Greek officials in Washington sparks more jitters of potential default

Notes/Observations

- Australia Mar Employment Change beat expectations (+37.7K vs. +15.0Ke); reduces speculation on near-term RBA rate cut

- Greek officials in Washington for scheduled IMF spring meeting sparks more jitters of potential default; Core European 10-year and 30-year govt bond yields at record lows on safe-haven flows (and ECB QE program)

Economic data

- (EU) EU27 Mar New Car Registrations: 10.6% v 7.3% prior

- (JP) Japan Mar Final Machine Tool Orders Y/Y: 14.9% v 14.6% prelim

- (CH) Swiss Mar Producer & Import Prices (beat) M/M: 0.2% v 0.0%e; Y/Y: -3.4% v -3.7%e

- (NL) Netherlands Mar Unemployment Rate: 7.0% v 7.0%e

- (IT) Italy Feb Total Trade Balance: €3.5B v €0.2B prior; Trade Balance EU: €0.7B v €0.5B prior

Fixed Income:

- (ES) Spain Debt Agency (Tesoro) sold total €4.56B vs. €4.0-5.0B indicated in 2020, 2025 and 2029 bonds

- Sold €1.91B in 1.4% 2020 bono; Avg Yield: 0.535% v 0.386% prior; Bid-to-cover: 1.97x v 3.2x prior; Maximum Yield: 0.549% v 0.402% prior

- Sold €1.43B in 1.6% 2025 bono; Avg Yield: 1.282% v 1.023% prior; Bid-to-cover: 2.28x v 1.68x prior; Maximum Yield: 1.289% v 1.050% prior

- Sold €1.22B in 6% Jan 2029 bono; Avg Yield: 1.652% (record low) v 1.907% prior, bid-to-cover 1.9x v 1.50x prior; Maximum Yield 1.664% (record low) v 1.935% prior

- (FR) France Debt Agency (AFT) sold total €7.994B vs. €7.0-8.0B indicated range in 2018, 2019 and 2020 Oats

- Sold €3.008B in 0.0% 2018 Oat; Avg Yield -0.16% v -0.11% prior; Bid-to-cover: 2.38x v 2.25x prior

- Sold €1.54B in 0.50% 2019 Oat; Avg Yield: -0.07% v 0.12% prior; Bid-to-cover: 3.06x v 1.79x prior

- Sold €3.446B in 0.0% May 2020 Oat; Avg Yield -0.03% (record low) v +0.04% prior; Bid-to-cover: 1.66x v 2.07x prior

- (SE) Sweden sells total SEK1.0B in I/L 2019 and 2025 Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 -0.6%, FTSE 100 -0.1% at 7,091, DAX -0.7% at 12,143, CAC-40 -0.2% at 5,242, IBEX-35 -0.8% at 11.684, FTSE MIB -0.3% at 23,965, SMI flat at 9,430, Athens Stock Exchange -0.2%, S&P 500 Futures flat at 2,099]

- Market Focal Points/Key Themes: Equity markets open mixed following gains on Wed, amid widening in peripheral spreads and sharp rise in Greek short-term yields; Consumer Discretionary results in focus (Unilever Q1 sales above ests, SABMiller Q4 sales above ests, Diageo Q3 sales below ests, Debenhams H1 profits rise, Casino weighed down by cautious outlook, Zalando supported by guidance); UK homebuilder Persimmon 15-week sales +7%; Upcoming US corporate earnings (BlackRock, Goldman, Citi, Philip Morris, UnitedHealth)

By Sectors

- Consumer Discretionary [Diageo DGE.UK -3% (Q3 sales below ests), lCasino CO.FR -2.5% (cautious outlook); Zalando ZALG.DE +8% (upbeat outlook), Unilever ULVR.UK +3% (Q1 sales above ests), SABMiller SAB.UK +2% (Q4 sales above ests)]

- Healthcare [Ipsen IPN.FR -12% (negative data presentation)]

- Industrials [BAE Systems BA.UK -1% (ex-dividend); Airbus AIR.FR +1.5% (buyback)]

- Stoxx50 Sectors [Technology -1.3% (ASML -1.7%), Basic Materials -1.2%, Financials -1%, Telecom -0.6%, Energy -0.5%, Consumer Non-Cyclical -0.4%, Consumer Cyclical -0.1%, Industrials -0.1%; Utilities flat]

Speakers

- Greece said to have made an informal approach to delay payments but were told that no rescheduling was possible

- France Fin Min Sapin: Reasonable that no solution for Greece would be found at the Apr 24th Eurogroup meeting but confident that one would be found

- ECB Survey of Professional Forecasters raised its GDP growth forecast for the 2015-17 period and slightly adjusted the latter end of the inflation forecast

- Sweden Central Bank (Riksbank) Dep Gov Ohlsson reiterated view that Riksbank concerned about low inflation and was prepared to do more if necessary

- Czech Central Bank's Rusnok stated that it could not rule out FX intervention as a potential tool if needed

- IMF chief economist Blanchard: Fed and ECB would be able to halt an excessive decline in the Euro currency. He noted that Euro at $0.80 would lead to 'serious talks'

- German Leading Economic Institutes (Advisors) raised 2015 GDP forecast from 1.2% to 2.1% (official release)

- RBA's Edwards: GDP growth too weak to lower Unemployment Rate (but could be wrong on that observation). Stated that the March unemployment data was unambiguously good and country was very far away from heading into any recession

Currencies

- Greek officials in Washington for scheduled IMF spring meeting sparks more jitters of potential default; The EUR/USD was softer but the pair remained locked within its 5-week trading range. Core European 10-year and 30-year govt bond yields at record lows on safe-haven flows (and ECB QE program). S&P also downgraded Greece sovereign rating further into junk territory on Wed.

- AUD/USD benefited from the better-than-expected Australian March jobs report. The pair climbed to a 2-week high of $0.7780as participants scaled back views for any near-term RBA rate cut.

Political/In the Papers:

- (GR) S&P cuts Greece sovereign rating to CCC+ from B+; cuts outlook to Negative from Creditwatch Negative

Looking Ahead

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

- G20 Finance Ministers, Central Bankers begin 2-day meeting in Washington

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 2018, 2020 and 2031 bonds

- 05:30 (UK) DMO to sell £1.25B in 0.625% I/L 2040 Gilts

- 05:50 (FR) France Debt Agency (AFT) to sell combined €1.5-2.0B in I/L 2020, 2024 and 2025 Bonds (Oatei)

- 06:00 (IL) Israel Q4 Final GDP Annualized: No est v 6.8% prelim

- 06:45 (US) Daily Libor Fixing

- 07:00 (RO) Romania to sell RON200M in 5.95% Jun 2021 bond; Yield: % vs. 2.60% prior

- 08:00 (PL) Poland Mar CPI Core M/M: 0.2%e v 0.0% prior; Y/Y: 0.3%e v 0.4% prior

- 08:00 (RU) Russia Gold and Forex Reserve w/e Apr 10th: No est v $355.3B prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Mar Housing Starts: 1.040Me v 897K prior; Building Permits: 1.081Me v 1.102M prior (revised from 1.092M)

- 08:30 (US) Initial Jobless Claims: 280Ke v 281K prior; Continuing Claims: 2.32Me v 2.304M prior

- 08:30 (US) Weekly USDA Net Export Sales

- 09:00 (PT) ECB's Constancio (Portugal) in Washington DC

- 10:00 (US) Apr Philadelphia Fed Business Outlook: 6e v 5 prior

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 11:00 (US) Treasury 5-year TIPS announcement

- 12:00 (NO) Norway Central Bank (Norges) Gov Olsen speaks in Oslo

- 12:00 (CA) Canada to sell 10-year bonds

- 13:00 (US) Fed's Lockhart (Voter, Dove) on economic outlook

- 13:00 (US) Fed's Mester (non voter, hawk) speaks at Forecasters Club of New York

- 13:30 (US) Fed's Rosengren (non-voter, Dove) in London

- 15:00 (US) Fed Vice Chair Fischer participating on inflation panel at IMF in Washington

- 15:00 (UK) Opposition Party Leaders' Election Debate on BBC

- 17:00 (CL) Chile Central Bank (Bcch) Interest Rate Decision: Expected to leave Overnight Rate Target

Unchanged at 3.00%

- (CO) Colombia Mar Consumer Confidence Index: 13.6e v 14.0 prior

- 23:00 (CN) China to sell 3-Year Bonds