Notes/Observations
- Central banks take additional easing measures; Fed cuts rates back to Zero, RBNZ, BOK also cut)
- Central Banks coordinate to increase global USD liquidity
- Risk aversion sentiment surges as Fed’s emergency easing failed to allay concerns about the global outlook
Asia:
- New Zealand Central Bank (RBNZ) cut its Official Cash rate (OCR) by 75bps to 0.25% in an intra-meeting move
- RBNZ Gov Orr: Our mandate remained the same; not considering negative rates, QE would be most effective tool for more stimulus
- RBA statement noted that it would conduct 1-month, 3-month operations until further notice and 6-months or longer as least weekly; until further notice. It stood ready to purchase govt bonds and would make further policy measures on Thursday, Mar 19th;
- China Feb YTD Industrial Production registered its 1st decline since Jan 1990 YoY: -13.5% v -3.0%e)
- China Feb YTD Retail Sales Y/Y: -20.5% v -4.0%e
- China Stats Bureau Mao Shengyong: Jan-Feb negatively impacted by coronavirus; Still confident of achieving 2020 economic growth target; To beef up macro policy to counter shocks
Coronavirus:
- Global cumulative total 169,4K; cumulative deaths 6,513
- Italy: +3.6k new cases to total of 24747, death toll +368 to 1809 total
- Iran: +1209 new cases to total of 13938, death toll +113 to 724 total
- UK: new cases +20% to total of 1372, death toll +14 to 35 total
- Japan: total cases 1484, death toll 29 total
- France: +838 new cases to total of 4499, death toll +13 to total of 91
Europe:
- ECB’s Panetta (Italy): any expansion of the Euro Area must be partnered with measures to deepen it both politically and economically. ECB is ready to limit unjustified spreads in yield between EGBs and could increase purchases to combat economic fallout from Covid-19
- Public health authority said UK coronavirus ‘to last until spring 2021 and could see 7.9M people hospitalized’
G7
- BoC: BoC, BoE, BoJ, Riksbank, ECB and the Fed agreed to lower pricing on standing USD liquidity swap arrangements by 25bps
Americas:
- FOMC cut Interest Rates by 100BPS to 0.00-0.25% range in another unscheduled move (2nd in March) Announced to increase Treasury holdings by at least $500B and Mortgage Backed Securities (MBS) by $200B
- Fed Chair Powell post rate decision press conference noted that the Coronavirus outbreak was having a profound effect on people in the US; expected to maintain rate near zero until economy improved but did not see negative rates as likely
- President Trump: Markets should be thrilled by Fed rate cut; take it easy on panic grocery buying
- New York City (NYC) Mayor De Blasio: Declares state of emergency, makes it illegal for large gatherings; All schools to be closed starting Monday; Will attempt to reopen schools April 20th, but its possible schools may not reopen this year; will teach teachers how to teach remotely this week
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -7.83% at 275.74, FTSE -5.85% at 5,052.00, DAX -7.62% at 8,528.95, CAC-40 -8.94% at 3,750.28, IBEX-35 -9.06% at 6,029.00, FTSE MIB -7.70% at 14,720.00, SMI -6.90% at 7,790.00, S&P 500 Futures -4.79% limit down]
- Market Focal Points/Key Themes: European indices open down across the board and continued to fall during the session; materials and financials sectors among leaders to the downside; better performing sectors include healthcare and consumer discretionary; airlines issue trading updates related to coronavirus outbreak; car manufacturers suspend production through March; Draegerwerk among better performers following order from German government; upcoming earnings in US session inclue Capital Senior Living
Equities
- Consumer discretionary: IAG [IAG.UK] -25% (COVID-19 update), Lufthansa [LHA.DE] -12% (rescue plan), SAS [SAS.SE] -12% (temporarily halts most traffic), AB Foods [ABF.UK] -15% (trading update)
- Industrials: Draegerwerk [DRW3.DE] +21% (mask order), Volkswagen [VOW3.DE] -11% (halting production at some European plants), Fiat Chrysler [FCA.IT] -13% (closes some European plants)
Speakers
- ECB’s Holzmann (Austria): People are withdrawing more cash than usual. Central bank is prepared to secure cash supply. ECB would be ready to discuss unlimited, direct bond buying of government bonds (OMT) if such need arose
- Italy PM Conte: Coronavirus outbreak has not reached its peak in country
- German Economic Ministry Monthly Report: No longer sees economic recovery in Q1; Sees lower foreign demand, lower consumption due to coronavirus
- Sweden Fin Min Andersson announces crisis package which included SEK300B in liquidity support for companies. Noted that the coronavirus to have significant negative effects on economy and companies
- Spain Development Minister Abalos: State of emergency to be extended and last more than 15 days to fight the coronavirus outbreak
- Poland Central Bank’s Lon reiterated stance od being strongly in favor of a cut in Base Rate
- BOJ Gov Kuroda post rate decision press conference noted that uncertainties over the global economy had risen; reiterated stance that would not hesitate to add to easing if necessary. Possible to deepen negative interest rates further and could increase bond buying further if necessary. Better to act quickly even if virus impact was temporary; current situation was different from the Lehman shock from a decade ago
- Japan Econ Min Nishimura stated that was looking at ways to revive consumption in aftermath of virus outbreak and put all efforts into defending jobs and livelihood
- BOJ announced additional outright JGB purchases for Tuesday, Mar 17th. To buy additional ¥100B in 3-5-year and 5-10-year maturities
- BOK Gov Lee post rate decision press conference noted that concern that global GDP would contract was rising as the coronavirus was spreading. One member dissented and sought only a 25bps cut. Believed that timing was right for rate cut and was ready to use all appropriate measures
- Sri Lanka Central Bank (CBSL) cut its key rates (intra-policy move)
- Philippines Central Bank (BSP) said to consider 50bps at upcoming rate meeting this week
- Iran President Rouhani: Country had passed the peak of the coronavirus outbreak
Currencies/ Fixed Income
- Risk aversion flows dominated as Fed’s emergency easing failed to allay concerns of the global impact of the coronavirus outbreak
- USD/JPY lower by 1.8% to test below 106 level while USD/CHF lower by 0.9% at 0.9420 by mid-session
- US 10-year yield was lower by 15bps to test 0.81%
Economic Data
- (PE) Peru Jan Economic Activity Index (Monthly GDP) Y/Y: 3.0% v 1.4%e
- (PE) Peru Feb Unemployment Rate: 7.1% v 7.4% prior
- (IN) India Feb Wholesale Prices (WPI) Y/Y: 2.3% v 2.4%e
- (NO) Norway Feb Trade Balance (NOK): 18.3B v 19.4B prior
- (DK) Denmark Feb PPI M/M: -2.7% v -0.1% prior; Y/Y: -2.1% v -0.9% prior
- (CH) Swiss Feb Producer & Import Prices M/M: -0.9% v 0.0% prior; Y/Y: -2.1% v -1.0% prior
- (KR) Bank of Korea (BOK) cut the 7-Day Repo Rate by 50bps to 0.75% (intra-meeting move)
- (ES) Spain Jan House transactions Y/Y: -2.6% v +1.8% prior
- (CZ) Czech Jan Export Price Index Y/Y: -2.1% v -1.5% prior; Import Price Index Y/Y: -1.5% v -1.2% prior
- (CZ) Czech Feb PPI Industrial M/M: -0.7% v 0.0%e; Y/Y: 1.4% v 2.1%e
- (TR) Turkey Feb Central Gov’t Budget Balance (TRY): -7.4 v +21.5B prior
- (ZA) South Africa Q1 BER Consumer Confidence: -9 v -10e
- (CH) Swiss weekly Total Sight Deposits (CHF): No est v 598.5B prior; Domestic Sight Deposits: No est v 503.6B prior
- (IT)) Italy Feb Final CPI M/M: -0.1% v 0.0% prelim; Y/Y: 0.3% v 0.4% prelim; CPI Index (Ex Tobacco): 102.8e v 102.7 prior
- (IT)) Italy Feb Final CPI EU Harmonized M/M: -0.5% v -0.4% prelim; Y/Y: 0.2% v 0.3% prelim;
- (CZ) Czech Jan Current Account (CZK): 18.5B v 25.6Be
- (IT) Italy Jan General Government Debt: €2.444T v €2.409T prior
Fixed Income Issuance
- None seen
Looking Ahead
- 06:00 (NO) Norway to sell Bills
- 06:00 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills
- 06:00 (SK) Slovakia Debt Agency (Ardal) to sell Bonds
- 06:00 (EU) Daily Euribor Fixing
- 06:30 (IN) India Central Bank (RBI) Gov Das
- 07:00 (IE) Ireland Jan Trade Balance: No est v €4.9B prior
- 07:00 (BR) Brazil Mar FGV Inflation IGP-10 M/M: 0.0%e v 0.0% prior
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey- 07:45 (US) Daily Libor Fixing
- 08:00 (TR) Turkey to sell 2025 I/L Bonds
- 08:30 (US) Mar Empire Manufacturing: 4.9e v 12.9 prior
- 09:00 (CA) Canada Feb Existing Home sales M/M: +0.5%e v -2.9% prior
- 09:00 (PL) Poland Jan Current Account Balance: €2.7Be v €1.0B prior; Trade Balance: €0.8Be v €0.2B prior; Exports: €19.6Be v €17.2B prior; Imports: €18.5Be v 17.0B prior
- 09:00 (PL) Poland Feb CPI Core M/M: 0.3%e v 0.6% prior; Y/Y: 3.4%e v 3.1% prior
- 09:00 (UK) Daily Baltic Dry Bulk Index
- 09:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming issuance
- 09:50 (FR) France Debt Agency (AFT) to sell €4.7-5.9B in 3-month, 6-month, 9-month and 12-month bills
- 10:45 (EU) ECB weekly QE bond buying update
- 16:00 (US) Jan Net Long-term TIC Flows: No est v $85.6B prior; Total Net TIC Flows: No est v $78.2B prior
- 18:30 (AU) Australia Roy Morgan Weekly Consumer Confidence: No est v 100.4 prior
- 20:30 (AU) Australia Q4 Preliminary House Price Index Q/Q: No est v 2.4% prior; Y/Y: No est v -3.7% prior
- 20:30 (SG) Singapore Feb Non-oil Domestic Exports M/M: -3.0%e v +4.6% prior; Y/Y: -6.9%e v -3.3% prior; Electronic Exports Y/Y: -17.0%e v -13.0% prior
- 20:30 (AU) RBA Mar Minutes
- 22:00 (NZ) New Zealand Feb Non Resident Bond Holdings: No est v 52.9% prior
- 23:00 (KR) South Korea Jan M2 Money Supply M/M: No est v 0.6% prior; “L” Money Supply M/M: No est v 0.4% prior
- 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills
- 23:30 (JP) Japan to sell 12-month bills
