Global RRRebound!

Economic Data

- (PT) Portugal Mar PPI M/M: 0.8% v 0.9% prior; Y/Y: -2.4% v -3.4% prior
- (PL) Poland Mar Sold Industrial Output M/M: 13.4% v 11.8%e; Y/Y: 8.8% v 7.2%e
- (PL) Poland Mar PPI M/M: 0.2% v 0.1%e; Y/Y: -2.4% v -2.5%e
- (PL) Poland Mar Retail Sales M/M: 17.4% v 15.7%e; Y/Y: 3.0% v +1.6%e
- (US) Mar Chicago Fed National Activity Index: -0.42 v +0.10e

European and US stocks are seeing a strong snapback from Friday's declines. The PBoC's RRR cut helped neutralize fears of a Chinese selloff after Friday's regulatory crackdown and some good US earnings helping US markets go higher. As of writing, the DJIA is up 1.34%, the S&P500 is up 1.02% and the Nasdaq is up 1.14%.

During the European session, there were news reports that EU Commissioner Juncker was looking at a new plan to prevent a Greek default, as negotiations were going nowhere. Later the Greek government issued a decree forcing local governments to transfer all their cash balances to the central bank ahead of another IMF payment as the nation's cash crunch worsens. With the situation looking dire, ECB member Constancio said that if a default happens, EU treaties do not allow a country to be expelled from the euro zone. ECB's Nowotny commented that there would be limited contagion from a Greek exit. EUR/USD remains right in the middle of its 6-week trading range between 1.05-1.10.

In a sign of things to come, major property firm Kaisa Group Holdings Ltd. Became the first Chinese developer to default on debts denominated in USD after 30 days elapsed from two missed bond payments. Kaisa had until Monday to make the payments after a 30-day grace period expired at the weekend. Kaisa's business imploded in February after the company's management quit over ties to China's disgraced internal security chief Zhou Yongkang, and analysts suggest the authorities will continue to let firms like Kaisa go in their efforts to clean up financial markets.

Morgan Stanley had a very good first quarter, with net income up sharply y/y and revenue up more than 10% y/y. Both EPS and revenue topped expectations. The CEO said the firm's investment banking pipeline remains healthy and bond trading revenue hit its highest level in three years. MS was up more than 2% in the premarket but has given up gains in cash trading. In other movers, Halliburton is up 4% on a good earnings report. In the US, the firm said drilling activity has dropped approximately 50% from the peak in November and pricing pressure would continue. Royal Caribbean cut its FY guidance, citing FX impact, and somewhat puzzlingly cited rising fuel costs. RCL is down nearly 8%.

Looking Ahead

- 21:30 (AU) RBA April Minutes
- 23:00 (TH) Thailand Central bank (Bot) to sell 3-month and 6-month Bills