Notes / observations
- Risk aversion is simmering as concerns hang over the financial risks of the pandemic, and various analysts have raised their alarms regarding stock values
Asia:
- Australia Apr Employment Change: -594.3K v -600.0Ke (record decline); Unemployment rate: 6.2% v 8.3% e (rate really 9.6% ex people leaving the workforce)
- RBA again skipped its scheduled bond purchase transaction for the 4th consecutive session (** Note: bought no bonds this week as interest rates remain below target level)
- China is said to be considering punitive countermeasures in the United States regarding Covid-19 lawsuits
- Japanese government said it plans to add capital to companies adversely affected by coronavirus and partially funded by a second additional budget for the current FY
- BOJ Gov Kuroda reiterated stance that would not hesitate to add relief if necessary, look closely at the viral impact, to take time to reach the CPI target
- The New Zealand 2020 budget raised its debt issuance projections through 2023/24 and the net debt ratio rose to 53.6% by 2023/24
- RBNZ Gov. Orr declared in Parliament that QE remained the best program for now; operational challenges remained for negative interest rates
coronavirus:
– advertising –
- Total Global Cases 4,347,018 (+ 2.0%); Total deaths: 297.2K
Europe:
- BOE Gov. Bailey stated that BOE was ready to fund state spending on COVID-19 (** Note: said to signal that BOE is likely to increase government bond purchases)
- Italian Prime Minister Conte stated that the Cabinet had approved € 55B of stimulus measures to tackle the coronavirus crisis
- British Prime Minister Johnson said to have been warned by senior conservatives that he could “anchor” the impact of the coronavirus crisis if he raises taxes or cuts spending
America:
- Trump said to extend executive order aimed at Huawei and ZTE on protecting the US supply chain for another year
- New York Fed: Desk for discontinuous three-month repo operations next month in light of more stable repo market conditions
SPEAKERS / FIXED INCOME / FX / COMMODITIES / ERRATUM
Equities
- Index [Stoxx600 -1.71% at 328.26, FTSE -2.12% at 5,778.63, DAX -1.73% at 10,360.30, CAC-40 -1.94% at 4,260.75, IBEX-35 -1.77% at 6,514.00, FTSE MIB -1.49% at 16,927.50, SMI -1.24% at 9,513.57, S&P 500 Futures -0.11%]
- Market Focal Points / Key Themes: European indexes open lower across the line and remained under pressure during the session; underperforming sectors include financial and industrial; Earnings expected in the upcoming US session include Applied Materials, Brookfield Asset Management and Diasorin
Equities
- Consumer Staples: Suedzucker [SZU.DE] -2% (earnings)
- Energy: Electricite de France [EDF.FR] + 2.5% (earnings), RWE AG [RWE.DE] -1% (earnings), Bouygues [EN.FR] -4% (earnings)
- Healthcare: Merck [MRK.DE] -1.5% (earnings)
- Technology: TeamViewer [TMV.DE] -6% (placement)
- Telecom: Deutsche Telecom [DTE.DE] + 1% (earnings)
speakers
- ECB Economic Bulletin: To continue supporting the euro area economy in the face of the current economic disruption and increased uncertainty
- The ECB’s Panetta (Italy) reiterated the EU’s feeling that the ECB was under the jurisdiction of the European Court of Justice
- EU Jourova: Member States should gradually remove emergency powers
- The Swedish Economic Management Authority’s (ESV) budget forecasts showed GDP at -7.5% in 2020 with 7% budget deficit relative to GDP
- BOJ Gov Kuroda reiterated that the domestic economy was severely affected by coronavirus outbreaks; expected Q2 GDP to be significantly depressed. Expected economy to recover in H2 once the pandemic was contained. Emphasized that BOJ would buy any amount of JGB bond for interest control
- Japan Econ My Nishimura stated that he would seek expert opinion on the abolition of the Tokyo and Osaka emergency on May 21
- Japan’s Prime Minister Abe confirmed lifting the state of emergency in 39 prefectures (as expected); also announces to start work on an additional 2nd budget
- Chinese Foreign Ministry spokeswoman rejected claims of hackers breaking into US Covid-19 research. Called FBI hacking reports “offensive.” Any action online to sabotage disease action must be condemned (** Note: Comment in response to US warning of Chinese targeting research organization COVID-19)
- IEA Monthly Oil Report: The seed market is improving amid the historic decline in production, softening its oil demand in 2020 from -9.3M bpd to -8.6M bpd. Welcomed the further voluntary production cuts by Gulf OPEC countries and early signs of a gradual rebalancing of global oil markets
Currencies / fixed income
- The USD was stable and the JPY currency was a bit firmer as the sense of risk aversion simmered. Traders noted that there was concern about the financial risk of the pandemic and various analysts raised the alarm level regarding stock valuation. Some perceived strains in US-China relations also contribute to headwinds.
- EUR / USD holding above 1.0800
- GBP / USD was down 0.2% in the wake of BOE Gov Bailey eager to increase its QE bond purchase to support the economy.
- USD / JPY back burst 107 level helped by flows in safe harbor.
Economic data
- (FI) Finland Mar Final retail sales volume Y / Y: -0.3% v -2.7% provisionally
- (FI) Finland Apr CPI M / M: -0.3% v -0.2% ahead; Y / Y: -0.3% v + 0.6% before
- (FR) France Q1 ILO Unemployment rate: 7.8% v 8.5% e; Unemployment rate on mainland: 7.6% v 8.3% e
- (SE) Sweden Prospera Survey of inflation expectations
- (JP) Japan Apr Provisional Machine Tool Orders Y / Y: -48.3% v -40.7% upfront
- (DE) Germany Apr Final CPI M / M: 0.4% v 0.3% e; Y / Y: 0.9% v 0.8% e
- (DE) Germany Apr Final CPI EU harmonized M / M: 0.4% v 0.4% e; Y / Y: 0.8% v 0.8% e
- (DE) Germany Apr Wholesale Price Index M / M: -1.4% v -0.4% ahead; Y / Y: -3.5% v -1.5% in advance
- (CH) Swiss apr producer and import prices M / M: -1,3% v -0,3% in advance; Y / Y: -4.0% v -2.7% prior
- (TR) Turkey Mar Industrial Production M / M: -7.1% v -4.0% e; Y / Y: -2.0% v + 1.6% e
- (ES) Spain Apr Final CPI M / M: 0.3% v 0.3% e; Y / Y: 0.7% v 0.7% e
- (ES) Spain Apr Final CPI EU harmonized M / M: 0.4% v 0.4% e; Y / Y: 0.7% v 0.6% e
- (ES) Spain Apr CPI Core M / M: 1.1% v 0.5% upfront; Y / Y: 1.1% vs. 1.1% in advance
- (CN) China Apr Foreign Direct Investment (FDI) CNY Y / Y: + 11.8% v -14.1% upfront
- (IT) Italy Mar Total trade balance: € 5.7 B against € 6.1 B before; EU trade balance: € 0.6B before € 1.0B before
- (CZ) Czech Mar Current account (CZK): -0.5B v -9.5Be
Issue of fixed income
- (SE) Sweden sold SEK 500m Vs. SEK 500 million Listed in 0.125% I / L 2030 Bonds; Average Yield: -1.2407% v -1.7875% Earlier; Bid-to-cover: 2.76x vs. 2.39x in advance
- (UK) DMO sold £ 3.25B in 0.625% June 2025 Gilts; Average yield: 0.037% v 0.168% previously; Bid-to-cover: 2.55x v 2.83x upfront; Tails: 0.4bps vs. 0.3 bps before
- (IE) Ireland Debt Agency (NTMA) sold a total of € 1.5B vs. 1.0-1.5 B € stated range in 2029 and 2050 IGB bonds
Look forward to
- (EC) Egypt Central Bank interest rate: Expected to give deposit rate unchanged at 9.25%; Lending rate current at 10.25%
- 06:00 (IE) Ireland Apr CPI M / M: No est v. 0.4% upfront; Y / Y: No est v. 0.7% in advance
- 06:00 (IE) Ireland Apr CPI EU Harmonized M / M: No est 0.5% in advance; Y / Y: No est. 0.4% in advance
- 06:00 (IE) Ireland Mar Property Prices M / M: No value v -0.1% before; Y / Y: No value is 1.1% in advance
- 06:00 (CA) Canada May provisional CFIB Business Barometer: No est v 46.4 in advance
- 06:00 (CZ) Czech Republic for sale of 3-month bills
- 06:00 (RO) Romania to sell RON500M in 12-month bills
- 06:00 (RO) Romania to sell RON200M in 3.65% September 2031 bonds
- 06:30 (UK) BOE Gov Bailey on webinar
- 06:30 (UK) DMO sells £ 2.25B in 1.25% October 2041 Gilts
- 07:45 (UK) BOE buys £ 1.5B in APF Gilt purchase transaction (3-7 years)
- 08:00 (PL) Poland Mar Current account balance: € 0.6Be vs. € 0.7B before; Balance of trade: € 0.6B against € 0.5B before; Exports: € 18.9Be from € 19.5B previously; Imports: € 18.5Be against € 18.9B
- 08:00 (UK) Daily Baltic dry mass index
- 08:30 (US) Apr Import Price Index M / M: -3.2% or -2.3% upfront; Y / Y: -7.4% e v -4.1% in advance; Import price index (ex-petroleum) M / M: -0.5% or -0.1% in advance
- 08:30 (US) Apr Export Price Index M / M: -2.3% or -1.6%; Y / Y: No est = -3.6% in advance
- 08:30 (US) Initial Unemployment Requirements: 2.50Me v 3.169M before; Current requirements: 25.12Me v 22.647M in advance
- 08:30 (CA) Canada Mar Production Sales M / M: -4.5% e v + 0.5% upfront
- 08:45 (UK) BOE buys £ 1.5B in APF Gilt purchase transaction (7-20 years)
- 09:00 (RU) Russia Gold and Forex Reserve w / e May 8: No value of $ 567.3B in advance
- 9:45 AM (UK) BOE buys £ 1.5B in APF Gilt purchase transaction (20+ years)
- 10:00 (CA) Bank of Canada (BOC) review of financial system
- 10:30 (US) Weekly Natural Gas EIA Storage
- 11:00 AM (CO) Colombia Mar trade balance: -0.9% e v – $ 0.8 B before; Total Imports: $ 3.5B against $ 4.0B in advance
- 11:00 (CO) Colombia Mar Manufacturing Production Y / Y: -5.4% e 4.6% upfront
- 11:00 AM (CO) Colombia Mar Retail Sales Y / Y: -6.1% e + 13.2% up
- 11:00 (ES) ECBs The Guindos
- 11:15 (CA) Bank of Canada (BOC) Gov Poloz press conference
- 11:30 a.m. (U.S.) Treasury to sell 4-week and 8-week bills
- 14:00 (MX) Mexico’s central bank (Banxico) Interest rate decision: Expected to reduce the daily price by 50 bps to 5.50%
- 15:00 (AR) Argentina Apr National CPI M / M: No est v 3.3% before; Y / Y: No value is 48.4% in advance
- 17:00 (KR) South Korea Apr Export price index M / M: No est v -1.1% before; Y / Y: No est v -3.3% previously
- 17:00 (KR) South Korea Apr Import price index M / M: No est v -5.2% before; Y / Y: No est v -7.7% previously
- 18:30 (NZ) New Zealand Apr Production PMI: No est v 53.2 in advance (Mar data was not released)
- 19:50 (JP) Japan Apr PPI M / M: -0.8% e v -0.9% ahead; Y / Y: -1.4% e v -0.4% in advance
- 21:10 (JP) BOJ Outright Bond Buy operation; you buy 5 ~ 10 years maturity
- 22:00 (CH) China Apr Industrial Production Å / Y: + 1.5% e v -1.1% in advance; Industrial production YTD Y / Y: -5.4% e -8.4% before
- 22:00 (CH) China Apr Retail Sales Y / Y: -6.0% e v -15.8% before; Retail YTD Y / Y: -15.6% e versus -19.0% previously
- 22:00 (CH) China Apr YTD Property Investment Y / Y: -4.8% e -7.7% up front
- 22:00 (CH) China Apr Fixed Urban Assets Y / Y: -10.0% e v -16.1% before
- 22:00 (CH) China Apr Unemployment rate examined: 5.8% or 5.9% in advance
- 22:05 (NZ) New Zealand to sell bonds 2023, 2029 and 2033;
- 23:00 (CN) China sells 30-year upgraded government bond
- 23:30 (JP) Japan for sale of 3-month bills