• Risk on sentiment aided by prospect of major economies reopening and optimism that the Fed would step up stimulus as needed to counter the pandemic’s impact
  • Businesses begin process to reopen in some major economies
  • Six European countries lift short-selling bans in place for the past two months (France, Spain, Italy, Austria, Belgium, Greece)


  • Japan Q1 Preliminary GDP entered a technical recession (Q/Q: -0.9% v -1.1%e; GDP Annualized Q/Q: -3.4% v -4.5%e
  • China Government Work Report draft stressed rolling out stronger macro policies to stabilize enterprises’ development and ensure employment, and reforms should be relied on to stimulate market entities’ vitality and foster new growth
  • China PBOC Gov Yi Gang commented that National People’s Congress that would implement “a more flexible and powerful” monetary policy to counter economic downturn pressure and mitigate the impact of the COVID-19 shocks, while maintaining financial stability
  • China PBOC adviser Ma Jun: PBOC should avoid buying special treasury bonds as such a move could fuel inflation risks and asset bubbles and lead to depreciation of the yuan currency; PBOC could cut RRR or provide liquidity via some mechanism to support their purchase of new treasury bonds


- advertisement -
  • Total global cases 4,713,769 (+6.1% vs. Friday); death toll 315.2K(+4.2% vs. Friday)


  • ECB’s Lagarde: Committed to doing everything needed within mandate – letter to EU Parliament
  • Germany said to be considering a €57B aid package to help municipalities cope with fall in tax revenues caused by virus (Reminder: on May 15th reports circulated that supplementary budget which may include €100B in extra debt)
  • BOE Haldane (Chief Economist): Looking at negative interest rates and buying riskier assets
  • Office of Budget Responsibility (fiscal watchdog) chief Chote: UK should be past worst of economic hit but the shape of recovery was key now. Likely to see a slower economic recovery rather than a quick bounce
  • Fitch affirmed France sovereign rating at AA; revises outlook to negative from stable

Fitch affirmed Austria sovereign rating at AA+; outlook revised to stable from positive


  • Fed Chair Powell 60 Minute interview reiterated stance that US would not have negative interest rates as had other options. Economy would recover but might a while. Projections of 20-25% unemployment peak sounded about right . Assuming there was no second wave of coronavirus infections, the economy would recover steadily through the second half of 2020. Full recovery would require a vaccine



  • Indices [Stoxx600 +2.02% at 334.88, FTSE +2.32% at 5,934.45, DAX +2.77% at 10,755.10, CAC-40 +2.28% at 4,375.35, IBEX-35 +1.99% at 6,604.00, FTSE MIB +1.34% at 17,077.50, SMI +1.32% at 9,608.07, S&P 500 Futures +1.61%]
  • Market Focal Points/Key Themes: European indices open higher across the board and continued higher as the session progressed; materials and energy sectors among better performers; telecom sector underperforming; French FinMin not considering tax hike to repay debt; earnings expected in the upcoming US session include International Game Technology and Telecom Italia.


  • Consumer discretionary: Ryanair [RYA.UK] +6% (earnings), Norwegian Air Shuttle [NAS.NO] -20% (equity offering), Zooplus [ZO1.DE] -5% (analyst action)
  • Energy: Royal Dutch Shell [RDSA.NL] +6% (strategic partnership)
  • Industrials: ISS [ISS.DK] +11% (earnings), ThyssenKrupp [TKA.DE] +6% (consolidation talks)


  • ECB’s Lane (Ireland, chief economic): Reiterates view that prepared to adjust all instrument if needed; can adjust QE program in both size and duration
  • France Fin Min Le Maire stated that would not raise taxes to pay off debt from crisis but prefer it resolved by pickup in economic growth. Reimposing the wealth tax is not a good solution
  • ESM’s Regling stated that he did not know of any Euro Area member applying to tap ESM credit or planning to do so. Saw the 2020 Euro Zone budget deficit to GDP ratio between 9.0-10.0% area
  • EU said to borrow considerably more €320B for its recovery fund with majority of the funding distributed would be in the form of grants rather than loans
  • US and UK trade officials said to be optimistic that negotiations for a comprehensive trade agreement can proceed at an accelerated pace
  • German VDMA Engineering Body: Q1 exports fell 6.6% and the Sector should expect double digit decline in exports in Q2
  • Various regulators announced an end to short-selling bans (France, Spain, Italy, Austria, Belgium, Greece)
  • Iran Foreign Ministry said to warn US that country would take countermeasures against any actions against its ships

Currencies/Fixed Income

  • FX markets were relatively quiet despite the run higher in equity markets.
  • EUR/USD steady at 1.08 as Fed chair Powell vowed the central bank would support the recovery. Italian bonds benefited on reports the EU would borrow considerably more €320B for its recovery fund and that the majority of the funding distributed would be in the form of grants rather than loans. Italy 10-year yield lower by almost 10bps to test 1.77%

Economic Data

  • (CH) Swiss weekly Total Sight Deposits (CHF): 673.5B v 669.1B prior; Domestic Sight Deposits: 591.0B v 586.9B prior

Fixed Income Issuance

  • (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 0.04% v 0.25% prior; Bid-to-cover: 2.54x v 2.61x prior

Looking Ahead

  • (IT) Italy Debt Agency (Tesoro) begins multi-day issuance of 1.40% May 2025 BTP Italia (retail bond)
  • 05:30 (DE) Germany to sell €4.0B in 12-month BuBills
  • 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills
  • 05:30 (BE) Belgium Debt Agency (BDA) to sell 2030, 2031 and 2050 OLO bonds
  • 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
  • 06:00 (ES) ECB’s De Cos (Spain)
  • 06:00 (IL) Israel to sell 2022, 2025, 2027, 2029 , 2030 and 2037 Bonds
  • 06:00 (RO) Romania to sell RON500M in 4.75% 2025 Bonds
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 07:00 (BR) Brazil May FGV Inflation IGP-10 M/M: -0.2%e v 1.1% prior
  • 07:25 (BR) Brazil Central Bank Weekly Economists Survey
  • 08:00 (PL) Poland Apr CPI Core M/M: 0.8%e v 0.5% prior; Y/Y: 3.5%e v 3.6% prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 Spain Debt Agency (Tesoro) size announcement on upcoming issuance
  • To sell €B in 2023, 2025, 2030 and 2066 bonds on Thursday, May 21st
  • 08:30 (CL) Chile Q1 GDP Q/Q: +2.7%e v -4.1% prior; Y/Y: -0.1%e v -2.1% prior
  • 08:30 (CL) Chile Q1 Current Account Balance: No est v -$2.4B prior
  • 08:50 (FR) France Debt Agency (AFT) to sell €7.9-9.5B in 3-month, 6-month and 12-month bills (4 tranches)
  • 09:45 (EU) ECB weekly QE bond buying update
  • 10:00 (US) May NAHB Housing Market Index: 34e v 30 prior
  • 11:00 (UK) BOE Tenreyro webinar
  • 11:30 (US) Treasury to sell 13-week and 26-week Bills
  • 14:00 (US) Fed’s Bostic
  • 16:00 (US) Weekly Crop Progress Report
  • 18:45 (NZ) New Zealand Q1 PPI Input Q/Q: No est v 0.1% prior; PPI Output Q/Q: No est v 0.4% prior
  • 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 90.3 prior
  • 21:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years and 25 Years~ maturities
  • 21:30 (AU) RBA May Minutes
  • 23:00 (NZ) New Zealand Apr Non Resident Bond Holdings: No est v 49.9% prior
  • 23:00 (TH) Thailand Central Bank to sell 3-month, and 6-month bills
  • 23:30 (HK) Hong Kong to sell 3-month and 6-month bills
  • 23:30 (JP) Japan to sell 12-month bills
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