Notes/Observations
- Key week for Brexit votes as little progress has been made on the Irish backstop issue; meaningful vote on Tuesday appears to be vote another huge loss for PM May
Asia:
- China Feb CPI data was in-line with expectations but hitting a 13-month low (YoY: 1.5% v 1.5%e)
- China Feb New Yuan Loans (CNY): 0.9B v 1.0Te
- China Feb Aggregate Financing (CNY): 0.7T v 1.45Te – China Feb M2 Money Supply data matched a record low (YoY: 8.0% v 8.4%e)
- The Chinese reportedly removed a trip to Mar-a-Lago from Pres Xi Jinping’s calendar – South Korea said to be in close communication with US following reports related to North Korea restoring rocket site
Europe:
- UK MPs said to have warn PM May: Brexit meaningful vote must be put on hold as she could face another three-figure defeat if she went ahead with her plan. Advised her to halt the vote and replace it with a motion setting out the kind of Brexit deal that would be acceptable to Tory MPs to keep the party together and put pressure on EU
- UK PM May told she must quit in order to save Brexit as only 2 Cabinet members still support her.
- EU said to prepare multi-billion pound increase on divorce payment from the UK in return for Brexit delay
- EU Parliament Chief Tajani: We must avoid a chaotic no-deal Brexit that would be bad for UK economy and hurt the EU. Brexit date could be delayed by a few weeks at the most
- UK Commons leader Leadsom: If the EU pushed the UK to leave without a deal, it would be much harder to guarantee no border in Ireland
- Bank of England (BOE) tightened bank liquidity buffers before Brexit; banks should assume they will not be able to exchange dollars and pounds and model balance sheets accordingly. told some domestic lenders to triple their liquidity buffers so that they hold enough liquid assets to be able to deal with stress for a period of 100 days vs the regular 30 days under the BoE’s Prudential Regulation Authority’s rules.
Americas:
- Fed Chair Powell ’60 Minutes’ interview reiterated Fed did not feel any hurry to change interest rates again. Watching retail sales after weak Dec, some evidence sales rebounded in Jan. Rate policy was ‘in a very good place right now’ and now ‘roughly neutral’
- President Trump to request avg of 5% cut to non-defense spending in FY2020 budget
- Ethiopian Airlines flying a new Boeing 737 Max, cashes shortly after takeoff, killing 157 people (2nd crash of the new 737 Max recently)
Macro
- (DE) Germany: According to German press the government has cut its growth forecast to 0.8%. The official forecast from the end of January was 1.0% but it appears latest revisions to production and orders data coupled with weak confidence numbers have prompted another downward revision. The finance ministry reportedly sees considerable negative risks, including global trade tensions, waning growth in the US, China end developing countries, as well as political risks in Europe.
- (DE) Germany: January trade surplus fell back to €18.5B with exports stagnating after rising 1.5% m/m in December, while import growth accelerated 1.5% from 0.7%. The three months trend improved, but unadjusted data also show sharply lower trade as well as current account surpluses in January compared with 2018, which will add to evidence that the German economy is struggling with ongoing trade uncertainty. Still export growth actually improved 1.7% y/y in January but risks appear to remain tilted to the downside.
- (UK) United Kingdom: Brexit negotiations continued over the weekend, but no progress to report. The second parliamentary vote on the government’s Withdrawal Agreement, slated for tomorrow, will now likely be pulled, as it is near certainty it would be rejected again. If the vote is cancelled then a vote on whether to leave the EU without a deal would take place on Wednesday, which would almost certainly be voted down. The House of Commons would then vote on delaying Brexit which would almost certainly be voted for. Then it would be up to the EU to agree to a delay.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.14% at 371.10, FTSE +0.76% at 7,158.75, DAX +0.14% at 11,474.16, CAC-40 +0.04% at 5,233.15, IBEX-35 -0.16% at 9,115.05, FTSE MIB +0.10% at 20,504.50, SMI +0.06% at 9,266.80, S&P 500 Futures +0.01%]
Market Focal Points/Key Themes:
Equities
- European Indices trade mostly higher across the board following a higher session in Asia overnight and slightly higher US futures. FTSE sharply outperforming other indices on the UK press report that PM May to most likely change the planned meaningful vote scheduled for Tuesday, Mar 12th to a provisional one. On the corporate front, French-listed Safran trades lower on Sunday’s Boeing 737 Max jet jet crash as its JV with General Electric was responsible for engines production. Both Deutsche Bank and Commerzbank trade higher on new press speculation regarding potential merger. Elsewhere Renault trades higher as it confirms negotiations on new alliance with Nissan and Mitsubishi. To the downside, Cerved Information Solutions trades 13% lower in Italy on announcement that Advent decided not to go ahead of takeover bid. Norwegian Air trades down over 6% on new load factor data and plans to continue operation of Boeing 737 Max for now notwithstanding further crash investigation. Looking ahead, notable earners include Century Casinos, Athenex and Ituran Location & Control.
- Consumer discretionary: Norwegian Air [NAS.NO] -6% (load factor; to continue 737 MAX 8 jets operation)
- Financials: Deutsche Bank [DBK.DE] +3%, Commerzbank [CBK.DE] +4.5% (reports regarding DB’s board opinion on Commerzbank merger), Banca IFIS [IF.IT] -12% (does not present CEO Giovanni Bossi in list to renew Board of Directors)
- Healthcare: Roche Holding [ROG.CH] n/c (FDA approval)
- Industrials: Safran [SAF.FR] -1.5% (JV with GE made engines to Boeing’s crashed jet), Renault [RNO.FR] +2% (new alliance)
- Technology: Acando [ACANB.SE] +43% (to be acquired), Tecan [TECN.CH] +1.5% (earnings), Xaar [XAR.UK] -6% (trading update), Cerved Information Solutions [CERV.IT} -13% (Advent decided not to go ahead of takeover bid)
Speakers
- ECB’s Coeure (France): Did not see need to restart asset purchases on markets. ECB didt see a recession in region at this time . Saw consistent growth but with less momentum. Italy was the only country in region in a technical recession, must be part of EU debate; country’s problem was productivity not linked to the Euro.
- UK Govt spokesperson: PM May spoke with EU Juncker on Sunday, Mar 10th; no plans for her to visit Brussels. Reiterated that Brexit talks are deadlocked
- PM May said to most likely change the planned meaningful vote scheduled for Tuesday, Mar 12th to a provisional one. BBC political reporter noted that If PM May delayed the ‘no-deal;’ Brexit or Article 50 extension then she could face resignations and possible removal as leader
- German govt official said not to expect to unanimously agree to a digital tax at Tuesday’s EcoFin meeting. Continuing to strive for a minimum tax at global level
- Czech Central Bank Gov Rusnok: domestic wage growth to slow notably after 2019
- South Korea Finance Ministry: IMF called for active fiscal and monetary polices. IMF concerned over pace of minimum wage hike
- Saudi Arabia official: To pump well below 10M bpd in April with exports below 7M bpd. Committed to oil market rebalancing and expect other producers to show similar commitment. April allocations were 635K bpd lower than volumes requested by its customers
- IEA: Global oil demand to reach 106.4M bpd in 2024. Saw global oil production rising by 5.9M bpd by 2024. US to dominate global oil supply growth through 2024 with a 2nd wave of shale revolution coming. US exports to surpass Russia. China and India to make up 44% of oil demand growth during period. OPEC capacity to decline by 400K bps by 2024 due to sanctions
Currencies/Fixed Income
- The GBP/USD was lower by 0.3% as the Brexit situation enters a key week as parliament was slated to vote this week on the plan to leave the EU. Lots of rumblings whether PM May would have the planned meaningful vote on Tuesday with speculation that it could be changed into a provisional one. Concerns bubbling too that if PM May delayed the ‘no-deal;’ Brexit or Article 50 extension votes then she could face resignations and possible removal as leader
- EUR/USD was slightly higher as dealers continued to focus on any divergence in central bank policies. The pair tested below the 1.12 level after the ECB pushed back its view for the 1st potential hike until after 2019 but a soft US payroll data gave the Euro some respite. Analysts still believe that the USD would continue its rally as the interest rate advantage would increase further down the road.
- USD/JPY steady with focus on the BoJ rate decision on Friday but analysts believe it would be a non-event
Economic Data
- (DE) Germany Jan Industrial Production M/M: -0.8% v +0.5%e; Y/Y: -3.3% v -3.3%e
- (DE) Germany Jan Current Account Balance: €18.3B v €18.0Be; Trade Balance: €14.5B v €15.2Be; Exports M/M: 0.0% v -0.5%e; Imports M/M: +1.5% v -0.1%e
- (DE) Germany Q4 Labor Costs Q/Q: -0.1% v +1.0% prior; Y/Y: 2.0 v 2.6% prior
- (NO) Norway Feb CPI M/M: 0.8% v 0.6%e; Y/Y: 3.0% v 2.8%e
- (NO) Norway Feb CPI Underlying M/M: 1.2% v 0.7%e; Y/Y: 2.6% v 2.1%e
- (NO) Norway Feb PPI (including Oil) M/M: 0.4% v 0.3% prior; Y/Y: 8.0% v 4.9% prior
- (DE) Denmark Feb CPI M/M: 0.4% v 0.8%e; Y/Y: 1.0% v 1.4%e
- (DE) Denmark Feb CPI EU Harmonized M/M: 0.5% v 0.2% prior; Y/Y: 1.1% v 1.2% prior
- (DK) Denmark Current Account Balance (DKK): 14.9B v 15.9B prior; Trade Balance: 9.1B v 7.2B prior
- (FI) Finland Jan Preliminary Trade Balance: +0.5B v -€0.4B prior
- (TR) Turkey Q4 GDP Q/Q: -3.0% v -2.4%e; Y/Y: -2.4% v -2.4%e (confirms technical recession)
- (TR) Turkey Jan Current Account Balance: -$0.8B v -$0.7Be (2nd straight deficit)
- (FR) Bank of France Feb Industrial (Business) Sentiment: 101 v 100e
- (SE) Sweden SEB House-Price Indicator: 13 v 13 prior
- (ES) Spain Jan Adjusted Retail Sales Y/Y: 0.8% v 1.0%e; Retail Sales Y/Y: 1.7% v 0.1% prior
- (CZ) Czech Jan National Trade Balance (CZK): 12.1B v 19.1Be
- (CZ) Czech Feb CPI M/M: 0.2% v 0.1%e; Y/Y: 2.7% v 2.6%e
- (CZ) Czech Jan Export Price Index Y/Y: 2.8% v 3.1% prior; Import Price Index Y/Y: 2.4% v 2.4% prior
- (HU) Hungary Jan Preliminary Trade Balance: €0.4B v €0.4B prior
- (CH) Swiss Total Sight Deposits w/e Mar 8th (CHF): 576.1B v 576.4B prior; Domestic Sight Deposits: 487.6B v 491.4B prior
Fixed Income Issuance
- None seen
Looking Ahead
- (IL) Israel Central Bank Feb Minutes
- 06:00 (EU) Daily Euribor Fixing
- 06:30 (DE) Germany to sell €2.0B in 6-month BuBills
- 07:00 (IL) Israel to sell bonds
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:45 (US) Daily Libor Fixing
- 08:00 (CZ) Czech Central Bank to comment on CPI data
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson
- 08:30 (US) Jan Advance Retail Sales M/M: 0.0%e v -1.2% prior; Retail Sales (Ex-Auto) M/M: +0.3%e v -1.8% prior; Retail Sales (Ex-Auto/Gas): +0.6%e v -1.4% prior; Retail Sales Control Group: +0.6%e v -1.7% prior
- 09:00 (UK) Baltic Dry Bulk Index
- 09:00 (EU) Eurogroup meeting
- 09:00 (UK) BOE’s Haskel
- 09:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming issuance
- 10:00 (US) Dec Business Inventories: +0.6%e v -0.1% prior
- 10:00 (FR) France Debt Agency (AFT) to sell combined €3.7-4.9B in 3-month. 5-month, 6-month and 12-month Bills
- 10:20 (BR) Brazil Feb Vehicle Production: No est v 196.8K prior; Vehicle Sales: No est v 199.8K prior; Vehicles Exports: No est v 25.0K prior
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills – 16:00 (US) Crop Progress Report
