Germany Seen Entering Into Its 3rd Wave Of The Pandemic

Mar 19 21, 10:57 GMT

Notes/Observations

Asia:

Bank of Japan (BOJ) left Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintain 10-Year Yield Target (YCC) at 0.00%. BOJ clarified the size of its movement range for bond yields and scrapped a buying target for stock funds at the end of a policy review meant to give it more flexibility (widened the band at which it allows long-term interest rates to move around its target from 20bps to 25bps)
Japan Feb National CPI Y/Y: -0.4% v -0.4%e; CPI Ex-fresh food (core) Y/Y: -0.4% v -0.4%e
Australia Feb Preliminary Retail Sales M/M: -1.1% v +0.6%e
China Officials stated that the beginning of talks in Alaska that US made ‘groundless’ attack on China’s domestic and foreign policies, provoking dispute

Coronavirus:

Total global cases: 121.8M (+0.5% d/d); total death toll 2.69M (+0.4% d/d)
French government imposed a new 4 week lockdown on Paris and parts of the north.
EMA concluded that the AZN.UK vaccine was “safe and effective”. Italy, France, Germany, and Spain to restart use

Americas:

Senior Biden Administration Official: Talks between US and China officials were substantive, serious and direct

Energy:

President Biden said to be considering new sanctions to block Nord Stream 2 pipeline

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.35% at 425.10, FTSE -0.54% at 6,743.14, DAX -0.25% at 14,737.95, CAC-40 -0.63% at 6,024.43, IBEX-35-0.76% at 8,559.00, FTSE MIB -0.46% at 24,248.50, SMI -0.42% at 10,927.34, S&P 500 Futures +0.35%]
Market Focal Points/Key Themes: European indices open lower across the board and remained under pressure as the session progressed; only the utilities sector manages to stay in the green; sectors leading to the downside include energy and financials; France reimposes lockdowns in Paris and other areas; NatWest buys back 590M shares from Uk government; Nike’s earnings yesterday drag on apparel retailers; Eni looking to restart buybacks; Mediaset offers to acquire minority astake in M6-Metropole; focus on upcoming meetings between Germany and Austria discussing covid measures; no major earnings expected in upcoming US session

Equities

Consumer discretionary: Adidas [ADS.DE] -2% (Nike earnings)
Financials: NatWest [NWG.UK] +2% (UK govt stake sale)
Healthcare: ReNeuron Group [RENE.UK] +13% (partnership update), AstraZeneca [AZN.UK] -1% (EU decides vaccine is safe)
Technology: Interroll [INRH.CH] +5% (earnings), IDOX [IDOX.UK] -22% (disposal)

Speakers

Germany Health Min Spahn stated country was entering a 3rd wave of the pandemic and saw some tough weeks ahead
BOJ Gov Kuroda post rate decision press conference noted that the priority was to keep entire yield curve low during pandemic; Deemed its appropriate to continue with current framework. Reiterated stance that BOJ would not hesitate to add to easing if necessary. To continue to target 2% inflation with current easing. Stressed that BOJ had made YCC more sustainable and effective; some fluctuation was positive for market function. Did not expand Yield band but made it more flexible and had no plans to widen the band at this time. New lending facility would ease the impact of lowering rates and levels could be adjusted. Facility supplemented the negative rate policy
BOJ announced that it would give an exact amount for JGB purchasers rather than range from April (**Reminder: Bank of Japan (BOJ) announces Bond purchases for month of April on Mar 31st)
China Foreign Ministry spokesperson Zhao Lijian stated that high-level talks in Alaska began with a lot of confrontation on both sides. Reiterated stance that US made unfounded claims in its opening remarks

Currencies/Fixed Income

US yields retreated from its recent highs in quiet trade on Friday. The backing off of yields helped some of the major currency pairs reclaim some ground against the USD.
EUR/USD having difficulty finding upward momentum. More lockdowns in Europe have been announced as concerns over a 3rd wave of pandemic spreads and thus delaying recovery hopes for the region.
USD/JPY was at 108.65 as BOJ provided more flexibility in its policy. Debate from any exit from stimulus is long down the road as the central bank is nowhere close to achieving its 2% inflation target.
TRY currency (Lira) continued to firm in the aftermath of an aggressive rate hike from Turkey earlier in the week. Analyss note the move by CBRT improved the prospects of achieving a visible disinflationary trend from May onward

Economic data

(DE) Germany Feb PPI M/M: 0.7% v 0.8%e; Y/Y: 1.9% v 2.0%e
(UK) Feb Public Finances (PSNCR): +£14.2B v -£19.6B prior; Public Sector Net Borrowing: £18.4B v £20.2Be; Central Government NCR: +£6.4B v -£10.8B prior; PSNB (ex-banking groups): £19.1B v £21.4Be
(CN) Weekly Shanghai copper inventories (SHFE): 187.4K v 171.8K tons prior
(FR) France Q4 Final Wages Q/Q: 0.3% v 0.3% prelim
(RU) Russia Narrow Money Supply w/e Mar 12th (RUB): 13.85T v 13.83T prior
(PL) Poland Feb Real Retail Sales M/M: 3.5% v 3.2%e; Y/Y: -3.1% v -2.5%e; Retail Sales Y/Y: -2.7% v -2.5%e
(PL) Poland Feb Construction Output Y/Y: -16.9% v -9.5%e

Fixed income Issuance

(IN) India sold total INR330B vs. INR290B indicated in 2025, 2030 and 2061 bonds

Looking Ahead

Virtual G7 meeting
06:00 (EU) Daily Euribor Fixing
06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance
06:10 (EU) Daily ECB Liquidity Stats
06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave Key 1-Week Auction Rate unchanged at 4.25%
06:30 (IN) India Weekly Forex Reserve w/e Mar 12th: No est v $580.3B prior
07:00 (UK) DMO to sell £3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively)
07:45 (US) Daily Libor Fixing
08:00 (MX) Mexico Q4 Aggregate Supply and Demand: -5.3%e v -11.4% prior
08:00 (IN) India announces upcoming bill issuance (held on Wed)
08:30 (CA) Canada Jan Retail Sales M/M: -3.0%e v -3.4% prior; Retail Sales (ex-auto) M/M: -2.7%e v -4.1% prior
09:00 (UK) Daily Baltic Dry Bulk Index
11:00 (EU) Potential sovereign ratings after European close (Moody’s on Portugal and European Union ratings; S&P on Spain Belgium sovereign ratings)
12:00 (RU) Russia Feb Unemployment Rate: 5.8%e v 5.8% prior
12:00 (RU) Russia Jan Real Wages Y/Y: 0.2%e v 4.6% prior
12:00 (RU) Russia Feb Real Retail Sales Y/Y: -1.6%e v -0.1% prior
13:00 (US) Weekly Baker Hughes Rig Count