Quiet start to trading week

Notes/Observations

- Shanghai Composite hits fresh 7-year highs on reports PBoC said to discuss QE

Economic data

- (DE) Germany Mar Import Price Index (beat) M/M: 1.0% v 0.4%e; Y/Y: -1.4% v -2.0%e

- (FI) Finland Apr Consumer Confidence Index (miss): 11.4 v 12.0e; Business Confidence: N-7 v -7 prior

- (FI) Finland Mar Preliminary Retail Sales Volume Y/Y: 0.7% v 0.6% prior

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.7%, FTSE 100 -0.4% at 7,042, DAX -0.2% at 11,785, CAC-40 -1% at 11,415, IBEX-35 -0.8% at 11,414, FTSE MIB -0.8% at 23,231, SMI -0.7% at 9,240, Athens Stock Exchange -0.2%, S&P 500 Futures flat at 2,112]

- Market Focal Points/Key Themes: European equity markets open mostly higher, tracking recent gains in US equities; Markets later pare gains; Greek banks trade lower by over 1%; IT name Capgemini to acquire iGate; Deutsche Bank issues strategy update, cut ROE target, Q1 revenues above ests; Event risks for the week include US Fed decision, German CPI, US GDP, UK GDP, BoJ decision, Apple earnings.

By Sector

- Financials [Deutsche Postbank DPB.DE +11% (Deutsche Bank to examine options for unit), HSBC HSBA.UK +3% (speculation related to UK retail banking unit); Deutsche Bank DBK.DE -2% (cautious ROE target), Bankia BKIA.ES -2% (Net interest income below ests)]

- Industrials [Volkswagen VOW3.DE +4% (Chairman resigned), Sandvik SAND.SE +3% (Q1 results above ests), Vinci DG.FR ]

- Energy [Tullow Oil TLW.UK +4% (favorable decision in Ghana)]

- Healthcare [Swedish Orphan Biovitrum SOBI.SE +20% (takeover speculation)]

- Basic Materials/Resources [SSAB SSABA.SE +7% (Q1 results above ests)]

- Consumer Discretionary [Joyou JY8.DE -60% (accounting update)]

- Stoxx50 Sectors [Financials -1%, Industrials -0.8%, Energy -0.7%, Utilities -0.6%, Consumer Non-Cyclical -0.6%, Basic Materials -0.5%, Telecom -0.5%; Consumer Cyclical +1.5%, Technology +0.1%]

Speakers

- Eurogroup chief Dijsselbloem reiterated the view of no 'major' third aid program for Greece

- Greece President Pavlopoulos ruled out possibility of an exit from EMU ("Grexit')

- Spain PM Rajoy stated that he saw 2015 and 2016 GDP growth at 2.9%

- ECB's Nouy (head of SSM): Limiting banking union to Euro Zone risks contagion effect

- South Korea President Park said to accept PM Lee resignation

- Fitch cuts Japan Sovereign Rating to A from A+ (one notch); Outlook Stable. It cited the fact that the Japanese government did not include sufficient structural fiscal measures in its budget for the fiscal year April 2015-March 2016 (FY15) to replace a deferred consumption tax increase.

- Saudi Prince Abdulaziz reiterated to meet any demand for oil; oil market was 'excellent'

Currencies

- The USD was marginally firmer against the major pairs in quiet trading. The mid-part of the week will be 'action packed' with several key rate decisions (included FOMC, BOJ, Riksbank, Brazil).

- The EUR/USD tested 1.0830 as the Friday Eurogroup meeting failed to reach any agreement on Greece. The next schedule Eurogroup meeting is scheduled for May 11th. Reports circulated that the deadline for a Greek agreement could be extended until May 25th. This would still allow 5 weeks for domestic parliaments to ratify (before June-end final deadline)

- The USD/JPY edged back above the 119 level ahead of Thursday BOJ decision. Some govt officials putting the BOJ under pressure to expand its QE but analyst put the probability around 20% at this time. The yen hit a bit more turbulence after Fitch cut its sovereign rating a notch to "A"

**Political/In the Papers:

- (GR) Reports circulated that tax debtors were seeing their accounts frozen, which some see as a sign of the arrival of "hard" capital controls

Looking Ahead

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

- (BR) Brazil Apr CNI Consumer Confidence: No est v 100 prior

- (IT) Italy Debt Agency (Tesoro) to sell €1.5-2,0B in 2017 CTZ

- (IT) Italy Debt Agency (Tesoro) to sell €0.5-0.75B in I/L 2021 and 2024 Bonds

- 05:30 (DE) Germany to sell €1.5B in 12-month BuBills

- 06:00 (UK) Apr CBI Industrial Trends Total Orders: 4e v 0 prior; Selling Prices: 2e v 4 prior; Business Optimism: 19e v 15 prior

- 06:00 Turkey to sell 2020 and 2025 bonds

- 06:00 (Il) Israel to sell 2017, 2019, 2024 and 2045 Bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Apr FGV Construction Costs M/M: 0.8%e v 0.4% prior

- 07:00 (BR) Brazil Apr FGV Consumer Confidence: No est v 82.9 prior

- 07:30 (BR) Brazil Central Bank Weekly Economists Survey

- 08:00 (PT) ECB's Constancio (Portugal) in Brussels

- 08:15 (US) Baltic Dry Bulk Index

- 08:20 (DE) German Chancellor Merkel with Poland PM Kopacz in Warsaw

- 08:30 (BR) Brazil Mar Total Federal Debt (BRL): No est v 2.329T prior

- 08:50 (FR) France Debt Agency (AFT) to sell €5.0-6.2B in 3-month, 6-month and 12-month Bills

- 09:00 (IL) Israel Central bank Interest Rate Decision: expected to leave Base Rate unchanged at 0.10%

- 09:00 (MX) Mexico Mar Unemployment Rate (Seasonally Adj): 4.2%e v 4.5% prior; Unemployment Rate NSA (unadj): 4.2%e v 4.3% prior

- 09:00 (MX) Mexico Mar Trade Balance: $0.6Be v $0.6B prior

- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

- 09:45 (EU) ECB announces Covered-Bond Purchases

- 09:45 (US) Apr Preliminary Markit Services PMI: 58.8e v 59.2 prior; Composite PMI: No est v 59.2 prior

- 10:30 (US) Apr Dallas Fed Manufacturing. Activity: -12.0e v -17.4 prior

- 11:30 (EU) EU's Katainen debates the Future of Europe in Luxembourg

- 11:30 (US) Treasury to sell combined $48B in 3-Month and 6-Month Bills

- 12:00 (FR) France Mar Net Change Jobseekers: No est v +12.8K prior; Total Jobseekers: 3.500Me v 3.494M prior

- 13:00 (US) Treasury to sell $26B in 2-Year Notes

- 13:30 (BR) Brazil Mar Tax Collections (BRL): 94.7Be v 90.0B prior

- 13:30 (NO) Norway Central Bank (Norges) Gov Olsen speaks in London

- 16:00 (US) Crop Condition Report

- 18:40 (AU) RBA' Gov Stevens speech in Sydney

- 19:50 (JP) Japan Mar Retail Sales M/M: 0.6%e v 0.7% prior; Retail Trade Y/Y: -7.5%e v -1.7% prior (revised from -1.8%); Large Retailers' Sales: -10.9%e v 1.3% prior

- 21:00 (PH) Philippines Feb Trade Balance: -$0.3Be v -$0.8B prior; Imports Y/Y: -3.1%e v -14.2% prior

- 21:00 (AU) Australia to sell Inflation-linked Bonds

- 23:00 (TH) Thailand Mar Customs Trade Balance: $0.5Be v $0.4B prior; Customs Exports Y/Y: -3.5%e v -6.1% prior; Customs Imports Y/Y: +0.3%e v +1.5% prior

- 23:00 (TH) Bank of Thailand to sell 3-month and 6-month Bills

- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills

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

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