Notes/Observations
Quiet session; focus on key end-of-week events: US payroll data and President Trump/China President Xi meeting in Florida
Spain’s Net Unemployment registers its biggest ever decline for the month of March (-48.8K v -40.9K)
Overnight:
Asia:
RBA keeps Cash Rate Target unchanged at 1.50% (as expected). Says view consistent with sustainable growth in the economy and achieving the inflation target over time. Reiterated view that domestic inflation remained quite low but was expected to pick up over the course of 2017
BOJ Gov Kuroda reiterated view that was too early to discuss an exit from current monetary policy. Exit strategy to vary depending on economy and markets. BOJ ETF purchases are not distorting market function
South Korea Mar CPI registered its highest annual pace since June 2012 (2.2% v 2.1%e)
Europe:
UK House of Commons Brexit committee noted that PM May had been urged by to carry out a full economic and legal assessment of the implications for Britain if it failed to sure a trade deal with the EU. Must publish cost reaching no deal in Brexit talks
Americas:
Fed’s Harker (hawk, FOMC voter): reiterated three hikes in 2017 would be appropriate; US inflation was moving slowly but surely upward
Senate Judiciary Committee approved Gorsuch nomination to Supreme Court; sent nomination to full Senate floor. Senate Democrats now have 41 votes against cloture, sufficient to filibuster nomination of Neil Gorsuch to the Supreme Court
Economic Data
(ES) Spain Mar Net Unemployment M/M: -48.8K v 0.9Ke (Biggest decline ever for month of March)
(IT) Italy Q4 YTD Budget Deficit to GDP: 2.4% v 2.5% prior
(BR) Brazil Mar FIPE CPI (Sao Paulo) M/M: 0.1% v 0.1%e
(UK) Mar Construction PMI: 52.2 v 52.5e (7th month of expansion)
(EU) Euro Zone Feb Retail Sales M/M: 0.7% v 0.5%e; Y/Y: 1.8% v 1.0%e
Fixed Income Issuance:
(EU) EFSF opened book to sell 2024 and 2045 bonds via syndicate
(ES) Spain Debt Agency (Tesoro) sold total €4.63B vs. €4.0-5.0B indicated range in 6-month and 12-month Bills
(ID) Indonesia sold total IDR4.46 in 2-year, 4-year, 7-year and 15-year Project based Sukuk (PBS)
(AT) Austria Debt Agency (AFFA) sold total €1.32B vs. €1.32B indicated in 2023 and 2027 RAGB bonds
(ZA) South Africa sold total ZAR2.35B vs. ZAR2.35B indicated in 2026, 2036 and 2048 bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Index snapshot (as of 10:00 GMT)
Indices [Stoxx50 -0.1% at 3,470, FTSE +0.4% at 7,314, DAX -0.1% at 12,241, CAC-40 flat at 5,086, IBEX-35 +0.1% at 10,337, FTSE MIB -0.2% at 20,193, SMI +0.1% at 8,643, S&P 500 Futures -0.2%]
Equities
Consumer discretionary [ASOS ASC.UK -6.2% (H1 results), Topps Tiles TPT.UK -6.9% (H1 update), Bunzl BNZL.UK +1.8% (2 acquisitions)]
Consumer Staples [Suedzucker SZU.DE -9.5% (Analyst downgrade), ITE Group ITE.UK +4.3% (Trading update), Carl Zeiss AFX.DE +1.3% (prelim H1)]
Materials: [Nanoco NANO.UK -18% (H1 results, lowers outlook)]
Financials: [Grenkeleasing GLJ.DE +3.5% (Q1 update)]
Technology: [Sophos Grp SOPH.UK +11.4% (Raised outlook, resolves patent dispute)]
Energy: [Seadrill SDRL.NO -41% (Amendments to Secured Credit Facilities), Polarcus PLCS.NO -3.5% (Vessel utilization)]
Speakers
BOE Financial Policy Committee (FPC) Mar 22nd Minutes: Concerned rapid growth in unsecured lending to British consumers; could principally represent a risk to lenders if accompanied by weaker lending standards
Sweden Central Bank (Riksbank) Dep Gov Floden: PMI data was a sign for growth but it remained to be seen what growth meant for inflation
RBA Gov Lowe: More home loan curbs would be considered if needed. Reiterates need to see improvement in job market to know economy is strengthening
Eurogroup Chief Dijsselbloem reiterated he had no intention to step down as Eurogroup chief; looking to speak in EU Parliament
EU Official: Greece talks in Brussels today could be an important stepping stone. Greek hurdles were political and not technical. Talks moving beyond July payments would be detrimental
Russia govt said not to be planning any measures to counter gains in RUB currency (ruble). It saw the Ruble currency weakening in H2 due to oil and rate cuts
Moody’s on South Africa: Will not be issuing any decision on sovereign rating on Friday, Apr 7th. To issue decision after concluding downgrade review that could take 1-3 months from now
Turkey Fin Min Agbal: Inflation might be back to single digits by Dec; upward trajectory to continue
Currencies
US Treasury yields at 5-week low helping to push the USD/JPY pair below 110.50 in the session. Some dealers also noting that BoJ and government advisors had been floating the idea of how to move away from yield curve control. Nonetheless BoJ’s Kuroda did reiterated his dovish stance that it was premature to discuss an exit strategy from the central bank’s aggressive easing policy.
EUR/USD hovered in the mid-1.06 area as price action continued the repricing of ECB rate outlook as various officials noted . ECB chief economist Praet continues, after yesterday ‘ s push back of rate hikes from Praet
RBA kept its policy steady with a dovish tilt and this helped the AUD/USD hit a 3-week low below 0.7560 area.
Spot gold at 1-month highs aided by geopolitical worries with the metal at $1,258/oz
Fixed Income:
Bund futures trade at 162.35 up a further 26 ticks trading at new one month highs with further momentum higher targeting 162.65 followed by 162.98 then Feb contract high at 163.12. Analysts eye support at 161.63 followed by 161.34 then 161.06.
Gilt futures trade at 128.40 up 13 ticks aided by a slight miss in UK construction PMI data. Resistance moves to 128.96 followed by 129.24. Support moves to 127.75 then 127.34 followed by 127.05. Short Sterling futures curve continues to flatten with futures trading flat to up 2bp along the curve. Jun17Jun18 spread falls to 13.5/14bp down 2.5bp from yesterday.
Tuesday’s liquidity report showed Monday’s excess liquidity fell to €1.444T a fall of €68B from €1.512T prior. Use of the marginal lending facility fell to €212M from €285M prior.
Corporate issuance saw $2.75B come to market via 5 issuers in a slow start to the quarter, headlined by Progressive Corp $850M 30 year offering, and Cimarex Energy $750M 10 year offering. Issuance for the week is expected to be around $25B.
Looking Ahead
(RU) Russia Mar Sovereign Wealth Fund Balances: Reserve Fund: No est v $16.1B prior; Wellbeing Fund: No est v $72.6B prior
(BR) Brazil Mat CNI Consumer Confidence: No est v 104.4 prior
05.30 (UK) Weekly John Lewis LFL sales data – 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender
05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills
05:30 (DE) Germany to sell €1.0B in 0.1% Apr 2026 Indexed-bonds
05:30 (BE) Belgium to sell €1.3-1.7B in 3-Month and 6-Month Bills
06:00 (IE) Ireland Mar Unemployment Rate: No est v 6.6% prior
06:00 (TR) Turkey to sell Zero 2018 Bonds; Yield: % v 11.67% prior; bid-to-cover: x v 6.86x prior
06:45 (US) Daily Libor Fixing
07:30 (TR) Turkey Mar Real Effective Exchange Rate (REER): No est v 88.83 prior
07:45 (US) Weekly Goldman Economist Chain Store Sales
08:00 (BR) Brazil Feb Industrial Production M/M: +0.7%e v -0.1% prior; Y/Y: 0.4%e v 1.4% prior
08:00 (NO) Norway Central Bank (Norges) Gov Olsen speaks in Oslo
08:00 (RU) Russia announces weekly OFZ bond auction – 08:15 (UK) Baltic Dry Bulk Index
08:30 (US) Feb Trade Balance: -$44.6Be v -$48.5B prior
08:30 (CA) Canada Feb Int’l Merchandise Trade: C$0.6Be v C$0.8B prior
08:30 (SI) Slovenia Debt Agency to sell 12-month and 18-month Bills
08:30 (NZ) Fonterra Global Dairy Trade Auction
08:55 (US) Weekly Redbook Sales
09:00 (EU) Weekly ECB Forex Reserves
09:00 (MX) Mexico Feb Leading Indicators M/M: No est v -0.20 prior
09:30 (EU) ECB’s Draghi speaks in Frankfurt
09:30 (EU) ECB announces Covered-Bond Purchases
10:00 (US) Feb Factory Orders: 1.0%e v 1.2% prior; Factory Orders Ex-Transportation: No est v 0.3% prior
10:00 (US) Feb Final Durable Goods Orders: 1.7%e v 1.7% prelim; Durables Ex-Transportation : No est v 0.4% prelim; Capital Goods Orders (Non-defense ex aircraft): No est v -0.1% prelim, Capital Goods Shipments (Non-defense/ex-aircraft): No est v +1.0%prelim; Durables Ex-Defense: No est v 2.1% prelim
10:00 (DK) Denmark Mar Foreign Reserves (DKK): 470.8Be v 466.6 prior
11:00 (BR) Brazil to sell I/L 2022, 2026, 2035 and 2055 Bonds – 11:30 (US) Treasury to sell 4-Week Bills
15:00 (CO) Colombia Mar Total PPI M/M: No est v -0.6% prior; Domestic PPI M/M: No est v -0.2% prior
16:30 (US) Weekly API Oil Inventories
