***Economic Data***
- (EU) ECB: €562M borrowed in overnight loan facility v €311M prior; €767.8B parked in deposit facility v €775.7B prior
- (CH) Swiss Mar Trade Balance (CHF): 1.7B v 3.0Be; Real Exports M/M: -2.5% v +1.0%e; Real Imports M/M: 4.6% v -12.2% prior
- (FI) Finland Mar PPI M/M: 0.4% v 0.8%e; Y/Y: 1.4% v 1.8%e
- (FI) Finland Mar Unemployment Rate: 8.5% v 8.2%e
- (CH) Swiss Mar UBS Consumption Indicator: 1.22 v 0.90 prior
- (FR) France Apr Consumer Confidence: 88 v 87e; Business Survey Overall Demand: +4 v -8 prior
- (ES) Spain Feb Mortgages-capital loaned Y/Y: -49.6 v -34.0% prior; Mortgages on Houses Y/Y: -47.1 v -41.3% prior
- (CZ) Czech Apr Business Confidence: +7.5 v +9.6 prior; Consumer Confidence: -29.3 v -29.5 prior; Composite: +0.2 v +1.7 prior
- (HU) Hungary Feb Retail Trade Y/Y: -1.4% v +0.2%e
- (ZA) South Africa Feb Leading Indicator: 134.4 v 132.9 prior
- (AT) Austria Feb Industrial Production M/M: -1.4% v +2.5% prior; Y/Y: -0.9% v +2.2% prior
- (SE) Sweden Mar Unemployment Rate: 7.7% v 8.0%e
- (IT) Italy Mar Hourly Wages M/M: 0.0% v 0.0% prior; Y/Y: 1.2% v 1.4% prior
- (UK) Mar Public Finances (PSNCR): £16.5B v £13.0Be; Public Sector Net Borrowing: £15.9B v £14.2Be; PSNB ex Interventions: £18.2B v £16.0Be
- (HK) Hong Kong Mar Trade Balance (HKD): -43.9B v -45.4Be; Exports Y/Y: -6.8% v +4.0%e; Imports Y/Y: -4.7% v +5.0%
- (IC) Iceland Mar Wage Index M/M: 1.1 v 2.1% prior; Y/Y: 12.1 v 11.3% prior
Fixed Income:
- DMO opened its syndication for its 3.75% 2052 Gilt; guidance seen 2.5-3.0bps over 4.25% 2049 Gilt
- EFSF set its price on €2.0B 2019 bonds at 80bps over mid-swaps
- (NL) Netherlands Debt Agency (DSTA) sold approx €2.0B vs. €1.5-2.5B indicated rangein 2014 and 2037 DSL Bonds
- Sold €1.0B in 3.75% July 2014 DSL Bond; Avg Yield 0.523% (No comparable)
- Sold €995M in in 4% Jan 2037 DSL Bond; Avg Yield 2.782% (No comparable)
- (DK) Denmark sold total DKK4.3B in 2014 and 2021 Bonds
- (ES) Spain Debt Agency (Tesoro) sold approx €1.94B vs. €1.0-2.0B indicated range in 3-Month and 6-Month
- Sold €725M in 3-month Bills; Avg Yield 0.634% v 0.381% prior; Bid-to-cover: 7.61x v 3.51x; Max Yield 0.720% v 0.428% prior
- Sold €1.2B in 6-month Bills; Avg Yield 01.580% v 0.836% prior; Bid-to-cover: 3.25x v 5.56x prior; Max Yield 1.628% v 0.868% prior
- (IT) Italy Debt Agency (Tesoro) sold €2.5B vs. €2.5B indicated in Zero Coupon Jan 2014 Notes (CTZ); Yield at 3.355% v 3.013% prior; bid-to-cover 1.79x v 1.93x prior
- (IT) Italy Debt Agency (Tesoro) sold €943M vs. €0.5-1.0B indicated range in I/L 2017 and 2019 BPTi Bonds
- (ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2017, 2036 and 2041 bonds
- (EU) ECB allotted €46.4B in 7-Day Main Refinancing Tender at fixed 1.00% vs. €50Be
- (HU) Hungary Debt Agency (AKK) sold HUF50B in 3-Month Bills; Avg Yield 7.29% v 7.28% prior; Bid-to-cover: 1.69x v 1.41x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Australia low CPI reading opens door future easing; its 10-year Govt yields hit all time lows.
- China Mar FX Reserves decline
- UK public sector net borrowing (PSNB) ex Interventions at highest since Nov 2010; yet DMO trims FY12/13 Gilt financing
- Spain sells Bills at higher yields and mixed bid-to-cover
- Netherland gets off its bond auction relatively easy
***Equities***
Indices: FTSE 100 +0.50% at 5691, DAX +0.90% at 6579, CAC-40 +1% at 3130, IBEX-35 +1.6% at 6953, FTSE MIB +1.9% at 14,103, SMI +0.10% at 6121
- European equity indices have rebounded from the sharp losses seen during the prior session, with today's gains being led by sectors which have recently underperformed. Overall, the equity markets have tracked the tightening in European peripheral debt spreads and lower yields for the Netherlands.
- In Belgium, shares of Solvay [SOLB.BE] have gained over 5%, after the company issued its Q1 trading update. Dutch telecom company, KPN [KPN.NL] is higher by about 3%, as the company reported in line Q1 results and reaffirmed its full year forecast. Shares of ARM Holdings [ARM.UK], Panmure Gordon [PMR.UK], Carpetright [CPR.UK], Capita Group [CPI.UK] and 888 Holdings [888.UK] are all trading lower after the release of their respective earnings reports. Homebuilder Redrow [RDW.UK] has gained over 4%, after reporting its trading update, while Associated British Foods [ABF.UK] is higher by more than 1% following its earnings release. In M&A news, Cove Energy [COV.UK] has gained over 3%, as the company noted that its board would recommend a £1.12B buyout offer from Royal Dutch Shell. Novartis [NOVN.CH] has declined by more than 1%, after reporting weaker than expected Q1 results. Swedish names Scania [SCVB.SE] and Nordea [NDA.SE] are trading higher following the release of their respective Q1 earnings reports. In Germany, Lufthansa [LHA.DE] is higher by more than 2%, supported by broker commentary, while ADVA AG [ADV.DE] has gained more than 4% after reporting earnings. In France, auto supplier Faurecia [EO.FR] is higher by over 1.5% after reporting Q1 sales. Michelin [ML.FR] is higher by over 6%, following the release of its Q1 figures.
Speakers:
- Three of the Netherlands opposition parties said to be considering cooperation on budget. The article noted that the leaders of the Liberal Democrats, the Green Party and the left-leaning Christian Party, said it was necessary to adopt measures quickly as the country could not afford any political day when faced with the current economic crisis. The three opposition parties, together with government parties VVD and CDA, have 77 seats of the 150 in parliament.
- Greece Central Bank Gov Provopoulos commented that the country needed a strategy for sustainable growth and that a deeper recession had negative impact on both deficit and debt targets. He noted that the Greek 2012 GDP was now seen contracting by nearly 5% vs. prior view of 4.5% contraction. The Greek current account deficit to GDP seen at -7.5% this year vs. prior -4.5% view. The central bank raised its 2012 CPI view to 1.2% vs. 1.0%, and stated that it could fall below 0.5% in 2013. Greece must implement economic reforms without delay as there was no time to waste after the May 6th elections. He added that the Greece economic program could succeed despite political setbacks and reiterated the view that Euro Zone was seen in a mild recession this year
- EU's Barroso commented that now was not the time to launch a new treaty
- Italy Deputy Fin Min Grilli commented that there was no room for tax cuts now
- China PBoC update details to its Q1 FX Reserves (previously released) and noted that its: China Mar FX Reserves decline by $4.69B (first monthly decline since Dec 2011) and its Gold Reserves was at 33.89M oz
- Portugal PM Coelho: Reiterates that spending is in control
- Bank of Italy's Saccomanni: Market volatility inevitable at the current time
- UK DMO cut its planned Gilt issuance for FY 12/13 to £164B from £167.7B prior
- India Finance Ministry: Road map for sale of shares in State-owned companies is in final stage of preparation
- IMF released its March report on central bank gold holdings which saw Russia, Kazakhstan, Mexico and Argentina increase their gold holdings. For Agentina it was the first increae in six years
- S&P sovereign analyst Kraemer: Rejects claim mistake was made on US Downgrade
- Fitch's Reily stated that he did not share S&P view on US debt dynamics
- Moody's reiterated that its negative UK sovereign outlook showed deficit challenge for the country and overall Euro Zone risks
Currencies:
- The Euro maintained a steady during the European morning which appeared to puzzle most dealers given the political uncertainty in Europe and rising peripheral bond yields. However one keen desk noted that upcoming FOMC meetings seemed to be rarely bullish the USD and might have played a role in the price action. The Spanish Bill auction and Dutch bond issuance seemed to go off without any hitches given the current environment. The EUR/USD stayed around the 1.3170 area throughout the morning.
- JPY softened by the mid-European morning on renewed reports circulates that BOJ to expand its asset buying scheme at its upcoming policy meeting. The debate was whether asset purchase increase will be ¥5T or ¥10T. The USD/JPY probed the 81.20 area in the session after testing 80.86 in late Asia.
- The GBP/USD was also slightly firmer. The DMO reduction in the current year Gilt issuance was seen as a positive for the pair.
Political/ In the Papers:
- The independent budget watchdog, the Irish Fiscal Advisory Council (IFAC), commented that Ireland may have to introduce more cuts this year to meet its deficit targets due to weaker than expected growth. The FT article added the watchdog estimated Ireland may need an additional €400M in austerity measures to achieve the 2012 deficit target (8.6% of GDP).
- Following the initial round of the French presidential elections, some now believe that supporters of the far-right presidential candidate Le Pen could help Sarkozy win in the second round of voting. Certain analysts believe Sarkozy will require the support of about 80% of Le Pen's supports in order to beat challenger Hollande. Opinion polls suggest that up to 60% of Le Pen's supporters could vote for Sarkozy.
***Looking Ahead***
- (AR) Argentina Apr Consumer Confidence: No est v 50.22 prior
- (ES) Spain Mar YTD Budget Balance: No est v -€20.67B prior
- (TR) EU and Turkish Officials meet in Luxembourg
- 6:00 (IE) Ireland Mar PPI M/M: No est v -0.6% prior; Y/Y: No est v 2.3% prior
- 6:00 (IC) Iceland Mar Wage Index M/M: No est v 2.1% prior; Y/Y: No est v 11.3% prior
- 6:00 (TR) Turkey to sell 2013 Zero Coupon Bonds
- 6:00 (TR) Turkey to sell 2014 and 2022 bonds
- 6:45 (EU) ECB member Gonzalez-Paramo
- 6:45 (EU) IMF's Debrun speaks on Fiscal Consolidation at EU Think Tank
- 7:00 (EU) ECB announces allotment in 7-Day Term Deposits; to drain €214.0B to offset Govt Bond purchases (SMP)
- 7:30 (TR) Turkey Apr Capacity Utilization: No est v 73.1% prior
- 7:45 (US) Weekly ICSC Chain Store Sales
- 8:00 (DE) German Fin Min Schaeuble, ECB member Mersch, and Austria Fin Min Frieden Speak at Banking Event in Berlin
- 8:00 (BR) Brazil Apr IBGE CPI IPCA-15 M/M: 0.4%e v 0.3% prior
- 8:00 (HU) Hungary Central Bank Interest Rate Decision: expected to leave the Base Rate unchanged at 7.00%
- 8:30 (CA) Canada Feb Retail Sales M/M: 0.1%e v 0.5% prior; Retail Sales Less Autos M/M: +0.6%e v -0.5% prior
- 8:55 (US) Weekly Redbook Retail Sales
- 9:00 (BE) Belgium Apr Business Confidence: -9.1e v -9.6 prior
- 9:00 (US) Feb S&P/CS Composite-20 City M/M: +020%e v -0.04% prior; Y/Y: -3.40%e v -3.78% prior; HPI Index: 135.24e v 135.46 prior
- 9:00 (MX) Mexico Feb Global Economic Indicator: 5.5%e v 4.4% prior
- 9:00 (EU) ECB Forex Reserves
- 9:30 (BR) Brazil Mar Current Account: -$4.0Be v -$1.8B prior; Foreign Direct Investment (FDI):$ 4.3Be v $3.7B prior
- 9:30 (EU) ECB calls for bids in 3-Month Tender
- 9:45 (UK) (UK) BOE to buy £1.6B in 2027-2060 Gilts in reverse auction
- 10:00 (US) Apr Consumer Confidence: 69.7e v 70.2 prior
- 10:00 (US) Apr Richmond Fed Manufacturing Index: 6e v 7 prior
- 10:00 (US) Feb House Price Index M/M: 0.1%e v 0.0% prior
- 10:00 (US) Mar New Home Sales: 318Ke v 313K prior
- 10:00 (MX) Mexico Weekly International Reserves
- 10:30 (UK) DMO to announce the size of 4.5% 2019 Gilt (May 1st) and 0.75% I/L 2034 Gilt (May 3rd)
- 11:00 (BR) Brazil to sell I/L 2016, 2018 and 2022 Bonds due 8/15/2016 - NTN-B
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 11:30 (US) Treasury to sell $30B in 4-Week Bills
- 12:00 (FR) France President Sarkozy
- 12:30 (DE) German Dep Fin Min speak on debt crisis
- 13:00 (EU) ECB member Costa
- 13:00 (DE) German Fin Min official Schuknecht speaks on German export sector
- 13:00 (US) Treasury to sell $35B in 2-Year Notes
- 13:30 (BR) Brazil Mar Tax Collections (BRL): 79.1B v 79.1B prior
- 14:00 (FR) France Presidental Candidate Hollande
- 15:00 (AR) Argentina Shop Center Sales Y/Y: No est v 17.4% prior
- 15:30 (CA) Bank of Canada Gov Carney
- 16:30 (US) Weekly EIA Energy Inventories
- (US) Republican Connecticut Primary
- (US) Republican Delaware Primary
- (US) Republican New York Primary
- (US) Republican Pennsylvania Primary
- (US) Republican Rhode Island Primary
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