German IFO Survey Sees Sentiment Surge In March

Notes/Observations

• UK Feb retail sales showed recovering
• Germany Mar IFO survey handily beats expectations aided by surging US-Chinese expects
• Suez canal saga continued with warnings that the blockage could take days or weeks to clear,

Asia:

• Japan Mar Tokyo CPI Y/Y: -0.2% v -0.2%e; CPI (ex-fresh food) Y/Y: -0.1% v -0.2%e
• China Foreign Ministry: to sanction 9 UK Officials and 4 entities [counter sanctions]; Reserves right to take additional measures. To sanction those who spread lies and false information on Xinjiang
• China PBOC official reiterated need to keep prudent monetary policy flexible

Coronavirus:

• Total global cases: 125.4M (+0.6% d/d); total deaths: 2.76M (+0.4% d/d)
• EU said to back down on blockades in vaccine war with Britain. Netherlands and Belgium, with German support, emphasized “the importance of global value chains” and urged companies such as AstraZeneca to “ensure predictability of their vaccine production
• PM Johnson received Parliamentary support to loosen COVID lockdown measures. Parliament also extended the coronavirus emergency legislation for another six months.

Europe:

• ECB’s Schnabel (Germany) stated that continued to deploy this envelope resolutely and efficiently, guided by our commitment to price stability
• ECB’s De Guindos (Spain) expressed hope that the EU Recovery Fund standoff was resolved soon. If a high percentage of the population was vaccinated and immunized in the summer it would have a very positive impact and lead to a second half of the year
• EU’ Commission President Von Der Leyen stated that the region was at the beginning of a third wave of the pandemic; We’re on track to meet vaccination targets
• German Chancellor Merkel stated that region was in a third COVID wave that is dominated by new variants
• Italy PM Draghi stated that the EU needed a new fiscal framework to get past the crisis and avoid mistakes with the economy recovery

Americas:

• President Biden stated that was beginning to see new signs of hope for economy after stimulus bill passage; Majority of economic forecasters project above 6% growth this year; Made clear to China President Xi that the US was ‘not looking for confrontation’ but there would be ‘steep competition’
• Fed’s Daly (non-voter, dove) stated that US job market was definitely ‘still in a ditch’; Should not be worried about inflation at this time
• Fed announced that banks that cleared stress tests could resume dividends and buybacks after June 30th
• US Senate passed two-month Paycheck Protection Program (PPP) extension (as expected)

Energy:

• Clearance for Suez Canal stuck ship could now take days to weeks (*Note: about 200 ships were caught up in traffic snarl in both directions as of late Thursday)

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 % at #, FTSE +0.60% at 6,714.75, DAX +0.85% at 14,745.35, CAC-40 +0.39% at 5,974.61, IBEX-35 +0.80% at 8,477.00, FTSE MIB +0.45% at 24,329.50, SMI +0.19% at ,, S&P 500 Futures +0.27%]
• Market Focal Points/Key Themes: European indices open higher across the board and stayed in the green as the session progressed; sectors leading to the upside include financials and materials; all sectors started higher, but laggards included utilities and consumer discretionary; Allianz confirms to acquire Aviva Poland; Nova Resources raises final bid for KAZ Minerals; Santander takes further stake in Mexico unit, to restore dividend policy; French government reaches agreement on further aid to Air France; focus on release of EMA’s CHMP medicine decisions later in the session; no major equities events expected during the upcoming US session

Equities

• Consumer discretionary: Smiths Group [SMIN.UK] +4% (earnings; raises dividend)
• Financials: Aviva [AV.UK] +1.5% (divestment)
• Healthcare: GenSight Biologics [SIGTH.FR] -4% (placement)
• Materials: KAZ Minerals [KAZ.UK] +3% (received increased offer)

Speakers

• ECB’s Rehn (Finland) stated that was important that ECB inflation goal seen as symmetric and added that the best option was a symmetrical 2% inflation target. Inflation seen as remaining subdued in 2022 and below target
• BoE Financial Policy Committee (FPC): Banking system had the capacity to continue to provide support, even if economic outcomes were considerably worse than currently expected. Expected banks to use all elements of capital buffers as necessary, to continue to support the economy through the recovery phase
• Italy PM Draghi said to need to ask for additional borrowing in April. Country was facing monthly aid costs as much as €15B (previously did not exceed €10B/month)
• Germany IFO Economists stated that saw signs of an upswing in manufacturing and that export demand had exploded due to strong demand from US and China
• Philippines Central Bank (BSP) Gov Diokno stated that the PHP currency (Peso) was not threatened by rising US yields
• Japan Parliament said to approve the FY21/22 budget of ¥106.6T
• China FX Regulator SAFE reiterated stance to maintain CNY currency (Yuan) exchange rate as basically stable and within a reasonable and balanced range
• Saudi Arabia Defense Minister stated that would take deterrent actions to protect oil exports following Houthi attacks (**Reminder: Earlier Houthi Rebels in Yemen claimed attacks on sites owned by Saudi Aramco)

Currencies/Fixed Income

• USD held onto its recent gains aide by higher rates.. Dealers noted that yields on Treasuries climbed following another weak US Treasury 7-year notes auction. Greenback also aided by the vaccination progress in US as it seemed to be progressing smoothly, relative to other parts of the world
• EUR/USD continued to encounter turbulence as rising covid infection in Euro -area amid vaccine supply issues posed risk to further lockdowns and recovery momentum.Seession ignored better EU data particularly the German IFO survey.
• USD/JPY hit a fresh 9-month high as the pair approached the 109.50 area with dealers targeting the recent cycle high of 112 as the next target

Economic data

• (NL) Netherlands Q4 Final GDP Q/Q: -0.1% v -0.1%e; Y/Y:-2.8 % v -2.9%e
• (UK) Feb Retail Sales (ex-auto/fuel) M/M: 2.4% v 1.7%e; Y/Y: -1.1% v -1.7%e
• (UK) Feb Retail Sales (including auto/fuel) M/M: 2.1% v 2.1%e; Y/Y: -3.7% v -3.5%e
• (NO) Norway Feb Credit Indicator Growth Y/Y: 5.0% v 4.9% prior
• (DK) Denmark Feb Retail Sales M/M: +2.9% v -4.9% prior; Y/Y: -4.9% v -7.5% prior
• (TR) Turkey Mar Real Sector Confidence (seasonally adj): 110.2 v 108.7 prior; Real Sector Confidence NSA (unadj): 110.8 v 109.3 prior
• (TR) Turkey Mar Capacity Utilization: 74.7% v 74.9% prior
• (CN) Weekly Shanghai copper inventories (SHFE): 188.4K v 187.4K tons prior
• (ES) Spain Q4 Final GDP Q/Q: 0.9% v 0.4%e v 0.4% prelim; Y/Y: –8.9% v 9.1%e
• (ES) Spain Jan Total Mortgage Lending Y/Y: -28.1% v -12.8% prior; House Mortgage Approvals Y/Y: -31.6% v -14.8% prior
• (RU) Russia Narrow Money Supply w/e Mar 19th (RUB): 13.85T v 13.85T prior
• (SE) Sweden Feb Retail Sales M/M: 0.7% v 4.3% prior; Y/Y: 4.6% v 3.8% prior
• (SE) Sweden Feb Trade Balance (SEK): 7.3B v 3.8B prior
• (CN) China Q4 Final Current Account: $123.8B v $130.2B prelim
• (DE) Germany Mar IFO Business Climate: 96.6 v 93.2e; Current Assessment: 93.0 v 91.3e; Expectations Survey: 100.4 v 95.0e
• (IT) Italy Mar Consumer Confidence Index: 100.9 v 100.3e; Manufacturing Confidence: 101.2 v 99.5e; Economic Sentiment: 93.9 v 93.3 prior
• (NO)) Norway Mar Unemployment Rate: 4.2% v 4.0%e

Fixed income Issuance

• None seen

Looking Ahead

• (EU) EU Leaders continue summit
• 06:00 (EU) Daily Euribor Fixing
• 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €6.0B in 6-month Bills
• 06:10 (EU) Daily ECB Liquidity Stats
• 07:00 (UK) DMO to sell £2.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.0B respectively)
• 07:30 (IN) India Weekly Forex Reserve w/e Mar 19th: No est v $582.0B prior
• 07:45 (US) Daily Libor Fixing
• 08:00 (MX) Mexico Feb Trade Balance: $2.9Be v -$1.2B prior
• 08:00 (UK) BOE’s Saunders
• 08:00 (IN) India announces upcoming bill issuance (held on Wed); to sell combined INR190B in 3-month, 6-month and
• 08:30 (US) Feb Advance Goods Trade Balance: -$85.8Be v -$84.6B prior (revised from -$83.7B)
• 08:30 (US) Feb Preliminary Wholesale Inventories M/M: 0.8%e v 1.4% prior (revised from 1.3%); Retail Inventories M/M: +0.7%e v -0.6% prior
• 08:30 (US) Feb Personal Income: -7.2%e v +10.0% prior; Personal Spending: -0.8%e v +2.4% prior; Real Personal Spending (PCE): -1.0%e v +2.0% prior
• 08:30 (US) Feb PCE Deflator M/M: 0.3%e v 0.3% prior; Y/Y: 1.6%e v 1.5% prior
• 08:30 (US) Feb PCE Core Deflator M/M: 0.1%e v 0.3% prior; Y/Y: 1.5%e v 1.5% prior
• 08:30 (BR) Brazil Feb Current Account Balance: -$2.4Be v -$7.3B prior; Foreign Direct Investment (FDI): $6.4Be v $1.8B prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 09:00 (ES) Spain Debt Agency (Tesoro) announces upcoming upcoming bond issuance
• 10:00 (US) Mar Final University of Michigan Confidence: 83.6e v 83.0 prelim
• 11:00 (EU) Potential sovereign ratings after European close (S&P on Germany; Fitch on Iceland, Cyprus, Belgium; Moody’s Sweden, Hungary)
• 12:45 (UK) BOE’s Tenreyro
• 13:00 (US) Weekly Baker Hughes Rig Count
• 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 1.75%
• 15:00 (AR) Argentina Feb Trade Balance: $1.0Be v $1.1B prior
• 21:30 (CN) China Feb YTD Industrial Profits