Notes/Observations
- German IFO Survey improves from month ago levels and handily beats expectations
- Focus remains on Government bond yields as the trend higher continued (Spread between US 5-year and 30-year bonds at steepest level since 2014)
Asia:
- S&P raised New Zealand sovereign rating one notch to AAA from AA+; Outlook stable from positive
- Fitch affirmed Australia sovereign rating at AAA; Outlook negative
- China PBoC Monthly Loan setting left both the 1-year and 5-year LPR unchanged for the 10th straight month (at 3.85% and 4.65% respectively)
- China Senior Diplomat Yi asked President Biden for removal of unreasonable tariffs on China Goods
- RBA resumed purchases of 3-year bonds after a 2-month hiatus to defends its yield target from a selloff in global debt markets
Coronavirus:
- New study from Israel showed that Pfizer vaccine results in 94% drop in symptomatic Covid-19 infections
Europe:
- UK PM Johnson said to plans to ease COVID-related restrictions by Easter. PM to plot path out of lockdown on Monday, Feb 22nd. Under the roadmap all schools in England will reopen to all pupils on March 8th
- Chancellor of the Exchequer Sunak (Fin Min) expected to raises taxes from 19% to 23% by the next general election, on businesses in order to fund extended COVID support programs as part of budget to be released in March
- Northern Ireland DUP and UUP parties said to be prepared to take legal action to challenge part of Brexit
- EU Economic Commissioner Gentiloni (Italy) stated that EU adult vaccination target of 70% by summer was ambitious but achievable
Americas:
- White House said to support studying the merits of a financial transaction tax for revenue and market stability.
- US Federal Aviation Authority (FAA) issued emergency directive after issue at Denver where a Boeing 777 with a Pratt & Whitney 4000 engine lost engine pieces
Energy:
- Algeria replaced its energy minister as part of a cabinet reshuffle. Appointed Mohamed Arkab (replaced Abdelmadjid Attar)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.8% at 411.7, FTSE -1.1% at 6,551, DAX -0.7% at 13,893, CAC-40 -0.7% at 5,731, IBEX-35 -1.0% at 8,068, FTSE MIB -1.0% at 22,918, SMI -0.5% at 10,656, S&P 500 Futures -0.7%]
- Market Focal Points/Key Themes: European indices open broadly lower and slipped further into the red as the session wore on; better trading sectors include materials and energy; technology and real estate sectors leading to the downside; reportedly UK to raise corporate tax at next Budget; ASTM receives offer to take private; Kuehne & Nagel acquire Apex International; Casino to list Assai; GardaWorld will not raise final offer for G4S; focus on UK PM’s announcement of roadmap to end lockdowns; Nexans plans to spend up to €2.0B in M&A; earnings expected in the upcoming US session include Cooper Tire; Palo Alto Networks and ZoomInfo
Equities
- Consumer discretionary: International Consolidated Airlines IAG.UK +1.5% (financing update), G4S GFS.UK -9.8% (GardaWorld will not raise offer), Ocado OCDO.UK -3.8% (analyst action), Continental CON.DE -2.5% (recommends dividend suspension)
- Energy: Saras SRS.IT -4.9% (CEO sells shares), Galp GALP.PT -2.7% (results)
- Financials: Icade ICAD.FR +5.3% (results), Gecina GFC.FR -1.1% (analyst action)
- Healthcare: Avacta AVCT.UK +14.8% (covid test update)
- Industrials: ASTM AT.IT +27.4% (takeover offer), Valeo FR.FR -4.0% (results), Faurecia EO.IT -3.1% (results), Varta VAR1.DE -6.1% (analyst action)
- Materials: Norilsk Nickel GMKN.RU -7.4% (analyst action)
Speakers
- German Foreign Min Maas stated that was in favor of preparing sanctions on Russia as relationship has reached a low point
- German Chancellor Merkel said to seek 4-stage plan to loosen coronavirus restriction
- Poland Central Bank’s Lon op-ed piece noted that he was more inclined to consider cut in Base Rate citing decline in retail sales, construction and job postings in January
- German IFO Economists noted that the domestic economy was looking forward to an upswing. Saw production plans being revise upward significantly
- Japan Kyoto prefecture said to ask govt to end State of Emergency at end of Feb
- Biden Administration said to make changes to Paycheck Protection Program to try to reach smaller, minority-owned firms and sole proprietors left behind in previous rounds of aid
Currencies/Fixed Income
- Focus remains on Government bond yields as the trend higher continued (Spread between US 5-year and 30-year bonds at steepest level since 2014). The situation building upon higher inflation expectations that are fueled by a vaccine-driven economic recovery. The latest impetus being a new Israeli study that showed Pfizer vaccine resulting in 94% drop in symptomatic Covid-19 infections
- USD was firmer aided by safe-haven flows as concern mount that the rising bond yields could become more destabilizing for risk assets
- EUR/USD holding above the 1.21 level. Better German IFO data helped to limit the downside in the pair.
Economic data
- (NL) Netherlands Jan House Price Index M/M: +2.5% v -0.5% prior; Y/Y: 9.3% v 8.3% prior
- (TR) Turkey Feb Real Sector Confidence (seasonally adj): 108.7 v 109.0 prior; Real Sector Confidence (unadj): 109.3 v 107.0 prior
- (TR) Turkey Feb Capacity Utilization: 74.9% v 75.4% prior
- (CH) Swiss Jan M3 Money Supply Y/Y: 7.0% v 6.5% prior
- (HK) Hong Kong Jan CPI Composite Y/Y: 1.9% v 0.9%e
- (DE) Germany Feb IFO Business Climate Survey: 92.4 v 90.5e; Current Assessment Survey: 90.6 v 89.1e; Expectations Survey: 94,2 v 91.7e
- (CH) Swiss weekly Total Sight Deposits (CHF): 704.4B v 704.3B prior; Domestic Sight Deposits: 642.2B v 643.1B prior
Fixed income Issuance
- None seen
Looking Ahead
- (EU) Daily ECB Liquidity Stats
- 05:30 (DE) Germany to sell €4.0B in 12-month Bubills
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.9-2.3B in 2025, 2028 and 2033 OLO Bonds
Yield: % v -0.284% prior; Bid-to-cover: x v 4.05x prior (Nov 23rd 2020) - 06:00 (IE) Ireland Jan PPI M/M: no est v -4.1% prior; Y/Y: No est v -14.5% prior
- 06:00 (IL) Israel Jan Unemployment Rate: No est v 4.8% prior (12.9% including Covid)
- 06:00 (IL) Israel Dec Manufacturing Production M/M: No est v 1.1% prior
- 06:00 (IL) Israel to sell bonds
- 06:25 (BR) Brazil Central Bank Weekly Economists Survey
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:00 (TR) Turkey to sell 2025 and 2027 bonds
- 08:00 (PL) Poland Jan M3 Money Supply M/M: -0.5%e v +1.8% prior; Y/Y: 16.6%e v 16.4% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Jan Chicago Fed National Activity Index: 0.50e v 0.52 prior
- 09:00 (BE) Belgium Feb Business Confidence: -7.0e v -7.5 prior
- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%
- 09:00 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills
- 09:45 (EU) ECB weekly QE bond buying update
- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (3-7 years)
- 10:00 (US) Jan Leading Index: 0.4%e v 0.3% prior
- 10:30 (US) Feb Dallas Fed Manufacturing Activity: 5.0e v 7.0 prior
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills
- (MX) Citibanamex Economist Survey
- (PE) Peru Q4 GDP Y/Y: No est v -9.4% prior
- 16:00 (KR) South Korea Feb Consumer Confidence: No est v 95.4 prior
- 16:45 (NZ) New Zealand Q4 Retail Sales Q/Q: -1.0%e v +28.0% prior
- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 109.9 prior
- 19:30 (AU) Australia Jan Preliminary Merchandise Trade
- 20:30 (CN) China Jan New Home Prices M/M: No est v 0.1% prior
- 22:00 (KR) South Korea Q4 Household Credit (KRW): No est v 1.682T prior
- 22:30 (TH) Thailand Jan Customs Trade Balance: $0.0Be v $1.0B prior
- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills
