Fed Decision And Biden Speech In Focus

Notes/Observations

• Focus on FOMC rate decision; Powell to remain ultra-dovish and emphasize the long period ahead; Fed also expected to upgrade its economic assessment to reflect recent strong data.
• President Biden poised to lay out his spending and tax plan in his 1st major speech to Congress.

Asia:

• Japan Mar Retail Sales registered its fastest rise in 5 months (M/M: 1.2% v 0.6%e; Y/Y: 5.2% v 4.6%e).
• Australia Q1 CPI Q/Q: 0.6% v 0.9%e; Y/Y: 1.1% v 1.4%e.
• Monetary Authority of Singapore (MAS) Biannual Macroeconomic Review reiterated stance that an accommodative monetary policy remained appropriate. Maintained 2021 Headline inflation forecast between +0.5% to +1.5% and noted that 2021 GDP growth projected to ‘exceed’ upper end of 4-6% range.

Europe:

• Ireland Foreign Min Coveney: Confident of solution for post-Brexit Northern Ireland trade.

Americas:

• President Biden said to be still planning a higher capital gains tax but had left out an estate tax expansion after concerns he’d fail to gather sufficient support from other Democrats.
• White House said to be quietly meeting Republican senators who drafted a counterproposal to Biden’s infrastructure plan. GOP senators said to be optimistic Biden was open to concessions and able to reach a compromise.
• BOC Gov Macklem affirmed that BOC would provide support through the full length of the recovery. Reiterated commitment of keeping inflation at 2.0%.

Energy:

• Weekly API Crude Oil Inventories: +4.3M v +0.4M prior.
• Russia Dep PM Novak: OPEC+ reconfirmed plans to raise output in May-July period, situation on oil market was positive, demand is recovering.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.06% at 439.58, FTSE +0.25% at 6,962.58, DAX +0.42% at 15,313.15, CAC-40 +0.41% at 6,299.45, IBEX-35 -0.10% at 8,748.00, FTSE MIB -0.22% at 24,418.50 , SMI -0.02% at 11,090.00 , S&P 500 Futures +0.08%]
• Market Focal Points/Key Themes: European indices open lower across the board, but later turned around to trade mixed; better performing sectors lead by financials and energy; consumer discretionary and health care sectors trending to the downside; energy sector supported as OPEC+ decides to continue with modest production increase; Archegos fallout weighs on financial sector, and reports new Credit Suisse Chairman might oust CEO; earnings expected during the upcoming US session include Owens Corning, Boston Scientific, Entergy and Humana.

Equities

• Consumer discretionary: Equiniti [EQN.UK] +8% (receives increased offer), Delivery Hero [DHER.DE] +6% (trading update), J Sainsbury [SBRY.UK] -2% (earnings), Puma [PUM.DE] 2% (earnings).
• Financials: Deutsche Bank [DBK.DE] +5% (earnings), Lloyds Banking [LLOY.DK] +3% (earnings), Danske Bank [DANSKE.DK] -3% (earnings).
• Materials: Covestro [1COV.DE] -1% (earnings).

Speakers

• EU Parliament said to have voted in favor of UK-EU post Brexit trade agreement.
• Sweden Central Bank (Riksbank) Breman commented that inflation was likely to be volatile in the coming period.
• Finland Center party leader Saarikko stated that party coalition talks were moving in the right direction but not yet completed.
• Russia Central Bank First Deputy Governor Yudaeva commented that the domestic real estate market was becoming speculative.
• S&P affirmed South Korea sovereign rating at AA, outlook stable.

Currencies/Fixed Income

• FX markets quiet with a focus on FOMC rate decision later during the NY afternoon. Dealers expect Fed chief Powell to remain ultra-dovish and emphasize the long period ahead; Fed also expected to upgrade its economic assessment to reflect recent strong data.
• Bond yields were higher ahead of President Biden’s 1st major speech. The President is poised to lay out his spending and tax plan. US 10-year is higher by 2bps in electronic trade.
• European bond yields followed in suit with bit core and peripheral yield higher.

Economic data

• (DE) Germany May GfK Consumer Confidence: -8.8 v -4.2e 14th straight negative reading).
• (NO) Norway Mar Retail Sales M/M: 0.0% v 0.6%e.
• (FR) France Apr Consumer Confidence: 94 v 93e.
• (HU) Hungary Mar Unemployment Rate: 4.5% v 4.7%e.
• (ES) Spain Feb Total Mortgage Lending Y/Y: -33.1% v -28.1% prior; House Mortgage Approvals Y/Y: -13.8% v -31.6% prior.
• (SE) Sweden Mar Retail Sales M/M: 2.6% v 0.2%e; Y/Y: % v 4.6% prior.
• (AT) Austria Apr Manufacturing PMI: 64.7 v 63.4 prior (10th straight expansion and a record high).
• (CH) Swiss Apr Expectations Survey: 68.3 v 66.7 prior.

Fixed income Issuance

• (IN) India sold total INR360B vs. INR360B in 3-month, 6-month and 12-month bills.
• (NL) Netherlands Debt Agency (DSTA) sold €2.35B vs. €1.5-2.5B indicated range to sell 0.50% July 2026 DSL bond; Avg Yield: -0.503% v -0.487% prior.
• (DK) Denmark sold total DKK2.38B in 3-month, 6-month, 9-month and 12-month bills.
• (SE) Sweden sold total SEK7.5B vs. SEK7.5B indicated in 3-month bills; Avg Yield: -0.1982% v -0.1903% prior; Bid-to-cover: 3.14x v 2.14x prior.
• (NO) Norway sold NOK2.0B vs. NOK2.0Bindicated in 1.25% Sept 2031 Bonds; Avg Yield: 1.500% v 1.460% prior; bid-to-cover: 2.85x v 3.13x prior.
• (UK) DMO sold £900M in 0.125% Aug 2031 Inflation-linked Gilts (UKei); Real Yield: -2.537% v -2.595% prior, bid-to-cover: 2.82x v 3.54x prior.
• (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: -0.481% v -0.486% prior; Bid-to-cover: 1.34x v 1.40x prior (Mar 26th 2021).
• 05:00 (PT) Portugal Debt Agency (IGCP) buy back.

Looking Ahead

• (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell €2.5B in 0% May 2036 Bunds.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.
• 05:30 (GR) Greece Debt Agency (PDMA) to sell 26-week bills.
• 05:30 (EU) ECB alloment in 3-month LTRO Tender.
• 05:30 (ZA) South Africa to sell combined ZAR4.8B in 2030, 2035 and 2040 bonds.
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).
• 06:00 (IE) Ireland Mar Retail Sales Volume M/M: No est v 13.9% prior; Y/Y: No est v -3.2% prior.
• 06:00 (CZ) Czech Republic to sell 2028, 2031, 2033 bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (RU) Russia OFZ Bond auction.
• 07:00 (US) MBA Mortgage Applications w/e Apr 23rd: No est v 8.6% prior.
• 07:00 (BR) Brazil Apr FGV Consumer Confidence: No est v 68.2 prior.
• 07:00 (UK) Weekly PM Question time in House.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (PT) ECB’s Centeno (Portugal).
• 08:30 (US) Mar Advance Goods Trade Balance: -$88.0Be v -$86.7B prior.
• 08:30 (US) Mar Preliminary Wholesale Inventories M/M: 0.5%e v 0.6% prior; Retail Inventories M/M: -0.3%e v 0.0% prior.
• 08:30 (CA) Canada Feb Retail Sales M/M: +4.0%e v -1.1% prior; Retail Sales (ex-auto) M/M: +3.5%e v -1.2% prior.
• 08:45 (DE) ECB’s Schnabel (Germany).
• 09:30 (BR) Brazil Mar Total Formal Job Creation: +150.0Ke v +401.6K prior.
• 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (7-20 years).
• 10:00 (EU) ECB chief lagarde.
• 10:30 (US) Weekly DOE Oil Inventories.
• 13:30 (BR) Brazil Mar Total Federal Debt (BRL): No est v 5.199T prior.
• 14:00 (US) FOMC Interest Rate Decision: Expected to leave Interest Rates unchanged between 0.00-0.25% range; Expected to leave Interest rate on Excess Reserves (IOER) unchanged at 0.10%.
• 14:30 (US) Fed Chair Powell post rate decision press conference.
• 17:00 (KR) South Korea May Business Manufacturing Survey: No est v 91 prior; Non-Manufacturing Survey: No est v 78 prior.
• 18:45 (NZ) New Zealand Mar Trade Balance (NZD): 0.0Be v 0.2B prior; Exports: 5.7Be v 4.5B prior; Imports: 5.7Be v 4.3B prior.
• 21:00 (NZ) New Zealand Apr Final ANZ Business Confidence: No est v -8.4 prelim; Activity Outlook: No est v 16.4 prelim.
• 21:00 (US) President Biden’s speech to Congress.
• 21:30 (AU) Australia Q1 Import Price Index Q/Q: -1.6%e v -1.0% prior; Export Price Index Q/Q: 9.0%e v 5.5% prior.