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Market Update – European Session: European PMIs Remain In Expansion While Unemployment Continues Its Improving Trend

European PMIs remain in expansion while unemployment continues its improving trend

Notes/Observations

ECB begins process of scaling back assets purchases in April (from €80B to €60B/month)

European PMI Manufacturing data overall shows region on firmer footing (Beats: Swiss, Italy, Norway, while UK missed expectations)

European unemployment continued its improving trend

Overnight:

Asia:

China Mar Caixin PMI Manufacturing : 51.2 v 51.7e (9th consecutive expansion)

Australia Feb Retail Sales M/M: -0.1% v +0.3%e

Japan Q1 Tankan Large Manufacturiers Index: 12 v 14e

President Trump to discuss North Korea threat with China President this week; Will handle North Korea without China’s help if need to; if China is not going to solve North Korea then we will (**Note: China’s Xi to meet Trump during April 6-7th at Mar-a-Lago)

Europe:

Chancellor Hammond: Brexit talks to be ‘parallel’ process; willing to have constructive negotiations to reach best possible exit deal

France Presidential Melenchon reiterates that has no intention to make way for Hamon. (**Insight: By joining forces Melenchon/Hamon would put the Left into 2nd round of upcoming elections)

S&P revised Spain outlook to Positive from Stable; affirms Spain sovereign rating at BBB+

Canadian rating agency DBRS affirmed France sovereign rating at AAA; trend Stable

Moody’s affirmed Netherlands sovereign rating at Aaa; outlook Stable

Fitch affirmed Russia sovereign debt rating at BBB- (lowest level of investment grade); outlook Stable

Economic Data

(IE) Ireland Mar Manufacturing PMI: 53.6 v 53.8 prior (46th month of expansion)

(RU) Russia Mar Manufacturing PMI: 52.4 v 52.5e (8th month of expansion)

(IN) India Mar Manufacturing PMI: 52.5 v 50.7 prior

(JP) Japan Mar Domestic Vehicle Sales Y/Y: 13.8% v 13.4% prior

(SE) Sweden Mar PMI Manufacturing: 65.2 v 60.0e

(TR) Turkey Mar CPI M/M: 1.0% v 0.6%e; Y/Y: 11.3% v 10.7%e; CPI Core Y/Y: 9.5% v 8.8%e

(NL) Netherlands Mar Manufacturing PMI: 57.8 v 58.3 prior (44th month of expansion)

(NO) Norway Mar Manufacturing PMI: 54.7 v 52.8e

(HU) Hungary Mar Manufacturing PMI: 56.0 v 58.0e (15th month of expansion)

(PL) Poland Mar PMI Manufacturing PMI: 53.5 v 54.6e (28th month of expansion)

(TR) Turkey Mar Manufacturing PMI: 49.8e (1st expansion in 13 months and highest since Feb 2014)

(ES) Spain Mar Manufacturing PMI: 53.9 v 54.7e (42nd month of expansion)

(CZ) Czech Mar Manufacturing PMI: 57.5 v 57.5e &th month of expansion)

(CH) Swiss Mar Manufacturing PMI: 58.6 v 58.0e (highest level in over six years)

(IT) Italy Mar Manufacturing PMI: 55.7 v 55.1e (7th month of expansion and the highest since Mar 2011)

(FR) France Mar Final Manufacturing PMI: 53.3 v 53.4e (confirms 6th month of expansion)

(DE) Germany Mar Final Manufacturing PMI: 58.3 v 58.3e (confirms its 28th month of expansion and highest since Apr 2011)

(EU) Euro Zone Mar Final Manufacturing PMI: 56.2 v 56.2e (confirms 44th straight month of growth and highest since April 2011)

(GR) Greece Mar Manufacturing PMI: 46.7 v 47.7 prior (7th month of contraction)

(IT) Italy Feb Preliminary Unemployment Rate: 11.5% v 11.9%e

(UK) Mar PMI Manufacturing: 54.2 v 55.0e (8th month of expansion)

(EU) Euro Zone Feb Unemployment Rate: 9.5% v 9.5%e (lowest since 2009)

Fixed Income Issuance:

(NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 12-month bills; Yield: 0.48% v 0.48% prior; Bid-to-cover: 2.72x v 2.74x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Index snapshot (as of 10:00 GMT)**

Indices [Stoxx50 flat at 3,499, FTSE flat at 7,320, DAX +0.2% at 12,341, CAC-40 -0.1% at 5,116, IBEX-35 -0.3% at 10,431, FTSE MIB -0.2% at 20,459, SMI +0.2% at 8,671, S&P 500 Futures -0.2%]

Equities

Consumer discretionary [Burberry BRBY.UK +2% (Strategic partnership with Coty), ITV ITV.UK -2% (Fading Friday spike before close)] Aurulius +5% (Responds to Gotham’s assertions)]

Industrials: [Schmolz+Bickenbach STLN.CH +6.5% (Feb trading update), Aurubis NDA.DE +2.0% (

Technology: [Imagination Tech IMG.UK -65% (Apple to no longer use IMG intellectual property in its new products), Sartorius SRT.DE -1.3% (Acquisition, raised guidance)

Speakers

ECB’s Coeure (France): Expect new cash collateral facility to help reduce tensions but not a panacea. Governing Council will continue to monitor there development

ECB’s Rimsevics (Latvia): Slow lending affecting economy; ECB stimulus is not flowing into economy

Turkey Econ Min Zeybekci: FX impact on inflation to continue

Japan PM Abe’s advisor Nakahara: BOJ should make a clean break from its current policy approach after Gov Kuroda’s term ends next spring

Libya’s Sharara oil field said to resume production over the weekend

Nigeria Nupeng Oil union said to begin strike over improved pay

Currencies

FX markets began the new quarter on relatively quiet footing.

April marked the beginning of the scaling back of ECB bond buying purchases from €80B to €60B per month until the program ends in Dec. Various ECB speakers noted that THE PROCESS WAS not any signal start of tapering as it had the option to be more expansionary if needed.

EUR/USD little changed at 1.0670 area.

GBP/USD was slightly lower as UK Mar Manufacturing PMI again missed expectations. The pair was softer by 0.5% in the lower end of the 1.25 handle just ahead of the NY morning.

Fixed Income:

Bund futures trade at 161.66 up 24 ticks trading at 1 month highs despite strength in Stocks. Continued upside targets 161.87 followed by 162.18 then 162.33. Analysts eye support at 161.21 followed by 160.06 then 160.74.

Gilt futures trade at 127.53 down 4 ticks, little changed with Mar PMI Manufacturing data coming slightly short of estimates but still marking an 8th month of expansion. Resistance remains at 127.69 followed by 127.89. Support remains at 127.05 then 126.86 followed by 126.40. Short Sterling futures curve continues to flatten with the rise in Gilts with the Jun17Jun18 spread trading down to 17/17.5bp down 2bp on the day.

Monday’s liquidity report showed Friday’s excess liquidity fell to €1.512T a fall of €22B from €1.534T prior. Use of the marginal lending facility rose to €285M from €110M prior.

Corporate issuance saw Q1 end with $399B being issued marking an active start to the year. Looking ahead analysts eye weeks issuance to in the region of $25B.

In Euro denominated issuance €21.8B came to market last week via 36 issuers and 41 tranches. Issuance peaked on Thursday when €6.6B came to market.

Looking Ahead

06:45 (US) Daily Libor Fixing

07:00 (CA) Canada Feb Leading Indicator M/M: No est v 0.6% prior

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:25 (BR) Brazil Central Bank Weekly Economists Survey

08:00 (CZ) Czech Mar Budget Balance (CZK): No est v 3.7B prior

08:00 (BR) Brazil Mar PMI Manufacturing: No est v 46.9 prior

08:00 (CL) Chile Feb Retail Sales Y/Y: 0.7%e v 3.8% prior

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions

08:00 (ZA) South Africa Mar Naamsa Vehicle Sales Y/Y: No est v -0.1% prior

08:15 (UK) Baltic Dry Bulk Index

08:50 (FR) France Debt Agency (AFT) to sell combined €4.7-5.9B in 3-month, 6-month and 12-month BTF Bills

09:00 (SG) Singapore Mar Purchasing Managers Index: 50.8e v 50.9 prior; Electronic Sector: No est v 51.4 prior

09:30 (CA) Canada Mar Manufacturing PMI: No est v 54.7 prior

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

09:45 (US) Mar Markit Final Manufacturing PMI: 53.5e v 53.4 prelim

09:45 (US) Fed’s Dudley (dove, FOMC voter) spekas in NY

10:00 (US) Mar ISM Manufacturing: 57.2e v 57.7 prior; Prices Paid: 66.0e v 68.0 prior

10:00 (US) Feb Construction Spending M/M: +1.0%e v -1.0% prior

10:00 (MX) Mexico Feb Total Remittances: $2.2Be v $2.1B prior

10:00 (MX) Mexico Central Bank Economist Survey

10:00 (BR) Brazil Feb CNI Capacity Utilization: No est v 77.2% prior

10:30 (MX) Mexico Mar Manufacturing PMI: No est v 50.6 prior

10:30 (CA) Bank of Canada (BOC) Q1 Senior Loan Officer Survey: No est v -2.6 prior; Business Outlook Future Sales: No est v 26 prior

11:00 (CO) Colombia Feb Exports: $2.9Be v $2.6B prior

11:30 (US) Treasury to sell 3-Month and 6-month Bills

12:00 (IT) Italy Mar New Car Registrations Y/Y: No est v 6.2% prior

13:00 (MX) Mexico Mar IMEF Manufacturing Index: 48.0e v 46.8 prior; Non-Manufacturing Index: 47.9e v 46.2 prior

(BR) Brazil Mar Trade Balance: $6.9Be v $4.6B prior; Exports: $20.4Be v $15.5B prior; Imports: $13.4Be v 10.9B prior

15:00 (US) Fed’s Harker (hawk, FOMC voter) speaks in Philadelphia

17:00 (US) Fed’s Lacker (hawk, non-voter) speaks in Virginia

(RO) Romania Mar International Reserves: No est v $38.4B prior

(RU) Russia Mar Sovereign Wealth Fund Balances: Reserve Fund: No est v $16.1B prior; Wellbeing Fund: No est v $72.6B prior

(AR) Argentina Central Bank Expectation Survey

(IT) Italy Mar Budget Balance: No est v -€8.2B prior

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