Focus On ECB With Markets Looking For Clarity On Bond Purchases

Notes/Observations

• Various EU confidence data mixed in session (Improved: Netherlands, Norway, Denmark, Worsened: France, Belgium, Turkey).
• Focus on ECB rate decision; markets looking for clarity on Pandemic Bond buying.
• Companies expected to report during the NY morning include American Airlines, Arch Resources, Biogen, The Blackstone Group, Cleveland-Cliffs, Quest Diagnostics, DR Horton, Danaher, Dow Inc, Freeport McMoran, Chart Industries, HCA Healthcare, Southwest Airlines, Nucor, Reliance Steel, AT&T, Union Pacific, Valero Energy.

Coronavirus:

• Japan plans to impose a fresh coronavirus state of emergency in Tokyo as well as Osaka, Kyoto, and Hyogo prefectures on Friday (Apr 23rd).
• UK COVID passports proving people have been vaccinated may be available for summer holidays, potentially opening up breaks in over 20 countries for those fully vaccinated.

Europe:

• Italy PM Draghi Recovery Plan said to include €220B to radically restructure the Italian economy. Comprised of €30B of Italian budgetary resources and €191.5Bn of loans and grants from the Next Generation EU scheme. Plan should be approved by the end of this week.
• BOE to open a ‘northern hub’ in England; the move is said to be an attempt to make the central bank less focused on London.

Americas:

• President Biden said to be poised to formally declare that the massacres of Armenians in the early 20th century constituted genocide by Turkey.
• Bank of Canada became the 1st G7 central bank to start tapering, accelerated timetable for rate hike.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.48% at 438.74, FTSE +0.17% at 6,906.79, DAX +0.54% at 15,277.60 , CAC-40 +0.69% at 6,253.07, IBEX-35 +0.71% at 580 , FTSE MIB +0.36% at 24,247.50 , SMI +0.16% at 11,227.44, S&P 500 Futures -0.09%].
• Market Focal Points/Key Themes: European indices open moderately higher across the board and continued to advance later in the session; reportedly Italy to unveil new recovery package; technology and industrials sectors helping to the upside; real estate and telecom sectors weighting on the indices; focus on further hearings on German covid law and developments out of informal EU ministers meeting; earnings expected in the upcoming US session include Danaher, Valero, Arch Resources and DR Horton.

Equities

• Consumer discretionary: Nestle [NESN.CH] +3% (earnings), Hermes [RMS.FR] +3% (sales), Domino’s Pizza [DOM.UK] -2% (trading update).
• Financials: Credit Suisse [CSGN.CH] -5% (earnings; placement; FINMA case).
• Industrials: Volvo [VOLVA.SE] +3.5% (earnings), Renault [RNO.FR] -2% (earnings).
• Technology: SAP [SAP.DE] +1.5% (final earnings).
• Telecom: Orange [ORA.FR] -2% (earnings).

Speakers

• Germany said to possibly lift vaccination prioritization from the end of May and would be viewed as a step that would open access to all adults.
• EU Parliament to vote on Tuesday, April 27th to ratify UK trade agreement.
• Greece PM Mitsotakis stated that it would extend tax breaks to address effects of pandemic and also cut basic business tax rate from 24% to 22% in 2022.
• Russia’s Economy Ministry to cut its 2021 GDP growth forecast from 3.4% to 2.9%.
• Japan Cabinet Office (Govt) Apr Economic Report maintained\ overall economic assessment: Domestic economy was picking up but had spots of weakness.
• S&P raised Taiwan sovereign rating from AA- to AA (one notch upgrade); outlook positive.

Currencies/Fixed Income

• Focus on ECB rate decisions and clarity on QE bond-buying. Analysts noted that since ECB’s March announcement of ‘significantly higher PEPP purchases pledge had not prevented the euro curve from bear-steepening further. ECB would likely to justify the higher yields with improving macro prospects. The ECB to update its Staff Projections in June and would likely to see higher revisions to its growth outlook.
• EUR/USD holding above the 1.20 level. Dealers cited that European headlines have turned more positive as vaccine rollout ramps up.
• TRY currency (Lira) was again weaker. reports circulated that President Biden was poised to formally declare that the massacres of Armenians in the early 20th century constituted genocide. Analysts noted such a move would further inflame ties with Turkey.

Economic data

• (NL) Netherlands Apr Consumer Confidence Index: -14 v -18 prior.
• (NL) Netherlands Mar Unemployment Rate: 3.5% v 3.6% prior.
• (NL) Netherlands Feb Consumer Spending Y/Y: -10.7 v -12.0% prior.
• (NL) Netherlands Mar House Price Index M/M: 1.6 v 1.2% prior; Y/Y: 11.3 v 10.4% prior.
• (CH) Swiss Mar Trade Balance: 5.8 v 3.7B prior; Real Exports M/M: +4.5 v -1.2% prior; Real Imports M/M: 3.5% v 0.3% prior; Watch Exports Y/Y: +37.2% v -0.3% prior.
• (NO) Norway Q1 Industrial Confidence: 8.2 v 3.8 prior.
• (DK) Denmark Apr Consumer Confidence Indicator: -1.1 v -5.0prior.
• (FR) France Apr Business Confidence:95 v 95e; Manufacturing Confidence: 104 v 99e; Production Outlook Indicator: 2 v 7e; Own-Company Production Outlook: 12 v 8e.
• (FR) France Apr Overall Business Demand Survey: +8 v -5 prior.
• (MY) Malaysia Mid-Apr Foreign Reserves: $109.3B v $108.6B prior.
• (TR) Turkey Apr Consumer Confidence: 80.2 v 86.7 prior.
• (TW) Taiwan Mar Unemployment Rate: 3.7% v 3.7%e.
• (IT) Italy Feb Industrial Sales M/M: 0.2% v 2.6% prior; Y/Y: +0.9% v -1.6% prior.
• (PL) Poland Mar Real Retail Sales M/M: 15.0% v 11.8%e; Y/Y: 15.2% v 10.5%e; Retail Sales Y/Y: 17.1% v 12.5%e.
• (PL) Poland Mar Construction Output Y/Y: -17.1% v -16.9% prior.
• (PL) Poland Apr Consumer Confidence: -22.5 v -22.6e.
• (HK) Hong Kong Mar Unemployment Rate: 7.2% v 7.1%e (matches highest level since 2004).
• (EU) Euro Zone Overall 2020 Govt Debt/GDP Ratio: 98.0% v 83.9% prior.
• (BE) Belgium Apr Consumer Confidence Index: -6 v -4 prior.

Fixed income Issuance

• (ES) Spain Debt Agency (Tesoro) sold a total €5.253B vs. €5.0-6.0B in 2024, 2027 and 2031 bonds.
• Sold €1.788B in 0.0% May 2024 SPGB bonds; Avg yield: -0.411% v -0.396% prior; Bid-to-cover: 2.50x v 1.83x prior (Mar 18th 2021).
• Sold €1.238B in 1.5% Apr 2027 SPGB; Avg yield: -0.132% v 0.473% prior; Bid-to-cover: 2.34x v 1.93x prior (Mar 19th 2020).
• Sold €2.227B in 0.10% Apr 2031 SPGB bonds; Avg Yield: 0.368% v 0.351% prior; bid-to-cover: 1.92x v 1.59x prior.
• (FR) France Debt Agency (AFT) sold total of €10.994B vs. €10.0-11.0B indicated range in 2024, 2027 and 2029 bonds.
• Sold €3.035B in 0.00% Feb 2024 Oat; Avg Yield: -0.61% v -0.61% prior; Bid-to-cover: 2.70x v 2.02x prior (Mar 18th 2021).
• Sold €4.304B in new 0.00% Feb 2027 Oat; Avg Yield: -0.36% v -0.48% prior; bid-to-cover: 2.21x v 2.10x prior (Mar 18th under 0.00% Feb 2026 Oat.
• Sold €3.655B in 0.50% May 2029 Oat; Avg Yield: -0.18% v -0.25% prior; Bid-to-cover: 1.90x v 1.87x prior.

Looking Ahead

• (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
• 05:50 (FR) France Debt Agency (AFT) to sell €1.5-2.0B in inflation-linked 2026, 2036 and 2047 bonds (Oatei).
• 05:50 (HU) Hungary Central Bank One-Week Deposit Rate Tender.
• 06:00 (IE) Ireland Mar PPI M/M: No est v 0.7% prior; Y/Y: No est v -14.0% prior.
• 06:00 (UK) Apr CBI Industrial Trends Total Orders: +2e v -5 prior; Selling Prices: No est v 20 prior; Business Optimism: No est v -22 prior.
• 06:00 (CZ) Czech Republic sells CZK vs. CZK5.0B indicated in 3-month Bills; Avg Yield: % v 0.25% prior; bid-to-cover: x v 2.52x prior.
• 06:00 (RO) Romania to sell RON300M in 4.75% 2034 Bonds; Avg Yield: % v 3.89% prior; bid-to-cover: x v 1.85x prior.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (MX) Mexico Mar Unemployment Rate NSA (unadj): 4.1%e v 4.4% prior.
• 07:45 (EU) ECB Interest Rate Decision: Expected to leave Key Rates unchanged; Expected to leave Main 7-Day Refinancing Rate unchanged at 0.00%; Expected to leave Marginal Lending Facility unchanged at 0.25%; Expected to leave Deposit Facility Rate unchanged at -0.50%.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) Initial Jobless Claims: 610Ke v 576K prior; Continuing Claims: 3.64Me v 3.371M prior.
• 08:30 (US) Mar Chicago Fed National Activity Index: +1.25e v -1.09 prior.
• 08:30 (US) Weekly USDA Net Export Sales.
• 08:30 (EU) ECB chief Lagarde holds post rate decision press conference.
• 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 16th: No est v $580.5B prior.
• 10:00 (US) Mar Existing Home Sales: 6.15Me v 6.22M prior.
• 10:00 (US) Mar Leading Index: 1.0%e v 0.2% prior.
• 10:00 (EU) Euro Zone Apr Advance Consumer Confidence: -11.0e v -10.8 prior.
• 10:30 (US) Weekly EIA Natural Gas Inventories.
• 11:00 (US) Apr Kansas City Fed Manufacturing Activity Index: 28e v 26 prior.
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.
• 12:00 (CA) Canada to sell 10-year notes.
• 13:00 (US) Treasury to sell 5-Year TIPS
• 15:00 (AR) Argentina Feb Economic Activity Index (Monthly GDP) M/M: No est v 1.9% prior; Y/Y: -2.3%e v -2.0% prior.
• 15:00 (AR) Argentina Mar Trade Balance: $1.4Be v $1.1B prior.
• 19:00 (AU) Australia Apr Preliminary PMI Manufacturing: No est v 56.8 prior; PMI Services: No est v 55.5 prior; PMI Composite: No est v 55.5 prior.
• 19:01 (UK) Apr GfK Consumer Confidence: -12e v -16 prior.
• 19:30 (JP) Japan Mar National CPI Y/Y: -0.2%e v -0.4% prior; CPI ex-fresh food (core) Y/Y: -0.2%e v -0.4% prior; CPI ex-fresh food/energy (core/core) Y/Y: 0.3%e v 0.2% prior.
• 20:30 (JP) Japan Apr Preliminary PMI Manufacturing: No est v 52.7 prior; PMI Services: No est v 48.3 prior; PMI Composite: No est v 49.9 prior.
• 20:30 (SG) Singapore Q1 Final Private Home Prices Q/Q: No est v 2.9% prelim.
• 23:00 (NZ) New Zealand Mar Credit Card Spending M/M: No est v -1.9% prior; Y/Y: No est v -12.4% pror.
• 23:30 (TH) Thailand Mar Customs Trade Balance: $0.8Be v $0.0B (nil) prior; Exports Y/Y: -1.3%e v -2.6% prior; Imports Y/Y: 3.4%e v 22.0% prior.
• 23:30 (JP) Japan to sell 3-Month Bills.