Notes/Observations
European inflation data continues to highlight that it had yet to show more convincing signs of a sustained upward adjustment (Euro Zone flash CPI in-line but lower from month ago levels; France, Italy both miss expectations
Germany Feb Unemployment Change beats expectations as the unemployment rate matched a post German reunification record low; March GFK Consumer Confidence moved off recent 16-year highs
China February PMI data showed a softening of conditions beyond what is a normal seasonal softening of activity owing to the Chinese New Year.
Chair Powell’s semiannual Congressional testimony had a very positive outlook on growth, fiscal stimulus, and inflation
Asia:
Bank of Japan (BOJ) Gov Kuroda reiterates BOJ easing was to reach price target. Would not continue easing if CPI was at 2% in ‘stable’ manner but any normalization would be very gradual process
BOJ reduced its purchases in the over 25-year JGBs part of its daily bond buying operations (2nd time in 2018 this occurred in this part of the curve) **Note: BOJ had previously noted that day to day JGB buying operations did not indicate future course of monetary policy. Target was yield curve and not the amount of JGB purchases
Japan Jan Preliminary Industrial Production registers its largest monthly decline since March 2011 (M/M: -6.6% v -4.0%e)
China Feb Govt Official Manufacturing PMI registered its lowest level since July 2016 (50.3 v 51.2e) Govt cited the Lunar New Year Holiday for decline and expected the economy to resume stable operations
China PBoC Open Market Operation (OMO): Skip operations for a 2nd straight session
China Commerce Ministry (MOFCOM): China will take necessary measures to protect legal (trade) rights
Europe:
UK govt official stated that PM May won’t agree to the European Court of Justice (ECJ) as an arbiter of the exit deal; would offer ‘robust’ response to EU on withdrawal
EU to publish first draft of Brexit treaty which was expected to say that Northern Ireland might have to follow EU single market rules to avoid a hard border. DUP party (part of May coalition) had stated if the Irish sea became a trade border it would withdraw its support for the UK govt
German Acting Fin Min Altmaier: Govt to maintain its stern fiscal orthodoxy it pursued under Schaeuble even if the Finance Ministry post was given to a Social Democrat in next Govt
Americas:
Treasury Sec Mnuchin: the goal is for US companies to participate fairly in the China market. Had begun very high level conversations on Trans-Pacific Partnership (TPP). Rejoining the regional trade pact was an option for President Trump
District Judge Gonzalo Curiel ruled Trump administration had the authority to waive a host of environmental laws and other regulations to begin construction
Economic Data:
(IN) India Feb Manufacturing PMI: 52.1 v 52.4 prior (7th month of expansion)
(ZA) South Africa Jan M3 Money Supply Y/Y: 5.8% v 6.5%e; Private Sector Credit Y/Y: 5.5% v 6.7%e
(DE) Germany Mar GfK Consumer Confidence: 10.8 v 10.9e
(NO) Norway Jan Retail Sales W/Auto Fuel M/M: -0.4% v +0.4%e
(NO) Norway Q4 Manufacturing Wage Index Q/Q: 0.1 v 0.4% prior
(FI) Finland Q4 GDP Q/Q: 0.7 v 0.2% prior; Y/Y: 2.7 v 2.5% prior
(DK) Denmark Q4 Preliminary GDP Q/Q: 1.0% v 0.9%e; Y/Y: 1.2% v 1.0% prior
(TR) Turkey Jan Trade Balance: -$9.1B v -$9.1Be
(MY) Malaysia Jan CPI Y/Y: 2.7% v 2.8%e
(TH) Thailand Jan Current Account: $5.2B v $4.3Be; Overall Balance of Payments (BOP): +9.0B v -$1.2B prior; Trade Account Balance: $1.3B v $1.5B prior; Exports Y/Y: 16.7 v 9,3% prior; Imports Y/Y: 22.5 v 15.4% prior
(FR) France Q4 Preliminary GDP (2nd reading) Q/Q: 0.6% v 0.6%e; Y/Y: 2.5% v 2.4%e
(FR) France Feb Preliminary CPI M/M: -0.1% v +0.3%e; Y/Y: 1.2% v 1.4%e
(FR) France Feb Preliminary CPI EU Harmonized M/M: 0.0% v 0.2%e; Y/Y: 1.3% v 1.5%e
(FR) France Jan Consumer Spending M/M: -1.9% v +0.4%e; Y/Y: -1.9% v +1.1% e
(FR) France Jan PPI M/M: 0.1% v 0.0% prior; Y/Y: 0.9% v 1.7% prior
(CH) Swiss Feb KOF Leading Indicator: 108.0 v 106.0e
(CZ) Czech Jan PPI Industrial M/M: 0.5% v 0.4%e; Y/Y: 0.5% v 0.4%e
(AS) Austria Q4 Final GDP SA Q/Q: 0.8% v 0.7% prelim; Y/Y: 2.9% v 2.8% prelim
(HU) Hungary Jan PPI M/M: 0.3% v 0.0% prior; Y/Y: 3.3% v 3.9% prior
(SE) Sweden Q4 GDP Q/Q: 0.9% v 1.0%e; Y/Y: 3.3% v 3.4%e
(SE) Sweden Jan Retail Sales M/M: 0.1% v 0.4%e; Y/Y: 1.2% v 2.9%e
(SE) Sweden Jan PPI M/M: 0.8% v 1.6% prior; Y/Y: 2.5% v 2.3% prior
(SE) Sweden Dec Non-Manual Workers Wages Y/Y: 2.5% v 2.2% prior
(DE) Germany Feb Unemployment Change: -22K v -15Ke; Unemployment Claims Rate: 5.4% v 5.4%e
(CH) Swiss Feb Credit Suisse Survey Expectations: 25.8 v 34.5 prior
(PL) Poland Q4 Final GDP Q/Q: 1.0% v 1.0% prelim; Y/Y: 5.1% v 5.1%e
(PT) Portugal Feb Preliminary CPI M/M: -0.7% v -1.0% prior; Y/Y: 0.6% v 1.0% prior
(PT) Portugal Feb Preliminary CPI EU Harmonized M/M: -0.6% v -1.2% prior; Y/Y: 0.7% v 1.1% prior
(ZA) South Africa Jan PPI M/M: 0.3% v 0.3%e; Y/Y: 5.1% v 5.1%e
(EU) Euro Zone Feb Advance CPI Estimate Y/Y: 1.2% v 1.2%e; CPI Core Y/Y: 1.0% v 1.0%e
(IT) Italy Feb Preliminary CPI (NIC incl. tobacco) M/M: 0.1% v 0.2%e; Y/Y: 0.6% v 0.7%e
(IT) Italy Feb Preliminary CPI EU Harmonized M/M: -0.3% v -0.1%e; Y/Y: 0.7% v 1.0%e
Fixed Income Issuance:
(IN) India sold total INR140B vs. INR140B indicated in 3-month, 6-month and 12-month bills
(SI) Slovenia opened its book to sell EUR-denominated Mar 2028 note; guidance seen +30bps to mid-swaps
(SE) Sweden sold SEK5.0B vs. SEK5B indicated in 6-month bill; Avg Yield: -07483% v -0.8233% prior; bid-to-cover: x v 1.57x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 -0.1% at 381.8, FTSE -0.2% at 7266, DAX -0.2% at 12472, CAC-40 -0.2% at 5334 , IBEX-35 -0.5% at 9855, FTSE MIB +0.1% at 22755 , SMI -0.4% at 8952, S&P 500 Futures +0.2%]
Market Focal Points/Key Themes:
European Indices trade lower across the board following a weaker close in Wallstreet overnight following comments from new FED Chair Powell.
It was another busy day on the corporate calendar, with notable earners trading higher include Ahold Delhaize, Dialog Semi, St James Place; Notable downisde movers include German Dax component Bayer, following a miss on the top and bottom line, while ITV, Taylor Whimpy, Travis Perkins trade lower in the UK. Biomerieux trades sharply lower in France, Solvay trades lower in Belgium.
Looking ahead notable earners include Loews, Valeant and TJX Companies.
Movers
Consumer Discretionary [ ITV [ITV.UK] -5.1% (Earnings), Travis Perkins [TPK.UK] -7.8% (Earnings), Foxtons [FOXT.UK] -1.6% (Earnings), Ahold Delhaize [AD.NL] +2.7% (Earnings)]
Industrials [ Solvay [SOLB.BE] -2.5% (Earnings), Kuehne & Nagel [KNIN.CH] -4.6% (Earnings)]
Materials [Salzgitter [SZG.DE] -1.3% (Earnings)]
Healthcare [Bayer [BAYN.DE] -3.3% (Earnings), Biomereux [BIM.FR]-10% (Earnings)]
Financial [Admiral [ADM.UK] +1.6% (Earnings), St James Place [STJ.UK] +4.0% (Earnings) ]
Technology [Dialog Semi [DLG.DE] +9.3% (Earnings)]
Real Estate [Taylor Wimpey [TW.UK] -4.6% (Earnings)]
Speakers
ECB’s Hansson (Estonia) stated that General Council to continue along its policy path. He himself did not want to apply for the position of the ECB President
Bank of Japan (BOJ): announced its Bond purchases for month of March which would maintain current pace of buying to prior month levels
Currencies
USD was holding onto gains in the aftermath of Fed Chair Powell’s inaugural Humphrey Hawkins testimony. Overall the market take of the testimony was interpreted as hawkish. Dealers noted that Powell stopped short of confirming that his expectation for 2018 for 4 rate hikes but established that his personal outlook for the economy had strengthened since December
EUR/USD was lower by 0.1% just ahead of the NY morning. Numerous bits of European inflation data continued to highlight that CPI had yet to show more convincing signs of a sustained upward adjustment. pair at 1.2220 area just ahead of the NY morning.
GBP/USD was holding below the 1.39 handle as markets awaited the EU publication of its first draft of Brexit treaty.
USD/JPY lower by 0.2% but holding above the 107 level.
Fixed Income
Bund Futures trades up 7 ticks at 159.33 as Bunds are underpinned as curves bull flatten as month-end gains focus. Upside targets 159.75, while a return lower targets the157.75 level.
Gilt futures trade at 121.73 up 21 ticks as Gilts continue to attempt to push higher. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.00-122.25 zone then 122.85.
Tuesday’s liquidity report showed Monday’s excess liquidity fell to €1.845T from €1.848T prior. Use of the marginal lending facility fell to €20M from €25M prior.
Corporate issuance saw 13 issuers raise $13.3B in the primary market
Looking Ahead
05:30 (DE) Germany to sell €3.0B in 0.5% Feb 2028 Bunds
06:00 (PT) Portugal Q4 Final GDP Q/Q: No est v 0.7% prelim; Y/Y: No est v 2.4% prelim
06:00 (IL) Israel Jan Unemployment Rate: No est v 4.0% prior
06:00 (EU) Russia to sell combined RUB50B in 2024 and 2034 OFZ Bonds
06:00 (EU) EU published first draft of Brexit treaty
06:30 (CL) Chile Central Bank Traders Survey
06:45 (US) Daily Libor Fixing
07:00 (US) MBA Mortgage Applications w/e Feb 23rd: No est v -6.6% prior
07:00 (ZA) South Africa Jan Budget Balance (ZAR): No est v 13.2B prior
07:00 (ZA) South Africa Jan Trade Balance (ZAR): -1.7Be v +15.7B prior
07:00 (BR) Brazil Jan National Unemployment Rate: 12.0%e v 11.8% prior
07:00 (CL) Chile Jan Industrial Production Y/Y: 3.5%e v 0.3% prior, Manufacturing Production Y/Y: 2.7%e v -3.4% prior, Copper Production Total: No est v 536.6K prior
07:00 (CL) Chile Jan Unemployment Rate: 6.3%e v 6.4% prior
07:00 (IN) India Q4 GDP Y/Y: 7.0%e v 6.3% prior, GVA Y/Y: 6.7%e v 6.1% prior, 2018 GDP Annual Estimate Y/Y: 6.5%e v 7.1% prior
08:05 (UK) Baltic Dry Bulk Index
08:30 (US) Q4 Preliminary GDP Annualized Q/Q: 2.5%e v 2.6% advance; Personal Consumption: 3.6%e v 3.8% advance
08:30 (US) Q4 Preliminary GDP Price Index: 2.4%e v 2.4% advance; Core PCE Q/Q: 1.9%e v 1.9% advance
08:30 (CA) Canada Jan Industrial Product Price M/M: +0.5%e v -0.1% prior; Raw Materials Price Index M/M: No est v -0.9% prior
09:00 (BE) Belgium Q4 Final GDP Q/Q: 0.5%e v 0.5% prelim; Y/Y: No est v 1.9% prelim
09:45 (US) Feb Chicago Purchasing Manager: 64.0e v 65.7 prior
10:00 (US) Jan Pending Home Sales M/M: 0.5%e v 0.5% prior; Y/Y: No est v -1.8% prior
10:00 (MX) Mexico Jan Net Outstanding Loans (MXN): No est v 4.052T prior
10:00 (CO) Colombia Jan National Unemployment Rate: No est v 8.6% prior; Urban Unemployment Rate: 13.2%e v 9.8% prior
10:00 (PT) Portugal Fin Min Cendano in Parliament
10:30 (US) Weekly DOE Crude Oil Inventories
11:00 (SE) Sweden Central Bank (Riksbank) Gov Ingves speech in Lulea, Sweden
12:00 (CA) Canada to sell 2-Year Bonds
12:30 (BR) Brazil Jan Nominal Budget Balance (BRL): -8.9Be v -65.6B prior; Primary Budget Balance: +32.0Be v -32.3B prior
14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: No est v 0.4% prior; Y/Y: 2.6%e v 3.9% prior
14:00 (AR) Argentina Jan Industrial Production Y/Y: 2.6%e v 0.3% prior, Construction Activity Y/Y: No est v 14.5% prior
(MX) Mexico Central Bank (Banxico) Quarterly Inflation Report (QIR)
