EU Leaders Meet For A 2-Day Summit And Likely To Discuss Vaccine Supply Issues, SNB Keeps Policy Steady

Notes/Observations

• SNB maintains its expansive policy and keeps FX language despite recent weakening of CHF currency (Franc)
• European leaders meet for a 2-day summit and likely to discuss vaccine supply issues

Asia:

• China PBOC might conduct their annual review of Reserve Ratio Requirement (RRR) on or before April 6th. Could adjust liquidity by CNY50-100B
• North Korea launched at least two “unidentified projectiles” into the East Sea and suspected to be ballistic missiles (South Korea and US to investigate North Korea missile launches

Coronavirus:

• Total global cases 124.7M (+0.5% d/d); total deaths: 2.74M (+0.3% d/d)
• AZN.UK updated on vaccine efficacy which reported an overall 76% efficacy against symptomatic coronavirus (prior reported 79%). Positive high level results from AZD1222 Phase 3 trial in US
• UK and EU joint statement stated that were working on specific steps to take to create a ‘win-win situation’ to expand vaccine supply for all citizens
• PM Johnson stated that a vaccine trade war would result in considerable and long-term economic damage. Could see pharmaceutical giants bring their business to Britain.

Europe:

• BOE’s Haldane (chief economist) reiterated stance of a ‘rip roaring recovery’ possible if UK savings are spent; UK excess savings are about £150B

Americas:

• Fed’s Evans (dove, voter) stated that e recovery was going better than expected; looking to see unemployment at 4.5% at end of 2021 and 2021 GDP +6.5%. Would not reduce easy monetary policy until it saw actual improvements
• Fed’s Williams (voter) stated that was seeing improvements in large parts of the economy; still had a ways to go to improve the unemployment rate. Would be a while before US could sustain 2% rate
• Fed’s Daly (non-voter, dove): Fed would not be preemptively taking away punch bowl from US economy
• Securities and Exchange Commission (SEC) said to have opened up an investigation into SPAC filings due to the volume of filings
• House passed the PPP extension to May 31st (vote: 415-3). Senate’s final passage should come on Thurs (Mar 25th)

Energy:

• Container ship Evergreen remained stuck in the Suez Canal disrupting cargo traffic, efforts to re-float the ship could take days

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.18% at 422.62, FTSE -0.07% at 6,708.23, DAX -0.15% at 14,588.90, CAC-40 -0.31% at 5,928.86, IBEX-35 -0.54% at 8,398.00, FTSE MIB +0.12% at 24,237.50, SMI +0.09% at 11,076.92, S&P 500 Futures +0.13%]
• Market Focal Points/Key Themes: European indices open lower across the board but later moderated losses as the session progressed; sectors among those performing better are utilities and materials; consumer discretionary and energy sectors among those leading to the downside; Greece closed for holiday; focus on upcoming EU summit; earnings expected in upcoming US session include Movado, Darden Restaurants and Exor

Equities

• Consumer discretionary: zooplus [ZO1.DE] +13% (earnings), SoftwareONE [SWON.CH] -13% (partnership and earnings), Cineworld [CINE.UK] -10% (offering; earnings)
• Financials: CMC Markets [CMCX.UK] +6% (trading update)
• Industrials: SAF-Holland [SFQ.DE] +6% (earnings)
• Technology: SMA Solar Technology [S92.DE] -4% (earnings)

Speakers

• Swiss National Bank (SNB) Policy Statement reiterated its language on FX in that the CHF currency remained highly valued despite recent weakening and willing to intervene as necessary in the FX market
• ECB Economic Bulletin stated that preserving favorable financing conditions over the pandemic period remained essential.
• SNB Chairman Jordan post rate decision press conference stressed that now was not the time to change rates of FX intervention policy. Welcomed the recent weakness in CHF currency (Franc) bit its willingness to intervene in FX market was exactly the same
• German Chancellor Merkel commented in her Parliament that the pandemic was a long way from being overcome; economic costs was immense. EU Recovery Fund was a one-off measure
• Romania Central Bank official Popa stated that had a cautious stance due to inflation spike; to try to keep accommodative market conditions
• Philippines Central Bank Policy Statement noted that inflation might breech the upper end of target in 2021 but to return to target in 2022. It saw the balance of risks tilted to the downside during 2022 period. To watch for signs to see if inflation became more broader based
• RBI Gov Das noted that new variants of coronavirus brought fresh wave of concerns
• China Commerce Ministry (MOFCOM): There are no so-called forced labor camps in Xinjiang. Hoped relevant companies corrected any wrongdoing. Urged US to treat Chinese companies fairly and respect market order. Opposed US crack down on Chinese tech companies

Currencies/Fixed Income

• USD was steady and holding onto its recent gains against the major pairs.
• EUR/USD hovered above the 1.18 level as participants remains concerned about extended lockdowns in Europe and its impact on growth.
• USD/CHF was at 8-month highs as the pair approached the 0.94 area. SNB reiterated its language on FX in that the CHF currency remained highly valued despite recent weakening of the currency over the course of 2021. It also reiterated its willingness to intervene as necessary in the FX market (**Note: pair moved from 0.89 to 0.94 since its Dec meeting)

Economic data

• (FI) Finland Feb Preliminary Retail Sales Volume Y/Y: 2.8% v 5.1% prior
• (DE) Germany Apr GfK Consumer Confidence: -6.2 v -12.1e (13th straight negative reading)
• (FR) France Mar Business Confidence: 97 v 91e; Manufacturing Confidence: 98 v 98e; Production Outlook Indicator: +6 v -3e; Own-Company Production Outlook: 5 v 13e
• (ES) Spain Feb PPI M/M: -1.5% v +3.4% prior; Y/Y: 0.8% v 0.9% prior
• (AT) Austria Jan Industrial Production M/M: -2.4% v -3.5% prior; Y/Y: -3.8% v -2.9% prior
• (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 2.00% (as expected)
• (CH) SNB left its Key Rates unchanged (as expected) with both Policy Rate Sight Deposit Interest Rate unchanged at -0.75% (as expected)
• (SE) Sweden Feb PPI M/M: -1.5% v+ 1.0% prior; Y/Y: 0.8% v -0.8% prior
• (SE) Sweden Feb Household Lending Y/Y: 5.5% v 5.5% prior
• (HK) Hong Kong Feb Trade Balance (HKD): -14.7B v -21.3Be; Exports Y/Y: 30.4% v 28.4%e; Imports Y/Y: 17.6% v 22.2%e
• (EU) Euro Zone Feb M3 Money Supply Y/Y: 12.3% v 12.5%e
• (IS) Iceland Feb CPI M/M: 0.5% v 0.7% prior; Y/Y: 4.3% v 4.1% prior
• (ZA) South Africa Feb PPI M/M: 0.7% v 0.4%e; Y/Y: 4.0% v 3.6%e

Fixed income Issuance

• (UK) DMO opened its book to sell £500M in July 2026 Sukuk; guidance seen +1bps to UK Treasuries

Looking Ahead

• (EU) EU Leaders begin 2-day summit
• 06:00 (CA) Canada Mar CFIB Business Barometer: No est v 62.5 prior
• 06:00 (EU) Daily Euribor Fixing
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €3.5-4.0B in new 0.00% Nov 2022 CTZ
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €0.75-1.0B in 0.40% May 2030 I/L Bonds (BTPei)
• 06:10 (EU) Daily ECB Liquidity Stats
• 06:30 (HU) Hungary Debt Agency (AKK) to sell bonds
• 06:50 (HU) Hungary Central Bank One-Week Deposit Rate Tender
• 07:00 (UK) Mar CBI Retailing Reported Sales: -37e v -45 prior; Total Distribution Reported Sales: No est v -35 prior
• 07:00 (IL) Israel Feb Unemployment Rate: No est v 4.5% prior; Unemployment Rate (including Covid): No est v 18.0% prior
• 07:00 (BR) Brazil Mar FGV Construction Costs M/M: 1.4%e v 1.1% prior
• 07:00 (BR) Brazil Central Bank (BCB) Quarterly Inflation Report (QIR)
• 07:00 (CZ) Czech Republic to sell CZK5.0B in 3-month Bills;
• 07:00 (RO) Romania to sell RON400M in 2.5% 2027 Bonds
• 07:30 (CL) Chile Central Bank Traders Survey
• 07:45 (US) Daily Libor Fixing
• 08:00 (MX) Mexico Jan Retail Sales M/M: -1.2%e v -2.4% prior; Y/Y: -8.1%e v -5.9% prior
• 08:00 (MX) Mexico Jan IGAE Economic Activity Index (Monthly GDP) M/M: 0.0%e v 0.1% prior; Y/Y: -5.3%e v -2.8% prior
• 08:00 (BR) Brazil Mid-Mar IBGE Inflation IPCA-15 M/M: 1.0%e v 0.5% prior; Y/Y: 5.6%e v 4.6% prior
• 08:30 (US) Q4 Final GDP Annualized Q/Q: 4.1%e v 4.1% prelim; Personal Consumption: 2.4%e v 2.4% prelim
• 08:30 (US) Q4 Final GDP Price Index: 2.1%e v 2.1% prelim; Core PCE Q/Q: 1.4%e v 1.4% prelim
• 08:30 (US) Initial Jobless Claims: 730Ke v 770K prior; Continuing Claims: 4.00Me v 4.124M prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave Interest Rate unchanged at 3.50% (24/25 for hold; 1 for cut)
• 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 19th: No est v $580.4B prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 10:00 (BE) Belgium Mar Business Confidence: -3.1e v -4.4 prior
• 10:30 (US) Fed’s Williams
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:00 (US) Mar Kansas City Fed Manufacturing Activity Index: 26e v 24 prior
• 12:00 (US) Fed’s Bostic
• 13:00 (US) Fed’s Evans
• 13:00 (DE) ECB’s Schnabel (Germany)
• 13:00 (ES) ECB’s De Guindos (Spain)
• 13:00 (US) Treasury to sell 7-year notes
• 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 4.00%
• 15:00 (AR) Argentina Q4 Unemployment Rate: No est v 11.7% prior
• 15:00 (AR) Argentina Jan Shop Center Sales Y/Y: No est v -32.7% prior; Supermarket Sales Y/Y: No est v 2.6% prior
• (CO) Colombia Feb Industrial Confidence: No est v 3.7 prior; Retail Confidence: No est v 32 prior
• (AR) Argentina Mar Consumer Confidence Index: No est v 37.77 prior
• 15:45 (US) Fed Vice Chair Clarida
• 17:00 (KR) South Korea Mar Consumer Confidence: No est v 97.4 prior
• 19:00 (US) Fed’s Daly
• 19:30 (JP) Japan Mar Tokyo CPI Y/Y: -0.2%e v -0.3% prior; CPI (ex-fresh food) Y/Y: -0.2%e v -0.3% prior; CPI (ex-fresh food/energy) Y/Y: 0.2%ev 0.2% prior
• 21:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years and 5~10 Years maturities
• 23:00 (CN) China to sell 3-month bills
• 23:00 (CN) China to sell 30-year upside bond
• 23:30 (JP) Japan to sell 3-Month Bills