Notes/Observations
- USD remains on soft footing, hits 7-week lows against various pairs as the unwinding of safe-haven flows due to perceived more synchronized global recovery in H2.
- Market to look for clarity from ECB on bond yields.
Asia
- RBA Apr Minutes noted that preliminary data suggested Q1 GDP likely to have recovered further to around its pre-pandemic level, earlier than previously expected. It reiterated forward guidance that would not increase the cash rate until actual inflation was sustainably within 2-3% target range.
- China PBoC Monthly Operation to set Loan Prime Rate kept both the 1-Year and 5-Year Loan Prime Rates unchanged at 3.85% and 4.65% respectively (as expected).
- China President Xi stated at the Boao Forum that China had kept deepening reform and was opening up. Stressed that one or few countries need stop imposing rules on others, meddling in others’ internal affairs would not get any support.
- BOJ Gov Kuroda reiterated the view that would take time to reach the 2.0% CPI Target and was not at the stage to consider an exit from monetary policy yet.
- BOJ said to be considering cutting CPI forecast for FY21/22, mostly due to price cuts to mobile phone fees (Reminder: BOJ to update its Outlook for Economic Activity and Prices at the next policy meeting this month (April). BOJ currently sees FY21/22 CPI at 0.5%).
Europe
- Germany CDU leader Laschet said to receive backing from the party as its candidate for Chancellor in Federal elections in Sept.
Americas
- President Biden stated that he was willing to compromise on infrastructure spending.
- White House: Infrastructure talks were fruitful.
- US Defense Dept spokesperson stated that Russia buildup on Ukraine border was bigger than it was in 2014.
- US State Dept expressed concern over Russia’s plan to limit navigation in the Black sea. Called on Russia to cease harassment of vessels in black sea and to halt buildup of troops on border with Ukraine.
Energy
- OPEC+ reportedly considering downgrading its April 28th meeting to only holding a JMMC technical meeting and not a full ministerial meeting.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 -0.76% at 438.80, FTSE -0.58% at 6,959.24, DAX -0.29% at 15,321.95, CAC-40 -0.96% at 6,236.58, IBEX-35 -1.46% at 8,584.00 , FTSE MIB -0.83% at 24,463.50, SMI -0.41% at 11,164.04 , S&P 500 Futures 0.00%].
- Market Focal Points/Key Themes: European indices open modestly lower across the board and fell further into the red as the session wore on; sectors that are outperforming include industrials and energy; materials and health care sectors among those leading to the downside; Elementis receives new takeover offer from Innospec; earnings expected in the upcoming session include Comerica, Fifth Third Bancorp, KeyCorp and Xerox.
Equities
- Consumer discretionary: Getinge [GETI.B.SE] +4% (earnings), Danone [BN.FR] -3% (sales), AB Foods [ABF.UK] -2% (earnings).
- Consumer staples: Imperial Brands [IMB.UK] -5%, British American Tobacco [BATS.UK] -5% (US limiting amount of nicotine in cigarettes).
- Industrials: Elementis [ELM.UK] +16% (offer speculation), BMW [BMW.DE] +1% (prelim profit).
- Technology: ATOS [ATO.FR] -6% (sales; acquisitions), Quantum Genomics [ALQGC.FR] -12% (ends collaboration).
Speakers
- ECB Q1 Lending Survey expected banks to tighten standards in the upcoming quarter to reflect uncertainty from pandemic. Corporate credit standards tightened moderately in Q1 which saw loan demand for both household and companies declined in Q1.
- Bank of Italy official reiterates view that Q1 GDP was seen roughly stable from Q4 levels (**Note: in-line with recent quarterly bulletin).
- Indonesia Central Bank Policy Statement noted that the decision to keep policy steady in line with need to maintain stability of the IDR currency (Rupiah) and support economic recovery. Reiterated pledge to use triple interventions to maintain FX stability.
- Indonesia Central Bank (BI) Gov Warjiyo pre-rate decision press conference noted that it still saw uncertainty and volatility around US bond yields which was impacting emerging market currencies (including the Rupiah). Domestic economy supported by gov’t spending (aka stimulus) and exports. Reiterated stance to stabilize the IDR currency (Rupiah) to be in line with fundamentals. Saw inflation remaining manageable with target range.
- China PBOC Gov Yi Gang commented from the Boao forum which reiterated stance to expand opening of the financial sector. Reiterated view that had been working on green finance and to consider climate change in stress tests. To limit investment of FX reserves in high carbon assets.
- Iran govt spokesperson Rabiei expressed some cautious optimism that the nuclear deal can be revived.
Currencies/ Fixed income
- USD continued to face headwinds as technical damage seemed to provide more weakness for the greenback despite an uptick in US bond yields. USD at roughly 2-month lows against several European pairs. Dealers noted that the recent weakness was attributed after the Fed reassured to markets that it would not end its monetary stimulus anytime soon.
- Peripheral bond yields continued to edge higher in the aftermath of ECB Weekly QE bond-buying stats. The weekly data proved to be disappointing as the increase in PEPP was only €16.3B. Markets will look for more clarity from the ECB on its strategy with regards to capping government bond yields on Thursday.
Economic data
- (UK) Mar Jobless Claims Change: +10.1K v +67.3K prior; Claimant Count Rate: 7.3% v 7.3% prior.
- (UK) Feb Average Weekly Earnings 3M/Y: 4.5% v 4.8%e; Weekly Earnings (ex-bonus) 3M/Y: 4.4% v 4.2%e.
- (UK) Feb ILO Unemployment Rate: 4.9% v 5.0%e; Employment Change 3M/3M: -73K v -150Ke.
- (DE) Germany Mar PPI M/M: 0.9% v 0.6%e; Y/Y: 3.7% v 3.3%e.
- (CZ) Czech Mar PPI Industrial M/M: 1.4% v 0.8%e; Y/Y: 3.3% v 2.6%e.
- (ZA) South Africa Feb Leading Indicator: 116.8 v 114.5 prior.
- (ID) Indonesia Central Bank (BI) left a 7-day Reverse Repo unchanged at 3.50% (as expected).
- (TW) Taiwan Mar Export Orders Y/Y: 33.3% v 34.9%e.
Fixed income issuance
- (EU) European Union opens book to sell €4.75B in 15-year bonds via syndicated under EFSF program; guidance seen -5bps to mid-swaps.
- (ES) Spain Debt Agency (Tesoro) sold total €1.95B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.
- (UK) DMO sold £3.25B in 0.125% Jan 2024 Gilts; Avg Yield: 0.150% v 0.182% prior; bid-to-cover: 2.70x v 2.45x prior; Tail: 0.2bps v 0.2bps prior.
- (HU) Hungary Debt Agency (AKK) sold HUF15.0B vs. HUF15.0T target in 3-Month Bills; Avg Yield: 0.63% v 0.58% prior; bid-to-cover: 4.40x v 4.40x prior.
- (CH) Switzerland sold CHF741.1M in 3-month Bills; Avg Yield: -0.778% v -0.770% prior.
Looking ahead
- (EU) Daily ECB Liquidity Stats.
- 05:30 (DE) Germany to sell €5.0B in 0% Mar 2023 Schatz.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 05:30 (ZA) South Africa to sell combined ZAR4.8B in 2031, 2037 and 2048 bonds.
- 06:00 (FI) Finland to sell €1.0B in 0.25% Sept 2040 RFGB Bonds.
- 06:45 (US) Daily Libor Fixing.
- 06:30 (EU) ESM to sell €1.5B in 6-Month Bills.
- 07:00 (TR) Turkey to sell 2025 and 2027 bonds.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (CA) Canada Mar Teranet House Price Index (HPI) M/M: No est v 0.5% prior; Y/Y: No est v 9.8% prior; House Price Index (HPI): No est v 251.8 prior.
- 08:55 (US) Weekly Redbook LFL Sales data.
- 09:00 (EU) Weekly ECB Forex Reserves.
- 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 09:30 (IT) Bank of Italy (BOI) Cipollone.
- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (over 20-years).
- 10:00 (MX) Mexico Weekly International Reserve data.
- 11:30 (US) Treasury to sell 52-Week Bills.
- 12:00 (RU) Russia Mar Unemployment Rate: 5.6%e v 5.7% prior.
- 12:00 (RU) Russia Feb Real Wages Y/Y: -0.2%e v +0.1% prior.
- 12:00 (RU) Russia Mar Real Retail Sales Y/Y: -1.9%e v -1.3% prior.
- 13:30 (BR) Brazil Mar Tax Collections (BRL): 119.1Be v 127.8B prior.
- (AR) Argentina Mar Budget Balance (ARS): No est v -18.8B prior.
- (MX) Citibanamex Survey of Economists.
- 16:30 (US) Weekly API Oil Inventories.
- 17:00 (KR) South Korea Mar PPI Y/Y: No est v 2.0% prior.
- 18:45 (NZ) New Zealand Q1 CPI Q/Q: 0.8%e v 0.5% prior; Y/Y: 1.5%e v 1.4% prior.
- 20:00 (KR) South Korea Apr Exports (1st 20 days) Y/Y: No est v 12.5% prior; Imports (1st 20 days) Y/Y: No est v 16.3% prior.
- 20:30 (AU) Australia Mar Leading Index M/M: No est v 0.01% prior
- 21:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years and 5~10 Years maturities.
- 21:30 (AU) Australia Mar Preliminary Retail Sales M/M: +1.0%e v -0.8% prior.
- 21:30 (KR) Bank of Korea to sell KRW2.1T in 2-year Bonds.
- 23:00 (CN) China to sell 1-year and 10-year Bond.
- 23:00 (TH) Thailand to sell combined THB35B in 2024 and 2035 bonds.
