Notes/Observations
- Some risk-on appetite following US-China trade negotiators spoke by phone on Friday and vowed to continue to support the phase one trade deal (Note: 1st contact between the top officials since the agreement was signed in January)
- Lackluster EU session with UK markets closed for banking holiday
- Focus on upcoming US payroll report with record losses anticipated. Numbers to reflect just how quickly the economy deteriorated amid the coronavirus pandemic
Asia:
- China and US trade ambassadors spoke over the phone and said to have agreed to keep communication line open and strengthen economic cooperation. The US/China trade negotiators said to have vowed to save the phase 1 trade deal
- Australia Quarterly Statement on Monetary Policy (SOMP): Near-term growth forecast to reflect drought, bushfires and coronavirus outbreak. Cut its June 2020 GDP growth forecast from +1.9% to -8.0% and cut Dec 2020 GDP growth forecast from +2.7% to -6.0%. it did raise its growth outlook for 2021 period. Prepared to scale up bond purchases. GDP from peak to trough expected at -10% . Initial stages of economic recovery could start soon, as activities previously restricted become possible again
- China Vice Commerce Min Wang stated that sales of durable consumer goods such as autos and home appliances rebounded significantly during May Day holiday
- Japan Mar Household Spending Y/Y: -6.0% v -6.5%e (6th straight fall and 5th largest decline since 2001)
- Japan ruling LDP party might discuss a second extra budget to deal with coronavirus during week of May 11thand would focus on small and medium-sized companies
Coronavirus:
- Total Global Cases: 3,846,861 (+2.4%); Total deaths: 269.6K (+2.2%)
Europe:
- ECB chief Lagarde: a second wave of coronavirus is among my top fears; Undeterred by German court ruling
- PM Johnson said to keep lockdown in place until Jun at the earliest. PM was being urged by cabinet ministers to give specific dates by which elements of the lockdown could be lifted to avert a collapse of consumer and business confidence.
Americas:
- US Treasury confirmed conference call between USTR Lighthizer, Treasury Sec Mnuchin, and China Vice Premier Liu He. Both sides agreed that good progress was being made on creating the governmental infrastructures necessary to make the agreement a success.
- White House said to be considering measures it could take to stimulate the economy without the need for legislation in Congress
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx 600 +0.6% at 340.2, FTSE closed, DAX +0.8% at 10847.5, CAC-40 +0.8% at 4537.0, IBEX-35 +0.4% at 6760, FTSE MIB +1.1% at 17,347, SMI +0.5% at 9666, S&P 500 Futures +0.9%]
- Market Focal Points/Key Themes: European indices open higher across the board and stayed in the green as the session progressed; UK closed for holiday; better performing sectors include aerospace and construction; reportedly UK lockdown to last until June, Finnish government to end remote work arrangements; upcoming earnings expected during the US session include Lear, Piaggio and Noble Energy
Equities
- Consumer discretionary: Bechtle BC8.DE +5.3% (results), Pandora PNDORA.DK +10.0% (Marshall Wace cuts short position)
- Energy: Energias de Portugal EDP.PT +6.1% (results)
- Financials: ING Groep ING.NL +4.5% (results)
- Industrials: Airbus AIR.FR +1.4% (order), Ferrovial FER.ES +3.9% (results), Heijmans HEIJM.NL +7.3% (results), Kongsberg KOG.NO +10.0% (results), Leonardo LDO.IT % (results), Rheinmetall RHMG.DE -0.6% (results)
- Technology: Siemens SIE.DE +5.9% (results)
Speakers
- Eurogroup chief Centeno stated ahead of a conference call with EU finance ministers that the EU recovery fund needed to have long maturities. Were discussing ESM credit line of up to 10years
- German intelligence officials doubt US claim virus came from Chinese lab
- World Health Organization (WH)) Coronavirus origin being linked to food is not unique
- Russia 1st week of May oil production could fall as low as 8.7M bpd (**Note: compares with 11.23M bpd in April)
Currencies/Fixed Income
- Some risk appetite was seeping back into markets after US and China trade negotiators spoke by phone and pledged to continue to support the Phase One trade deal.
- The USD was steady after Thursday’s soft tone inspired from Fed speak that the US was not looking at any “V” shape recovery.
- EUR/USD steady at 1.0830 with focus on the European Finance Ministers video call to discuss the EU recovery fund. Italian 10-year BTP yields lower by 10bps to test 1.81%
Economic Data
- (SE) Sweden Maklarstatistik Apr Housing Prices Y/Y 5% v 6% prior; Apartment Prices Y/Y: 7% v 7% prior
- (NL) Netherlands Mar Manufacturing Production M/M: -1.0% v -1.7% prior; Y/Y: -2.5% v -1.3% prior; Industrial Sales Y/Y: -8.4 v 0.0% prior
- (FI) Finland Mar Industrial Production M/M: 1.9% v 0.7% prior; Y/Y: +2.8% v -0.8% prior
- (DE) Germany Mar Current Account Balance: €24.4B v €20.7Be; Trade Balance: €17.4B v €18.8Be; Exports M/M: -11.8% v -5.0%e; Imports M/M: -5.1% v -4.0%e
- (FI) Finland Mar Preliminary Trade Balance: -€0.3B v -€0.8B prior
- (ZA) South Africa Apr Gross Reserves: $53.0B v $52.4B prior; Net Reserves: $45.5B v $44.8B prior
- (NO) Norway Mar Industrial Production M/M: 1.4% v 2.5% prior; Y/Y: 7.6% v 5.4% prior
- (NO) Norway Mar Manufacturing Production M/M: -3.0% v -0.5% prior; Y/Y: -1.3% v +0.6% prior
- (MY) Malaysia End-Apr Foreign Reserves: $102.5B v $102.0B prior
- (ES) Spain Mar Industrial Output NSA Y/Y: -10.2% v -0.1% prior; Industrial Output SA Y/Y: -12.2% v -1.5% prior; Industrial Production M/M: -11.9% v -9.6%e
- (HU) Hungary Apr CPI M/M: -0.6% v -0.4%e; Y/Y: 2.4% v 2.7%e
- (HU) Hungary Mar Preliminary Trade Balance: €0.4B v €1.1B prior
- (CN) Weekly Shanghai copper inventories (SHFE): 204.2K v 231.0K tons prior
- (SE) Sweden Apr Budget Balance (SEK): -38.9B v -42.1B prior
- (SE) Sweden Mar Household Consumption M/M: -5.4% v +0.4% prior; Y/Y: -3.1% v +2.5% prior
- (RU) Russia Narrow Money Supply w/e May 1st (RUB): 12.11T v 11.94T prior
- (TW) Taiwan Apr Trade Balance: $2.3B v $2.5Be; Exports Y/Y: -1.3% v +0.6%e; Imports Y/Y: +0.5% v +0.4%e
- (CN) China Q1 Preliminary Current Account: -$29.7B v +$40.5B prior
- (GR) Greece Apr CPI Y/Y: -1.4% v 0.0% prior; CPI EU Harmonized Y/Y: -0.9% v +0.2% prior
- (HU) Hungary Apr YTD Budget Balance (HUF): B v -831.9B prior
Fixed Income Issuance
- None seen
Looking Ahead
- (UR) Ukraine Apr CPI M/M: 1.7%e v 0.8% prior; Y/Y: 3.1%e v 2.3% prior
- (IT) Bank of Italy Balance-Sheet Aggregates
- (MX) Mexico Apr Nominal Wages: No est v 5.0% prior
- 05:30 (ZA) South Africa to sell combined ZAR1.04B in 2025, 2046 and 2050 I/L Bonds
- 06:00 (IE) Ireland Apr Live Registry Monthly Change: No est v +24.4K prior; Live Registry Level: No est v 207.2K prior
- 06:00 (PT) Portugal Mar Trade Balance: No est v -€1.6B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (MX) Mexico Feb Gross Fixed Investment: -8.3%e v -8.8% prior
- 07:00 (MX) Mexico Apr Vehicle Production: No est v 261.8K prior; Vehicle Exports: No est v 285.1K prior
- 07:00 (BR) Brazil Apr FGV Inflation IGP-DI M/M: 0.4%e v 1.6% prior; Y/Y: 6.5%e v 7.0% prior
- 07:00 (EU) ECB’s Lagarde
- 08:00 (BR) Brazil Apr IBGE Inflation IPCA M/M: -0.2%e v +0.0% prior; Y/Y: 2.5%e v 3.3% prior
- 08:00 (CL) Chile Apr CPI M/M: -0.1%e v +0.3% prior; Y/Y: 3.4%e v 3.7% prior
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:15 (CA) Canada Apr Annualized Housing Starts: 105.0Ke v 195.2K units prior
- 08:30 (US) Apr Change in Nonfarm Payrolls: -22.00Me v -701K prior; Change in Private Payrolls: -21.86Me v -713K prior; Change in Manufacturing Payrolls Apr -2.5Me v -18K prior
- 08:30 (US) Apr Unemployment Rate: 16.0%e v 4.4% prior; Underemployment Rate: No est v 8.7% prior; Labor Force Participation Rate: 61.3%e v 62.7% prior
- 08:30 (US) Apr Average Hourly Earnings M/M: 0.5%e v 0.4% prior; Y/Y: 3.3%e v 3.1% prior; Average Weekly Hours: 33.6e v 34.2 prior
- 08:30 (CA) Canada Apr Net Change in Employment: -4.00Me v -1.01M prior; Unemployment Rate: 18.1%e v 7.8% prior; Full Time Employment Change: No est v -474.0K prior; Part Time Employment Change: No est v -536.7K prior; Participation Rate: 61.4%e v 63.5% prior; Hourly Wage Rate Y/Y: 7.5%e v 6.1% prior
- 08:30 (CA) Canada Mar Building Permits M/M: -20.0%e v -7.3% prior
- 09:00 (EU) Eurogroup teleconference call of Euro Zone Finance Ministers (ECB’s Panetta on call)
- 09:30 (BR) Brazil Apr Vehicle Production: No est v 190.0K prior; Vehicle Sales: No est v 163.6K prior; Vehicle Exports: No est v 30.8K prior
- 10:00 (US) Mar Final Wholesale Inventories M/M: -1.0%e v -1.0% prelim; Wholesale Trade Sales M/M: -3.0%e v -0.8% prior
- 10:30 (TR) Turkey Apr Cash Budget Balance (TRY): No est v -40.4B prior
- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Italy, Greece Sovereign Debt; Slovakia Sovereign Debt to be rated by Fitch; Italy, Finland and Estonia Sovereign Debt to be rated by Canadian rating agency DBRS
- 13:00 (US) Weekly Baker Hughes Rig Count data
