USD Remains On Soft Footing Following Friday’s Jobs report

Notes/Observations

• Colonial Pipeline remains closed for 3rd day following cyber-attack
• Higher commodity prices keeps focus on inflation despite narrative of transitory factors

Asia

• New Zealand Fin Min Robertson pre-budget speech noted that the economic recovery provided us with more options, further scope to keep lid on debt
• South Korea President Moon stated that would to try to achieve 2021 GDP growth of over 4.0%. To focus on recovering jobs and economic recovery, seeing end to coronavirus pandemic; South Korea

Europe

• ECB Rehn (Finland) reiterated the central bank should follow the lead of the Federal Reserve by overshooting of its inflation target to counter sluggish price growth
• Spain PM Sanchez reiterated calls for debt mutualisation noting it would aid Europe to better compete with other countries around the world
• Pro-independence Scottish National Party won Scotland’s parliamentary elections but failed to secure an absolute majority. Damping the risks of an imminent independence vote (SNP won 64 seats in Scottish parliament (1 short of an outright majority)

Energy

• US Dept of Energy is monitoring potential impacts to national energy supply due to the Colonial Pipeline shutdown following a cyberattack (Note: System transports more that 2.5 million barrels of fuel every day and account for about 45% of all fuel consumed on the heavily populated U.S. East Coast.
• Colonial Pipeline: No time line for restart after cyber-attack, main lines remained closed, smaller lateral times were operational; To bring system back online when safe
• Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 0.00% at 444.92, FTSE +0.01% at 7,130.35, DAX -0.20% at 15,369.20, CAC-40 -0.19% at 6,373.26, IBEX-35 +0.24% at 9,081.00, FTSE MIB +0.51% at 24,738.50, SMI -0.46% at 11,122.25, S&P 500 Futures +0.01%]
• Market Focal Points/Key Themes: European indices open mixed but took on a downward bias later in the session; better performing sectors include materials and energy; worse performing sectors include technology and healthcare; Russia closed for holiday; energy sector pushed higher following cyberattack on pipeline in the US; travel sector affected after UK publishes “green list”; UK expected to announce further easing of covid restrictions; earnings expected in the upcoming US session include Air Products, Clear Channel and Duke Energy

Equities

• Consumer discretionary: Greggs [GRG.UK] +9% (trading update), EasyJet [EZJ,UK] -3%, Ryanair [RYA.UK] -1.5%, IAG [AIG.UK] -2% (UK green list), PostNL [PNL.NL] -6% (trading update)
• Consumer staples: Carl Zeiss Meditec [AFX.DE] -3% (earnings)
• Financials: Deutsche Bank [DBK.DE] +1% (sued in 1MDB case)
• Healthcare: AstraZeneca [AZN.UK] -1% (considering bypassing EUA process for Covid vaccine in US and moving directly to application for full authorization from FDA) – Industrials: Victrex [VCT.UK] +7% (earnings)

Speakers

• ECB’s Lane (Ireland, chief economist) stated that the regional economy to grow rapidly and be back at pre-pandemic growth in 2022. Govt would still need to maintain State aid programs to cope with Covid fallout
• Sweden Central Bank (Riksbank) Apr Minutes noted that continued expansionary monetary policy was needed but outlook brighter compared to Feb meeting. Recovery was well underway, but it would take time before inflation was more permanently close to the target of 2.0%
• Sweden Central Bank (Riksbank) Gov Ingves noted in the April Minted that medium term prospects looked brighter. Repo Rate cut be cut even if scope for cuts is not large
• France Fin Min Le Maire stated that he maintained 2021 GDP growth forecast of 5.0% and looked to get back to pre-pandemic growth levels by H1 2022. No plans for a 2nd economic recovery plan on top of the current one
• Poland MPC Member Ancyparowicz stated that QE would have to end before any rate hike. No sign of demand-driven inflation
• Israel Central Bank Gov Yaron stated that was likely to reach the 1.0-3.0% inflation target range by June

Currencies/Fixed income

• USD remained on the defensive following last Friday’s disappointing jobs report which added to beliefs that the Fed will take longer to consider rate steps
• GBP was firmer with Cable hitting a 10-week high. Strength of the pound attributed after results showed PM Johnson’s party made strides against the opposition in local elections. PM Johnson emerged stronger from last Thursday’s local elections and the Scottish National Party (SNP) failed to win an outright majority in its parliamentary elections. GBP/USD probing the 1.41 level by mid-session.
• Optimistic outlook by ECB members on growth aided the EUR/USD pair as it traded at 1.2175 by mid-session.

Economic data

• (SE) Sweden May SEB Housing-Price Indicator: 66 v 63 prior
• (NL) Netherlands Mar Manufacturing Production M/M: +3.1% v -2.5% prior; Y/Y: +3.0% v -1.7% prior; Industrial Sales Y/Y: +10.3% v -4.6% prior
• (FI) Finland Mar Industrial Production M/M: -2.1% v +2.2% prior; Y/Y: -2.3% v +3.4% prior
• (NO) Norway Apr CPI M/M: 0.3% v 0.5%e; Y/Y: 3.0% v 3.1%e
• (NO) Norway Apr CPI Underlying M/M: 0.4% v 0.3% prior; Y/Y: 2.0% v 2.1%e
• (NO) Norway Apr PPI (including 0il) M/M: +0.1% v -0.2% prior; Y/Y: 22.5% v 18.4% prior
• (DK) Denmark Apr CPI M/M: 0.4% v 0.1% prior; Y/Y: 1.5% v 1.0% prior
• (DK) Denmark Apr CPI EU Harmonized M/M: 0.5% v 0.1% prior; Y/Y: 1.5% v 0.9% prior
• (DK) Denmark Current Account Balance (DKK): 15.2B v 16.1B prior; Trade Balance: 5.5B v 7.0B prior
• (TR) Turkey Mar Unemployment Rate: 13.1% v 13.4% prior
• (UK) Halifax Apr House Price Index M/M: 1.4% v 1.1% prior; Y/Y: 8.2% v 6.5% prior
• (CH) Swiss weekly Total Sight Deposits (CHF): 705.0B v 701.4B prior; Domestic Sight Deposits: 634.1B v 634.0B prior
• (EU) Euro Zone May Sentix Investor Confidence Index: 21.0 v 15.0e (highest since May 2018)
• (HU) Hungary Apr YTD Budget Balance (HUF): -1.044T v -1.114T prior
• (GR) Greece Mar Industrial Production Y/Y: 5.5% v 4.3% prior

Fixed income issuance

• (DK) Denmark sold total DKK2.58B in 3-month, 6-month, 9-month bills
• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 0.14% v 0.12% prior; Bid-to-cover: 4.61x v 2.00x prior

Looking Ahead

• (IT) Italy Debt Agency (Tesoro) announces specific Bonds for issuance on Thursday, May 13th
• 05:20 (EU) Daily ECB Liquidity Stats
• 05:30 (DE) Germany to sell €4.0B in 6-month BuBills
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays) Bonds
• 06:00 (IE) Ireland Mar Live Register Monthly Change: No est v -2.7K prior; Live Register Level: No est v 186.3K prior
• 06:00 (FI) Finland to sell €1.0-2.0B in 6-month and 9-month Bills
• 06:00 (IL) Israel to sell bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (TR) Turkey to sell 12.6% 2025 Bonds
• 07:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson at webinar
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (IS) Iceland Apr Unemployment Rate: No est v 12.1% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming size on issuance
• 08:30 (CL) Chile Central Bank Traders Survey
• 09:00 (FR) France Debt Agency (AFT) to sell €B in 3-month, 6-month and 12-month bills
• 09:45 (EU) ECB weekly QE bond buying update
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills
• 12:00 (UK) PM Johnson press conference
• 16:00 (US) Weekly Crop Progress Report
• 18:00 (NZ) New Zealand Apr Heavy Truckometer M/M: No est v 2.8% prior
• 18:45 (NZ) New Zealand Apr Total Card Spending M/M: No est v 2.0% prior; Retail Card Spending M/M: No est v 0.9% prior
• 19:01 (UK) Apr BRC Sales Like-For-Like Y/Y: No est v 20.3% prior
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 112.7 prior
• 19:30 (JP) Japan Mar Household Spending Y/Y: M pest v -6.6% prior
• 21:30 (CN) China Apr CPI Y/Y: +1.0%e v -0.5% prior; PPI Y/Y: 6.5%e v 4.4% prior
• 22:00 (PH) Philippines Q1 GDP Q/Q: 1.6%e v 5.6% prior; Y/Y: -3.5%e v -8.3% prior
• 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills
• 23:35 (JP) Japan to sell 10-Year JGB Bonds