Notes/Observations
- Jobless claims remain the focus. Spain Mar unemployment surged by over 300K; US later today expected at a fresh record level
Asia:
- China interbank market regulator stated that would increase number of “quality” bond issuers, China used 83.5% of allocated 2020 local govt bond quota in Q1; To relax rules for issuance of short term bills and medium term notes
- RBNZ announced a new term lending facility (TLF), the measure is aimed at ensuring access to funding for banks at low interest rates for up to 3 years duration (which is longer than the central bank’s other liquidity facilities)
- Hong Kong Monetary Authority (HKMA): No need for banks to cancel dividend payouts
Coronavirus:
- Global cumulative cases 937.2K (+9.0% d/d); cumulative deaths 47.3K (+11.6%)
- Reports circulated that a classified report to White House concluded that Beijing had under-reported both total cases and deaths from disease
Europe:
- Italy PM Conte stated that the country could not afford to decelerate its measures against coronavirus now that we were seeing improvements. Reiterated stance that the ESM was an old instrument and not appropriate for the current crisis. ESM could be a tool if no conditionality was attached
Americas:
- FED announced temporary change to supplementary leverage ratio rule to ease strains in the Treasury market resulting from the coronavirus and increase banking organizations’ ability to provide credit to households and businesses
Mid-East/Energy:
- China said to start buying oil for state reserves after price crash
- Senior Gulf Official stated that Saudi Arabia supported cooperation among oil producers to stabilize oil markets; Oil market turmoil caused by Russia opposition to proposed OPEC+ cuts at meeting in early March
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.30% at 311.70, FTSE +0.58% at 5,486.00, DAX +0.35% at 9,577.75, CAC-40 +0.50% at 4,228.21, IBEX-35 -0.26% at 6,560.55, FTSE MIB +0.51% at 16,630.00, SMI +0.71% at 9,234.00, S&P 500 Futures +1.88%]
- Market Focal Points/Key Themes: European indices open generally higher but later retraced to be just above breakeven; Energy sector best performer supported by higher crude prices, report China was buying for strategic reserves; Financial sector among worst performers; UK FCA proposes to freeze payments on certain credit cards for up to 3 months; Italy PM says has no plan to nationalized troubled businesses; upcoming earnings expected in the US session include Walgreens Boots, CarMax and Schnitzer Steel
Equities
- Consumer discretionary: Vapiano [VAO.DE] -66% (files for insolvency)
- Energy: BP [BP.UK] +5% (Trump meeting on oil prices)
- Financials: Hays [HAS.UK] -7% (withdraws outlook; placement)
- Industrials: John Wood Group [WG.UK] -8% (COVID-19 update), Dassault Systemes [DSY.FR] -4% (prelim Q1 Rev)
Speakers
- EU Coronavirus response package said to urge a quick deal on a new EU long-term budget to support recovery from virus impact. Proposed to borrow €100B against EU government guarantees to finance short-term work schemes
- Italy PM Conte said to have stated had no plans to nationalize any company but look to use golden power to protect strategic assets. Noted that golden power instruments should be strengthened at the EU level. Saw ‘winds of change’ in Europe; told both Germans and Dutch officials to think with a European perspective
- German KFW State Development Bank expected a significant increase in aid applications as a severe recession was unavoidable. Saw German Q2 GDP contracting between 10-15% and added that the coronavirus crisis was worse than the financial crisis
- China Foreign Ministry spokesperson Geng Shuang responded to reports that the Chinese govt concealed the extent of the virus outbreak within the country. He noted that China had acted in open, transparent manner amid coronavirus outbreak
- China Commerce Ministry (MOFCOM) spokesperson Gao Feng: China has sufficient grain reserves
- Oman Oil Min stated that it would take time for oil prices to recover to prior levels; did not see prices moving below $15/barrel
- Russia Energy Min Novak reiterated stance that had not yet discussed oil market situation with Saudi Arabia, but had not ruled this out. Had no plans to raise oil production due to oversupply on the market
Currencies/Fixed Income
- USD maintained a firm tone in session against most major pairs.
- EUR/USD was trading soft by 0.2% towards the lower end of the 1.09 level. Dealers noted that a disagreement between EU leaders over how to financially support member countries during the coronavirus pandemic was a headwind for the currency.
Economic Data
- (UK) Mar Nationwide House Price Index M/M: 0.8% v 0.0%e; Y/Y: 3.0% v 2.1%e
- (CH) Swiss Mar CPI M/M: 0.1% v 0.1%e; Y/Y: -0.5% v -0.5%e; CPI Core Y/Y: -0.1% v 0.0%e
- (CH) Swiss Mar CPI EU Harmonized M/M: 0.1% v 0.0%e; Y/Y: -0.4% v -0.5%e
- (ES) Spain Mar Net Unemployment Change: +302.3K v +30.0Ke (record rise)
- (BR) Brazil Mar FIPE CPI (Sao Paulo) M/M: 0.1% v 0.2%e
- UN FAO World Food Price Index: 172.2 v 180.5 prior; M/M: -4.6% v -1.0% prior
- (EU) Euro Zone Feb PPI M/M: -0.6% v -0.4%e; Y/Y: -1.3% v -0.8%e
Fixed Income Issuance
- (ES) Spain Debt Agency (Tesoro) sold total €5.988B vs. €5.0-6.0B indicated range in 2023, 2025, 2030 and 2050 bonds
- Sold €2.339B in 0.00% Apr 2023 SPGB bonds; Avg Yield: % v 0.024% prior; Bid-to-cover: 1.58x v 2.55x prior
- Sold €1.149B 0.0% Jan 2025 SGPB bonds; Avg Yield: +0.238% v -0.260% prior; Bid-to-cover: 2.37x v 1.82x prior
- Sold €1.177B in 0.50% Apr 2030 SPGB bonds; Avg Yield: 0.694% v 0.661% prior; bid-to-cover: 2.01x v 2.21x prior
- Sold €1.323B in 1.00% Oct 2050 SPGB; Avg Yield: 1.565% v 1.270% prior; Bid-to-cover: 1.17x v 1.49x prior
- (FR) France Debt Agency (AFT) sold total €9.49B vs. €7.5-9.5B indicated range in 2028, 2029 and 2039 bonds
- Sold €4.928B in 0.75% Nov 2028 Oat; Avg Yield: -0.04% v -0.12% prior; Bid-to-cover: 1.48x v 2.40x prior (Dec 5th 2019)
- Sold €2.562B in 0.00% Nov 2029 Oat; Avg Yield: +0.04% v -0.32% prior; Bid-to-cover: 2.67x v 2.17x prior (Mar 5th 2020)
- Sold €2.0B in 1.75% Jun 2039 green Oat; Avg Yield: 0.51% v 0.38% prior; Bid-to-cover: 1.90x v 1.71x prior
- (SE) Sweden sold SEK500M vs. SEK500M indicated in 1% inflation-linked 2025 bonds; Avg Yield: -1.2920% v -2.0491% prior; Bid-to-cover: 4.90x v 1.28x prior
Looking Ahead
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
- 05:30 (UK) DMO to sell £2.0B in 1.25% Oct 2041 Gilts
- 05:30 (PL) Poland to sell Bonds
- 06:00 (IE) Ireland Mar Live Register Monthly Change: No est v -1.4K prior; Live Register Level: No est v 182.5K prior
- 06:45 (US) Daily Libor Fixing
- 07:30 (US) Mar Challenger Job Cuts: No est v +56.7K prior; Y/Y: No est v -26.3% prior
- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
- 08:00 (MX) Mexico Feb Leading Indicators M/M: No est v 0.14 prior
- 08:00 (MX) Mexico Mar Vehicle Domestic Sales: No est v 104.3K prior
- 08:00 (UK) Daily Baltic Dry Bulk Index – 08:30 (US) Initial Jobless Claims: 3.700Me v 3.283M prior; Continuing Claims: 4.941Me v 1.803M prior
- 08:30 (US) Feb Trade Balance: -$40.0Be v -$45.3B prior
- 08:30 (CA) Canada Feb Int’l Merchandise Trade (CAD): -2.3Be v -1.5B prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
- 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 27th: No est v $551.2B prior
- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
- 10:00 (US) Feb Factory Orders: -0.6%e v -0.5% prior; Factory Orders (ex-transportation): No est v -0.1% prior
- 10:00 (US) Feb Final Durable Goods Orders: 1.2%e v 1.2% prelim; Durables (ex-transportation): -0.6%e v -0.6% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v -0.8% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v -0.7% prelim
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (DK) Denmark Mar Foreign Reserves (DKK): No est v 429.0B prior
- 11:00 (CO) Colombia Feb Exports: $3.1Be v $3.4B prior
- 11:30 (US) Treasury to sell 4-week and 8-week bills
- 12:00 (CA) Canada to sell 10-year notes
- (EG) Egypt Central Bank Interest Rate Decision: Lending Rate currently at 10.25% and Deposit Rate currently at 9.25% prior
- 17:00 (KR) South Korea Mar Foreign Reserves: No est v $409.2B prior
- 17:30 (AU) Australia Mar Performance of Construction Index: No est v 42.7 prior
- 18:00 (AU) Australia Mar Final PMI Services: No est v 39.8 prelim; PMI Composite: No est v 40.7 prelim
- 20:01 (IE) Ireland Mar PMI Services: No est v 59.9 prior; PMI Composite: No est v 56.7 prior
- 20:30 (AU) Australia Feb Retail Sales M/M: +0.4%e v -0.3% prior
- 20:30 (JP) Japan Mar Final PMI Services: No est v 32.7 prelim; PMI Composite: No est v 35.8 prelim
- 20:30 (HK) Hong Kong Mar PMI: No est v 33.1 prior
- 20:30 (SG) Singapore Mar PMI: No est v 47.0 prior
- 21:45 (CN) China Mar Caixin PMI Services: 39.0e v 26.5 prior; PMI Composite: No est v 27.5 prior
- 22:35 (CN) China to sell 3-month Bills
- 23:30 (JP) Japan to sell 3-Month Bills
