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China Vice Premier Still Planning To Attend Trade Talks In Washington This Week

Notes/Observations

  • China Vice Premier still attending planned trade talks in Washington later this week
  • German Mar Factory Orders continue to highlight the headwinds of the EU economy
  • China Apr FX reserves registers its 1st decline in 7 months while its gold holding continue to climb

Asia:

  • RBA left the Cash Rate Target unchanged at 1.50% (not expected). To pay close attention to the labour market in coming meeting. Still had spare capacity in the economy
  • Australia Mar Trade Balance registered its 15th straight surplus (A$5.0B v A$4.3Be)
  • Australia Mar Retail Sales: 0.3% v 0.2%e

Europe/Mideast:

  • EU’s Barnier stated that EU was willing to revise Brexit blueprint on future EU/UK ties and reiterated that cancelling Brexit was still an option for UK
  • Turkey Election Board reportedly has nullified the mayoral vote in Istanbul; AKP party rep says election will be re-run on June 23

Americas:

  • USTR Lighthizer confirmed US would raise China tariffs effective 12:01ET on Friday if no deal; confirmed that China was reneging on commitments and that US had not had no contact with China’s Liu in 24 hours
  • US Treasury Sec Mnuchin: US-China trade deal was 90% done; talks saw big change in direction as China moved away from language in the agreement that would have changed it substantially. If Chinese changed position, US would be willing to keep talking

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 -0.18% at 386.20, FTSE -0.58% at 7,338.05, DAX -0.30% at 12,250.30, CAC-40 -0.44% at 5,459.56, IBEX-35 +0.20% at 9,350.10, FTSE MIB +0.27% at 21,466.50, SMI -0.10% at 9,648.50, S&P 500 Futures -0.46%]
  • Market Focal Points/Key Themes: European Indices trade mixed this morning, with Indices coming off earlier highs, following a generally higher session in Asia after China Commerce Min Vice Premier Liu said he will visit the US this week for trade talks. US Index futures trade lower, after recouping the majority of opening losses yesterday. On the corporate front Illiad shares rise over 5% following their Q1 Revenue and strategic cooperation with Cellnex Telecom; Uniper rises after a rise in Revenue and affirmed outlook, while DSM, Adecco, Wacker Neuson, Hanover Re, Anheuser Busch among other notable names rising on earnings. Meanwhile shares of German car giant BMW declines on a sharp decline in profits and adjusted outlook; Henkel declines 4% after Q1 results signaled a weak start the year; with Domino’s Pizza, Westwing Group, Infineon and Outokumpu among other names declining on orders. In other news Vectura rises sharply after wining patent litigation against Glaxo, QSC gains on the ale of Plusnet, while Thomas Cook gains as Lufthansa is to bid for its Condor unit. Looking ahead notable earners include Emerson Electric, Dean Foods, Crocs, Jacob’s Engineering and Owen and Minor among others.

Equities

  • Consumer discretionary: Lagardere [MMB.FR] +2% (sales), Domino’s Pizza [DOM.UK] -6% (trading update), G4S [GFS.UK] -3.5% (statement on no intention to make offer), Hellofresh [HFG.DE] +5% (earnings), Thomas Cook [TCG.UK] +8% (Lufthansa to make offer for Condor), Adecco [ADEN.CH] +1.5% (earnings)
  • Financials: Societe Generale [GLE.FR] -2% (investor day)
  • Materials: DSM [DSM.NL] +5.5% (earnings)
  • Industrials: BMW [BMW.DE] -1% (earnings), Alstom [ALO.FR] +2.5% (earnings), Evonik [EVK.DE] +2% (earnings; raises outlook), Henkel [HEN3.DE] -4% (earnings), Varta [VAR1.DE] +8% (earrings), Outokumpu [OUT1V.FI] -4.5% (earnings)
  • Technology: Infineon [IFX.DE] -0.5% (earnings), Axel Springer [SPR.DE] +2.5% (earnings)
  • Telecom: Iliad [ILD.FR] +5% (sales; divestment), QSC [QSC.DE] +11% (acquisition)

Speakers

  • EU’s Tusk said to discuss potential picks for top EU positions at the upcoming informal EU meeting on May 9th and could propose fast process for filling top EU positions
  • Italy Stats Agency (Istat) Monthly Economic Note: Leading indicator declined in April but at a slower pace compared to prior months
  • Sweden Central Bank (Riksbank) Apr Minutes: Global economy was still fraught with uncertainty; questions about strength of inflationary pressures
  • Sweden Central Bank (Riksbank) Gov Ingves: Inflation target attainment continued to be good and that interest rates could be cautiously raised. Postponement of next rate hike felt natural in light of lower inflation forecast
  • US Commerce Sec Ross: Imbalance in US-India trade needs to be address as imbalances due to IT business. India’s trade barriers were a disadvantage for foreign companies
  • China Commerce Ministry (MOFCOM) confirmed that Vice Premier Liu He would visit the US this week for trade talks (scheduled for Thur-Fri, May 9-10th)
  • China Foreign Ministry spokesperson Geng Shuang: Raising tariff will not resolve issues; reiterated that hope to meet the US half-way on trade issues
  • Malaysia Central Bank (BNM) Policy Statement noted that Adjustment to OPR was intended to preserve degree of monetary accommodativeness. Inflation expected to be broadly stable in 2019 compared to year ago levels. Inflation expected to remain low mainly due to policy measures in the immediate term

Currencies/Fixed Income

  • Risk-on appetite trying to find some momentum in the session as China’s Vice Premier Liu He was still planning to attend the trade talks in Washington later in the week; Liu attendance seem as a potentially positive sign for a trade agreement between the US and China
  • GBP was softer as the prospect of a cross-party Brexit deal lacked optimism. GBP/USD at 1.3100 just ahead of the NY morning.
  • TUR currency (Lira) was weaker after Turkey ordered a re-run of Istanbul’s mayoral elections. USD/TRY testing above 6.16 with Lira weaker by 1.3%
  • AUD saw a relief rally in the aftermath of a surprise RBA hold in its key rate. AUD/USD higher by 0.4% at 0.7015 area

Economic Data

  • (NL) Netherlands Apr CPI M/M: 0.7% v 0.4% prior; Y/Y: 2.9% v 2.8% prior
  • (NL) Netherlands Apr CPI EU Harmonized M/M: 1.1% v 0.5% prior; Y/Y: 3.0% v 2.9% prior
  • (DE) Germany Mar Factory Orders M/M: 0.6% v 1.4%e; Y/Y: -6.0% v -5.4%e
  • (CH) Swiss Q1 Real Estate Bubble Index: No est v 0.88 prior
  • (DE) Denmark Mar Industrial Production M/M: +1.0% v -1.4% prior
  • (FR) France Mar Trade Balance: -€5.3B v -€4.5Be
  • (FR) France Mar Current Account Balance: -€1.3B v v -€0.6B prior
  • (MY) Malaysia Central Bank (BNM) cut the Overnight Policy Rate by 25bps to 3.00% (as expected) for its 1st rate cut since July 2016)
  • (MY) Malaysia End-Apr Foreign Reserves: $103.4B v $103.5B prior
  • (CH) Swiss Apr Foreign Currency Reserves (CHF): 771.6B v 758.3Be
  • (CZ) Czech Mar Retail Sales Y/Y: 2.7% v 1.9%e; Retail Sales (ex-auto) Y/Y: 4.3% v 4.5%e
  • (AT) Austria Apr Wholesale Price Index M/M: 0.7% v 0.3% prior; Y/Y: 2.2% v 2.9% prior
  • (DE) Germany Apr Construction PMI: 53.0 v 55.6 prior
  • (SE) Sweden Mar Private Sector Production M/M: -0.5% v +0.2%e; Y/Y: 1.1% v 1.8%e
  • (SE) Sweden Mar Industrial Orders M/M: -4.9% v -2.4% prior; Y/Y: -8.1% v -3.5% prior
  • (SE) Sweden Mar Industry Production Value Y/Y: -1.3% v 2.9% prior; Service Production Value Y/Y: 0.3% v 1.7% prior
  • (UK) Apr New Car Registrations Y/Y: -4.1% v -3.4% prior
  • (CZ) Czech Apr International Reserves: $142.9B v $143.0B prior
  • (TW) Taiwan Apr CPI Y/Y: 0.7% v 0.5%e; CPI Core Y/Y: 0.6% v 0.6%e; WPI Y/Y: % v 1.4%e
  • (TW) Taiwan Apr Trade Balance: $2.7B v $3.1Be; Exports Y/Y: -3.3% v -3.1%e; Imports Y/Y: 2.6% v 1.0%e
  • (CN) China Apr Foreign Reserves: $3.0950T v $3.100Te (1st decline in 7 months)
  • (IS) Iceland Apr Preliminary Trade Balance (ISK): -15.9B v -8.8B prior
  • (SG) Singapore Apr Foreign Reserves: $296.8B v $295.8B prior

Fixed Income Issuance

  • (EU) ESM opened its to sell €1.0B in Jan 2022 bond; guidance seen -17bps to mid-swaps
  • (ID) Indonesia sold total IDR21.6T vs. IDR15.0T target in 3-month and 12-month Bills and 5-year, 10-year, 15-year, and 20-year Bonds
  • (ES) Spain Debt Agency (Tesoro) sold total €4.145B vs. €3.5-4.5B indicated range in 3-month and 6-month Bills
  • (AT) Austria Debt Agency (AFFA) sold total €1.38B vs. €1.38B indicated in 2023 and 2029 RAGB bonds
  • (SE) Sweden sold SEK5.0B in 3-month bills; Avg Yield: -0.4578% v -0.4626% prior; Bid-to-cover: 1.70x v 1.92x prior

Looking Ahead

  • (EU) EU Commission Spring Economic Forecasts
  • (RU) Russia Feb Sovereign Wealth Funds: Wellbeing Fund: No est v $59.1B prior TradeTheNews.com EU Mid-Market Update:
  • (IL) Israel Apr Foreign Currency Balance: No est v $118.2B prior
  • 05:30 (UK) Weekly John Lewis LFL sales data
  • 05:30 (ZA) South Africa Apr Sacci Business Confidence: 91.7e v 91.8 prior
  • 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 (DE) Germany to sell €700M in 2026 and 2046 I/L Bonds (Bundei)
  • 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 6-month Bills
  • 05:30 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
  • 06:00 (IE) Ireland Mar Industrial Production M/M: No est v -0.1% prior; Y/Y: No est v 0.8% prior
  • 06:15 (SE) Sweden Central Bank (Riksbank) Gov Ingves Speech
  • 06:30 (EU) ESM to sell €2.0B in 3-month bills
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (US) Fed’s Kaplan (dove, non-voter)in Beijing on Moderated Panel
  • 07:45 (US) Weekly Chain Store Sales data
  • 08:00 (PL) Poland Apr Official Reserves: No est v $112.9B prior
  • 08:00 (BR) Brazil CONAB Sugar Production Report
  • 08:00 (UK) Baltic Bulk Index
  • 08:00 (RU) Russia announces upcoming OFZ Bond issuance
  • 08:15 (BR) Brazil Apr Vehicle Production: No est v 240.6K prior; Vehicle Sales: No est v 209.2K prior; Vehicle Exports: No est v 39.0K prior
  • 08:30 (CL) Chile Apr Trade Balance: $1.0Be v $0.6B prior; Total Exports: No est v $6.2B prior; Total Imports: No est v $5.6B prior
  • 08:30 (CL) Chile Apr International Reserves: No est v $38.8B prior
  • 08:55 (US) Weekly Redbook Retail Sales data
  • 09:00 (MX) Mexico Feb Gross Fixed Investment: -2.5%e v +1.6% prior
  • 09:00 (MX) Mexico Apr Vehicle Production: No est v 346.9K prior; Vehicle Exports: No est v 323.6K prior
  • 09:00 (CL) Chile Mar Nominal Wage M/M: No est v 0.1% prior; Y/Y: No est v 4.3% prior
  • 09:00 (EU) Weekly ECB Forex Reserves
  • 10:00 (US) Mar JOLTS Job Openings: 7.735Me v 7.087M prior
  • 10:00 (CA) Canada Apr Ivey Purchasing Managers Index (Seasonally Adj): No est v 54.3 prior; PMI (unadj): No est v 57.6 prior
  • 10:00 (MX) Mexico Weekly International Reserves data
  • 10:30 (NZ) Fonterra Global Dairy Trade Auction
  • 11:35 (US) Fed’s Quarles (hawk, voter)
  • 12:30 (UK) BOE’s Haldane (chief economist) in Sheffield.
  • 13:00 (TR) Treasury to sell 3-Year Notes
  • 15:00 (US) Mar Consumer Credit: $16.0Be v $15.2B prior
  • 16:30 (US) Weekly API Oil Inventory data
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