Notes/Observations
- Major European PMI Manufacturing continue to move off recent cycle highs (Beats: UK, France, Poland, Hungary; Misses: Germany, Italy, Netherlands, Norway, Czech; in-line: Euro Zone)
- All eyes on the US March labor market report due on Friday, with wages in focus
Asia:
- RBA left its Cash Rate Target unchanged at 1.50% (as expected). Reiterated view that low level of interest rates was supporting the domestic economy. Inflation remained low. Reiterated that Australian dollar remained within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
Europe:
- EU warned UK banks not to rely on Brexit transition deal and urged to implement their ‘hard’ Brexit contingency plans. ECB said to have told banks to prepare for a scenario where there was no deal, leading to a hard Brexit with no transition
Americas:
- Mexico Economy Min Guajardo saw the possibility to send positive signals on NAFTA among heads of governments at upcoming Americas summit in Peru
- President Trump said to be pushing for a preliminary NAFTA deal at a summit in Peru next month. Trump to host cabinet ministers in Washington to try and get a breakthrough
- White House Trade Advisor Navarro: Did not believe US and China will go into an ‘action-response’ escalation of trade differences; China needed to think about its response. Needed to be hopeful about NAFTA negotiations; wanted to get it done before Mexico election (July 1st)
Economic Data:
- (IE) Ireland Mar Manufacturing PMI: 54.1 v 56.2 prior (58th month of expansion)
- (IN) India Mar Manufacturing PMI: 51.0 v 52.1 prior (8th month of expansion but lowest since March 2017)
- (DE) Germany Feb Retail Sales M/M: -0.7% v +0.7%e; Y/Y: 1.3% v 2.4%e
- (AU) Australia Mar Commodity Index (AUD): 113.2 v 112.1 prior; Commodity Index SDR Y/Y -2.1% v -2.8% prior
- (SE) Sweden Mar Manufacturing PMI: 55.9 v 59.9 prior
- (CZ) Czech Q4 Final GDP Q/Q: 0.8% v 0.5%e; Y/Y: 5.5% v 5.2%e
- (ES) Spain Mar Net Unemployment M/M: -47.7K v -47.5Ke
- (NL) Netherlands Mar Manufacturing PMI: 61.5 v 62.2e (55th month of expansion)
- (NO) Norway Mar Manufacturing PMI: 55.0 v 56.6e
- (PL) Poland Mar Manufacturing PMI: 53.7 v 53.0e (40th month of expansion)
- (HU) Hungary Mar Manufacturing PMI: 57.0 v 57.2 prior (28th month of expansion)
- (TR) Turkey Mar CPI M/M: 1.0% v 0.9%e; Y/Y: 10.2% v 10.0%e, CPI Core Index Y/Y: 11.4% v 11.9% prior
- (TR) Turkey Mar PPI M/M: 1.5% v 2.7% prior; Y/Y: 14.3% v 13.7% prior
- (ES) Spain Mar Manufacturing PMI: 54.8 v 54.7e (53rd month of expansion)
- (CH) Swiss Feb Real Retail Sales Y/Y: -0.2% v -0.4% prior
- (CH) Swiss Mar Manufacturing PMI: 60.3 v 65.5 prior
- (CZ) Czech Mar Manufacturing PMI: 57.3 v 57.6e (20th month of expansion)
- (IT) Italy Mar Manufacturing PMI: 55.1 v 55.5e (19th month of expansion)
- (FR) France Mar Final Manufacturing PMI: 53.7 v 53.6e (confirmed its 18th month of expansion but lowest since March 2017)
- (DE) Germany Mar Final Manufacturing PMI: 58.2 v 58.4e (confirmed its 39th month of expansion but lowest since July)
- (EU) Euro Zone Mar Final Manufacturing PMI: 56.6 v 56.6e (confirmed its 56th month of expansion)
- (CH) SNB Total Sight Deposits for Week Ended Mar 30th (CHF): 575.4B v 576.0B prior
- (BR) Brazil Mar FIPE CPI (Sao Paulo): 0.0% v 0.0%e
- (UK) Mar Manufacturing PMI: 55.1 v 54.7e (20th month of expansion)
- (HK) Hong Kong Feb Retail Sales Value Y/Y: 29.8% v 7.5%e; Retail Sales Volume Y/Y: 28.2% v 5.0%e
- (ZA) South Africa Mar Manufacturing PMI: 46.9 v 50.8 prior
- (DK) Denmark Mar PMI Survey: 62.9 v 70.0 prior
Fixed Income Issuance:
- (ES) Spain Debt Agency (Tesoro) sold total €4.5B vs. €4.0-5.0B indicated range in 6-month and 12-month bills
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -1.0% at 367.3, FTSE -0.8% at 7002, DAX -1.4% at 11925, CAC-40 -0.9% at 5122, IBEX-35 -0.9% at 9510, FTSE MIB -0.7% at 22254, SMI -1.3% at 8627, S&P 500 Futures +0.4%]
Market Focal Points/Key Themes:
- European Indices trade lower across the board following closures for Easter Holidays, after a sharp sell off in Wallstreet overnight. Following weakness in the Nasdaq, Tech names are under pressure in Europe with Dialog Semi, Infineon and STM Micro among the names trading lower. On the earnings front Bossard outperforms after upbeat Q1 comments, while Groupe Gorge trades lower after final FY results and outlook. Elsewhere Air Partner trades over 15% lower after a year end update, warning on uncollected receivables with Flybe trading higher after a Q4 update. Looking ahead notable earners include International Speedway and Beyond Spring.
Movers
- Consumer Discretionary [- Air Partner [AIR.UK] -17% (Year end update), Hornby [HRN.UK] -6% (Trading update), Flybe [FLYB.UK] +2.6% (Trading update) ]
- Industrials [Bossard [BOSN.CH] +5.7% (Q1 update), Groupe Gorge [GOE.FR] -4.3% (Earnings) ]
- Healthcare [Astrazeneca [AZN.UK] -0.9% (Reports anonymously paying to promote drugs),
- Technology [Dialog Semi [DLG.DE] -1%, ST Micro [STM.FR] -2.9%, Infineon [IFX.DE] -2.4% (Tech sector selloff) ]
Equities
Speakers
- Greece PM Tsipras: To hold elections in autumn 2019
- Spain Budget Ministry plans 2018 gross debt issuance of €215.3B and net issuance at €40B
- BoJ Gov Kuroda testified in Parliament that the BOJ was internally discussing an exit with the manner to depend on prices, economy and markets. BOJ communicate well with market when needed. He stressed that it was too early to discuss exit strategy as remained quite distant from inflation target. Politics would not prevent BOJ from taking needed policy.
- UAE Oil Min Mazrouei: Global economy is benefiting from OPEC/Non-Opec production cut agreement. Not concerned about a trade war affecting oil
- Qatar Oil Min Al Sada (OPEC President): Russia has been a great partner on production cuts
Currencies
- The start of Q2 brought the same trading range for the USD. Dealers debated whether the greenback will trend or continue moving sideways in the quarter. The April-May period historical is one of extending price moves in FX. All the moving parts on the global trade front seems encouraging that a fresh trend will emerge in coming weeks. The EUR/USD has been locked in a 400 pip range for the bulk of 2018 thus far. Momentum likely to be fired up on the break of either 1.21 or 1.25
- The GBP currency was unfazed by reports the ECB said to have told banks to prepare for a scenario where there was no deal leading to a hard Brexit with no transition. GBP/USD was higher by 0.2% at 1.4080 area. Slightly better UK PMI data helping cable hold onto session gains
- USD/JPY briefly dipped below the 106 level as BOJ Gov Kuroda testified in Parliament that the BOJ was internally discussing an exit and the way forward to depend on prices, economy and markets (**Note he began his testimony that it was too early to discuss exit strategy as was still distant from inflation target). The pair recovered as the session progressed
Fixed Income
- Bund Futures trade 23 ticks lower at 159.14 as major European manufacturing pmi data comes in mixed. Upside targets 159.75, while a return lower targets the158.25 level.
- Gilt futures trade at 122.86 down 4 ticks tentatively respecting the 123 handle. Support continues stands at 121.25 then 120.85, with upside resistance at 123.35 then 123.85.
- Tuesday’s liquidity report showed Thursday’s excess liquidity fell to €1.758T from €1.789T prior. Use of the marginal lending facility increased from €131M to €189M.
- Corporate issuance saw 1 issuer raise $0.5B in the primary market
Looking Ahead
- (BE) Belgium Dec Unemployment Rate: No est v 6.8% prior
- (US) Mar Wards Total & Domestic Vehicle Sales
- (IT) Italy Mar Budget Balance: No est v -€6.3B prior
- (AR) Argentina Mar Government Tax Revenue (ARS): No est v 235.6B prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
- 05:30 (EU) ECB allotment in 7-day Main Financing Tender (prior €2.4B with 33 bids recd)
- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month Bills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 6-month bills
- 05:30 (ZA) South Africa to sell total ZAR2.3B in 2032, 2035 and 2041 bonds
- 06:30 (EU) ESM to sell €2.0B in 3-month Bills – 06:45 (US) Daily Libor Fixing
- 07:45 (US) Weekly Goldman Economist Chain Store Sales
- 08:00 (CZ) Czech Mar Budget Balance (CZK): No est v 25.8B prior
- 08:00 (BR) Brazil Feb Industrial Production M/M: +0.6%e v -2.4% prior; Y/Y: 3.9%e v 5.7% prior
- 08:00 (CL) Chile Feb Retail Sales Y/Y: 5.3%e v 3.8% prior, Commercial Activity Y/Y: No est v 7.3% prior
- 08:05 (UK) Baltic Dry Bulk Index
- 08:55 (US) Weekly Redbook Sales
- 08:55 (FR) France Debt Agency (AFT) to sell combined €4.6-5.8B in 3-month, 6-month and 12-month BTF Bills
- 09:30 (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: No est v -1.2% prior
- 09:30 (EU) ECB announces Covered-Bond Purchases
- 10:00 (DK) Denmark Mar Foreign Reserves (DKK): No est v 467B prior
- 11:00 (CO) Colombia Feb Exports: $3.1Be v $3.2B prior
- 11:30 (US) Treasury to sell 4-Week Bills
- 12:00 (IT) Italy Mar New Car Registrations Y/Y: No est v -1.4% prior
- 16:30 (US) Weekly API Oil Inventories
