Notes/Observations
SNB keeps its rhetoric unchanged; shows it was in no hurry to change rates
Norway Central Bank (Norges) tweaked its view on the 1st potential rate hike to after summer from its prior view of in the autumn (more hawkish)
Sweden Unemployment data handily beats expectations but analyst see several caveats due to design of survey
Poland Feb CPI data miss keeps door open for more potential rate cuts
Asia:
New Zealand Q4 GDP Q/Q: 0.6% v 0.8%e; Y/Y: 2.9% v 3.1%e
Australia Mar Consumer Inflation Expectation Survey: 3.7% v 3.6% prior
-Japan Fin Min Aso reiterated stance that BoJ law had the central bank forbidden from buying foreign bonds for the purpose of influencing FX rates; had to be ‘very careful’ about buying foreign bonds. BoJ was adopting easing policy to beat deflation, not influence FX moves (**Insight: BoJ was not allowed to buy foreign bonds for the purpose of influencing FX rates, since exchange rate policy was under Japan’s Finance Ministry)
Japan ruling party Diet affairs official stated that Fin Min Aso to skip G20 finance chief meeting next week (as speculated). Aso was scheduled to participate in a session of the Budget Committee of the House of Councilors on Monday to answer questions from lawmakers.
BoJ Gov Kuroda: Japan had been implementing strong QE; inflation had been steadily rising in the last two years. Reiterated to continue with powerful easing and carefully look at impact from policy
Europe:
UK Brexit Sec Davis: Could live with a transition period under 2 years if that helps secure an early deal. The govt main priority was to secure an agreement on implementation period at next week’s EU Leader summit
Forza Italia’s Berlusconi stated that would not join a govt with the Five Star Party and sought to convince right-wing ally to try to form government with support from centre-left democratic party
EU said to consider 3% ‘digital tax’ on the revenues of technology companies and could apply to technology companies that have over 100K users in Europe.
Americas:
White House confirmed Kudlow has accepted the position as NEC chairman (replaced Gary Cohn); Fed’s Quarles said to be considered by the Trump administration for Chairman of the Financial Stability Board
Economic Data:
(NL) Netherlands Jan Trade Balance: €3.4B v €4.2B prior
(NL) Netherlands Jan Retail Sales Y/Y: 4.9 v 1.3% prior
(NL) Netherlands Feb Unemployment Rate: 4.1% v 4.2% prior
(DK) Denmark Feb PPI M/M: 0.0% v 0.7% prior; Y/Y: 1.1% v 1.4% prior
(FI) Finland Jan Current Account Balance: €0.3B v €0.4B prior
(TR) Turkey Dec Unemployment Rate: 10.4% v 10.4%e
(EU) EU27 Feb New Car Registrations: 4.3% v 7.1% prior
(SE) Sweden Prospera Inflation Expectations Survey
(FR) France Feb Final CPI M/M: 0.0% v -0.1%e; Y/Y: 1.2% v 1.2%e
(FR) France Feb Final CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 1.3% v 1.3%e; CPI Ex-Tobacco Index: 101.64 v 101.60e
(CZ) Czech Jan Industrial Output Y/Y: 5.5% v 5.5%e; Construction Output Y/Y: +33.6% v -3.2% prior
(CZ) Czech Jan Retail Sales Y/Y: 5.7% v 6.3%e; Retail Sales (ex- Auto) Y/Y: 8.2% v 6.5%e
(TR) Turkey Feb Central Gov’t Budget Balance (TRY): -1.9B v +1.7B prior
(CH) Swiss Feb Producer & Import Prices M/M: 0.3% v 0.3% prior; Y/Y: 2.3% v 1.8% prior
(CH) Swiss National Bank (SNB) Interest Rate Decision: Expected to leave Sight Deposit Interest Rate unchanged at -0.75% and maintain the 3-Month Libor Range between -1.25% to -0.25%
(SE) Sweden Feb Unemployment Rate: 6.3% v 7.0%e; Unemployment Rate (Seasonally Adj): 5.9% v 6.5%e
05:00 (PL) Poland Feb CPI M/M: -0.2% v +0.2%e; Y/Y: 1.4% v 1.8%e
(NO) Norway Central Bank (Norges) left the Deposit Rates unchanged at 0.50% (as expected); brings forward its 1st potential rate hike
(ZA) South Africa Jan Total Mining Production M/M: 1.0% v 0.5%e; Y/Y: 2.4% v 1.3%e; Gold Production Y/Y: -7.7% v -12.5% prior; Platinum Production Y/Y: -13.6% v -1.4% prior
(IT) Italy Jan General Government Debt: €2.280T v €2.256T prior
Fixed Income Issuance:
(ES) Spain Debt Agency (Tesoro) sold total €4.95B vs. €4.5-5.5B indicated in 2022, 2028, 2033 and 2040 Bonds
Sold €1.81B in 0.45% Oct 2022 SPGB; Avg yield: 0.294% v 0.358% prior, Bid-to-cover: 1.45x v 1.88x prior
Sold €1.61B in 1.40% Apr 2028 SPGB; Avg yield: 1.363% v 1.580% prior, Bid-to-cover: 1.28x v 2.47x prior
Sold €719M in 2.35% July 2033 SPGB; Avg Yield:1.875% v 2.110% prior; Bid-to-cover: 1.65x v 1.87x prior
Sold €940M in 4.9% July 2040 SPGB; Avg yield: 2.167% v 2.462% prior, bid-to-cover 1.26x v 1.57x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.3% at 376.2, FTSE +0.4% at 7158, DAX +0.6% at 12313, CAC-40 +0.5% at 5261, IBEX-35 -0.1% at 9682, FTSE MIB +0.6% at 22576 , SMI -0.2% at 8853, S&P 500 Futures +0.2%]
Market Focal Points/Key Themes: Trades mostly higher across the board with notable strength in the Dax which leads the gainers, following US futures, which look to rebound after declines yesterday. Lufthansa, K+S, Munich Re, Sixt SE trade higher in Germnay following earnings and guidance. In the UK gainers include Old Mutual, Cineworld following reuslts, while PZ Cussons trades sharply lower after cutting its outlook. Unilever shares trade slightly lower after announcing a new corporate structure; Swedish retail giant H&M trades over 4% lower after missing Revenue forecasts. Looking ahead notable earners include Dollar General and Genesco.
Movers
Consumer Discretionary [Lufthansa [LHA.DE] +2.1% (Earnings), H&M [HMB.SE] -4.7% (Earnings), Sixt SE [SIX2.DE] +2.1% (Earnings), Cineworld [CINE.UK] +2.7% (Earnings), Pz Cussons [PZC.UK] -18% (Outlook)]
Industrials [Leonardo [LDO.IT] +1.8% (Earnings), Kier [KIE.UK] -4.0 (Earnings) ]
Financials [ Generali [G.IT] +1.0% (Earnings), Munich Re [MUV2.DE] +1.4% (Guidance), Old Mutual [OML.UK] +1.2% (Earnings)]
Energy [Bourbon [GB.FR] -8.3% (Earnings)]
Speakers
Swiss National Bank Policy Statement reiterated its view that CHF currency (franc) remained highly valued while FX market remained fragile. Reiterated that negative interest rates and FX intervention pledge remained essential. Reiterated that imbalances in property market persisted and would watch it closely
Norway Central Bank (Norges) Policy Statement: noted that it now saw economic conditions as stronger than expected back in Dec and now forecasted a somewhat earlier increase in interest rates to after summer 2018 compared to its Dec view of one in autumn. Housing market correction had reduced the risk of an abrupt and more pronounced decline further out
Norway Central Bank (Norges) Gov Olsen post rate decision press conference stated that interest rates would most likely to be raised after summer. Remained to be seen if August was a summer month. International growth seen higher than forecast but risk of protectionism could dampen outlook
Bank of France updated its economic outlook which raised 2018 and 2019 GDP forecasts. Raised 2018 GDP growth forecast from 1.7% to 1.9% and 2019 GDP growth forecast from 1.7% to 1.8%
UK Brexit Min Davis reiterated view that no deal is better than a bad deal. Transition period based upon existing arrangements
Italy 5-star leader Di Maio: Spoke with Northern League leader Salvini on options
Japan Fin Min Aso reiterated stance that BoJ law has the central bank forbidden from buying foreign bonds for the purpose of influencing FX rates; hade to be ‘very careful’ about buying foreign bonds
Thailand Central Bank Gov Veerathai: THB currency (Baht) aprreciating due to weaker USD and inflows of foreign funds. Could not resist the FX trend but could address excessive swings in price action
India Trade Ministry official Dwivedi: Draft gold policy could be finalized by end of month or in early April (**Note: Had been speculation that the tax could be cut by 2% by 2019)
IEA Monthly Report raised its 2018 global oil demand growth forecast from 1.4M bpd to 1.5M bpd with global demand seen at 99.3M vs. 99.2M bpd prior. OPEC Feb oil production at 32.1M (prior was 32.3M bpd) and maintained its Non-OPEC 2018 Oil supply at 59.9M bpd (compared to 58.2M in 2017)
Currencies
USD was again little changed against the major European pairs
SNB kept its rhetoric unchanged with the CHF currency seen as ‘highly valued’ thus showing it was in no hurry to change rates
The SEK currency (Krona) was firmer after Swedish Feb unemployment data handily beat expectations. EUR/SEK cross at 2-week lows to test under 10.0850 level
The NOK currency was former after the Norway Central bank tweaked its view on the 1st potential rate hike to after summer from its prior view of in the autumn. EUR/NOK hit a 4-month low of under 9.50 in the aftermath of the commentary as Norges new rate path suggested 100% chance of a Sept rate hike
Fixed Income
Bund Futures trade 4 ticks higher at 157.89 erasing earlier losses. Upside targets 157.75, while a return lower targets the155.50 level.
Gilt futures trade at 122.44 up 4 ticks approaching the January 17th high. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.85 then 123.35.
Thursday’s liquidity report showed Wednesday’s excess liquidity rose to €1.901T from €1.900T prior. Use of the marginal lending facility stayed rose from €5M to €85M.
Looking Ahead
(CO) Colombia Feb Consumer Confidence Index: No est v -5.4 prior
(CO) Colombia Q4 Current Account Balance: No est v -$2.6B prior
06:00 (GR) Greece Q4 Unemployment Rate: No est v 20.2% prior
05:50 (FR) France Debt Agency (AFT) to sell €6.5-7.5B in 2021, 2023 and 2025 Oats
06:00 (EU) Daily Euribor Fixing
06:00 (SE) Sweden to sell I/L Bonds
06:30 (UK) DMO to sell £2.5B in new 1.625% Oct 2028 Gilts
06:30 (PL) Poland to sell Bonds
06:30 (IE) Ireland Debt Agency (NTMA)to sell€500M in 12-month bills
06:50 France Debt Agency (AFT) to sell €1.25-1.75B in Inflation-Linked 2023, 2028 and 2040 bonds (Oatei)
07:00 (IE) Ireland Q4 GDP Q/Q: 1.7%e v 4.2% prior; Y/Y: 6.0%e v 10.5% prior
07:00 (IE) Ireland Q4 Current Account Balance: No est v €14.5B prior
07:00 (IE) Ireland Feb CPI M/M: No est v -0.7% prior; Y/Y: No est v 0.2% prior
07:00 (IE) Ireland Feb CPI EU Harmonized M/M: No est v -0.7% prior; Y/Y: No est v 0.3% prior
07:00 (BR) Brazil Mar FGV Inflation IGP-10 M/M: 0.4%e v 0.2% prior
07:00 (HU) Hungary Central Bank Holds Interest Rate Swap (IRS) Tender
07:30 (TR) Turkey Central Bank TCMB Survey of Expectations; Next 12 Month: No est v 9.3% prior
07:30 (CL) Chile Central bank Traders Survey – 07:45 (US) Daily Libor Fixing
08:30 (US) Initial Jobless Claims: 227e v 231K prior; Continuing Claims: 1.903Me v 1.870M prior
08:30 (US) Mar Empire Manufacturing: 15.0e v 13.1 prior
08:30 (US) Feb Import Price Index M/M: 0.2%e v 1.0% prior; Y/Y: 3.5%e v 3.6% prior; Import Price Index (ex-Petroleum) M/M: 0.3%e v 0.5% prior
08:30 (US) Feb Export Price Index M/M: 0.3%e v 0.8% prior; Y/Y: No est v 3.4% prior
08:30 (CA) Canada Feb ADP Payrolls Report
08:30 (US) Weekly USDA Net Export Sales
09:00 (RU) Russia Gold and Forex Reserve w/e Mar 9th: No est v $450.9B prior
09:00 (CA) Canada Feb Existing Home Sales M/M: No est v -14.5% prior
09:05 (UK) Baltic Dry Bulk Index
-10:00 (BE) Belgium Jan Trade Balance: No est v -€1.9B prior
10:00 (US) Mar NAHB Housing Market Index: 72e v 72 prior
10:30 (US) Weekly EIA Natural Gas Inventories
11:00 (PT) Portugal PM Costa in Parliament
11:00 (US) Treasury to announcement for upcoming 10-year TIPS auction schedule for Mar 22nd
11:45 (DE) ECB’s Lautenschaelger (Germany, SSM member)
12:30 (IL) Israel Feb CPI M/M: 0.0%e v -0.5% prior; Y/Y: 0.1%e v 0.1% prior
16:00 (US) Jan Total Net TIC Flows: No est v -$119.3B prior; Net Long-term TIC Flows: No est v $27.3B prior
