China continues its spat of disappointing data

EU Mid-Market Update: ECB expected to hold policy steady as conditions improve since the launch of QE; China continues its spat of disappointing data

Notes/Observations

- Chinese data continues it string of disappointing releases with Q1 GDP hitting its slowest quarterly growth rate since 2009. (Y/Y: 7.0% v 7.0%e) with growth in industrial production, fixed-asset investment and retail sales all decelerated

- ECB likely to leave monetary policy unchanged at today's council meeting with focus on the press conference afterwards (**Note: Inflation has picked up and confidence indicators improved since the last council meeting)

Economic data

- (JP) Japan Feb Final Industrial Production M/M: -3.1% v -3.4% prelim; Y/Y: -2.0% v -2.6% prelim; Capacity Utilization M/M: -3.2% v +3.6% prelim

- (SG) Singapore Feb Retail Sales M/M: -3.3 v +4.8% prior; Y/Y: 15.8% v 3.0%e; Retail Sales Ex Auto Y/Y: +14.8% v -8.7% prior

- (DE) Germany Mar Final CPI (inline) M/M: 0.5% v 0.5%e; Y/Y: 0.3% v 0.3%e

- (FI) Finland Feb GDP Indicator WD: -0.5 v +0.1% prior

- (IN) India Mar Wholesale Prices (WPI) Y/Y: -2.3% v -2.1%e

- (FR) France Mar CPI (inline) M/M: 0.7% v 0.7%e; Y/Y: -0.1% v 0.0%e; CPI Ex-Tobacco Index: 126.20 v 126.30e

- (TR) Turkey Jan Unemployment Rate: 11.3% v 11.2%e

- (NO) Norway Mar Trade Balance (NOK): 20.7B v 21.0B prior

- (EU) Euro Zone Feb Trade Balance (Seasoanlly Adj): €20.0B v €22.0Be; Trade Balance NSA (unadj): €20.3B v €21.0Be

Fixed Income:

- (IN) India sold total INR140B in 3-month and 12-month Bills (INR80B and INR60B respectively)

- (DK) Denmark sold total DKK1.46B in 3-month and 6-month Bills

- (EU) ECB allotted $0.0ment in 7-day USD Liquidity Tender at fixed 0.62$ vs. $0.0M prior

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month Bills

- (GR) Greece Debt Agency (PDMA) sold €812.5M vs. €625M in 13-week bills; Avg Yield: 2.70% (matches 2-year high) v 2.70% prior; Bid-to-cover: 1.30x (matches 2-year low) v 1.3x

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

**Equities**

Indices [Stoxx50 +0.7%, FTSE 100 +0.5% at 7,109, DAX +0.6% at 12,297, CAC-40 +0.7% at 5,254, IBEX-35 +0.7% at 11,792, FTSE MIB +0.9% at 23,968, SMI +0.5% at 9,461, Athens Stock Exchange -0.8%, S&P 500 Futures +0.1% at 2,093]

- Market Focal Points/Key Themes: Equity markets open mixed following declines on Tuesday; Athens Stock Exchange declines, amid renewed debt restructuring chatter; Alcatel and Nokia in €15.6B stock merger; Danone Q1 sales rise on higher prices and positive fx impact, Remy Cointreau sees sales rebound in Q4; Burberry H2 sales in line; H&M March sales above ests; Chip equipment firm ASML issues cautious outlook ; Total sees sharp rise in Q1 refining margin; Germany Economy Ministry cautious comments on Q1 growth; Upcoming ECB meeting, US Industrial Production and earnings from Bank of America; China Q1 GDP and March data below ests

By Sector:

- Telecom [Alcatel ALU.FR -8% (confirmed merger with Nokia)]

- Consumer Discretionary [Remy Cointreau RCO.FR +2% (Q4 sales above ests)]

- Basic Resources/Materials [Fresnillo FRES.UK +1% (Q1 silver production +18.9%)]

- Healthcare [Galapagos GLPG.BE +18% (data presentation)]

- Stoxx50 Sectors [Consumer Cyclical +1%, Energy +1%, Industrials +1%, Technology +0.7%, Basic Materials +0.7%, Consumer Non-Cyclical +0.4%, Utilities +0.2%, Telecom +0.2%, Financials +0.2%]

**Speakers**

- Germany Economy Ministry Report: High rate of growth at end of 2014 would not be achieved in Q1 but reiterated economic uptrend should continue at moderate rate aided by weaker euro and lower oil prices

- France Fin Min Sapin confirmed 2015 Budget Deficit to GDP Ratio at 3.8% and forecasted 2016 Budget Deficit to GDP Ratio at 3.3% and at 2.7% in 2017 (in line with EU target).Stated that its economic forecasts were extremely prudent with new deficit trajectory realistic (**Reminder: On Feb 25th EU commission provided France with new deadline for Maastricht budget deficit targets until 2017 to bring its deficit below 3%)

- Spain PM Rajoy stated that was on course to meet 2015 Budget Deficit to GDP target of 4.2%. Budget Deficit to GDP to fall below 3.0% in 2016

- Greece State Min: Reiterates no point in calling early elections

- German Leading Economic Institutes (Advisors) raise 2015 GDP forecast from 1.2% to 2.0%

- Sweden Finance Ministry spring budget and forecasts cut its CPI forecast for both 2015 and 2016 but raises its GDP forecast for this year.

- Turkey Fin Min Simsek stated that the country could still achieve 4.0% GDP growth in 2015 as macroeconomic fundamentals remained strong. To see a delayed effect from lower oil prices and GDP to pick up after elections

- Turkey PM advisor Bulut: USD FX speculators fail to grasp that action could occur at any time. USD traders will learn that Turkey is not a place to speculate. Says USD/TRY above 2.63 is contrary to market reality (**Note: pair currently above 2.70)

- BOJ Gov Kuroda reiterated QQE exerting its intended effects. Inflation expectations were rising on whole with underlying inflation trend steadily improving

- Iran President Rouhani reiterated there would be no nuclear deal if sanctions were not lifted

- IEA Monthly Oil Report raised forecast for global oil demand growth in 2015 by 90K bpd to 1.08M bpd. OPEC March crude oil production +890K bpd to 31.02M driven by Saudi Arabia, Iraq and Libya (largest OPEC jump in 4 years)

**Currencies***

- The USD consolidated its recent losses following the miss of the US retail sales data from Tuesday.

- The EUR/USD remained vulnerable to the Greek situation. One press article noted that Greece Fin Min Varoufakis might with an infamous sovereign debt lawyer during his US visit this week for the IMF and World Bank spring meetings (**Note: there had been numerous reports that Greece was mulling a possible debt default, if talks with creditors failed). EUR/USD was off approx 0.7% at 1.0582 just ahead of the NY morning. The German 10-year Bund matched its record low yield of 0.13% while the 30-year Bund hit a fresh record low in the session below 0.57%

- Hungary govt officials provided some verbal FX intervention as the TRY currency hit fresh record lows against the USD above 2.70 level

Political/In the Papers:

- (EU) ECB reportedly evaluating agency debt from Asfinag (Germany highway finance bonds) and CDP for the QE program

- (GR) IMF: In talks with Greece about resuming lending program; Lot of work remains - financial press

- (DE) Germany CDU ruling party official Kauder: Will not support 3rd Greek bailout package; Still focused on 2nd package from which Greece can receive €7B

Looking Ahead

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

- 05:30 (DE) Germany to sell €4.0B in 0.5% 2025 Bunds

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell 3-Month and 12-month Bills

- 06:00 (IE) Ireland Feb Trade Balance: No est v €3.9B prior

- 06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: expected to leave Base Rate unchanged at 1.50%

- 06:45 (US) Daily Libor Fixing

- 07:00 (US) MBA Mortgage Applications w/e Apr 10th: No est v +0.4% prior

- 07:00 (BR) Brazil Apr FGV Inflation IGP-10 M/M: 1.2%e v 0.8% prior

- 07:00 (ZA) South Africa Feb Retail Sales M/M: +1.2%e v -0.1% prior; Y/Y: 1.9%e v 1.7% prior

- 07:00 (RU) Russia to sell RUB30B in weekly OFZ bond

- 07:30 (BR) Brazil Feb Economic Activity Index (Monthly GDP): M/M: -0.2%e v -0.1% prior; Y/Y: -4.0%e v -1.8% prior

- 07:45 (EU) ECB Interest Rate Decision: Expected to leave key rates unchanged; Expected to leave Main Refinancing Rate unchanged at 0.05%; Expected to leave Deposit Facility Rate unchanged at -0.20%; Expected to leave Marginal Lending Facility unchanged at 0.30%

- 08:00 (PL) Poland Mar CPI M/M: +0.3%e v -0.1% prior; Y/Y: -1.3%e v -1.6% prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Apr Empire Manufacturing: 7.17e v 6.90 prior

- 08:30 (CA) Canada Feb Manufacturing Sales M/M: +0.1%e v -1.7% prior

- 08:30 (EU) ECB Draghi post rate decision press conference

- 09:00 (CA) Canada Mar Existing Home Sales M/M: No est v 1.0% prior

- 09:00 (PL) Poland Mar YTD Budget Balance Level (PLN): No est v -11.3B prior; Budget Balance Performance: No est v 24.6% prior

- 09:00 (BE) Belgium Feb Trade Balance: No est v -€0.1B prior

- 09:00 (US) Fed's Bullard (moderate, non voter) speaks on Financial Regulation in Washington

- 09:00 (US) IMF global stability report

- 09:15 (US) Mar Industrial Production M/M: -0.3%e v 0.1% prior; Capacity Utilization: 78.6%e v 78.9% prior; Manufacturing Production: +0.2%e v -0.2% prior

- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.75%

- 10:00 (US) Apr NAHB Housing Market Index: 55e v 53 prior

- 10:00 (PL) Poland Central Bank Gov Belka post rate press conference

- 10:00 (NZ) Fonterra Global Dairy Trade auction

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

- 11:15 (CA) Bank of Canada (BOC) Gov port rate decision press conference

- 11:30 (IL) Israel Mar CPI M/M: No est v -0.7% prior; Y/Y: No est v -1.0% prior

- 11:30 (BR) Brazil Weekly Currency Flows

- 12:00 (IS) Iceland Mar International Reserves (ISK): No est v 551B prior

- 14:00 (US) Federal Reserve Beige Book

- (PE) Peru Mar Unemployment Rate: No est v 6.9% prior

- (PE) Peru Feb Economic Activity Index (Monthly GDP): Y/Y: No est v 1.7% prior

- 16:00 (US) Feb Net Long-term TIC Flows: No est v -$27.2B prior; Total Net TIC Flows: No est v $88.3B -prior

- 19:30 (US) Fed's Lacker (hawk, FOMC voter) speaks to Business Leaders in Charleston, SC

- 21:00 (AU) Australia Apr Consumer Inflation Expectation: No est v 3.2% prior

- 21:30 (AU) Australia Mar Employment Change: +15.0Ke v +15.6K prior; Unemployment Rate: 6.3%e v 6.3% prior

- 23:00 (TH) Thailand Central Bank to sell THB35B in 2017 bonds

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

- 23:45 (JP) Japan to sell 20-Year JGB Bonds