Notes/Observations
Asia:
- Market concerns over trade continue to pivot from NAFTA to China
- High expectations ahead of 1Q earnings season
Asia:
- China Mar Foreign Reserves: $3.143T v $3.147Te (FX Reserve data has registered increases in 13 of the past 14 months (declined in Feb 2018)
- North Korea confirmed Leader Kim Jong Un prepared to discuss denuclearization of the Korean Peninsula
Europe:
- Italy’s center-right alliance to present a united stance to President Mattarella during a second round of talks with party leaders this week. Move would be viewed as reducing chances of a pact between the League and the fellow-populist Five Star Movement
- S&P affirmed France sovereign rating at AA; outlook Stable
- Canadian ratings agency DBRS raised Spain sovereign rating to A from A (low), Stable trend
Americas:
- Fed Chair Powell: he and colleagues believed US economy would require further gradual interest rate increases. Inflation could rise to unwelcome levels if Fed waited for inflation and employment to hit goals
- Fed’s Williams (moderate, voter): three to four rate hikes in 2018 remained appropriate; gradual rate rises help economy from overheating
- Fed’s Evans (non-voter, dove): US economy was very strong; optimistic about hitting 2% inflation target. Need for accommodative monetary policy was less than it was before
- The reworking of NAFTA said not to be advanced enough to announce a deal in principle this month at the summit in Lima (April 13-14). Officials were still debating issues related to the auto sector.
- Senior Mexican Economy Ministry official: very convinced that new NAFTA trade agreement will be reached very soon
- Canada Foreign Min Freeland: NAFTA teams will continue to work intensively in days to come; have had some good conversations; have entered a new more intensive phase, had some constructive talks
- Treasury Sec Mnuchin: Did not expect there will be a trade war’, reiterated that the US’ intention is to continue to have talks with China
- White House Econ Adviser Kudlow: Believes solution to trade dispute with China is possible within three months but tariffs are not a bluff
- White House and certain Republicans in Congress said to be seeking to revise some of the federal spending measures approved under the $1.3T spending bill (Reminder: President Trump previously expressed dissatisfaction with some of the spending in the $1.3T package)
- President Trump tweeted China will take down its trade barriers because it is the right thing to do, taxes will become reciprocal and a deal will be made on intellectual property’
Economic Data:
- (NL) Netherlands Feb Manufacturing Production M/M: -0.2% v -0.6% prior; Y/Y: 4.2 v +7.1% prior, Industrial Sales Y/Y: 6.9 v 5.1% prior
- (JP) Japan Mar Consumer Confidence: 44.3 v 44.5e
- (CH) Swiss Mar Unemployment Rate: 2.9% v 3.0%e, Unemployment Rate (Seasonally Adj): 2.9% v 2.9%e
- (DE) Germany Feb Current Account Balance: €20.7B v €22.9Be; Trade Balance: €18,4B v €20.1B; Exports MoM: -3.2% v +0.4%e; Imports M/M: -1.3% v +0.5%e
- (NO) Norway Feb Industrial Production M/M: -0.3% v +3.3% prior; Y/Y: 1.8% v 1.8% prior
- (NO) Norway Feb Manufacturing Production M/M: 0.2% v 1.0%e; Y/Y: +0.2% v -0.4% prior
- (DK) Denmark Feb Current Account Balance (DKK): 13.5B v 9.4B prior; Trade Balance: 7.0B v 6.0B prior
- (ZA) South Africa Mar Gross Reserves: $50.0B v $50.0Be; Net Reserves: $43.4B v $43.4Be
- (FI) Finland Feb Preliminary Trade Balance: -€0.3B v -€0.2B prior
- (JP) Japan Mar Eco Watchers Current Survey: 48.9 v 48.0e; Outlook Survey: 49.6 v 51.0e
- (AU) Australia Mar Foreign Reserves: A$76.6B v A$70.8B prior
- (SE) Sweden Apr SEB Housing Price Indicator: 7 v 4 prior
- (CZ) Czech Feb National Trade Balance (CZK): 18.0B v 16.0Be
- (HU) Hungary Feb Preliminary Trade Balance: €0.8B v €0.7Be
- (UK) Mar Halifax House Prices M/M: 1.5% v 0.1%e; 3M/Y: 2.7% v 2.0%e
- (SE) Sweden Mar Budget Balance (SEK): 6.4 v 49.9B prior
- (CH) SNB Total Sight Deposits for Week Ended Apr 6th(CHF): 574.9B v 575.4B prior
- (TW) Taiwan Mar Trade Balance: $6.0B v $3.9Be; Exports Y/Y: +16.7% v +7.1%e; Imports Y/Y: 10.4% v 9.1%e
- (EU) Euro Zone Apr Sentix Investor Confidence: 19.6 v 20.8e
Fixed Income Issuance:
- (EG) Egypt to sell EUR-denominated 8-year and 12-year notes
- (NO) Norway sold NOK4.0B vs. NOK4.0B indicated in 6-month bills; Avg Yield: 0.61% v 0.46% prior; Bid-to-cover: 1.61x v 2.39x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.5% at 376.6, FTSE +0.1% at 7192, DAX +0.9% at 12352, CAC-40 +0.4% at 5280, IBEX-35 +0.9% at 9770, FTSE MIB +0.6% at 23070, SMI +0.8% at 8739, S&P 500 Futures +0.7%]
Market Focal Points/Key Themes:
- European Indices trade higher across the board extending a 2 week rally as the pan-European benchmark remains on track to close at a 2 week high as worries over a potential global trade war fade.
- The Dax trades higher helped by share of Deutsche Bank following the announcement of Christian Sewing as the new CEO; Sulzer trader lower after buying back 5M shares, French Connection trades over 10% higher after divesting Toast, while Mothercare trades lower after reports of store closures.
- Healthcare giant Novartis announced the acquisition of AveXis in an $8.7B deal, elsewhere Oerilkon and Schmolz + Birkenback trade lower after holder Victor Vekselberg is said to be affected by the US sanctions.
Movers
- Consumer Discretionary [Mothercare [MTC.UK] -9.0% (Reports of possible store closures), Hollywood Bowl [BOWL.UK] +1% (Earnings), French Connection [FCCN.UK] +19% (Divestment)]
- Industrials [Sulzer [SUN.CH] -9% (Repurchases stock from Renova to avoid US sanctions)]
- Financials [Deutsche Bank [DBK.DE] +4.2% (Names new CEO)]
- Healthcare [EKF diagnostics [EKF.UK] +7% (FDA approval of Diaspect Tm)]
Speakers
- Turkey Presidential advisor Bulut: Steps to reduce interest rates to following govt package. Govt incentive package in response to cool down economy
- South Africa Fin Min Nene: Some domestic cities on the verge of collapse, cannot be allowed to occur
- China govt said to study a potential CNY currency (Yuan) devaluation as a tool in the current trade spat
- China Premier Li reiterated view that needed to oppose unilateralism and trade protectionism
- China Foreign Ministry reiterated that have not conducted negotiations with US on trade and saw the talks as impossible under current conditions
- Thailand Central Bank reiterated view that policy to remain accommodative; Had no policy of FX intervention for trade
- US and India official said to hold trade talks on Wed, Apr 10th
Currencies
- USD maintained a firm tone as the global trade concerns continued to simmer. The greenback looking to continue its gains for the 2nd straight week with market concerns over trade continuing to pivot from NAFTA to China. Dealers noted that we are moving in the window where the next semi-annual Treasury report would be published amidst of backdrop of rising trade tensions and could name countries that were considered to be manipulating their currency
- EUR/USD softer by 0.2% at 1.2275 while USD/JPY was firmer by 0.2% at 107.15 area.
Fixed Income
- Bund Futures trade 22 ticks lower at 159.35 after Euro zone Investor confidence for April declines. Upside targets 159.75, while a return lower targets the158.25 level.
- Gilt futures trade at 122.27 lower by 15 ticks continuing the respect of the 123 handle. Support continues stands at 121.25 then 120.85, with upside resistance at 123.35 then 123.85.
- Monday’s liquidity report showed Friday’s excess liquidity fell to €1.864T from €1.868T prior. Use of the marginal lending facility fell from €40M to €0M.
- Corporate issuance saw the primary market finish with over $25B sold
Looking Ahead
- 05:30 (DE) Germany to sell €3.0B in 6-Month BuBills
- 06:00 (PT) Portugal Feb Trade Balance: No est v -€1.2B prior
- 06:00 (JP) BOJ Gov Kuroda press conference to mark his 2nd term
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Mar FGV Inflation IGP-DI M/M: 0.7%e v 0.2% prior; Y/Y: +0.9%e v -0.2% prior
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (CL) Chile Central Bank Traders Survey
- 07:30 (CL) Chile Mar Trade Balance: $0.9Be v $1.3B prior; Total Exports: $6.4Be v $6.4B prior; Total Imports: $5.5Be v $5.1B prior
- 07:30 (CL) Chile Mar International Reserves: No est v $38.4B prior
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:05 (UK) Baltic Dry Bulk Index
- 08:15 (CA) Canada Mar Housing Starts: 218.0Ke v 229.7K prior
- 08:55 (FR) France Debt Agency(AFT) to sell combined €4.7-5.9B in 3-month, 6-month and 12-month BTF Bills
- 09:00 (MX) Mexico Mar CPI M/M: 0.4%e v 0.4% prior; Y/Y: 5.1%e v 5.3% prior, CPI Core M/M: 0.4%e v 0.5% prior
- 09:30 (EU) ECB announces Covered-Bond Purchases
- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 10:30 (CA) Bank of Canada (BOC) Q1 Loan Officer Survey: No est v -6.4 prior, Business Outlook Future Sales: No est v 8 prior
- 11:30 (US) Treasury to sell 3-Month and 6-Month bills
- 16:00 (US) Weekly Crop Progress Report
