BOE minutes still show that next rate move is likely higher

Notes/Observations

- Japan registers its first trade surplus in almost three years aided by the decline in energy prices (¥229B vs. ¥44.6Be)

- Australia Q1 CPI data eases pressure on RBA to cut rates(Q/Q: 0.2% v 0.1%e; Y/Y: 1.3% v 1.3%e)

- BOE April minutes reiterates that next likely move in rates is higher

Economic data

- (TR) Turkey Apr Consumer Confidence Index: 65.4 v 66.0e

- (DK) Denmark Apr Consumer Confidence Indicator: 13.7 v 12.5e

- (DK) Denmark Mar Retail Sales M/M: 0.5% v 0.5%e; Y/Y: 2.7% v 0.9% prior

- (NL) Netherlands Apr Consumer Confidence Index : 0 v 2 prior

- (ZA) South Africa Mar CPI (miss) M/M: 1.4% v 1.5%e; Y/Y: 4.0% v 4.1%e

- (IT) Italy Feb Industrial Orders M/M: +0.8% v -3.7% prior; Y/Y: 2.0% v -5.5% prior

- (IT) Italy Feb Industrial Sales M/M: +0.4% v -1.7% prior; Y/Y: -0.9% v -2.5% prior

- (UK) Bank of England (BOE) Minutes: Voted 9 to 0 (unanimous) to leaves Interest Rates unchanged at 0.50%

- (UK) Bank of England (BOE) Minutes: Voted 9 to 0 (unanimous) to maintain Asset Purchase Target at £375B

- (CH) Swiss Apr Credit Suisse ZEW Expectations Survey: -23.2 v -37.9 prior

- (IT) Italy Feb Retail Sales M/M: 0.4% v 0.2% prior; Y/Y: 0.1% v 1.2% prior

Fixed Income:

- (IN) India sold INR140B in 3-month and 6-month in Bills (INR80B and INR60B respectively)

- (SE) Sweden sold total SEK4.0B vs. SEK4.0B indicated in 2.5% 2025 Bond; Avg Yield: 0.3045% v 0.3827% prior; bid-to-cover: 1.81x v 2.84x prior

- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 1.75% 2025 bond; Yield: 1.40% v 1.48% prior; Bid-to-cover: 2.62x v 2.28x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.6%, FTSE 100 -0.8% at 7,004, DAX -0.8% at 11,837, CAC-40 -0.7% at 5,154, IBEX-35 -0.8% at 11,332, FTSE MIB -0.3% at 23,180, SMI flat 9,301, Athens Stock Exchange -1%, S&P 500 Futures -0.4% at 2,082]

- Market Focal Points/Key Themes: Equity markets open generally higher amid better than expected sales figures from Roche; Markets later pare gains led by FTSE 100 (Tesco pares gains); FTSE 100 holds losses amid BoE minutes release and election concerns; Greek equities open lower; Swiss Watchmaker Richemont's FY results to be hurt by mark-to-market loss; Tesco confirms FY write down, trading profit inline; Heineken Q1 sales above ests; Upcoming US morning earnings (Boeing, Coca-Cola, Michelin, Bank of New York, McDonalds)

By Sector

- Healthcare [Roche ROG.CH +2% (Q1 sales above ests, reaffirmed outlook)]

- Consumer Discretionary [Kering KER.FR -4% (weak Q1 sales), Richemont CFR.CH -1% (profit warning)]

- Industrials [Zodiac ZC.FR +6% (H1 sales +4.9%), Volvo VOLVB.SE +13% (new CEO, Q1 results above ests), Rolls Royce RR.UK +3% (new CEO), Croda CRDA.UK +2.5% (Q1 sales rose), Safran SAF.FR +1% (reaffirmed outlook)]

- Energy [Vopak VPK.NL -3% (Q1 profits declined)]

- Technology [ASML ASML.NL +8% (large order award)]

- Stoxx50 Sectors [Energy -1%, Utilities -0.7%, Consumer Cyclical -0.7%, Basic Materials -0.7%, Financials -0.3%, Industrials -0.3%, Consumer Non-Cyclical -0.1%; Technology +4% (supported by ASML), Telecom +0.3%]

**Speakers**

- ECB refuted press speculation and stated it had not made any decision on higher haircuts for Greek banks

- ECB's Coeure (France) reiterated Greece capital controls were not a working assumption and reiterated Greece needed to complete bailout review talk and that the current situation was clearly not sustainable. ECB profits on Greek bond holdings would be returned to Athens only after successful conclusion of the country's bailout review. He also reiterated view that a Greece exit from EMU (Grexit) was out of the question

- Bank of England (BOE) April Minutes had no surprises. The vote was again unanimous to keep policy steady (both interest rates and asset purchase target). Reiterated that next rate move likely to be higher and saw risk of faster inflation pickup from GBP currency impact. It reiterated two members (prior hawks) saw case for rate hike being 'finely balanced'. GBP currency (Pound) rise was weighing on CPI quicker vs expected. CPI expectations hint households would not delay spending

- German govt presented its spring economic forecasts raised both 2015 and 2016 GDP growth forecasts citing strong private consumption and higher employment. Weaker Euro currency also a factor in the revoision. Raised 2015 GDP from 1.5% to 1.8% and raised 2016 GDP from 1.6% to 1.8%

- Greece Dep Fin Min: Will need €350-400M by April 27th if local government cash not freed

- Ireland Fin Min Noonan reiterated the general view that not expecting any 'crystalizing decisions' on Greece until May. Nothing of substance to report on Greece but progress was being made

- Hungary Central Bank might decide on funding for loan growth plan in autumn. Possibilities include decision to expand, revamp or phase-out the funding for loan growth scheme

- Russia Economic Ministry seeks to suspend budget rule for 2016-17 period due to spending being linked to oil price

- Japan BOJ is expected to maintain its monetary policy steady at its April 30th meeting but could lower its inflation outlook

- BOJ Semi-Annual Financial System Report noted that banks in Japan would suffer ¥7.5T in losses if interest rates broadly rise by 100bps

- India Central bank (RBI) advisor Goyal: RBI has room to further cut Repo Rate by 50bps in 2015

- Iran President Rouhani stated that nuclear talks were on a constructive path and could lead to a final solution. Focus to seek peace in Yemen; military action was not the right solution

Currencies

- The USD was slightly weaker against the major and commodity-related currency pairs in the session

- EUR/USD remained locked in the middle of it 5 big-figure range for the past few sessions but approached the 1.08 level. The focus remained on Greece with local official noting the country has enough cash through May and continue negotiations on its bailout program

- The GBP currency was firmer after release of BOE minutes as it reiterated that next rate move likely to be higher but saw risk of faster inflation pickup from GBP currency impact. GBP/USD tested above 1.50 level

- The AUD/USD was firmer in Asia after Australia Q1 CPI data eased pressure on RBA to cut rates in the near-term. AUD/USD was higher by over 1% at test 0.78

- Greece 10-year govt bond yields held above the 13% level ahead of Friday's Eurogroup. More EU official expressed little optimism that this week meeting would resolve the key issues to complete the current bailout review.

**Political/In the Papers:

- (CN) China's official People's Daily article said the country's 'bull market' has just started

Looking Ahead

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

- (CH) Swiss Government holds Regular Meeting

- (CZ) Czech Central Bank Gov Singer at CCE risk conference in Prague

- (PT) Portugal Feb Current Account Balance: No est v €0.1B prior

- 05:30 (DE) EU's Dombroskis with German Fin Min Schaeuble in Berlin

- 06:00 (CZ) Czech Republic to sell combined CZK8.0-14.0B in 2020 and 2025 bonds

- 06:00 (NO) Norway to sell NOK3.0B in 1.75% 2025 bond

- 06:45 (US) Daily Libor Fixing

- 07:00 (RU) Russia to sell combined RUB25B in OFZ bonds

- 07:00 (US) MBA Mortgage Applications w/e Apr 17th: No est v -2.3% prior

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave Key Rates Unchanged; expected to leave Benchmark Repurchase Rate unchanged at 7.50%; Expected to leave Overnight Lending Rate unchanged at 10.75%; Expected to leave Overnight Borrowing Rate unchanged at 7.25%

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

- 08:15 (US) Baltic Dry Bulk Index

- 09:00 (US) Feb FHFA House Price Index M/M: 0.5%e v 0.3% prior

- 09:30 (BR) Brazil Mar Current Account Balance: -$4.9Be v -$6.9B prior; Foreign Direct Investment (FDI): $3.7Be v $2.8B prior

- 10:00 (US) Mar Existing Home Sales: 5.03Me v 4.88M prior

- 10:00 (EU) Euro Zone Apr Advance Consumer Confidence: -2.5e v -3.7 prior

- 10:00 (PT) Portugal Parliament debates stability program

- 10:30 (DE) German Chancellor Merkel at Industry event

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

- 11:00 (PT) ECB's Costa (Portugal) in Lisbon

- 11:00 (EU) Eurogroup chief Dijsselbloem in Dutch Parliament

- 11:30 (BR) Brazil Weekly Currency Flows

- 17:00 (CO) Colombia Feb Trade Balance: -$1.4Be v -$1.8B prior; Total Imports: $4.8Be v $4.9B prior

- 19:00 (KR) South Korea Q1 Preliminary GDP Q/Q: 0.6%e v 0.3% prior; Y/Y: 2.3%e v 2.7% prior

- 20:00 (NZ) RBNZ Gov Wheeler speaks in Hamilton (Not Public)

- 21:35 (JP) Japan Apr Preliminary Manufacturing PMI: 50.7e v 50.3 prior

- 21:45 (CN) China Apr Preliminary HSBC Manufacturing PMI: 49.6e v 49.6 prelim

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

- 23:45 (JP) Japan to sell 40-Year JGB Bonds