Quiet Markets ahead of Easter Sunday; G20 Energy Ministers Look to Get Mexico On-board OPEC+ Cuts

Apr 10 20, 10:47 GMT

Notes/Observations

China’s bank lending and credit provision surge in March indicating that govt and PBoC efforts to boost support for the economy were having an effect
Focus oln G20 energy ministers meeting to see if Mexico could be persuaded to join OPEC+ proposed production cuts

Asia:

China Mar CPI Y/Y: 4.3% v 4.9%e (slowest annual pace since Oct)
Japan Fin Min Aso stated that was important to exchange opinions at G20 meeting next week. Would clearly explain Japan’s actions at the meeting
Hong Kong Govt announced new HK$137.5B in measures to support coronavirus impact: HK$80B to help companies pay salaries; HK$20B to aviation industry

Europe:

European Finance Ministers (Eurogroup) said to agree on a €500B economic support package. Defer disagreement on shared debt via Eurobonds but to discuss “innovative financial instruments” Eurogroup President Centeno:
Member states did not agree to joint debt issuance; some countries want it, some don’t
Next EU budget will be key component of the recovery strategy
If we combine the EU fiscal response to the epidemic we have to start talking in the trillions of euros
Agreed to 3 safety nets: for workers, for businesses, and for governments

Americas:

US President Trump stated that was close to deal on OPEC output cuts, “We will see what happens”; Had a very good call with Russia and Saudi Arabia; Expected announcement from Russia/Saudi Arabia; US could do something where US only used its own oil; Needed to be an oil price minimum so companies did not shut down
President Trump stated that we were at the top of the hill with coronavirus; 19 Drugs in trial at the moment, 26 active planning for trial

Mid-East/Energy:

Mexico said to be holding up a deal by the world’s largest oil producers, including Saudi Arabia and Russia, to curb production. Reports circulated of a tentative OPEC+ agreement to cut 10M bpd in May and June. However, Mexican said to have refused to go along with the proposed cuts to its production, and walked out. OPEC+ said to hope to convince Mexico in further talks on Friday. The proposed deal required all parties to cut production by 23%. Mexico only wanted to cut its production by 100K bpd compared to OPEC+ request of a cut of 400K bps.

Italy Econ Minister Gualtieri stated that it would face a battle over the recovery plan with potential issuance of Eurobonds; added that Italt needed a win at the European Council
Greece Fin Min Staikouras stated that govt would not need to use the precautionary credit lines as part of efforts to deal with the economic effects of the coronavirus
Poland Central Bank’s Kropiwnicki stated that he did not see the purpose of any additional rate cuts; Believed that lowering interest rates would be ineffective (**Reminder Poland had cut rates twice in recent weeks by total of 100bps)
Japan rating agency JCR cuts Turkey sovereign rating from BBB- to BB+
China Assistant Commerce Minister Ren: China foreign trade faces mos] unprecedented challenge in years due to coronavirus epidemic; global demand contracted noticeably
China PBoC official Ruan Jianhong stated that liquidity was sufficient. The rapid rise in macro leverage had been fixed and the ratio should be allowed to rise currently
China PBoC Sun Guofeng (head of monetary policy department) stated that the Yuan exchange rate was relatively strong and saw the US-China bond spread as appropriate. China was far away from a liquidity trap

FX markets were listless with many market closes around the globe due to the upcoming Easter holiday.
Chinese data during the EU morning showed that PBoC lending and credit provision surged in March and suggested that govt efforts to boost support for the economy was having an effect. However, analysts did caution that credit path did not mean that the economy to immediately recoup what’s likely to be an unprecedented contraction in 1Q

(NL) Netherlands Feb Trade Balance: €5.6B v €4.5B prior
(RO) Romania Mar CPI M/M: 0.5% v 0.2%e; Y/Y: 3.1% v 2.6%e
(FR) France Feb Industrial Production M/M: 0.9% v 0.0%e; Y/Y: -1.4% v -2.5%e
(FR) France Feb Manufacturing Production M/M: 0.9% v 0.4%e; Y/Y: -1.5% v -2.0%e
(TR) Turkey Jan Unemployment Rate: 13.8% v 13.7% prior
(CN) China Mar M2 Money Supply Y/Y: 10.1% v 8.8%e; M1 Money Supply Y/Y: 4.5%e; M0 Money Supply Y/Y: 11.6%e
(CN) China Mar New Yuan Loans (CNY): 2.850T v 1.800Te
(CN) China Mar Aggregate Financing (CNY): 5.150T v 3.14Te
(CN) Weekly Shanghai copper inventories (SHFE): 317.9K v 332.4K tons prior
(RU) Russia Narrow Money Supply w/e Apr 3rd (RUB): 11.57T v 11.28T prior
(GR) Greece Mar CPI Y/Y: 0.0% v 0.2% prior; Y/Y: 0.2% v 0.4% prior

Fixed Income Issuance

07:30 (IN) India Weekly Forex Reserve w/e Apr 3rd: No est v $475.6B prior
08:00 (RO) Romania Central Bank Mar Minutes
08:00 (G20) Energy Ministers tele-conference
08:30 (US) Mar CPI M/M: -0.3%e v +0.1% prior; Y/Y: 1.6%e v 2.3% prior
08:30 (US) Mar CPI (ex-food/energy) M/M: 0.1%e v 0.2% prior; Y/Y: 2.3%e v 2.4% prior
08:30 (US) Mar CPI NSA Index: 258.120e v 258.678 prior; CPI Core Index (Seasonally Adj): 267.000e v 267.07 prior
08:30 (US) Mar Real Avg Weekly Earnings Y/Y: No est v 0.7% prior; Real Avg Hourly Earning Y/Y: No est v 0.6% prior
09:00 (RU) Russia Feb Trade Balance: $11.0Be v $12.5B prior; Exports: $29.1Be v $29.5B prior; Imports: $18.3Be v $17.0B prior
09:00 (RU) Russia Q1 Preliminary Current Account Balance: $15.8Be v $10.2B prior
11:00 (EU) Potential sovereign ratings after European close (S&P on Poland Sovereign Debt’; Fitch on Latvia Sovereign Debt
12:30 (US) Fed’s Mester
14:00 (US) Mar Monthly Budget Statement: -$120.0Be v -$235.3B prior