EU Issuance Continues, Focus Turning To EU Leader Teleconference Call On Thursday

Notes/Observations

• Risk-on appetite finding some room as rising as optimism grows over a gradual lifting of lockdown restrictions to begin a first step towards economic recovery
• EU debt issuance parade continues in session, Spain, UK, Portugal with supply (saw Italy and Luxembourg syndicates on Tuesday)
• Demand for Spain 10-year syndicate sees record demand aided by ECB standing as a backstop with its regular and emergency bond purchases
• Collapse in oil prices and weaker demand caused by coronavirus brings back concerns over deflation

Asia:

• Australia preliminary March Retail Sales showed the strongest rise ever published in the Retail Trade Publication, data was supported by consumer staples
• South Korea President Moon called for 3rd extra budget of KRW40T, to be focused on key industries and job retention

Coronavirus:

• Total Global Cases: 2,564190 (+3.5%); Total deaths: 177.4k (+4.2%)

Europe:

• BoE Gov Bailey stated that country should be cautious about lifting the lockdown too early; lifting it too early and then slamming on the brakes again would damage economy even more
• ECB Governing Council reportedly considering loosening collateral rules; could discuss allowing junk bonds as collateral (call said to be scheduled on Wed evening)

Americas:

• Senate unanimously passed $484B Relief Bill for small business ,the package will be voted on in the House on Wed (Apr 22nd)
• President Trump: suspending immigration for 60 days for those seeking green cards

Mid-East/Energy:

• Weekly API Crude Oil Inventories: +13.2M v +13.1M prior
• Tuesday conference call by OPEC+ members had no fresh initiatives announced

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 % at #, FTSE +1.63% at 5,732.86, DAX +1.55% at 10,409.18, CAC-40 +1.07% at 4,404.29, IBEX-35 +0.89% at 6,694.00, FTSE MIB +1.54% at 16,703.50, SMI +1.04% at 9,646.81, S&P 500 Futures +1.59%]
• Market Focal Points/Key Themes: European indices open higher across the board and remained supported through morning trading; financial and technology sectors better performers; consumer discretionary on the backfoot; continuing declines in the price of crude weighed on energy sector; reportedly Italy to request €55B in stimulus; upcoming earnings expected in the US session include AT&T, Nasdaq and Alcoa.

Equities

• Consumer discretionary: Roche [ROG.CH] +1.5% (earnings; comments on vaccine), Heineken [HEIA.NL] -1% (volumes), Kering [KER.FR] -6% (earnings; dividend cut)
• Financials: UniCredit [UCG.IT] +1% (takes additional loan provision)
• Materials: Akzo Nobel [AKZA.NL] +7% (earnings)
• Technology: STMicroelectronics [STM.FR] +4% (earnings; cuts dividend)
• Telecom: Ericsson [ERICB.SE] +3% (earnings)

Speakers

• ECB chief Lagarde in a letter to EU Parliament member reiterated stance that Governing Council was working hard to alleviate financing pressures but stressed it never had discussed concept of helicopter money
• ECB’s Rehn (Finland) called for member states to enhance pan-european cooperation and for Governments to take measures to support the economy. Necessary to support most severely hit European countries. Reiterated Governing Council to do everything to ensure supportive financing conditions amid the epidemic
• Italy said to request €55B stimulus from parliament (**Reminder: Conte stated that the next Italian stimulus measures to be worth at least €50B taking overall stimulus efforts to over €75B)
• Germany Dep Foreign Min Roth: Govt prepared to contribute more to the EU long-term budget
• EU official stated that the differences between member States on coronavirus recovery fund should focus between making only grants or only making loans. Northern European States believe debt mutualization would contaminate their financial positions because of decisions by its southern member
• Hong Kong Monetary Authority (HKMA) to arrange $10B under its temporary USD liquidity window to ease pressures; to perform weekly 7-day operations
• Nigeria said to reduce oil production citing lack of storage facilities
• Iran official: OPEC+ might need other measures to support oil; called on producers of more expensive oil to cooperate. Believed that US and Canadian shale producers should cut production

Currencies/Fixed Income

• FX markets saw some slight USD weakness as some risk-on appetite found some leg room with rising as optimism of a gradual lifting of lockdown restrictions
• Core and periphery yields were higher in the session as EU debt issuance parade continued. Spain, UK, Portugal with supply today (saw Italy and Luxembourg syndicates on Tuesday)

Economic Data

• (NL) Netherlands Apr Consumer Confidence Index: -22 v -2 prior
• (NL) Netherlands Feb Consumer Spending Y/Y: 1.1 v 1.0% prior
• (UK) Mar CPI M/M: 0.0% v 0.0%e; Y/Y: 1.5% v 1.5%e; CPI Core Y/Y: 1.6% v 1.6%e; CPIH Y/Y: 1.5% v 1.6%e
• (UK) Mar RPI M/M: +0.2% v -0.2%e; Y/Y: 2.6% v 2.3%e; RPI-X (ex-mortgage interest payments ) Y/Y: 2.7% v 2.4%e; Retail Price Index: 292.6 v 291.8e
• (UK) Mar PPI Input M/M: -3.6% v -4.0%e; Y/Y: -2.9% v -3.0%e
• (UK) Mar PPI Output M/M: -0.2% v -0.3%e; Y/Y: 0.3% v 0.1%
• (UK) Mar PPI Output Core M/M: 0.3% v 0.0%e; Y/Y: 0.9% v 0.5%e
• (NL) Netherlands Mar House Price Index M/M: 0.8% v 0.2% prior; Y/Y: 7.0% v 6.6% prior
• (DK) Denmark Apr Consumer Confidence Indicator: -11.9 v +0.4 prior
• (MY) Malaysia Mid-Apr Foreign Reserves: $102.0B v $107.1B prior
• (TR) Turkey Apr Consumer Confidence: 54.9 v 58.2 prior
• (TW) Taiwan Mar Unemployment Rate: 3.8% v 3.8%e
• (IT) Italy Feb Industrial Sales M/M: -2.1% v +5.5% prior; Y/Y: 0.9% v 3.8% prior
• (IT) Italy Feb Industrial Orders M/M: -4.4% v +1.1% prior; Y/Y: -2.6% v -1.9% prior
• (ZA) South Africa Mar CPI M/M: 0.3% v 0.5%e; Y/Y: 4.1% v 4.2%e
• (ZA) South Africa Mar CPI Core M/M: 0.6% v 0.6%e; Y/Y: 3.7% v 3.8%e
• (PL) Poland Mar Retail Sales M/M: -3.3% v +2.9%e; Y/Y: -7.0% v -0.6 %e; Real Retail Sales Y/Y: -9.0% v -5.1%e
• (UK) Feb ONS House Price Index Y/Y: 1.1% v 1.6%e
• (EU) Euro Zone Overall 2019 Govt Debt to GDP Ratio: % v 85.9% prior
• (IS) Iceland Mar Wage Index M/M: % v 0.1% prior; Y/Y: % v 4.8% prior

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) opened its book to sell EUR-denominated 10-year bonds; guidance seen +22bps to mid-swaps
• (IN) India sold total INR450B vs. INR450B indicated in 3-month, 6-month and 12-month bills
• (DK) Denmark sold total DKK7.47B in 2029 and 2052 bonds
• (SE) Sweden sold SEK5.0B in 0.125% 2031 Bonds; Avg Yield: 0.1176% v 0.138% prior; Bid-to-cover: 2.56x v 3.0x prior
• (NO) Norway sold NOK2.0B in 1.375% Aug 2030 Bonds;Avg Yield: 0.800% v 0.900% prior; Bid-to-cover: 3.87x v 3.00x prior
• (UK) DMO sold £3.00B 1.25% July 2027 Gilts; Avg Yield: 0.160% v 1.288% prior; Bid-to-cover: 2.27x v 2.38x prior; Tails: 0.3bps v 0.1bps prior

Looking Ahead

• 05:30 (PT) Portugal Debt Agency (IGCP) to sell €0.75-1.0B in 2026 and 2030 OT bonds
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 06:00 (IE) Ireland Mar PPI M/M: No est v 2.5% prior; Y/Y: No est v -0.8% prior
• 06:00 (PT) Portugal Feb Current Account Balance: No est v -€0.5B prior
• 06:00 (FI) Finland to sell €1.0B in 0.5% Sept 2029 RAGB bond
• 06:00 (CZ) Czech Republic to sell 2023, 2025 and 2040 bonds
• 06:00 (RU) Russia to sell 2024 and 2025 OFZ bonds
• 06:30 (UK) DMO to sell £3.25B 1.0% Apr 2024 Gilts
• 06:45 (US) Daily Libor Fixing
• 07:00 (US) MBA Mortgage Applications w/e Apr 17th: No est v 7.3% prior
• 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 50bps to 9.25%
• 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (CA) Canada Mar CPI M/M: -0.2%e v +0.4% prior; Y/Y: 1.2%e v 2.2% prior; CPI Core- Median Y/Y: 1.8%e v 2.1% prior; CPI Core- Common Y/Y: 2.0%e v 1.8% prior; CPI Core- Trim Y/Y: 1.8%e v 2.0% prior; Consumer Price Index: 137.3e v 137.4 prior
• 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
• 09:00 (US) Feb FHFA House Price Index M/M: 0.3%e v 0.3% prior
• 09:00 (RU) Russia Mar Industrial Production Y/Y: 0.2%e v 3.3% prior
• 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
• 10:00 (EU) Euro Zone Apr Advance Consumer Confidence: -20.0e v -11.6 prior
• 10:30 (US) Weekly DOE Oil Inventories
• 12:00 (CA) Canada to sell 2.0% Dec 2051 bonds
• 15:00 (AR) Argentina Mar Trade Balance: No est v $1.1B prior
• 19:00 (KR) South Korea Q1 Preliminary GDP Q/Q: -1.4%e v +1.3% prior; Y/Y: 0.9%e v 2.3% prior
• 19:00 (AU) Australia Apr Preliminary PMI Manufacturing: No est v 49.7 prior; PMI Services: No est v 38.5 prior; PMI Composite: No est v 39.4 prior
• 20:30 (JP) Japan Apr Preliminary PMI Manufacturing: No est v 44.8 prior; PMI Services: No est v 33.8 prior; PMI Composite: No est v 36.2 prior
• 21:00 (CN) China Mar Swift Global Payments (CNY): No est v 2.1% prior
• 21:30 (AU) Australia Q1 NAB Business Confidence: No est v -1 prior
• 23:00 (NZ) New Zealand Mar Credit Card Spending M/M: No est v -0.6% prior; Y/Y: No est v 2.5% prior
• 23:35 (JP) Japan to sell 2-Year JGB Bonds
• (CO) Colombia Mar Retail Confidence: No est v 28.3 prior; Industrial Confidence: No est v 9.8 prior
• (AR) Argentina Mar Leading Indicator: No est v -2.5% prior