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Market Update – European Session: Mar Final Euro Zone CPI Confirms Move Back Below ECB Target


British lawmakers set to approve PM May’s June 8th election plan



China said to have eased its yuan outflow controls last week citing smaller risk of capital exodus and greater market confidence in the value of the yuan. (**Insight: 1st relaxation of outbound capital control in nearly two years ). Banks can now freely process outbound yuan payment (matched payment reporting no longer required)


German govt believes an interest rate increase by the ECB would help to reduce current account surplus due to an expected strengthening of the euro. Fin Min Schaeuble planned to present eight-page paper at the spring meeting of the IMF later this week (**Note: does not call for the ECB to raise interest rates)

German Bundesbank’s Dombret (ECB SSM member): Bundesbank sees 800 banks that are vulnerable to interest rate risk

UK Yougov Poll: PM May on course for 114 seat majority; could win 382 seats compared to 330 currently (17 seat majority)


Runoff election set for Jun in Georgia special congressional election between Ossoff (D) and Handel (R)


(US) Weekly API Oil Inventories: Crude: -0.8M v -1.3M prior; 3rd straight draw

Economic Data

(EU) Mar EU27 New Car Registrations: 11.2% v 2.2% prior

(AT) Austria Mar CPI M/M: 0.6% v 0.3% prior; Y/Y: 2.0% v 2.2% prior

(ZA) South Africa Mar CPI M/M: 0.6% v 0.9%e; Y/Y: 6.1% v 6.3%e (6-month low)

(IT) Italy Feb Total Trade Balance: +€1.9B v -€0.6B prior; Trade Balance EU: €0.2B v €0.3B prior

(EU) Euro Zone Mar CPI M/M: 0.8% v 0.8%e; Y/Y (Final reading): 1.5% v 1.5%e; CPI Core Y/Y(Final reading): 0.7% v 0.7%e

(EU) Euro Zone Feb Trade Balance (Seasonally Adj): €19.2B v €18.0Be; Trade Balance NSA(unadj): €17.8B v €16.2Be

Fixed Income Issuance:

(IN) India sold total INR140B vs. INR140B in 3-month and 6-month Bills

(DK) Denmark sold total DKK740M in 2027 and 2039 Bonds

(EU) ECB allotted $80M in 7-day USD Liquidity Tender at fixed 1.41% vs $35M prior

(SE) Sweden sold total SEK2.5B vs. SEK2.5B indicated in 2023 and 2028 bonds


Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 flat at 3,420, FTSE -0.1% at 7,142, DAX +0.2% at 12,023, CAC-40 +0.2% at 5,000, IBEX-35 % +0.7at 10,334, FTSE MIB +1.2% at 19,677, SMI -0.3% at 8,503, S&P 500 Futures +0.3%]

Market Focal Points/Key Themes: European equity indices are trading mixed as political uncertainty in France and the UK continue to weigh on the markets; Banking stocks providing some support across the board as shares of Intesa Sanpaolo, ING Groep, and SocGen lead the sector gains in the Eurostoxx; commodity and mining stocks trading notably higher in the FTSE 100 as copper prices trade higher intraday; energy stocks trading lower in the index as oil prices stabilize after yesterday’s sell off; shares of Burberry the notable laggard in the index after releasing H2 SSS results lower than expected.

Upcoming scheduled US earnings (pre-market) include Abbott Laboratories, TD Ameritrade, BlackRock, Genuine Parts, Huntington Bancshares, Lithia Motors, Morgan Stanley, Signature Bank, Textron Inc, US Bancorp.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Associated British Foods ABF.UK +3.6% (H1 results), Bunzl BNZL.UK -1.2% (Q1 sales), Bonmarche BON.UK +4.7% (Q4 sales), Burberry BRBY.UK -5.9% (H2 sales), Exova Group EXO.UK -0.6% (To be acquired by Element Materials Tech for 242.35p/shr valued at £620.3M), Heineken HEIA.NL +1.1% (Q1 results), Remy Cointreau RCO.FR -0.4% (FY16/17 sales), Rentokil Initial RTO.UK -1.5% (Q1 sales), Tomtom TOM2.NL +4.8% (Q1 results), Zalando ZALG.DE -4.5% (prelim Q1 results)]

Energy: [Vopak VPK.NL +3.9% (Q1 results)]

Financials: [Great Portland GPOR.UK +0.3% (special dividend), Segro SGRO.UK +0.5% (trading update)]

Materials: [Akzo Nobel AKZA.NL +0.7% (Q1 results, strategic plan, special dividend)]

Technology: [ASML Holdings ASML.NL +0.4% (Q1 results), Frontier Developments FDEV.UK +10.7% (trading update), GB Group GBG.UK +3.9% (trading update)]

Utilities: [Abertis ABE.ES -1.8% (Atlantia said to offer about €16/shr for Abertis)]


ECB’s Hansson (Estonia): Not too early to have a discussion on ECB policy but was too early for any concrete actions

Treasury Sec Mnuchin: President Trump is "absolutely not" trying to talk down USD

UKPM May: Possible to complete Brexit negotiation within the two year timeframe and reiterated stance that there will be NO 2nd referendum

Fitch: decision to call an early general election does not alter our UK sovereign rating assessment

Austrian member of the Council of Europe observer mission: Up to 2.5M votes could have been manipulated in Sunday’s Turkish referendum

South Africa Fin Min Gigaba: To meet with Moody’s during upcoming bond roadshow

Turkey Election Board: To assess election objections on Wed, Apr 19th (today)

China govt said to urge fiscal and monetary measures if unemployment situation worsens

OPEC Sec Gen Barkindo reiterated optimism that policy measures have taken us on the path of recovery. OPEC to decide on extending production cuts on May 25th

Kuwait Oil Min AlmarzooqOpec to study decision to extend oil production cuts before May 25th meeting. Saw Iran maintaining current production level if cuts are extended


US Dollar index tested 3-week lows below 99.47 on Tuesday and remained in a consolidated mode in a quiet EU session.

EUR/USD was starting the day testing its best levels for the month and on course for its 4th straight day of gains but some weakness did slip in just ahead of the NY morning. ECB’s Hansson noted that it was too early for any concrete action seems to take some wind out of the sails for the Euro. Political headwinds from the upcoming 1st round of the French election also a factor in limiting Euro gains

GBP/USD was retracing after hitting 6-month highs above 1.2860 on Tuesday after PM May called an early general election ahead of Brexit negotiations. Pair below 1.2820 level as the NY morning approached

USD/JPY was higher and inching back towards the 109 area

Fixed Income

Bund futures trade at 163.55 down 13 ticks having gaped lower from yesterday’s close of 163.86 as Equities recoup some of yesterday’s losses. Futures look to 163.99 initially followed by 164.20. A continued move lower targets yesterday low of 163.34 then 163.01.

Gilt futures trade at 128.70 down 4 ticks falling from yesterday’s close of 129.00 following the yesterday’s snap election announcement, which saw Cable push higher by over 3 big figures. Support moves to 128.42 low followed by 128.24 then 127.94. A move back high targets 129.00 followed by 129.24. Short Sterling curve is flattening slightly with Jun17/Jun18 spread widening marginally to 10/10.5bp.

Wednesday’s liquidity report showed Tuesday’s excess liquidity fell to €1.570T a fall of €17B from €1.587T prior. Use of the marginal lending facility fell to €254M from €721M prior.

Corporate issuance saw $10.98B come to market led by financial names headlined by Citigroup 3 part $4.5B offering and JP Morgan’s $5.25B 3 part offering. This puts issuance for the week at $11.8B and Monthly issuance at $44.2B.

Looking Ahead

(CO) Colombia Mar Consumer Confidence Index: -19.5e v -24.3 prior

(IT) Italy Debt Agency (Tesoro) announces upcoming CTZ and BTPei auctions for Apr 24th

05:30 (UK) Weekly John Lewis Partnership LFL sales

05:30 (DE) Germany to sell €1.0B 2.5% July 2044 Bunds

05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 3-month and 12-month Bills

06:00 (RU) Russia to sell combined RUB39.5B in 2019 and 2033 OFZ bonds

06:00 (PT) Portugal Mar PPI M/M: No est v -0.8% prior; Y/Y: No est v 4.0% prior

06:00 (IE) Ireland Feb Property Prices M/M: No est v 0.6% prior; Y/y: No est v 7.9% prior

06:45 (US) Daily Libor Fixing

07:00 (US) MBA Mortgage Applications w/e Apr 14th: No est v 1.5% prior

07:00 (BR) Brazil Apr IGP-M Inflation (2nd Preview): -0.7%e v +0.1% prior

07:00 (UK) Weekly PM May question time in House of Commons

08:00 (PL) Poland Mar Employment M/M: 0.2%e v 0.3% prior; Y/Y: 4.6%e v 4.6% prior

08:00 (PL) Poland Average Gross Wages M/M: 5.4%e v 0.6% prior; Y/Y: 4.3%e v 4.0% prior

08:15 (UK) Baltic Dry Bulk Index

09:00 (EU) Weekly ECB Forex Reserves

10:30 (US) Weekly DOE Crude Oil Inventories

12:00 (US) Fed’s Rosengren speaks at Bard College Conference

12:00 (CA) Canada to sell 2-Year Bonds

14:00 (US) Fed Beige book

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