Notes/Observations

  • Iran uncertainty pushing up oil and US yields, USD benefits
  • France production data continued the theme of moderation of EU data during Q1
  • Swedish, Norwegian and Hungarian CPI data roughly in-line with expectations; concerns of prolong low inflation seem to be abating

Asia:

  • Japan Mar Labor Cash Earnings saw its fastest annual rise since June 2003 (YoY: 2.1% v 1.0%e); Real Cash Earnings rose for the 1st time in 4 months (y/y: +0.8% v -0.5%e)

Europe:

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  • ECB’s Vasiliauskas (Lithuania): ending QE in Dec was a realistic scenario. A 6 to 9 month period between end of QE and first rate hike seemed logical. Reiterated MPC view that there was no reason to dramatize the recent economic slowdown
  • Forza Party’s Berlusconi said to have denied he was considering stepping aside to allow 5-Star/Northern League to form government
  • UK House of Lords voted in favor of Brexit amendment that would allow the UK to participate in EU agencies after leaving the union (another defeat of PM May’s govt Brexit strategy)
  • UK PM May could bypass her Brexit Cabinet by asking the full Cabinet to back her plans for a customs partnership with the EU
  • France Pres Macron: France, Germany and UK regret the US decision to leave Iran deal; To work collectively on a wider Iran agreement. Iran framework will cover ballistic missiles, the post-2025 period
  • EU’s Mogherini: EU vows to uphold Iran nuclear accord despite Trump decision. Intended to protect its economic investments in Iran
  • Russia foreign ministry: deeply disappointed with Trump decision to leave the Iran nuclear deal; US move was a violation of the deal

Americas:

  • President Trump: US to withdraw from Iran nuclear agreement; to reinstate highest level of economic sanctions on Iranian regime
  • Former President Obama: Trump’s decision to withdraw from the Iran deal was misguided and a serious mistake

Energy:

  • Weekly API Oil Inventories: Crude: -1.9M v +3.4M prior

Economic Data:

  • (NL) Netherlands Mar Manufacturing Production M/M: -0.1% v -0.2% prior; Y/Y: 3.5% v 4.2% prior; Industrial Sales Y/Y: -1.8% v +6.9% prior
  • (NO) Norway Apr CPI M/M: 0.4% v 0.4%e; Y/Y: 2.4% v 2.3%e
  • (NO) Norway Apr CPI Underlying M/M: 0.5% v 0.5%e; Y/Y: 1.3% v 1.4%e
  • (NO) Norway Apr PPI (including Oil) M/M: 3.3% v 0.5% prior; Y/Y: 12.2% v 6.4% prior
  • (DK) Denmark Mar Current Account Balance (DKK): 13.9B v 13.5B prior; Trade Balance: 5.1B v 6.9B prior
  • (FR) France Mar Industrial Production M/M: -0.4% v +0.4%e; Y/Y: 1.8% v 2.8%e
  • (FR) France Mar Manufacturing Production M/M: 0.1% v 0.9%e; Y/Y: 0.4% v 2.1%e
  • (ES) Spain Mar Industrial Output NSA Y/Y: -3.6% v +3.0%e; Industrial Output SA Y/Y: 5.1% v 3.6%e, Industrial Production M/M: +1.2% v -0.1%e
  • (CZ) Czech Mar National Trade Balance (CZK): 18.7B v 21.3Be
  • (HU) Hungary Apr CPI M/M: 0.7% v 0.7%e; Y/Y: 2.3% v 2.3%e
  • (SE) Sweden Apr CPI M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.7%e; CPI Level: 327.10 v 327.24e
  • (SE) Sweden Apr CPIF M/M: 0.4% v 0.4%e; Y/Y: 1.9% v 1.9%e
  • (SE) Sweden Mar Household Consumption M/M: 0.5% v 0.5% prior; Y/Y: 3.3% v 1.7% prior
  • (CZ) Czech Apr International Reserves: $147.0B v $149.7B prior
  • (IT) Italy Mar Retail Sales M/M: -0.2% v 0.0%e; Y/Y: 2.9% v 0.1%e

Fixed Income Issuance:

  • (IN) India sold total INR150B vs. INR150B indicated in 3-month, 6-month and 12-month bills

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.3% at 391.2, FTSE +0.6% at 7608, DAX +0.3% at 12953, CAC-40 flat at 5522, IBEX-35 flat at 10167, FTSE MIB +0.8% at 24328, SMI +0.1% at 8949, S&P 500 Futures -+0.5%]
  • Market Focal Points/Key Themes: European Indices trade higher across the board, trending upwards through the session on the back of rising US futures following earnings and Geo political developments. Siemens trades higher after results and raised guidance, with AB Inbev, Imperial Brands, Dialog Semi among other gainers after earnings. Meanwhile Greggs drops sharply in the UK after a drop in profits, with Compass Group and Skanska also lower after earnings. In the M&A Space Vodafone acquired the select European assets from Liberty Global in a €18.4B deal, with Bruberry lower after Groupe Bruxelles Lambert sells its stake for £498M, in the US its reported Walmart has acquired 75% stake in Flipkart for $15B. Looking ahead notable earners include Coty, Mylan and Groupon.

Movers

  • Consumer Discretionary [ Ahold Delhaize -1.8% (Earnings), Greggs [GRG.UK] -15% (Earnings), G4S [GFS.UK] -4% (Earnings), Burberry [BRBY.UK] -6% (Groupe Bruxelles Lambert sells stake) ]
  • Industrials [Skanska [SKAB.SE] -4.7% (earnings), Fraport [FRA.DE] +1.4% (Earnings) ]
  • Consumer Staples [ Imperial Brands [IMB.UK] +4% (Earnings), Compass Group [CPG.UK] -5.7% (Earnings) ]
  • Telecom [ Vodafone [VOD.UK] +1.3% (Acquires certain European assets from Liberty Global)]
  • Technology [Siemens [SIE.DE] +4.7% (Earnings), Dialog Semi [DLG.DE] +7.3% (Earnings)]

Speakers

  • Brazil Central Bank Gov Goldfajn: Focus remained on inflation, strong USD was a global issue (not just exclusive for Brazil)
  • Turkey Fin Min Agbal said to announce a tax amnesty for overseas repatriation
  • Turkey Central Bank increases size of Lira FX swap auction size to $1.5B from $1.25B
  • Turkey President Erdogan to have meeting with Economic officials regarding the exchange rate
  • Russia Foreign Min lavrov stated that its govt remains committed to the Iranian nuclear accord.
  • Iran Parliament to vote on motion to call for ‘proportional and reciprocal’ action by govt in the aftermath of the US withdrawal from the nuclear accord

Currencies

  • USD continued its firm tone as geopolitical and trade issues remain in focus and remain at its best level for the year against the major pairs. Trump’s announcement to withdraw from the Iran nuclear accord providing some uncertainty and helping to push up oil prices and US yields.
  • EUR/USD tested the 1.1822 level before consolidating its losses.
  • USD/JPY making another approach toward the 110 handle, which has proven to be stubborn resistance in recent weeks.
  • GBP/USD initially tested below the 1.35 handle before recovering the bulk of its losses. Again the focus was turning towards Thursday’s BOE decision. The Times shadow MPC had 6 of the 9 members vote for a 25bps hike tomorrow despite recent weak economic data with 2 of the members saying QE should start to be wound down. Nonetheless the market seemed to be on the lookout for a hawkish hold by the central bank.
  • Emerging market currencies continues to struggle. Turkey announces a few measures to combat the lira weakness. The TRY currency reversed its initial losses in the session after reports circulated that President Erdogan would hold a meeting on exchange rates.

Fixed Income

  • Bund Futures trade 28 ticks lower at 158.63 as Euro Zone money markets price in roughly 75% chance of a 10bps ECB rate hike by June 2019, after fully pricing a move two weeks ago. Upside targets 159.75, while a return lower targets the 157.25 level.
  • Gilt futures trade at 121.87 lower by 26 ticks, coming off the highs made in March. Support continues stands at 120.85 then 120.25, with upside resistance at 123.35 then 123.85.
  • Wednesday’s liquidity report showed Tuesday’s excess liquidity rose to €1.900T from €1.892T prior. Use of the marginal lending facility increased from €25M to €14M.
  • Corporate issuance saw 7 issuers raise $15B in the primary market

Looking Ahead

  • 05:30 (ZA) South Africa Apr Sacci Business Confidence: No est v 97.6 prior
  • 05.30 (UK) Weekly John Lewis LFL sales data
  • 05:30 (DE) (DE) Germany to sell €1.5B in 1.25% Apr 2048 Bunds
  • 05:30 (UK) DMO to sell £2.75B in 1.625% Oct 2028 Gilts
  • 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2023 and 2028 OT bonds
  • 06:00 (PT) Portugal Q1 Unemployment Rate: No est v 8.1% prior – 06:00 (IE) Ireland Mar Property Prices M/M: No est v 1.1% prior; Y/Y: No est v 13.0% prior
  • 06:00 (CZ) Czech Republic to sell CZK15B in bonds
  • 06:45 (US) Daily Libor Fixing – 07:00 (RU) Russia to sell OFZ bonds
  • 07:00 (US) MBA Mortgage Applications w/e May 4th: No est v -2.5% prior
  • 07:00 (TR) Turkey President Erdogan to have meeting with Economic officials regarding the exchange rate
  • 08:00 (HU) Hungary Central Bank’s Apr Minutes
  • 08:05 (UK) Baltic Dry Bulk Index
  • 08:30 (US) Apr PPI Final Demand M/M: 0.2%e v 0.3% prior; Y/Y: 2.8%e v 3.0% prior
  • 08:30 (US) Apr PPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 2.4%e v 2.7% prior
  • 08:30 (US) Apr PPI Ex Food, Energy, Trade M/M: 0.2%e v 0.4% prior; Y/Y: No est v 2.9% prior
  • 08:30 (CA) Canada Mar Building Permits M/M: +2.2%e v -2.6% prior
  • 09:00 (MX) Mexico Apr CPI M/M: -0.3%e v +0.3% prior; Y/Y: 4.6%e v 5.0% prior, CPI Core M/M: 0.2%e v 0.3% prior
  • 10:00 (US) Mar Final Wholesale Inventories M/M: 0.5%e v 0.5% prelim, Wholesale Trade Sales M/M: No est v 1.0% prior
  • 10:30 (US) Weekly DOE Crude Oil Inventories
  • 13:00 (US) Treasury to sell 10-Year Notes
  • 13:15 (US) Fed’s Bostic (FOMC voter, dove) on economic outlook and monetary policy
  • 17:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate unchanged at 1.75%

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