Another Go To Find Solidarity For Both Europe And OPEC

Notes/Observations

• Another attempt at key meetings to resolve issues in Europe and in oil markets; can solidarity be achieved???
• Europe looks to continue to find solutions for a joint funding for increasing borrowing needs
• Oil markets hoping that Russia and Saudi Arabia can strike a deal to cut production

Asia:

• Bank of Korea (BOK) left the 7-Day Repo Rate unchanged at 0.75% (as expected). Announced to expand the eligible collateral for open market operations (OMOs)
• Australia Parliament passed the A$130B emergency stimulus package to address coronavirus impact to jobs and wages
• BOJ expected to project that GDP to contract as coronavirus pandemic worsened (this would be the 1st prediction of a contraction since 2014)
• BOJ Gov Kuroda reiterates that global economic uncertainty was very high and would not hesitate to add easing if needed

Coronavirus:

• Global cumulative cases: 1,4848,811 (+3.8% d/d); death toll 88.5K (+7.8% d/d)

Europe:

• ECB’s Lagarde op-ed article stressed that full alignment of fiscal and monetary policy was needed in this crisis; if one country suffered, others could not avoid fallout; Pandemic Fund PEPP program could be flexible across assets and countries

Americas:

• President Trump stated that was getting the country much closer to the way it was before coronavirus; We could begin opening the economy slowly, and in phases
• CDC Dir Redfield: CDC guidance to allow return of some essential workers if asymptomatic, wear face masks, take temperature, and ensure social distancing
• Fed’s Kaplan (dove, voter): US GDP might shrink 25-35% in Q2, then grow in H2; when asked about new Fed policies to support the economy says “stay tuned”; expected a phased return to work

Mid-East/Energy:

• Kuwait Oil Min Khaled al-Fadhel: OPEC+ talks were intended to agree on a 10-15M bpd production cut to restore balance and halt the price decline
• Texas Oil Regulator Sitton: 20M bpd cuts are needed from OPEC and other countries. If OPEC and other countries did not cut production then oil storage would likely fill in two months. US firms likely to organically cut 4M bpd in 3 months

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.63% at 328.14, FTSE +1.81% at 5,723.79, DAX +0.99% at 10,435.62, CAC-40 +0.37% at 4,459.21, IBEX-35 -0.16% at 6,941.00, FTSE MIB +1.02% at 17,558.50, SMI -0.27% at 9,408.00, S&P 500 Futures +0.16%]
• Market Focal Points/Key Themes: European indices open higher across the board; reportedly Italy and France to extend lockdowns until early May; focus on results of Eurogroup meeting and OPEC+ meeting later in the day; Switzerland will allow companies to defer bankruptcy; upcoming earnings expected in the US session include Conn’s and Shaw Communications

Equities

• Consumer discretionary: Just Eat Takeaway [TKWY.NL] +10% (trading update)
• Financials: UBS [UBSG.CH] +2%, Credit Suisse [CSGN.CH] +1.5% (decide to postpone dividend payout partially)
• Industrials: Airbus [AIR.FR] +5% (orders update), Sodexo Alliance [SW.FR] +10% (earnings), Mondi [MNDI.UK] +1% (earnings), Gama Aviation [GMAA.UK] +3% (trading update)
• Technology: SAP [SAP.DE] +2% (prelim earnings)

Speakers

• ECB’s Lagarde stated that should not get fixated on coronabonds as other forms of solidarity could emerge; added that things take time in Europe. Cost of lockdown seen between 2-3% of GDP each month
• Germany Econ Min Altmaier stated that he could not see any damage from German coronabonds stance as the priority was for the stability of Euro region. Did expect Eurogroup finance ministers to reach an agreement. Added that a recovery in German economy possible in 2H
• UK Treasury and BOE temporarily extended a Ways and Means Facility to provide a short-term source of additional liquidity
• Swiss govt said to to end a suspension on bankruptcy proceedings; effective Apr 19th. Move to avoid a likely wave of business failures that would have serious consequences for the Swiss economy amid fallout from the coronavirus pandemic
• German Health Min Spahn: Infection numbers showing positive trend and if that continues, govt can talk about gradual return to normality after Easter Break
• China Commerce Ministry (MOFCOM) noted that its trade situation did show improvement in the month of March
• Bank of Japan (BOJ) quarterly Regional Economic Report (Sakura): Cuts assessment in all 9 regions citing impact from coronavirus outbreak
• Russia could cut up to 2M bpd under any OPEC+ production cut agreement

Currencies/Fixed Income

• FX markets experience narrow ranges ahead of key meetings. Europe looks to find solidarity on a crisis response to the virus outbreak while OPEC+ looks for ways to offset the massive demand destruction in global oil markets.
• EUR/USD at 1.0870 in quiet trade with focus on the upcoming Eurogroup meeting later today. Officials kept a positive view that a compromise could be reached with the ESM and coronabonds being a key sticking point between North and South Europe.
• USD/JPY holding below the 109 area. Key OPEC+ and Eurogroup meeting to provide clues on safe-haven flows ahead of an extended holiday weekend for most markets.

Economic Data

• (NL) Netherlands Feb Manufacturing Production M/M: -1.7% v 3.1% prior; Y/Y: -1.3% v +0.9% prior; Industrial Sales Y/Y: 0.3 v 2.1% prior
• (FI) Finland Feb Industrial Production M/M: +0.8% v -1.3% prior; Y/Y: -0.1% v -1.8% prior
• (DE) Germany Feb Current Account Balance: €23.7B v €17.0Be; Trade Balance: €20.8B v €16.5Be; Exports M/M: +1.3% v -1.0%e; Imports M/M: -1.6% v -0.7%e
• (UK) Feb Monthly GDP M/M: -0.1% v +0.1%e; GDP 3M/3M: 0.1% v 0.1%e
• (UK) Feb Industrial Production M/M: 0.1% v 0.1%; Y/Y: -2.8% v -3.0%e
• (UK) Feb Manufacturing Production M/M: 0.5% v 0.1%e; Y/Y: -3.9% v -4.0%e
• (UK) Feb Construction Output M/M: -1.7% v +0.3%e; Y/Y: -2.7% v +0.2%e
• (UK) Feb Visible Trade Balance: -£11.5B v -£6.0Be; Overall Trade Balance: -£2.8B v +£1.0Be; Trade Balance Non EU: -£5.6B v -£1.0Be
• (UK) Feb Index of Services M/M: 0.0% v 0.2%e; 3M/3M: 0.2% v 0.3%e
• (JP) Japan Mar Preliminary Machine Tool Orders Y/Y: -40.8% v -29.6% prior
• (IT) Italy Feb Industrial Production M/M: -1.2% v -1.7%e; Y/Y: -2.4% v -2.3%e; Industrial Production NSA Y/Y: -1.8% v -3.3% prior
• (GR) Greece Jan Unemployment Rate: 16.4% v 16.4% prior
• (GR) Greece Feb Industrial Production Y/Y: -3.4% v -1.2% prior

Fixed Income Issuance

• (IT) Italy Debt Agency (Tesoro) sold total €7.5B vs. €6.5-7.5B indicated range in 3-year and 7-year BTP Bonds
• Sold €4.5B vs. €4.0-4.5B indicated range in 0.05% Jun 2023 BTP; Avg Yield: +0.86% v -0.10% prior; Bid-to-cover: 1.50x v 1.51x prior (Feb 13th 2020)
• Sold €3.0B vs. €2.5-3.0B indicated range in 0.85% Jan 2027 BTP; Avg Yield: 1.37% v 0.92% prior; Bid-to-cover: 1.36x v 2.38x prior
• Sells €B vs. €4.0-4.5B indicated range in 0.05% Jun 2023 BTP; Avg Yield: % v
• (IT) Italy Debt Agency (Tesoro) sold total €2.0B vs. €1.0-2.0B indicated range in 2036 and 2044 BTP bonds

Looking Ahead

• (UR) Ukraine Mar CPI M/M: +1.6%e v-0.3% prior; Y/Y: 3.1%e v 2.4% prior
• (EG) Egypt Mar CPI M/M: No est v 0.0% prior; Y/Y: No est v 5.3% prior
• 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds
• 06:00 (IE) Ireland Mar Unemployment Rate: No est v 4.8% prior
• 06:00 (IE) Ireland Mar CPI M/M: No est v 0.6% prior; Y/Y: No est v 1.1% prior
• 06:00 (IE) Ireland Mar CPI EU Harmonized M/M: No est v 0.6% prior; Y/Y: No est v 0.9% prior
• 06:00 (PT) Portugal Feb Trade Balance: No est v -€1.5B prior
• 06:00 (UK) DMO to sell £7.0B in 1-month, 3-month and 6-month bills (£1.0B, £2.0B and £4.0B respectively)
• 06:00 (CZ) Czech Republic to sell 3-month bills
• 06:45 (US) Daily Libor Fixing
• 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
• 08:00 (BR) Brazil Mar IBGE Inflation IPCA M/M: 0.1%e v 0.3% prior; Y/Y: 3.4%e v 4.0% prior
• 08:00 (IN) India Feb Industrial Production Y/Y: 3.4%e v 2.0% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (BR) Brazil CONAB Corp Report
• 08:30 (US) Initial Jobless Claims: 5.50Me v 6.648M prior; Continuing Claims: 8.24Me v 3.029M prior
• 08:30 (US) Mar PPI Final Demand M/M: -0.4%e v -0.6% prior; Y/Y: 0.5%e v 1.3% prior
• 08:30 (IUS) Mar PPI Ex Food and Energy M/M: 0.0%e v -0.3% prior; Y/Y: 1.2%e v 1.4% prior
• 08:30 (IUS) Mar PPI Ex Food, Energy, Trade M/M: 0.0%e v -0.1% prior; Y/Y: No est v 1.4% prior
• 08:30 (CA) Canada Mar Net Change in Employment: -500.0Ke v +30.3K prior; Unemployment Rate: 7.5%e v 5.6% prior; Full Time Employment Change: No est v +37.6K prior; ; Part Time Employment Change: No est v -7.3K prior; Participation Rate: 65.0%e v 65.5% prior; Hourly Wage Rate Y/Y: 4.4%e v 4.3% prior
• 08:30 (US) Weekly USDA Net Export Sales
• 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
• 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 3rd: No est v $551.2B prior
• 09:00 (RU) Russia Q1 Preliminary Current Account Balance: $14.1Be v $10.2B prior
• 09:00 OPEC+ teleconference call on potential production cuts
• 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
• 10:00 (US) Feb Final Wholesale Inventories M/M: -0.5%e v -0.5% prelim; Wholesale Trade Sales M/M: No est v 1.6% prior
• 10:00 (US) Apr Preliminary University of Michigan Confidence: 75.0e v 89.1 prior
• 10:00 (US) Fed Chair Powell
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:00 (EU) Eurogroup Finance Ministers meet again on its response to the coronavirus outbreak
• 11:00 (UK) BOE announcement on APF operations for week of Apr 13th
• 11:30 (US) Treasury to sell 4-week and 8-week bills
• 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
• 12:00 (CA) Canada to sell 0.50% Sept 2025 notes
• 13:00 (US) Weekly Baker Hughes Rig Count
• 13:00 (US) Treasury to sell 30-Year Notes Reopening
• 16:00 (US) Fed’s Daly
• 19:50 (JP) Japan Mar Overall Bank Lending Y/Y: No est 2.1% prior; Lending (ex-trusts) Y/Y: No est v 2.2% prior
• 19:50 (JP) Japan Mar PPI M/M: -0.6%e v -0.4% prior; Y/Y: -0.1%e v +0.8% prior
• 21:30 (CN) China Mar CPI Y/Y: 4.9%e v 5.2% prior; Y/Y: -1.1%e v -0.4% prior
• 22:30 (KR) Korea to sell KRW750B in 50-Year Bond
• 23:00 (KR) South Korea Feb M2 Money Supply M/M: No est v 0.7% prior; “L” Money Supply M/M: No est v 0.7% prior