Notes/Observations
- Risk aversion diminished on hopes that central bank calls for fiscal stimulus will be honored on look out for a more coordinated policy response today or during the weekend;
- Past 24 hours saw numerous liquidity actions by central banks (Fed, BOC, BOJ, RBA); an intra-meeting rate cut by Norges and numerous short-selling bans announced (Thailand, Korea, Italy), China PBoC implements a targeted RRR cuts
- Persistent concerns about the coronavirus pandemic do linger….
Asia:
- Japan Top Currency Official Takeuchi: No comment on market intervention; confirmed G7 held phone conference and that Japan would closely cooperate with G7. To watch markets closely and act as needed – BOJ purchased ¥200B in 5-10 year JGB operation (unscheduled)
- China Banking Regulator (CBIRC): Banking institutions have issued CNY1.4T in loans related to virus control and prevention; To support some ‘key’ firms debt issuance to help resolve liquidity crunch for the firms’ suppliers
- New Zealand Feb Manufacturing PMI: 53.2 v 49.8 prior (back into expansion)
Coronavirus:
- Global cumulative: 128,343 (+2,089); cumulative deaths 4,720 (+83) – China cumulative: 81,003 (+23); cumulative deaths 3,180 (+8)
Europe:
- ECB sources: there were no proposals for an ECB rate cut at today’s meeting; no policymakers proposed a different amount of QE purchase increase than the final decision
- Eurogroup Chief Centeno: EU to make budget rules more flexible to deal with coronavirus impact –
Americas:
- House Speaker Pelosi (D): Lawmakers and White House have ‘neared agreement’ on coronavirus legislative package, hopes to make an announcement on Friday (March 13th)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +1.59% at 301.24, FTSE +3.07% at 5,394.55, DAX +1.80% at 9,321.95, CAC-40 +2.27% at 4,136.02, IBEX-35 +4.71% at 6,649.00, FTSE MIB +4.41% at 15,579.00, SMI +2.06% at 8,441.00, S&P 500 Futures +3.44%]
- Market Focal Points/Key Themes: European indices open broadly higher but soften gains as the session moved forward; financials and materials sectors among most supported; energy outperforming after rebound in crude prices; real estate and travel among worst performers; UK FCA bans short selling of certain Spanish and Italian instruments; Italy, Spanish stock exchanges ban short selling; Deutsche Boerse spokesman said considering ban on short selling, but no ban until further notice; upcoming earnings expected in the US session include Buckle, International Paper and Jabil.
Equities
- Healthcare: Redx Pharma [REDX.UK] +168% (confirms approach), Roche [ROG.CH] +3% (FDA approval)
- Industrials: Fraport [FRA.DE] -7% (earnings), Leonardo [LDO.IT] -6% (earnings)
- Technology: Wirecard [WDI.DE] +8% (KPMG completed investigation)
Speakers
- China PBoC cut the Reserve ratio Requirement between 50-100bps in a targeted response; effective Monday, Mar 16th. RRR cut to unleash CNY550B to banking system
- Norway Central Bank (Norges) cut the Deposit Rate by 50bps to 1.00% for an intra-policy move and its 1st cut since Mar 2016
- ECB’s Lane (Ireland, chief economist): Baseline scenario was that coronavirus seen as a temporary situation; retained option of future rate cuts if needed. Decision about short-term policy rate should be understood regarding the duration of the shocks. ECB would not tolerate risks to monetary policy transmission
- ECB’s Villeroy (France) stated that the economic shock was severe but seen a s temporary
- Sweden Central Bank (Riksbank): To lend up to SEK500B via banks to safeguard credit supply; prepared to take additional measures if necessary
- France Fin Min Le Maire: Support for economy to cost tens of billions of Euros. Believed ECB chief Lagarde had taken the right measures at address virus outbreak
- Sweden FSA lowered the countercyclical buffer from 2.5% to 0.0% (zero)
- EU proposed draft Brexit deal reportedly sees cooperation on sanctions and includes some European Court of Justice (ECJ) jurisdiction in post Brexit
- India Chief Economic Adviser (CEA) Subramanian: FX reserves are adequate to cover imports and debt servicing. Lower oil prices to help significantly lower the current account deficit
- BOJ stated that it would continue to conduct JGB purchases as needed. Reiterated pledge to provide liquidity and keep repo markets steady
- China PBoC stated after the targeted RRR cut the it would implement a prudent and more flexible monetary policy and keep liquidity reasonable sufficient. Would not open the floodgates for credit
Currencies/Fixed Income
- Risk aversion diminished on hopes that central bank calls for fiscal stimulus would be honored on look out for a more coordinated policy response today or during the weekend. The past 24 hours saw numerous liquidity actions by central banks (Fed, BOC, BOJ, RBA); an intra-meeting rate cut by Norges and numerous short-selling bans announced (Thailand, Korea, Italy), China PBoC implements a targeted RRR cuts
- USD/JPY was higher as risk appetite peaked its head out as the pair hovered around the 106 area.
- EUR/USD was lower as ECB’s anti-virus measures was deemed insufficient as its targeted package to support financial conditions appeared to less aggressive compared than other major central banks. All eyes on Euro Zone finance ministers who are expected to announce further wide-ranging measures to support the economy (Eurogroup meeting on Monday, Mar 16th)
Economic Data
- (NL) Netherlands Jan Trade Balance: €4.2B v 4.6B prior
- (NL) Netherlands Jan Retail Sales Y/Y: 4.8% v 3.9% prior
- (FI) Finland Feb CPI M/M: +0.3% v -0.3% prior; Y/Y: 0.8% v 1.0% prior
- (FI) Finland Jan GDP Indicator Y/Y: 1.7% v 0.6% prior
- (FI) Finland Jan Current Account: -€0.2B v +€0.8B prior
- (DE) Germany Feb Final CPI M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.7%e
- (DE) Germany Feb Final CPI EU Harmonized M/M: 0.6% v 0.6%e; Y/Y: 1.7% v 1.7%e
- (DE) Germany Feb Wholesale Price Index M/M: -0.9% v +1.0% prior; Y/Y: -0.9% v +0.3% prior
- (TR) Turkey Jan Industrial Production M/M: -0.2% v +0.5%e; Y/Y: 7.9% v 8.4%e
- (NO) Norway Central bank (Norges) cuts Deposit rate by 50bps to 1.00% (intra-policy move and 1st cut since Mar 2016)
- (FR) France Feb Final CPI M/M: 0.0% v 0.0%e; Y/Y: 1.4% v 1.4%e; CPI Ex-Tobacco Index: 103.93 v 103.95e
- (FR) France Feb Final CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 1.6% v 1.6%e
- (CN) Weekly Shanghai copper inventories (SHFE): 345.8K v 310.8K tons prior
- (ES) Spain Feb Final CPI M/M: -0.1% v -0.1%e; Y/Y: 0.7% v 0.8%e
- (ES) Spain Feb Final CPI EU Harmonized M/M: -0.1% v 0.0%e; Y/Y: 0.9% v 0.9%e
- (ES) Spain Feb CPI Core M/M: +0.3% v -1.5% prior; Y/Y: 1.1% v 1.0% prior
- (RU) Russia Narrow Money Supply w/e Mar 6th (RUB): 10.99T v 10.81T prior
- (CZ) Czech Jan Retail Sales Y/Y: 2.1% v 3.5%e; Retail Sales (ex-auto) Y/Y: 4.9% v 3.8%e
- (SE) Sweden Feb Unemployment Rate: 8.2% v 7.6%e; Unemployment Rate (seasonally adj): 7.6% v 7.0%e
- (PL) Poland Feb CPI M/M: 0.7% v 0.3%e; Y/Y: 4.7% v 4.4%e
- (CN) China PBoC cuts RRR between 50-100bps under inclusive finance scheme
- Fixed Income Issuance
- (ZA) South Africa sold total ZAR1.04B vs. ZAR1.04B indicated in 2025, 2033 and 2050 I/L Bonds
Looking Ahead
- 06:00 (EU) Daily Euribor Fixing
- 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance (bills)
- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £3.0B respectively)
- 07:30 (IN) India Weekly Forex Reserve w/e XXX: No est v $481.5B prior
- 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations: Next 12-month: No est v 9.6% prior
- 08:00 (IS) Iceland Feb Unemployment Rate: No est v 4.8% prior
- 08:00 (MX) Mexico Jan Industrial Production M/M: +0.4%e v -0.3% prior; Y/Y: -1.5%e v -1.0% prior; Manufacturing Production Y/Y: -1.5%e v -0.5% prior
- 08:00 (UK) BOE Mar Minutes (from intra-policy move)
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
- 08:30 (US) Feb Import Price Index M/M: -1.0%e v 0.0% prior; Y/Y: -1.5%e v +0.3% prior; Import Price Index (ex-petroleum) M/M: 0.1%e v 0.2% prior
- 08:30 (US) Feb Export Price Index M/M: -0.4%e v +0.7% prior; Y/Y: -0.6%e v +0.5% prior
- 09:00 (CA) Canada Feb Existing Home Sales M/M: +0.5%e v -2.9% prior
- 09:00 (RU) Russia Jan Trade Balance: $14.5Be v $15.5B prior; Exports: $31.0Be v $39.6B prior; Imports: $17.0Be v $24.1B prior
- 09:00 (UK) Daily Baltic Dry Bulk Index
- 10:00 (US) Mar Preliminary University of Michigan Confidence: 95.0e v 101.1 prior
- 11:00 (CO) Colombia Jan Manufacturing Production Y/Y: 1.5%e v 3.2% prior
- 11:00 (CO) Colombia Jan Retail Sales Y/Y: 7.6%e v 7.1% prior
- 12:00 (EU) Potential sovereign ratings after European close: Moody’s on Poland and Slovakia; S&P on Austria, Luxembourg; Norway, Portugal and Ukraine Sovereign Debt; Canadian rating agency DBRS on Slovakia Sovereign Debt
- 13:00 (US) Weekly Baker Hughes Rig Count
- 15:00 (CO) Colombia Jan Industrial Production Y/Y: No est v 2.3% prior
