Notes/Observations
- Focus on upcoming US Q1 Advance GDP data for assurances that global growth remained stable
- S&P Global Ratings’ review of Italy after market close
- Continued barrage of corporate earning
- BOJ altered its monthly bond-buying plan for a second time this year as it paved the way to purchase fewer long-dated bonds in May as yields stay low
- China President Xi speech at the Belt and Road Forum basically addressed all the concerns the US had raised in trade talks
Asia:
- Japan Mar Jobless Rate: 2.5% v 2.4%e – Japan Mar Preliminary Industrial Production M/M: -0.9% v 0.0%e; Y/Y: -4.6% v -3.8%e
- Japan Mar Preliminary Retail Sales M/M: 0.2% v 0.0%e; Y/Y: 1.0% v 0.8%e
- Japan Apr Core CPI for Tokyo area hits the highest level since 2015
- Japan’s Golden Week holiday has exchanges closed until Monday May 6th
- China President Xi speech at the Belt and Road Forum basically addressed all the concerns the US had raised in trade talks. Xi reiterated that won’t pursue yuan depreciation that harms others. To ensure that yuan remained within a stable and reasonable range.
- Trump administration might concede to a Chinese proposal that would give less protection for US pharmaceutical products than they receive at home (Note: a move that could draw opposition from the American drug industry). Reportedly China offered 8 years of IP protections for biologics data (vs 12 years under current US law); US considers concession on drug protections.
- Japan Fin Min Aso stated that was not in favor of linking currency talks with trade talks. Noted that he did speak about currency for ~5 minutes with US Treasury Sec Mnuchin. Talked about a wide range of things including global economy. Yen movement had not impacted trade
Europe/Mideast:
- France President Macron believed that policies implemented by his gov’t over past 2 years were right; did not want to raise taxes; would stick to planned spending cuts
- Investor Warren Buffet said to be ready to buy in the UK regardless of Brexit. Welcomed the chance to put money out any place where we think we understand and sort of trust the system.
Americas:
- White House Econ Adviser Kudlow stated that saw Fed moving towards a rate cut. Reiterated support for Stephen Moore for Fed
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.04% at 389.98, FTSE -0.24% at 7,416.45, DAX +0.02% at 12,285.27, CAC-40 +0.10% at 5,563.19, IBEX-35 -0.42% at 9,460.98, FTSE MIB -0.44% at 21,623.50, SMI -0.04% at 9,690.50, S&P 500 Futures -0.07%]
- Market Focal Points/Key Themes: European Indices trade mostly lower following a mixed session in Asia and flat US futures. With mixed earnings markets await US GDP data for direction. On another busy morning for corporate earnings shares of UK Bank RBS trades over 4% lower on Revenue which fell short of forecasts with Deutsche Bank also declining after its full earnings report; Kloeckner declines over 10% on a profit warning, while French names Casino and Capgemini also decline on earnings. German Car Giant Daimler trades slightly lower on mixed earnings and affirmed outlook, while Skanska falls on a top and bottom line miss. Meanwhile Continental trades higher on higher Revenues; Snaofi reported strong earnings beating on the top and bottom line, with Valeo, Electrolux, Safran and Astrazeneca other notable names gaining on earnings. In other news Glencore declines after the CFTC is investigating whether Glencore and its subsidiaries may have violated certain provisions; Recticel unanimously decided to reject Kingspan offer to acquire Insulation and Flexible division. In the US Intel shares decline sharply in the premarket after cutting its outlook, which is impacting other chip names in Asia and Europe. Amazon gains on a strong earnings beat, and Revenue growth. Looking ahead notable earners include American Airlines, Exxon, Chevron, Autonation and Colgate Palmolive among others.
Equities
- Consumer discretionary: Puma [PUM.DE] +1% (earnings), WPP [WPP.UK] +1% (trading update), Casino Guichard-Perrachon [CO.FR] -4% (sales data)
- Materials: Ferrexpo [FXPO.UK] -19.5% (auditor resigns), Glencore [GLEN.UK] -3.5% (CFTC investigation)
- Energy: Total [FP.FR] -0.5% (earnings)
- Financials: Deutsche Bank [DBK.DE] -4% (earnings), RBS [RBS.UK] -5.5% (earnings)
- Healthcare: Sanofi-Aventis [SAN.FR] +3.5% (earnings)
- Industrials: Daimler [DAI.DE] -0.5% (earnings), Skanska [SKAB.SE] -5.5% (earnings), Renault [RNO.FR] +2% (earnings; comments on joint alliance with Nissan), Continental [CON.DE] +2.5% (earnings), Electrolux [ELUXB.SE] +1% (earnings), Signify [LIGHT.NL] -2.5% (earnings)
- Technology: Just Eat [JE.UK] -3% (trading update)
- Telecom: Royal KPN [KPN.NL] +2% (earnings)
Speakers
- ECB’s Rehn (Finland): Decline in inflation might be due to asymmetry in ECB’s definition of price stability. Long-lasting slow inflation might have lowered inflation expectations durably. Markets might find that under certain circumstances that monetary policy measures are not effective enough to accelerate inflation
- SNB’s Jordan: Abandoning negative rates at this time would hardly improve the situation for savers, pension funds, insurers and banks. A rate hike at this time would hurt the economy. A future rate hike would depend on inflation and FX, convinced it would happen at some point. Reiterated pledge to intervene in FX if necessary as foreign exchange markets remained fragile
- France Fin Min Le Maire: Government to stick to debt and deficit reduction targets
- Bank of Japan (BOJ) announced its Bond purchases for month of May (lowered bottom end of 10-25-year range)
- China President Xi could travel to US as early as June
Currencies/Fixed Income
- USD was headed for its best week in more than two months amid a rally in US stocks and Treasuries and as traders awaited GDP data. DXY was holding near its highest level since May 2017 with the greenback rally picking up speed and strength as the divergence theme among central banks remained in force
- EUR/USD trading at 1.1140 area with focus on several events. S&P’s review of Italian sovereign ratings and the review of France President Macron’s ‘Act II’ promise of tax cuts and reforms are due todays and Spanish elections expected on Sunday. The 1.13 level remains the key technical resistance at this time with 1.10 as psychological support.
- The GBP currency continued to be weighed down by Brexit concerns and was headed for a second weekly decline. Weakness attributed amid concern that PM May’s government was unlikely to bring its Brexit legislation to a vote in Parliament next week. GBP/USD hovering just above the 1.29 level
Economic Data
- (CN) Weekly Shanghai copper inventories (SHFE): 219.7K v 236.7K tons prior
- (FR) France Apr Consumer Confidence: 96 v 97e
- (SE) Sweden Mar Retail Sales M/M: 0.5% v 0.2%e; Y/Y: 1.9% v 1.0%e
- (SE) Sweden Mar PPI M/M: 0.4% v 0.2% prior; Y/Y: 6.3% v 6.3% prior
- (RU) Russia Narrow Money Supply w/e Apr 19th (RUB): 10.30T v 10.27T prior
- (AT) Austria Apr Manufacturing PMI: 49.2 v 50.0 prior (1st contraction in 39 months)
- (UK) Mar BBA Loans for Housing: 40.0K v 38.7Ke
Fixed Income Issuance
- (IN) India sold total INR170B vs. INR170B indicated in 2024, 2029, 2043 and 2049 bonds
- (IT) Italy Debt Agency (Tesoro) sold €6.0B vs. €6.0B indicated in 6-month Bills; Avg Yield: -0.028% v -0.062% prior; Bid-to-cover: 1.89x v 1.59x prior
Looking Ahead
- (PT) Portugal Year-to-Date Budget Report
- (BR) Brazil Mar Total Federal Debt (BRL): No est v 3.874T prior
- 06:00 (UK) Apr CBI Industrial Trends Total Orders: 2e v 1 prior; Selling Prices: 8e v 7 prior; Business Barometer: -16e v -23 prior
- 06:00 (FR) France Q1 Total Jobseekers: No est v 3.419M prior
- 06:00 (UK) DMO to sell €3.5B in 1-month, 3-month and 6-month bills £0.5B, £1.0B and £2.0B respectively)
- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: expected to leave Key 1-Week Auction Rate unchanged at 7.75%
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Apr FGV Construction Costs M/M: 0.4%e v 0.2% prior
- 07:30 (IN) India Weekly Forex Reserves w/e Apr 19th: No est v $414.9B prior
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:30 (US) Q1 Advance GDP Annualized Q/Q: 2.2%e v 2.2% prior; Personal Consumption: 1.0%e v 2.5% prior
- 08:30 (US) Q1 Advance GDP Price Index: 1.2%e v 1.7% prior; Core PCE Q/Q: 1.3%e v 1.8% prior
- 09:00 (MX) Mexico Mar Trade Balance: $1.6Be v $1.2B prior
- 09:00 (MX) Mexico Feb IGAE Economic Activity Index (Monthly GDP) M/M: 0.3%e v 0.2% prior; Y/Y: 1.0%e v 1.3% prior
- 09:30 (BR) Brazil Mar Total Outstanding Loans (BRL): 3.272Te v 3.241T prior; M/M: 0.7%e v 0.3% prior; Personal Loan Default Rate: No est v 4.7% prior
- 10:00 (US) Apr Final University of Michigan Confidence: 97.0e v 96.9 prelim
- 11:00 (CO) Colombia Central Bank Interest Rate Decision: expected to leave Overnight Lending Rate unchanged at 4.25%
- 11:00 (EU) Potential sovereign ratings after European close (S&P on Italy, UK and Greece sovereign ratings; Fitch on UK and Netherlands sovereign ratings)
- 13:00 (US) Weekly Baker Hughes Rig Count data
- 21:30 (CN) China Mar Industrial Profits Y/Y:
