German IFO survey continues to improve

EU Mid-Market Update: German IFO survey continues to improve; ECB said to increase pressure on Athens to reach rapid agreement with its creditors

Notes/Observations

- ECB set to tighten funding noose on Greek govt and limit on Greek bank holdings of govt t-bills

- German IFO Business Climate Survey continues its improvement (6th straight MoM rise) and beats expectations

Economic data

- (CH) Swiss Feb UBS Consumption Indicator: 1.19 v 1.11 prior

- (FR) France Mar Business Confidence (beat): 96 v 95e; Manufacturing Confidence (miss): 99 v 100e; Production Outlook Indicator: 0 v -8 prior; Own-Company Production Outlook: 7 v 11 prior

- (ES) Spain Feb PPI M/M: +0.2% v -0.5% prior; Y/Y: -1.6% v -2.8% prior

- (SE) Sweden Mar Consumer Confidence (beat): 100.5 v 98.0e; Manufacturing Confidence (miss): 101.2 v 106.7e; Economic Tendency Survey: 101.5v 104.2 prior

- (NL) Netherlands Mar Producer Confidence Index: 1.4 v 3.0e

- (DE) Germany Mar IFO Business Climate Survey (beat): 107.9 v 107.3e (highest level since July 2014); Current Assessment Survey: 112.0 v 112.0e; Expectations Survey: 103.9 v 103.0e

- (UK) Feb BBA Loans for House Purchase (beat): 37.3K v 36.7Ke

Fixed Income:

- (IN) India sold total INR140B in 3-month and 6-month Bills

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.3%, FTSE 100 flat at 7,025, DAX -0.3% at 11,974, CAC-40 -0.4% at 5,065, IBEX-35 -0.3% at 11,547, FTSE MIB -0.3% at 23,261, SMI flat at 9,296, Athens Stock Exchange closed, S&P 500 Futures flat at 2,085]

- Market Focal Points/Key Themes: Equity markets open mostly lower following US declines ;Various companies decline on share placements (Accor, HeidelbergDruck); UK-listed Moneysupermarket.com cancels stock offering; Negative currency impact weighs on Hermes' FY14 margin, reaffirms sales forecast; Balfour Beatty reports FY loss and omits dividend; German IFO data generally above expectations, little market reaction; Upcoming US durable goods data

By Sector

- Consumer Discretionary [Hermes RMS.FR -1.5% (FY profits below ests); Bellway BWY.UK +3% (H1 profits rose), TUI AG TUI1.DE +1% (reaffirmed outlook) ]

- Industrials [Norma Group NOEJ.DE +3% (raised dividend)]

- Energy [Hunting HTG.UK +4% (takeover speculation)]

- Technology [Monitise MONI.UK -18% (ended sale process)]

- Stoxx50 Sectors [Technology -0.5%, Industrials -0.4%, Energy -0.4%, Utilities -0.2%, Telecom -0.1%, Consumer Non-Cyclical -0.1%; Consumer Cyclical +0.8%, Financials +0.5%, Basic Materials flat]

**Speakers**

- IFO Economists reiterated view that weaker EUR currency and lower oil prices aiding sentiment. It saw no danger that the German economy would overheat

- Sweden's NIER think tank raised 2015 and 2016 GDP and CPI outlooks. Raised 2015 GDP growth forecast from 2.3% to 3.1% and 2016 GDP growth forecast from 3.1% from 3.3%. On inflation the think tank raised 2015 CPI from +0.1% to +0.2% and 2016 CPI from +1.0% to +1.1%

- Bank of Korea (BOK) Ha stated that he saw limited capital outflows even if Fed began its rate hike process. FX markets needed to prepare for external shocks and strengthen contingency system like FX swaps

Currencies

- The FX markets were generally quiet in the session with EUR/USD remaining in the upper end of the post FOMC trading range. The better-than-expected German IFO data failed to inspire any momentum to gun for EUR/USD stops said to be building above the 1.1040 raea.

Political/In the Papers:

- (GR) ECB tells Greek banks not to raise exposure to government's debt - including T-Bills for prudential reasons. The move would "effectively cuts off a key source of funding for Athens and heightens the risk of a sovereign default." ECB to hold a call on Wed, Mar 25th to review Greek ELA. (**Insight: ECB's move increases the pressure on Athens to reach rapid agreement with its creditors on a reform package to unlock fresh cash)

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (IR) Iran nuclear talks continue in Switzerland

- 06:00 (EU) ECB allotment in 7-day USD Liquidity Tender

- 06:00 (EU) Daily Euribor Fixing

- 06:00 (NO) Norway to sell Bonds

- 06:00 (SE) Sweden to sell 2019 and 2022 Bonds

- 06:15 (EU) ECB allotment in 3-Month Tender

- 06:30 (BE) ECB's Praet (Belgium) in London

- 06:30 (US) Fed's Evans Speaks on Economy, Monetary Policy in London

- 07:00 (US) MBA Mortgage Applications w/e Mar 20th: No est v -3.9% prior

- 07:00 (BR) Brazil Mar FGV Consumer Confidence: No est v 85.4 prior

- 07:00 (IE) Ireland Feb Property Prices M/M: No est v -1.4% prior; Y/Y: No est v 15.5% prior

- 07:00 (CZ) Czech Republic to sell 2018 and 2028 bonds

- 07:30 (CL) Chile Central Bank's Traders Survey

- 07:45 (US) Daily Libor Fixing

- 08:00 (UK) Prime Minister's Question Time in House of Commons

- 08:00 (EU) Russia weekly OFZ Bond auction (if not cancelled)

- 08:30 (US) Feb Durable Goods Orders: 0.2%e v 2.8% prior; Durables Ex Transportation: 0.2%e v 0.0% prior (revised from 0.3%); Capital Goods Orders (Non-defense/Ex-aircraft): 0.3%e v 0.5% prior (revised from 0.6%); Capital Goods Shipments (Non-defense/Ex-aircraft): 0.3%e v 0.1% prior (revised from 0.3%); Durables Ex-Defense: No est v +3.0% prior

- 08:30 (TR) Turkey Mar Real Sector Confidence (Seasonally Adj): 104.6e v 104.3 prior; Real Sector Confidence NSA (Unadj): 103.8e v 103.4 prior

- 08:30 (TR) Turkey Mar Capacity Utilization: 72.5%e v 72.8% prior

- 09:00 (PT) Bank of Portugal Spring Economic Bulletin

- 09:15 (US) Baltic Dry Bulk Index

- 09:30 (BR) Brazil Feb Total Outstanding Loans (BRL): No est v 3.013T prior; M/M: No est v -0.2% prior; Personal Loan Default Rate: No est v 5.4% prior

- 10:00 (MX) Mexico Jan Economic Activity Index Y/Y: 1.8%e v 3.2% prior

- 10:00 (DE) German Fin Min Schaeuble with IMF's Gaspar

- 10:30 (US) Weekly DOE Crude Oil Inventories

- 11:30 (BR) Brazil Weekly Currency Flows

- 11:30 (US) Treasury to sell 2-Year Floating Rate Notes

- 12:00 (CA) Canada to sell 2-Year Bonds

- 12:00 (DE) German Chancellor Merkel on economic policy in Berlin

- 12:00 (PT) Portugal Fin Min Albuquerque in Parliament

- 13:00 (DE) ECB's Weidmann (Germany) in Munich

- 13:00 (FR) France Feb Net Change in Jobseekers: +10.0Ke v -19.1K prior; Total Jobseekers: 3.491Me v 3.482M prior

- 13:00 (US) Treasury to sell $26B in 5-Year Notes

- 14:30 (US) Treasury Sec Lew testifies at Senate Banking Committee

- 15:00 (AR) Argentina Feb Trade Balance: $92Me v $73M prior

- 15:30 (CA) Bank of Canada Dep Gav Lane gives presentation in Kelowna

- 17:00 (KR) South Korea Mar Consumer Confidence: No est v 103.0 prior

- 23:35 (JP) Japan to sell 3-Month Bills

- 23:45 (JP) Japan to sell 2-Year JGB