Notes/Observations

  • UK to vote for a postponement to the current March 29 deadline on Brexit. PM May still fighting for her Brexit deal, with a 3rd attempt to get it through Parliament likely next week

Asia:

  • Australia Mar Consumer Inflation Expectation Survey: 4.1% v 3.7% prior
  • China Feb YTD Industrial Production hits a 17-year low (YoY: 5.3% v 5.6%e for its slowest pace since early 2002)
  • China Feb YTD Retail Sales YoY: 8.2% v 8.2%e
  • China Feb YTD Fixed Urban Assets: 6.1% v 6.1%e
  • China Feb YTD Surveyed Jobless Rate: 5.3% v 4.9% prior
  • Speculation that BOJ could ‘slightly’ downgrade its overall economic assessment at its upcoming policy meeting

Europe:

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  • UK Parliament voted 321-278 to reject a no-deal Brexit under all circumstances
  • PM May reiterated that, despite this vote, the legal default position remained that the UK would leave the EU without a deal unless something else was agreed. Parliament must understand that without finding a consensus on a deal in the coming days there would need to be longer extension of Article 50 (longer than the ‘short technical’ extension she had proposed). Govt would propose a short extension if a deal was passed by March 20th (Note: date is the eve of the EU Leader Summit)
  • Brexiteer ERG caucus members suggested that they might support the PM’s Brexit deal in the 3rd ‘meaningful vote’ on the condition that she resigned
  • PM’s office stated that PM May was NOT considering resigning. Ministers who voted against the govt in today’s final motion would be expected to resign (implying those that abstained need not resign from the Cabinet)
  • EU Commission statement noted that it took note of the votes in the House of commons. Added that there were only 2 ways to leave the EU: with or without a deal, and the EU was prepared for both. To take no deal off the table is not enough; UK has to agree to a deal
  • Italy Cabinet to approve new decree to renew bad loan guarantee scheme between weekend and Tuesday (Mar 16th thru 19th). The new scheme would have duration of 2 years; Cost of scheme higher than prior scheme given higher spread, market volatility; scheme won’t regard unlikely to pay loans
  • ECB’s Coeure (France): TLTRO’s were instruments that were equal and accessible everywhere. Italy faced challenges related to longer term growth and had nothing to do with the EU. Italy was facing challenge of a technical recession and the country was not a threat to Europe

Americas:

  • President Trump: We’re in no rush to complete China trade deal; talks were going along ‘very nicely’ but a deal must cover IP. It did not matter whether a deal was made before or at a summit; China President Xi has seen that I could walk away from a deal

Energy:

  • US said to seek to reduce Iran oil sales by about 20% to less than 1M bpd from May. US was expected to renew the sanctions waivers to Iranian oil buyers, but might deny waivers to countries that were not using them

Macro

  • (UK) United: A Brexit delay is now likely to be decided at March 21 EU summit if Parliament votes for a n extension to Article 50 today. The EU’s chief negotiator Barnier has not shown much enthusiasm for a short delay. Chancellor Merkel reportedly suggested previously that a delay until May 23 would be “very easy”, a delay until the end of June “easy” and faced with the risk that the UK exits out of the EU as it runs out of time, EU leaders will likely take the final decision on a delay themselves, rather than leaving it to negotiators, or deputies to make a decision ahead of the summit.
  • (DE) Germany: Feb HICP inflation was unchanged at 1.7% y/y,. Food price inflation saw a marked jump but overall petrol prices barely nudged the needle at 0.1% y/y, after 0.3% y/y in January, but diesel prices actually picked up. Prices for household energy also increased 4.3% y/y, up from 3.3% y/y in January The headline rate remains close to the ECB’s definition of price stability, but above the Eurozone average, and the ECB’s extension of the negative interest rate environment and the new round of TLTRO funding will likely ensure that expectations for inflation in Germany will remain above the average. Rent prices in particular are likely to continue to move higher, as real estate prices continue to surge under the current monetary policy regime.

Equities

  • Indices [Stoxx600 +0.72% at 378.00, FTSE +0.36% at 7,184.71, DAX +0.43% at 11,622.16, CAC-40 +0.70% at 5,343.77, IBEX-35 +0.90% at 9,274.99, FTSE MIB +0.93% at 20,941.50, SMI +2.01% 9,447.50, S&P 500 Futures +0.13%]

Market Focal Points/Key Themes:

  • European Indices trade higher across the board continuing the positive momentum after a mostly higher session in Asia and higher US Index futures. The FTSE under performs the general market on continued strength in cable following parliament rejecting a no-deal Brexit in any scenario. On the corporate front German Airliner Lufthansa trades sharply lower after earnings and a cautious outlook; German listed K+S and Wacker Neuson trades sharply higher on a rise in profits, with GEA Group, Lagardere, Leonardo, Vifor Pharma and Dufry among other notable names rising on earnings. Just Group declines sharply after reporting an unexpected loss in earnings, with Bourbon, Comet Group, Sixt Leasing and Casino among some of the other notable decliners on earnings. Elsewhere Targovax rises after being granted an FTO license to Zelluna Immunotherapy; Debenhams gains as Sports Direct proposes a £150M loan to the company while Charter Court Financial Services gains following the confirmation of a merger with OnSavings Bank. Looking ahead notable earners include Dollar General, Genesco and Embraer among others.

Equities

  • Consumer discretionary: Lufthansa [LHA.DE] -4.5% (earnings), Casino Guichard-Perrachon [CO.FR] -2% (earnings), Rallye [RAL.FR] +4% (earnings), Debenhams [DEB.UK] +4.5% (statement to Sports Direct proposal), Capita [CPI.UK] +1% (earnings)
  • Consumer staples: British American Tobacco [BATS.UK] -0.5% (investor day)
  • Energy: RWE [RWE.DE] -1.5% (earnings)
  • Financials: TCS Group Holding [TCS.UK] -4.5% (placing), Charter Court Financial Services [CCFS.UK] +1% (to be acquired by OneSavings Bank), Sixt Leasing [LNSX.DE] -10% (guidance), Just Group [JUST.UK] -15% (earnings; placing), Savills [SVS.UK] -9.5% (earnings)
  • Industrials: Leonardo-Finmeccanica [LDO.IT] +9% (earnings), Komax [KOMN.CH] -19.5% (earnings; profit warning), Deutz [DEZ.DE] +1% (earnings)
  • Materials: K+S [SDF.DE] +8.5% (earnings)

Speakers

  • UK Chancellor of the Exchequer Hammond (Fin Min): EU could insist on a long Brexit delay. UK Parliament needed a way to give view on Brexit options. There was not a majority in Parliament to call for a 2nd referendum
  • Northern Irish DUP Leader Foster stated that was working with Govt on trying to find a way to leave the EU with a deal. She believed that taking a ‘no-deal’ option off the table did weaken the UK’s negotiating hand
  • Swiss SECO March Economic Forecasts cut 2019 GDP growth from 1.5% to 1.1% while maintaining 2020 growth at 1.7%. Swiss Govt cut both 2019 and 2020 CPI to 0.4% and 0.6% respectively
  • German Economic Ministry Monthly Report: Domestic economy was having a subdue start to 2019 due to exports risks. GDP likely increased moderately in Q1 as leading indicators remained muted. Problem in auto sector related to emissions should be largely overcome at this time
  • German IFO Institute cut its 2019 GDP growth forecast from 1.1% to 0.6% and set 2020 outlook at 1.8%
  • Poland Central Bank Gov Glapinski reiterated view that interest rates were seen steady until 2022. Fiscal package to support GDP growth in coming years
  • Poland Central Bank Hardt: 2020 CPI seen above target and could be even higher
  • Poland Fin Min Czerwinska: 2019 GDP growth seen slowing moderately to around 4.0%
  • Fitch affirmed Indonesia sovereign rating at BBB, outlook stable

Currencies/Fixed Income

  • The GBP saw a 2nd day of volatility as the UK parliament continued its voting on Brexit options. GBP/USD hit a 9-month high above 1.3380 after the House of Commons rejected a no-deal Brexit under all circumstances . In today’s session, some of the optimism wore off as the Parliament still faced another vote later today on any extension of Article 50. PM May warned of long delay if no deal could be reached by March 20th (the eve of the next EU Leader Summit). The key issue at this time was what kind of plan would Parliament vote for, and how much longer do Britain’s politicians needed to make up their minds? PM May was still fighting for her Brexit deal, with a 3rd attempt to get it through Parliament likely next week. GBP/USD at 1.3280 area ahead of the US morning.
  • The JPY was softer ahead of Friday’s BOJ rate decision. Analysts noted that BOJ could take a more dovish tone with growing expectations that the next policy move could be towards another easing. Attention had turned to the BOJ’s economic view with reports indicating the central bank might cut its overall assessment due to the recent slowdown being exhibited in China economic data. It would be the 1st such cut in three years. USD/JPY higher by 0.4% at 111.70 just ahead of the US morning.

Economic Data

  • (IN) India Feb Wholesale Prices (WPI) Y/Y: 2.9% v 2.8%e
  • (DE) Germany Feb Final CPI M/M: 0.4% v 0.5%e; Y/Y: 1.5% v 1.6%e
  • (DE) Germany Feb Final CPI EU Harmonized M/M: 0.5% v 0.5%e; Y/Y: 1.7% v 1.7%e
  • (FI) Finland Feb CPI M/M: +0.5% v -0.4% prior; Y/Y: 1.3% v 1.1% prior
  • (TR) Turkey Jan Industrial Production M/M: 1.0% v 0.3%e; Y/Y: -7.3% v -8.0%e
  • (CH) Swiss Feb Producer & Import Prices M/M: +0.2% v -0.1%e; Y/Y: -0.7% v -1.0%e
  • (FR) France Feb Final CPI M/M: 0.0% v 0.0%e; Y/Y: 1.3% v 1.3%e; CPI Ex-Tobacco Index: 102.73 v 102.68e
  • (FR) France Feb Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.6% v 1.5%e
  • (CZ) Czech Jan Retail Sales Y/Y: 1.5% v 0.9%e; Retail Sales (ex Auto) Y/Y: 4.7% v 4.1%e
  • (ES) Spain Jan House transactions Y/Y: -0.2% v +3.8% prior
  • (HK) Hong Kong Q4 PPI Y/Y: 0.3% v 0.1% prior
  • (HK) Hong Kong Q4 Industrial Production Y/Y: 1.3% v 1.2% prior
  • (SE) Sweden Feb Unemployment Rate: 6.6% v 6.5%e; Unemployment Rate (Seasonally Adj): 6.2% v 6.2%e; Trend Unemployment Rate: % v 6.2% prior
  • (ZA) South Africa Jan Total Mining Production M/M: +0.2% v -0.6%e; Y/Y: -3.3% v -3.8%e; Gold Production Y/Y: -22.5% v -31.0% prior; Platinum Production Y/Y: 28.1% v 6.1% prior

Fixed Income Issuance

  • None seen

Looking Ahead

  • 06:00 (EU) Daily Euribor Fixing
  • 06:30 (HU) Hungary Debt Agency (AKK) to sell bonds (3 tranches)
  • 06:30 (UK) DMO to sell €1.75B in 1.75% Jan 2049 Gilts
  • 06:30 (IE) Ireland Debt Agency (NTMA) to sell €500M in 12-month Bills
  • 07:00 (IE) Ireland Q4 GDP Q/Q: No est v 0.9% prior; Y/Y: No est v 4.9% prior
  • 07:00 (IE) Ireland Q4 Current Account Balance: No est v €9.1B prior
  • 07:00 (IE) Ireland Feb CPI M/M: No est v -0.7% prior; Y/Y: No est v 0.7% prior
  • 07:00 (IE) Ireland Feb CPI EU Harmonized M/M: No est v -0.7% prior; Y/Y: No est v 0.8% prior
  • 07:00 (ZA) South Africa Jan Manufacturing Production M/M: -0.5%e v +0.7% prior; Y/Y: 1.2%e v 0.1% prior
  • 07:30 (TR) Turkey Central Bank TCMB Mar Survey of Expectations: 12-month inflation expectation: No est v 15.5% prior
  • 07:30 OPEC Monthly Report
  • 07:45 (US) Daily Libor Fixing
  • 08:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 18.00%
  • 08:00 (BR) Brazil Jan Retail Sales M/M: +0.1%e v -2.2% prior; Y/Y: 0.9%e v 0.6% prior
  • 08:00 (BR) Brazil Jan Broad Retail Sales M/M: +0.2%e v -1.7% prior; Y/Y: 2.3%e v 1.8% prior
  • 08:00 (BR) Brazil Jan IBGE Services Sector Volume Y/Y: No est v -0.2% prior
  • 08:30 (US) Initial Jobless Claims: 225Ke v 223K prior; Continuing Claims: 1.76Me v 1.755M prior
  • – 08:30 (US) Feb Import Price Index M/M: +0.3%e v -0.5% prior; Y/Y: -1.5%e v -1.7% prior; Import Price Index ex Petroleum M/M: -0.1%e v -0.7% prior
  • – 08:30 (US) Feb Export Price Index M/M: +0.1%e v -0.6% prior; Y/Y: No est v -0.2% prior
  • 08:30 (CA) Canada Jan New Housing Price Index M/M: 0.0%e v 0.0% prior; Y/Y: 0.0%e v 0.0% prior
  • 08:30 (US) Weekly USDA Net Export Sales
  • 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 8th: No est v $482.8B prior
  • 09:00 (RU) Russia Jan Trade Balance: $18.9Be v 18.9B prior; Exports: $35.8Be v $41.4B prior; Imports: $16.3Be v $22.5B prior
  • 09:00 (UK) Baltic Dry Bulk Index
  • 10:00 (US) Jan New Home Sales: 622Ke v 621K prior
  • 10:30 (US) Weekly EIA Natural Gas Storage Inventories
  • 11:00 (CO) Colombia Jan Industrial Production Y/Y: +2.8%e v -0.8% prior
  • 11:00 (CO) Colombia Jan Retail Sales Y/Y: 4.4%e v 7.0% prior
  • 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
  • 12:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Olhsson
  • 15:00 (AR) Argentina Feb National CPI M/M: 3.6%e v 2.9% prior; Y/Y: No est v 49.3% prior
  • 15:00 (UK) Parliament holds vote on Article 50 extension
  • 19:05 (CA) Bank of Canada (BOC) Wilkins
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