• Risk aversion sentiment eases a bit in session as market anticipate easing in the coronavirus epidemic over the next three months
  • Major European PMI data mixed but viewed overall as surprisingly good for the region (PMI Manufacturing: Beats: Germany, Euro Zone, UK; Misses: France; PMI Services: Beats: France, Euro Zone, UK; Misses: Germany)
  • Riksbank Feb Minutes show policy firmly on hold but concede that might have to return to negative one day in case of crisis and QE remained an option


  • Australia Feb Preliminary PMI Manufacturing: 49.8 v 49.6 prior (4th consecutive contraction)
  • Japan Feb Preliminary PMI Manufacturing: 47.6 v 48.8 prior (10th straight contraction)
  • Japan Jan National CPI Y/Y: 0.7% v 0.7%e; CPI Ex-Fresh Food (core) Y/Y: 0.8% v 0.8%e
  • China Commerce Ministry Official saw the Jan-Feb trade growth slowing sharply; Expressed cautious optimism about 2020 trade outlook
  • China PCA: H1 Feb car sales -92% y/y on coronavirus; very few dealerships are opening in the first weeks of Feb as they have little customer traffic
  • BOJ Gov Kuroda stated that the central bank was not at stage to discuss additional easing but ready to act if necessary. Reiterated won’t hesitate to take additional easing steps if necessary. Virus would likely impact global economy with effects on exports, supply chain and tourism. Such effects could become larger; to impact China economy first
  • RBNZ Gov Orr reiterated view that central bank was in a favorable position with cash rate (OCR) at 1.00%. Monetary policy was working as expected but needed to be prepared for the unanticipated.


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  • China National Health Commission Coronavirus Update for Feb 20th: 889 additional cases v 394 prior; Additional death 118 v 114 prior (Note: over half of the new Chinese infections coming outside the epicenter of Hubei
  • South Korea number of cases of the coronavirus continued to rise to 156 (+56 over past 24 hours)


  • Ireland PM Varadkar (Fine Gail) lost vote to be reelected as PM; later resigned
  • German Finance Ministry Monthly Report: Export outlook remains clouded; coronavirus poses risk for trade in coming month


  • Agricultural Sec Perdue stated that US expected China to live up to ‘Phase 1’ deal; could not say when they would begin their ‘Phase 1’ purchases



  • Indices [Stoxx600 -0.08% at 429.86, FTSE -0.28% at 7,416.00, DAX -0.01% at 13,662.82, CAC-40 -0.19% at 6,050.72, IBEX-35 +0.14% at 9,945.00, FTSE MIB -0.17% at 25,038.18, SMI -0.11% at 11,142.50, S&P 500 Futures -0.36%]
  • Market Focal Points/Key Themes: European indices in the red following Asia indices mostly lower and lower US futures. Allianz up following FY19 earnings; the company announced a €1.5B share buyback program. Boozt Fashion rallying following strong Q4 earnings results and FY20 guidance. Other risers following earnings include Sopra Steria and Kingspan. Valeo down slightly on FY19 earnings results despite the company guided FY20 operating profit margin improvement and significant FCF generation. BAM shares slide after the company cut FY20 profit margin guidance. Pearson also down on FY19 results that saw an earnings contraction y/y; the company slightly raised the dividend. Other decliners on earnings include Proximus and Alimak. On the merger front, UBI Banca and Intesa Sanpaolo shares down as UBI is reportedly considering alternative merger plans to fend off Intesa’s takeover bid, including discussions with Banca Monte Paschi di Siena, which is trading higher. Unicredit down on press speculation that CEO Mustier is a contender for the CEO role at HSBC. Notable earners today include Deere and Pilgrim’s Pride.


  • Consumer discretionary: Pearson [PSON.UK] -1.5% (earnings)
  • Financials: Allianz [ALV.DE] +1% (earnings; buyback), Banca Monte Paschi de Siena [BMPS.IT] +3% (report UBI weighs tie-up)
  • Industrials: James Fisher & Sons [FSJ.UK] +3% (contract), Kingspan [KGP.UK] +1.5% (earnings), LPKF Laser & Electronics [LPK.DE] -1% (earnings)
  • Telecom: Deutsche Telecom [DTE.DE] -1.5% (T-Mobile and Sprint announce amendment)


  • Sweden Central Bank (Riksbank) Feb Minutes: Conronavirus was contributing to uncertainty; had the tools to act in event of economic crisis. Monetary policy should look though low inflation as it was seen near the 2% target once low energy prices subsided. Saw no need to hike if CPI jumped. Could not rule out negative rates in the future (**Reminder: moved out of negative rates in Dec 2019)
  • Poland Central Bank Gov Glapinski reiterates MPC majority stance that Inflation spike viewed as temporary (in-line with Feb minutes). Annual CPI pace in 2020 to significantly exceed target. No reason to raise interest rates despite higher inflation. Believed rate hike would impact domestic economy but if price stability was threatened in the long term then will take appropriate action
  • Poland Central Bank Hardt stated that he believed a 15bps rate hike motion in March would boost central bank credibility if staff projections do not show lower CPI

Currencies/Fixed Income

  • USD retraced some of its recent gains in the session against the major pairs.
  • EUR/USD was higher by 0.3% to edge back above the 1.08 level. The major European PMI data was mixed in the session but the overall take was viewed as surprisingly good for the region.
  • USD/JPY back below the 112 level. Risk aversion sentiment eased a bit in session as market did anticipate easing in the coronavirus epidemic over the next three months despite the pick up in cases outside the epicenter of Hubei province.

Economic Data

  • (NL) Netherlands Jan House Price Index M/M: 1.5% v 0.0% prior; Y/Y: 6.3% v 6.5% prior
  • (MY) Malaysia Med-Feb Foreign Reserves: $104.3B v $104.2B prior
  • (AT) Austria Jan CPI M/M: -0.5% v +0.7% prior; Y/Y: 2.0% v 1.7% prior
  • (RU) Russia Narrow Money Supply w/e Feb 14th (RUB): 10.85T v 10.72T prior
  • (CN) Weekly Shanghai copper inventories (SHFE): 298.6K v 262.7K tons prior
  • (CH) Swiss Jan M3 Money Supply Y/Y: 0.3% v 0.7% prior
  • (FR) France Feb Preliminary PMI Manufacturing: 49.7 v 50.7e (1st contraction in 7 months); PMI Services: 52.6 v 51.3e (11th month of expansion); PMI Composite: 51.9 v 51.0e
  • (DE) Germany Feb Preliminary PMI Manufacturing: 47.8 v 44.8e 14th straight contraction but highest since Jan 2019); PMI Services: 53.3 v 53.8e; PMI Composite: 51.1 v 50.7e
  • (SE) Sweden Q4 Industry Capacity: 89.2% v 91.3% prior
  • (EU) Euro Zone Feb Preliminary PMI Manufacturing: 49.1 v 47.4e (13th straight month of contraction and highest since Feb 2019); PMI Services: 52.8 v 52.3e; PMI Composite: 51.6 v 51.0e
  • (IT) Italy Dec Industrial Sales M/M: -3.0% v +0.1% prior; Y/Y: -1.4% v 0.0% prior
  • (IT) Italy Dec Industrial Orders M/M: +1.4% v -4.3% prior; Y/Y: +6.0% v -0.3% prior
  • (IS) Iceland Jan Wage Index M/M: 0.7% v 0.3% prior; Y/Y: 4.9% v 4.5% prior
  • (PL) Poland Jan Retail Sales M/M: -20.4% v -20.0%e; Y/Y: 5.7% v 6.1%e; Real Retail Sales Y/Y: 3.4% v 4.1%e
  • (PL) Poland Jan Construction Output Y/Y: +6.5% v -3.6%e
  • (UK) Feb Preliminary PMI Manufacturing: 51.9 v 49.7e (2nd month of non-contraction); PMI Services: 53.3 v 53.4e; PMI Composite: 53.3 v 52.8e
  • (UK) Jan Public Finances (PSNCR): -£18.0B v +£16.8B prior; Public Sector Net Borrowing: -£10.5B v -£12.0Be; Central Government NCR: -£20.5B v +£15.8B prior; PSNB ex Banking Groups: -£9.8B v -£11.4Be
  • (EU) Euro Zone Jan Final CPI Y/Y: 1.4% v 1.4%e; CPI Core Y/Y: 1.1% v 1.1%e; CPI M/M: -1.0% v -1.0%e
  • (IT) Italy Jan Final CPI M/M: 0.1% v 0.2% prelim; Y/Y: 0.5% v 0.6% prelim; CPI Index (ex-tobacco): 102.7 v 102.5 prior
  • (IT) Italy Jan Final CPI EU Harmonized M/M: -1.8% v -1.7% prelim; Y/Y: 0.4% v 0.5% prelim

Fixed Income Issuance

  • (ZA) South Africa sold total ZAR1.04B vs. ZAR1.04B indicated in 2029, 2033 and 2046 I/L Bonds

Looking Ahead

  • (IS) Iceland to sell 3.5% 2021 RIKB bonds
  • 06:00 (IR) Ireland Jan PPI M/M: No est v 0.2% prior; Y/Y: No est v -3.2% prior
  • 06:00 (BR) Brazil Feb FGV Construction Costs M/M: 0.3%e v 0.3% prior
  • 06:00 (UK) DMO to sell £4.5B in 1-month, 3-month and 6-month bills (£2.0B, £1.0B and £1.5B respectively)
  • 06:30 (IN) India Weekly Forex Reserve w/e Feb 14th: No est v $ 473.0 prior
  • 06:30 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson
  • 07:00 (CL) Chile Jan PPI M/M: No est v 0.8% prior
  • 07:30 (BR) Brazil Jan Current Account Balance: -$11.3Be v -$5.7B prior; Foreign Direct Investment (FDI): $5.3Be v $9.4B prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:30 (CA) Canada Dec Retail Sales M/M: 0.1%e v 0.9% prior; Retail Sales (ex-auto) M/M: 0.3%e v 0.2% prior
  • 08:30 (US) Weekly USDA Net Export Sales
  • 09:00 (BE) Belgium Feb Business Confidence: -2.8e v -2.0 prior
  • 09:35 (US) Fed’s Kaplan (dove, voter)
  • 09:45 (US) Feb Preliminary Markit PMI Manufacturing: 51.5e v 51.9 prior; PMI Services: 53.2e v 53.4 prior; PMI Composite: No est v53.3 prior
  • 10:00 (US) Jan Existing Home Sales: 5.45Me v 5.64M prior
  • 10:15 (US) Fed’s Brainard (dove, voter) with Bostic (dove, non-voter) on panel
  • 11:00 (EU) Potential sovereign ratings after European close (Moody’s on France; S&P on Latvia, Lithuania; DBRS on Slovenia)
  • 12:00 (IE) ECB’s Lane (Ireland, chief economist) in NY
  • 13:00 (US) Weekly Baker Hughes Rig Count
  • 13:30 (US) Fed’s Clarida (moderate, voter) on apnel with member Mester (hawk, voter)
  • 13:30 (UK) BOE’s Tenreyro on panel in NY
  • 14:00 (AR) Argentina Jan Trade Balance: No est v $2.2B prior
  • 14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: No est v -1.7% prior; Y/Y: No est v -1.9% prior
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