Notes/Observations

Asia:

  • (AU) Westpac now forecasts 3 RBA rate cuts in 2019 (previously said it saw rate cuts in June and Aug 2019); Now expects the RBA to cut the cash rate to 0.75% by Nov 2019 (current target rate is 1.50%)
  • (NZ) New Zealand PM Ardern: Economic growth set to be slower than recent years
  • (NZ) New Zealand Apr Trade Balance (NZ$): 433M v 450Me
  • (JP) JAPAN APR NATIONAL CPI Y/Y 0.9% V 0.9%E; CPI EX FRESH FOOD (CORE) Y/Y: 0.9% V 0.9%E
  • (CN) China said to issue policy to boost development of small tech companies – press
  • (CN) China responds to Hikvision blacklist: hopes US will stop escalation
  • China Commerce Min (MOFCOM): Domestic Economy faces downward pressure; some structural issues remain to be resolved; trade environment growing more uncertain
  • Report on China’s Foreign Trade Condition
  • (KR) North Korea said to take actions against U.S. distrust, hostility

Korean press

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  • (JP) Japan Cabinet Office cuts economic assessment in May monthly report

Europe/Mideast:

  • (RU) IMF: Russia’s Central Bank monetary stance is moderately tight now, it’s time to resume cutting rates
  • (LY) Airstrikes by breakaway Eastern Libya forces hit Libya parliament, other locations in Tripoli – Local Press
  • (FI) Finland Apr Preliminary Retail Sales Volume Y/Y: 3.2% v 1.7% prior
  • (UK) PM May said to announce her departure date today, on May 24th – BBC
  • (UK) APR RETAIL SALES (EX-AUTO /FUEL) M/M: -0.2% V -0.5%E; YOY: 4.9% V 4.2%E
  • (UK) PM MAY ANNOUNCES TO STEP DOWN ON JUN 7TH FOLLOWING MEETING WITH 1922 COMMITTEE

Americas

  • (US) US Commerce Dept: Proposing rule to impose countervailing duties on countries that undervalue their currency relative to the US dollar

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.80% at 376.80, FTSE +0.70% at 7,281.82, DAX +0.93% at 12,063.50, CAC-40 +0.94% at 5,331.23, IBEX-35 +0.81% at 9,187.48, FTSE MIB +1.42% at 20,422.50, SMI +0.76% at 9,666.80, S&P 500 Futures +0.62%]
  • Market Focal Points/Key Themes: European indices opened higher and tacked onto early gains, with continued focus on US-China trade situation as well as UK/EU politics. China continued to talk up policy directives aimed at boosting technology development while the US indicated the administration was going to tie currencies to trade through potential countervailing duties. As speculated, UK PM Theresa May announced she would be stepping down on June 7th, after meeting with the 1922 committee. European elections began yesterday and initial results are expected to be announced on Sunday evening. Italy bond markets performed well following a set of more soothing comments for Dep PM Salvini.

Equities

  • Consumer discretionary: Casino Guichard-Perrachon [CO.FR] +16%, Rallye [RAL.FR] -60% (research note; CFO statement), Vapiano [VAO.DE] +1.5% (restructuring), Mothercare [MTC.UK] +13% (earnings), Bodycote International [BOY.UK] -0.5% (trading update)
  • Industrials: Maersk [MAERSKB.DK] +1% (earnings; dividend policy and buyback)

Materials:

  • Financials: Gam Holding [GAM.CH] +8% (voting rights), Julius Baer Group [BAER.CH] -1% (AUM data), Old Mutual [OML.UK] -0.5% (unit CEO resigns)
  • Technology: IQE [IQE.UK] n/c (trading update; Huawei comments), Tarsus [TRS.UK] +37% (to be acquired), Spectris [SXS.UK] +1.5% (trading update)

Speakers

  • (JP) Japan PM Abe: Will do all to manage economy amid overseas uncertainties; reiterates no change on sales tax [increase plan] unless Lehman Brothers scale shock occurs
  • (KR) South Korea Official Yoon: Q2 GDP expected to ‘significantly’ improve; housing prices remain stable
  • (IT) Italy Dep PM Salvini: Turin-Lyon high-speed rail line, flat tax and devolution are priorities for government after EU vote – press
  • (EU) ECB’s Vasle (Slovenia): At this stage the economy is ‘strong enough’, economy still in line with March projections
  • (CN) China Foreign Min Spokesman: U.S. politicians are making all kinds of rumors but not giving evidence
  • (CN) China PBoC Deputy Governor: FX market condition is stable, has ample policy tools to cope with exchange rate fluctuations
  • (JP) Japan Econ Min Motegi: plan to raise nationwide sales tax unchanged, economic growth still intact

Currencies/Fixed Income

  • Yesterday saw the Dollar index futures retreat from its high of 98.26 after US Commerce Secretary Ross commented to propose a rule to impose countervailing duties that undervalue their currency relative to the USD. This led the USD/JPY and equity indexes to sell off and the US 10 year future prices to increase to yearly highs and yields to fall. EUR/USD The Euro finally broke out of its range breaking above the 1.12 handle only to get pushed back below. The EU elections will more than likely cause a bit of volatility in the coming week. GBP/USD The Cable has traded in-between the 1.26 and 1.27 handle today and yesterday as the UK waits to hear if the UK PM May will step down or at least set a date to do so. If she does step offer to step down, will she ensure certain steps for Brexit are taken before so.

Economic Data

  • (FI) Finland Apr PPI M/M: 0.1% v 0.0% prior; Y/Y: 2.0% v 2.3% prior
  • (FI) Finland Apr Preliminary Retail Sales Volume Y/Y: 3.2% v 1.7% prior
  • (SE) Sweden Q1 FSA Bank Capital Requirements
  • (ES) Spain Apr PPI M/M: +0.6% v -0.3% prior; Y/Y: 2.3% v 2.4% prior
  • (AT) Austria Mar Industrial Production M/M: -1.0% v +0.6% prior; Y/Y: 5.7% v 5.9% prior
  • (CZ) Czech May Consumer Confidence Index: 2.8 v 1.5 prior; Business Confidence: 12.7 v 15.1 prior
  • (SE) Sweden Mar PPI M/M: -0.7% v +1.2% prior Y/Y: 4.9% v 6.3% prior
  • (RU) Russia Narrow Money Supply Narrow w/e May 17th (RUB): 10.40T v 10.35T prior
  • (UK) APR RETAIL SALES (EX-AUTO /FUEL) M/M: -0.2% V -0.5%E; YOY: 4.9% V 4.2%E

Fixed Income Issuance

NO ISSUANCE

  • Looking Ahead
  • All Day (EU) European Parliamentary Elections
  • 06:00 (UK) CBI Retailing Reported Sales: 6e v 13 prior; CBI Total Distribution Reported Sales: No est v 9 prior
  • 08:00 (PL) Poland Apr M3 Money Supply: 0.4%e v 0.9 prior; Y/Y 10.1%e v 9.9% prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 0830 (US) Core Durable Goods
  • 09:00 (RU) Russia Apr Unemployment Rate: 4.7%e v 4.7% prior; Real Wages Y/Y: No est v 0.0% prior (revised from 0.2%)
  • 09:00 (RU) Russia Apr Real Retail Sales Y/Y: 1.4e% v 1.6% prior
  • 09:00 (BE) Belgium May Business Confidence: No est v -3.2 prior
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