Various European inflation data comes in positive and above expectations

Notes/Observations

- Plethora of mixed month-end data from Japan; Jobless rate higher to a 4-month high while both Industrial Production and Retail Sales best expectations

- Analysts debate whether Sweden Q4 GDP data dampens speculation that Riksbank could cut the Repo further into negative territory

- Various German States shows Feb CPI rebounding with both MoM and YoY reading back in positive territory; Italy Feb prelim CPI reading beats expectations

Economic data

- (JP) Japan Jan Annualized Housing Starts: 864K v 880Ke; Y/Y: -13.0% v -11.6%e

- (ZA) South Africa Jan M3 Money Supply Y/Y: 7.4% v 7.4%e; Private Sector Credit Y/Y: 9.2% v 7.9%e

- (DE) Germany Jan Import Price Index (beats) M/M: -0.8% v -1.1%e; Y/Y: -4.4% v -4.6%e

- (FR) France Jan PPI M/M: -0.9% v -0.9% prior; Y/Y: -2.5% v -2.9% prior

- (FR) France Jan Consumer Spending (beats) M/M: +0.6% v -0.3%e; Y/Y: 2.6% v 1.8%e

- (DE) Germany Feb CPI Saxony M/M: +0.9% v -1.2% prior; Y/Y: +0.3% v -0.3% prior

- (CH) Swiss Feb KOF Leading Indicator: 90.1 v 89.0e

- (ES) Spain Feb Preliminary CPI (beats); Y/Y: -1.1% v -1.5%e; CPI EU Harmonized Y/Y: -1.2% v -1.5%e

- (CZ) Czech Republic Q4 Preliminary GDP Q/Q: 0.4% v 0.2% advance; Y/Y: 1.5% v 1.2% advance

- (HU) Hungary Jan Unemployment Rate: 7.4% v 7.3%e

- (TR) Turkey Jan Trade Balance (beats): -$4.3B v -$4.6Be

- (DK) Denmark Q4 Preliminary GDP Q/Q: 0.4% v 0.1%e; Y/Y: 1.3% v 0.8%e

- (SE) Sweden Q4 GDP (beat) Q/Q: 1.1% v 0.5%e; Y/Y: 2.7% v 1.5%e

- (SE) Sweden Jan Retail Sales M/M: 1.2% v +0.5%e; Y/Y: 5.1% v 3.8%e

- (PL) Poland Q4 Final GDP (beat); Q/Q: 0.7% v 0.6% prelim; Y/Y: 3.1% v 3.0% prelim

- (NO) Norway Jan Retail Sales W/Auto Fuel M/M: -0.7% v 0.0%e

- (NO) Norway Feb Unemployment Rate: 3.0% v 3.0%e

- (DE) Germany Feb CPI Hesse M/M: +1.0% v -1.0% prior; Y/Y: +0.1% v -0.6% prior

- (DE) Germany Feb CPI Bavaria M/M: +0.9% v -1.0% prior; Y/Y: +0.3% v -0.2% prior

- (DE) Germany Feb CPI North Rhine Westphalia M/M: +0.8 v -1.0% prior; Y/Y: 0.0% v -0.4% prior

- (ZA) South Africa Jan Budget Balance (ZAR): -20.0B v +22.7B prior

- (IT) Italy Feb Preliminary CPI NIC incl. tobacco (beats) M/M: 0.3% v 0.1%e; Y/Y: -0.2% v -0.5%e

Fixed Income:

- (ZA) South Africa sold total ZAR800M in I/L 2025, 2046 and 2050 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.3%, FTSE 100 -0.1% at 6,945, DAX -0.1% at 11,313, CAC-40 -0.1% at 4,904, IBEX-35 -0.5% at 11,087, FTSEMIB -0.2% at 22,109, SMI -0.6% at 8,998, Athens Stock Exchange -3%, S&P 500 Futures -0.2% at 2,106]

- Market Focal Points/Key Themes: Equity markets open mixed ahead of German vote on Greece; Airbus rises on better than expected results and dividend increase, BASF declines amid cautious outlook, Airline IAG beats ests, Lloyds confirms dividend resumption plan, Steelmaker Salzgitter profits below ests; Greek equities decline by over 2.5%; German CPI and US Prelim GDP in focus

By Sector

- Industrials [Airbus AIR.FR +6% (Q4 results above ests, raised dividend 60%), IAG IAG.UK +4% (FY profits above ests); BASF BAS.DE -2.5% (dividend below ests, cautious outlook)

- Consumer Discretionary [Straumann STMN.CH +6% (FY results above ests), Pearson PSON.UK +1% (raised dividend)]

- Financials [Lloyds LLOY.UK +1% (FY profits rose) ]

- Technology [Fugro FUR.NL +15% (FY sales above ests)]

- Healthcare [Optos OPTS.UK +30% (takeover offer)]

- Basic Materials/Resources [Salzgitter SZG.DE -2% (FY profits below ests)]

- Stoxx50 Sectors [Utilities +1%, Industrials +0.8%, Consumer Cyclical +0.1%, Energy flat; Basic Materials -1.2%, Telecom -0.7%, Consumer Non-Cyclical -0.4%, Financials -0.3% Technology -0.2%

Speakers

- BoE Forbes stated that it must think about normalizing interest rates; external factors behind inflation decline would fade quickly. BOE rate hikes to depend on wage data and expects this data series to strengthen. She did not see consumer spending delays from low CPI

- German Fin Min Schaeuble began debate in Bundestag (Lower House) that the decision to extend Greece aid program was not an easy one. The Greek program was not about new or more money but completing the program (giving Greece time). He added that Greece could not change its bailout program without the agreement of IMF, EU and ECB

- HKMA announced measures to slow property market, effective immediately. To tighten mortgage rules for second homes and revise debt service ratio

Currencies

- The USD consolidated its recent strength in the session following the US core inflation reading on Thursday. The lower European yields helping to give the greenback an advantage ahead of the formal launch of the ECB's QE program

- Various German States shows Feb CPI rebounding with both MoM and YoY reading back in positive territory. The EUR/USD held above the 1.12 handle and over a big figure away from its January lows

- The SEK currency was firmer in the session after Sweden Q4 GDP data dampened speculation that Riksbank could cut the Repo further into negative territory in coming months. EUR/SEK tested below 9.35 after the data beat.

- AUD rebounded from its Asian session low of 0.7777 that took place on renewed RBA rate cut speculation ahead of next week's review. The Aussy rebounded after RBA rate watcher Terry McCrann stated that he saw RBA keeping policy steady at next Tuesday's policy meeting.

**Political/In the Papers:

- (GR) Reportedly a third rescue package remains a possibility for Greece as it could need over €30B over the next 2 years

- (CN) China Statistics Bureau (NBS): China external environment is still complex: Single digit export growth to be new norm for China; Improvement in external demand may be limited and rise in fx volatility to add downside risks to exports

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- Moodys to review Germany, Luxembourg and Austria

- Fitch to review Malta (currently A)

- DBRS to review EFSF and ESM (currently AAA with stable)

- (UK) UKIP Spring Conference in Margate

- (BR) EU-Brazil Summit in Brussels

- (US Fed's Mester speaks to Monetary Policy Forum in New York

- (JP) BOJ's Nakaso in NY

- (DE) German Lower House (Bundestag) will vote on the Greek aid extension

- (DE) Germany Feb CPI Brandenburg M/M: % v -1.2% prior; Y/Y: % v -0.6% prior

- (DE) Germany Feb CPI Baden Wuerttemberg M/M: No est v -1.0% prior; Y/Y: No est v 0.1% prior

- 05:30 (IN) India Jan Fiscal Deficit (INR) Crore: No est v 7.3B prior

- 06:00 (PT) Portugal Q4 Final GDP Q/Q: 0.5%e v 0.5% prelim; Y/Y: 0.7%e v 0.7% prelim

- 06:00 (IE) Ireland Jan Retail Sales Volume M/M: No est v 0.5% prior; Y/Y: No est v 5.1% prior

- 06:00 (UK) DMO to sell combined £5.0B in 1-month, 3-month and 6-month Bills (1.0B, 2.0B and 2.0B respectively)

- 06:30 (IN) India Weekly Forex Reserves w/e Feb 20th: No est v $333.2B prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (ZA) South Africa Jan Trade Balance (ZAR): No est v 6.8B prior

- 07:00 (CL) Chile Jan Unemployment Rate: No est v 6.0% prior

- 07:00 (CL) Chile Jan Retail Sales Y/Y: No est v 1.9% prior

- 07:00 (CL) Chile Jan Total Copper Production: No est v 522.7K tons prior

- 07:00 (CL) Chile Jan Manufacturing Index Y/Y: No est v 3.1% prior

- 07:30 (CL) Chile Central Bank Meeting Minutes

- 08:00 (PL) Poland Central Bank (NBP) Feb Inflation Expectations Survey: No est v 0.2% prior

- 08:00 (DE) Germany Feb Preliminary CPI M/M: 0.6%e v -1.1% prior; Y/Y: -0.3%e v -0.4% prior

- 08:00 (DE) Germany Feb Preliminary CPI EU Harmonized M/M: +0.6%e v -1.3% prior; Y/Y: -0.5%e v -0.5% prior

- 08:00 (ES) Spain Debt Agency (Tesoro) announces specific bonds to be issued in next week auction (if any)

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Q4 Preliminary GDP Annualized Q/Q: 2.0%e v 2.6% advance; Personal Consumption: 4.3%e v 4.3% advance

- 08:30 (US) Q4 Preliminary GDP Price Index: 0.0%e v 0.0% advance; Core PCE Q/Q: 1.1%e v 1.1% advance

- 08:30 (BR) Brazil Jan Nominal Budget Balance (BRL): No est v -60.1B prior; Primary Budget Balance (BRL): No est v -12.9B prior; Net Debt to GDP Ratio: No est v 36.7% prior

- 09:00 (US) Feb ISM Milwaukee: 54.00e v 51.60 prior

- 09:00 (MX) Mexico Jan Unemployment Rate (Seasonally Adj): No est v 4.4% prior; Unemployment Rate NSA (unadj): No est v 3.8% prior

- 09:45 (US) Feb Chicago Purchasing Manager: 58.0e v 59.4 prior

- 10:00 (US) Jan Pending Home Sales M/M: 2.0%e v -3.7% prior; Y/Y: 8.7%e v 8.5% prior

- 10:00 (US) Feb Final University of Michigan Confidence: 94.0e v 93.6 prelim

- 10:00 (MX) Mexico Jan Net Outstanding Loans (MXN): No est v 2.713T prior

- 10:15 (US) Fed's Fisher (hawk, non-voter) in NY

- 11:00 (CO) Colombia Jan National Unemployment Rate: No est v 8.7% prior; Urban Unemployment Rate: No est v 9.3% prior

- 13:00 (US) Weekly Baker Hughes Rig Count

- 13:30 (PT) ECB's Constancio (Portugal) in NY

- 14:00 (AR) Argentina Jan Construction Activity M/M: No est v -4.0% prior; Y/Y: No est v 0.3% prior

- 14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: No est v -0.1% prior; Y/Y: No est v 0.2% prior

- 19:00 (KR) South Korea Feb Trade Balance: No est v $5.5B prior; Exports Y/Y: No est v -0.4% prior; Imports Y/Y: No est v -11.0% prior

- 20:00 (CN) China Feb Manufacturing PMI: No est v 49.8 prior

- 20:00 (CN) China Feb Non-manufacturing PMI: No est v 53.7 prior