Notes/Observations
- Trade tension continue to simmer; Thursday/Friday talks in Washington of critical importance and likely dictate whether the threat of tariffs was real or just hard ball negotiating tactics
Asia:
- China Apr Trade Balance: $13.8B v $34.6Be; Exports Y/Y: -2.7% v +3.0%e; Imports Y/Y: +4.0% v -2.5%e v -7.6% prior
- New Zealand Central Bank (RBNZ) cut Official Cash Rate (OCR) by 25bps to 1.50% (as expected) to resume its easing mode (last cut was back in Nov 2016); lowered rate path outlook
- RBNZ Gov Orr post rate decision press conference noted that was iIn good position to be able observe data as it unfolded. Noted of large uncertainties around OCR track
- BOJ March Minutes (two meetings ago): Most member agreed that would take time to hit 2% price target, appropriate to persist with monetary easing
Europe/Mideast:
- PM May met 1922 Chair Sir Graham Brady on Tuesday, May 7th amid pressure for her to announce a firm departure date
- PM May said to stay in office until the Tory party conference in Sept after setting a summer deadline to finish Brexit talks
- Local Tory associations confirmed to hold of vote of confidence in the PM on June 15th (non-binding)
Energy:
- Weekly API Oil Inventories: Crude: +2.8M v +6.8M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.03% at 381.52, FTSE -0.22% at 7,244.68, DAX +0.26% at 12,124.62, CAC-40 +0.09% at 5,400.50, IBEX-35 -0.17% at 9,218.95, FTSE MIB -0.28% at 21,160.50, SMI -0.06% at 9,571.50, S&P 500 Futures -0.07%]
- Market Focal Points/Key Themes: European Indices trade mostly higher rebounding from the sharp losses seen yesterday despite a weaker close on Wallstreet overnight and weaker Asian Indices. US Index futures trade flat as trade tensions continue to be at the forefront. On the corporate front shares of Siemens outperform trading over 4.5% higher helping the Dax outperform, as the company reported strong earnings and announced the confirmed carve out of its Gas & Power unit. German traded Wirecard rises sharply following strong earnings and raised outlook, while Shaeffler, ISS, Amadeus, Travis Perkins and Ratos among others rising on earnings. Meanwhile Imperial Brands declines after in line results, with Munich Re also declining, along with Commerzbank and Ahold Delhaize following earnings. In the US shares of Electronic Aets gained after earnings, with Match Group, Qorvo and Paysign some of the notable gainers in the permarket, with Inogen, ADT, TripAdvisor, Sprint and Western Union declining. Looking ahead notable earners include Bunge, Thomson Reuters, Mckessen and Coty among many others.
Equities
- Consumer discretionary: Ahold Delhaize [AD.NL] -1% (earnings), Travis Perkins [TPK.UK] -3% (trading update), ITV [ITV.UK] -2.5% (trading update), Wolters Kluwer [WKL.NL] +1.5% (trading update)
- Consumer staples: Imperial Brands [IMB.UK] -3.5% (earnings)
- Financials: Commerzbank [CBK.DE] +1% (earnings), Munich Re [MUV2.DE] -2% (earnings), Ratos [RATOB.SE] +15% (earnings)
- Healthcare: ReNeuron Group [RENE.UK] -9% (business update)
- Industrials: Siemens [SIE.DE] +5.5% (earnings), Schaeffler [SHA.DE] +5% (earnings), Bilfinger [GBF.DE] -1.5% (earnings)
- Technology: Wirecard [WDI.DE] +5% (earnings; raises outlook)
- Materials: Bekaert [BEKB.BE] +2.5% (earnings)
Speakers
- BOE’s Ramsden: Most of the Brexit risks were mitigated but some did remain
- Italy could face €35B budget deficit in 2020 based on EU figures
- Thailand Central Bank policy statement noted that the decision was unanimous to keep policy steady and reiterated stance that monetary policy remained accommodative. Economy seen growing less than previously forecasted (**Note: saw 3.8% growth in March) and saw inflation close to the low end of target range. Reiterated that THB currency (Baht) moves were in-line with regional peers and likely to remain volatile. Risks to financial stability remained
- Philippines Central Bank (BSP) Dep Gov Guinigundo: Reiterates stance that RRR cut is a live issue
- Iran submitted a letter to the ambassadors of nations that are party to the nuclear deal, notifying them of a scale back of its commitments
- Iran President Rouhani stated that the country would not withdraw from nuclear deal but would scale back commitments. To give remaining signatories of nuclear deal to implement promises in oil and banking sectors. Collapse of nuclear deal was dangerous for both Iran and the world
Currencies/Fixed Income
- Focus remained on the upcoming g trade talks in Washington between US-China. Fresh uncertainty about a trade deal had surfaced in recent sessions. The Thursday/Friday talks in Washington now of critical importance and likely dictate whether the threat of tariffs was real or just hard ball negotiating tactics
- EUR/USD steady around the 1.12 level but dealers saw headwinds for the currency. Overall the recent EU Commission downgrade of growth for the region to reinforce the view that ECB will keep rates lower for longer
- ZAR currency (Rand) was firmer as South Africa’s Ramaphosa’s ANC party was expected to win in today’s general elections and keep the path on necessary reforms.
Economic Data
- (CH) Swiss Apr Unemployment Rate: 2.4% v 2.4%e; Unemployment Rate (Seasonally Adj): 2.4% v 2.4%e
- (DE) Germany Mar Industrial Production M/M: +0.5% v -0.5%e; Y/Y: -0.9% v -2.6%e
- (NO) Norway Mar Industrial Production M/M: -1.4% v -1.8% prior; Y/Y: -6.5% v -5.7% prior
- (NO) Norway Mar Manufacturing Production M/M: -0.8% v +0.3%e; Y/Y: 1.4% v 3.1% prior
- (NO) Norway Q1 Average Monthly Earnings Y/Y: 3.2% v 2.8% prior
- (FI) Finland Mar Preliminary Trade Balance: -€0.1B v -€0.1B prior
- (HU) Hungary Mar Industrial Production M/M: 1.0% v 1.0% prior; Y/Y: 8.0% v 6.0%e
- (TH) Thailand Central Bank (BoT) left the Benchmark Interest Rate unchanged at 1.75% (as expected)
- (UK) Apr Halifax House Prices M/M: 1.1% v 0.1%e; 3M/Y: 5.0% v 4.5%e
- (SE) Sweden Apr Budget Balance (SEK): -2.6B v +12.0B prior
- (RU) Russia Narrow Money Supply Narrow w/e May 1st (RUB): 10.28T v 10.30T prior
Fixed Income Issuance
- (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills
- (SE) Sweden sold SEK1.5 vs. SEK1.5B indicated in 0.75% 2029 bonds; Avg Yield: 0.2520% v 0.3975% prior; Bid-to-cover: 2.80x v 4.48x prior
Looking Ahead
- (RU) Russia Feb Sovereign Wealth Funds: Wellbeing Fund: No est v $59.1B prior
- (UR Ukraine Apr CPI M/M: 0.5%e v 0.9% prior; Y/Y: 8.4%e v 8.6% prior
- (IT) Bank of Italy Balance-Sheet Aggregates
- (ZA) South Africa elections
- 05:30 (UK) Weekly John Lewis Partnership LFL sales w/e May 4th:
- 05:30 (DE) Germany to sell €3.0B in 0% Apr 2024 BOBL
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2029 and 2034 bonds
- 05:30 (VN) Vietnam to sell VND2.5T in 5-year, 7-year, 10-year and 20-year bonds
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (PT) Portugal Q1 Unemployment Rate: No est v 6.7% prior
- 06:00 (RO) Romania to sell Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e May 3rd: No est v -4.3% prior
- 07:00 (BR) Brazil Apr FGV Inflation IGP-DI M/M: 0.8%e v 1.1% prior; Y/Y: 8.2%e v 8.3% prior
- 08:00 (CL) Chile Apr CPI M/M: 0.3%e v 0.5% prior; Y/Y: 2.1%e v 2.0% prior
- 08:00 (UK) Baltic Bulk Index
- 08:15 (CA) Canada Apr Annualized Housing Starts: 195.0Ke v 192.5K prior
- 08:30 (US) Fed’s Brainard (voter, dove)
- 08:40 (SE) Sweden Central Bank (Riksbank) af Jochnick Speech
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 10:30 (TR) Turkey Apr Cash Budget Balance (TRY): No est v -15.0B prior
- 12:00 (CA) Canada to sell 5 Year Bonds
- 13:00 (US) Treasury to sell 10-Year Notes
- 16:00 (NZ) New Zealand Central Bank (RBNZ) Gov Orr in Parliament
- 17:00 (BR) Brazil Central Bank (BCB) Interest Rate decision: expected to leave Selic Target Rate unchanged at 6.50%
