Notes/Observations
- Continued improvement in global economic data aiding risk appetite (China PMI, Australia Retail Sales; Major European Services PMI data all beat expectations)
- UK Mar PMI Services bucks the trend and registered its 1st contraction in 32 months and lowest level since Brexit Referendum back in July 2016
- China’s Vice Premier Liu He in Washington to resume trade negotiations with his US counterparts.
Asia:
- US and China continue to haggle on trade deal enforcement and implementation; had resolved most other issues (in line with prior reports). Reports circulate that f this round of talks is successful, it could result in a Trump-Xi summit this month to sign the agreement; if not an agreement could be delayed until the end of June
- Australia Feb Retail Sales registered its fastest rise since Nov 2017 (M/M: 0.8% v 0.3%e)
- Australia Feb Trade Balance hits a record high surplus (A$4.8B v A$3.7Be)
- China Mar Caixin PMI Services: 54.4 v 52.3e
Europe:
- EU said to be preparing to offer a long delay on Brexit to January or April of 2020 with strict conditions. Conditions to include the need to hold European Parliament elections and a possible promise/informal agreement over Britain’s future conduct as a member state
- PM May stated that needed a further short extension of Article 50 and would try and find an arrangement with Labour to put to EU next week. Focused on find route out of impasse. Could make a success of no deal in long term but stressed that leaving with a deal was best. EU had stated that withdrawal deal would not be reopened, focus on future relationship in new talks. Would try and complete legislating by May 22nd
- PM May spokesman: there needs to be compromise on both sides of Brexit. Cabinet agreed as a whole to back the position. PM was talking about approaches to the future relationship that may be negotiated. UK would prepare for EU elections and then cancel if needed
- UK Brexiteer MP Rees Mogg stated that PM May’s move to work with Opposition Leader Corbyn was deeply unsatisfactory; history would not reflect well on her decision to work with Labour
- Opposition Labour Leader Corbyn statement: we want a customs union with the EU, access to markets, and worker protections; I will ensure that those aims are on the table
Americas:
- Fitch affirmed the United States sovereign rating at AAA; outlook Stable
- Trump Fed Nominee Stepthen Moore: Believe in a stable dollar
Energy:
- Weekly API Oil Inventories: Crude: +3M v +1.9M prior
- SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.67% at 387.60, FTSE +0.07% at 7,395.95, DAX +1.31% at 11,905.83, CAC-40 +0.68% at 5,460.48, IBEX-35 +1.00% at 9,461.93, FTSE MIB +1.12% at 21,759.50, SMI -0.03% at 9,527.00, S&P 500 Futures +0.49%]
- Market Focal Points/Key Themes: European Indices trade mainly higher across the board with the Dax outperforming once again tracking stronger Indices in Asia on upbeat service PMI data out of Europe and Asia as well as continued trade optimism. On the corporate front shares of German Auto makers Volkswagen, BMW and Daimler rise on trade optimism and US March car sales data. On the earnings front Gattaca, Stagecoach, Groupe Gorge are among the names trading higher, while CMC Markets declines after a profit warning and Christian Hansen trades lower after earnings and announcing a JV with Lonza Group. Elsewhere UK fashion group Superdry trades over 10% lower after the stepping down of its Chairman, CEO and CFO, while Babcock International trades higher after naming Ruth Cairnie Chairman. Looking ahead notable earners include Signet Jewelers and Acuity Brands.
Equities
- Consumer discretionary: Superdry [SDRY.UK] -12% (management changes), Pandora [PNDORA.DK] -1.5% (COO steps down)
- Consumer staples: CHR Hansen [CHR.DK] -4% (earnings), Ite Group [ITE.UK] +1.5% (trading update)
- Energy: Chariot Oil & Gas [CHAR.UK] +19% (award), Maersk [MAERSK.DK] +1.5% (Vice-CEO to step down)
- Financials: CMC Markets [CMCX.UK] -7% (trading update; CFO to step down), AA Plc [AA.UK] +3% (earnings)
- Healthcare: Roche [ROG.CH] -1% (refiling of premerger notification)
- Industrials: BMW [BMW.DE] +2%, Volkswagen [VOW3.DE] +2.5% (car sales), Saint-Gobain [SGO.FR] +3.5% (media reports), Stagecoach [SGC.UK] +7.5% (trading update), Babcock [BAB.UK] +2% (appoints Chairman)
Speakers
- SNB’s Maechler: Global economic growth should remain solid
- Italy Fin Min Tria rules out idea he could step down following frictions with ruling coalition, warned on market reaction if he were to resign
- UK Brexit Sec Barclay: Customs union with EU is highly undesirable; opportunity to see if labour party would stand by manifesto. Not the govt intention to hold EU parliamentary elections. Not holding elections would rule out a long extension. Timing for any request for Brexit extension will be shaped by discussions with Labour party leader Corbyn; any formal request to come on April 10th but informal approaches could be earlier
- UK Conservative MP Letwin: Process of seeking a delay in Brexit in parliament to continue
- UK Conservative MP Baker: PM May’s shift on Brexit might unite the conservatives against her
- Labour MP Long-Bailey (opposition): PM May’s Brexit shift was a welcome change; must find common ground
Currencies/Fixed Income
- A pick-up in risk appetite put some headwinds into the recent USD strength. Continued improvement in global economic data was aiding risk appetite (China PMI, Australia Retail Sales; Major European Services PMI data all beat expectations).
- GBP/USD was higher after PM May reached out to the opposition labour party for help in resolving the current Brexit impasse ahead of the April 12th deadline imposed by the EU. PM May implied that she would negotiate that with the EU without calling for elections. Dealers noted that the removal of election risk and that of hopes of a compromise supported the GBP currency. The UK parliament has failed twice to find a way forward in the process after PM May’s deal was rejected 3 times. The situation appeared to be moving towards a softer Brexit as Labour sought to remain in the Customs Union. Pair approaching the 1.32 level but knocked oof its best levels of the session after UK Mar PMI Services bucked the trend and registered its 1st contraction in 32 months and lowest level since Brexit Referendum back in July 2016 .
- USD/JPY higher on the unwinding of safe-haven flows with the pair testing 111.50 in the session.
Economic Data
- (RU) Russia Mar PMI Services: 54.4 v 55.0e (38th month of expansion); PMI Composite: 54.6 v 54.1 prior
- (SE) Sweden Mar PMI Services: 55.3 v 55.8 prior; PMI Composite: 54.6 v 54.9 prior
- (TR) Turkey Mar CPI M/M: 1.0% v 1.0%e; Y/Y: 19.7% v 19.6%e; CPI Core Index Y/Y: 17.5% v 18.0%e
- (TR) Turkey Mar PPI M/M: 1.6% v 1.2%e; Y/Y: 29.6% v 29.2%e
- (ES) Spain Mar Services PMI: 56.8 v 55.0e (65th month of expansion and highest since May 2018); Composite PMI: 55.4 v 53.8e
- (ZA) South Africa Mar PMI (whole economy): 48.8 v 50.2 prior
- (IT) Italy Mar Services PMI: 53.1 v 50.8e (2nd straight expansion); Composite PMI: 51.5 v 49.8e
- (FR) France Mar Final Services PMI: 49.1 v 48.7e confirms move back into contraction); Composite PMI: 48.9 v 48.7e
- (DE) Germany Mar Final Services PMI: 55.4 v 54.9e (confirms 69th month of expansion); Composite PMI: 51.4 v 51.5e
- (EU) Euro Zone Mar Final Services PMI: 53.3 v 52.7e (confirms 69th month of expansion); Composite PMI: 51.6 v 51.3e
- (IT) Italy Q4 YTD Budget Deficit to GDP: 2.1% v 2.2% prior
- (BR) Brazil Mar FIPE CPI (Sao Paulo): 0.5% v 0.5%e
- (TW) Taiwan Mar Foreign Reserves: $464.1B v $463.9B prior
- (UK) Mar Services PMI: 48.9 v 50.9e (1st contraction in 32 months and lowest level since July 2016); Composite PMI: 50.0 v 51.1e
- (UK) Mar Official Reserves Changes: -$172M v +$73M prior
- (NG) Nigeria Mar PMI Services: 53.6 v 53.3 prior
- (EU) Euro Zone Feb Retail Sales M/M: 0.4% v 0.3%e; Y/Y: 2.8% v 2.3%e
- (NO) Norway Mar House Prices M/M: 0.7% v 0.5% prior; Y/Y: 3.2% v 3.0% prior
Fixed Income Issuance
- (EU) EFSF opened its book to sell €3.0B in 16-year bond via syndicate; guidance seen +5bps to mid-swaps
- (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK2.6B in 2023 and 2029 Bonds
- (SE) Sweden sold SEK5.0B vs. SEK2.0B indicated in 3-month Bills; Avg Yield: -0.4626% v -0.4559% prior; Bid-to-cover: 1.92x v 3.04x prior
Looking Ahead
- (BR) Brazil Feb CNI Capacity Utilization: No est v 78.3% prior
- 05:30 (GR) Greece Debt Agency (PDMA) to sell 26-week bills
- 06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.50%
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia OFZ Bond auction results
- 07:00 (US) MBA Mortgage Applications w/e Mar 29th: No est v 8.9% prior
- 07:00 (UK) Weekly PM May question time in House of Commons
- 08:00 (UK) Baltic Bulk Index
- 08:15 (US) Mar ADP Employment Change: +175Ke v +183K prior
- 08:30 (US) Fed’s Bostic (dove, non-voter) speaks at American Banker Association Summit
- 09:00 (BR) Brazil Mar PMI Services: No est v 52.2 prior; PMI Composite: No est v 52.6 prior
- 09:00 (SG) Singapore Mar Purchasing Managers Index: 50.5e v 50.4 prior; Electronics Sector Index: No est v 49.5 prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:45 (US) Mar Final Markit Services PMI: 54.8e v 54.8 prelim; Composite PMI: No est v 54.3 prelim
- 09:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation
- 10:00 (US) Mar ISM Non-Manufacturing Index: 58.0e v 59.7 prior
- 10:00 (MX) Mexico Mar Vehicle Domestic Sales: No est v 103.7K prior
- 10:00 IMF updates its World economic Outlook
- 10:00 (PL) Poland Central Bank Gov Glapinski to hold post rate decision press conference
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (CO) Colombia Feb Exports: $3.2Be v $3.1B prior
- 12:00 (CA) Canada to sell 5-year notes
- 17:00 (US) Fed’s Kashkari (dove, non-voter)
