Euro Area Inflation Continues To Be Soft

Notes/Observations

• European Mar inflation data (German States and Spain) coming in below expectations and moving farther away from ECB target
• Brexit Stalemate deepens as UK Parliament failed to agree on a way forward via 8 options
• UK PM May announced to backbench Conservative MPs that she would step down as PM after her Brexit deal was delivered and would not lead the next stage of negotiations
• Turkey’s deepening market turmoil fuels concern about contagion to other developing market

Asia:

• China Premier Li keynote speech at Boao Forum (aka Asian Davos) stated that it had not adopted loose monetary policy to stimulate growth but policies were paying off. Economic indicators were steady in first 2 months of the year with market expectations improving. Could not rule out some fluctuation in quarterly economic growth this year, enough policy tools to deal with any slowdowns

Europe:

• UK Parliament indicative votes showed that no majority was reached on any indicative votes (as expected); MP Letwin proposed parliament should vote again on Monday (Apr 2nd) to reconsider the matters
• Parliament approved legislation to delay date of Brexit (as expected) in a 441 to 105 vote. To delay Brexit until May 22nd if Brexit deal was approved by Parliament before March 29th, or April 12th if no deal was approved
• Brexit Min Barclay stated that the process strengthened our view that PM May’s deal was the best option
• PM May said to have told Tory MPs in her Statement to 1922 Tory party committee that she’ll hand over leadership once Brexit was delivered but did not offer a specific timetable for stepping down
• Tory Lawmaker Rees-Moog: If PM May brought her Brexit deal to 3rd meaningful vote, then would support Northern Irish DUP party view. Did not expect vote on PM’s deal, if no DUP party support was secured.

Americas:

• Trump Administration Official: US and China had made progress in all areas of trade talks. China had made proposals on trade, including technology transfers, that are more specific and with wider scope than ever before. Reiterated that enforcement and intellectual property remained sticking points. Had no specific time frame set for trade deal, talks could conclude anytime from April to June
• US President Trump: We’re going to make ‘very good’ deal with China

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.37% at 378.68, FTSE +0.74% at 7,247.25, DAX +0.54% at 7,247.25, CAC-40 +0.44% at 5,324.55, IBEX-35 +0.04% at 9,234.04, FTSE MIB -0.02% at 21,190.50, SMI +0.61% at 9,447.50, S&P 500 Futures +0.08%]
• Market Focal Points/Key Themes: European Indices trades higher across the board, trading towards session highs, tracking higher US futures and mixed Asian Indices. On a busy morning for corporate earnings shares of SLM Solutions trades higher after earnings and the naming of a new CEO, with S&T, Evotec, Volex and Manz among other names gaining on earnings, while SMA Solar, Mitie Group and Drillisch are some of the notable names declining on earnings. In other news SwedBank announced the dismissal of its CEO amid the money laundering investigation; Hochtief declines almost 8% after Atlantia entered into a funded collar transaction for over 5.6M shares, while tobacco names British American Tobacco and Imperial brands rise on analyst upgrades. Looking ahead notable earnings include Accenture, Qiwi and Trans World Entertainment.

Equities

• Consumer discretionary: Dignity [DTY.UK] -3% (CMA decision), Asos [ASC.UK] +2.0% (analyst action), Volex [VLX.UK] -8% (trading update), Mitie Group [MTO.UK] -8% (trading update)
• Financials: Swedbank [SWEDA.SE] -4% (CEO steps down)
• Healthcare: Bayer [BAYN.DE] -1.5% (statement on Jury’s decision), Evotec [EVT.DE] +4% (earnings)
• Industrials: Manz Automation [M5Z.DE] +3% (earnings)
• Technology: United Internet [UTDI.DE] -4% (earnings), Meyer Burger Technology [MBTN.CH] -4% (placement), SMA Solar Technology [S92.DE] -12% (earnings; guidance)
• Utilities: SSE [SSE.UK] +0.5% (trading update)

Speakers

• ECB’s Praet (Belgium, Chief Economist) confirmed that ECB was looking at tiered deposit rates but would need a monetary policy case. Could decide on TLTRO pricing at June meeting with terms to depend on lending conditions
• Northern Irish DUP Leader Foster: Decline to rule out supporting a softer Brexit. She noted that abstention was never an option as would be the worst of all worlds
• Turkey Central Bank Gov Cetinkaya: To continue to decisively strengthen the reserves. Noted that net reserves rose by $2.4B during the past week
• German BGA exporters association forecasted 2019 exports at 3.0% if no escalation of Brexit chaos and the U.S.-China trade row
• China Commerce Ministry (MOFCOM) spokesperson Gao Feng: Both sides had achieved some progress during recent phone calls but more work was needed to be done. Liu He, USTR Lighthizer and Mnuchin to hold a full day of talks on Fri, Mar 28th; Trade negotiators to hold a working dinner
• China Premier Li stated that he hoped that trade talks produce an outcome as the process was in constant consultations. Both sides should implement it once a deal was reached. Trying to avoid a trade war with US
• Russian troops said to have arrived in Venezuela to discuss military cooperation but not there to carry out any military operation

Currencies/Fixed Income

• European inflation data coming in below expectations and supporting the recent central bank trend that have tilted from normalization bias back towards reflation. The data complementing the recent caution remarks by ECB chief Draghi of risks being tilted to the downside for the region. EUR/USD steady around 1.1250 area.
• GBP/USD was steady in the mid-1.31 area as the Brexit stalemate deepened after UK Parliament failed to agree on a way forward via its 8 options. PM had yet to decide whether to press ahead with a third meaningful vote as the Commons speaker Bercow continued to oppose another vote
• The TRY currency (Lira) continued to be quite volatile. On Wed, the Turkish market saw the overnight implied yield continued to blow out, rising to as high as 1,350% before ending the day at 750%. The market turmoil comes before local elections on Sunday. The TRY has been quite volatile throughout the wee ever since speculation surfaced that the currency might have been propped

Economic Data

• (NL) Netherlands Mar Producer Confidence Index: 6.1 v 6.3 prior
• (FI) Finland Feb House Price Index M/M: +2.0% v -1.3% prior; Y/Y: 1.4% v 0.2% prior
• (NO) Norway Feb Credit Indicator Growth Y/Y: 5.7% v 5.6%e
• (TR) Turkey Mar Economic Confidence: 81.9 v 79.4 prior
• (DE) Germany Mar CPI Saxony M/M: 0.5% v 0.3% prior; Y/Y: 1.4% v 1.4% prior
• (ES) Spain Mar Preliminary CPI M/M: 0.4% v 0.6%e; Y/Y: 1.3% v 1.4%e
• (ES) Spain Mar Preliminary CPI EU Harmonized M/M: 1.4% v 1.6%e; Y/Y: 1.3% v 1.5%e
• (HU) Hungary Feb Unemployment Rate: 3.6% v 3.7%e
• (SE) Sweden Feb Retail Sales M/M: 0.2% v 0.3%e; Y/Y: 3.0% v 2.8%e
• (DE) Germany Mar CPI Brandenburg M/M: 0.4% v 0.6% prior; Y/Y: 1.4% v 1.6% prior
• (DE) Germany Mar CPI Hesse M/M: 0.5% v 0.5% prior; Y/Y: 1.1% v 1.1% prior
• (DE) Germany Mar CPI Bavaria M/M: 0.5% v 0.5% prior; Y/Y: 1.5% v 1.7% prior
• (EU) Euro Zone Feb M3 Money Supply Y/Y: 4.3% v 3.9%e
• (DE) Germany Mar CPI North Rhine Westphalia M/M: 0.4% v 0.5% prior; Y/Y: 1.5% v 1.6% prior
• (PT) Portugal Mar Consumer Confidence Index: -9.5 v -8.3 prior; Economic Climate Indicator: 2.3 v 2.2 prior
• (ZA) South Africa Feb PPI M/M: 0.3% v 0.2%e; Y/Y: 4.7% v 4.5%e

Fixed Income Issuance

• (DK) Denmark sold total DKK3.86B in 3-month and 6-month Bills

Looking Ahead

• (DE) Germany Mar CPI Baden Wuerttemberg M/M: No est v 0.5% prior; Y/Y: No est v 1.7% prior
• (BE) Belgium Mar CPI M/M: No est v 0.3% prior; Y/Y: No est v 2.2% prior
• (BZ) Brazil Feb Central Govt Budget Balance (BRL): -16.5Be v 30.2B prior
• (EG) Egypt Central Bank Interest Rate Decision: Lending Rate currently stands at 16.75%; Deposit Rate: expected to be cut by 50bps to 15.25%-
• (CO) Colombia Feb Industrial Confidence: No est v 6.3 prior; Retail Confidence: No est v 29.3 prior
• (PT) Portugal Central Bank March Economic Bulletin
• 06:00 (EU) Euro Zone Mar Business Climate Indicator: 0.68e v 0.69 prior; Consumer Confidence: -7.2e v -7.2 advance; Economic Confidence: 105.9e v 106.1 prior; Industrial Confidence: -0.6e v -0.4 prior; Services Confidence: 12.0e v 12.1 prior
• 06:00 (CA) Canada Mar CFIB Business Barometer: No est v 59 prior
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €5.5-6.25B in 5-year and 10-year BTP bonds
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €0.5-1.0B indicated range in Jan 2025 CCTeu (Floating rate Note)
• 06:30 (HU) Hungary Debt Agency (AKK) to sell bonds (3 tranches)
• 07:00 (IE) Ireland Feb Retail Sales Volume M/M: No est v -1.2% prior; Y/Y: No est v 1.2% prior
• 07:00 (BR) Brazil Mar FGV Inflation IGPM M/M: 1.2%e v 0.9% prior; Y/Y: 8.3%e v 7.6% prior
• 07:15 (US) Fed’s Quarles speaks at ECB Conference in Frankfurt
• 07:30 (IS) Iceland to sell Bills
• 07:45 (US) Daily Libor Fixing
• 08:00 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to leave 2-Week Repurchase Rate unchanged at 1.75%
• 08:00 (NL) ECB’s Knot (Netherlands) in Amsterdam
• 08:30 (US) Q4 Final GDP Annualized (3rd reading) Q/Q: 2.3%e v 2.6% prelim; Personal Consumption: 2.6%e v 2.8% prelim
• 08:30 (US) Q4 Final GDP Price Index: 1.8%e v 1.8% prelim; Core PCE Q/Q: 1.7%e v 1.7% prelim
• 08:30 (US) Initial Jobless Claims: 220Ke v 221K prior; Continuing Claims: 1.78Me v 1.750M prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (DE) Germany Mar Preliminary CPI M/M: 0.6%e v 0.4% prior; Y/Y: 1.5%e v 1.5% prior
• 09:00 (DE) Germany Mar Preliminary CPI EU Harmonized M/M: 0.6%e v 0.5% prior; Y/Y: 1.6%e v 1.7% prior
• 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave Interest Rates unchanged at 6.75%
• 09:00 (ZA) South Africa BER Inflation Expectation Survey
• 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 22nd: No est v $482.5B prior
• 09:00 (UK) Baltic Bulk Index
• 09:30 (US) Fed’s Clarida at Bank of France Conference in Paris
• 10:00 (US) Feb Pending Home Sales M/M: 0.5%e v 4.6% prior; Y/Y: -3.0%e v -3.2% prior
• 10:00 (BR) Brazil Central Bank (BCB) Quarterly Inflation Report (QIR)
• 10:00 (US) Fed’s Bowman (voter) discusses Agriculture and Community Banking
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:00 (US) Mar Kansas City Fed Manufacturing Activity Index: 0e v 1 prior
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 11:45 (SE) Sweden Central Bank (Riksbank) Dep Gov Skingsley in Paris
• 11:45 (IE) Ireland Central Bank Dep Gov Donnery in Paris
• 13:00 (CH) SNB’s Maechler in Zurich
• 13:00 (US) Treasury to sell $32B in 7-Year Notes
• 13:15 (US) Fed’s Williams (moderate, voter) in Puerto Rico
• 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 8.25%
• 15:00 (AR) Argentina Jan Economic Activity Index (Monthly GDP) M/M: No est v 0.7% prior; Y/Y: -6.0%e v -7.0% prior
• 15:00 (US) Feb Agricultural Prices Paid: No est v 1.0% prior; Prices Received: No est v -0.7% prior
• 17:20 (US) Fed’s Bullard (dove, voter) in Madison, Wisconsin