Notes/Observations
- Markets sentiment weighing the easing of lockdown measures against the risk of a resurgence in coronavirus infections
- UK Q1 GDP registered its biggest contraction since 2008 with the worse likely to come
- Focus turning to Fed Chair Powell testimony on coronavirus; markets looking for hints of negative rates
Asia:
- South Korea Apr Unemployment Rate: 3.8% v 4.1%e but Employment fell by -476K for its largest decline since Feb 1999)
- New Zealand Central Bank (RBNZ) left Official Cash Rate (OCR) unchanged at 0.25% (as expected); increases its bond purchase program and signaled that it’s open to cutting interest rates further
Coronavirus:
- Total global cases 4,261,955 (+2.0%); Total deaths: 292.0K (+2.0%)
- China Jilin City announced partial lockdown after coronavirus cases surge
- Hong Kong woman with no travel history said to have coronavirus [would end HK’s 23-day streak of not having a ‘local’ coronavirus case]
Europe:
- UK Apr BRC Sales Like-For-Like Y/Y: +5.7% v -15.0%e (ex-temporarily closed stores and includes online sales)
- German Federal Constitutional Court Judge Huber noted that the high court’s message to the ECB was ‘very mild’ and ECB only now needed to explain its policy
Americas:
- Apr Monthly Budget Statement: -$737.9B v -$737.2Be (record deficit was magnified by delay of th April 15 tax deadline to July
Mid-East/Energy:
- Weekly API Crude Oil Inventories: +7.6M v +8.4M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -1.59% at 335.18, FTSE -1.24% at 5,920.65, DAX -1.87% at 10,617.26, CAC-40 -2.09% at 4,379.01, IBEX-35 -1.47% at 6,663.00, FTSE MIB -1.60% at 17,278.50, SMI -1.06% at 9,630.84, S&P 500 Futures -0.05%]
- Market Focal Points/Key Themes: European indices open lower across the board continuing lower as the session wore on; risk-off sentiment attributed to concerns of second covid wave; best performing sectors include utilities and healthcare; underperformers include automotive sector and consumer discretionary; French EconMin says domestic economy running at around 60%; earnings expected in the upcoming US session Cisco Systems and Pirelli
Equities
- Consumer discretionary:Stock Spirits [STCK.UK] +11% (earnings) , TUI [TUI1.DE] -2% (earnings)
- Financials: Commerzbank [CBK.DE] -4% (earnings), ABN AMRO Group [ABN.NL] -7% (earnings)
- Industrials: Aston Martin Lagonda Global Holdings [AML.UK] -10% (earnings)
- Technology: United Internet [UTDI.DE] +3% (earnings), AMS [AMS.CH] -9% (publishes AGM proposals)
Speakers
- EU Economic Commissioner Gentiloni (Italy) stated that he envision the EU recovery fund being at least €1.0T
- France Economy Junior Min Pannier-Runacher stated that the domestic economy was running around 60%
- Chancellor of the Exchequer (Fin Min) Sunak: Country was very likely facing a significant recession
- Greece Fin Min Staikouras: 2020 GDP contraction could be as much as 13%
- Norway Central Bank (Norges) Gov Olsen reiterated view that did not foresee any additional rate cuts at this time
- Germany govt said to ease border controls from Saturday, May 16th
- Poland Central Bank (NBP) Mar Minutes: Vote was 6-3 to cut by 50bps with Members Zubelewicz, Hardt and Kropiwnicki dissenting
Currencies/Fixed Income
- USD price action was subdued in the session with focus on upcoming testimony from Fed Chair Powell and the dire economic outlook under the virus outbreak environment. Market participants debating whether Powell will put any fire or dampen expectations for possible negative rates down the road.
- EUR/USD steady at 1.0840 while USD/JPY was holding above the 107 level.
- GBP currency (Cable) saw a slight lift after the UK Q1 Preliminary GDP beat expectations but still regisited its biggest contraction in over a decade. Dealers conceded that the worst is yet to come for data due to the virus outbreak, Markets pricing in approx 50% chance of another BOE rate cut by end-2020
- NZD currency (Kiwi) was the big mover during the Asian session after RBNZ expanded its quantitative-easing program and said negative policy rates may be on the horizon.
Economic Data
- Finland Mar Current Account Balance: -€1.2B v -€0.5B prior
- (UK) Mar Monthly GDP M/M: -5.8% v -7.9%e
- (UK) Q1 Preliminary GDP Q/Q: -2.0% v -2.6%e; Y/Y: -1.6% v -2.2%e (worst quarterly contraction since Q4 2008)
- (UK) Q1 Preliminary Private Consumption Q/Q: -1.7% v -2.8%e; Government Spending Q/Q: -2.6% v +1.3%e; Gross Fixed Capital Formation Q/Q: -1.0% v -2.6%e; Exports Q/Q: -10.8% v -8.0%e; Imports Q/Q: -5.3% v -3.7%e
- (UK) Q1 Preliminary Total Business Investment Q/Q: 0.0% v -3.0%e; Y/Y: 0.7% v 1.8% prior
- (UK) Mar Industrial Production M/M: -4.2% v -5.6%e; Y/Y: -8.2% v -9.1%e
- (UK) Mar Manufacturing Production M/M: -4.6% v -6.0%e; Y/Y: -9.7% v -10.5%e
- (UK) Mar Construction Output M/M: -5.9% v -7.6%e; Y/Y: -7.1% v -9.2%e
- (UK) Mar Visible Trade Balance: -£12.5B v -£10.0Be; Overall Trade Balance: -£6.7B v -£2.5Be; Trade Balance Non EU: -£4.9B v -£4.0Be
- (UK) Mar Index of Services M/M: -6.2% v -8.0%e; 3M/3M: -1.9% v -2.5%e
- (RO) Romania Apr CPI M/M: 0.3% v 0.1%e; Y/Y: 2.7% v 2.4%e
- (ES) Spain Mar House transactions Y/Y: -18.6% v +0.1% prior
- (CZ) Czech Apr CPI M/M: -0.2% v -0.2%e; Y/Y: 3.2% v 3.1%e
- (CZ) Czech Mar Export Price Index Y/Y: +1.1 v -3.2% prior; Import Price Index Y/Y: -0.3% v -3.2% prior
- (TR) Turkey Mar Current Account Balance: -$4.9B v -$4.4Be
- (SE) Sweden Apr CPI M/M: -0.3% v +0.1%e; Y/Y: -0.4% v 0.0%e; CPI Level: 332.90 v 334.14e
- (SE) Sweden Apr CPIF M/M: -0.3% v +0.1%e; Y/Y: -0.4% v 0.0%e
- (SE) Sweden Apr CPIF (ex-energy) M/M: 0.1% v 0.4%e; Y/Y: 1.0% v 1.4%e
- (EU) Euro Zone Mar Industrial Production M/M: -11.3% v -12.5%e; Y/Y: -12.9% v -13.6%e
- (IS) Iceland Apr International Reserves (ISK): 971B v 948B prior
Fixed Income Issuance
- (FI) Finland opened its book to sell USD-denominated 10-year bond; guidance seen +33bps to mid-swaps
- (IN) India sold total INR450B vs. INR450B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK11.56B in 3-month, 6-month and 9-month Bills
- (SE) Sweden sold SEK7.5B vs. SEK7.5B indicated in 3-month Bills; Avg Yield: -0.1412% v -0.1907% prior; Bid-to-cover: 3.47x v 1.79x prior
- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 2.0% May 2023 bonds; Avg Yield: 0.00% v 1.27% prior; Bid-to-cover: 2.48x v 2.53x prior
- (IT) Italy Debt Agency (Tesoro) sold total €9.0B vs. €7.5-9.0B in 3-year, 7-year, 15-year and 20-year BTP bonds
- Sold €4.5B vs. €4.0-4.5B indicated range in Jun 0.6% 2023 BTP bonds; Avg Yield: 0.87% v 0.74% prior; Bid-to-cover: 1.34x v 1.30x prior (Mar 12th 2020)
- Sold €2.5B vs. €2.0-2.5B indicated range in 0.85% Jan 2027 BTP; Avg Yield: 1.53% v 1.37% prior; Bid-to-cover: 1.50x v 1.36x prior (Apr 9th 2020)
- Sold €1.0B vs. €0.75-1.0B indicated range in 3.35% Mar 2035 BTP; Avg Yield: 2.23% v 2.87% prior; Bid-to-cover: 1.65x v 1.56x prior (Jun 13th 2019)
- Sold €1.0B vs. €0.75-1.0B indicated range in 3.1% Mar 2040 BTP; Avg Yield: 2.49% v 1.97% prior; bid-to-cover: 1.63x v 1.36x prior (Mar 12th 2020)
- (UK) DMO sold £600M in 0.125% Inflation-linked 2048 Gilts (UKTei); Real Yield: -2.166% v -1.963% prior; Bid-to-cover: 3.36x v 3.44x prior
Looking Ahead
- 05:30 (DE) Germany to sell €1.0B in 1.25% Oct 2048 bunds
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2025 and 2030 OT bonds
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (IL) Israel Apr Trade Balance: No est v -$2.1B prior
- 06:00 (PT) Portugal Apr Final CPI M/M: No est v 0.6% prelim; Y/Y: No est v 0.1% prelim
- 06:00 (PT) Portugal Apr Final CPI EU Harmonized M/M: No est v 1.0% prelim; Y/Y: No est v 0.1% prelim
- 06:00 (CZ) Czech Republic to sell 2022, 2026 and 2031 bonds
- Sells CZK in 4.7% 2022 Bonds
- To sell 1% 2026 Bonds
- To sell 1.2% 2031 Bonds
- 06:00 (RU) Russia to sell OFZ bonds (if held)
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e May 8th: No est v +0.1% prior
- 07:00 (UK) Weekly PM Question time in House
- 07:00 (IE) ECB’s Lane (Ireland, chief economist )
- 07:00 (CZ) Czech Central Bank to comment on CPI data
- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
- 08:00 (HU) Hungary Central Bank Apr Minutes
- 08:00 (BR) Brazil Mar Retail Sales M/M: -4.1%e v +1.2% prior; Y/Y: -2.9%e v +4.7% prior
- 08:00 (BR) Brazil Mar Broad Retail Sales M/M: -14.4%e v +0.7% prior; Y/Y: -6.8%e v +3.3% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Apr PPI Final Demand M/M: -0.5%e v -0.2% prior; Y/Y: -0.3%e v +0.7% prior
- 08:30 (US) Apr PPI Ex Food and Energy M/M: 0.0%e v 0.2% prior; Y/Y: 0.9%e v 1.4% prior
- 08:30 (US) Apr PPI Ex Food, Energy, Trade M/M: -0.1%e v -0.2% prior; Y/Y: No est v 1.0% prior
- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
- 09:00 (RU) Russia Apr Official Reserve Assets: $567.5Be v $563.5B prior
- 09:00 (US) Fed Chair Powell
- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
- 10:30 (US) Weekly DOE Oil Inventories
- 11:00 (ES) ECB’s De Guindos (Spain)
- 12:00 (IE) ECB’s Lane (Ireland, chief economist)
- 12:00 (CA) Canada to sell 5-year notes
- 13:00 (US) Treasury to sell 30-Year Bonds
- 15:00 (AR) Argentina Mar Capacity Utilization: No est v 59.4% prior
- 18:45 (NZ) New Zealand Mar Net Migration: No est v 8.3K prior
- 19:01 (UK) Apr RICS House Price Balance: -25%e v +11% prior
- 19:50 (JP) Japan Apr M2 Money Stock Y/Y: 3.4%e v 3.3% prior; M3 Money Stock Y/Y: 2.8%e v 2.7% prior
- 21:00 (AU) Australia May Consumer Inflation Expectation Survey: No est v 4.6% prior
- 21:30 (AU) Australia Apr Employment Change: -600.0Ke v +5.9K prior; Unemployment Rate: 8.3%e v 5.2% prior; Participation Rate: 65.3%e v 66.0% prior
- 23:35 (JP) Japan to sell 30-Year JGB Bonds
