Pre-position ahead of US payroll data and Easter Holiday

Notes/Observations

- Japan Tankan Survey has large companies seeing inflation at 1.6% in five years; still well below the BOJ 2% target; building speculation that BOJ will act again to make sure target is achieved

- Greek reform list updated bit still needs work as country tries to unlock funds ahead of next IMF payment

- USD softer in pre-positioning following disappointing ADP data ahead of Friday's US payroll data

Economic data

- (IN) India Mar Manufacturing PMI: 52.1 v 51.2 prior (17th month of expansion)

- (EU) ECB €123M borrowed in overnight loan facility vs. €281M prior; €76.6B parked in deposit facility vs. €62.2B prior - Daily Eurosystem Liquidity Conditions

- (UK) Retailer John Lewis weekly LFL Partnership sales w/e Mar 27th: -2.4% v +0.6% prior

- (BR) Brazil Mar FIPE CPI (Sao Paulo) M/M: 0.7% v 0.7%e

- (IT) Italy Q4 YTD Deficit to GDP Ratio: 3.0% v 3.3% prior

- FAO Mar World Food Price Index: 173.8 v 179.4 prior; Y/Y: -1.5% v -14.0% prior

- (UK) Mar Construction PMI (miss): 57.8 v 59.8e

Fixed Income:

- (FR) France Debt Agency (AFT) sold total €7.999B vs. €7.0-8.0B indicated range in 2025, 2026 and 2045 Oats

- Sold €4.711B in 0.5% 2025 Oat; Avg Yield: 0.46% v 0.67% prior; Bid-to-cover: 1.72x v 1.53x prior

- Sold €1.38B in 3.5% Apr 2026 OAT; avg yield 0.51% v 2.9% prior; Bid-to-cover: 2.41x v 1.94x prior

- Sold €1.908B in 3.25% 2045 Oat; Avg Yield: 1.09% v 1.77% prior; Bid-to-cover: 1.51x v 3.06x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.1%, FTSE 100 +0.1% at 6,816, DAX flat at 11,995, CAC-40 flat at 5,063, IBEX-35 flat at 11,570, FTSE MIB -0.1% at 23,332, SMI +0.1% at 9,146, Athens Stock Exchange -1.6%, S&P 500 Futures -0.4% at 2,045]

- Market Focal Points/Key Themes: European equity markets open mixed, with the US non-farm payrolls report (due Friday) seen as the only remaining catalyst in holiday shortened week; Greek equity markets slightly lower as funding talks continue with the April 9th IMF payment deadline in focus; Marks & Spencer rises after reporting increase in Q4 sales; Premier Oil, Rockhopper Exploration and Falkland Oil & Gas rise after disclosing gas discovery.

By Sector

- Consumer Discretionary [Marks & Spencer MKS.UK +5% (Q4 sales rose)]

- Consumer Staples [Tate & Lyle TATE.UK +1 (reaffirmed cautious outlook)]

- Stoxx50 Sectors [Consumer Cyclical -0.7%, Telecom -0.3%, Basic Materials -0.3%, Utilities -0.2%, Consumer Non-Cyclical -0.1%; Energy +0.6%, Technology +0.2%, Financials flat, Industrials flat]

Speakers

- ECB's Lautenschlaeger (Germany) reiterated her doubts that ECB QE program would have the desired economic impact. Reiterated view that low interest rates raises risk of economy overheating and causing asset price bubbles in other asset classes

- France Fin Min Sapin stated that it would maintain the 2015 GDP growth forecast of 1.0%; wont raise forecasts but level seen as a 'floor' . Vowed that French govt to achieve €21B in cost spending cuts in 2015; still looking for an additional €3-4B in cuts

- Landesbank of Baden-Wurttemberg (L-Bank) to sue ECB in EU Court over supervisory role. The firm wants to be supervised by regulators in Germany (BaFin) and not the ECB.

- Poland Central Bank Gov Belka: Domestic deflation not in any panic situation but would deepen if companies stopped increasing wages. Hoped that PLN currency (Zloty) exchange rate would follow the Euro's path against the USD

- Hungary Central Bank's Palotai stated that it needed to continue lowering the Base Rate as long as the CPI situation warranted

- Thailand's military government lifts martial law. Junta would maintain the absolute authority it gave itself under the interim constitution

- Iran Foreign Min Zarif: Joint statement expected today from talks in Switzerland. Substantial progress has been made but some issues still needed to be resolved in order to reach a final deal. Agreement might be appended to UN Resolution

Currencies

- The USD was softer in the session in what dealers described as positioning for tomorrow's US jobs report. Trading likely to be dominated by pre-holiday book squaring and not fresh positioning. The sub-200K reading of the ADP report has prompted some concerns that a disappointing payroll data could be a negative surprise by investors and lead to a sharp USD sell-off

Looking Ahead

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds

- 06:00 (CZ) Czech Republic to sell Bills

- 06:00 (RO) Romania to sell RON400M in 2918 bond

- 6:00 (UK) DMO to sell combined €3.5B in 1-month, 3-month and 6-month Bills

- 06:45 (US) Daily Libor Fixing

- 07:00 (ZA) South Africa Feb Electricity Consumption Y/Y: No est v -1.3% prior; Electricity Production Y/Y: No est v -1.5% prior

- 07:30 (US) Mar Challenger Job Cuts: No est v +50.6K prior; Y/Y: No est v 20.9% prior

- 07:30 (EU) ECB Minutes from Mar 4-5th policy meeting

- 08:00 (US) Fed Chair Yellen gives opening remarks in Washington

- 08:00 (RU) Russia Gold and Forex Reserve w/e Mar 27th: No est v $352.9B prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Initial Jobless Claims: 286Ke v 282K prior; Continuing Claims: 2.41Me v 2.416M prior

- 08:30 (US) Feb Trade Balance: -$41.2Be v -$41.8B prior

- 08:30 (CA) Canada Feb Int'l Merchandise Trade: -C$2.0Be v -C$2.5B prior

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

- 09:00 (SG) Singapore Mar Purchasing Managers Index: 49.6e v 49.7 prior; Electronics Sector Index: No est v 49.8 prior

- 09:45 (US) Mar ISM New York: 62.0e v 63.1 prior

- 10:00 (US) Feb Factory Orders: -0.4%e v -0.2% prior

- 10:00 (US) Possible Feb Durable Goods revisions

- 10:00 (DK) Denmark Feb Foreign Reserves (DKK): No est v 737.1B prior

- 10:30 (EU) OECD chief Gurria with France Fin Min Sapin

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

- 11:00 (US) Treasury size announcement for 3-year, 10-year and 30-year

- 13:00 (US) Baker Hughes Rig Count data for w/e Apr 3rd

- 15:00 (UK) Party leaders TV debate

- 15:45 (US) Fed's Brainard (dove, voter) at conference in Washington

- 17:00 (KR) South Korea Mar Foreign Reserves: No est v $362.4B prior

- 21:35 (JP) Japan Mar Services PMI: No est v 48.5 prior; Composite PMI: No est v 50.0 prior

- 21:45 (CN) China Mar HSBC Services PMI: No est v 52.0 prior Composite PMI: No est v 51.8 prior