Notes/Observations
- Risk appetite finding fresh legs thanks to diplomatic tones as US officials indicated efforts to diffuse rising trade tensions between the world’s two leading economies were ongoing
- Spain Mar Preliminary CPI data comes in below expectations (YoY: 1.2% v 1.4%e) while Euro Zone M3 Money Supply misses (4.2% v 4.6%e)
- European confidence data continues its retreat from recent cycle highs as technical indicators did not appear to be generating a robust signal in the region
Asia:
- North Korea leader Kim Jong Un reportedly was visiting China (Note: First known trip outside North Korea since taking power). Note: Neither China or North Korea made any official comment but such a visit would be seen as being a significant development
- China PBoC sets yuan reference rate at 6.2816 v 6.3193 prior (strongest setting since August 11, 2015)
- Japan former tax agency head Sagawa: PM Abe, his wife Akie, Fin Min Aso and their top aides did not give instructions to change documents about a land deal
Europe:
- IMF chief Lagarde said to see no risk of currency war
Americas:
- Reportedly USTR could announce the list of specific tariffs against China as soon as Tuesday; will still be a 30 comment period
- Fed’s Mester (FOMC voter, hawk): Further gradual rate hikes were appropriate. Saw unemployment falling below 4% through 2019
Economic Data:
- (DE) Germany Feb Import Price Index M/M: -0.6% v -0.3%e; Y/Y: -0.6% v -0.3%e
- (FI) Finland Mar Consumer Confidence: 24.7 v 25.8 prior; Business Confidence: 11 v 14 prior
- (ES) Spain Mar Preliminary CPI M/M: 0.1% v 0.3%e; Y/Y: 1.2% v 1.4%e
- (ES) Spain Mar Preliminary CPI EU Harmonized M/M: 1.2% v 1.7%e; Y/Y: 1.3% v 1.6%e
- (SE) Sweden Mar Consumer Confidence: 101.5 v 104.6e; Manufacturing Confidence: 114.5 v 112.2e, Economic Tendency Survey: 108.4 v 108.0e
- (TR) Turkey Mar Economic Confidence: 100.2 v 103.0 prior
- (SE) Sweden Feb Household Lending Y/Y: 7.0% v 7.0%e
- (SE) Sweden Feb PPI M/M: -0.5% v +0.8% prior; Y/Y: 2.8% v 2.5% prior
- (SE) Sweden Feb Trade Balance (SEK): -3.4B v -1.5Be
- (EU) Euro Zone Feb M3 Money Supply Y/Y: 4.2% v 4.6%e
- (IT) Italy Mar Consumer Confidence: 117.5 v 115.0e; Manufacturing Confidence: 109.1 v 109.9e, Economic Sentiment: 106.0 v 108.5 prior
- (PT) Portugal Mar Consumer Confidence: 2.0 v 1.3 prior; Economic Climate Indicator: 2.1 v 1.9 prior
- (HK) Hong Kong Feb Trade Balance (HKD): -42.7B v -40.0Be; Exports Y/Y: 1.7% v 7.0%e; Imports Y/Y: -3.2% v +2.3%e
- (EU) Euro Zone Mar Business Climate Indicator: 1.34 v 1.36e; Consumer Confidence (Final): 0.1 v 0.1e, Economic Confidence: 112.6 v 113.3e, Industrial Confidence: 6.4 v 6.9e, Services Confidence: 16.3 v 16.5e
Fixed Income Issuance:
- (IN) India sold total INR120B vs. INR120B in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK1.20B in 3-month and 6-month Bills
- (ID) Indonesia sold total IDR20.7T vs. IDR17.0T target in 3-month, 6-month bills, 10-year, 15-year and 20-year Bonds
- (IT) Italy Debt Agency (Tesoro) sold total €6.0B vs. €6.0B indicated in 6-month Bills; Avg Yield: -0.43% v -0.403% prior; Bid-to-cover: 1.63x v 1.57x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 1.3% at 367.7, FTSE +1.6% at 6999, DAX +1.4% at 11976, CAC-40 +1.3% at 5133, IBEX-35 +1.0% at 9473, FTSE MIB 1.4% at 22307 , SMI +1.5% at 8639, S&P 500 Futures +0.6%]
- Market Focal Points/Key Themes: European Indices trade sharply higher following on from a strong sessions in Wallstreet and Asia overnight and positive US futures this morning following on from easing fears of a US-China trade war. M&A remained the focal point with Akzo Nobel divesting its Specialty Chemicals unit to Carlyle for €10.1B and GSK acquiring Novartis stake in Consumer Healthcare JV for $13B. On the earnings front Ferguson outperforms in the UK, with Baloise and Nordex also gaining, while H&M trades sharply lower following their Q1 results. Elsewhere IG Group trades sharply lower after cutting its FY19 outlook following the ESMA ruling. Looking ahead notable earners include Factset, McCormick and Francesca holding.
Movers
- Consumer Discretionary [Casino [CO.FR] +4.1% (Amazon and Monoprix partnership), H&M [HMB.SE] -6.6% (Earnings), Ferguson [FERG.UK] +5.0% (Earnings) ]
- Materials [Akzo Nobel [AKZA.NL] +4.0% (Divests Chemicals Unit to Carlyle)]
- Heatlthcare [ Novartis [NOVN.CH] +2.0%, GSK [GSK.UK] +4.5% (Divests consumer healthcare JV to GSK) ]
- Financial [ Deutsche Bank [DBK.DE] +1.6% (Reportedly approached Goldman Execs for CEO position), Plus 500 [PLUS.UK] +4% (ESMA ruling), IG Group [IGG.UK] -7.8% (Response to ESMA ruling), Baloise [BALN.CH] +1.5% (Earnings) ]
- Energy [Nordex [NDX1.DE] +5.7% (Earnings)]
Speakers
- ECB’s Vasiliauskas (Lithuania): Saw a deeper discussion on policy changes in June. Could agree with market expectations of a rate hike in mid-2019 (in-line with Weidmann on such views).
- ECB’s Liikanen (Finland): Cautioned about tightening policy too soon; reiterated Council view that patience and persistence was needed. The bond buying programs remains open-ended.
- BOE Financial Policy Committee (FPC) Minutes: Brexit still poses material risks to UK finance but progress has been made in mitigating risks
- Sweden Think Tank NIER Economic Forecasts cut its 2018 GDP from 2.9% to 2.8% while raising 2019 GDP from 2.0% to 2.1%. It maintained both 2018 and 2019 CPIF at 1.8%
- S&P raised South Africa 2018 and 2019 GDP growth forecasts noting that the country was making good progress on its fiscal path and the might have bottomed out on its rating. Raised 2018 GDP to 2.0% and 2019 GDP to 2.1%
- China Foreign Ministry: No information whether North Korea leader Kim Jong Un is in Beijing
Currencies
- USD initially probed its recent weekly lows against the major European pairs but saw its fortunes turn around as the session wore on. The greenback still well contained within its 2018 trading range.
- EUR/USD initial probed the upper end of its 2018 price range with 1.2476 as the session high. The pair drifted from its best levels after ECB’s Liikanen cautioned about tightening policy too soon and reiterated Council view that patience and persistence was needed. Euro also dampened with poor data in the session. Spain Mar Preliminary CPI data came in below expectations (YoY: 1.2% v 1.4%e) while Euro Zone M3 Money Supply missed (4.2% v 4.6%e). European confidence data was also retreating from recent cycle highs. Pair testing below 1.2430 just ahead of the US session.
- GBP/USD could not sustain holding above the 1.42 level as cross-related selling in EUR/GBP weighed down the pound sterling. Cable testing the mid-1.41 area just ahead of the NY morning.
Fixed Income
- Bund Futures trade 17 ticks higher at 158.94 as bund downside demand emerges as yield fails to break below 0.50%. Upside targets 159.75, while a return lower targets the158.25 level.
- Gilt futures trade at 122.02 up 2 ticks ahead of UK 2056 I/L Gilt auction. Support continues stands at 121.25 then 120.85, with upside resistance at 123.35 then 123.85.
- Tuesday’s liquidity report showed Monday’s excess liquidity rose to €1.802T from €1.801T prior. Use of the marginal lending facility increased from €100M to €105M.
Looking Ahead
- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
- 05:30 (EU) ECB allotment in 7-day Main Financing Tender (MRO) tender
- 05:30 (UK) DMO to sell £600M in 0.125% 2056 I/L Gilts (UKTi)
- 05:30 (PL) Poland to sell 2020, 2023, 2024, 2028 bonds
- 05:30 (ZA) South Africa to sell combined ZAR2.4B in 2030, 2035 and 2048 bonds
- 06:45 (US) Daily Libor Fixing – 07:00 (BR) Brazil Central Bank (BCB) COPOM Mar Minutes
- 07:00 (ES) Spain Feb YTD Budget Balance: No est v -€18.2B prior
- 07:00 (RU) Russia announces weekly OFZ bond auction
- 07:45 (US) Weekly Goldman Economist Chain Store Sales
- 08:00 (HU) Hungary Central Bank (NBH) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.90%
- 08:05 (UK) Baltic Dry Bulk Index
- 08:55 (US) Weekly Redbook Sales
- 09:00 (US) Jan S&P/ Case-Shiller 20-City M/M: 0.60%e v 0.64% prior; Y/Y: 6.10%e v 6.30% prior; House Price Index (HPI): No est v 204.45 prior
- 09:00 (US) Jan S&P Case-Shiller (overall) HPI Y/Y: No est v 6.27% prior, Overall HPI Index: No est v 196.23 prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (HU) Hungary Central Bank (NBH) Gov Matolcsy post rate decision statement
- 10:00 (US) Mar Consumer Confidence: 131.0e v 130.8 prior
- 10:00 (US) Mar Richmond Fed Manufacturing Index: 22e v 28 prior
- 10:00 (MX) Mexico Feb Trade Balance: +$0.5Be v -$4.4B prior
- 10:00 (MX) Mexico Feb Unemployment Rate (seasonally adj): 3.4%e v 3.4% prior; Unemployment Rate (unadj): 3.3%e v 3.4% prior
- 11:00 (US) Fed’s Bostoc (2018 voter, dove) at conference in Atlanta
- 11:30 (US) Treasury to sell 4-week and 52-Week Bills
- 12:00 (CA) Canada to sell 2-Year Bonds
- 13:00 (US) Treasury to sell 5-Year Notes
- 13:30 (BR) Brazil Feb Central Gov Budget Balance (BRL): -21.1Be v +31.1B prior
- (AR) Argentina Central Bank Interest Rate Decision: Expected to leave 7-Day Repo Reference Rate unchanged at 27.25%
- 16:30 (US) Weekly API Oil Inventories
