Debt Parade Continues As The Rush To Get Funding Continues

Notes/Observations

• Sovereign and corporate issuance remains steady
• UK DMO syndicate a 10-year maturity for the 1st time ever
• BOE Broadbent keeps door open for more easing

Asia:

• China Apr CPI registered its slowest annual CPI pace since 2019 (Y/Y: 3.3% v 3.7%e)
• BOJ Gov Kuroda noted that the global economy was rapidly worsening due to coronavirus and reiterated view that the domestic economy likely to remain in a severe state and inflation likely to weaken. BOJ would not hesitate to add easing if needed. He did not believe that BOJ needed to buy regional bonds now. Warned that coronavirus could impact land prices if prolonged
• South Korea President Moon said to be his Cabinet to put together 3rd extra budget soon
• Coronavirus:- Total global cases 4,177,504 (+1.8%); Total deaths: 286.3K (+1.3%)
• Wuhan, China (epicenter of outbreak) said to be planning to test all 11M residents for Cocid-19 over next 10 days

Europe:

• Austria Chancellor Kurz stated that was looking to show solidarity with Italy and knows the country could not handle its debt load without EU help. He did reiterate view that shared EU debt was not the right approach
• Italy govt said to have agreed to allow regions to reopen by Monday, May 18th

Americas:

• NY Fed to begin purchases of corporate debt ETFs from Tues, May 12th
• President Trump on phase-1 trade deal: not interested in reopening China trade deal, let’s see if they live up to the deal they signed

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.22% at 340.36, FTSE +0.55% at 5,972.15, DAX +0.03% at 10,827.80, CAC-40 -0.13% at 4,484.26, IBEX-35 +0.69% at 6,718.00, FTSE MIB +0.79% at 17,518.50, SMI +0.33% at 9,721.66, S&P 500 Futures -0.31%]
• Market Focal Points/Key Themes: European indices open generally lower but later reverted to trade slightly higher; risk appetite is muted; materials and consumer discretionary sectors lead to the downside; better performing sectors are healthcare and telecom; German Bafin sees banking sector able to endure, but look at models after covid; earnings expected in upcoming US session include Ingersoll-Rand, Duke Energy and Hochtief.

Equities

• Consumer discretionary:Dufry [DUFN.CH] -7.5% (earnings)
• Industrials: Thyssenkrupp [TKA.DE] -10% (earnings), ArcelorMittal [MT.NL] -6% (placement)
• Technology: Teamviewer [TMV.DE] +4% (earnings), Logitech [LOGI.CH] +5% (earnings)
• Telecom: Vodafone [VOD.UK] +6% (earnings; affirms dividend), Iliad [ILD.FR] +4% (earnings)

Speakers

• BOE’s Broadbent: MPC was prepared to do what is necessary with all tools under review. Was possible more easing will be needed and he was not too concerned about monetary financing
• Bank of France: Domestic economy was 27% below normal level in April
• Germany Financial regulator (Bafin): Domestic banking system could endure the current virus situation but must take a hard look at business models afterwards. Loan defaults may play out over months and years
• Germany Public Health RKI Institute: Germany’s virus danger was much lower than 1 month ago
• Japan Fin Min Aso reiterated stance that govt was not thinking about cutting the sales tax at this time
• Indonesia Fin Min Indrawati presented the govt 2021 budget with growth and inflation targets which would focus on recovery. Targeted 2021 GDP growth between 4.5-5.5% range and 2021 CPI between 2.0-4.0% range
• China Foreign Ministry spokesperson Zhao Lijian reiterated US and China should implement trade deal with equality and mutual respect. Halted some Australian beef imports in order to protect consumers; suspended imports declaration of 4 Australian companies as they violated inspection and quarantine requirements

Currencies/ Fixed Income

• USD was little changed in a quiet session with focus on debt issuance as sovereign and corporate flows remain steady.
• GBP was softer after BOE member Broadbent kept to door open for more easing measures. Cable at 1.2340 area as a result. DMO did a 10-year syndicate for the 1st time for that specific maturity with demand a healthy £65B
• EUR/USD holding above the 1.08 level in uneventful trading.

Economic Data

• (NL) Netherlands Apr CPI M/M: 0.5% v 0.7%e; Y/Y: 1.2% v 1.5%e
• (NL) Netherlands Apr CPI EU Harmonized M/M: 1.0% v 0.6%e; Y/Y: 1.0% v 0.9%e
• (NO) Norway Q1 Overall GDP Q/Q: -1.5% v +1.5% prior; GDP Mainland Q/Q: -2.1% v -1.9%e
• (NO) Norway Mar Overall GDP M/M: -5.5% v 0.7% prior; GDP Mainland M/M: -6.9% v 0.4% prior
• (FR) Bank of France Apr Industrial (Business) Sentiment: 48 v 40e
• (CZ) Czech Apr Unemployment Rate: 3.4% v 3.0% prior
• (IT) Bank of Italy: Mar Non-performing loan (NPLs) at €70.9B v €71.7B m/m

Fixed Income Issuance

• (UK) DMO opened its book to sell GBP-denominate 0.375% Oct 2030 Gilts; guidance seen 8.5-9.5bps to Dec 2030 Gilt; order book over £50B
• (NL) Netherlands Debt Agency (DSTA) sold €2.2B vs. €1.0-3.0B indicated range in 0% July 2030 DSL Bonds; Avg Yield: -0.213% v -0.120% prior (Apr 15th 2020)
• (ES) Spain Debt Agency (Tesoro) sold total €2.485B vs. €1.5-2.5B indicated range in 3-month and 9-month Bills (Apr 21st 2020)
• (ID) Indonesia sold total IDR20T vs. IDR20T target in 3-month and 12-month Bills; 5-year, 10-year, 15-year, 20-year and 30-year bonds
• (IT) Italy Debt Agency (Tesoro) sold total €10.5B v. €10.5B indicated in 6-month and 12-month Bills

Looking Ahead

• (PT) Bank of Portugal Data on Banks
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills
• 05:30 (DE) Germany to sell €4.0B in new 0.00% Nov 2027 Bund
• 05:30 (ZA) South Africa to sell combined ZAR4.53 in 2026, 2030 and 2035 bonds
• 05:40 (UK) BOE weekly allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 06:00 (US) Apr NFIB Small Business Optimism: 83.0e v 96.4prior
• 06:00 (IE) Ireland Apr Unemployment Rate: No est v 5.4% prior
• 06:30 (FI) Finland to sell €2.0B in 6-month and 12-month bills
• 06:30 (EU) ESM to sell €1.5B in 12-month bills
• 06:30 (EU) ECB allomtment in its 3-month LTRO operation
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Mar Industrial Production M/M: -4.0%e v -0.6% prior; Y/Y: -6.3%e v -1.9% prior; Manufacturing Production Y/Y: -6.9%e v -1.0% prior
• 07:00 (BR) Brazil May IGP-M Inflation (1st Preview): 0.0%e v 1.1% prior
• 07:00 (BR) Brazil Central Bank May Minutes
• 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
• 07:00 (TR) Turkey to sell 9% 2024 Bonds
• 07:30 (CL) Chile Central Bank Economists Survey
• 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 (IN) India Apr CPI Y/Y: 5.9%e v 5.9% prior
• 08:00 (IN) India Mar Industrial Production Y/Y: -8.0%e v +4.5% prior
• 08:00 (BR) Brazil Mar IBGE Services Sector Volume Y/Y: -2.1%e v +0.7% prior
• 08:00 (BR) Brazil CONAB Crops Report
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Apr CPI M/M: -0.8%e v -0.4% prior; Y/Y: 0.4%e v 1.5% prior
• 08:30 (US) Apr CPI Ex Food/Energy M/M: -0.2%e v -0.1% prior; Y/Y: 1.7%e v 2.1% prior
• 08:30 (US) Apr CPI NSA Index: 256.489e v 258.115 prior; CPI Core Index: 266.110e v 266.795 prior
• 08:30 (US) Apr Real Avg Hourly Earning Y/Y: No est v 1.6% prior; Real Avg Weekly Earnings Y/Y: No est v 0.7% 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 (EU) Weekly ECB Forex Reserves
• 09:00 (US) Fed’s Bullard (dove, non-voter)
• 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
• 10:00 (US) Fed’s Harker
• 10:00 (US) Fed Quarles
• 10:30 (IN) India PM Modi to address the nation
• 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
• 13:00 (US) Treasury to sell 10-Year Notes
• 14:00 (US) Apr Monthly Budget Statement: -$737.2Be v -$119.1B prior
• 16:30 (US) Weekly API Oil Inventories
• 17:00 (US) Fed’s Mester
• 19:00 (KR) South Korea Apr Unemployment Rate: 4.1%e v 3.8% prior
• 19:01 (UK) Apr BRC Sales Like-For-Like Y/Y: -15.0%e v -3.5% prior
• 19:50 (JP) Japan Mar Current Account Balance: ¥2.043Te v ¥3.169T prior; Adjusted Current Account Balance: €1.254Te v ¥2.378T prior; Trade Balance (BoP Basis): €185.0Be v ¥1.367T prior;
• 19:50 (JP) Japan Apr Bank Lending Y/Y: No est v 2.0% prior; Bank Lending (ex-trusts) Y/Y: No est v 2.2% prior
• 20:30 (AU) Australia May Consumer Confidence Index: No est v 75.6 prior
• 21:10 (JP) BOJ Outright Bond Purchase operation for 1~3 Years; 3~5 Years and 10~25 Years maturities
• 21:30 (AU) Australia Q1 Wage Price Index Q/Q: 0.5%e v 0.5% prior; Y/Y: 2.1%e v 2.2% prior
• 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate (OCR) unchanged at 0.25%
• 23:00 (KR) South Korea Mar M2 Money Supply M/M: No est v 0.9% prior; “L” Money Supply M/M: No est v 0.8% prior
• 23:00 (CN) China to sell 2-year and 5-year Upsized Government Bonds
• 23:30 (HK) Hong Kong to sell HKD2.5B in 1.68% 5-Year
• (US) Nebraska and West Virginia Primaries