Risk Appetite Looks To Find Its Groove Ahead Of Key US Data

Notes/Observations

• Risk appetite trying to regain its grove ahead of key US data.

Asia:

• Request for canceling Tokyo Olympics said to have been submitted to various officials (including the President of the IOC), cites a statement from petition organizer and former Japan Bar Association Head Utsunomiya.

Coronavirus:

• CDC stated that fully vaccinated people did not need to wear face masks indoors or outdoors in most settings.
• Japan Econ Min Nishimura: To add 3 additional prefectures to the state of emergency.
• Singapore strengthens coronavirus restrictions.

Europe:

• BOE Gov Bailey stated that he did not believe higher inflation will persist, is watching inflation very carefully.

Americas:

• Fed’s Bullard (non-voter, dove) noted that US GDP was poised to recoup its pre-pandemic level; this quarter the US economy moved into an expansion phase. higher inflation expectations were not concerning; the job market might be much tighter than data suggest.
• USTR Chief Tai noted that Section 301 tariff exclusions for Chinese imports would be part of the Biden administration’s top-to-bottom China trade review; knows time was of the essence.

Energy:

• Israeli military intensified assaults with air and ground forces on Gaza although a military spokesman said they haven’t entered Gaza yet.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.43% at 439,14, FTSE +0.72% at 7,013.80, DAX +0.50% at 15,275.17 , CAC-40 +0.56% at 6,323.68, IBEX-35 +0.81% at 9,039.00, FTSE MIB +0.39% at 24,581.50, SMI +0.34% at 11,071.30, S&P 500 Futures +0.63%].
• Market Focal Points/Key Themes: European indices open higher across the board but retraced some of the gains as the session progressed; press reports that UK and Germany will continue with covid restriction easing; better-performing sectors include consumer discretionary and financials; underperformers include materials and energy; Sanne rejects offer from Cinven; Toshiba Tec’s European unit reports being hacked; Adidas receives an offer for Reebok unit; focus on the forthcoming release of ECB minutes; earnings expected during the upcoming US session include ACS, SNC-Lavalin, and Diasorin.

Equities

• Consumer discretionary: Adidas [ADS.DE] +1% (Reebok offer speculation).
• Consumer staples: Danone [BN.FR] -2% (analyst downgrade).
• Financials: Sanne Group [SNN.UK] +25% (rejects offers).
• Industrials: Knorr-Bremse [KBX.DE] +3% (earnings).

Speakers

• Czech Central Bank (CNB) May Minutes noted that the decision to raise rates was moving closer. Members Mora and Holub noted that increasing rates too late could entail costs of anchoring inflation expectations; raising rates in June was consistent with the forecast. Member Michl believed rates should remain steady until the pandemic was under control.
• Thailand Central Bank noted that foreign tourist arrivals might come in below forecasts and impact economic growth.

Currencies/Fixed Income

• Risk appetite managed to muster some traction and helped to offset some recent safe-haven flows into the USD. Dealers eyeing strong US retail sales, industrial production, and consumer confidence data later in the session to improve sentiment.

Economic data

• (FI) Finland Apr CPI M/M: 0.4% v 0.2% prior; Y/Y: 2.1% v 1.3% prior.
• (ES) Spain Apr Final CPI M/M: 1.2% v 1.2%e; Y/Y: 2.2% v 2.2%e.
• (ES) Spain Apr Final CPI Harmonized M/M: 1.1% v 1.1%e; Y/Y: 2.0% v 1.9%e.
• (ES) Spain Apr CPI Core M M/M: % v 0.4% prior; Y/Y: % v 0.3% prior.
• (ES) Spain Mar House transactions Y/Y: +32.4% v -4.3% prior.
• (CN) Weekly Shanghai copper inventories (SHFE): 229.2K v 208.5K tons prior.
• (RU) Russia Narrow Money Supply w/e May 7th (RUB): 14.06T v 14.14T prior.
• (CZ) Czech Mar Current Account (CZK): 11.8B v 14.5Be.
• (PL) Poland Q1 Preliminary GDP Q/Q: 0.9% v 1.1%e; Y/Y: -1.2% v -1.4%e.
• (PL) Poland CPI M/M: 0.8% v 0.7% prelim; Y/Y: 4.3% v 4.3% prelim.
• (IT) Italy Mar General Government Debt: €2.651T v €2.644T prior.
• (HK) Hong Kong Q1 Final GDP Q/Q: 5.4% v 5.3%e; Y/Y: 7.9% v 7.8%e.
• (IS) Iceland Apr International Reserves (ISK): B v 857B prior.
• 05:00 (CY) Cyprus Q1 Preliminary GDP Q/Q: % v 1.4% prior; Y/Y: % v -4.5% prior.

Fixed income Issuance

• None seen.

Looking Ahead

• (EU) Daily ECB Liquidity Stats.
• 05:30 (IN) India to sell combined INR260B in 2023, 2030 and 2061 bonds.
• 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L Bonds; to sell combined ZAR1.2B in I/L 2025, 2033 and 2050 bonds.
• 06:00 (IR) Ireland Mar Trade Balance: No est v €6.2B prior.
• 06:00 (UK) DMO to sell £3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively).
• 06:45 (US) Daily Libor Fixing.
• 07:00 (IL) Israel Apr CPI M/M: 0.4%e v 0.6% prior; Y/Y: 0.9%e v 0.2% prior.
• 07:30 (IN) India Weekly Forex Reserve w/e May 7th: No est v $588.0B prior.
• 08:00 (PL) Poland Mar Current Account Balance: €1.6Be v €1.6B prior; Trade Balance: €1.0Be v €0.9B prior; Exports: €24.4Be v €21.3B prior; Imports: €23.4Be v €20.4B prior.
• 08:00 (UR) Ukraine Q1 Preliminary GDP Q/Q: -0.6%e v +0.8% prior; Y/Y: -1.4%e v -0.5% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces upcoming bill issuance (held on Wed).
• 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond issuance.
• 08:30 (US) Apr Advance Retail Sales M/M: 1.0%e v 9.7% prior (revised from 9.8%); Retail Sales (ex-auto) M/M: 0.7%e v 8.4% prior; Retail Sales (ex-auto/gas): 0.3%e v 8.2% prior; Retail Sales (control group): -0.4%e v +6.9% prior.
• 08:30 (US) Apr Import Price Index M/M: 0.6%e v 1.2% prior; Y/Y: 10.2%e v 6.9% prior; Import Price Index (ex-petroleum) M/M: 0.5%e v 0.9% prior.
• 08:30 (US) Apr Export Price Index M/M: 0.8%e v 2.1% prior; Y/Y: 14.0%e v 9.1% prior.
• 08:30 (CA) Canada Mar Manufacturing Sales M/M: +3.3%e v -1.6% prior.
• 08:30 (CA) Canada Mar Wholesale Trade Sales M/M: +1.0%e v -0.7% prior.
• 09:00 (CA) Canada Apr Existing Home Sales M/M: No est v +5.2% prior.
• 09:15 (US) Apr Industrial Production M/M: 1.0%e v 1.4% prior; Capacity Utilization: 75.0%e v 74.4% prior; Manufacturing Production: 0.2%e v 2.7% prior.
• 10:00 (US) Mar Business Inventories: 0.3%e v 0.5% prior.
• 10:00 (US) May Preliminary University of Michigan Confidence: 90.0e v 88.3 prior.
• 10:05 (US) Fed’s Clarida at Atlanta Fed.
• 11:00 (CO) Colombia Mar Trade Balance: -$1.2Be v -$0.7B prior; Total Imports: $4.8Be v $3.9B prior.
• 11:00 (EU) Potential sovereign ratings after the European close.
• 12:00 (CO) Colombia Q1 GDP Q/Q: 0.9%e v 6.0% prior; Y/Y: -0.5%e v -3.6% prior.
• 13:00 (US) Fed’s Kaplan.
• 13:00 (US) Weekly Baker Hughes Rig Count.
• 15:00 (CO) Colombia Mar Economic Activity Index (Monthly GDP) Y/Y: +7.7%e v -3.5% prior.