Notes/Observations
- Various EU inflation and confidence data remain fragile
- China NPC approves Hong Kong National Security Law (as expected)
Asia:
- Bank of Korea (BOK) cut the 7-Day Repo Rate by 25bps to 0.50% (as expected)
- BOK Gov Lee Post Rate Decision Press Conference noted that the policy rate very close to effective lower bound and would use tools over than interest rate where appropriate
- China NPC expected to pass a National Security Law for Hong Kong on Thursday
Coronavirus:
- Total global cases 5,693,066 (+1.8% d/d); Total deaths: 355.7K (+1.5% d/d)
Europe:
- UK PM Johnson to go to Brussels in Jun to meet the presidents of the EU Commission and Council to formally assess the state of the Brexit talks
- BoE Gov Bailey reiterated stance that was important we consider negative rates, but also their potential issues
Americas:
- US Sec of State Pompeo announced that US could no longer certify Hong Kong autonomy from China; No reasonable person can assert today that Hong Kong maintained a high degree of autonomy from China given facts on the ground
- US House approved legislation calling for sanctions on Chinese officials responsible for oppression of Uighur Muslims (vote: 413 to 1). Massie (R-Ky.) was the sole “no” vote
- President Trump to issue an executive order about social media , due to be signed on Thursday (May 28th)
- Fed Beige Book noted that economic activity declined in all districts. Employment continued to fall sharply in retail and leisure
Mid-East/Energy:
- Weekly API Crude Oil Inventories: +8.7M v -4.8M prior
- Russia govt said to want to loosen oil production restrictions from July, in line with OPEC+ plan
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +1.07% at 353.24, FTSE +0.59% at 6,180.80, DAX +0.58% at 11,724.78, CAC-40 +0.76% at 4,724.13, IBEX-35 -0.13% at 7,165.00, FTSE MIB +1.16% at 18,117.50, SMI +1.63% at 9,874.81, S&P 500 Futures +0.13%]
- Market Focal Points/Key Themes: European indices open generally higher across the board, remaining higher as the session progressed, with IBEX turning negative; better performing sectors include consumer discretionary and materials; underperformering sectors lead by financials; AKO Capital divests stake in Rolls Royce; Spain EconMin said saw EU recovery plan ready by July; earnings expected in the upcoming US session include Dell, Autodesk and Salesforce.
Equities
- Consumer discretionary: EasyJet [EZJ.UK] +8% (capacity update), International Workplace Group [ISG.UK] +9% (earnings; placement), Cineworld [CINE.UK] +25% (liquidity), Daily Mail [DMGO.UK] -6% (earnings), SAS [SAS.SE] -9% (earnings
Speakers
- ECB’s Villeroy (France) reiterated stance that negative interest rates was an effective policy tool
- France Fin Min Le Maire reiterated govt view that 2020 GDP seen contracting by over 8.0%
- EU Economic Commissioner Gentiloni (Italy): EU recovery grants were linked to policy implementation
- German IFO Institute updated German GDP outlook for 2020 and 2021 which saw 2020 GDP contracting by 6.6% and 2021 GDP growth at 10.2%. It noted that upcoming Q2 GDP was seen at -12.4%
- Hungary Central Bank’s Dep Gov Nagy said to resign from position to take another leadership role
- Japan Cabinet Office (Govt) May Monthly Economic Report maintained its overall economic assessment that in an extremely severe situation
- China NPD said to approve its Hong Kong National Security Law (as expected)
- China’s Global Times: China might also resolutely impose sanctions on US companies helping anti-China US politicians in separating China. Could shut down US intelligence agencies in Hong Kong
- China Premier Li closing remarks at NPC noted that the pandemic had impacted global economic growth in a very serious manner and China was not immune. Govt would not hesitate in adopting new measures. Employment target was directly related with economic growth. China’s 2020 policies were powerful in both timing and intensity but not flood the economy with liquidity. Had room in both fiscal and financial policies which would help to increase consumption. Lastly he reiterated ‘One China principle’ in its ties with Taiwan. US-China relationship faced new issues and challenges
- China Foreign Ministry stated that it opposed US Sec of State comments on Hong Kong National Security Law
- US said to expel Chinese students with ties to Chinese military schools
- Russia govt official: US decision to end sanction waiver that allowed some work at Iranian nuclear facility was a mistake. US move would provoke Iran into developing nuclear weapons
Currencies/Fixed Income
- FX markets were lackluster despite a steady flow of EU inflation and confidence data in the session. Markets also seemed to ignore heightened tensions on the US-China front.
- EUR/USD hovering around the 1.10 level in the aftermath of Wed’s gains follwoing the EU proposal on its recovery plan.
- Various German and Spanish CPI showed the recent concerns of the slowdown in inflation and potential central bank measures to turn the tide.
Economic Data
- (NE) Netherlands May Producer Confidence Index: -25.1 v -28.7 prior
- (FI) Finland Apr House Price Index M/M: +0.1% v -0.2% prior; Y/Y: -0.2% v +0.4% prior
- (DE) Germany May CPI Saxony M/M: 0.1% v 0.4% prior; Y/Y: 0.9% v 1.1% prior
- (ES) Spain May Preliminary CPI M/M: 0.0% v 0.0%e; Y/Y: -1.0% v -1.0%e
- (ES) Spain May Preliminary CPI EU Harmonized M/M: 0.0% v -0.1%e; Y/Y: -0.9% v -0.9%e
- (ES) Spain Apr Adjusted Retail Sales Y/Y: -31.6% v -14.5% prior; Retail Sales (unadj) Y/Y: -31.5% v -14.2% prior
- (SE) Sweden May Consumer Confidence: 77.3 v 74.2 prior; Manufacturing Confidence: 76.8 v 71.4 prior; Economic Tendency Survey: 64.1 v 60.0 prior
- (TR) Turkey May Economic Confidence: 61.7 v 51.3 prior
- (HU) Hungary Mar Average Gross Wages Y/Y: 9.0% v 8.0%e
- (SE) Sweden Apr Retail Sales M/M: +0.2% v -2.1%e; Y/Y: -1.3% v +1.1% prior
- (DE) Germany May CPI Brandenburg M/M: -0.1% v +0.6% prior; Y/Y: 0.9% v 1.2% prior
- (DE) Germany May CPI Hesse M/M: -0.1% v +0.5% prior; Y/Y: 0.3% v 0.8% prior
- (DE) Germany May CPI Bavaria M/M: -0.2% v +0.5% prior; Y/Y: 0.6% v 0.9% prior
- (IT) Italy May Consumer Confidence Index: 94.3 v 89.0e; Manufacturing Confidence: 71.2 v 80.0e; Economic Sentiment 51.1 v 81.7
- (TW) Taiwan Q1 Final GDP Y/Y: 1.6% v 1.5%e
- (DE) Germany May CPI North Rhine Westphalia M/M: -0.1% v +0.3% prior; Y/Y: 0.6% v 0.8% prior
- (PT) Portugal May Consumer Confidence Index: -29.1 v -41.6 prior; Economic Climate Indicator: -3.2 v -0.7 prior
- (EU) Euro Zone May Economic Confidence: 67.5 v 70.6e; Industrial Confidence: -27.5 v -26.5e; Services Confidence: -43.6 v -27.9e; Consumer Confidence (final): -18.8 v -18.8 advance
- (IS) Iceland May CPI M/M: 0.6% v 0.5% prior; Y/Y: 2.7% v 2.2% prior
Fixed Income Issuance
- (DK) Denmark solds total DKK in 13.02B in 3-month, 6-month and 9-month bills
- (SE) Sweden sold SEK vs. SEK500M indicated in 0.125% 2030 I/L Bonds; Avg Yield: -1.2325% v -1.2407% prior; Bid-to-cover: 3.39x v 2.76x prior
- (UK) DMO sold £2.75B in 1.25% July 2027 Gilt Avg Yield: 0.025% v 0.160% prior; Bid-to-cover: 2.21x v 2.37x prior; tail: 0.3bps vs. 0.3bps prior
Looking Ahead
- (DE) Germany May CPI Baden Wuerttemberg M/M: No est v 0.4% prior; Y/Y: No est v 0.9% prior
- (BE) Belgium May CPI M/M: No est v 0.0% prior; Y/Y: No est v 0.6% prior
- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base rate unchanged at 0.50%
- (NG) Nigeria Central Bank (CBN) Interest Rate Decision: Expected to leave Interest Rates unchanged at 13.50%
- 05:30 (ZA) South Africa Apr PPI M/M: 0.1%e v 0.3% prior; Y/Y: 2.7%e v 4.5% prior (*8Note: March data not released)
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds????
- 06:00 (IT) Italy Apr PPI M/M: No est v -1.3% prior; Y/Y: No est v -4.9% prior
- 06:00 (CA) Canada May Final CFIB Business Barometer: No est v 53.2 prelim
- 06:00 (CZ) Czech Republic to sell 6-month Bills
- 06:30 (UK) DMO to sell £2.0B in 1.75% Jan 2049 Gilts
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil May FGV Inflation IGPM M/M: 0.1%e v 0.8% prior; Y/Y: 6.4%e v 6.7% prior
- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
- 08:00 (BR) Brazil Apr National Unemployment Rate: 13.4%e v 12.2% prior
- 08:00 (DE) Germany May Preliminary CPI M/M: -0.1%e v +0.4% prior; Y/Y: 0.6%e v 0.9% prior
- 08:00 (DE) Germany May Preliminary CPI EU Harmonized M/M: -0.1%e v +0.4% prior; Y/Y: 0.4%e v 0.8% prior
- 08:30 (US) Q1 Preliminary GDP Annualized (2nd reading) Q/Q: -4.8%e v -4.8% advance; Personal Consumption: -7.5%e v -7.6% advance
- 08:30 (US) Q1 Preliminary GDP Price Index: 1.3%e v 1.3% prior; Core PCE Q/Q: 1.8%e v 1.8% prior
- 08:30 (US) Apr Preliminary Durable Goods Orders: -19.1%e v -14.7% prior; Durables (ex-transportation): -15.0%e v -0.4% prior; Capital Goods Orders (non-defense/ex-aircraft): -10.0%e v -0.1% prior; Capital Goods Shipments (non-defense/ex-aircraft): -12.2%e v -0.2% prior
- 08:30 (US) Initial Jobless Claims: 2.10Me v 2.438M prior; Continuing Claims: 25.68Me v 25.073M prior
- 08:30 (CA) Canada Q1 Current Account Balance: -$10.0Be v -$8.8B prior
- 08:30 (BR) Brazil Apr Total Outstanding Loans (BRL): No est v 3.587T prior; M/M: No est v 2.9% prior; Personal Loan Default Rate: No est v 5.2% prior
- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
- 09:00 (RU) Russia Gold and Forex Reserve w/e May 22nd: No est v $562.9B prior
- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
- 10:00 (US) Apr Pending Home Sales M/M: -17.0%e v -20.8% prior; Y/Y: -28.7%e v -14.5% prior
- 10:00 (MX) Mexico Central Bank (Banxico) May Minutes
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Weekly DOE Oil Inventories
- 11:00 (US) May Kansas City Fed Manufacturing Activity Index: -22e v -30 prior
- 11:30 (US) Treasury to sell 4-week and 8-week Bills
- 12:00 (CA) Canada to sell 5-year notes
- 13:00 (US) Treasury to sell 7-year Notes
- (BR) Brazil Apr Central Govt Budget Balance (BRL): No est v -21.2B prior 05/28/2020 05/29 (HK) Hong Kong Apr M3 Money Supply Y/Y: No est v 0.0% prior; M2 Money Supply Y/Y: No est v 0.0% prior; M1 Money Supply Y/Y: No est v -0.3% prior 05/28/2020 05/29 (PH) Philippines Apr M3 Money Supply Y/Y: No est v % prior 05/28/2020 05/29 (PH) Philippines Apr Bank Lending Y/Y: No est v % prior; Net Lending Y/Y: No est v % prior 05/28/2020 06/03 (UK) May Nationwide House Price M/M: No est v 0.7% prior; Y/Y: No est v 3.7% prior
- 18:00 (NZ) New Zealand May Consumer Confidence Index: No est v 84.8 prior
- 19:00 (KR) South Korea Apr Industrial Production M/M: -3.5%e v +4.6% prior; Y/Y: -0.5%e v +7.1% prior
- 19:00 (KR) South Korea Apr Cyclical Leading Index Change: No est v -0.6 prior
- 19:01 (UK) May GfK Consumer Confidence: No est v -34 prior
- 19:01 (UK) May Lloyds Business Barometer: No est v -32 prior
- 19:30 (JP) Japan May Tokyo CPI Y/Y: 0.1%e v 0.2% prior; Tokyo CPI (ex-fresh food) Y/Y: -0.2%e v -0.1% prior; Tokyo CPI (ex-fresh food/energy) Y/Y: 0.1%e v 0.2% prior
- 19:30 (JP) Japan Apr Jobless Rate: 2.7%e v 2.5% prior; Job-To-Applicant Ratio: 1.32e v 1.39 prior
- 19:50 (JP) Japan Apr Retail Sales M/M: -6.9%e v -4.6% prior (revised from -4.5%); Y/Y: -11.2%e v -4.7% prior (revised from -4.6%);
- 19:50 (JP) Japan Apr Dept. Store, Supermarket Sales Y/Y: No est v -10.1% prior
- 19:50 (JP) Japan Apr Industrial Production M/M: -5.7%e v -3.7% prior; Y/Y: -10.6%e v -5.2% prior
- 21:10 (JP) BOJ Outright Bond Purchase Operation for 3~5 Years; 5~10 Years and 10~25 Years maturities
- 21:30 (AU) Australia Apr Private Sector Credit M/M: 0.6%e v 1.1% prior; Y/Y: 4.0%e v 3.6% prior
- 22:00 (SG) Singapore Apr M2 Money Supply Y/Y: No est v 6.8% prior; M1 Money Supply Y/Y: No est v 10.9% prior
- 22:00 (SG) Singapore Apr Bank Loans and Advances Y/Y: No est v 2.4% prior
- 22:00 (VN) Vietnam May CPI Y/Y: 2.6%e v 2.9% prior
- 22:00 (VN) Vietnam May Trade Balance: -$1.2Be v -$0.7B prior
- 22:00 (VN) Vietnam May YTD Retail Sales Y/Y: No est v -4.3% prior
- 23:30 (JP) Japan to sell 3-Month Bills
