UK Q1 advance GDP misses expectations but will it have any impact in upcoming elections

Notes/Observations

- New Greek negotiating team brings optimism that an agreement can be achieved

- Chinese official downplays rumors of imminent QE

- UK Q1 Advance GDP misses expectations ahead of national elections; grows at slowest pace since Q4 2012

Economic data

- (JP) Japan Apr Small Business Confidence (miss): 47.4 v 49.0e

- (FR) France Apr Consumer Confidence: 94 v 94e (highest since Jan 2010)

- (SE) Sweden Apr Consumer Confidence (miss): 97.1 v 100.8e; Manufacturing Confidence (miss): 93.7 v 102.1e; Economic Tendency Survey: 99.2 v 102.0e

- (EU) ECB €71 borrowed in overnight loan facility vs. €31M prior; €89.1B parked in deposit facility vs. €86.2B prior - Daily Eurosystem Liquidity Conditions

- (SE) Sweden Mar Trade Balance (SEK): 4.2B v 2.0Be

- (SE) Sweden Mar PPI M/M: 0.3% v 1.1% prior; Y/Y: 2.3% v 1.9% prior

- (SE) Sweden Mar Retail Sales M/M: 0.7% v 0.2%; Y/Y: 4.6% v 3.4%e

- (NO) Norway Q1 Industrial Confidence: -3 v -2e

- (UK) Q1 Advance GDP (miss) Q/Q: 0.3% v 0.5%e; Y/Y: 2.4% v 2.6%e (slowest pace since Q4 2012)

- (UK) Mar BBA Loans for House Purchase (beat): 38.8K v 37.8Ke

- (HK) Hong Kong Mar Trade Balance (HKD): -46.2B v -45.0Be; Exports Y/Y: -1.8% v +2.1%e; Imports Y/Y: -2.7% v -0.5%e

Fixed Income:

- (CY) Cyprus opened its book to sell 7-year EUR-denominated bond; yield guidance seen at 4.125%

- (NL) Netherlands Debt Agency (DSTA) sold €1.08B €1.0-1.5B in 2.75% 2047 OLO Bonds; Avg Yield: 0.746% (record low) v 1.152% prior

- (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: 0.00% (record low) v 0.40% prior; Bid-to-cover: 1.80x v 1.71x prior

- (EU) ECB allotted €108.5B in 7-Day Main Refinancing Tender at fixed 0.05% vs. €98.5Be

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.5%, FTSE 100 -0.7% at 7,054, DAX -0.6% at 11,969, CAC-40 -0.9% at 5,224, IBEX-35 +0.2% at 11,660, FTSE MIB flat at 23,812, SMI -0.8% at 9,270, Athens Stock Exchange -0.5%, S&P 500 Futures -0.2% at 2,100]

- Market Focal Points/Key Themes: Equity markets open mostly lower following the sharp gains seen on Monday; Greek equities open higher, then pare gains; FTSE 100 weaker amid UK GDP data; Energy firms beat ests on better refining results (BP, Total); Daimler beats ests on Mercedes-Benz unit; Apple beat ests; Deutsche Bank shares see follow through selling after recent strategy update, Commerzbank Bank weighed down by capital raise; US morning earnings include (Bristol-Myers, Ford, JetBlue, Merck, Pfizer, UPS, Whirlpool)

By sector:

- Financials [Commerzbank CBK.DE -4% (capital raise), Standard Chartered STAN.UK -0.5% (Q1 profits declined); Santander SAN.ES +1% (Q1 results in line)

- Industrials [Gerberit GEBN.CH -4% (Q1 results below ests); Daimler DAI.DE +2% (Q1 results above ests)

- Technology [Philips PHIA.NL -1.8% (cautious 2016 outlook, lower Q1 margins)

- Telecom [Orange ORA.R -1.8% (Q1 EBITDA declined)

- Energy [BP BP.UK +1% (Q1 profits above ests), Total FP.FR +1% (Q1 profits above ests)]

- Stoxx50 Sectors [Telecom -1.1%, Consumer Non-Cyclical -1.1%, Financials -0.8%, Basic Materials -0.7%, Industrials -0.3%, Consumer Cyclical -0.1%; Energy +1%, Utilities +0.1%, Technology flat]

**Speakers**

- ECB's Noyer (France) stated that France 2016 GDP growth could achieve 1.5%

- Greece creditors seen an additional €3.0B in measures needed in order for Greece to achieve primary surplus between 1.5-2.0%. Creditors seen Greek 2015 GDP at best between 0.0-0.5% range

- UK PM Cameron stated that the ciuntry's economic recovery cannot be taken for gramted

- Japan Vice Econ Min Nishimura: Making steady progress in ending deflation; would not be surprised if BoJ's 2% price target goal was delayed into FY16 but shares view with central bank that there was no change in overall trend of inflation. Private consumption expected to move in an overall positive direction and saw a greater risks from overseas

- PBoC chief economist Ma Jun: To maintain prudent monetary policy approach; no need to inject funds via bond purchases

- HKMA reiterated it has no plans to change the curerncy peg

- Russia Energy Min Novak: To meet with OPEC between Jun 2-3rd (**Note next OPEC is Jun 5th)

**Currencies***

- The EUR/USD was little changed just above the 1.09 handle following yesterday's rise on fresh optimism of a deal on Greece. The new Greek Working Group official Chouliarakia was deemed as "more constructive" and "light years" more familiar with the program's details than the official he replaced (Theocarakis)

- The GBP/USD seemed posed to snap its 6-day winning streak after Q1 advance GDP reading missed expectations. The GBP/USD fell over 0.3% following the data to test its 100-day moving average near 1.5175 while 10-year Gilt yield saw a 3 basis-point reversal to test 1.67%

Political/In the Papers:

- (GR) Greece Finance Ministry reportedly preparing legislation that has the reform proposals as requested by creditors

- (GR) Greek political analyst on draft law: Says it involves fiscal measures, tax administration, TV ad tax, public admin reforms ; Developments are accelerating; includes structural reforms for first time

Looking Ahead

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

- (PT) Bank of Portugal report on Supervision of Banks

- (ES) Spain Mar YTD Budget Balance: No est v -€1.2B prior

- (ZA) South Africa to sell combined ZAR2.35B in 2030, 2032 and 2048 bonds

- (ID) Indonesia to sell 9-month Bills;2-year; 5-year, 15-year and 30-year govt bonds

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills

- 06:00 (TR) Turkey to sell 2016, 2022 and 2025 bonds

- 06:00 (RO) Romania to sell RON1.0B in Bills

- 06:00 (IE) Ireland Mar Property Prices M/M: No est v -0.4% prior; Y/Y: No est v 14.9% prior

- 06:00 (IE) Ireland Mar Retail Sales Volume M/M: No est v -0.2% prior; Y/Y: No est v 8.3% prior (revised from 8.2% prior)

- 06:45 (US) Daily Libor Fixing

- 07:00 (RU) Russia announces weekly OFZ bond auction

- 07:00 (EU) EU Commission to make proposals on fighting Terrorism

- 07:45 (US) Chain Store Sales

- 08:00 (BR) Brazil Mar Unemployment Rate: 6.1%e v 5.9% prior

- 08:10 (DE) German Chancellor Merkel with Denmark PM Thorning-Schmidt

- 08:15 (US) Baltic Dry Bulk Index

- 08:45 (CA) Bank of Canada (BOC) Gov Poloz

- 08:55 (US) Weekly Redbook Sales

- 09:00 (US) Feb S&P/ Case-Shiller 20 City M/M: 0.70%e v 0.87% prior; Y/Y: 4.70%e v 4.56% prior; HPI NSA: 173.13e v 172.94 prior

- 09:00 (EU) Weekly ECB Forex Reserves:

- 10:00 (US) Apr Consumer Confidence Index: 102.2e v 101.3 prior

- 10:00 (US) Apr Richmond Fed Manufacturing Index: -2e v -8 prior

- 10:00 (MX) Mexico Weekly International Reserves

- 11:30 (US) Treasury to sell 4-Week and 52-Week Bills

- 13:00 (US) Treasury to sell $35B in 5-Year Notes

- 13:30 (DE) ECB's Weidmann (Germany) in Essen

- 16:30 (US) Weekly API Oil Inventories

- 17:00 (KR) South Korea May Business Manufacturing Survey: No est v 80 prior; Non-Manufacturing Survey: No est v 74 prior

- 18:45 (NZ) New Zealand Mar Trade Balance: 300Me v 50M prior

- 23:00 (TH) Thailand to sell THB7.0B in 2061 Bonds