Notes/Observations
- UK Parliament returns from Easter recess; PM May facing yet another threat to her leadership.
Asia:
- Japan Fin Min Aso had no comment on content of talks with US Treasury Sec Mnuchin
- BOJ Senior Official Maeda reiterates BOJ would ease policy further if needed, if momentum for hitting price target was threatened; ready to act including combining various means
- China PBOC skips OMO and drains liquidity for first time since late March
- China 10-year bond yields extended gains amid focus on PBOC policy outlook; recent stabilization of data dampens RRR cut hopes
Europe/Mideast:
- 1922 Committee of Conservative MPs (back benchers) Chair Brady said to have prepared to tell PM May that she must step down by the end of June or her MPs would change the Tory party leadership rules to force her out
- Greece officially submitted a request to ESM for early repayment of IMF loans
Americas:
- Herman Cain withdrew his nomination from Fed
- US House speaker Pelosi: House Democrats had differing views on how to proceed after Mueller report. Important to know that the facts regarding holding the President accountable could be gained outside of impeachment hearings
Energy:
- President Trump: oil flow lost from Iran sanctions would be more than made up by Saudi Arabia and others
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.25% at 389.48, FTSE +0.39% at 7,488.77, DAX -0.13% at 12,205.90, CAC-40 -0.18% at 5,570.31, IBEX-35 -0.57% at 9,526.85, FTSE MIB -0.17% at 21,919.50, SMI -0.21% at 9,551.50, S&P 500 Futures -0.05%]
- Market Focal Points/Key Themes: European Indices trade mostly lower this morning with the exception of the FTSE 100 following the long weekend after a mixed session in the US and Asia. On the corporate front Umicore shares decline sharply after warning profits will be below expectations; Ahold Delhaize also declines on a downgrade in forecasts; Melexis falls on a sharp fall in profits and Revenue while Plastic Omnium also declines on earnings. Getinge trades almost 10% higher after Q1 results handily beats forecasts, while Faurecia and Lysogene also trades higher after a trading update. Elsewhere Thomas Cook gains on reports Fosun International raised its stake to 17%, with TehchnipFMC and BW Offshore gaining on contract awards. Looking ahead notable earnings include Verizon, Coca Cola, Twitter, P&G and Lockheed Martin among others.
Equities
- Consumer discretionary: Thomas Cook [TCG.UK] +14% (reportedly approached by potential bidders), Ahold Delhaize [AD.NL] -5% (profit warning due to strikes), Casino Guichard-Perrachon [CO.FR] -0.5% (partnership with Amazon)
- Financials: Partners Group [PGHN.CH] +0.5% (acquisition)
- Industrials: Faurecia [EO.FR] +1.5% (Q1 sales)
- Technology: Wirecard [WDI.DE] -2.5% (short ban expired), Melexis [MELE.BE] -6% (earnings), Datalex [DLE.IR] -3% (trading to be suspended), TechnipFMC [FTI.FR] +3% (contract)
- Materials: Plastic Omnium [POM.FR] -1.5% (earnings); Umicore [UMI.BE] -15% (profit warning), Severstal [SVST.UK] +1.5% (earnings)
Speakers
- ECB’s Coeure (France) stated that he did not see monetary policy argument for tiering at this time but discussions was. both useful and relevant. Negative interest rates were not the biggest problem for the banking sector; Sector should focus on costs
- Italy govt could delay the approval of the growth pact possibly until Monday, Apr 29th citing renewed tension in ruling coalition
- Poland Central Bank’s Kropiwnicki reiterated rate-setter stance that was no need or room for Base Rate cuts at this time. Did motion to begin raising rates in early 2020
- China official reiterated that have made substantial progress in trade talks
- Saudi Arabia welcomed US announcement related to Iranian oil export sanctions
Currencies/Fixed Income
- FX volatility remained at a lull against the major pairs.
- EUR/USD slightly lower I the mid-1.12 area as dealers believe the 1.13 level was solid resistance at this time.
- GBP/USD was back below the 1.30 level as UK Parliament returned from Easter recess and the Brexit drama now saw PM May again facing yet another threat to her leadership. 1922 Committee of Conservative MPs (back benchers) Chair Brady said to have prepared to tell PM May that she must step down by the end of June or her MPs would change the Tory party leadership rules to force her out
- USD/JPY below the 112 level in subdued trade as investors focused on the upcoming BOJ rate decision on Thursday. Japan investors were also said to be reducing risk and exposure ahead of the extended Golden Week holiday that begins next weeo .
- EUR/SEK was higher by 0.4% ahead of Thursday’s Riksbank rate decision. Dealers are expecting the central bank to signal that it would remain on hold for longer than previously expected as inflation was not seen sustainably at target level for the time being
- AUD softer ahead of Wednesday Q1 CPI data for Australia. Dealers believing that the data would reinforce speculation that the next RBA move would be a rate cut
Economic Data
- (NL) Netherlands Apr Consumer Confidence Index: -3 v -4 prior
- (NL) Netherlands Feb Consumer Spending Y/Y: 0.9% v 0.9% prior
- (DK) Denmark Apr Consumer Confidence Indicator: 3.7 v 3.8 prior
- (NL) Netherlands Mar House Price Index M/M: +0.4 v -0.1% prior; Y/Y: 7.7 v 7.5% prior
- (JP) Japan Mar Final Machine Tool Orders Y/Y: -28.5% v -28.5% prelim
- (CH) Swiss Mar M3 Money Supply Y/Y: 3.5% v 3.5% prior
- (ZA) South Africa Feb Leading Indicator: 104.9 v 102.8 prior
- (TW) Taiwan Mar Industrial Production Y/Y: -9.9% v -1.5%e
- (PL) Poland Mar Retail Sales M/M: 14.1% v 14.9%e; Y/Y: 3.1% v 4.1%e; Retail Sales Y/Y: 1.8% v 2.7%e
- (HK) Hong Kong Mar CPI Composite Y/Y: 2.1% v 2.2%e
- (EU) Euro Zone 2018 Govt Debt/GDP Ratio: 85.1% v 87.1% prior
Fixed Income Issuance
- (ID) Indonesia sold total IDR23.4T vs. IDR15.0T target in 3-month and 9-month Bills and 5-year, 10-year, 15-year, 20-year and 30-year Bonds
- (CH) Switzerland sold CHF400.4M in 3-month Bills; Avg Yield: -0.778%
- (ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2026, 2032 and 2037 bonds
Looking Ahead
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
- 05:30 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
- 06:45 (US) Daily Libor Fixing
- 07:45 (US) Weekly Chain Store Sales data
- 08:00 (BR) Brazil CONAB Sugarcane and Ethanol Production
- 08:00 (PL) Poland Mar M3 Money Supply No est v 1.3% prior; Y/Y: 9.6%e v 9.8% prior
- 08:00 (UK) Baltic Bulk Index
- 08:00 (RU) Russia announces upcoming OFZ Bond issuance
- 08:30 (CA) Canada Feb Wholesale Trade Sales M/M: 0.1%e v 0.6% prior
- 08:55 (US) Weekly Redbook Retail Sales data
- 08:55 (FR) France Debt Agency (AFT) to sell combined €B in 3-month, 6-month and 12-month Bills
- 09:00 (MX) Mexico Mar Unemployment Rate (Seasonally Adj): 3.5%e v 3.4% prior; Unemployment Rate (unadj): 3.1%e v 3.3% prior
- 09:00 (US) Feb FHFA House Price Index M/M: 0.6%e v 0.6% prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:00 (US) Apr Richmond Fed Manufacturing Index: 10e v 10 prior
- 10:00 (US) Mar New Home Sales: 647Ke v 667K prior
- 10:00 (EU) Euro Zone Apr Advance Consumer Confidence: -7.0e v -7.2 prior
- 10:00 (MX) Mexico weekly International Reserves data
- 11:30 (US) Treasury to sell 52-Week Bills
- 13:00 (US) Treasury to sell 2-Year Notes
- 16:30 (US) Weekly API Oil Inventory data
