Notes/Observations
Focus on US Apr Payroll report with jobs seen rebounding and wages rising
Macron increases poll lead as French presidential campaign enters into home-stretch
UK PM May’s Conservatives make gains in local elections
Overnight:
Asia:
RBA Quarterly Statement on Monetary Policy (SOMP): Inflation and GDP forecast little changed from Feb statement. Reiterates view that appreciating AUD currency would complicate their economies transition
Japan, China and South Korea’s Trilateral financial leaders: Will resist all forms of protectionism; agreed that trade is the most important engines of economic growth
US House passes bill that would expand sanctions against North Korea. Voted 419-1 to impose new sanctions that target North Korea shipping industry and use of slave labor.
Europe:
Parliamentary By-Election results: Tories making early gains. Conservatives have gained control of five councils while Labour have lost control of two. Liberal Democrats have lost several seats. UKIP has lost all the seats it has been defending so far
German Finance Ministry: There is no debt relief being prepared for Greece at this time
EMMI Industry Body Report on Euribor Administration: Will work in coming months to develop new hybrid methodology based on transactions. Discard Euribor rate reform following market test that showed impact on volatility and volumes
Americas:
House of Representatives passes ACHA Obamacare healthcare replacement bill (Yeas 217, nays 213 (20 GOP no votes, no Democrats voted in favor of it). Bill now sent to the Senate for consideration
Senate passed the $1.1T omnibus spending bill (vote was 79-18) to fund govt through end of Sept, as expected. bill now goes to President Trump for signature
Energy:
OPEC and Non-OPEC producers expected agree to a six month extension of output cut agreement, but not likely to increase the size of the cut from current 1.8M bpd
Economic Data
(CH) Swiss Apr Foreign Currency Reserves (CHF): 695.9B v 690.5Be
(SE) Sweden Mar Industrial Production M/M: 0.3% v 0.6%e; Y/Y: 3.8% v 3.4%e
(HK) Hong Kong Mar Retail Sales Value Y/Y: +3.1% v -0.9%e (first rise since Feb 2015); Retail Sales Volume Y/Y: +2.7% v -1.0%e
Fixed Income Issuance:
(IN) India sold total INR150B vs.INR150B indicated in 2022, 2029, 2033 and 2055 bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 -0.3% at 3616, FTSE +0.1% at 7255, DAX -0.3% at 12606, CAC-40 -0.2% at 5362, IBEX-35 -0.2% at 10995, FTSE MIB -0.2% at 21122, SMI -0.3% at 8953, S&P 500 Futures +0.1%]
Market Focal Points/Key Themes European indices trade off the session lows but lower across the board with the exception of the FTSE100, taking queue from a weaker session in Asia overnight being led lower on commodity price concerns. Airline stocks are outperforming this morning with IAG and Air France trading at year highs, and Easyjet trading higher following strong April Metrics. April US Non Farm Payrolls will be the main focus looking ahead, as well as another bout of earnings, notably from Cigna and Cognizent Tech and
Equities
Consumer discretionary [ International Consolidated Airlines [IAG.UK] +5% (Earnings, April metrics), Marks and Spencer [MKS.UK] +5.4% (Names new Chairman), Pearson [PSON.UK] +11% (Q1 update, Affirms outlook, simplification plan), Easyjet [EZJ.UK] +3.5% (April metrics), Heidelberger Druck -5% (Earnings)]
Industrials: [Evonik [EVK.DE] -1% (Earnings), Skanska [SKAB.SE] flat (Earnings), Porr [ABS2.DE] -4%, Strabag[STR.AT] -4% (report that it has been raided on collusion suspicions)]
Telecom: [Telefonica Deutschland [O2D.DE] -6% (Earnings)] – Healthcare: [Smith & Nephew +3.0% (Q1 results)]
Utilities: [Engie [ENGI.FR] -1.4% (Earnings)]
Speakers
Italy Stats Agency (ISTAT) Monthly Economic Note: Leading indicator is positive but showing some deceleration. Economic growth was more constrained compared to previous months
German Bundesbank’s Dombret (ECB SSM member): Most bankers expect a hard or very hard Brexit
Czech PM Sobotka: will NOT submit his resignation (withdraws offer); proposed to dismiss his finance minister Babis
Indonesia Economic Affairs Min Nasution: 2017 GDP Growth seen between 5.2%-5.3% range. Exports to be main driver of growth, along with household consumption and govt spending
Saudi Oil Min Al-Falih commented after speaking with Russia’s Energy Min Novak of a growing consensus among OPEC and Non-Opec members on need to continue re balancing the oil market . Both Russia and Saudi ministers to meet in Beijing within 10 days to discuss oil markets
Currencies
USD on some soft footing against the European pairs heading into the April US payroll data. Yield divergence
EUR/USD edging towards the key psychological 1.10 level. Analyst cited commentary from ECB chief economist Praet on Thursday and appearing to be shifting guidance into a data dependent approach. Praet hinted at more upbeat economic assessment as growth firmed up
The GBP/USD was back above the 1.29 level and recovering from losses from earlier in the week. GBP benefiting from UK local elections which suggested PMMay’s Conservative Party was on course for a sweeping victory at the upcoming Jun 8th Parliamentary election. If May does secure a laeger majority in Parliament then that could help give her a better hand while negotiating a Brexit deal with the European Union victory
Fixed Income
Bund futures trade at 161.15 up 18 ticks but still near the week’s low. A break of 160.64 support level could see lows target 160.41 followed by 159.01. Resistance remains near the 161.88 level followed by 163.54.
Gilt futures trade at 128.11 higher following a range bound trading week. A continuation of the pullback from the 129.14 April 18th high has price eyeing the 127.50 support level. An acceleration lower could test the 126.62 region. Resistance stands at 128.49 then 128.81 followed by 129.14.
Friday’s liquidity report showed Thursday’s excess liquidity rose to €1.649T a gain of €4B from €1.645T prior. Use of the marginal lending facility dropped to €312M from €340M prior.
Corporate issuance saw over $10.6B come to market via 5 issues headlined by Apple’s $7B 6-part senior unsecured note offering and Northern Trust $2.25B in a 3-part senior unsecured note offering. For the week ending May 3rd Lipper US fund flows reported IG funds net inflows $1.05B bringing YTD inflows to $49.1B, High yield funds reported outflows of $385.6M bringing YTD outflows to $4.37B.
Looking Ahead
(PT) Portugal Debt Agency (IGCP) possible announcement for upcoming auction
(RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.75%
06:00 (IE) Ireland Apr Live Register Monthly Change: No est v -3.9K prior
06:00 (IE) Ireland Mar Industrial Production M/M: No est v -15.5% prior; Y/Y: No est v -9.9% prior
06:00 (UK) DMO to sell combined £2.5B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.5B respectively)
06:45 (US) Daily Libor Fixing
07:30 (CL) Chile Mar Economic Activity Index (Monthly GDP) M/M: -0.2%e v -0.7% prior; Y/Y: -0.4%e v -1.3% prior
07:30 (IN) India Weekly Forex Reserves
08:00 (PL) Poland Apr Official Reserves: No est v $112.0B prior
08:00 (CL) Chile Mar Nominal Wage M/M: +0.4%e v -0.4% prior; Y/Y: 4.0%e v 4.2% prior
08:00 (RO) Romania Central Bank gov Isarescu post rate decision press conference
08:15 (UK) Baltic Dry Bulk Index
08:30 (US) Apr Change in Nonfarm Payrolls: +190Ke v +98K prior, Change in Private Payrolls: +190Ke v +89K prior, Change in Manufacturing Payrolls: +10Ke v +11K prior
08:30 (US) Apr Unemployment Rate: 4.6%e v 4.5% prior, Underemployment Rate: No est v 8.9% prior, Change in Household Employment (civilian labor force): No est v +160.2K prior, Civilian Labor Force Participation Rate: No est v 63.0 prior
08:30 (US) Apr Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y: 2.7%e v 2.7% prior; Average Weekly Hours: 34.4e v 34.3 prior
08:30 (CA) Canada Apr Net Change in Employment: +10.0Ke v +19.4K prior; Unemployment Rate: 6.7%e v 6.7% prior
09:00 (EU) EU Foreign Min Mogherini in Italy
09:00 (DE) German Chancellor Merkel campaigns in Schleswig-Holstein (State election)
10:00 (CA) Canada Apr Ivey Purchasing Managers Index (Seasonally Adj): No est v 61.1 prior
10:20 (BR) Brazil Apr Vehicle Production: No est v 234.8K prior; Vehicle Sales: No est v 189.2K prior; Vehicle Exports: No est v 68.5K prior
12:30 (IT) Italy PM Gentiloni in Italy
-12:45 (US) Fed’s Williams (non-voter) speaks in Keynote in New York
13:00 (US) Weekly Baker Hughes Rig Count data
13:30 (US) Fed’s Rosengren (non-voter) with members Evans (Voter) and Bullard (non-voter) on panel
13:30 (US) Fed Chair Yellen at Brown University
15:00 (US) Mar Consumer Credit: $14.0Be v $15.2B prior
15:00 (MX) Mexico Citibanamex Survey of Economists
20:00 (CO) Colombia Apr CPI M/M: 0.4%e v 0.5% prior; Y/Y: 4.6%e v 4.7% prior
20:00 (CO) Colombia Apr CPI Core M/M: No est v 0.6% prior; Y/Y: No est v 5.1% prior
Weekend data
(CN) China Apr Trade Balance (CNY terms): 197.2Be v 164.3B prior; Exports Y/Y: 16.8%e v 22.3% prior; Imports Y/Y: 18.0%e v 20.3% prior:
(CN) China Apr Trade Balance (USD terms): No est v $23.9B prior
(CH) China Apr Foreign Reserves: $3.020Te v 3.009T prior
Weekend Events:
Sun (FR) France hold 2nd round of Presidential election
