Notes/Observations
- European PMI manufacturing data helped to smooth concerns over the region’s growth outlook (Beats: Euro Zone, France, Italy, Spain; Misses: Germany)
- Less dovish FOMC as Fed to stay patient on rates as economy remained solid while inflation was muted
Asia:
- US and China said to be near deal to roll back some tariffs and could announce a deal by the end of next week
Europe/Mideast:
- PM May said to be considering staying in the EU customs union in order to secure a deal with Labour. Under the terms of a tentative agreement PM May said to be close to signing up to a long-term customs Union with the EU in all but name in return for Labour supporting her withdrawal agreement.
- United Kingdom Defense Sec fired for allegedly leaking security council discussions regarding Huawei role in 5G infrastructure
Americas:
- FOMC keeps Key policy rates steady (as expected) while cutting IOER by 5bp to 1.35%; in a unanimous decision. IOER move was intended to keep funds rate in the target range. Expected healthy GDP growth over rest of 2019; core inflation drop in early 2019 was unexpected and might be transitory factors at work Labor market remained strong and that economic activity rose at a solid rate. Job gains had been solid, on average, in recent months, and the unemployment rate had remained low. Growth of household spending and business fixed investment slowed in the first quarter
- BOC Gov Poloz stated that negative developments had created a detour for the Canadian economy; impact was temporary and growth would pick up. Reiterated reason to believe that the economy would accelerate in H2 2019. If headwinds dissipate, then rates would naturally rise
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.25% at 390.18, FTSE +0.01% at 7,386.00, DAX +0.16% at 12,363.94, CAC-40 -0.34% at 5,567.25, IBEX-35 -0.39% at 9,533.00, FTSE MIB -0.40% at 21,794.50, SMI 0.00% at 9,769.50, S&P 500 Futures +0.23%]
- Market Focal Points/Key Themes: European Indices trade mixed, coming off earlier lows, tracking higher US futures as markets return from holidays yesterday amid a very busy morning for corporate earnings and the FOMC rate decision yesterday. The Dax trades near session highs on the back of strong results for car giant Volkswagen which trades higher by almost 5%. Profits and Revenue handily beat estimates whilst affirming their outlook. BNP Paribas also rises on strong Revenue, while Royal Dutch Shell gains after beating forecasts. Other notable risers include Axa, Veolia, Geberit and Orexo. Meanwhile Hugo Boss declines on a Revenue miss, Andritz, Paddy Power, Lloyds and Legrand among other names declining on earnings. Elsewhere AMS continues to rally after strong earnings on Tuesday, rising a further 6% in sympathy with results from Apple; Bayer trades higher following affirmation from the EPA that Glyphosate is not carcinogenic, while Porsche trades higher following operating profit results and US car sales figures. Looking ahead notable earners include Cigna, Teva Pharma, Dunkin Brands, Kellogg, PG&E and Under Armor among others.
Equities
- Consumer discretionary: Hugo Boss [BOSS.DE] -5% (earnings), Zalando [ZAL.DE] -2% (earnings), Carlsberg [CARLB.DK] -1% (earnings), Paddy Power Betfair [PPB.UK] -4.5% (earnings), McBride [MCB.UK] -11.5% (CEO steps down; second profit warning)
- Energy: Royal Dutch Shell [RDSA.NL] +1% (earnings; buyback)
- Financials: BNP Paribas [BNP.FR] +2.5% (earnings), Metro Bank [MTRO.UK] -12.5% (earnings)
- Healthcare: Bayer [BAYN.DE] +2.5% (US EPA reaffirms that Glyphosate is not carcinogenic), Transgene [SNG.FR] +10% (collaboration with Astrazeneca), Fresenius SE [FRE.DE] -0.5% (earnings), Smith and Nephew [SN.UK] +3.5% (earnings)
- Industrials: Volkswagen [VOW3.DE] +5% (earnings), Rolls Royce [RR.UK] +1% (earnings), Andritz [ANDR.AT] -10.5% (earnings), Porsche [PAH3.DE] +4.5%, Fiat Chrysler [FCA.IT] -2.5% (car sales), Geberit [GEBN.CH] +7% (earnings)
- Technology: AMS [AMS.CH] +5.5% (Apple earnings)
Speakers
- ECB’s Nowotny (Austria): Monetary policy review would make sense for the ECB (**Note: On May 1st ECB’s De Guindos (Spain) stated that ECB had not discussed changing their target in response to question whether if the new president might want to review it)
- Sweden Central Bank (Riksbank) Gov Ingves testified in Parliament that unusual monetary policy has had effect. Important to analyst the SEK currency developments
- Taiwan Central Bank (CBC) Mar Minutes: Members concerned about local investments. One member did not see the need to cut rates; One member saw no grounds to raise rates while one member was concerned about slowing of M2 money supply growth
- Russia Apr oil production at 11.23M bpd v 11.30M bpd m/m
- OPEC Sec Gen Barkindo: Watching Venezuela oil situation carefully; OPEC+ working to avoid any supply crisis
Currencies/Fixed Income
- European PMI manufacturing data helped to sooth concerns over the region’s growth outlook and helped the EUR/USD stay above the 1.12 level.
- GBP was slightly firmer in the session around the 1.3070 area with focus on the BOE rate decision later in session. Some participants believe BOE could surprise the market with a hawkish tilt
- Overall the USD was basically steady after the Fed reiterated patience on Wed but its statement dented any expectations of coming rate cuts.
Economic Data
- (IN) India Apr PMI Manufacturing: # v 51.8
- (DE) Germany Mar Retail Sales M/M: -0.2% v -0.5%e; Y/Y: -2.1% v +.9%e
- (SE) Sweden Apr PMI Manufacturing: 50.9 v 52.8e
- (CH) Swiss Mar Real Retail Sales Y/Y: -0.7% v -0.4%e
- (NO) Norway Apr PMI Manufacturing: 53.8 v 56.8e (10th month of expansion)
- (HU) Hungary Apr Manufacturing PMI: 54.9 v 51.5e (41st month of expansion)
- (PL) Poland Apr PMI Manufacturing: 49.0 v 48.7e (6th straight contraction)
- (TR) Turkey Apr PMI Manufacturing: 46.8 v 47.2 prior (13th straight contraction)
- (HU) Feb Final Trade Balance: €0.8B v €0.9B prelim
- (ES) Spain Apr Manufacturing PMI: 51.8 v 51.2e (2nd straight expansion)
- (CH) Swiss Apr PMI Manufacturing: 48.5 v 51.0e (1st contraction in 40 months)
- (CZ) Czech Republic Apr PMI Manufacturing: 46.6 v 47.6e (5th straight contraction)
- (TH) Thailand Apr Business Sentiment Index: 49.2 v 51.4 prior
- (IT) Italy Apr Manufacturing PMI: 49.1 v 47.8e (7th straight contraction)
- (FR) France Apr Final Manufacturing PMI: 50.0 v 49.6e (moved back into expansion)
- (DE) Germany Apr Final Manufacturing PMI: 44.4 v 44.5e (confirmed 4th straight contraction)
- (EU) Euro Zone Apr Final Manufacturing PMI: 47.9 v 47.8e (confirmed 3rd straight contraction)
- (GR) Greece Apr Manufacturing PMI: 56.6 v 54.7 prior (22nd month of expansion)
- (BR) Brazil Apr FIPE CPI (Sao Paulo) M/M: 0.3% v 0.3%e
- (UK) Apr Construction PMI: 50.5 v 50.3e
- (HK) Hong Kong Q1 GDP Q/Q: 1.2% v 0.7%e; Y/Y: 0.5% v 1.9%e
- (ZA) South Africa Apr Manufacturing PMI: 47.2 v 45.8e (4th straight contraction)
- (IS) Iceland Q1 Unemployment Rate: % v 2.4% prior
Fixed Income Issuance
- (FR) France Debt Agency (AFT) sold total €B vs. €7.0-8.5B indicated range in 2029, 2034 and 2039 bonds
- Sold €3.957B in 0.50% May 2029 Oat; Avg Yield: 0.37% v 0.39% prior; Bid-to-cover: 3.11x v 2.06x prior
- Sold €2.633B in 1.25% May 2034 Oat; Avg Yield: 0.78% v 0.80% prior; Bid-to-cover: 2.29x v 3.29x prior
- Sold €1.896B in 1.75% Jun 2039 green Oat; Avg Yield: 1.04% v 1.25% prior; Bid-to-cover: 2.01x v 2.09x prior
- (SE) Sweden sold SEK500M vs. SEK500M indicated in I/L 2027 Bonds; Avg yield: -1.7686% v -1.6260% prior; Bid-to-cover: 3.23x v 3.36x prior
- (VN) Vietnam sold total VND2.7T vs. VND4.0T target in 5-year, 10-year, 15-year and 30-year bonds
Looking Ahead
- (UK) UK holds Local Elections
- (NO) Norway Central Bank (Norges) Dep Gov Nicolaisen
- (ZA) South Africa Apr Naamsa Vehicle Sales Y/Y: No est v -3.1% prior
- (RO) Romania Apr International Reserves: no est v $35.9B prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
- 06:00 (IE) Ireland Apr Live Register Monthly Change: No est v -2.3K prior; Live Register Level: No est v 194.8K prior
- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.75%
- 07:00 (UK) Bank of England (BOE) Apr Minutes
- 07:00 (UK) Bank of England (BOE) Quarterly Inflation Report (QIR)
- 07:00 (CZ) Czech Central Bank (CNB) Interest Rate Decision: expected to raise 2-Week Repurchase Rate by 25bps to 2.00%
- 07:00 (ZA) South Africa Mar Electricity Production Y/Y: No est v -1.9% prior; Electricity Consumption Y/Y: No est v -1.0% prior
- 07:30 (US) Apr Challenger Job Cuts: no est v 60.6K prior; Y/Y: No est v 0.4% prior
- 07:30 (UK) BOE Gov Carney post rate decision press conference
- 08:00 (CZ) Czech Apr Budget Balance (CZK): No est v -9.2B prior
- 08:00 (UK) Baltic Bulk Index
- 08:15 (CZ) Czech Central Bank Gov Rusnok to hold post Rate Decision press conference
- 08:30 (US) Initial Jobless Claims: 215Ke v 230K prior; Continuing Claims: 1.66Me v 1.655M prior
- 08:30 (US) Q1 Preliminary Nonfarm Productivity: 2.3%e v 1.9% prior; Unit Labor Costs: 1.5%e v 2.0% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (BR) Brazil Apr PMI Manufacturing: No est v 52.8 prior
- 10:00 (US) Mar Factory Orders: +1.5%e v -0.5% prior; Factory Orders (ex-transportation): No est v 0.3% prior
- 10:00 (US) Mar Final Durable Goods Orders: No est v 2.7% prelim; Durables Ex-transportation: No est v 0.4% prelim; Capital Goods Orders (Non-defense/ex-aircraft): No est v 1.3% prelim; Capital Goods Shipments (Non-defense/ex-aircraft): No est v -0.2% prelim
- 10:00 (MX) Mexico Mar Total Remittances: $2.8Be v $2.4B prior
- 10:00 (MX) Mexico Central Bank Economist Survey
- 10:30 (MX) Mexico Apr PMI Manufacturing: No est v 49.8 prior
- 10:30 (US) EIA Weekly Natural Gas Inventories
- 11:30 (US) Treasury to sell 4-week and 8-week bills
- 11:00 (DK) Denmark Apr Foreign Reserves (DKK): No est v 454.1B prior
- 12:00 (CA) Canada to sell 2-year bonds
- 13:00 (MX) Mexico Apr IMEF Manufacturing Index: 50.2e v 50.2 prior; Non-Manufacturing Index: 51.1e v 51.2 prior
- 13:30 (BE) ECB’s Praet (Belgium, outgoing economist)
- 14:15 (BR) Brazil Apr Trade Balance: $6.9Be v $5.0B prior; Total Exports: $20.5Be v $18.1B prior; Total Imports: No est v $13.1B prior
- (IT) Italy Apr Budget Balance: No est v -€20.2B prior
- (AR) Argentina Apr Government Tax Revenue (ARS): No est v 327.9B prior
- (BR) Brazil Mar CNI Capacity Utilization: No est v 78.0% prior
