Hope that spread of coronavirus is slowing

Notes/Observations

- Risk appetite finds some lags on belief the of signs suggesting that the coronavirus outbreak might be peaking (rate of new cases has been falling in Italy, Spain, Germany and Switzerland, and US)

- Focus on Tuesday's Eurogroup meeting to see if the bloc could achieve solidarity on resolving its economic issues

Asia:

- Japan Senior Ruling LDP official Kishida: Govt is close to finalizing economic package; Japan PM Abe to give details of economic package

- Japan govt said to be prepared to declare a State of Emergency as early as Tuesday Apr 7th

- RBNZ) Ha (Chief Economist): Not preparing for negative Official Cash Rate (OCR) at the moment, they would need to be ready if OCR was taken lower; expanding QE is a decision for the MPC

- New Zealand PM Ardern stated that there were no plans to end 4-week lock down early; Border measures to continue 'long period of time'; time needed to stamp out coronavirus

Coronavirus:

- Global cumulative cases 1,274,923 (+25.5% from Friday); cumulative deaths 69.5K (+30.9% from Friday)

- Regional outlook: US 313.2K (+36.1%), Italy 129.0K (+3.5%), Iran 34.9K (+14.0%), Spain 80.9K (+7.9%), Germany 100.1K (+4.2%), France 69.3K (+65.2%), UK 43.25K (+39.3%), Japan 3.0K (+43.8%), South Korea 10.3K

Europe:

- ECB's Schnabel (Germany): A one-off issuance of coronabonds was possible. Believed that it was not just a question of European solidarity, but also made sense from an economic standpoint.

- BOE Gov Bailey: BOE was not doing monetary financing. MPC remained in full control of how and when reserves for QE were eventually unwound

- UK PM Johnson admitted to hospital for tests after he had shown symptoms of coronavirus for 10 days, situation was not an emergency but he would be held overnight

- S&P affirmed France sovereign rating at AA; outlook Stable

- S&P affirmed Germany sovereign rating at AAA; outlook stable - Fitch cuts South Africa sovereign rating to BB from BB+; outlook Negative

Americas:

- President Trump Sunday press conference noted that there might be good signs coming from New York City. Spoke to number of Governors and were seeing a trend in leveling of coronavirus cases. Seeing light at the end of the tunnel

Mid-East/Energy:

- OPEC+ has postponed Monday's virtual meeting to later in the week due to continued icy relations between Saudi Arabia and Russia; likely postponed to April 8th or 9th

- Russia and Saudi Arabia with other large producers said to be in talks for a deal that will stop the price of oil from declining, despite remaining negative in the press

- Saudi Energy Min Abdulaziz: Russia was the first country to announce that OPEC+ members are no longer obligated to cut output, which has led to increasing supply (Reminder: Russia laid the blame on Saudi Arabia for flooding the oil market in an effort to damage the North American shale producers)

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +2.59% at 317.08, FTSE +1.69% at 5,507.00, DAX +3.62% at 9,871.00, CAC-40 +3.22% at 4,288.35, IBEX-35 +2.79% at 6,765.50, FTSE MIB +3.37% at 16,937.00, SMI +1.95% at 9,422.50, S&P 500 Futures +3.80%]

Market Focal Points/Key Themes: European indices open higher across the board; Consumer discretionary and automakers among better performers; telecom and utilities among underperformers; Scandinavian clothing retailer Stockmann STCBV.FI files for financial restructuring; Governor of Lombardy region sees lockdown extended for another 2-3 weeks; no major US earnings expected in the upcoming session

 

Equities

- Consumer discretionary: Stockmann [STCBV.FI] -32% (restructuring)

- Financials: DIC Asset [DIC.DE] +10% (updates outlook), 888 Holdings [888.UK} +14% (analyst action)

- Industrials: Recticel [REC.BE] +34% (divestment), Rolls-Royce [RR.UK] -2% (trading and COVID-19 update)

 

Speakers

- German Fin Min Scholz reiterated view that ESM could be adapted to address the current crisis

- France Fin Min Le Maire stated that had yet to convince other EU members of the need for a long-term fund

- Italy Fin Min Gentiloni stated that EU might set up a fund for long-term bonds

- EU industry Chief Breton: No country can financially face the crisis alone

- Singapore Dep PM Heng Swee Keat announced a 3rd stimulus program of S$5.1B

- Philippines Central Bank (BSP) Gov Diokno stated that it saw room for monetary policy action and would not rule out any intra-policy moves. Ready to purchases govt debt from secondary market

- Japan draft stimulus plan said to mobilize all steps including fiscal, monetary and tax policies to respond to fallout of the coronavirus. Govt to share a sense of crisis with BOJ and pledge close cooperation to address crisis. Plan said to include an ample loan scheme with essentially no interest or collateral and give airlines a grace period for payment of landing fees

- Japan PM Abe confirmed a State of Emergency for 7 prefectures (including Tokyo and Osaka) to last about a month but it would not lead to a lockdown as seen in other countries. Agreed with LDP party on ¥108T economic package

 

Currencies/Fixed Income

- Some risk-on sentiment started the week as participant took some comfort in the latest coronavirus stats and believe that easing in the outbreak was perhaps coming.

- EUR/USD was initially higher to move above the 1.08 level but continued soft data out of Europe proved to be a headwind. Focus on Tuesday's Eurogroup meeting to see if the bloc could achieve solidarity on funding to bring the region out of economic abyss.

- The JPY currency was weaker on the unwinding of safe-haven flows and addition weakness on reports that Japan could announce emergency measures as soon as Tuesday, Apr 7th

 

Economic Data

- (SE) Sweden SEB Housing-Price Indicator: -20 v +47 prior (record decline)Indicator

- (DE) Germany Feb Factory Orders M/M: -1.4% v -2.5%e; Y/Y: +1.5% v -0.2%e

- (DK) Denmark Feb Industrial Production M/M: +2.1 v -5.1% prior

- (CZ) Czech Feb Industrial Output Y/Y: -0.9% v -0.9%e; Construction Output Y/Y: 5.3% v 6.0% prior

- (CZ) Czech Feb Trade Balance (CZK): 22.4B v 15.3Be

- (DE) Germany Mar Construction PMI: 42.0 v 55.8 prior

- (CH) Swiss weekly Total Sight Deposits (CHF): 627.2B v 620.5B prior; Domestic Sight Deposits: 535.6B v 529.0B prior

- (UK) Mar New Car Registrations Y/Y: -44.4% v -2.9% prior

- (EU) Apr Sentix Investor Confidence: -42.9 v -37.5e (2nd straight negative reading and a record low)

- (UK) Mar Construction PMI: 39.3 v 44.0e (moved back into contraction and lowest since Apr 2009)

- (IS) Iceland Mar Preliminary Trade Balance (ISK): -9.2B v -1.8B prior Fixed Income Issuance

Fixed Income Issuance

- (LT) Latvia to sell EUR-denominated 3-year bonds; guidance seen +50bps to mid-swaps

- (NO) Norway sold NOK4.0B in 6-month bills; Avg Yield: 0.23% v 1.27% prior; Bid-to-cover: 2.27 v 3.24x prior

 

Looking Ahead

- 05:30 (DE) Germany to sell €4.0B in 6-month BuBills

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 6-month bills

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)

- 06:00 (IE) Ireland Feb Industrial Production M/M: No est v 5.8% prior; Y/Y: No est v 1.2% prior

- 06:00 (IL) Israel to sell bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (TR) Turkey to sell Zero Coupon 2021 Bonds

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

- 07:00 (MX) Mexico Jan Gross Fixed Investment: -8.9%e v -3.0% prior

- 07:00 (MX) Mexico Mar Vehicle Production: No est v 326.2K prior; Vehicle Exports: No est v 266.0K prior

- 07:00 (BR) Brazil Mar FGV Inflation IGP-DI M/M: 1.3%e v 0.0% prior; Y/Y: 6.6%e v 6.4% prior

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey

- 07:30 (TR) Turkey Mar Real Effective Exchange Rate (REER): No est v 75.16 prior

- 08:00 (UK) Daily Baltic Dry Bulk Index

- 08:00 Spain Debt Agency (Tesoro) size announcement on upcoming issuance

- 08:50 (FR) France Debt Agency (AFT) to sell €5.3-6.5B in 2-month, 3-month, 6-month and 12-month bills

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to cut Base rate by 15bps to 0.10%

- 09:00 (RU) Russia Mar CPI M/M: 0.7%e v 0.3% prior; Y/Y: 2.7%e v 2.3% prior

- 09:00 (RU) Russia Mar CPI Core M/M: 0.6%e v 0.1% prior; Y/Y: 2.7%e v 2.4% prior

- (RU) Russia Mar Light Vehicle Car Sales Y/Y: No est v -2.2% prior

- 09:45 (EU) ECB weekly QE bond buying update

- 10:00 (MX) Mexico Weekly International Reserve data

- 10:30 (CA) Bank of Canada Q1 BoC Overall Business Outlook Survey: No est v 0.7 prior; Future Sales Survey: No est v 11 prior

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills

- 16:00 (US) Weekly Crop Progress Report

- 18:30 (AU) Australia Mar Perf romance of Services Index: No est v 47 prior

- 19:00 (KR) South Korea Feb Current Account Balance: No est v $10.1B prior; Balance of Goods (BOP): No est v $1.9B prior

- 19:30 (AU) Australia Weekly ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 65.3 prior

- 19:30 (JP) Japan Feb Labor Cash Earnings Y/Y: 0.4%e v 1.5% prior; Real Cash Earnings Y/Y: -0.7%e v +0.7% prior

- 19:30 (JP) Japan Feb Household Spending Y/Y: -3.3%e v -3.9% prior

- 21:00 (PH) Philippines Mar CPI Y/Y: 2.3%e v 2.6% prior

- 21:30 (AU) Australia Feb Trade Balance: A$3.8Be v A$5.2B prior

- 23:00 (ID) Indonesia Mar Foreign Reserves: No est v $130.4B prior

- 23:30 (TH) Thailand Mar CPI M/M: -0.9%e v -0.1% prior; Y/Y: -0.5%e v 0.7% prior; CPI Core Y/Y: 0.5%e v 0.6% prior

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

- 23:35 (JP) Japan to sell 30-Year JGB Bonds