HomeContributorsFundamental AnalysisEuro Area PMI Services Data Suggesting Regional Economy Was Showing Resilience

Euro Area PMI Services Data Suggesting Regional Economy Was Showing Resilience

Notes/Observations

  • Major European Services PMI highlights that regional economy showing resilience (Beats: Euro Zone, Germany, France; Misses: UK, Italy, Spain).
  • Sovereign bond issuance picks up pace as new quarter underway (Italy and Portugal with syndicates).

Asia

  • Japan PM Suga stated that a snap election before the end of Sept was a possibility, it would only happen after virus was under control.
  • BOJ Gov Kuroda stated that BOJ could keep interest rates low as market trusts JGBs.
  • India Central bank (RBI) kept its key rates steady; vowed to maintain an accommodative stance for as long as necessary to support growth.

Coronavirus

  • Total global cases 132.3M; total deaths: 2.87M.
  • White House does not support federal mandate on COVID vaccine credentials; will not require US vaccine credential system.
  • California plans to lift most Covid restrictions June 15th but planned to keep mask mandate in place.

Americas

  • Fed’s Barkin (voter, hawk) stated that more jobs would come back as US economy reopened and expected to see a really strong spring and summer.
  • President Biden stated that the country was making incredible progress on COVID but cautioned that new variants were spreading and moving quickly, and cases were rising.

Energy

  • Weekly API Crude Oil Inventories: -2.6M v +3.9M prior.
  • Iran state TV: Iran rebuffed an offer to freeze uranium enrichment in return for release of $1B in funds.
  • Iran Deputy Foreign Min Araghchi: first round of talks in Vienna were constructive.
  • US State Dept spokesperson: Iran nuclear talks in Vienna today were constructive and a potentially useful step.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

  • Indices [Stoxx600 +0.04% at 435.42, FTSE +0.85% at 6,881.68 , DAX +0.13% at 15,231.70 , CAC-40 +0.32% at 6,149.72 , IBEX-35 +0.05% at 8,639.00 , FTSE MIB +0.09% at 24,784.50 , SMI -0.34% at 145 , S&P 500 Futures +0.09%].
  • Market Focal Points/Key Themes: European indices open mixed and took on a downward bias as the session wore on; better performing sectors include financials and industrials; consumer discretionary and technology sectors among those underperforming; SogGen negotiating sale of Lyxor to Amundi; equities events in the upcoming US session include Costco March sales, and quarterly earnings from Schnitzer Steel and Marathon Oil.

Equities

  • Consumer discretionary: Carnival [CCL.UK] +4% (extends pause in all operations from US ports), Deliveroo [ROO.UK] +3% (strike), Ryanair Holdings [RYA.UK] +1% (outlook), Flutter Entertainment [FLTR.UK] -2 (Fox files suit against Flutter over disputed 18.6% option in FanDuel).
  • Financials: Amundi [AMUN.FR] +2% (SocGen confirms Amundi to acquire Lyxor unit), Saga [SAGA.UK] +10% (earnings.

Speakers

  • G20 Finance Ministers and central bankers Draft Statement said to commit to global rules on corporate tax – including a digital tax by mid-2020. To stay vigilant and avoid any premature withdrawal of support measures as global recovery was bumpy and uneven. To increase IMF reserves by $650B through new SDR allocation . Committed to fight protectionism and wanted exchange rates to reflect underlying fundamentals. Addressing climate change was increasingly urgent.
  • ECB’s Knot (Netherlands) stated that was comfortable with current level of financing conditions. End of PEPP was not the end of ECB accommodation. Saw no case for modifying other instruments like APP or forward guidance. Comfortable with nominal yield rise if driven by inflation and growth prospects. Short-term outlook had not changed; economy showing resilience. Saw upside risks to growth in H2.
  • France Fin Min Le Maire stated that was very confident about a quick economic rebound. Saw 2022 growth back at pre-pandemic level. Concerned by delay in EU Recovery Fund; urged EU member States to reignite impulse for recovery.
  • France govt said to seek EU approval to extend the State-backed loan program maturities from six years to seven or eight years.
  • Romania Central Bank Gov Isarescu: Policies have helped prevent the RON currency (Leu) from an excessive decline while also targeting inflation.
  • Ukraine Central Bank saw a small impact on GDP from virus lockdown restrictions.
  • China Finance Ministry (MOF) reiterated stance that local govt debt risk was controllable and would firmly curb increase in local govt hidden debt.

Currencies/Fixed income

  • USD was mostly softer as US Treasury yields remain off recent cycle highs. Dealers noted that the loss of upward momentum for yields would make it harder for the greenback to sustain further gains.
  • EUR/USD was firmer on expectations that vaccine rollout will ramp up in EU as quarter progressed. PMI Services data in the region appeared to suggest that the economy was showing resilience.
  • GBP/USD was lower as concerns over the UK’s vaccine rollout and placing doubt on whether PM Johnson would be able to open the economy according to his timetable.
  • USD/JPY was below the 110 level as US yields took a pause from its recent ascent.

Economic data

  • (SE) Sweden Mar Maklarstatistik Housing Prices Y/Y: 17% v 15% prior; Apartment Prices Y/Y: 8% v 6% prior.
  • (UK) Mar Official Reserves Changes: -$0.4B v -$1.1B prior.
  • (AT) Austria Mar Wholesale Price Index M/M: 1.6% v 1.5% prior; Y/Y: 6.9% v 2.2% prior.
  • (CZ) Czech Feb Retail Sales Y/Y: -4.9% v -8.7%e; Retail Sales (ex-auto) Y/Y: -5.8% v -8.0%e.
  • (MY) Malaysia End-Mar Foreign Reserves: $108.6B v $109.2B mid-month reading.
  • (ES) Spain Mar PMI Services: 48.1 v 45.5e (8th straight contraction and highest since Jun 2020); PMI Composite: 50.1 v 48.0e.
  • (ZA) South Africa Mar PMI (whole economy): 50.3 v 50.2 prior (6th straight expansion).
  • (CZ) Czech Mar Unemployment Rate: 4.2% v 4.3% prior.
  • (IT) Italy Mar PMI Services: 48.6 v 49.0e (8th month of contraction); PMI Composite: 51.9 v 52.2e.
  • (FR) France Mar Final PMI Services: 48.2 v 47.8e (confirmed 7th straight contraction); PMI Composite: 50.0 v 49.5e.
  • (DE) Germany Mar Final PMI Services: 51.5 v 50.8e (confirmed 1st expansion in 6 months); PMI Composite: 57.3 v 56.8e.
  • (EU) Euro Zone Mar Final PMI Services: 49.6 v 48.8e (confirmed 7th straight contraction); PMI Composite: 53.2 v 52.5e.
  • (CZ) Czech Mar International Reserves: $162.8B v $165.7B prior.
  • (TW) Taiwan Mar Foreign Reserves: $539.0B v $543.3B prior.
  • (CN) China Mar Foreign Reserves: $3.170T v $3.718Te (3rd straight monthly decline).
  • (UK) Mar Final PMI Services: 56.3 v 56.8e (confirmed 1st expansion in 5 months); PMI Composite: 56.4 v 56.6e.
  • (NG) Nigeria Mar PMI (whole economy): 52.9 v 52.0 prior (9th month of expansion).
  • (SG) Singapore Mar Foreign Reserves: $382.0B v $382.6B prior.

Fixed income issuance

  • (PT) Portugal Debt Agency (IGCP) opened its book to sell EUR-denominated 10-year bonds via syndicate; guidance seen +29bps to mid-swaps.
  • (IT) Italy Debt Agency (Tesoro) opened book to sell EUR-denominated 7-year and 50-year BTP via syndicate.
  • Opened book to sell 0.25% Mar 2028 BTP; guidance seen +12bps to mid-swaps.
  • Opened book to sell new Mar 2072 BTP; guidance seen +50bps to mid-swaps.
  • (IN) India sold total INR360B vs. INR360B indicated in 3-month, 6-month, and 12-month bills.
  • (DK) Denmark sold total DKK4.2B in 2022 and 2031 DGB bonds.
  • (RO) Romania opened its book to sell EUR-denominated 12-year and 20-year bonds.
  • (UK) DMO sold ÂŁ3.0B in 0.375% Oct 2026 Gilts; Avg Yield: 0.468% v 0.454% prior; bid-to-cover: 2.56x v 2.53x prior; Tails: 0.3bps v 0.3bps prior.

Looking ahead

  • (G20) G20 Finance Ministers and central bankers spring meeting.
  • (EG) Egypt Mar Net Reserves: No est v $40.2B prior; Gross Reserves: No est v $40.2B prior.
  • (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%.
  • 05:10 (EU) Daily ECB Liquidity Stats.
  • 05:30 (ZA) South Africa Mar Sacci Business Confidence: 94.0e v 94.5 prior.
  • 05:30 (DE) Germany to sell €4.0B in 0% Apr 2026 BOBL.
  • 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 13-week bills.
  • 06:30 (UK) Debt Management Office (DMO) to sell ÂŁ2.0B in 0.875% Jan 2046 Gilts.
  • 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 -3.9% prior.
  • 06:45 (US) Daily Libor Fixing.
  • 07:00 (RU) Russia OFZ Bond auction (if any).
  • 07:00 (US) MBA Mortgage Applications w/e Apr 2nd: No est v -2.2% prior.
  • 07:00 (BR) Brazil Mar FGV Inflation IGP-DI M/M: 2.5%e v 2.7% prior; Y/Y: 31.1%e v 30.0% prior.
  • 07:00 (MX) Mexico Jan Gross Fixed Investment: -12.5%e v -11.5% prior.
  • 07:00 (UK) Weekly PM Question time in House.
  • 08:00 (PL) Poland Mar Official Reserves: No est v $163.4B prior.
  • 08:00 (HU) Hungary Central Bank (MNB) Mar Minutes.
  • 08:00 (UK) Daily Baltic Dry Bulk Index.
  • 08:30 (US) Feb Trade Balance: -$70.5Be v -$68.2B prior.
  • 08:30 (CA) Canada Feb Int’l Merchandise Trade (CAD): 1.3Be v 1.4B prior.
  • 08:30 (CL) Chile Mar Trade Balance: $1.1Be v $1.5B prior; Total Exports: No est v $7.1B prior; Total Imports: No est v $5.6B prior; Copper Exports: No est v $3.9B prior.
  • 08:30 (CL) Chile Mar International Reserves: No est v $39.6B prior.
  • 09:00 (RU) Russia Mar Official Reserve Assets: $580.0Be v $586.3B prior.
  • 09:00 (CN) Chile Feb Nominal Wage M/M: No est v 1.1% prior; Y/Y: No est v 4.2% prior.
  • 09:00 (BR) Brazil Mar Vehicle Production: No est v 197.0K prior; Vehicle Sales: No est v 167.4K prior; Vehicle Exports: No est v 33.1K prior.
  • 09:00 (EU) Weekly ECB Forex Reserves.
  • 09:00 (US) Fed’s Evans.
  • 09:45 (EU) ECB weekly QE bond buying update.
  • 09:45 (UK) BOE to buy ÂŁ1.48B in APF Gilt purchase operation (7-20 years).
  • 10:00 (CA) Canada Mar Ivey Purchasing Managers Index (seasonally adj): No est v 60.0 prior; PMI (unadj): No est v 63.1 prior.
  • 10:30 (TR) Turkey Mar Cash Budget Balance (TRY): No est v -3.5B prior.
  • 10:30 (US) Weekly DOE Oil Inventories.
  • 11:00 (DK) Denmark Mar Foreign Reserves (DKK): No est v 429.4B prior.
  • 11:00 (US) Fed’s Kaplan.
  • 12:00 (US) Fed’s Barkin.
  • 14:00 (US) FOMC Mar Minutes.
  • 15:00 (US) Feb Consumer Credit: +$2.8Be v -$1.3B prior.
  • 19:01 (UK) Mar RICS House Price Balance: 55%e v 52% prior.
  • 19:50 (JP) Japan Feb BoP Current Account Balance: ÂĄ2.00Te v ÂĄ0.7T prior; Adjust Current Account Balance: ÂĄ1.019Te v €1.500T prior; Trade Balance (BoP Basis): +ÂĄ471.8Be v -ÂĄ130.1B prior.
  • 20:30 (HK) Hong Kong Mar PMI (whole economy): No est v 50.2 prior.
  • 21:00 (NZ) New Zealand Apr Preliminary Business Confidence: No est v -4.1 prior; Activity Outlook: No est v 16.6 prior.
  • 21:00 (PH) Philippines Feb Trade Balance: -$2.2Be v -$2.4B prior; Exports Y/Y: +2.7%e v -5.2% prior; Imports Y/Y: +4.4%e v -14.9% prior.
  • 21:30 (AU) RBA Financial Stability Report.
  • 22:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: Expected to leave Standing Lending Rate unchanged at 5.50%; Expected to leave Standing Deposit Rate unchanged at 4.50%.
  • 23:30 (TH) Thailand Mar Consumer Confidence: No est v 49.4 prior; Economic Confidence: No est v 43.4 prior.
  • 23:30 (JP) Japan to sell 6-month bills.
  • 23:35 (JP) Japan to sell 5-Year JGB Bonds.

 

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