Notes/Observations
- EU grants UK a six-month extension (until Halloween) on Bexit to avert a potential crisis but membership could be cut short if UK fails to hold EU elections next month
- UK PM May had indicated that she still aimed to leave by May 22 to avoid EU elections
Asia:
- Australia PM Morrison confirmed that Federal elections to be held May 18th
- Australia Apr Consumer Inflation Expectation: 3.9% v 4.1% prior
- China Mar CPI saw its fastest pace since Oct (YoY: 2.3% v 2.3%e)
Europe:
- EU’s Tusk confirmed that EU and UK had agreed to Brexit extension until Oct 31st (additional 6-months) and would set up a review for Jun 21st to check on progress. Condition includes that UK must now hold EU elections or leave the Bloc by Jun 1st
- PM May: Still looking to leave the EU asap. EU agreed that the extension could end when Withdrawal Agreement was ratified by Parliament; UK to keep full membership rights during extension. UK could leave EU before June 30th and did not need to hold EU elections if deal was reached by May 22nd. No simple way to break deadlock in UK Parliament
- France President Macron: EU leaders were convinced to grant the UK an extension because PM May believed that a cross party deal could pass parliament. There were different sensibilities but reached a compromise at Brexit summit; True that a majority of EU leaders were for longer extension, but it was neither good for us nor the UK
- Germany Chancellor Merkel: Brexit delay was in the best interest of EU. Germany fighting for an orderly Brexit because of our own interests. Important that UK prepared for EU elections
- UK Labour Shadow Chancellor Mc’Donnell: There’s a potential for a deal with PM May’s govt but so far there were fundamental disagreements
- PM May reportedly would seek to stay on as PM if Brexit deal was not passed by end of June
- ECB’s Coeure (France): ECB not in business of helping banks
Americas:
- US Treasury Sec Mnuchin stated that had agreed with China on enforcement mechanism and to establish enforcement offices. Hopeful could reach a trade deal quickly but would not set any arbitrary deadline for Trump-Xi summit He had no comment on tariffs. Both US and China were working hard to reach trade agreement with more calls scheduled this week
- FOMC Mar Minutes: Most officials saw no need for change in rates this year. Majority said that patient approach was needed given uncertainties
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.20% at 385.92, FTSE -0.07% at 7,416.75, DAX -0.25% at 11,876.69, CAC-40 +0.31% at 5,466.69, IBEX-35 -0.26% at 9,382.04, FTSE MIB -0.69% 21,521.50, SMI +0.17% at 9,557.40, S&P 500 Futures -0.02%]
Market Focal Points/Key Themes:
- European Indices trade mostly lower with the French CAC bucking the trend after a mixed session in Assia and Flat US futures.
- On the corporate front shares of French listed LVMH and Christian Dior rise after strong Q1 Revenue numbers which beat forecasts; Sodexo also gains sharply on earnings and affirmed outlook. Other notable gainers on earnings include 2G Energy, Euromicron, Barry Callebaut and Lindab. Shares of Hella KGaA declines on earnings, with Curetis and hVIVO also declining on earnings.
- In other news Prysmian trades sharply lower on the cancellation of shareholder meeting, as a spokesperson notes it is to re-examine financial statements on WesternLink; Lufthansa gains after launching the formal sale process for its catering unit while Ocado, Marks & Spencer, Engie and Glencore all trade lower on analyst downgrades.
- In the US, Tesla shares fall over 4% on the premarket after reports its to freeze spending on its $4.5B gigafactory.
- Looking ahead notable earners include Fastenal, Apogee Industries and Rite Aid.
Equities
- Consumer discretionary: LVMH [MC.FR] +3% (sales), Ted Baker [TED.UK] +0.5% (new CEO; notes probe), WH Smith [SMWH.UK] -0.5% (earnings), Barry Callebaut [BARN.CH] +3.5% (earnings), Christian Dior [CDI.FR] +2.5% (sales), easyHotel [EZH.UK] +7.5% (trading update), Grafton [GFTU.UK] +2.5% (acquisition)
- Financials: Man Group [EMG.UK] -0.5% (FUM stats), Commerzbank [CBK.DE] +0.5% (reports on labor talks regarding merger)
- Healthcare: hVIVO [HVO.UK] -7% (earnings)
- Industrials: Hella [HLE.DE] n/c (earnings), BMW [BMW.DE] -0.5% (sales), Lindab [LIAB.SE] +10% (earnings), Oxford Instruments [OXIG.UK] +4.5% (trading update)
- Technology: ASML [ASML.NL] -2% (confirmed it has been victim to corporate Chinese espionnage responding to Dutch press reports)
Speakers
- ECB Survey of Professional Forecasters (SPF) cut its inflation view for the forecast horizon (2019-2021 period) and cut its growth outlook as well for both 2019 and 2020.
- Ireland PM Varadkar: Brexit extension gave the UK time to reach a cross-party agreement; talks might work out
- German BGA exporters association on Brexit: Extending Britain’s departure date was the lesser evil as it avoided chaos but added crippling uncertainty for companies
- RBNZ Gov Orr: mixed picture makes next RNBZ rate decision on May 8th difficult
- China Commerce Ministry (MOFCOM) Spokesman Gao stated that US and China to continued to talk on ‘legacy issues’
- IEA Monthly Oil Report maintained its 2019 global oil demand growth forecast at 1.4M bpd but noted Oil market was tightening but global demand could falter. Production decline was the result of production curbs from the OPEC and its allies, as well as outages in Venezuela due to US sanctions
Currencies/ Fixed Income
- FX markets quiet despite the plethora of events on Wednesday and appeared to be lacking a directional theme.
- GBP currency hovering around the 1.31 area after the risk of a cliff edge Brexit subsided for now with EU granting an extension until Halloween (with conditions). UK PM May had indicated that she still aimed to leave by May 22 to avoid EU elections
- EUR/USD steady at 1.1280 despite a ‘dovish’ ECB meeting on Wed with some dealers believing the central bank could open the way for more rate cuts if risks intensify.
- The SEK currency (Kroner ) was initially firmer after as Swedish March inflation data kept the door open for another rate hike in the 2nd half of 2019. EUR/SEK tested below 10.42 following the data but retraced the bulk of the move as analysts noted that the Riksbank could not overlook the recent spat of soft data for the country.
Economic Data
- (DE) Germany Mar Final CPI M/M: 0.4% v 0.4%e; Y/Y: 1.3% v 1.3%e
- (DE) Germany Mar Final CPI EU Harmonized M/M: 0.5% v 0.5%e; Y/Y: 1.4% v 1.4%e
- (FR) France Mar Final CPI M/M: 0.8% v 0.8%e; Y/Y: 1.1% v 1.1%e; CPI (ex-tobacco) Index: 103.43 v 103.44e
- (FR) France Mar Final CPI EU Harmonized M/M: 0.9% v 0.9%e; Y/Y: 1.3% v 1.3%e
- (TR) Turkey Feb Current Account Balance: -$0.7B v -$0.9Be
- (SE) Sweden Mar CPI M/M: 0.2% v 0.2%e; Y/Y: 1.9% v 1.8%e; CPI Level: 331.79 v 331.60e
- (SE) Sweden Mar CPIF M/M: 0.2% v 0.1%e; Y/Y: 1.8% v 1.8%e
- (SE) Sweden Mar CPIF (ex-energy) M/M: 0.3% v 0.2%e; Y/Y: 1.5% v 1.4%e
- (SE) Sweden Mar Average House Prices (SEK): 3.097M v 2.984M prior
- (SE) Sweden Feb Household Consumption M/M: 0.2% v 1.1% prior; Y/Y: 1.8% v 1.8% prior
- (IS) Iceland Mar International Reserves (ISK): 765B v 752B prior
- (GR) Greece Jan Unemployment Rate: 18.5% v 18.4% prior
Fixed Income Issuance
- (ES) Spain Debt Agency (Tesoro) sold total €3.94B vs. €3.5-4.5B indicated range in 2024 and 2035 bonds
- Sold €2.69B in new July 2024 SPGB bond; Avg yield: 0.171% v 0.142% prior; Bid-to-cover: 2.24x v 2.13x prior (Mar 7th 2019 under 0.35% July 2023 SPGB)
- Sold €1.249B in July 2035 SPGB bond; Avg yield: 1.639%; Bid-to-cover: 1.32x
- (IT) Italy Debt Agency (Tesoro) sold total €7.25B vs. €6.25-7.25B indicated range in 2022, 2026 and 2035 BTP bonds
- Sold €2.5B vs. €2.0-2.5B indicated range in 1.00% July 2022 BTP; Avg Yield: 1.08% v 1.06% prior; Bid-to-cover: 1.62x v 1.49x prior
- Sold €3.75B vs. €3.25-3.75B indicated range in new 2.10% July 2026 BTP; Avg Yield: 2.05% v 2.05% prior; Bid-to-cover: 1.36x v 1.40x prior
- Sold €1.5B vs. €1.0-1.5B indicated range in 3.35% Mar 2035 BTP; Avg Yield: 3.00%; Bid-to-cover: 1.37x
Looking Ahead
- 05:30 (ZA) South Africa Feb Total Mining Production M/M: 0.1%e v 0.2% prior; Y/Y: -2.55e v -3.3% prior; Gold Production Y/Y: No est v -22.5% prior; Platinum Production Y/Y: No est v 28.1% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds (3 tranches)
- 06:00 (IL) Israel Mar Trade Balance: No est v -$1.6B prior
- 06:00 (IE) Ireland Mar CPI M/M: No est v 0.8% prior; Y/Y: No est v 0.6% prior
- 06:00 (IE) Ireland Mar CPI EU Harmonized M/M: No est v 0.8% prior; Y/Y: No est v 0.7% prior
- 06:00 (IE) Ireland Feb Property Prices M/M: No est v -0.4% prior; Y/Y: No est v 5.6% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (ZA) South Africa Feb Manufacturing Production M/M: -1.3%e v -2.0% prior; Y/Y: 0.5%e v 0.3% prior
- 08:00 (BR) Brazil CONAB Report
- 08:00 (UK) Baltic Bulk Index
- 08:00 (UK) PM May Statement following EU Leader Summit
- 08:30 (US) Mar PPI Final Demand M/M: 0.3%e v 0.1% prior; Y/Y: 1.9%e v 1.9% prior
- 08:30 (US) Mar PPI Ex Food and Energy M/M: 0.2%e v 0.1% prior; Y/Y: 2.4%e v 2.5% prior
- 08:30 (US) Mar PPI Ex Food, Energy, Trade M/M: 0.2%e v 0.1% prior; Y/Y: No est v 2.3% prior
- 08:30 (US) Initial Jobless Claims: 210Ke v 202K prior; Continuing Claims: 1.74Me v 1.717M prior
- 08:30 (CA) Canada Feb New Housing Price Index M/M: No est v -0.1% prior; Y/Y: No est v -0.1% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 5th: No est v $489.5B prior
- 09:00 (RU) Russia Feb Trade Balance: $12.4Be v $13.4B prior; Exports: $31.7Be v $29.8B prior; Imports: $18.9Be v $16.5B prior
- 09:00 (MX) Mexico Feb Industrial Production M/M: 0.1%e v 0.6% prior; Y/Y: -0.8%e v -0.9% prior; Manufacturing Production Y/Y: 0.9%e v 1.3% prior
- 09:30 (Fed’s Clarida (hawk, voter) at IIF in Washington
- 09:40 (US) Fed’s Bullard (dove, voter) on economy and monetary policy
- 10:00 (MX) Mexico Central Bank Monetary Policy Minutes
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
- 13:00 (US) Treasury to sell 30-Year Bonds Reopening
- 14:00 (US) Fed’s Kaskari (dove, non-voter)
- 16:00 (US) Fed’s Bowman (voter)
