Volatility In Turkish Assets Following Removal Of Central Bank Governor

Notes/Observations

• Turkey President Erdogan shocks markets with any replacement to the central-bank chief
• German said to consider another extension of current lockdown measures

Asia:

• China PBOC Gov Yi Gang stated that monetary policy needed to focus on supporting economic growth in a targeted way while also reducing financial risks; Monetary policy was in a normal range and had room to provide liquidity and appropriate interest rate levels – (CN) China – China Vice Premier Han Zheng reiterated stance that govt was planning to increase high quality imports as the economy recovered
• China PBOC appointed 2 new members to its policy committee, not expected to shift policy with new members
• BOJ Gov Kuroda reiterated stance of no need to change 2% CPI Target. More flexible ETF purchases to improve nimbleness

Coronavirus:

• Total global cases 121.8M (+0.5% vs. Fri); total deaths: 2.69M (+0.4% vs. Fri)
• EU Set to Block Exports of Astra Vaccine and Ingredients to UK
• UK PM Johnson expected to speak to EU counterparts this week to try and stop export bans on vaccines being imposed
• UK ministers said to be working on plans to speed up the manufacture of vaccines in Britain due to rising fears of vaccine nationalism after EU Commission President Von der Leyen threatened AstraZeneca with a vaccine export ban if the firm failed to meet delivery targets to Europe first
• Germany was said to be considering extending restrictions until Apr 18th

Europe:

• Turkey President Erdogan removed central bank governor Agbal; TRY currency weakens dramatically in the aftermath
• Germany Chancellor Merkel stated that country was in good position with three and soon four vaccines available
• S&P affirmed Spain sovereign rating at A-; outlook Negative
• Fitch affirmed Poland sovereign rating at A-; outlook Stable

Americas:

• Fed’s Barkin (voter,hawk): US will have a strong Spring and Summer, expect strong demand met by some supply chain issues; inflation is not a 1 year phenomenon, its multi year

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.21% at 422.48, FTSE -0.43% at 6,680.04, DAX +0.02% at 14,623.45, CAC-40 -0.59% at 5,962.74, IBEX-35 -1.55% at 8,361.00, FTSE MIB +0.05% at 24,211.50, SMI -0.02% at 10,964.98, S&P 500 Futures -0.05%]
• Market Focal Points/Key Themes: European indices open lower across the board but moderated losses as the session progressed; investor sentiment sapped by increasing covid cases across Europe; better performing sectors include technology and health care; sectors leading to the downside include materials and consumer discretionary; concern over lack of holiday bookings weigh on travel sector; South Africa closed for holiday; change in Turkish central bank president weighs on stocks with exposure in Turkey; De’Longi to acquire remaining stake in Eversys; focus on upcoming meeting between Merkel and state premiers on lockdown extension; earnings expected in the upcoming US session include Synnex

Equities

• Consumer discretionary: Greenyard Foods [GREEN.BE] +17% (refinancing)
• Financials: BBVA [BBVA.ES] -8% (Turkey’s CB change)
• Healthcare: AstraZeneca [AZN.UK] +1.5% (US trial results), Paion [PA8.DE] -10% (placement)
• Industrials: Kingfisher [KGF.UK] +4% (earnings), Volkswagen [VOW3.DE] +3% (analyst upgrade)

Speakers

• Swiss National Bank (SNB) annual report showed its 2020 FX interventions at CHF110B (higher by CHF13.2B y/y), It reiterated its stance that market interventions had nothing to do with currency manipulation
• France Fin Min Le Maire stated that the domestic economy could surprise on the upside. Mass Covid-19 vaccination was the only way out of the pandemic
• Italy government said to plan up to €30B extra stimulus for businesses
• Turkey Treasury Dept official Elvan stated that fiscal policies to support price stability; reiterated stance of no retreat from free market mechanism and would continue implementing liberal FX regime
• Thailand Dep PM Supattanapong stated tat could extend some economic stimulus measures to aid the recovery in H2

Currencies/Fixed Income

• Major FX pairs saw little price action in a quiet market
• EUR/USD hovering around the 1.1900 area. Pair continued to face headwinds as extension of current lockdown measures circulated for Germany
• TRY currency was in focus after Turkey President Erdogan again removed another central bank governor after CBRT implemented a fresh round of rate hikes. TRY currency weakened dramatically in the aftermath falling by 17% during the thin-Asian session. The Lira did manage a rebound after the Finance Ministry vowed keep its free market mechanism and would continue implementing a liberal FX regime. Turkey 10-year govt bond yield moved above 18.00% (higher by almost 400 bps) for a daily record rise

Economic data

• (NL) Netherlands Feb House Price Index M/M: 1.2% v 2.5% prior; Y/Y: 10.4% v 9.3% prior
• (MY) Malaysia Mid-Mar Foreign Reserves: $109.2B v $109.0B prior
• (TW) Taiwan Feb Export Orders Y/Y: 48.5% v 49.4%e
• (TW) Taiwan Feb Unemployment Rate: 3.7% v 3.7%e
• (CH) Swiss Feb M3 Money Supply Y/Y: 6.7% v 7.0% prior
• (TR) Turkey Feb Foreign Tourist Arrivals Y/Y: -69.0% v -71.5% prior
• (HK) Hong Kong Q4 Current Account Balance: $30.9B v $97.5B prior (revised from $96.5B); Overall balance of Payments (BOP): $233.5B v $19.3B prior
• (HK) Hong Kong Feb CPI Composite Y/Y: 0.3% v 0.9%e
• (EU) Euro Zone Jan ECB Current Account (seasonally adj): €30.5B v €36.7B prior
• (CH) Swiss weekly Total Sight Deposits (CHF): 702.9B v 702.8B prior; Domestic Sight Deposits: 628.7B v 631.8B prior
• (IT) Italy Jan Current Account Balance: €0.7B v €6.7B prior
• (GR) Greece Jan Current Account Balance: -€0.4B v -€0.7B prior

Fixed income Issuance

• None seen

Looking Ahead

• (IL) Israel Feb Leading ‘S’ Indicator M/M: No est v -0.2% prior
• (AR) Argentina Feb Budget Balance (ARS): No est v 24.1B prior
• (MX) Citibanamex Survey of Economists
• (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
• 06:00 (BE) Belgium Mar Consumer Confidence Index: No est v -9 prior
• 06:00 (EU) Daily 3-Month Euribor Fixing:
• 06:10 (EU) Daily ECB Liquidity Stats
• 06:30 (DE) Germany to sell €4.0B in 12-month Bubills
• 07:00 (IE) Ireland Feb PPI M/M: No est v 1.1% prior; Y/Y: No est v -12.6% prior
• 07:00 (IL) Israel Jan Manufacturing Production M/M: No est v 0.5% prior
• 07:00 (BE) Belgium Debt Agency (BDA) to sell €2.6-3.0B in 2026, 2031 and 2040 OLO Bonds
• 07:00 (IL) Israel to sell 2023, 2026, 2031 and 2037 bonds
• 07:00 (RO) Romania to sell RON400M in 3.7% 2024 Bonds
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 07:45 (US) Daily Libor Fixing
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 08:30 (US) Feb Chicago Fed National Activity Index: 0.71e v 0.66 prior
• 09:00 (PL) Poland Feb M3 Money Supply M/M: +0.9%e v -0.1% prior; Y/Y: 16.4%e v 16.8% prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 09:30 (UR) Ukraine Q4 Final GDP Q/Q: No est v 0.8% prelim; Y/Y: -0.7%e v -0.7% prelim
• 10:00 (US) Feb Existing Home Sales: 6.50Me v 6.69M prior
• 10:00 (FR) France Debt Agency (AFT) to sell €5.0-6.2B in 3-month, 6-month and 12-month bills
• Sells €B vs. €2.6B indicated in 3-month bills; Avg Yield: % v -0.607% prior; Bid-to-cover: x v 2.93x prior
• 10:45 (EU) ECB weekly QE bond buying update
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills
• 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 110.9 prior
• 22:00 (NZ) New Zealand Feb Credit Card Spending M/M: No est v -0.1% prior; Y/Y: No est v -10.6% prior
• 22:30 (KR) South Korea to sell KRW900B in 20-year Bonds
• 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills