Notes/Observations

– Light start to the week on the data front. ECB debate continues over May rate decision, revolving around 25bps hike, with Centeno over weekend noting ECB should slow pace or pause. Opposingly, Kazaks this morning said ECB has option for 25 or 50bps at next meeting. Euro Zone Final CPI on Wed to assist decision making for the ‘data dependent’ ECB council. Focus remains on core.

– US weekly deposits data released after the market closed on Friday showed US deposits rose for the 1st time in about one month; Meanwhile, House Speaker McCarthy (R-CA) could formally unveil his proposal regarding the debt limit’s suspension during his speech at the New York Stock Exchange later this morning.

– In terms of macro, seeing repercussions of the irregular grain exports out of Ukraine. Over the weekend, Poland announced a suspension of all Ukrainian grain imports after local farmers complained of falling prices. Worth noting a Polish election is being held later this year. This morning, Hungary said the Govt will do all possible means to also protect farmers and referred to 2.5Mt of imports from Ukraine in 2022, a notable increase from 40-60Kt in prior years. Surplus of grain is also causing price declines in Hungary. In last few minutes, Slovakia said to halt imports aswell.

– Main focus will be on earnings this week, with a calm start on Monday. Watch for STT, SCHW and MTB results in US premarket.

– Asia closed higher with NZX50 outperforming at +0.5%. EU indices are +0.1-0.5%. US futures are +0.1%. Gold +0.4%, DXY +0.2%; Commodity: Brent -0.4%, WTI -0.5%, TTF +0.9%; Crypto: BTC -1.4%, ETH -0.1%.

Asia

– China PBoC conducted CNY170.0B in 1-year Medium Term Lending Facility (MLF) with rate steady at 2.75% (Note: [CNY150B in MLF funds were maturing). Insight: Smallest injection of medium-term liquidity support since November.

– China said to refuse to allow US Sec State Blinken travel to China over concerns about pending FBI report on investigation of downed Chinese spy balloon.

– China said to be begin ‘surgical’ retaliation against foreign groups following US-led tech blockade; Commented on actions that China had taken against US companies in the past months [mentioned Lockheed Martin, Raytheon, Micron, Mintz].

– China Mar New Home Prices M/M: 0.5% v 0.3% prior (fastest rise in 21 months); Y/Y: -0.8% v -1.2% prior (smallest drop since June 2022).

Taiwan

– US warship Milius sailed thru the Taiwan Strait Sunday after China ended its war exercises around the island; US navy today described the passage as a routine transit.

– EU Foreign Policy Chief Borrell: Remarks on Taiwan Strait, Ukraine, Indo- Pacific. Stated that had specific interest in Taiwan Strait, challenging the status quo unilaterally would be unacceptable. Reiterated stance that future relationship with China would be determined by China’s behavior.

Europe

– ECB’s Nagel (Germany) reiterated view that did not believe the job on inflation was over or even mostly done; More rate hikes were needed; it was certainly too soon to stop raising rates.

– ECB’s Rehn (Finland) believed that the General Council needed to carry on and act consistently with rate hikes. Was important that we do not relax prematurely.

– ECB’s Villeroy (France) believed that most of Euro Zone monetary tightening was over. Decision to be data-dependent.

– ECB’s Centeno (Portugal): ECB should either slow the pace of rate hike or pause at the May meeting.

– ECB officials said to be pushing for complete halt in reinvestments in asset purchase program in H2 2023 as they focused squarely on taming inflation.

– BOE’s Tenreyro (dove; dissenter) stated that had y Yet to see most impact of rate rises, need to be patient over impact of past rate rises on inflation.

– Bank of England (BoE) reportedly considering urgent reform of deposit guarantee scheme. Included boosting the amount covered for businesses and forcing banks to pre-fund the system to a greater extent to ensure faster access to cash when a lender collapses.

– UK PM Sunak said to be considering cutting inheritance tax ahead of the next general election which could deliver a major boost to the Tories in opinion polls.

– France Constitutional Council clears most of the pension law that increases retirement age to 64. President Macron signed bill to raise France’s retirement age from 62 to 64.

Americas

-House Speaker McCarthy (R-CA) could formally unveil his proposal regarding the debt limit’s suspension during his speech at the New York Stock Exchange later this morning.

– Treasury Sec Yellen noted that banks were likely to become more cautious after recent bank failures; Bank credit tightening could be a substitute for further Fed interest rate hikes.

Ukraine

-Head of Russian mercenary troops ‘Wagner Group’ Prigozhin: For Russia authorities and for society as a whole, it is necessary to put some kind of strong point in Ukraine; The ideal option is to announce the end of the special military operation.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.13% at 467.54, FTSE +0.53% at 7,913.49, DAX +0.20% at 15,839.35, CAC-40 +0.10% at 7,527.23, IBEX-35 +0.18% at 9,379.57, FTSE MIB +0.30% at 27,957.00, SMI -0.04% at 11,338.00, S&P 500 Futures +0.13%].

Market focal points/key themes: European indices open generally higher and maintained modest gainst through the early hours of the session; sectors trending upwards include materials and industrials; lagging sectors include technology and financials; Rovio to be acquired by Sega; Network International confirms receipt of non-binding offer from CVC; Wendel in exclusive talks to buy Scalian; earnings expected in the upcoming US session include State Street, M&T Bank and Charles Schwab.

Equities

– Consumer discretionary: Rovio Entertainment [ROVIO.FI] +18.0% (SEGA confirms to acquire Rovio Entertainment Oyj at €9.25 per share and €1.48 per option, or €706 million in total), SAS [SAS.SE] +26.5% (updates on loan and Chapter 11 proceedings), Pagegroup [PAGE.UK] +1.0% (trading update).

– Energy: GALP Energia [GALP.PT] +1.5% (reports Q1 production).

– Financials: Barclays [BARC.UK] -1.5% (reportedly to cut 100 roles in Investment Banking Group).

– Healthcare: Transgene [TNG.FR] +4.0% (preclinical results showing TG6050 induces tumor regression by activating innate and adaptive immune responses), Orphazyme [ORPHA.DK] -3.0% (delays earnings; updates on class action in US), Morphosys [MOR.DE] -1.0% (MorphoSys and Incyte Announce Five-Year Results of L-MIND Study – post close), GSK [GSK.UK] -1.0% (EAGLE-2 and EAGLE-3 phase III trials met primary endpoint of non-inferiority to nitrofurantoin).

– Industrials: Uponor [UPONOR.FI] +42% (confirms non-binding offer), Forvia [EO.FR] +2.0% (reports Q1 sales, affirms FY23 guidance and FY25 targets), Sulzer [SUN.CH] +1.5% (reports Q1 orders, guides Q2, affirms FY23).

– Technology: TeamViewer [TMW.DE] +5.0% (analyst action – raised to buy at Berenberg), Cicor Group [CICN.CH] +3.0% (reports Q1, raises FY23).

Speakers

– ECB’s Kazaks (Slovenia) stated that ECB had option of either a 25bps or 50bps hike at the May meeting.

– Sweden Finance Ministry Updated its outlook which cut the 2023 GDP from -0.7% to -1.0% and cut the 2023 CPIF from 6.0% to 5.9%. Domestic economy had entered a downturn. Stressed that it was important that the Govt fought inflation.

– Russia Central Bank (CBR) and Russia Finance Ministry reportedly developing a mechanism to set a monthly limit on FX purchases on the domestic market by foreign companies that are exiting Russia.

Currencies/fixed income

– USD steady after hitting on-year lows last week. Fed could raise interest rates by 25 basis points in May but markets believing it would pause afterwards.

– EUR/USD just under the 1.10 level as numerous ECB members touted their view on the upcoming May policy meeting. Usual hawks like Nagel believed that 50bps was needed while on the other end of the spectrum was Centeno who argued for steady policy. Terminal rate still seen around 3.75% (implies 75bps in hike to come).
USD/JPY at 133.95 in quiet trading.

Economic data

– (DK) Denmark Mar PPI M/M: -0.5% v -0.3% prior; Y/Y: 3.8% v 8.3% prior.

– (NO) Norway Mar Trade Balance (NOK): 71.1B v 77.9B prior.

– (IN) India Mar Wholesale Prices Y/Y: 1.3% v 1.6%e.

– (CH) Swiss weekly Total Sight Deposits (CHF): 544.1B v 532.2B prior; Domestic Sight Deposits: 515.7B v 499.4B prior.

– (IT) Italy Mar Final CPI M/M: -0.4% v -0.3% prelim; Y/Y: 7.6% v 7.7% prelim; CPI Index (ex-tobacco): 118.0 v 118.5 prior.

– (IT) Italy Mar CPI EU Harmonized M/M: 0.8% v 0.8% prelim; Y/Y: 8.1% v 8.2% prelim.

– (TR) Turkey Mar Central Govt Budget Balance (TRY): -47.2B v -170.6B prior.

Fixed income issuance

– (EU) EFSF opened its book to sell EUR-denominated Dec 2028 bond; guidance seen -5bps to mid-swaps.

– (SK) Slovakia Debt Agency (Ardal) sold total €660.4M in 2025, 2032, 2035 and 2051 bonds.

Looking ahead

– 05:25 (EU) Daily ECB Liquidity Stats.

– 05:30 (DE) Germany to sell combined €7.0B in 6-month and 12-month BuBills.

– 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

– 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

– 06:00 (IL) Israel to sell combined ILS1.2B in 2025, 2026, 2029, 2032 and 2051 bonds.

– 06:55 (US) Daily Libor Fixing.

– 07:00 (BR) Brazil Apr FGV Inflation IGP-10 M/M: -0.6%e v +0.1% prior.

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

– 08:00 (PL) Poland Mar CPI Core M/M: 1.2%e v 1.3% prior; Y/Y: 12.2%e v 12.0% prior.

– 08:00 (BR) Brazil Jan Economic Activity Index (Monthly GDP) M/M: -0.1%e v +0.3% prior; Y/Y: 2.8%e v 1.4% prior.

– 08:00 (UK) Daily Baltic Dry Bulk Index.

– 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

– 08:00 (ES) Spain Debt Agency (Tesoro) size announces details of upcoming issuance.

– 08:30 (US) Empire Manufacturing: -18.0e v 24.6 prior.

– 08:30 (CA) Canada Feb Int’l Securities Transactions (CAD): No est v 4.21B prior.

– 08:30 (CA) Canada Feb Wholesale Trade Sales M/M: -1.6%e v +2.4% prior.

– 09:00 (FR) France Debt Agency (AFT) to sell €5.1-6.3B in 3-month, 6-month and 12-month bills.

– 09:00 (UK) BOE’s Cunliffe.

– 10:00 (US) Apr NAHB Housing Market Index: 45e v 44 prior.

– 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

– 16:00 (US) Feb Net Long-Term TIC Flows: No est v $31.9B prior; Total Net TIC Flows: No est v $183.1B prior.

– 16:00 (US) Weekly Crop Progress Report.

– 17:00 (NZ) New Zealand Mar REINZ House Sales Y/Y: No est v -31.1% prior.

– 19:00 (AU) Australia Mar CBA Household Spending M/M: No est v -0.1% prior; Y/Y: No est v 4.5% prior.

– 19:30 (AU) Australia Weekly ANZ Roy Morgan Consumer Confidence: No est v +0.1 prior.

– 21:30 (AU) Reserve Bank of Australia (RBA) Apr Minutes.

– 22:00 (CN) China Q1 GDP Q/Q: 2.1%e v 0.0% prior; Y/Y: 3.8%e v 2.9% prior; GDP YTD Y/Y: 3.8%e v 3.0% prior.

– 22:00 (CN) China Mar YTD Industrial Production Y/Y: 2.6%e v 2.4% prior.

– 22:00 (CN) China Mar YTD Retail Sales Y/Y: 3.7%e v 3.5% prior.

– 22:00 (CN) China Mar YTD Fixed Urban Assets Y/Y: 5.7%e v 5.5% prior.

– 22:00 (CN) China Mar YTD Property Investment Y/Y: -4.7%e v -5.7% prior; Residential Property Sales Y/Y: No est v 3.5% prior.

– 22:00 (CN) China Mar Surveyed Jobless Rate: 5.5%e v 5.6% prior.

– 23:00 (TH) Thailand Central Bank to sell THB60B in 3-month bills; Avg Yield: % v 1.4213% prior; bid-to-cover: x v 1.87x prior.

– 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.