Notes/Observations
- German inflation data highlight the headwinds in reaching the ECB 2% target
- Political woes accompany recent soft UK data
Asia:
- China Apr Manufacturing PMI: 51.4 v 51.3e
- China Securities Regulatory Commission (CSRC) eased restrictions on foreign investment in security joint ventures, removing the restriction of single foreign investors to a 30% stake in JVs
Europe:
- UK PM May accepted resignation of Home Sec Amber Rudd (Note: Resignation said to be because her department had targets for deportations and this was something that she should have been aware of, but had denied)
- EU Commissioner Malmstrom: EU Commission was preparing to respond with punitive measures if US tariffs took effect next week and stressed that its priority was high-level dialogue. Preparing 3-fold response which would be compatible with WTO rules
- German Govt Spokesperson: Chancellor Merkel/ French President Macron UK PM May agreed that US should take no trade measures against the EU, or else EU should be ready to defend its interests within the framework of the multilateral trade order
- EU Commission said to be inclined to give Italy more time to comply with budget rules. To wait for final 2018 economic data before making final decision on whether Italy was in breach of this year’s target
- Republica poll said to show that Italian politics was moving to the right wing as a political impasse carried on in the two months after the general election. Northern League Party: 22% vs 17.4% election results; Five Star support was approx. 33% and Democratic Party (PD): 17.8% vs 18.7% election result
Sovereign ratings:
- S&P affirmed Germany sovereign rating at AAA; outlook Stable
- S&P affirmed United Kingdom sovereign rating at AA; outlook Negative
- S&P affirmed Italy sovereign rating at BBB; outlook Stable
- Fitch affirmed United Kingdom sovereign rating at AA; outlook Negative
- Fitch affirmed Netherlands sovereign rating at AAA; outlook Stable
- Moody’s affirmed Finland sovereign rating at Aa1; outlook Stable
Americas:
- Expected meeting between US President Trump and North Korea’s Kim said to be expected to be held in either May or early June
- Commerce Sec Ross: White House plans to extend the steel and aluminum tariffs to some countries, but not all, following the scheduled expiration on May 1st
Economic Data:
- (DE) Germany Mar Retail Sales M/M: -0.6% v +0.8%e; Y/Y: 1.3% v 1.2%e
- (FI) Finland Feb Final Trade Balance: -0.3B v -€0.3B prelim
- (NO) Norway Mar Retail Sales W/Auto Fuel M/M: 1.1% v 0.6%e
- (NO) Norway Mar Credit Growth Indicator Y/Y: 6.3% v 6.2%e
- (DK) Denmark Mar Gross Unemployment Rate: 4.1% v 4.1%e; Unemployment Rate (Seasonally adj): 3.3% v 3.2% prior
- (ZA) South Africa Mar M3 Money Supply Y/Y: 6.4% v 7.0%e; Private Sector Credit Y/Y: 6.0% v 5.8%e
- (DE) Germany Apr CPI Saxony M/M: 0.0% v 0.4% prior; Y/Y: 1.6%v 1.5% prior
- (CH) Swiss Apr KOF Leading Indicator: 105.3 v 106.0e
- (AT) Austria Mar PPI M/M: No est v 0.0% prior; Y/Y: No est v 1.2% prior
- (TR) Turkey Mar Trade Balance: -$5.8B v -$5.8Be
- (TH) Thailand Mar Current Account: $5.8B v $4.4Be; Trade Account Balance: $3.0B v $2.3B prior, Overall Balance of Payments (BOP): $3.0B v $0.0B prior; Exports Y/Y: 6.3% v 7.7% prior; Imports Y/Y: 6.7% v 21.8% prior
- (EU) Euro Zone Mar M3 Money Supply Y/Y: 3.7% v 4.0%e
- (DE) Germany Apr CPI Bavaria M/M: -0.1% v +0.5% prior; Y/Y: 1.7 v 1.7% prior
- (DE) Germany Apr CPI Brandenburg M/M: -0.1% v +0.4% prior; Y/Y: 1.6 v 1.6% prior
- (DE) Germany Apr CPI Hesse M/M: 0.0% v 0.4% prior; Y/Y: 1.5 v 1.5% prior
- (DE) Germany Apr CPI Baden Wuerttemberg M/M: 0.0% v 0.4% prior; Y/Y: 1.7% v 1.7% prior
- (ES) Spain Feb Current Account: -€0.5B v -€0.4B prior
- (CH) SNB Total Sight Deposits for Week Ended Apr 27th (CHF): 575.2B v 575.4B prior
- (CZ) Czech Mar Money Supply Y/Y: 5.6% v 7.2% prior
- (NO) Norway Central Bank (Norges) May Bank Daily FX Purchases (NOK): -800M v -800Me
- (PT) Portugal Apr Preliminary CPI M/M: 0.7% v 1.9% prior; Y/Y: 0.4% v 0.7% prior
- (PT) Portugal Apr Preliminary CPI EU Harmonized M/M: 1.0% v 2.2% prior; Y/Y: 0.3% v 0.8% prior
- (DE) Germany Apr CPI North Rhine Westphalia M/M: 0.0% v 0.4% prior; Y/Y: 1.5%e v 1.6% prior
- (IT) Italy Apr Preliminary CPI (NIC incl. tobacco) M/M: 0.1% v 0.2%e; Y/Y: 0.5% v 0.7%e
- (IT) Italy Apr Preliminary CPI EU Harmonized M/M: 0.5% v 0.6%e; Y/Y: 0.6% v 0.8%e
- (GR) Greece Feb Retail Sales Volume Y/Y: -0.4% v +0.1% prior
- (IS) Iceland Mar Final Trade Balance (ISK): -14.0BB v -8.2B prelim
Fixed Income Issuance:
- None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.1% at 384.9, FTSE +0.4 at 7528, DAX +0.2% at 12605, CAC-40 +0.2% at 5491, IBEX-35 +0.4% at 9965, FTSE MIB +0.2% at 23982, SMI +0.4% at 8881, S&P 500 Futures +0.3%]
Market Focal Points/Key Themes:
- European Indices trades slightly higher across the board buoyed by a flurry of M&A deals. UK supermarkets are in focus after Sainsburys and Walmart owned Asda agreed to merge in a deal which valued Asda at £7.2B. Sainsburys shares trade sharply higher following the announcement, with Tesco and Morrisons trading lower in negative sympathy. Deutsche Telekom trades higher after T-Mobile and Sprint agreed to merge with Deutsche Telekom to hold ~40% of the combined company. Elsewhere IC Group and Amer Sports trade higher after IC group divested its Peak Performance unit to Amer in a DKK1.9B deal. On the earnings front WPP outperforms after a 1 update; SEB trades lower after missing on the top and bottom line. Interseve trades sharply lower after a substantial profit fall.
- In the US shares Andeaver shares to be in focus after talks Marthon Petroleum plans to acquire the company for more than $20B, Baidu to divest its Financial Services business, while DCT Industrial trust is to be acquired by Prologis in an $8.4B deal.
- Looking ahead notable earners include Dow components McDonalds, Allergan and Loews.
Movers
- Consumer Discretionary [IC Group [IC.DK] +5% (Amer Sport [AMEAS.FI] +2.1% (IC to divest Peak Performance for DKK1.9B to Amer Sports), WPP [WPP.UK] +7.3% (Earnings), Sainsburys [SBRY.UK] +15% (To merge with Asda), Tesco [TSCO.UK] -1.2% (Negative sympathy from Sainsburys/Asda merger), Morrisons [MRW.UK] +0.1% (Negative sympathy from Sainsburys/Asda merger)]
- Materials [ Glencore [GLEN.UK] -2.7% (Congo freezes assets)]
- Financials [SEB [SEBA.SE]-4.1% (Earnings) ]
- Industrials [Interserve [IRV.UK] -16.4% (Earnings), Wastec [WSH.DE] +3.0% (Earnings)]
- Telecoms [ Telit Communication [TCM.UK] +4.6% (Earnings), Deutsche Telekom [DTE.DE] +1.2% (T-Mobile and Sprint merge)]
Speakers
- EU chief Brexit negotiator Barnier: Must not have a gard border on Ireland. Determined to find a Brexit solution but risks remained. Needed rapid progress on backstop. need to use time to find operational solutions
- Ireland PM Varadkar: Progress was needed on Brexit in June and needed to finalize legal text on backstop. Barnier had unique understanding of Ireland; united with him on issue . No backstop then no withdrawal accord
- Ireland Dep PM Coveney (also foreign Min): Wanted a sensible and managed Brexit and saw extraordinary unity on Brexit. No with drawal accord without backstop
- Italy Five Star leader Di Maio said to signal that no government was possible with Democratic Party (PD)
- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) reiterated its stance to maintain the current tight monetary policy and would tighten policy further if needed. To use all available tools. The forecasts raised 2018 CPI from 7.9% to 8.4% while maintaining 2019 CPI at 6.5%
- Turkey Dep PM Simsek: single-digit inflation is hard to achieve in the short term:
Currencies
- The USD held onto recent gains as German inflation data highlighted the headwinds in reaching the ECB 2% target while political woes accompany recent soft UK data
- EUR/USD was probing the lower end of the 1.21 level as recent ECB cautious was thus echoed in German April CPI data.
- GBP/USD was softer and trading in the mid-1.37 area as UK Home Secretary Rudd resigned over an immigration scandal. The political turmoil accompanied the recent spat of soft economic data.
Fixed Income
- Bund Futures trade 15 ticks lower at 158.45 ahead of Thursday’s Euro Zone CPI flash estimate. Upside targets 159.75, while a return lower targets the 157.25 level.
- Gilt futures trade at 122.08 higher by 5 ticks, as investors no longer pricing in a May rate hike. Support continues stands at 120.85 then 120.25, with upside resistance at 123.35 then 123.85.
- Monday’s liquidity report showed Friday’s excess liquidity fell to €1.859T from €1.879T prior. Use of the marginal lending facility declined from €40M to €37M.
- Corporate issuance saw the primary market sell $26B last week
Looking Ahead
- (IL) Israel Central Bank (BOI) Mar Minutes
- (MX) Mexico Mar YTD Budget Balance (MXN): No est v -67.8B prior
- 06:00 (PT) Portugal Mar Industrial Production M/M: No est v -2.3% prior; Y/Y: No est v 2.1% prior
- 06:00 (PT) Portugal Mar Retail Sales M/M: No est v -1.1% prior; Y/Y: No est v 3.7% prior
- 06:00 (IL) Israel Mar Unemployment Rate: No est v 3.8% prior
- 06:00 (IL) Israel to sell Bonds
- 06:45 (US) Daily Libor Fixing
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (DE) Germany Apr Preliminary CPI M/M: -0.1%e v +0.4% prior; Y/Y: 1.5%e v 1.6% prior
- 08:00 (DE) Germany Apr Preliminary CPI EU Harmonized M/M: -0.1%e v +0.4% prior; Y/Y: 1.5%e v 1.5% prior
- 08:00 (ZA) South Africa Mar Trade Balance (ZAR): 3.8Be v 0.4B prior
- 08:00 (ZA) South Africa Mar Budget Balance (ZAR): No est v 20.2B prior
- 08:00 (CL) Chile Mar Unemployment Rate: 6.8%e v 6.7% prior
- 08:00 (CL) Chile Mar Industrial Production Y/Y: 12.0%e v 8.9% prior; Manufacturing Production Y/Y: 0.7%e v 3.7% prior; Total Copper Production: No est v 456.0K tons prior
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:15 (UK) Baltic Dry Bulk Index
- 08:30 (US) Mar Personal Income: 0.4%e v 0.4% prior; Personal Spending: 0.4%e v 0.2% prior
- 08:30 (US) Mar PCE Core M/M: 0.2%e v 0.2% prior; Y/Y: 1.9%e v 1.6% prior
- 08:30 (US) Mar PCE Deflator M/M: 0.0%e v 0.2% prior; Y/Y: 2.0%e v 1.8% prior
- 08:30 (CA) Canada Mar Industrial Product Price M/M: 0.7%e v 0.1% prior; Raw Materials Price Index M/M: No est v -0.3% prior
- 08:55 (FR) France Debt Agency (AFT) to sell combined €4.2-5.4B in 3-month, 6-month and 12-month bills
- 09:00 (MX) Mexico Q1 Preliminary GDP Q/Q: 0.7%e v 0.8% prior; Y/Y: 1.7%e v 1.5% prior
- 09:30 (BR) Brazil Mar Nominal Budget Balance (BRL): -58.4Be v -45.8B prior; Primary Budget Balance: -24.2Be v -17.4B prior
- 09:30 (EU) ECB announces Covered-Bond Purchases
- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 09:45 (US) Apr Chicago Purchasing Manager: 58.0e v 57.4 prior
- 10:00 (MX) Mexico Mar Net Outstanding Loans (MXN): No est v 4.056T prior
- 10:00 (US) Mar Pending Home Sales M/M: 0.5%e v 3.1% prior; Y/Y: No est v -4.4% prior
- 10:30 (US) Apr Dallas Fed Manufacturing Activity: 25.0e v 21.4 prior
- 11:00 (CO) Colombia Mar National Unemployment Rate: No est v 10.8% prior
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 15:00 (AR) Argentina Mar Industrial Production Y/Y: 4.9%e v 5.3% prior
- 16:00 (US) Weekly Crop Progress Report
