Notes/Observations
- Market sentiment mixed as new virus outbreaks hurt efforts to reopen the global economy (new infections in South Korea, Germany and China)
- China reiterates its commitment to support its real economy
Asia:
- China PBOC Q1 Monetary Report noted that would step up counter-cyclical adjustment to support the real economy and fend off risks; Restoring development of the real economy would be put at a more prominent position. Reiterated commitment to make its prudent monetary policy more flexible and appropriate
- China Vice premier Liu He stated that it was not close to meeting US purchase demands under Phase 1 trade deal. Recent phone call with US official had all parties vow to implement their part of the trade deal and boost cooperation on public health
Coronavirus:
- Total global cases 4,102,849 (+6.7% vs. Friday); Total deaths: 282.7K (+4.9% vs. Friday)
- Wuhan (epicenter of global breakout) reported its first coronavirus cases since early April
Europe:
- Eurogroup statement agreed to offer cheap loans to countries that had been hit by the coronavirus pandemic. To adopts new rules allowing EU nations to recapitalize and provide subordinated loans to virus-hit companies
- Eurogroup chief Centeno stated that no strings would be attached as part of ESM credit facility
- EU Commission may open legal case against Germany over ECB bond purchase ruling
- PM Johnson speech announced first easing of lockdown and sets out three-step plan. Anyone who could not work from home should now go to work to “restore the freedoms that we need”. Pupils in primary school years one, six and reception, together with nurseries, to go back on June 1 if the virus remained in retreat. Phased reopening of non-essential shops in June, while cafes and restaurants with open-air seating, as well as churches and cinemas could be allowed limited opening in July, subject to strict conditions
- SNB President Jordan stated that the central bank had no alternative to its ultra-expansive monetary policy, with the coronavirus crisis putting “enormous” appreciation pressure on the safe haven Swiss franc
- Canadian ratings agency DBRS affirms Italy sovereign rating at BBB (high), trend revised to Negative from Stable
Americas:
- President Trump tweet: Starting early next week, at my order, the USA will be purchasing, from our Farmers, Ranchers & Specialty Crop Growers, 3 Billion Dollars worth of Dairy, Meat & Produce for Food Lines & Kitchens. “FARMERS TO FAMILY FOOD BOX” Great news for all!
- US Govt said to be in talks with US chip makers about expanding and accelerating plans for chip factories in the US, amid concerns about relying too much over overseas manufacturing
- Vice president Pence to self-isolate after his aide tested positive for coronavirus; Fauci also said to be doing a “modified” quarantine after “low risk” contact with Pence’s spokeswoman
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.24% at 340.22, FTSE -0.14% at 5,927.50, DAX -0.45% at 10,855.80, CAC-40 -0.68% at 4,518.73, IBEX-35 -0.25% at 6,766.00, FTSE MIB +0.14% at 17,464.50, SMI -0.20% at 9,646.26, S&P 500 Futures -0.21%]
- Market Focal Points/Key Themes: European indices open higher across the board but latter turned around to perform mixed; consumer discretionary and financials among better performers; heal care sector underperforming; UK announces plan to end lockdowns; Brexit discussions restart today; Wirecard announces reorganization of management board; upcoming earnings expected in the US session include Under Amour, Entergy and Mylan.
Equities
- Consumer discretionary: Dignity [DTY.UK] +5% (trading update), International Consolidated Airlines Group [IAG.UK] -3% (analyst action), Carl Zeiss Meditec [AFX.DE] -2% (earnings)
- Industrials: Henkel [HEN3.DE] -1% (earnings)
- Technology: Wirecard [WDI.DE] +9% (reshuffles management board)
Speakers
- ECB’s Schnabel (Germany): ECB measures formed a powerful package; reiterated General Council stance that stood ready to adjust size and duration of Pandemic bond buying fund (PEPP). ECB was committed to countering fragmentation in spreads. Rating agencies downgrades might be risk to policy transmission
- SNB expanded its Covid-19 refinancing facility; to accept now t claims secured by loan guarantees or credit default guarantees offered by cantons; effective immediately
- Sweden Central Bank (Riksbank) Apr Minutes: All members supported rate decision; policy to focus on measures providing liquidity. All members supported purchases of govt and mortgage bonds. Decline in inflation should be temporary
- UK Foreign Sec Raab stated that had a very clear guidance on reopening economy. To set out full list of advice to employers later today and Transport on Tuesday, May 12th. To look at non-essential retail from Jun 1st and other sectors in July. Ambition to get all primary school children back to class
- German VDMA Engineering association: 2020 production forecast of -5% cannot be maintained. Close to 50% of companies saw continued difficult situation in the coming three months. Did see China supply chain problems subsiding
- According to German press, on Jan 21st China President Xi reportedly asked WHO Chief not to announce coronavirus virus could be transmitted between humans and to delay any declaration of a pandemic
Currencies/Fixed Income
- USD was firmer across against the major pairs as various new virus outbreaks hurt efforts to reopen the global economy (new infections in South Korea, Germany and China)
- GBP was lower by approx 0.5% as PM Johnson’s easing of lockdown measures seemed to provide more questions than answers. GBP/USD testing 1.2360 area by mid-session.
- EUR/USD lower by 1.5% at 1.0810 and continued to remain locked within recent muli-month trading range
- USD/JPY back above the 107 level
Economic Data
- (SE) Sweden Apr PES Unemployment Rate: 4.8% v 4.2% prior
- (SE) Sweden May SEB Swedish Housing-Price Indicator: -26 v -20 prior
- (NO) Norway Apr CPI M/M: 0.4% v 0.1%e; Y/Y: 0.8% v 0.4%e
- (NO) Norway Apr CPI Underlying M/M: 1.1% v 0.4%e; Y/Y: 2.8% v 2.1%e
- (NO) Norway Apr PPI M/M: -3.3% v -7.5% prior; Y/Y: -16.1% v -12.6% prior
- (DK) Denmark Apr CPI M/M: -0.1% v -0.3% prior; Y/Y: 0.0% v -0.1%e
- (DK) Denmark Apr CPI EU Harmonized M/M: -0.1% v -0.3% prior; Y/Y: -0.1% v +0.3% prior
- (DK) Denmark Current Account: (DKK): 16.3B v 11.1B prior; Trade Balance: 9.4B v 1025B prior
- (TR) Turkey Feb Unemployment Rate: 13.6% v 13.8% prior
- (CN) Chia Apr New Yuan Loans (CNY): 1.70T v 1.300Te
- (CN) Chia Apr Aggregate Financing (CNY): 3.09T v 2.278Te
- (CN) Chia Apr M2 Money Supply Y/Y: 11.1% v 10.3%e
- (CH) Swiss Weekly Total Sight Deposits (CHF): 669.1B v 663.8B prior; Domestic Sight Deposits: 586.9B v 579.5B prior
- (IT) Italy Mar Industrial Production M/M: -28.4% v -20.0%e; Y/Y: -29.3% v -18.3%e; Industrial Production NSA Y/Y: -27.1 v -1.6% prior
- (GR) Greece Mar Industrial Production Y/Y: +0.6% v -3.4% prior
Fixed Income Issuance
- (EU) ESM opened its book to sell €1.5B in 0.75% Sept 2028 bond; guidance seen +5bps to mid-swaps
Looking Ahead
- 05:30 (DE) Germany to sell €4.0B in 6-month BuBills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell combined €5.0B in 6-month, 9-month and 12-month bills
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (IL) Israel to sell 2022, 2025, 2026, 2037 and 2045 Bonds Bonds
- 06:00 (RO) Romania to sell RON500M in 3.65% 2025 Bonds
- 06:00 (IL) Israel Apr Consumer Confidence: No est v 129 prior (Feb reading)
- 06:45 (LX) ECB’s Mersch (Luxembourg)
- 06:45 (US) Daily Libor Fixing
- 07:00 (TR) Turkey to sell 2021, 2025 and 2027 bonds
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Jansson speech (online)
- 08:00 (UK) BOE’s Breeden
- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance
- 08:50 (FR) France Debt Agency (AFT) to sell €7.9-9.5B in 3-month, 6-month and 12-month bills (4 tranches)
- 09:45 (EU) ECB weekly QE bond buying update
- 11:30 (US) Treasury to sell 13-week and 26-week Bills
- 13:00 (US) Treasury to sell 3-Year Notes
- 16:00 (US) Weekly Crop Progress Report
- 18:00 (NZ) New Zealand Apr ANZ Heavy Truckometer Heavy M/M: No est v -8.0% prior
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 89.5 prior
- 19:50 (JP) Japan Apr Official Reserve Assets: No est v $1.366T prior
- 21:30 (AU) Australia Mar Home Loans Value M/M: No est v -1.7% prior
- 21:30 (AU) Australia Apr Business Condition: No est v -21 prior; Business Confidence: No est v -66 prior
- 21:30 (CN) China Apr CPI Y/Y: 3.7%e v 4.3% prior; PPI Y/Y: -2.5%e v -1.5% prior
- 23:00 (TH) Thailand Central Bank to sell 3-month, 6-month and 12-month bills to Sell
- 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills
- 23:35 (JP) Japan to sell 10-Year JGB Bonds
