Optimism On Reopening Global Markets Continues To Gain Traction

Notes/Observations

Asia:

• Japan Mar Jobless Rate: 2.5% v 2.5%e
• South Korea President Moon: Q2 GDP to be worse than Q1 (implies technical recession)
• Singapore Central Bank (MAS) Economic Review stated that the domestic economy in 2020 was likely to contract markedly, could be more than official GDP forecast of -4% to -1%; core and headline CPI to turn negative
• New Zealand began a phased exit from its lockdown after downgrading the situation to a less severe phase with some non-essential activity able to restart. New Zealand PM Ardern stated that it must remain vigilant, must remain home if possible

Coronavirus:

• Total global cases 3,041,517 (+2.4%); Total deaths: 211.2k (+2.2%)
• Chinese scientists: novel coronavirus will not be eradicated and that the pathogen will likely return in waves like the flu

Europe:

• UK Apr Lloyds Business Barometer: -32 v +6 prior

Americas:

• President Trump: US continuing to see encouraging signs of progress; All parts of the US were in good shape or getting better, states should be open quickly and safely; testing was good enough to open
• Fed announced an update to the Municipal Liquidity Facility (MLF) to aid states and municipalities to help manage coronavirus-related financial stresses

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.80% at 338.14, FTSE +0.57% at 5,880.29, DAX +0.64% at 10,728.40, CAC-40 +0.49% at 4,527.36, IBEX-35 -0.04% at 6,729.00, FTSE MIB +1.43% at 17,646.50, SMI +1.08% at 9,864.48, S&P 500 Futures +0.39%]
• Market Focal Points/Key Themes: European indices open marginally higher and moved up slightly as the session progressed; financials and technology sectors lead better performers; energy sector underperforming as crude prices retreate; Germany, France, Italy and Spain reportedly coordinating rescue of airlines; Austria to end lockdown measures on Thursday; upcoming earnings expected in the US session include Pepsico, Caterpillar, Merck and 3M

Equities

• Consumer discretionary:Lufthansa [LHA.DE] +6% (rescue plan), UBS [UBSG.CH] +5% (earnings), Capgemini [CAP.FR] +7% (earnings)
• Energy: BP [BP.UK] -2% (earnings)
• Financials: UBS [UBSG.CH] +5% (earnings), Santander [SAN.ES] +2% (earnings), HSBC [HSBA.UK] -1% (earnings), HSBC [HSBA.UK] -1% (earnings)
• Healthcare: Novartis [NOVN.CH] +1% (earnings)
• Industrials: Thales [HO.FR] -1.5% (earnings)
• Technology: Wirecard [WDI.DE] -15% (audit report)

Speakers

• ECB quarterly bank lending survey: Household credit standards tightened in Q1 while corporate loan demand to likely to surge further in Q2. Expected credit standards to ease considerably for companies in Q2
• German IFO Institute: Germany 2020 GDP seen contracting by 6.6%. Country seen returning to pre-crisis growth at the end of 2021
• UK Health Min Hancock: Too soon to come out of lockdown safely
• Sweden Central Bank (Riksbank) Policy Statement noted that it was not justified at this time to lower Repo Rate when downturn is due from the imposed restrictions but not ruling rate cut later in year. To continue purchases of govt and mortgage bonds until end of Sept 2020. Riksbank adjusted its forward guidance to Repo Rate expected to remain low in coming years (prior was expected to remain at 0% in coming years)
• Sweden Central Bank (Riksbank) Gov Ingves post rate decision press conference noted that had seen signs of acute stress in some markets. Purchase programs were likely to be extended gradually as measures had work so far as markets have calmed. Drop in inflation seen as temporary and should normalize at some point
• Czech Central Bank’s Dedek: Interest rates should eventually drop to technically zero but did not want negative rates. QE was an academic question at this time and need needed. He urged caution in FX intervention against the CZK currency
• S&P affirmed Singapore sovereign rating at AAA; outlook stable
• BOJ Gov Kuroda stated that the global economy was rapidly slowing down and the central bank was closely watching risks to the financial system. If pandemic was prolonged, Japan bank credit costs could rise. BOJ must be vigilant about risk of rising credit costs for banks, to work closely with FSA
• Bank of Korea (BOK) Apr Minutes noted that one Board member saw the need for additional measures to help boost growth. A member called for cutting rate to lower bound if necessary while another member noted that monetary policy needed to be eased. One member called for unconventional tools
• Russia Energy Min Novak: oil price will not recover quickly as storage full
• S&P to pre-roll WTI oil futures behind GSCI Commodity index from Jun into July noting of risks that Jun could go negative

Currencies/ Fixed Income

• USD continues some soft footing with continued optimism on the reopening of the global economy. EUR/USD higher by 0.2% at 1.0850 area. USD/JPY lower by 0.2% at 107.00
• The SEK currency (Krona) was firmer after the Riksbank kept its policy steady. EUR/SEK lower by 0.5%
• Oil continued to be facing headwinds and its price action weighed upon commodity-related currencies. Oil prices continued its slide on storage capacity worries

Economic Data

• (NO) Norway Mar Retail Sales M/M: -0.9% v -7.0%e
• (FR) France Apr Consumer Confidence: 95 v 80e
• (ES) Spain Q1 Unemployment Rate: 14.4% v 15.7%e
• (HU) Hungary Mar Unemployment Rate: 3.7% v 3.8%e
• (SE) Sweden Central Bank (Riksbank) left its Repo Rate unchanged at 0.00% (as expected)
• (SE) Sweden Mar Trade Balance (SEK): 4.1B v 12.7B prior
• (SE) Sweden Mar Retail Sales M/M: -1.7% v -3.0%e; Y/Y: +0.6% v -1.0%e
• (AT) Austria Apr Manufacturing PMI: 31.6 v 45.8 prior (2nd straight contraction and record low)

Fixed Income Issuance

• (ID) Indonesia sold total IDR16.6T vs. IDR20T target in 3-month and 9-month bills; 5-year, 10-year, 15-year, 20-year and 30-year bonds
• (NL) Netherlands Debt Agency (DSTA) sold €1.19B vs. €0.75-1.25B indicated range in 2.75% Jan 2047 DSL Bonds; Avg Yield: +0.067% v -0.048% prior
• (UK) DMO sold £3.0B in 0.875% Oct 2029 Gilts; Avg Yield: 0.261% v 0.269% prior; Bid-to-cover: 3.19x v 2.94x prior; Tail: 0.1bps vs. 0.3bps prior
• (IT) Italy Debt Agency (Tesoro) sold total €10.5B vs. €10.5B indicated in 3-month and 6-month bills

Looking Ahead

• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills; Avg Yield: % v 1.13% prior; Bid-to-cover: x v 2.93x prior (Apr 21st 2020)
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €3.5B in 3-month, 6-month and 12-month bills
• 05:30 (ZA) South Africa to sell combined ZAR4.53 in 2023, 2026 and 2030 bonds
• 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 06:00 (UK) Apr CBI Retailing Reported Sales: -45e v -3 prior; Total Distributions: No est v 5 prior
• 06:00 (IE) Ireland Mar Retail Sales Volume M/M: No est v -4.3% prior; Y/Y: No est v -0.3% prior
• 06:30 (EU) ECB allotment in weekly fixed-rate 3-month LTRO operation (prior €18.9B with 82 bids recd)
• 06:30 (UK) DMO to sell £1.2B in 0.125% Aug 2028 inflation-linked Gilts (UKi)
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Mar Trade Balance: $2.7Be v $2.9B prior
• 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
• 07:00 (TR) Turkey to sell 2024 and 2026 bonds
• To sell Floating 9% 2024 Bonds
• To sell Floating 2026 Bonds
• 07:45 (US) Goldman Economist Chain Store Sales
• 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
• 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.90%; Leave Overnight Deposit Rate unchanged at -0.05%
• 08:00 (BR) Brazil Mid-Apr IBGE Inflation IPCA-15 M/M: 0.0%e v 0.0% prior; Y/Y: 3.0%e v 3.7% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Mar Advance Goods Trade Balance: -$55.0Be v -$59.9B prior
• 08:30 (US) Mar Preliminary Wholesale Inventories M/M: -0.4%e v -0.7% prior; Retail Inventories M/M: +0.5%e v -0.3% prior
• 08:30 (BR) Brazil Mar Total Outstanding Loans (BRL): 3.489Te v 3.491T prior; M/M: -0.1%e v +0.6% prior; Personal Loan Default Rate: No est v 5.1% prior
• 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (US) Feb S&P Case-Shiller House Price Index (20-City) M/M: 0.30%e v 0.30% prior; Y/Y: 3.19%e v 3.08% prior; HPI: No est v 218.62 prior
• 09:00 Feb S&P Case-Shiller House Price Index (overall) YoY: 4.10%e v 3.92% prior; House Price Index (HPI): No est v 212.43 prior
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (HU) Hungary Central Bank Gov Matolcsy post rate decision statement
• 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
• 10:00 (US) Apr Consumer Confidence: 87.0e v 120.0 prior
• 10:00 (US) Apr Richmond Fed Manufacturing Index: -42e v +2prior
• 10:00 (MX) Mexico Weekly International Reserve data
• 11:30 (US) Treasury to sell 2-Year FRNs
• 13:00 (US) Treasury to sell 7-Year Notes
• 15:00 (AR) Argentina Feb Economic Activity Index (Monthly GDP) M/M No est v -0.1% prior; Y/Y: -4.0%e v -1.8% prior
• 16:30 (US) Weekly API Oil Inventories
• 17:00 (KR) South Korea May Business Manufacturing Survey: No est v 54 prior; Non-Manufacturing Survey: No est v 52 prior
• 18:45 (NZ) New Zealand Mar Trade Balance (NZD): 0.7Be v 0.6B prior; Exports: 5.8Be v 4.9B prior; Imports: 5.1Be v 4.3B prior
• 19:00 (KR) South Korea Mar Industrial Production M/M: +1.5%e v -3.8% prior; Y/Y: -1.7%e v +11.4% prior
• 19:00 (KR) South Korea Mar Cyclical Leading Index Change: No est v 0.0 prior
• 19:01 (UK) Apr BRC Shop Price Index Y/Y: No est v -0.8% prior
• 21:30 (AU) Australia Q1 CPI Q/Q: 0.2%e v 0.7% prior; Y/Y: 1.9%e v 1.8% prior
• 22:20 (SG) Singapore Q1 Unemployment Rate: 2.6%e v 2.3% prior