Awaiting US CPI data

Notes/Observations

- Focus on US CPI data but analysts believe it would unlikely alter expectations for Fed policy

- Chancellor of Exchequer Hammond (Fin Min): Spring Statement expected to reduce FY issuance for the 1st time since the financial crisis began a decade ago

Asia:

- China proposes changes to government departments, ministries and bureaus: to give PBOC some functions currently held by CBRC and CIRC and merge the insurance and banking regulators. Govt giving thr PBoC the power to write the rules for the financial sector (**Note: part of a sweeping overhaul aimed at closing regulatory loopholes and curbing risk in the $43 trillion banking and insurance industries)

- RBNZ Acting Gov Spencer: To review macro-prudential policy with Treasury (**Insight: Review could lead to an easing of some restrictions on home loans)

Europe:

- Eurogroup Chief Centeno: ESM to approve €5.7B tranche by the end of March for Greece after national approval procedures were completed (as expected); commended Greece for its progress

- Euro zone without breakthrough on deposit guarantee despite ECB call. Technical work before the meeting was still under way to agree on a common way of measuring if risks have fallen enough. ECB chief Draghi said to have told EU ministers during the meeting that conditions for the guarantees already existed - Italy Democratic Party Dep Sec Martina said to have ruled out coalition agreements with Five Star and the Centre Right. Would continue to serve citizens, from the opposition, with the role of a parliamentary minority

Americas:

- Trump blocks Broadcom takeover of Qualcomm on security risks

- CNBC's Larry Kudlow reportedly leading contender to replace White House economic adviser Gary Cohn

- Republicans find no evidence of collusion or Russian preference for Trump. The worst the panel uncovered was “perhaps some bad judgment, inappropriate meetings, inappropriate judgment at taking meetings

 

Economic Data:

- (FR) France Q4 Final Private Sector Payrolls Q/Q: 0.4% v 0.3%e; Total Payrolls Q/Q: 0.3% v 0.2%e

- (RO) Romania Feb CPI M/M: 0.3% v 0.3%e; Y/Y: 4.7% v 4.7%e

- (FI) Finland Jan Final Retail Sales Volume Y/Y: 5.1% v 4.0% prelim

- (ES) Spain Feb Final CPI M/M: 0.1% v 0.1%e; Y/Y: 1.1% v 1.1%e

- (ES) Spain Feb Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.2% v 1.2%e

- (ES) Spain Feb CPI Core M/M: 0.3% v 0.1%e; Y/Y: 1.1% v 0.8%e

- (HK) Hong Kong Q4 Industrial Production Y/Y: 0.6% v 0.3% prior

- (HK) Hong Kong Q4 PPI Y/Y: 3.5% v 3.7% prior

- (IT) Italy Q4 Unemployment Rate: 11.0% v 11.0%e (lowest since 2012)

 

Fixed Income Issuance:

- (ID) Indonesia sold total IDR23.45T vs. IDR17T indicated in 3-month, 12-month bills, 5-year,10-year,20-year and 30-year Bonds

- (ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2031, 2040, 2044 and 2048 bonds

- (ES) Spain Debt Agency (Tesoro) sold total €1.355B vs. €1.0-2.0B indicated range in 3-month and 9-month Bills

- (NL) Netherlands Debt Agency ((DSTA) opened book to sell €4.0-6.0B in 0.75% July 2028 DSL Bond vis dutch auction; Guidance seen +16.5-17.5BPS to 0.5% Feb 2028 DSL; order book over €11B

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx600 +0.1% at 379.6, FTSE flat at 7215, DAX +0.2% at 12437, CAC-40 +0.5% at 5301, IBEX-35 +0.8% at 9800, FTSE MIB +0.4% at 22846 , SMI +0.1% at 8979, S&P 500 Futures +0.2%]

Market Focal Points/Key Themes: European Indices trade higher across the board following a mixed session in Wallstreet overnight and mixed markets in Asia. On the corporate front, EON trades higher after results and guidance, with other notable risers including Antofagasta, RWE, Aurubis, Geberit, while Illiad, Hannover Re, Telit and Greencore trade lower after results and updates. Veolia trades lower after the Qatari Diar divested its stake; In the states shares of Qualcomm will be in focus after receiving a presidential order prohibiting Broadcom's proposed takeover. Looking ahead notable earners include Dick Sporting Goods, HD Supply and DSW.

 

Movers

-Consumer Discretionary [ Greencore [GNC.UK] -23% (Profit warnings)]

-Industrials [Antofagasta [ANTO.UK] +2.6% (Earnings), Aurubis [NDA.DE] +3.6% (Earnings), Geberit [GEBN.CH] +1.2% (Earnings)]

-Financials [ Hannover Re [HNR1.DE] -3.5% (Earnings)]

-Telecom [Telit Communications [TCM.UK] -3.4% (Business update), Illiad [ILD.FR] -6.6% (Earnings)]

-Materials [Wacher Chemie [WCH.DE] -3.4% (Earnings)]

-Utilities [Veolia [VIE.FR] -2.3% (Qatari sovereign wealth developer sell entire stake)] -Energy [RWE [RWE.DE] +0.8% (Earnings), EON [EOAN.DE] +5.6% (Earnings)]

 

Speakers

- ECB's Coeure (France): Cryptocurrencies are poor imitations of money

- EU's Juncker stated that he saw an increase urgency in Brexit negotiations and reiterated that PM May must give more clarity. Solid draft text of UK withdrawal pact exists and believed the UK will regret its Brexit decision. Brexit must mean no change for citizens in Irelands and reiterates that the EU stood firm and united on the issue

- EU Dombrovskis reiterated the view that EU was prepared to react to US tariffs

- EU might avoid US tariffs if certain conditions were met. Exemption could come if EU was considered a reliable partner in addressing over capacity and other criteria

- Italy Northern League leader Salvini (euro-skeptic) stated that EU policies were crazy and suicidal but did not foresee any unilateral, improvised exit from the Euro

- Italy Northern League official Giorgetti: Likely a 50% change of another election this year - Germany BDI Industry Association: Companies needed to prepare for a hard Brexit

- South Africa Fin Min Nene: Need to keep debt at sustainable level. Working towards revising higher GDP growth forecasts. Met with senior Moody's sovereign analyst in London; hard to read their body language. Land expropriation will be handled responsibly but can be abused by populists

- Taiwan Central Bank: Domestic inflation seen stable; Jan-Feb CPI being mild. Market liquidity had been ample. TWD currency REER lower than China's Yuan, Korean Won and Singapore Dollar. Real interest rates higher than major economies

- Iran said to increase its oil production to repay Chinese investors. Believed that OPEC to agree on the production increase

 

Currencies

- USD was little changed against the major European FX pairs with the focus turning to US CPI data. However analysts believed it would unlikely alter expectations for Fed policy for the time being.

- GBP/USD was softer ahead of Chancellor of Exchequer Hammond (Fin Min): Spring Statement but dealers noting the commentary seem more likely to help the gilts as less issuance is expected to be announced for the current fiscal year (thanks to higher tax receipts).

- USD/JPY was higher by 0.6% above the 107 area for its best session in 5 months with the USD aided by the US Treasury auction results on Monday that showed the highest 3-year bond yield since 2007. Dealers noted that the Japan’s political situation warranted a close watch as historically the JPY currency tended to trive on political turmoil. Japan Fin Min Aso mighty skip G20 finance minister meeting in Buenos Aires later this month with calls for his resignation following the recent firestorm surrounding the cover-up of the govt land sale

 

Fixed Income

- Bund Futures trade 17 ticks higher at 157.46 ahead of the DMO update on Gilts issuance. Upside targets 157.75, while a return lower targets the155.50 level.

- Gilt futures trade at 122.38 up 12 ticks with little reaction to UK Trade and production data. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.85 then 123.35.

- Tuesday's liquidity report showed Monday's excess liquidity fell to €1.896T from €1.898T prior. Use of the marginal lending facility stayed steady €0M.

 

Looking Ahead

- (AR) Argentina Central Bank (BCRA) Interest Rate Decision: Expected to leave the 7-Day Repo Reference Rate unchnaged at 27.25%

- 06:00 (US) Feb NFIB Small Business Optimism: 107.1e v 106.9 prior

- 06:00 (EU) Daily Euribor Fixing - 06:00 (SI) Slovenia to sell bills

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell combined €7.25-8.75B in 2020, 2025, 2033 and 2047 BTP Bonds

- 06:15 (CH) Switzerland to sell 3-month Bills

- 06:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)

- 06.30 (UK) Weekly John Lewis LFL sales data

- 06:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills; Avg Yield: % v 0.00%prior; Bid-to-cover: x v 1.71x prior (Mar 6th 2018)

- 07:00 (TR) Turkey to sell 12.2% Fixed Rate 2023 Bonds; Yield: % v 12.47% prior

- 07:00 (IE) Ireland Jan Industrial Production M/M: No est v 3.0% prior; Y/Y: No est v 3.0% prior

- 07:00 (IL) Israel Feb Trade Balance: No est v -$1.4B prior

- 07:00 (ZA) South Africa Jan Manufacturing Production M/M: 0.2%e v 1.1% prior; Y/Y: 2.5%e v 2.0% prior

- 07:45 (US) Weekly Goldman Economist Chain Store Sales

- 07:45 (US) Daily Libor Fixing - 08:00 (IS) Iceland Feb Unemployment Rate: No est v 2.4% prior

- 08:00 (BR) Brazil Jan Retail Sales M/M: +0.5%e v -1.5% prior; Y/Y: 3.5%e v 3.3% prior

- 08:00 (BR) Brazil Jan Broad Retail Sales M/M: +0.2%e v -0.8% prior; Y/Y: 6.2%e v 6.4% prior

- 08:00 (RU) Russia announces weekly OFZ bond auction

- 08:30 (US) Feb CPI M/M: 0.2%e v 0.5% prior; Y/Y: 2.2%e v 2.1% prior

- 08:30 (US) Feb CPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 1.8%e v 1.8% prior

- 08:30 (US) Feb CPI Index NSA: 248.929e v 247.867 prior; CPI Core Index : 255.749e v 255.287 prior

- 08:30 (US) Feb Real Avg Weekly Earnings Y/Y: No est v 0.4% prior; Real Avg Hourly Earning Y/Y: No est v 0.8% prior

- 08:30 (UK) Chancellor of Exchequer Hammond (Fin Min): Spring Statement; to provide govt's half-yearly update of Britain's public finance figures (Debt Management Office expect to cut FY18/19 issuance from £118.7B to £98.2B)

- 08:55 (US) Weekly Redbook Sales

- 09:05 (UK) Baltic Dry Bulk Index

- 10:00 (EU) Weekly ECB Forex Reserves

- 10:00 (MX) Mexico Jan Industrial Production M/M: 0.4%e v 0.9% prior; Y/Y: 0.4%e v -0.7% prior, Manufacturing Production Y/Y: 2.1%e v -0.1% prior

- 10:00 (IT) Italy Five Star Part Ledaer Di Maio

- 10:30 (CA) Bank of Canada (BOC) Gov Poloz

- 10:45 (UK) BOE APF Gilt purchase operation

- 13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening

- 16:30 (US) Weekly API Oil Inventories