Notes/Observations
- New quarter begins where old one left off – safe haven flows dominate
- German Feb Retail Sales beats expectations as strong demand for convenience goods due to coronavirus pandemic
- Most Major European PMI Manufacturing in contraction territory and at decade lows (Contraction included: Euro Zone, Germany, France, Italy, Spain, Swiss, UK and emerging Europe countries…Netherlands stayed in expansion)
Asia:
- South Korea Mar Trade Balance: $5.0B v $5.5Be; Exports Y/Y: -0.2% v +1.2%e; Imports Y/Y: -0.3% v +0.7%e
- Japan Q1 Tankan Large Manufacturing Index: -8 v -10e (lowest since Mar 2013); Outlook Index: -11 v -15e
- Japan Q1 Tankan Large Non-Manufacturing Index: 8 v 2e (lowest since Mar 2013; Outlook Index: -1 v -1e – RBA Minutes of March 18 Meeting (QE decision)
- Australia Mar Final Manufacturing PMI: 49.7 v 50.1 prelim
- Japan Mar Final PMI Manufacturing: 44.8 v 44.8 prelim
- South Korea Mar PMI Manufacturing: 44.2 v 48.7 prior
- China Caixin Mar PMI Manufacturing: 50.1 v 45.0e
Coronavirus:
- Global cumulative cases at 859.6K (+9.4%); cumulative deaths 42.3K (+12.0%)
Europe:
- Italy PM Conte reiterated call for joint issuance of euro bonds noting that current pandemic might morph into a sovereign debt crisis
- European Banking Authority (EBA): all banks should limit dividends and share buybacks that distribute capital outside banking system
- Bank of England (BOE) and Prudential Regulation Authority (PRA) issued directive asking banks to not pay dividends, suspend share buybacks or pay bonuses to senior staff
- ECB Vasle (Slovenia): ECB could take additional measures if the coronavirus crisis persisted
Americas:
- Trump Admin issued 30-day social distancing guidelines, formally extending the guidelines that have been in place the last 15 days
- Pres Trump noted that US to go through “very tough 2 weeks” and added it was a matter of life and death that people follow the social distancing guidelines for the next 30 days; Holding back some equipment including 10K ventilators for a surge in coronavirus cases
- White House said to have projected that there could be 100K-240K deaths from the coronavirus pandemic in the US even if current social distancing guidelines were maintained
Mid-East/Energy:
- Weekly API Crude Oil Inventories: +10.5M v -1.2M prior
- OPEC Members said to fail to agree on emergency meeting of its Economic Commission Board
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -2.82% at 311.02, FTSE -3.66% at 5,464.25, DAX -2.88% at 9,649.25, CAC-40 -3.54% at 4,240.62, IBEX-35 -1.63% at 6,675.05, FTSE MIB -1.62% at 16,775.00, SMI -2.11% at 9,115.00, S&P 500 Futures -2.82%]
- Market Focal Points/Key Themes: European indices open lower across the board and continued lower as the session wore on; Healthcare and Utilities sectors among best performers; Financials among underperfomers; UK PRA directs banks to suspend dividends, buybacks and bonuses; reportedly Italy pledged €500B in loan guarantees for businesses; Italy extends lockdown to April 13th (prior speculation of up to May 4); upcoming earnings expected in the US include Teck Resources and Corus Entertainment.
Equities
- Consumer discretionary: Air Partner [AIR.UK] +4% (trading update)
- Consumer staples:
Energy:
- Financials: Lloyds Banking Group [LLOY.UK] -5%, Barclays [BARC.UK] -5% (suspends dividend and buyback following UK request)
- Healthcare: Faron Pharmaceuticals [FARN.UK] +12% (program to study IFN beta-1a effect in COVID-19)
- Industrials: Continental [CON.DE] -6% (withdraws FY20 guidance; Q1 outlook), Varta [VAR1.DE] -2% (earnings)
Speakers
- ECB’s Stournaras (Greece): EU risks new debt crisis if no common action
- ECB’s Villeroy (France) stated that due to low inflation outlook the interest rates environment to remain low as well
- Italy Econ Minister Gualtieri said to have pledged €500B in loan guarantees for companies. Noted that business lobby estimates of a 6% contraction in 2020 GDP this year as ‘realistic’
- Italy Health Min Speranza: Lockdown to be extended until Monday April 13th (*8Reminder: went into effect on Mar 11th)
- Denmark Central Bank Gov Rohde: 2020 GDP seen contracting between 3.0 to 10.0%’ use of non-conventional tools could put EUR/DKK peg at risk
- Ukraine Central Bank: 2020 GDP could contract by 5%. Reiterated stance of no need for FX restrictions
- Japan Chief Cabinet Sec Suga reiterates govt stance that now was not the time to make an emergency declaration
- China President Xi stated that it would ensure normal economic and trade activities; reiterates that domestic economy faces challenges from virus outbreak
- China PBOC Gov Yi Gang said to favor a G20 action plan to combat the economic impact of the coronavirus
- Russia Govt official reiterated stance of not planning to hold talks with Saudi Arabia soon. Russia was not planning to increase production amid oversupply
Currencies/Fixed Income
- USD entered the new quarter on solid footing as safe-haven flows over the economic impact of the coronavirus remained the theme.
- EUR/USD lower by almost 1% to probe the lower end of 1.09 area
- Peripheral yields moved higher as several EU govt and central bank officials warned that the current situation could morph into a sovereign debt crisis if there was no coordination betwem members
Economic Data
- (PE) Peru Mar CPI M/M: 0.7% v 0.6%e; Y/Y: 1.8% v 1.8%e
- (DE) Germany Feb Retail Sales M/M: 1.2% v 0.1%e; Y/Y: 6.4% v 1.5%e
- (RU) Russia PMI Manufacturing: 47.5 v 48.2 prior (11th month of contraction)
- (SE) Sweden Mar PMI Manufacturing: 43.2 v 46.5e (1st contraction in 3 months)
- (NL) Netherlands Mar Manufacturing PMI: 50.5 v 46.3e (2nd straight expansion)
- (HU) Hungary Mar Manufacturing PMI: 29.1 v 47.0e (1st contraction in 51 months)
- (PL) Poland Mar PMI Manufacturing: 42.4 v 45.1e (17th month of contraction and lowest since Apr 2009)
- (TR) Turkey Mar PMI Manufacturing: 48.1 v 52.4 prior (1st contraction in 3 months)
- (HU) Hungary Jan Final Trade Balance: €0.4B v €0.4B prelim
- (ES) Spain Mar Manufacturing PMI: 45.7 v 44.0e (moves back into contraction and lowest since Apr 2013)
- (CH) Swiss Mar PMI Manufacturing: 43.7 v 42.2e (13th month of contraction)
- (CZ) Czech Republic Mar PMI Manufacturing: 41.3 v 41.8e (16th month of contraction and lowest since May 2009))
- (TH) Thailand Mar Business Sentiment Index: 42.6 v 44.1 prior
- (IT) Italy Mar Manufacturing PMI: 40.3v 41.0e (17th month of contraction and lowest since Apr 2009)
- (FR) France Mar Final Manufacturing PMI: 43..2 v 42.9e (confirmed 2nd straight contraction and lowest since Jan 2013)
- (DE) Germany Mar Final Manufacturing PMI: 45.4 v 45.5e (confirmed 15th straight contraction)
- (EU) Euro Zone Mar Final Manufacturing PMI: 44.5 v 44.6e (confirms 14th straight month of contraction and lowest since July 2012)
- (GR) Greece Mar Manufacturing PMI: 42.5 v 56.2 prior (1st contraction in 34 months)
- (NO) Norway Mar PMI Manufacturing: 41.9 v 51.6 prior (1st contraction in 8 months)
- (IT) Italy Feb Preliminary Unemployment Rate: 9.7% v 10.0%e
- (UK) Mar Final PMI Manufacturing: 47.8 v 47.0e (confirmed 1st contraction in 3 months)
- (EU) Euro Zone Feb Unemployment Rate: 7.3% v 7.4%e (lowest level since 2008)
- (ZA) South Africa Mar Manufacturing PMI: 48.1 v 41.1e (11th straight contraction)
- (DK) Denmark Mar PMI Survey: 46.8 v 48.4 prior
- (BE) Belgium Feb Unemployment Rate: 5.2% v 5.2% prior
Fixed Income Issuance
- (PT) Portugal Debt Agency (IGCP) opened its book to sell Oct 2027 OT Bonds; guidance seen 90bps to mid-swaps
- (DK) Denmark sold DKK5.09B in new 0.25% Nov 2052 DGB Bonds; Avg Yield: 0.28%; Bid-to-cover: 1.69x
- (SE) Sweden sold SEK7.5B vs. 7.5BSEK indicated in 3-month bills; Avg Yield: -0.1907% v -0.1952% prior; Bid-to-cover: 1.79x v 1.83x prior
Looking Ahead
- (ZA) South Africa Mar Naamsa Vehicle Sales Y/Y: -5.8%e v -0.7% prior
- (RO) Romania Mar International Reserves: No est v $40.8B prior
- (BR) Brazil Jan CNI Capacity Utilization: No est v 77.7% prior
- (EU) ECB non-monetary policy meeting in Frankfurt
- 05:30 (DE) Germany to sell €4.0B in 0% Apr 2025 BOBL
- 05:30 (UK) DMO to sell £3.0B in 1.625% Oct 2028 Gilts
- 05:30 (GR) Greece Debt Agency (PDMA) to sell €375M in 26-week Bills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 3-month and 6-month bills
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (IL) Israel Feb Chain Store Sales M/M: No est v 3.0% prior
- 06:00 (FI) Finland to sell €2.0B in 6-month and 12-month bills
- 06:00 (CZ) Czech Republic to sell 2021, 2023 and 2025 bonds
- 06:00 (RU) Russia to sell OFZ bonds (if held)
- 07:00 (US) MBA Mortgage Applications w/e Mar 27th: No est v -29.4% prior
- 07:30 (CL) Chile Feb Economic Activity Index (Monthly GDP) M/M: 0.3%e v 1.3% prior; Y/Y: 2.6%e v 1.5% prior; Economic Activity (ex-mining) Y/Y: No est v 1.5% prior
- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
- 08:00 (BR) Brazil Feb Industrial Production M/M: -0.4%e v +0.9% prior; Y/Y: -2.4%e v -0.9% prior
- 08:00 (CZ) Czech Mar Budget Balance (CZK): No est v -27.4B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:15 (US) Mar ADP Employment Change: -150Ke v +183K prior
- 08:30 (CA) Canada Feb MLI Leading Indicator M/M: No est v 0.5% prior
- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
- 09:00 (BR) Brazil Mar PMI Manufacturing: No est v 52.3 prior
- 09:00 (RU) Russia Q4 GDP Y/Y: 1.7%e v 1.7% prior; Overall Final Annual 2019 GDP Y/Y: No est v 1.3% prelim
- 09:30 (CA) Canada Mar Manufacturing PMI: No est v 51.8 prior
- 09:45 (US) Mar Markit Final Manufacturing PMI: 48.0e v 49.2 prelim
- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
- 10:00 (US) Feb Construction Spending M/M: 0.6%e v 1.8% prior
- 10:00 (US) Mar ISM Manufacturing: 45.0e v 50.1 prior; Prices Paid: 41.6e v 45.9 prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (MX) Mexico Feb Total Remittances: $2.7Be v $2.6B prior
- 11:00 (MX) Mexico Central Bank Economist Survey
- 11:00 (CO) Colombia Mar PMI Manufacturing: No est v 52.5 prior
- 11:30 (MX) Mexico Mar PMI Manufacturing: No est v 50.0 prior
- 12:00 (IT) Italy Mar New Car Registrations Y/Y: No est v -8.8% prior
- 12:00 (CA) Canada to sell 5-year notes
- (IT) Italy Mar Budget Balance: No est v -€1.6B prior
- 14:00 (MX) Mexico Mar IMEF Manufacturing Index: 44.7e v 49.1 prior; Non-Manufacturing Index: 45.6e v 48.8 prior
- 14:00 (BR) Brazil Mar Monthly Trade Balance: $4.0Be v $3.1B prior; Total Exports: $19.2Be v $16.4B prior; Total Imports: $15.1Be v $13.3B prior
- 19:00 (KR) South Korea Mar CPI M/M: -0.4%e v 0.0% prior; Y/Y: 0.8%e v 1.1% prior; CPI Core Y/Y: 0.6%e v 0.6% prior
- 19:30 (AU) Australia to sell combined AUD2.5B in 3-month, 6-month and 12-month Bills
- 19:50 (JP) Japan End-of-Mar Monetary Base: No est v ¥515.9T prior; Y/Y: No est v 3.6% prior
- 20:30 (AU) Australia Feb Job vacancies: No est v 1.6% prior
- 23:35 (JP) Japan to sell 10-Year JGB Bonds
