From Eric Peters, CIO of One River Asset Management, here is a topical anecdote, as well as a review of the key events in the past week. Weekend Notes “Where’s the beef?” bellowed Biggie Too. “Health care, regulation reform, tax cuts – where’s it at?” continued the Chief Global Strategist for one of those too big to fail affairs. “You boys were always gonna face this moment,” barked Biggie, sliding into a slow groove. “But here’s the thing brotha. The market doesn’t care about health care - you know that. Poor people care about health care. And the market doesn’t care about poor people. No one cares about poor people.” Biggie nodded, smiled, a big golden smile. And pulled out a roll; crisp $100 notes. “The market only cares about taxes, regulations baby. It’s all about the Benjamins.” Overall: “You cannot spend all the money on drinks and women, then ask for help,” said some Dutch dude with an utterly unpronounceable name, trying on a little Trump, just to see how it feels to call it as you see it. “Dijsselbloem lost a great opportunity to be quiet,” responded Italy’s failed former prime minister Renzi. “Dijsselbloem’s European vision is evident in the union’s policies: a presumed economic, moral and even cultural superiority coming from northern countries, to the detriment of the South,” announced the Five Star Movement, memories of Berlusconi’s Bunga Bunga parties echoing off the ruins of Caligula’s castle. “It’s worth bearing in mind that the UK helped restructure Germany’s post-war debts at the 1953 London conference,” said Sir Bill Cash, presiding over the EU Exit Committee, reminding Europeans of the devastation inflicted by Germany. You see, Sir Cash wants nothing of the E60bln Brexit bill. “It might be worth tactfully reminding people - not one of my strongest points - that there’s a realistic position here that we don’t really owe anything to the EU,” concluded Cash, Europe’s endless war with itself always a scratch below the surface. The European Central Bank urged Brussels to toughen sanction procedures against governments who persistently fall foul of its economic rules, as over 90 per cent of its reform recommendations had been ignored by member states last year. “If they weren’t ashamed, they would revive the gas chambers,” said Turkish President Erdogan, referring to the Dutch and Germans for their opposition to his revival of the Ottomon Empire. “Turks in Europe should have five children, not three, because you are the future,” ordered Erdogan, fanning the Far Right’s anti-Islam flames. And in America, the Republican majority refused to deny 24mm poor people health care. Then moved on to our only real problems, like over-regulation and complex taxation. Week-in-Review (expressed in YoY terms): Mon: May to trigger Article 50 on Mar 29th, German PPI +3.1% (5yr high), Macron takes lead in 1st round poll with 25.5% (Le Pen 25.0%), Comey testifies on Russia links to Trump (discredits Trump claims of Obama wiretapping and other conspiracy theories), S&P -0.2%; Tue: Japan sovereign CDS hits 2008 lows (45bps), RBA warns of housing market froth, Macron performs well in debate (Le Pen shows poorly), UK CPI +2.3% (3.5yr high), UK home prices +6.2%, US Q4 current account deficit -0.1 to 2.4%, fears rise that Trump running into legislative obstacles, Trump record low 37% approval rating (58% disapproval), small-cap stocks surrender 2017 gains, S&P -1.2% (largest fall since Oct); Wed: Chinese banks ordered to rein in home loan growth (iron ore -6%), Japan exports +11.7% (+28.2% to China, +0.4% to US) imports +1.2%, UK terror attack (4 dead), EU current account surplus 15mth low, US oil stocks jump (imports surge), existing home sales slow (limited supply, high prices), S&P +0.2%; Thur: EU banks borrow E223bln from TLTRO, UK retail sales +3.7% (online +20.7%), Fed’s Williams “3-4 rate hikes make sense in 2017,” new home sales rise most since July, unemployment claims +15k to 258k (highest since Jan), S&P -0.1%; Fri: Japan PMI -0.7 to 52.6, Egypt’s Hosni Mubarak released, Russia cuts 25bps to 9.75% (1st cut in 7mths), EU PMIs hit 6yr high, Le Pen meets Putin and says “Russia will not interfere in French elections,” Pope Francis urges Europe to “show solidarity” as the antidote to populism, Portuguese budget deficit 40yr low of 2.1%, US drillers wkly rig count +21 to 652 (vs 372 last March), US M&A deals -21% vs Feb 2016, Trump approves Keystone pipeline, Republicans abandon healthcare vote (Trump moves on to tax reform), VIX index jumps to 2017 high of 14.16 (settled 12.96), Mnuchin “Tax reform much simpler than healthcare,” durable goods orders rise, S&P -0.1%; Sat: 60th anniversary for the EU. Weekly Close: S&P 500 -1.4% and VIX +1.68 at +12.96. Nikkei -1.3%, Shanghai +1.0%, Euro Stoxx -0.5%, Bovespa -0.6%, MSCI World -1.0%, and MSCI Emerging +0.2%. USD rose +1.0% vs Australia, +0.6% vs Brazil, and +0.2% vs Canada. USD fell -1.6% vs Mexico, -1.3% vs Yen, -0.8% vs Turkey, -0.7% vs Sterling, -0.6% vs Euro, -0.5% vs Russia, -0.3% vs China, -0.3% vs Chile, -0.1% vs Indonesia, and -0.1% vs India. Gold +1.3%, Silver +2.0%, Oil -2.3%, Copper -1.8%, Iron Ore -7.9%, Corn -3.3%. 5y5y inflation swaps (EU -3bps at 1.65%, US -2bps at 2.39%, JP flat at 0.49%, and UK +8bps at 3.51%). 2yr Notes -6bps at 1.26% and 10yr Notes -9bps at 2.42%. YTD Equity Indexes: Poland +20.9% priced in US dollars (+14.1% priced in zloty), Argentina +18.9% in dollars (+16.5% in pesos), Mexico +18.1% (+7.5%), Chile +16.5% (+14.7%), Korea +15.9% (+7.0%), India +15.6% (+11.3%), Taiwan +14.3% (+7.0%), Spain +12.9% (+10.2%), Singapore +12.9% (+9.1%), Turkey +12.9% (+15.7%), South Africa +12.3% (+1.7%), Austria +10.7% (+8.1%), Brazil +10.7% (+6.0%), HK +10.5% (+10.7%), Czech Republic +9.2% (+6.6%), Netherlands +8.4% (+5.9%), NASDAQ +8.3% (+8.3%), Malaysia +7.8% (+6.3%), Germany +7.6% (+5.1%), Switzerland +7.6% (+4.8%), Italy +7.5% (+5.0%), Sweden +7.4% (+4.1%), Australia +7.2% (+1.5%), Euro Stoxx 50 +7.2% (+4.7%), Indonesia +6.9% (+5.1%), Belgium +6.4% (+3.9%), China +6.2% (+5.3%), Japan +6.0% (+0.8%), Thailand +5.9% (+2.0%), France +5.8% (+3.3%), Finland +5.0% (+2.5%), Philippines +4.9% (+6.3%), Denmark +4.7% (+2.3%), S&P 500 +4.7% (+4.7%), New Zealand +4.1% (+2.8%), UK +4.0% (+2.7%), Israel +4.0% (-1.3%), Ireland +3.9% (+1.5%), Portugal +3.9% (+1.4%), Colombia +3.3% (-0.4%), Hungary +2.4% (+0.3%), Norway +2.4% (+0.8%), Canada +1.6% (+1.0%), Greece +1.2% (-1.2%), Russell -0.2% (-0.2%), UAE -1.1% (-1.1%), Russia -1.9% (-8.6%), and Saudi Arabia -4.5% (-4.6%).
European stocks are modestly in the green as gains in banks and oil companies offset declines in miners. Asian stocks and S&P futures rise with Emerging-market stocks extending their longest winning streak since August on the back of the 5th consecutive daily drop in the USD. The euro rose to the strongest in six weeks after a French presidential debate eased market concerns about a possible Le Pen win: the first French debate was reportedly won by centrist Emmanuel Macron. For those who missed it, last night saw the first televised debate between the candidates. Those who tuned in may be feeling a little jaded as the debate ended up lasting a whopping three and a half hours. There were plenty of head to head moments between Macron and Le Pen in particular which included much finger pointing and also amusing bouts of sarcasm. Immigration was unsurprisingly a hot topic while the exchanges also moved over to the economy and various policy measures. The general feeling was certainly one of it being lively however. Markets were largely waiting for some sort of conclusion about who came out on top though and following the debate an Elabe poll (covering 1157 respondents) found that Macron was seen as the winner of the debate at 29% with Melenchon second with 20%. Fillon and Le Pen came in joint third at 19% and Hamon came in fifth at 11%. An Opinionway poll showed 25% for Macron; in both polls Fillon and Le Pen were tied at 19%. "From the point of view of international investors, this is a positive as it keeps France's position in the euro zone secure, or at least not weaker," said DZ Bank analyst Rene Albrecht. As a result, the average probability of Macron win implied from betting odds climbed 2ppts to over 63%... ... boosting the Euro and peripheral bonds while pressuing Bunds. It’s worth noting that there are another two debates to come prior to the first round election on April 23rd. It's also worth noting that Hillary Clinton was seen as the comfortable winner in all the US Presidential debates. Taking a cue from the debate polling which showed Macron as the most convincing, German bonds slid from the open, with French election risks seen waning. Losses extended in bunds after stronger-than-expected U.K. inflation data pressured gilts lower, with 10y U.K. yields climbing by around 6bps. MPC-dated SONIA rate jumps to price in almost one full hike by August 2018. The easing of French election risk has firmed rate-hike expectations for the ECB. Euribor strip has bear steepened from the open, with market pricing now showing over 20bps of rate increases priced by Sept. 2018. ECB rate expectations have seen the 5y sector on the German curve underperform, now cheaper by around 2bps on the 2s5s10s fly. French bonds meanwhile opened higher after the debate, with 10y yields dropping as much as 4bps. The move was quickly faded, as has been repeatedly observed in similar bouts of optimism around the French election. OATs now little changed. The biggest winner, however, was the Euro, which rose to just shy of 1.08, the strongest in more than a month. “When you consider how many people have been worried about this election and how cheap the euro is, if that risk were to go away then there’s the potential for money to flow into Europe,” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley in London. “That would be another form of volatility. There’s always a risk of large moves when valuations are extreme -- and the euro is quite cheap.” The dollar index fell below 100 for the first time since early February and was down almost half a percent on the day. The currency was on the defensive after Chicago Federal Reserve President Charles Evans reinforced the perception that the U.S. central bank will not accelerate the pace of its interest rate hikes. He said on Monday that two more interest rate hikes this year were likely, disappointing investors who had anticipated rates would be increased more quickly. The greenback is on its longest losing streak since November after the Federal Reserve’s dovish message on the speed of monetary tightening last week. European stock markets opened higher after a rally in Asia, where MSCI's broadest index of Asia-Pacific shares outside Japan hit 21-month highs. U.S. stock futures pointed to a positive start for Wall Street, which had suffered on Monday as investors worried that President Donald Trump's plan to cut taxes and boost the economy would take longer than expected to realize. South Korea led gains among Asian emerging markets, with the Kospi jumping 1 percent to the highest since July 2011. Hyundai Motor Co. climbed 8.6 percent amid market speculation over a possible stake purchase by Elliott Management. The Stoxx Europe 600 Index added less than 0.1 percent at 9:48 a.m. in London. Banking stocks outperformed, led by Italian and French lenders, as worries over the French presidential election further abated. Mining stocks lost ground, trimming recent sharp gains. Futures on the S&P 500 rose 0.1 percent. The benchmark gauge fell 0.2 percent on Monday. The 10-year U.S. Treasury yield briefly fell to two-week lows following the comments to 2.461 percent. It last stood at 2.48%. Oil prices rallied on expectations that an OPEC-led production cut to prop up the market could be extended. Prices for front-month Brent crude futures LCOc1, the international benchmark for oil, gained 1 percent to $52.13 per barrel. OPEC members increasingly favor extending the output curb beyond June to balance the market, sources within the group said, although they added this would require non-OPEC members such as Russia to also step up their efforts. Elsewhere, Deutsche Bank was in focus as the subscription period for a capital raising began on Tuesday. Also today, Nike, FedEx, and General Mills are among companies scheduled to publish results * * * Bulletin Headline Summary from RanSquawk Sentiment in Europe received a lift from the open as participants reacted to a perceived strong performance from Macron in last night's French presidential debate. GBP ramps higher after inflation rises to the highest level since Sep'13 Looking ahead, focus will Canadian retail sales, API crude report as well as comments from Fed's George and Mester. Market Snapshot S&P 500 futures up 0.2% to 2373.5 STOXX Europe 600 up less than 0.1% to 378 MXAP up 0.1% to 149 MXAPJ up 0.3% to 483.23 Nikkei down 0.3% to 19,455.88 Topix down 0.2% to 1,563.42 Hang Seng Index up 0.4% to 24,593.12 Shanghai Composite up 0.3% to 3,261.61 Sensex down 0.3% to 29,432.19 Australia S&P/ASX 200 down 0.07% to 5,774.62 Kospi up 1% to 2,178.38 German 10Y yield rose 2.8 bps to 0.468% Euro up 0.5% to 1.0795 per US$ Brent Futures up 0.9% to $52.06/bbl Italian 10Y yield rose 0.7 bps to 2.364% Spanish 10Y yield fell 0.4 bps to 1.843% Gold spot down 0.4% to $1,229.24 U.S. Dollar Index down 0.4% to 100.01 Top Overnight News from BBG PPG Said to Ready New Akzo Offer After Failed $22.4 Billion Bid Fed’s Dudley Says Wells Fargo Shows Bank Culture Needs Improving Google Overhauls Policies After Uproar Over YouTube Videos Deutsche Bank Said to Face Regulatory Fines Over Currency Trades Mideast Airlines Say New U.S. Restrictions Will Force Changes BlackRock Likes Property Even After Yellen Calls Prices ‘High’ BMW Sees 2017 Profit Rising Slightly as Spending Exceeds Target Banking Panel Senators Make Bipartisan Call for Growth Proposals Baidu’s iQiyi Signs Pact With Warner Bros. on Movie Rights Chevron Says New LNG Projects Unlikely in West Australia NYSE Says It Has Identified, Fixed Cause of Arca Disruption In Asian Markets, the major equity indices traded somewhat mixed following a similar lead from Wall St., where financials underperformed and participants were indecisive amid a lack of tier-1 data releases. ASX 200 (-0.1%) was dampened by weakness in telecoms and underperformance in the financial sector, while Nikkei 225 (-0.4%) lagged on return from an extended weekend, although downside was stemmed as USD/JPY nursed losses. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp. (+0.3%) were kept afloat following the continued liquidity operations by the PBoC which resulted in a 2nd day of net injections. Finally, 10 year JGBs traded higher amid a dampened risk tone in Japan and with the BoJ present in the market for a total JPY 1.15tIn of JGBs ranging from 1-10yr maturities. PBoC injected CNY 50bIn 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 10bIn in 28-day reverse repos Top Asian News SoftBank Is Said to Invest in WeWork at $17 Billion Valuation Downer Makes A$1.26 Billion Takeover Offer for Spotless McDonald’s China Says It’s Not Affected by Ban on Brazil Meat Billionaire Damani’s Avenue Supermarts Shares Double on Debut Modi-Backed ETF May Fuel India Sales After $1.4 Billion Haul China H Shares Rise to Highest Since 2015; Power Producers Gain M1 Bids May Not Come Above S$2.20/Share, Religare’s Jin Says India’s HPCL to Use Honeywell Clean-Fuel Technology Freeport Indonesia Restarts Copper Concentrate Mill: Spokesman European risk sentiment received a lift from the open as participants reacted to a perceived strong performance from Macron in last night's French presidential debate. As such European equities opened higher, with Euro Stoxx 50 spending much of the session higher by around 0.5%. On a sector breakdown, financials are among the best performers as Deutsche Bank trades higher on the session after going ex-subscription to their capital raising plans. Elsewhere Akzo Nobel are among the best performers on a stock specific basis as M&A news continues to circulate, with pre-market reports today suggesting PPG is preparing a renewed takeover offer for the Co. The notable data of the session, came in the form of UK CPI, with the higher than exp. reading (Y/Y 2.3% vs. Exp. 2.1%) seeing gilts underperform and sending GBP/USD towards 1.2450. The GBP strength has further exacerbated pressure on the USD, with the USD-index slipping below 100, while the French presidential election saw EUR/USD touch 1.0800. Fixed income markets have been pressured by the aforementioned risk on sentiment, with Bunds down 35 ticks on the session, while OATs saw a paring of some of their initial losses in the wake of reports that PM Cazeneuve asked govt. members not to back Macron. Top European News EU Makes U.K. Wait to Start Brexit Talks as Trigger Date Set Macron on Top After First Debate of French Presidential Election Porsche SE Posts Profit as Owner Clan Plans to Buy Out Piech Swiss Watch Slump Extends Record Decline as U.S. Exports Slide Fingerprint Cards Withdraws Dividend Plan as Revenue Plummets Abertis Gives Information on Ruling on AP-7 Accounting Treatment Swedish Casino Company Takes Breather From Deals to Drive Growth Poland Needs Innovation to Catch Up With West, World Bank Says In currencies, the Bloomberg Dollar Spot Index slipped by 0.2 percent, following a 0.1 percent drop Tuesday. The euro was up by 0.5 percent at $1.0796, while it rose versus all of its G-10 peers. The British pound traded 0.7 percent higher after data showed U.K. inflation rose faster than expected. The main mover of the morning has been GBP, which had been trending higher ahead of the inflation report to trip above 1.2400. In the wake of the release, GBP continued its ascension after CPI beat expectations, subsequently stoking expectations that the overshoot will force the Bank of England to act through potentially hiking rates, as such, a 25bps hike is now fully priced in by Aug'18. Elsewhere, a reassuring performance from Macron in the first presidential TV debate has buoyed EUR, with the currency touching 1.08 against the greenback. RBA minutes from Mar 7th meeting stated that it judged steady policy was consistent with growth and inflation targets and that rising AUD/USD would complicate economic transition. RBA also stated that economic growth is to accelerate gradually to above potential over the next 2 years and higher commodity prices could last longer than first thought given the stronger global demand. In commodities, West Texas Intermediate oil climbed 0.8 percent to $48.60 before U.S. inventory data on Wednesday and as Libya prepared to restart crude shipments from major ports. Copper slumped 0.7 percent amid signs supplies are returning; disruptions caused the metal to surge last month to the highest level since 2015; prices slipped after reports that the union for workers on strike at the BHP Billiton Escondida copper mine held talks with the company and also coincided with a 4% drop in Dalian iron ore futures during Asian trade. Gold (-0.4%) prices pulled back from 2 week highs after four days of gains, while the softness in the USD index has supported oil prices with Brent futures above USD 52/bbl and WTI above USD 49/bbl ahead of the API inventories after market. Looking at the day ahead, in the US the diary remains sparse with just the Q4 current account balance reading expected. Away from the data this morning we are expected to hear from the Fed’s Dudley and BoE’s Carney at a bank ethics event in London, while this afternoon we are due to hear from the Fed’s George and then this evening the Fed’s Mester is due to speak. The EU finance ministers meeting will also continue in Brussels this morning. US Event Calendar 8:30am: Current Account Balance, est. $129.0b deficit, prior $113.0b deficit Central Banks 6:35am: Fed’s Dudley, BOE’s Carney Speak at Bank Ethics London Event 12pm: Fed’s George Speaks in Washington on U.S. Economy and the Fed 6pm: Fed’s Mester Speaks at University of Richmond 9:45pm: Boston Fed Rosengren Speaks in Bali at Asia-Pacific Meeting DB's Jim Reid concludes the overnight wrap Will France wake up this morning feeling more confident about the upcoming Presidential race? Well last night saw the first televised debate between the candidates. Those who tuned in may be feeling a little jaded as the debate ended up lasting a whopping three and a half hours. There were plenty of head to head moments between Macron and Le Pen in particular which included much finger pointing and also amusing bouts of sarcasm. Immigration was unsurprisingly a hot topic while the exchanges also moved over to the economy and various policy measures. The general feeling was certainly one of it being lively however. Markets were largely waiting for some sort of conclusion about who came out on top though and following the debate an Elabe poll (covering 1157 respondents) found that Macron was seen as the winner of the debate at 29% with Melenchon second with 20%. Fillon and Le Pen came in joint third at 19% and Hamon came in fifth at 11%. It’s worth noting that there are another two debates to come prior to the first round election on April 23rd. It's also worth noting that Hillary Clinton was seen as the comfortable winner in all the US Presidential debates. Prior to the outcome from that poll the Euro did touch as low as 1.072 overnight versus the US Dollar but bounced post the news and hit a high of 1.078, or up just under half a percent with the market seemingly comforted that the debate failed to yield any further support to Le Pen’s chances. The Euro is now sitting at 1.076 as we go to print. Meanwhile equity markets are once again a bit mixed. Having been closed on Monday bourses in Japan are open again with the Nikkei currently -0.27%. The ASX (-0.16%) is also down however there are small gains for the Hang Seng (+0.31%), Shanghai Comp (+0.19%) and more notably the Kospi (+1.02%). US equity index futures are also up about +0.20% while Gold is -0.57% so suggesting a slightly more positive environment for risk at the margin this morning. While we’re on France, we thought it would be worth highlighting a report published by our colleagues yesterday in Europe summarising the results of their recently conducted global cross asset survey about investors’ views of asset returns one week after the French presidential election. They summarise that a Le Pen or a Left win is, perhaps unsurprisingly, strongly associated with Negative or Very Negative risk asset outcomes. A Centre win is mainly associated with Positive (but not Very Positive) outcomes, suggesting investors remain cautious about the economic environment, regardless of outcome. Many investors are neutrally positioned, but of non-neutral investors there is a distinct tilt towards long volatility and long hedges. A negative outcome is largely associated with high equity vol and sharp equity falls. In a positive outcome, the majority expectation is for limited equity upside only; however, we highlight a notable tail of expectations in the highly positive scenario, i.e. for very low vol and large equity upside. In rates the dominant expectation is for stable / higher yields regardless of election outcome. FX markets show a more bearish tilt, with EURUSD below parity in a negative outcome. In addition, upside is more limited – only 26% of respondents see EUR/USD above 1.10 in a positive outcome. Moving on. In what was an otherwise very quiet day for the most part yesterday, it was the chorus of Fedspeak which markets were most concentrated on. Of particular focus was the Chicago Fed’s Evans who made the case for the Fed hiking 2 or 3 more times this year. Evans also said that he expects inflation to hit 2% in 2018 and that things are “much more balanced around the outlook” than they were two years ago. The Philadelphia Fed President Harker also spoke and said that he expects the Fed to overshoot the 2% inflation target “a little bit” and that he would not rule out a faster or slower pace of hikes in 2017 than the three he has projected so far. Finally there was a much more dovish angle to the Fedspeak yesterday too with Minneapolis Fed President Kashkari also speaking. He said that “we do not have a high inflation threat right around the corner” and that ‘I’d be very surprised if core inflation reaches 2% this year”. He also said that “the data are basically moving sideways, so I’m asking, what’s the rush to raise rates”. Aside from the Fedspeak, there wasn’t a huge amount more for markets to feed off aside from some political related stories. The G-20 news from the weekend came and went however a lot of the focus was on the news that the FBI has confirmed that it is conducting a broad inquiry into a possible link between President Trump’s presidential campaign in 2016 and Russia. Meanwhile here in the UK we got the confirmation that PM Theresa May will trigger Article 50 on March 29th and so officially starting the clock on negotiations. The European Council President Donald Tusk confirmed that he will present the draft Brexit guidelines to the EU27 members states within 48 hours. It’s worth noting also that a provisional plan for the EU to hold a summit on April 6th to discuss early negotiation plans has been pushed back to late April/early May, all of which obviously eats into PM May’s negotiating time frame. Over in markets the end result of all the Fedspeak and various political related headlines was a very modest risk off start to the week. The S&P 500 ended -0.20% by the closing bell and so confirming a third consecutive daily decline following last Wednesday’s big post-FOMC rally. The Stoxx 600 (-0.17%) was down a similar amount and fell for the first time since last Tuesday. The exception was once again in EM however where the MSCI EM index (+0.70%) rose for the seventh consecutive session. In government bonds 10y Treasury yields dipped 4bps to 2.462% and are now down to the lowest yield since March 6th having touched an intraday high of 2.628% a week ago. In Europe bond markets didn’t really do much although Greek bonds were a bit weaker after Eurogroup head Jeroen Dijsselbloem said at a finance minister’s meeting that “some key issues” still remain to be sorted out between Greece and its creditors and that talks will continue and intensify in coming days. Moving on. Yesterday’s data was fairly thin on the ground. In the US the sole release was the Chicago Fed national activity index which came in at a better than expected 0.34 in February (vs. 0.03 expected) and in doing so has pushed the three-month average up to 0.24 which is the highest since December 2014. In Germany PPI was reported as rising +0.2% mom in February which was a little less than expected. Meanwhile in the UK the Rightmove index of house prices showed prices as stable at +2.3% yoy in March. The other data concerned the latest weekly ECB CSPP holdings where the average daily run rate last week of €363m more or less matched the average €367m since the program started. Looking at the day ahead, this morning in Europe the focus will be on the UK where we will get the February CPI/RPI/PPI data (with headline CPI expected come in at +0.5% mom and headline RPI at +0.8% mom). We will also get the February public sector net borrowing data in the UK and then the March CBI industrial trends survey. This afternoon in the US the diary remains sparse with just the Q4 current account balance reading expected. Away from the data this morning we are expected to hear from the Fed’s Dudley and BoE’s Carney at a bank ethics event in London, while this afternoon we are due to hear from the Fed’s George and then this evening the Fed’s Mester is due to speak. The EU finance ministers meeting will also continue in Brussels this morning.
Согласно опубликованным сегодня протоколам заседания по денежно-кредитной политики, которое состоялось 7 марта , члены совета Резервного банка Австралии ожидают, что потребительские цены продолжат расти, хотя и в постепенном темпе. На заседании, центральный банк оставил свою ставку кредитования на прежнем уровне 1,5%, как и ожидалось, после снижения на 25 б.п. в августе и мае прошлого года. "Совет решил, что нынешняя денежно-кредитная политика будет согласовываться с принципами устойчивого роста экономики и достижения целевого показателя инфляции с течением времени," - говорится в протоколе. Члены совета РБА отметили, что австралийская экономика продолжает развиваться, несмотря на небольшой отскок цен на сырьевые товары. Условия торговли также выросли в последние месяцы. Экономические перспективы по-прежнему опираться на более низкие процентных ставок. Тем не менее, РБА отметил, что укрепление австралийского доллара негативно для развития экономики. Кроме того, банк наблюдал различные условия на рынке жилья по всей стране. Кредитование на жилье также увеличилось за последние месяцы. Тем не менее, надзорные меры способствовали некоторому укреплению стандартов кредитования. "Внутренние давление заработной платы остается приглушенным и рост доходов домохозяйств был низким, и если такая тенденция сохранится, это будет иметь последствия для роста потребления и рисков, связанных с уровнем задолженности домашних хозяйств," - говорится в протоколе. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
By Shant Movsesian and Raj Dhall MSTA, This week has not been one to savor for USD bulls, with the FOMC rate hike accompanied by a statement which failed to generate the fresh wave of hawkish sentiment markets had positioned for. We saw some hesitancy ahead of the Fed announcement Wednesday evening, with Fed chair Yellen’s familiar cautiousness reining in UST yields to a modest degree. The subsequent pull back has also been relatively modest with the 2yr shedding 5bps on the week as a whole; both 5yr and 10yr off the highs by some 10bps. Fresh US data will therefore be required to drive fresh direction, and with the Fed reiterating their longer term rate at 3.0%, sluggish progress in the belly of the Treasury (yield) curve is perhaps unsurprising. No major releases out of the US until the end of the week when the Friday schedule offers up March services and manufacturing PMIs. Among the USD pairings, USD/JPY remains the most vulnerable given the heavy Fed based positioning, even though the BoJ have no plans to alter their accommodative policy stance. Over the near term however, end March is Japanese year end, and this could see JPY repatriation flow tipping the balance to see the 112.50-111.50 area tested at the very least. For EUR/USD, upside pressure has been more a case of easing political tensions as the Dutch elections voted against the far right movement, much to the relief of the rest of Europe, with this likely to ease concerns for the relevant parties in France. Perhaps of greater influence has been the change in sentiment at the ECB, which has since been underpinned by comments from Novotny alluding to movement in interest rates (still in negative territory). The lead spot rate has now put in an early test on 1.0800, but as we neared this level early Friday, the selling interest intensified, as many anticipated. We still see some looking to an eventual return to the lows, but the daily charts suggest otherwise. This has played a large part in the EUR/GBP move higher, but Brexit uncertainty is here to stay for now, and potentially for the next 2 years! Against this, a hawkish shift at the BoE where the majority of the MPC see a need for a rate hike sooner than previously believed, helped solidify the resistance seen from 0.8800-50,. On the downside, demand ahead of 0.8650 continues to stubbornly hold. This is in part due to the resistance in Cable from 1.2400, having stopped a tick shy of the figure early Friday. Economic data of late – although coming off better levels – holds its ground to allay fears of collapse in the UK, so it will not surprise us to see some of this GBP undervaluation curtailed – currently around 9% based on the WPI. Key inflation data out on Wednesday, followed up by retail sales on Thursday – both for Feb. Also on Wednesday is the next RBNZ rate decision, and even though no change is expected in the current base rate (1.75%), traders will be looking for any (further) verbiage on the exchange rate. At their last meeting in 9/10 Feb, NZD was trading on a 0.7300 handle, but more significantly was an AUD/NZD rate still trading comfortably below 1.0500. The spot rate has since tested to a little under 0.6900, while the cross has now managed to tip the 1.1000 mark. We also have the latest Global Dairy Trade index from the Fonterra auctions ahead of this, with national trade data on Friday. In Australia, the RBA minutes usually offer little fresh insight on policy sentiment. Once again, we saw USD/CAD resisting a move on 1.3600 on the topside, with the modest fallout in Oil prices faded out within established ranges - for now. This may have a deeper impact if WTI cannot reclaim the USD50.00 mark, but from the domestic data perspective, the numbers have shown considerable improvement, notably Q4 GDP and the recent payrolls shift (gain of 100k+ into full time employment). The follow on effect of US growth also contains any excessive weakness in the CAD, leading some to believe 1.3000-1.3500 is set limit the range near term. Canadian inflation data at the end of next week. * * * Of course, with G-20 dropping its 'free trade' language and half-heartedly remarking on FX stability, we wonder what chaos will strike as FX markets open tonight.
Резервный банк Австралии готов ужесточить правила по ипотечному кредитованию, чтобы обуздать бурный рост на рынке недвижимости, об этом сегодня сообщил помощник главы РБА Мишель Баллок на Bloomberg. Она сказала, что нет никаких сомнений в том, что действия, предпринятые для сдерживания кредитования, должны уменьшить риски. "Ранний опыт свидетельствует о том, что, в то время как позиции заемщиков и кредиторов без сомнений улучшились, первоначальные эффекты от увеличения кредитов и некоторые другие показатели, которые мы используем для оценки риска, могут исчезнуть. Мы продолжаем следить за их последствиями и готовы сделать больше, если это необходимо" - заявила Баллок. Помимо этого, чиновница отметила, что правление РБА располагает инструментами и стратегиями выхода из проблемной ситуации и обеспечения финансовой стабильности в условиях низкой процентной ставки. Напомним, ключевая процентная ставка РБА с августа 2016 года находится на рекордно низком уровне 1.50%. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
"Новозеландский доллар остается под понижательным давлением на широкой основе. Относительное улучшение перспектив для молочных поставок было компенсировано резким падением цен. Это изменение баланса на молочном рынке, похоже, будет удерживать цены, что в свою очередь должно негативно влиять на курс новозеландской валюты. Кроме того, Резервный банк Новой Зеландии придерживается осторожного тона, в отличие от изменения рыночных ожиданий по поводу других центральных банков, таких как Федеральная резервная система и Резервный банк Австралии. Такая ситуация подрывает преимущества относительной доходности Новой Зеландии. Поэтому, на наш взгляд, усиление ожиданий повышения процентных ставок ФРС на 25 б.п. в ходе мартовского заседания, а также дальнейшая переоценка перспектив на 2017 год, наряду с повышением доходности облигаций США, может иметь более выраженное негативное воздействие на новозеландский доллар, чем это было в недавнем прошлом", - заявили эксперты. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
По данным ЦБ Австралии индекс деловой конъюнктуры в стране в январе вырос до максимального за 9-летний период значения 16 пунктов с 10 пунктов в декабре.
По данным ЦБ Австралии индекс деловой конъюнктуры в стране в январе вырос до максимального за 9-летний период значения 16 пунктов с 10 пунктов в декабре.
As 2016 drew to a close, even as US bank stocks posted some of the biggest gains since Mr. Trump got elected, it seemed their counterparts down-under aren’t doing that well! All signs point to a huge weakening in Aussie bank stocks in 2017. But the bigger question is: Will we hear a loud boom as banks down under go bust? THE OMINOUS SIGNS There are ominous performance lags in Australia’s premier stock index, the S&P ASX/200 (AS51:IND), when compared to the iShares MSCI ACWI ex-US ETF (ACWX:US). If you plot the two over a graph and analyse performance over a 5-year period, you can clearly see that they are moving in harmony – not necessarily in convergence, but definitely in the same direction. These lock-step moves indicated that there was a strong co-relationship between the two comparators. The equity market down under seemed to be working in tandem with most of the world. All was well until now! A shorter term (1-year) view of these same two comparators reveals a whole new story, however. While the lock-step journey continued until around mid-December 2016, with the AS51:IND even outperforming the ACWX:US for a brief while; all that came to an abrupt end by mid-January 2017. There now appears a clear divergence, with the AS51:IND racking up a -26.88 differential as of the time of this writing. The tight co-relation between the ASX and the rest of the world is clearly decoupling! THE UNDERLYING CAUSES The underlying causes for this apparent divergence can be summed up in two words: Australia’s banks! Australia’s financials index (AXFJ), which comprises over a 3rd of the ASX 200, had been ticking along merrily over the last 1 year or so, gaining a healthy 12.22%. This lead the broader S&P/ASX 200 to a nearly 13% gain during the 1-year period. However, since the beginning of 2017, the ASX 200 is down nearly 1.94% (at the time of this writing), largely on a 3.55% decline of its financials component. Analysts are convinced that the Australian Banks are largely responsible for the dismal YTD performance of the broader benchmark; and yet again there’s a 2-word explanation for the underlying cause: Interest rates. The US banks continue to deliver steady improvements in their performance, largely driven by the gradually improving US economy, and powered by the recent Fed rate increases. The prospect of an additional two (for sure), and probably three increases over the next 12 months is also putting wind in the sails of the US banks. With Australian banks however, it’s a whole different ballgame! With no imminent Australian central bank rate increases in sight – the odds are just 15% that there will be even a single hike, the spreads between borrowing and lending rates are compressing even further. This is then putting huge pressure on profitability and future outlook for growth in bank stocks. Because of the comparatively lower premium (compared to U.S Treasuries) offered by Australian debt instruments, it would appear that the financial sector in Australia could be destined for darker times. The Australian stock market is clearly diverging from its previous charted course in line with broader global equity markets. Leading the downward spiral are Australia’s banks. The question is: Will the banks go bust with a loud boom? That is the million dollar question!
Большинство фондовых индексов Азиатско-Тихоокеанского региона (АТР) продемонстрировали слабый рост во вторник, однако такие ключевые рынки, как Япония, Индия и Индонезия, завершили сессию в "красной зоне", в том числе из-за реакции финансового сектора на проблемы Deutsche Bank.
After a turbulent overnight session on Monday morning, this morning traders settle at their desks to find a relatively calmer environment, with US equity futures down 0.2% to 2,371.75, while European stocks fell for a third consecutive day, and Asian markets which closed mixed (China up, Nikkei down, MXAP up 0.2%). Basic metals continue to slide following another drop in copper as a result of the biggest inventory inflow to LME warehouses in 15 years, coupled with worries about China's telegraphed slowdown.Some have also pointed out that the market topped just in time for the SNAP IPO, which after crashing yesterday to below its IPO break price of $24, continued to sink in the pre-market this morning. In addition to hopes about an imminent Fed rate hike shifting to concerns, as reported yesterday JPMorgan warned that hawkish Fed rhetoric has increased the likelihood for a short-term pullback after stocks hit the bank's year-end target of 2,400 the previous week. The dollar rose modestly as a surge in corporate bond issuance pushed up Treasury yields. Markets appear to have topped off the relentless post-election surge, and are coming off recent peaks as investors start to contemplate what the upcoming March interest rate increase will mean for risk assets. They also have to contend with overnight headlines out of China where the "Two Sessions" are taking place, and where Premier Li Keqiang warned of larger challenges ahead during his work report to the annual National People’s Congress gathering in Beijing. In Europe, politics has become the main market driver as election campaigns in the Netherlands, France and Germany put the status quo under threat. “The ‘pothole’ is a political one with far-right parties gaining ground in opinion polls ahead of both a Dutch and French ballots in spring,” Luca Paolini, chief strategist at Geneva-based Pictet, said in a research note. “We are scaling back exposure to European stocks, albeit retaining our overweight stance.” Germany's largest lender continued to grab attention and European stocks fell for a third consecutive day on Tuesday, once again dragged down by financials as Deutsche Bank shares slid again on deepening concern about its health after its $8.5 billion cash call. Deutsche shares dropped as much as 3% to a fresh 2017 low. They have lost more than 10% in the last few days since the bank said it would tap investors for $8.5 billion. Furthermore, a batch of weak corporate earnings reports and the biggest fall in German industrial orders since the depths of the global financial crisis also disappointed investors, setting the tone for a lackluster session in Europe. German industrial orders slumped 7.4 percent in January, the biggest fall since January 2009 and nearly three times as steep as the 2.5 percent fall expected by economists. "Weak German industrial orders suggests it's not a one-way ticket in Europe – there's been a lot of bullishness around European equities lately but maybe this is a sign it's not all positive. Deutsche Bank is not helping either," Neil Wilson, senior market analyst at ETX Capital, told Reuters. Across the Atlantic, S&P500 futures pointed to a slightly lower open on Wall Street, further cooling off last week's record highs. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4%, and Japan's Nikkei closed down 0.2%. In currencies, the dollar inched higher against a basket of trade-weighted peers. The dollar index rose 0.1 percent to 101.73 mirroring Monday's slender gain. The Bloomberg Dollar Spot Index added 0.2 percent, headed for its sixth advance in seven days. A rate hike from the Federal Reserve next week is virtually fully priced into financial markets, so the dollar and U.S. bond yields might be vulnerable to a correction lower. But investors saw enough room to push the greenback and yields higher on Tuesday, lifting the 10-year yield for the fifth day in a row back above 2.50 percent and the two-year yield up a basis point to 1.32 percent, on what traders attributed to interest rate locks following another massive corporate issuance session. The Aussie Dollar has rallied after the RBA left rates on hold, as widely expected. The post meeting statement pointed to a firmly on hold RBA and few expect a change in the cash rate through 2017 or 2018. The pound was the biggest mover on major FX markets, falling nearly a third of one percent against the dollar to a seven-week low of $1.2202. Britain's House of Lords will on Tuesday try to force the government to give lawmakers a greater say over the terms of Britain's exit from the European Union and final approval of an eventual deal with the block. Analysts at Morgan Stanley said on Tuesday they expect the pound to snap back as high as $1.45 by the end of next year. "Sterling looks increasingly cheap in a historical context and our FX strategists (have) recently turned more bullish on the currency, targeting $1.28 for year end and $1.45 by the end of 2018," they wrote in a note on Tuesday. The euro was steady at $1.0575 and the dollar was flat against the yen at 113.90 yen. In commodities, U.S. oil CLc1 rose 0.3 percent to $53.55 a barrel, following Monday's 0.2 percent drop, and Brent crude also rose 0.3 percent to $56.17 LCOc1. Market Snapshot S&P 500 futures down 0.2% to 2,371.75 STOXX Europe 600 down 0.03% to 373.16 German 10Y yield fell 2.2 bps to 0.32% Euro down 0.06% to 1.0576 per US$ Brent Futures up 0.3% to $56.16/bbl Italian 10Y yield rose 6.5 bps to 2.165% Spanish 10Y yield fell 2.6 bps to 1.702% MXAP up 0.2% to 144.63 MXAPJ up 0.5% to 465.42 Nikkei down 0.2% to 19,344.15 Topix up 0.01% to 1,555.04 Hang Seng Index up 0.4% to 23,681.07 Shanghai Composite up 0.3% to 3,242.41 Sensex down 0.2% to 28,997.87 Australia S&P/ASX 200 up 0.3% to 5,761.39 Kospi up 0.6% to 2,094.05 Brent Futures up 0.3% to $56.16/bbl Gold spot down 0.09% to $1,224.14 U.S. Dollar Index up 0.09% to 101.73 Top Overnight News Hellman & Friedman, GIC Buy Allfunds Bank for $1.9 Billion CSX Names Harrison CEO, Warns He’ll Exit Unless Paid $84 Million Fitbit Chief Business Officer to Leave, Samir Kapoor Promoted Copper’s Biggest Storage Rush in 15 Years Jeopardizes Rally Ford Not Planning Job Cuts as it Pares Europe Costs After Brexit Republicans Unveil Health Care Bill to Bridge Gaps in Party WhatsApp Joins Arsenal of Online Luxury Amid Race for Customers German Factory Orders Slump Most Since 2009 on Investment Turkey Imposes Anti-Dumping Levy on Kraftliner Paper From U.S. Dakota Access Pipeline Could See Oil by Week of March 13 Asian equity markets largely shrugged off the broad negative lead from Wall Stret to trade mixed as cautiousness remained ahead of the looming risk events. ASX 200 (+0.3%) recovered from early losses amid strength in healthcare and utilities, although upside was capped as participants awaited the RBA which kept rates unchanged and maintained a neutral tone, while Nikkei 225 (-0.2%) languished after USD/JPY failed to gain a footing above 114.00. Shanghai Comp. (+0.3%) was choppy as mainland sentiment was dampened following another weak PBoC liquidity injection and reports China is looking to slow borrowing using short term money markets, while the Hang Seng (+0.3%) was resilient after several encouraging operating updates. Finally, 10yr JGBs saw mild gains amid a lack of risk appetite in Japan, although upside has been limited following a mixed 30yr JGB auction in which accepted prices were higher and demand fell from prior. Top Asian News China to Avoid Coal Mining Limits If Prices Remain ‘Reasonable’ Japanese Double Bearish Yen Bets as Wall Street Cuts and Runs PAG to Replace Yingde Chairman, CEO If Takeover Is Completed Duterte Backs Environment Chief as Congress Weighs Endorsement Lupin CFO Says $1 Billion M&A War Chest Could Be Just The Start Traders Shun Hedges Before India Vote on Confidence in Modi Win In European bourses, materials stocks are among the best performers amid a relatively flat session . Midcaps grabbed the attention given the number of earnings in an otherwise quiet session for large caps, with UK listed Intertek are at the top of the FTSE100 leader board after the company's revenue and dividends both rose. Elsewhere, Paddy Power underperform after an uninspiring earnings update and this comes despite increased revenue past the GBP 1.5bIn mark during a "transformational" year. In Fixed Income markets, the German 2/10Y spread is nearly back to 119bps again after German factory orders fell short of expectation and many analysts are paying credence to the PSPP which has lifted the Shatz after strong buying yesterday. RAI Way Said to Consider Takeover of Berlusconi’s EI Towers U.K. House Price Growth Adds Weight to Predictions of a Slowdown Deutsche Bank Bets on Ex-Goldman Partner in Strategy Revamp EDF Begins $4.2 Billion Share Sale to Bolster Balance Sheet Million Migrants Fleeing Putin Score a Jackpot for Poland Norway Regional Survey Outlook Jumps to Highest in 4 Years Niel’s Iliad Boosts Profit After Luring Users With Discounts In currencies, despite the range bound USD, there has been some movement in major pairs to keep traders busy ahead of the US payrolls on Friday, as well as (what could be) a lively ECB meeting on Thursday, Both USD/JPY and EUR/USD are still trading inside relatively tight ranges, but with UST yields firm, the former is retesting 114.00 again. For EUR/USD, there is little to get excited about until we retest 1.0500 lower down. German factory orders fell 7.4% compared to a more modest forecast of -2.5%, and this may have assisted the move back towards 1.0550. The Bloomberg Dollar Spot Index added 0.2 percent, headed for its sixth advance in seven days. The euro weakened 0.4 percent to $1.0585, the worst performer among major. The yen was at 113.895 per dollar. Some support is coming through EUR/GBP buying as we continue to probe into offers ahead of 0.8700. Pressure on GBP has been exacerbated by yet another potential hurdle for PM May's proposed Brexit timetable, as the House of Lords are set to seek a more meaningful vote on the terms of exit. This delay would have been GBP supportive a few months ago, but with the government seemingly undermined, the uncertainty factor has pushed the cross rate higher and Cable below 1.2200 accordingly. 1.2150 the next level of support to note here. In commodities the big story at present is the recent highs seen in base metals, where the growing stockpiles in China have been garnering greater attention. Copper prices have continued their move below USD2.70 to trade below USD2.65 today, with losses in Zinc and Nickel also impacted given supply issues in all cases (strikes/mine closures). Precious metals are also lower today as they follow in tight correlation to Treasuries. The USD has been a little more reluctant to follow, but enough to pull Gold back towards USD1220 again while Silver is still pressuring the recent lows around USD17.70. Gold futures slumped 0.1 percent to settle at $1,225.50 an ounce in New York for a fifth day of losses. That’s the longest slump since November. Oil prices still in a range, with compliance and production/inventory levels ahead feeding near term support, but CERA week could prompt some volatility: speakers include Barkindo, Novak and Al-Falih. West Texas Intermediate crude slipped 0.2 percent to settle at $53.20 a barrel. Clashes between armed factions in Libya curbed crude output, while U.S. drilling increased. Looking at the day ahead, we will get the January trade balance and then the January consumer credit reading in the evening. Away from the data, German Finance Minister Schaeuble is scheduled to speak this morning, while in the UK we are also expecting the House of Lords to complete its scrutiny of the Brexit bill. * * * US Event Calendar 8:30am: Trade Balance, est. $48.5b deficit, prior $44.3b deficit 3pm: Consumer Credit, est. $17.3b, prior $14.2b DB's Jim Reid concludes the overnight wrap In terms of markets, yesterday felt like a day you rolled the dice and landed on someone's property and had to pay a small unwelcome amount of rent after a good run of accumulating cash in the bank. Equities closed on the soft side led by Europe with financials and commodity names in particular having a rough start to the week. Coming off the back of a +1.41% gain last week which was the strongest week this year, the Stoxx 600 closed -0.52% and European banks finished -1.23%. Markets in the US were back peddling from the start although the S&P 500 (-0.33%) did manage to pare back heavier losses into the close. The Dow (-0.24%) did likewise but still closed back below the 21,000 level for the first time since passing it last week. There were similar losses across credit markets with CDX IG about 0.8bps wider and the iTraxx Main 1.5bps wider. Sub-financials in Europe did however outperform on a relative basis, with the iTraxx Sub-Fins index finishing just 0.5bps wider (compared to +1.5bps for iTraxx Senior-Fins). It was a similar outperformance story in the cash credit market with EUR Fin Subs actually 1bp tighter (using Markit indices), compared to EUR Fin Sen which was just 0.5bps tighter. On those moves for commodities, while Oil ended up little changed both precious and base metals struggled throughout the day. Gold (-0.77%), Silver (-1.07%), Iron Ore (-1.74%), Copper (-1.00%) and Aluminium (-0.82%) in particular all finished lower. A few potential reasons were discussed but it appears that a combination of the China NPC headlines from the weekend, rising Copper inventories and a stronger US Dollar in the face of geopolitical related headlines all contributed to some degree. The latter concerned the reports of North Korea firing missiles into the Sea of Japan – although in fairness there didn’t appear to be a huge reaction in EM FX or equity markets – while later on in the day we got confirmation that President Trump has signed a new travel order banning the entry of citizens from 6 countries (1 less than the initial January order) into the US for the next 90 days from March 16th. The new order will also see the US Refugee Admissions Program suspended for 120 days. Elsewhere, all things considered Treasuries had a relatively calm day compared to the Fed-driven excitement of last week. 10y Treasury yields finished +2.2bps higher at 2.500% with the slight weakness reflecting a busy day for corporate issuance with over $22bn of IG sales coming, while short end yields ended little changed. A Fed rate hike next week also consolidated around 96% according to Bloomberg’s calculator. Meanwhile bond markets in Europe were busy digesting the latest French presidential election update. Indeed as hinted by the L’Obs press report over the weekend Juppe left the French elections for a second time as he ruled out a comeback in spite of the fragile nature of Fillon's campaign. His speech didn't endorse Fillon's campaign and the Republicans have to choose soon whether to stick with a candidate who is losing support due to the recent allegations or to consider alternatives who weren't part of the original run-off or who were earlier beaten. Bloomberg reports they have 10 days to file paperwork if they want to replace Fillon. French 10y yields climbed +2.3bps yesterday versus a -1.5bps fall in the German equivalent. The spread tightened 15.6bps last week and this gave up around a quarter of these gains. Refreshing our screens this morning now. It's been a fairly mixed but quiet start in Asia. While the Nikkei (-0.20%) and Shanghai Comp (-0.07%) are posting modest losses, the Hang Seng (+0.42%), Kospi (+0.64%) and ASX (+0.27%) are all firmer. In FX the Aussie Dollar has rallied +0.64% after the RBA left rates on hold, as widely expected. Our economists in Australia believe that the post meeting statement point to a firmly on hold RBA and expect no change in the cash rate through 2017 or 2018. Moving on. The latest ECB CSPP data came out yesterday. The average daily run rate in the week to March 3rd was €339mn, a bit below the average of €365mn since the scheme started. In February 8.8% was bought in the primary market, lower than the 13.5% ratio since the scheme commenced and the lowest ratio since the summer. It's too early to say whether the ECB are starting to prepare for taper but there seems to have been a reduction recently from peak purchases. We can't extrapolate too much as there are many who think they'll initially taper more on the government side rather than the corporate side. Anyway one to keep an eye on over the weeks ahead. With regards to the rest of the data yesterday, in the US factory orders in January printed at +1.2% mom which was marginally ahead of consensus expectations for a +1.0% rise in orders. The final revisions to January durable and capital goods orders were also released. Headline durable goods orders were confirmed at +2.0% mom which was up two-tenths from the initial estimate while core capex orders were revised up three-tenths to -0.1% mom. Interestingly the two most followed GDP trackers have diverged significantly for Q1 GDP estimates. The Atlanta Fed is now at 1.8% while the NY Fed is at 3.1%. It’s worth noting that over the past 4 quarters the NY Fed has tended to be the more accurate of the two although both have shown a tendency to have large errors during various quarters. Elsewhere and wrapping up, yesterday in Europe the most notable release was the Sentix investor sentiment reading for the Euro area which showed the index as rising 3.3pts in February to 20.7 and in the process reaching a new post financial crisis high. So a sign perhaps that improving data is overshadowing any potential political concerns for now. Looking at the day ahead, this morning in Europe the early data comes from Germany where the January factory orders data is due. Shortly after that we’ll get the February Halifax house prices data in the UK before we then get the final Q4 GDP print for the Euro area. No change from the initial +0.4% qoq estimate is expected. This afternoon in the US we will get the January trade balance and then the January consumer credit reading in the evening. Away from the data, German Finance Minister Schaeuble is scheduled to speak this morning, while in the UK we are also expecting the House of Lords to complete its scrutiny of the Brexit bill.
Токио и Шанхай ушли в минус, Гонконг, Сеул, Сидней торгуются в "зеленой зоне"
Основные фондовые индексы Азиатско-Тихоокеанского региона торгуются разнонаправленно, поскольку инвесторы продолжают анализировать политическую нестабильность в мире. Также на динамику торгов влияет рост ожиданий повышения процентной ставки на заседании ФРС в марте. Рыночные ожидания повышения ставки в марте составляют 86,4%, в соответствии с опросом группы СМЕ инструмента FedWatch. Кроме того , производственные заказы в США выросли на 1,2% и заказы на товары длительного поднялись на 2%, что указывает на продолжение роста экономики США. Австралийский индекс ASX 200 вернулся в зеленую зону после отрицательного начала, после того, как Резервный банк Австралии (РБА) оставил процентную ставку без изменений на уровне 1,50%, в ходе сегодняшнего заседания. Котировки на токийской фондовой бирже торгуются в минусе. Инвесторов отпугивает геополитическая напряженности после северокорейских ракетных испытаний. Доллар торгуется в узком диапазоне по отношению к иене на ожиданиях, что Федеральная резервная система США будет повышать процентные ставки на следующей неделе. Акции Yamato Holdings подорожали на 4,1% после того, как Nikkei Business Daily сообщила, что компания, которая контролирует около половины отечественного внутреннего рынка поставки, планирует повысить свои тарифы в первый раз в 27 лет. Экспортеры были смешаны: Акции Toyota Motor Corp подешевели на -0,2%, бумаги Nissan Motor Co подорожали на 1,5%, а рыночная стоимость Panasonic Corp снизилась на -0,4%. NIKKEI 19336,50 -42,64 -0,22% HSI 23694,99 +98.71 +0,42% ASX 200 5764,50 +17.99 +0,31% SHANGHAI 3231,63 -2,24 -0,07% KOSPI 2095,08 +13.72 +0,66% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Сегодня Резервный банк Австралии, по окончанию заседания, сохранил ключевую процентную ставку без изменений на рекордно низком уровне 1,5%, как ожидали экономисты Совет Резервного Банка Австралии заявил, что проводимая центробанком денежно-кредитная политики соответствует устойчивому росту экономики и достижению целевого показателя инфляции. Австралийская экономика продолжает расширяться примерно на 2,5% в 2016 году, после окончания инвестиционного бума горнодобывающей промышленности. Общий уровень инфляции, как ожидается, достигнет 2% в течение 2017 года. Ростом базовой инфляции, как ожидается, будет немного более постепенным. В центробанке также отметили, что более высокий курс австралийского доллара осложнит переходный процесс в экономике В РБА высказали опасения по поводу неопределенности в мировой экономике. "В ряде развитых экономик ожидается рост ВВП выше тренда. В мировой экономике сохраняется неопределенность ", - отмечают в РБА. Также остаются среднесрочные риски в развитии экономики Китая, который является основным торговым партнером Австралии. В центробанке также заявили, что потребление остается уверенным, несмотря на слабый рост доходов домохозяйств. Доверие потребителе улучшается, также улучнается доверие в деловых кругах Австралии. Индикаторы рынка труда довольно неоднозначны, хотя уровень занятости указывает на рост Австралийский доллар вырос после публикации результатов заседания австралийского центробанка. Пара AUD/USD выросла до 0,7620 с 0,7575 в начале сессии. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Условия на рынке жилья существенно варьируются. Заимствования для покупки жилья выросли Условия в мировой экономике продолжают улучшаться Доверие потребителей улучшается. Потребление остается уверенным, несмотря на слабый рост доходов домохозяйств Индикаторы доверия деловых кругов превышают средние уровни Инфляция остается довольно низкой Индикаторы рынка труда неоднозначны. Опережающие индикаторы занятости указывают на рост В ряде развитых экономик ожидается рост ВВП выше тренда. В мировой экономике сохраняется неопределенность Рост экономики Китая получает поддержку за счет увеличения расходов на инфраструктуру, строительство.Среднесрочные риски для роста экономики Китая сохраняются Более высокий курс австралийского доллара осложнит переходный процесс в экономике Цены на сырьевые товары в значительной степени благоприятны для Австралии Процентные ставки в США, как ожидается, будут повышены Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Во вторник выйдет умеренное количество статданных. В 03:30 GMT в Австралии будет оглашено решение РБА по учетной ставке. Напомним, учетная ставка - это процент, под который Резервный Банк Австралии предоставляет кредиты коммерческим банкам. Отталкиваясь от данного значения, коммерческие банки устанавливают свои проценты по кредитам и вкладам. Основная учетная ставка - один из самых важных механизмов, с помощью которого осуществляется регуляция экономики страны. Ожидается. что ставка останется на уровне 1,5%. В 07:00 GMT Германия заявит об изменении производственных заказов за январь. Данный индикатор отображает изменение общего объема промышленных заказов, полученных промышленными предприятиями к предыдущему месяцу. Часто является опережающим индикатором динамики промышленного производства на несколько месяцев. Согласно прогнозам, заказы сократились на 2,7% после роста на 5,2% по итогам декабря. В 10:00 GMT еврозона опубликует окончательные данные по ВВП за 4-й квартал. Показатель отражает изменение рыночной стоимости всех товаров и услуг, предназначенных для непосредственного употребления, произведённых за определенный период во всех отраслях экономики на территории государства для потребления, экспорта и накопления, вне зависимости от национальной принадлежности использованных факторов производства. Является наиболее полным индикатором состояния экономики. Ожидается, что ВВП вырос на 0,4% относительно 3-го квартала. В 13:30 GMT Канада и США отчитаются по изменению сальдо торгового баланса за январь. Показатель отражает все торговые операций Канады. Сальдо торгового баланса - это разницу между объемом произведенной и вывезенной из страны продукции (экспорт) и объемом продукции, ввезенной в страну (импорт). Позитивное сальдо называется профицитом, негативное дефицитом. Согласно прогнозам, дефицит торгового баланса США вырос до $47.3 млрд. с $44,3 млрд. в декабре. В 15:00 GMT Канада представит индекс деловой активности менеджеров от Ivey за февраль. Индикатор показывает уровень деловой активности промышленного сектора. Более полутора сотням менеджеров из разных регионов и отраслей предлагается оценить уровень закупок по сравнению с предыдущим месяцем (выше, ниже или на том же уровне). Значение индикатора выше 50 означает увеличение закупок, а значение ниже 50 свидетельствует о снижении. В 23:50 GMT Япония выпустит окончательные данные по ВВП за 4-й квартал. Ожидается, что ВВП вырос на 0,4% в квартальном выражении и на 1,6% годовых. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
The key economic release this week is the employment report on Friday, which as Janet Yellen noted in her speech on Friday, is the only economic event (together perhaps with the CPI report on April 15), that could potentially derail a now practically guaranteed rate hike. Following a slew of hawkish Fed commentary throughout last week and reinforced by both Fischer and Yellen on Friday, a March 15th Fed hike looks firmly on the cards and it would seem unlikely that data would cause a change of course. Nevertheless, attention will be squarely on Friday's jobs report. Consensus expects a strong report, with NFP growth of 190K, average hourly earnings of 0.3% and unemployment ticking down to 4.7%. A summary breakdown of key events in the US in the coming week: In addition to the US jobs report, two G10 Central Bank decisions this week, as the RBA and ECB meet to decide policy. Neither bank is expected to change policy, although more interesting times are likely ahead as both now face rising inflationary pressures which will likely prompt them to turn hawkish in the coming months. There is a more compelling case for the RBA to begin normalizing policy next year, but doubt the RBA will shift guidance this week. Look for moves in Feb and Aug 2018. The ECB will also be on hold as the current "truce" between hawks and doves holds and is reflected in a dovish tone, with no decision. After the summer, the debate between hawks and doves cannot be avoided however. Keep an eye on the batch of forecasts released by ECB, though few expect revolutionary changes. Elsewhere, in the UK, the Budget announced on Wednesday is a key release, while we also get trade balance and industrial production. The House of Lords continues their examination of the Brexit Bill. Following the completion of third reading, the bill will return to the Commons for consideration of Lords amendments. In Japan, main economic releases include trade balance, final GDP, PPI and money supply. In Canada, the main release will be the labor market report. In Norway, data this week will be the last main inputs for the Norges Bank meeting on March 16th. Particular focus will be on the regional network survey and inflation. Detailed breakdown of global events below: * * * A daily look at key events: It looks set to be a quiet start to the week with just the Sentix investor confidence reading for the Euro area due this morning followed by January factory orders and final durable and capital goods revisions in the US this afternoon. Tuesday kicks off in Germany with the January factory orders data, before we then get the Q4 GDP report for the Euro area. Over in the US tomorrow data includes the January trade balance and consumer credit prints. Wednesday starts in Japan where the final Q4 GDP revisions are due before we then get February trade numbers in China. During the European session we will get Germany industrial production and France trade data. In the US the focus will likely be on the February ADP employment change print, while Q4 nonfarm productivity and unit labour costs along with wholesale inventories and trade sales data is also due. Kicking off Thursday is China where the February CPI and PPI prints are due. In Europe we’ll then get business sentiment data in France before all eyes turn to the ECB meeting just after midday followed by Draghi’s press conference. Over in the US the data includes the import price index and initial jobless claims. We end the week on Friday in Europe with trade data in Germany and industrial production data in France and the UK, along with trade data in the latter. Over in the US we’ve then got the February employment report including the all important payrolls print. Fedspeak this week is light with just Kashkari due to speak today. Away from that BoE Governor Hogg speaks today while Germany’s Schaeuble speaks on Thursday. Other important events to keep an eye on this week include the House of Lords completing its scrutiny of the Brexit bill on Tuesday and UK Budget on Wednesday. An EU summit of country leaders also starts on Thursday. Detailed breakdown of global events below: Finally, here is Goldman's summary of key events with sellside estimates for the key US events of the week: Monday, March 6 10:00 AM Factory orders, January (GS +1.2%, consensus +1.0, last +1.3%); Durable goods orders, January final (last +1.8%); Durable goods orders ex-transportation, January final (last -0.2%); Core capital goods orders, January final (last -0.4%); Core capital goods shipments, January final (last -0.6%): We expect factory orders to rise 1.2% following a 1.3% increase in December. Last week’s durable goods report showed new durable goods orders were firm, while core capital goods orders were softer. 03:00 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Federal Reserve Bank President Neel Kashkari will give a speech at the annual NABE Economic Policy Conference in Washington D.C. Tuesday, March 7 08:30 AM Trade balance, January (GS -$47.5bn, consensus -$48.0bn, last -$44.3bn): We expect the trade deficit to widen in January. The Advance Economic Indicators report last week showed a wider goods trade deficit and strong consumer goods imports—likely related to the relatively early Chinese New Year—that we anticipate will not be fully offset by a modest improvement in the services balance. 03:00 PM Consumer credit, January (consensus +$17.2bn, last +$14.2bn) Wednesday, March 8 08:15 AM ADP employment report, February (GS +200k, consensus +185k, last +246k): We expect a 200k gain in ADP payroll employment in February, reflecting stable hiring trends, a further decline in initial jobless claims, and a rise in leading indicators. The ADP report introduced methodological changes with the October release and now offers more details by sector. While we believe the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises. 08:30 AM Nonfarm productivity (qoq saar), Q4 final (GS +1.5%, consensus +1.5%, last +1.3%); Unit labor costs, Q4 final (GS +1.6%, consensus +1.6%, last +1.7%): We expect a +0.2pp revision to nonfarm productivity in Q4 to an annualized rate of +1.5% – double the post-recession trend pace of +0.75% – driven by the upward revision to nonfarm business output in last week’s GDP report. We expect unit labor costs – compensation per hour divided by output per hour – to be revised down 0.1pp to +1.6%. 10:00 AM Wholesale inventories, January final (last -0.1%) Thursday, March 9 08:30 AM Initial jobless claims, week ended March 4 (GS 245k, consensus 239k, last 223k); Continuing jobless claims, week ended February 28 (last 2,066k): We expect initial jobless claims to rise 22k to 245k, as we believe last week’s 19k drop reflected the unusual timing of automotive plant shutdowns as well as New York school holidays, both of which imply a rebound in coming weeks. Even after accounting for temporary factors, the trend pace of initial jobless claims continues to drift lower. We also note the year-to-date improvement in several energy-producing states, where claims remained low again this week. 08:30 AM Import price index, February (consensus +0.1%, last +0.4%): Consensus expects import prices to increase at a slower pace in February (nsa). In the January report, the headline index advanced 0.4%, primarily driven by a pickup in petroleum and industrial goods prices. 10:00 AM Quarterly Services Survey, Q4: The Quarterly Services Survey includes data on revenue for service sector firms. The Commerce Department uses this information for estimating services spending in the third release of the GDP report. Friday, March 10 8:30 AM Nonfarm payroll employment, February (GS +190k, consensus +190k, last +227k); Private payroll employment, February (GS +200k, consensus +185k, last +237k); Average hourly earnings (mom), February (GS +0.3%, consensus +0.3%, last +0.4%); Average hourly earnings (yoy), February (GS +2.7%, consensus +2.8%, last +2.5%); Unemployment rate, February (GS 4.7%, consensus 4.7%, last 4.8%): We expect February nonfarm payrolls to increase 190k following a 227k increase in January and compared to the three-month moving average of +183k. We expect job growth to be supported by encouraging employment surveys and a further drop in jobless claims, which averaged 244k during the payroll month (the lowest level since the 1970s). February also exhibited unseasonably warm weather and relatively limited snowfall, both of which should boost payrolls in weather-sensitive categories. On the negative side, the federal hiring freeze (excluding defense and public safety) announced in late January is likely to weigh on government payrolls, and we expect a net decline in these categories of roughly 10-15k in the month. The extent of the headwind on overall payroll growth may be mitigated by the ability of government departments to circumvent the hiring freeze, for example through reduced attrition or increased contracted hiring. We also expect below-trend payroll growth in the transportation and warehousing industry, following elevated temporary hiring in Q4 related to strong online holiday shipments. We expect the unemployment rate to fall one-tenth to 4.7%, driven by continued household employment growth and a potential pullback in the participation rate following last month’s 0.2pp rise. Finally, we expect average hourly earnings to increase 0.3% month over month and 2.7% year over year, reflecting firming wage growth and the continued impact of state-level minimum wage hikes. 02:00 PM Monthly budget statement, February (consensus -$151.0bn, last +$51.3bn) Source: BofA, Goldman, DB