Notes/Observations
- Coronavirus spotlight has now largely shifted to the US; Treasury yields fall to record lows during electronic trade; greenback on the defensive as US rate advantage evaporates
- OPEC+ meeting underway in Vienna to see if Russia signs on to deeper production cuts
- Expected strong US jobs report likely to be ignored by markets
Asia:
- Australia Jan Retail Sales M/M: -0.3% v 0.0%e
- Japan Jan Cash Earnings data beat expectations; Labor Cash Earnings YoY: 1.5% v 0.2%e; Real Cash Earnings YoY: +0.7% V -0.6%E (first rise in 4 months)
- Japan Finance Min Aso: G-7 not thinking of taking further steps now and won’t rush to respond to all market moves. Closely watching new virus impact on inbound tourism and economy.
Coronavirus:
- Global cumulative cases 98,382 (+2,966); Cumulative deaths 3,383 (+98)
- US Vice President Pence stated that there are at least 150 coronavirus cases in the US now, 70 in Washington State. President Trump to sign coronavirus funding bill into law on Friday (March 6th);
Americas:
- Fed’s Williams (moderate, voter): Fed rate cut to provide meaningful support to the economy. Ready to act as appropriately with monetary policy
- Fed’s Kaplan (dove, voter): will be watching the path of diagnosed coronavirus cases and will factor that into the March FOMC meeting decision
- Fed’s Kashkari (dove, FOMC voter): Tuesday rate cut was insurance, if virus is really bad we may need to do more
Mid-East/ Energy:
- OPEC statement noted that it had decided to recommend to OPEC+ that the deepening of 1.5M bpd cuts should last until end of 2020
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -3.5% at 367.5, FTSE -2.9% at 6,513, DAX -3.5% at 11,530, CAC-40 -3.7% at 5,162, IBEX-35 -3.4% at 8,389, FTSE MIB -3.21% at 20,863.52, SMI -3.6% at 9,777.50, S&P 500 Futures -2.2%]
Market Focal Points/Key Themes:
- European Indices trade sharply lower across the board as selling momentum continues on Covid-19 developments, following sharp declines on Wall Street overnight and lower Asian Indices.
- Travel names continue to bare the brunt of the selling as global travel continues to cease up on virus fears.
- On the earnings front Prysmian trades sharply lower, on results and guidance; Essilorluxottica also declines following earnings and subdued outlook. Accell Group, Savencia and Cineworld are among other notable decliners on earnings.
- Elsewhere Infineon trades lower on report CFIUS could block its merger with Cypress Semi, on security fears, while Astrazeneca trades lower as phase III Danube trial not meeting its primary endpoint, while Airbus declines as the company report no Jet sales in Feb.
- Looking ahead notable earners include Global Partners LP and Vermillion Energy among others.
Equities
- Consumer discretionary: easyHotel [EZH.UK] +14% (subscription), Cineworld [CINE.UK] -5% (prelim earnings), EssilorLuxottica [EL.FR] -3% (earnings)
- Healthcare: AstraZeneca [AZN.UK] -1% (study did not meet primary endpoint), Nicox [COX.FR] -5% (earnings)
- Industrials: Airbus [AIR.FR] -5% (orders)
Speakers
- Sweden Central Bank (Riksbank) Dep Gov Ohlsson: hard to estimate coronavirus consequences. If quick decisions were needed then we would make them. Natural to think of balance sheet if measures needed (Aka more QE)
- Sweden Central Bank (Riksbank) Statement: Prepared to take appropriate action should need arise; too early for definitive conclusions of virus effect
- EU trade Chief Hogan: Hopefully could reach some mini deal or understandings with the US in the coming weeks
- Italy Stats Agency (Istat) Monthly Economic Note: Leading indicator points to ongoing weakness in the domestic economy
- Japan Fin Min Aso: To ask financial organizations to support businesses
- Iran Oil Min Zanganeh stated that he expected a difficult OPEC+ meeting but hopeful that OPEC+ agreement to deepen production cuts by 1.5M bpd to begin from April
Currencies/ Fixed Income
- USD was on the defensive as US rate advantage evaporated on expectations of further interest rates cuts by the Fed
- EUR/USD reaching the highest level since Jan with the pair edging back towards the 1.13 level. US Treasury yields have fallen to record lows during electronic trade with the US 10-year yield at 0.75%.
- USD/JPY lower by over 0.5% to test the lower end of the 105 area.
Economic Data
- (ZA) South Africa Feb Gross Reserves: $54.7B v $54.6B prior; Net Reserves: $45.4B v $45.3Be
- (DE) Germany Jan Factory Orders M/M: 5.5% v 1.3%e; Y/Y: -1.4% v -5.2%e
- (NO) Norway Jan GDP M/M: -0.5% v +0.3% prior; GDP Mainland M/M: 0.2% v 0.1%e
- (NO) Norway Jan Industrial Production M/M: -2.3% v +1.5% prior; Y/Y: 0.3% v 1.1% prior
- (NO) Norway Jan Manufacturing Production M/M: 0.4% v 0.2%e; Y/Y: 1.2% v 0.6% prior
- (DK) Denmark Jan Industrial Production M/M: -2.6% v 6.9% prior
- (MY) Malaysia End Feb Foreign Reserves: $103.4B v $104.3B mid-month reading
- (FR) France Jan Trade Balance: -€5.9B v -€4.8Be; Current Account Balance: -€2.8B v -€0.3B prior
- (TW) Taiwan Feb CPI Y/Y: -0.2% v +0.7%e; CPI Core Y/Y: -0.4% v +0.3%e; WPI Y/Y: -4.5% v -3.1% prior
- (ES) Spain Jan Industrial Output NSA Y/Y: -3.6% v +2.1% prior; Industrial Output SA Y/Y: -2.1% v -1.4%e; Industrial Production M/M: 0.2% v 0.5%e
- (CH) Swiss Feb Foreign Currency Reserves (CHF): 769.1B v 764.0B prior
- (AT) Austria Feb Wholesale Price Index M/M: -1.2% v +0.5% prior; Y/Y: -1.2% v +0.7% prior
- (CZ) Czech Q4 Average Real Monthly Wage Y/Y: 3.6% v 3.4%e
- (HU) Hungary Jan Industrial Production M/M: +4.6% v -3.7% prior; Y/Y: +2.7% v -0.9%e
- (RU) Russia Narrow Money Supply (RUB) w/e Feb 28th: T v 10.86 T prior
- (SE) Sweden Feb Budget Balance (SEK): +58.9B v -3.0B prior
- (IT) Italy Jan Retail Sales M/M: 0.0% v 0.5% prior; Y/Y: 1.4% v 0.8% prior
- (GR) Greece Q4 GDP Q/Q: -0.7% v +0.4%e; Y/Y:1.0 % v 2.3% prior; GDP NSA (unadj) Y/Y: 0.5% v 3.0% prior
Fixed Income Issuance
- (ZA) South Africa sold total ZAR775M vs. ZAR1.04B indicated in I/L 2029, 2033 and 2050 Bonds
Looking Ahead
- (IT) Bank of Italy Report on Balance-Sheet Aggregates
OPEC+ meeting in Vienna
- 06:00 (IR) Ireland Q4 GDP Q/Q: No est v 1.7% prior; Y/Y: No est v 5.0% prior
- 06:00 (IR) Ireland Jan Industrial Production M/M: No est v -6.2% prior; Y/Y: No est v 0.7% prior
- 06:00 (CL) Chile Feb CPI M/M: 0.2%e v 0.6% prior; Y/Y: 3.7%e v 3.5% prior
- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£2.0B, £1.5B and £2.5B respectively)
- 06:30 (IN) India Weekly Forex Reserve w/e Feb 28th: No est v $476.1B prior
- 07:00 (MX) Mexico Dec Gross Fixed Investment: -2.9%e v -3.5% prior
- 07:00 (MX) Mexico Feb Vehicle Production: No est v 320.4K prior; Vehicle Exports: No est v 228.2K prior
- 08:00 (PL) Poland Feb Official Reserves: No est v $125.5B prior
- 08:00 (RU) Russia Feb Official Reserve Assets: No est v $562.3B prior
- 08:00 (RU) Russia Feb CPI M/M: 0.3%e v 0.4% prior; Y/Y: 2.2%e v 2.4% prior
- 08:00 (RU) Russia Feb CPI Core M/M: 0.2%e v 0.2% prior; Y/Y: 2.5%e v 2.7% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:30 (US) Feb Change in Nonfarm Payrolls: +175Ke v +225K prior; Change in Private Payrolls: +160Ke v +206K prior; Change in Manufacturing Payrolls: -3Ke v -12K prior
- 08:30 (US) Feb Unemployment Rate: 3.6%e v 3.6% prior; Underemployment Rate: No est v 6.9% prior; Labor Force Participation Rate: No est v 63.4% prior
- 08:30 (US) Feb Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y: No est v 3.1% prior; Average Weekly Hours: 34.3e v 34.3 prior
- 08:30 (US) Jan Trade Balance: -$46.1Be v -$48.9B prior
- 08:30 (CA) Canada Feb Net Change in Employment: +12.0Ke v +34.5K prior; Unemployment Rate: 5.6%e v 5.5% prior; Full Time Employment Change: No est v +35.7K prior; Part Time Employment Change: No est v -1.2K prior; Participation Rate: 65.4%e v 65.4 prior; Hourly Wage Rate Y/Y: 3.9%e v 4.4% prior
- 08:30 (CA) Canada Jan Int’l Merchandise Trade (CAD): -0.8Be v -0.4B prior
- 09:20 (US)Fed’s Evans and Mester speaks at Shadow Open Market Committee
- 09:30 (TR) Turkey Feb Cash Budget Balance (TRYT): No est v 22.8B prior
- 10:00 (US) Jan Final Wholesale Inventories M/M: -0.2%e v -0.2 % prelim; Wholesale Trade Sales M/M: No est v -0.7% prior
- 10:00 (CA) Canada Feb Ivey Purchasing Managers Index (Seasonally Adj): No est v 57.3 prior; PMI (unadj): No est v 51.1 prior
- 11:00 (EU) Potential sovereign ratings after European close (Estonia Sovereign Debt to be rated by Moody’s; Cyprus and Finland Sovereign Debt to be rated by S&P; Luxembourg and Ukraine Sovereign Debt to be rated by Fitch; Luxembourg and Spain Sovereign Debt to be rated by DBRS
- 11:20 (US) Fed’s Bullard Speaks at Shadow Committee Event in New
- 13:00 (US) Weekly Baker Hughes Rig Count
- 15:00 (US) Jan Consumer Credit: $16.5Be v $22.1B prior
- 15:30 (US) Fed’s George Speaks at Shadow Committee Event in New York
