20% at 21,715.50, SMI -0.19% at 9,523.00, S&P 500 Futures -0.15%]
- Market Focal Points/Key Themes: European Indices trade lower across the board following recent strength tracking mixed Asian Indices and lower US Index futures. On the corporate front shares of BMW trade slightly lower, coming off earlier steeper losses after the company announces over €1B in provisions while cutting its EBIT margin outlook for the automotive segment. On the earnings front, Impax Asset Management rises on AUM figures, with Bossard Holdings, Vp Plc and Poxel rising on earnings. Meanwhile Petroleum Geo-Services and Keyword Studios are among the decliners on earnings. Elsewhere Fiat Chrysler gains on a reported deal with Tesla to allow it have Tesla’s electric cars counted towards its fleet to comply with EU emissions rules; Debenhams gains on continued hopes of a takeover by Sports Direct; D’ieteren declines on the stepping down of its CEO, while Continental, SDL and Fraport declines on analyst downgrades. Looking ahead notable earners include Renesola and Kenon Holdings.
Equities
- Consumer discretionary: Debenhams [DEB.UK] +14% (Sports Direct offer statement), Ramirent [RMR1V.FI] +2.5% (acquisition), Swatch [UHR.CH] +0.5% (CEO interview)
- Healthcare: Poxel [POXEL.FR] +1% (earnings)
- Industrials: BMW [BMW.DE] -0.5%, Daimler [DAI.DE] -0.5%, Volkswagen [VOW3.DE] +0.5% (BMW provision; cuts division outlook), Continental [CON.DE] -1.5% (analyst action), Fiat [FCA.IT] +1% (agreement with Tesla), CEVA Logistics [CEVA.CH] -6.5% (YTD earnings), Airbus [AIR.FR] +1% (Boeing to cut production), Aston Martin [AML.UK] -4.5% (analyst action), Veidekke [VEI.NO] +2% (contract)
Speakers
- ECB 2018 Supervisory Review and Evaluation Process (SREP): Overall CET1 demand: 10.6% v 10.1% y/y. Overall risk management framework of some banks should improve
- EU’s Moscovici: Convinced that the UK would not leave the EU without a deal on April 12th
- UK Foreign Min Hunt: Talks with Labour party have been difficult; PM May leaving no stone unturned to reach a Brexit deal
- Turkey President Erdogan urged the country’s election board to investigate widespread irregularities in local elections in Istanbul.
- China said to cut import duties on some goods with duties on computers, digital cameras cut to 13%; sports goods, textiles cut to 20%
- Saudi Energy Minister Khalid al-Falih: Getting into the stage of stabilized oil inventories but still needed to bring them down. The May JMMC meeting would be key in deciding whether to extend the current round of production cuts
- UAE Energy Min Mazrouei (OPEC president) stated that OPEC+ had not yet reduced inventories to the OECD 5-year average
- Russia Gov official Dmitriev (head of Direct Investment Fund): OPEC+ could decide to raise oil production in Jun but would not signal an end to coordination
Currencies/Fixed Income
- Quiet start to perhaps a key week for Europe as EU leaders gather to discuss the Brexit situation. Markets to be looking ahead at central bank events due later in the week (ECB decision and FOMC Minutes on Wed), as well as any updates on Brexit situation
- EUR/USD was steady with the focus on Wed ECB decision. Analysts were not expecting the central bank to reveal any more details regarding the third round of targeted longer-term refinancing operations (TLTRO-3). Pair steady at 1.1235 area
Economic Data
- (DE) Germany Feb Current Account Balance: €16.3B v €19.0Be; Trade Balance: €17.9B v €16.0Be; Exports M/M: -1.3% v -0.5%e; Imports M/M: -1.6% v -0.6%e
- (RO) Romania Q4 Final GDP (3rd reading) Q/Q: 0.9% v 0.7% prelim; Y/Y: 4.1%v 4.1% prelim
- (JP) Japan Mar Eco Watchers Current Survey: 44.8 v 47.8e; Outlook Survey: 48.6 v 49.1e
- (FR) Bank of France Mar Industrial (Business) Sentiment: 100 v 101e
- (SE) Sweden SEB House-Price Indicator: 18 v 13 prior
- (CZ) Czech Feb National Trade Balance (CZK): 15.0Be v 12.1B prior
- (CZ) Czech Feb Industrial Output Y/Y: +1.5%e v -1.1% prior; Construction Output Y/Y: No est v -13.2% prior
- (CZ) Czech Mar Unemployment Rate: 3.0%e v 3.2% prior
- (HU) Hungary Feb Preliminary Trade Balance: €0.8B v €0.4B prior
- (SE) Sweden Feb Private Sector Production M/M: 0.0% v 0.0%e; Y/Y: 1.2% v 2.0%e
- (SE) Sweden Feb Industrial Orders M/M: -2.0%t v -2.5% prior; Y/Y: -2.8% v -0.5% prior
- (SE) Sweden Feb Industry Production Value Y/Y: 2.7 v 3.0% prior; Service Production Value Y/Y: 0.8% v 1.4% prior
- (CH) Swiss Weekly Total Sight Deposits (CHF): 576.3B v 576.1B prior; Domestic Sight Deposits: 485.5B v 488.5B prior
- (TW) Taiwan Mar Trade Balance: $3.1B v $5.5Be; Exports Y/Y: -4.4% v -8.3%e; Imports Y/Y: +6.6% v -12.6%e
- (EU) Euro Zone Apr Sentix Investor Confidence: -0.3% v -2.0e
- (HU) Hungary Mar YTD Budget Balance (HUF): -141.9B v +67.3B prior
Fixed Income Issuance
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 1.11% v 0.90% prior; Bid-to-cover: 2.54x v 1.51x prior
Looking Ahead
- (NL) Netherlands Debt Agency (DSTA) announcement on Green bond
- (IT) Italy Debt Agency (Tesoro) announcement on BTP auction for Thursday, Apr 11th – (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 05:30 (DE) Germany to sell €3.0B in BuBills
- 06:00 (IL) Israel to sell bonds – 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Mar FGV Inflation IGP-DI M/M: No est v 1.3% prior; Y/Y: No est v 7.7% prior
- 07:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: no estimates: Current Standing Deposit at 8.00%; Standing Lending Rate currently at 9.00%
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (CL) Chile Mar CPI M/M: 0.4%e v 0.0% prior; Y/Y: 1.9%e v 1.7% prior
- 08:00 (UK) Baltic Bulk Index
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming issuance
- 08:15 (CA) Canada Mar Annualized Housing Starts: 194.0Ke v 173.2K prior
- 08:30 (CA) Canada Feb Building Permits M/M: No est v -5.5% prior
- 08:30 (CL) Chile Mar Trade Balance: No est v $0.3B prior; Total Exports: No est v $5.6B prior; Total Imports: No est v $5.3B prior
- 08:45 (EU) SSM chief Enria
- 09:00 (MX) Mexico Jan Gross Fixed Investment: No est v -6.8% prior
- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.25%
- 09:00 (FR) France Debt Agency (AFT) to sell combined €3.7-4.9B in 3-month, 4-month, 6-month and 12-month Bills
- 10:00 (US) Feb Factory Orders: -0.5%e v +0.1% prior; Factory Orders (Ex-transportation): No est v -0.2% prior
- 10:00 (US) Feb Final Durable Goods Orders: No est v -1.6% prelim; Durables Ex-Transportation: No est v 0.1% prelim; Capital Goods Orders (Non-defense/ex-aircraft): No est v -0.1% prelim;; Capital Goods Shipments (Non-defense/ex-aircraft): No est v 0.0% prelim
- 10:30 (SE) Sweden FSA chief Thedeen
- 10:30 (SE) Sweden Central Bank (Riksbank) Floden on Panel on Developments in Mortgage
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 11:45 (FR) ECB’s Villeroy (France)
- 16:00 (US) Weekly Crop Progress Report
