Notes/Observations
Continued rumblings of looming staff shake-up within the Trump Administration
Optimism that UK can hash out a deal on Brexit transition ahead of next week’s EU Leader Summit
Asia:
Japan Lower and Upper Houses of Diet approved BoJ Gov Kuroda to additional 5-year term; also approved Amamiya and Wakatabe as Dep Governors
Europe:
UK and EU officials agree to take part in ‘intensive talks’ to resolve Irish border issue and to include discussion of customs and goods rule. UK had plenty of ground to make up on the Irish border issue before next week’s EU summit where it wanted to agree a deal on a Brexit transition period as the gap on the Irish question remained wide
ECB opened a second consultation on the new euro unsecured overnight rate with final consultations due by 20th April 2018
Americas:
Jan Total Net TIC Flows +$119.7B v -$122.5B prior; Net Long Term TIC Flows: $62.1B v $23.3B prior; China Total holding of US Treasuries at a 6-month low ($1.17T v $1.18T prior)
US Chamber of Commerce spokesperson: urged Trump administration to not impose tariffs against China as it would hurt Americans and could lead to trade war. Did believe that needed focus on negative economic impact of Chinese industrial practices but imposing tariffs was wrong approach
President Trump said to have decided to replace national security advisor McMasters but the move was not expected to be made immediately (denied by White House)
Special counsel Robert Mueller had subpoenaed Trump and his organization to turn over documents (includes those related to Russia). This would be the first known instance of Mueller demanding records directly related to President Trump’s businesses
Economic Data:
(DE) Germany Feb Wholesale Price Index M/M: -0.3% v +0.9% prior; Y/Y: 1.2% v 2.0% prior
(FI) Finland Jan GDP Indicator WDA Y/Y: 0.9 v 2.7% prior
(NO) Norway Feb Trade Balance (NOK): 21.3B v 28.5B prior
(TR) Turkey Jan Industrial Production M/M: -0.8% v +1.2%e; Y/Y: 12.0% v 6.7%e
(CN) Weekly Shanghai copper inventories (SHFE): 297.0K v 268.1K tons prior
(AT) Austria Feb CPI M/M: +0.3% v -0.7% prior; Y/Y: 1.8% v 1.8% prior
(ES) Spain Q4 Labour Costs Y/Y: 0.7 v 0.4% prior
(CZ) Czech Feb PPI Industrial M/M: -0.4% v 0.1%e; Y/Y: -0.3% v +0.2%e
(CZ) Czech Jan Current Account (CZK): +28.8B v -7.5B prior
(PL) Poland Feb Employment M/M: 0.2% v 0.2%e; Y/Y: 3.7% v 3.7%e, Average Gross Wages M/M: 0.2% v 0.6%e; Y/Y: 6.8% v 7.2%e
(IT) Italy Feb Final CPI M/M: 0.0% v 0.1% prelim; Y/Y: 0.5% v 0.6% prelim
(IT) Italy Feb Final CPI EU Harmonized M/M: -0.5% v -0.3% prelim, Y/Y: 0.5% v 0.7% prelim, CPI Index (Ex Tobacco): 101.5 v 101.5 prior
Fixed Income Issuance:
(ZA) South Africa sold total ZAR900M vs. ZAR900M indicated in I/L 2025, 2029 and 2050 bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.1% at 377.1, FTSE +0.2% at 7152, DAX +0.4% at 12394, CAC-40 -0.1% at 5264, IBEX-35 +0.1% at 9692, FTSE MIB +0.2% at 22761 , SMI +0.2% at 8893, S&P 500 Futures +0.1%]
Market Focal Points/Key Themes: European Indices trades slightly higher across the board, with the Dax outperforming following a late open after technical issues on the futures which prevented the usual open. On the earnings front Fraport, Bachem, Mitie, JD Weatherspoons trade lower after Earnings/trading updates; Salini Impregilo a notable riser after strong results and guidance. Nex Group trades over 30% higher after confirming bid interest from the CME; Deutsche Bank issued their annual report, guiding 2018 Revenue to rise while increasing their cost forecast. Looking ahead notable earners include retailers Tiffany’s, Hibbett Sport, Buckle and Pery Ellis.
Movers
Consumer Discretionary [ JD Weatherspoon [JDW.UK] -1.7% (Trading update), Mitie [MTO.UK] -4.0% (Trading update), Takeaway.com [TKWY.NL] -3.9% (Prime Ventures priced ~2.4M shares at €45.70/share) ]
Industrials [Fraport [FRA.DE]-1.3% (Earnings), Salini Impregilo [SAL.IT] +8.2% (Earnings) ]
Financials [ Nex Group [NXG.UK] +32% (confirms takeover interest from CME), Deutsche Bank [BDK.DE] +0.8% (Annual report ]
Healthcare [Bachem [BANB.CH] -3.4% (Earnings)]
Speakers
ECB’s Praet (Belgium, chief economist) noted that was seeing an improvement in inflation but the region might have more slack than previously thought which could be slowing the rebound of inflation. ECB to ensure that policy controled the short-end of the yield curve. Must be precise on short-term rates once QE bond buying ended. Rate guidance would need to be specified and reiterated view that ECB to proceed at a gradual pace
BOE Financial Policy Committee (FPC) Mar Minutes maintained its countercyclical buffer at 1.0% and would revisit level at the Jun meeting. Banks to face tougher hurdles in 2018 stress test. It noted that domestic risk appetite had slightly risen since Nov
EU said to see ‘little chances’ for WTO suit versus steel tariffs announced by the US; said to be preparing member states for a trade war with the US over President Trump’s steel and aluminum tariffs
Austria WIFO think tank Quarterly Economic Forecasts raised its 2018 GDP from 3.0% to 3.2% and maintained 2019 GDP at 2.2%
Norway Central Bank (Norges) Dep Gov Nicolaisen reiterated view that interest rates to be raised after summer but would be careful on rate hikes He noted a close link between NOK currency (Krone) and oil
Russia Central Bank’s Dmitriev: CPI to accelerate smoothly towards the 4% target in H2 2018. Q2 inflation to be somewhat lower than Q1 due to base effects
Japan Fin Min Aso reiterated his position that he had no intention to resign at this time
Japan Cabinet Office (Gov’t) Monthly Economic Report for March maintained its overall assessment that economy was recovering at a moderate pace. The govt did raises its view on inflation which now saw CPI as rising moderately (prior view was seen as flat).
North and South Korea officials to hold high level talks in March. A potential meeting between the two leaders (Moon and Kim) could be decided after the high-level talks with any leader summit would likely end within a day. South Korea said to be considering a Moon-Trump meeting before the planned Trump-Kim summit
Taiwan Central Bank official Harry Yen (top FX official) reiterated view to maintain order in currency markets
Currencies
USD consolidating with the focus turning towards next week’s FOMC meeting but continued rumblings within the Trump Administration and potential trade war were headwinds for the greenback.
EUR/USD was well contained within the 2018 trading range as ECB officials continued to speak cautious on the inflation front. Pair holding above the 1.23 just ahead of the NY morning.
GBP/USD was slightly higher above the 1.3950 level as reports circulated that UK and EU officials agreed to take part in ‘intensive talks’ to resolve Irish border issue ahead of next week’s EU summit. However the gap on the Irish question said to remained wide.
USD/JPY was lower by over 0.5% at 105.50 as the political rumblings within the Trump administration provided some JPY safe-haven flows. Japanese govt did raise its view on inflation which now saw CPI as rising moderately (prior view was seen as flat).
Fixed Income
Bund Futures trade 10 ticks higher at 158.22 at the highs for the week. Upside targets 158.75, while a return lower targets the157.50 level.
Gilt futures trade at 123.01 up 9 ticks after the Irish border spat complicates Brexit transition talks. Support continues to stand at 121.75 then 120.95, with upside resistance at 123.35 then 123.75.
Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.865T from €1.900T prior. Use of the marginal lending facility stayed rose from €107M to €85M.
Corporate issuance saw equity fund inflows of $20.4B in w/e Mar 14th vs outflows of $9.8B in w/e Mar 7th
Looking Ahead
(DE) German Chancellor Merkel to meet France President Macron in Paris
06:00 (EU) Euro Zone Feb Final CPI Y/Y: 1.2%e v 1.2% advance; CPI Core Y/Y: 1.0%e v 1.0% advance, M/M: No est v -0.9% prior
06:00 (EU) Euro Zone Q4 Labour Costs Y/Y: No est v 1.6% prior
06:00 (CY) Cyprus Feb CPI EU Harmonized M/M: No est v -1.9% prior; Y/Y: No est v -1.5% prior
06:00 (EU) Daily Euribor Fixing – 06:00 (FR) France Debt Agency (AFT) announces upcoming auctions
07:00 (IE) Ireland Jan Trade Balance: No est v €3.9B prior
07:00 (UK) DMO to sell combined £3.5B in 1-month, 3-month and 6-month Bills (£0.5B, £1.0B and £2.0B respectively)
07:30 (IN) India Weekly Forex Reserves
07:45 (US) Daily Libor Fixing
08:00 (BR) Brazil Jan IBGE Services Sector Volume Y/Y: No est v 0.5% prior
08:30 (US) Feb Housing Starts: 1.29Me v 1.326M prior; Building Permits: 1.32Me v 1.377 prior (revised from 1.396M)
08:30 (CA) Canada Jan Manufacturing Sales M/M: -0.9%e v -0.3% prior
08:30 (CA) Canada Jan Int’l Securities Transactions (CAD): No est v -2.0B prior
(BE) Belgium Debt Agency (BDA) announces upcoming OLO auction for Monday, Mar 19th
09:00 (PL) Poland Jan Current Account: +€1.0Be v -€1.2B prior; Trade Balance: €0.0Me v -€1.3B prior
09:00 (PL) Poland Feb CPI Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.0%e v 0.9% prior
09:00 (IN) India announces upcoming Bill auction (held on Wed)
09:05 (UK) Baltic Dry Bulk Index
09:15 (US) Feb Industrial Production M/M: +0.4%e v -0.1% prior; Capacity Utilization: 77.7%e v 77.5% prior, Manufacturing Production: 0.5%e v 0.0% prior
10:00 (US) Jan JOLTS Job Openings: 5.917Me v 5.811M prior
10:00 (US) Mar Preliminary University of Michigan Confidence: 99.3e v 99.7 prior
12:00 (EU) Potential Sovereign ratings after European close: (Austria, Cyprus, Denmark, Finland, Luxembourg, Nigeria and Portugal Sovereign debt to be rated by S&P; Italy Sovereign Debt to Be Rated by Moody’s; Italy Sovereign Debt to be rated by Fitch
13:00 (US) Weekly Baker Hughes Rig Count data
