Norges delivers another rate hike, focus turns to various EU meetings on Ukraine

Notes/Observations

- EU Leaders, NATO and G7 all meeting today; EU Council's summit might bring a new round of sanctions against Russia.

- Norway Central Bank continued with its tightening and raised the rate path outlook.

- Major European PMI data mixed but remaining in expansion terriory (PMI Manufacturing: Beats: Germany, Euro Zone; Misses: France, UK); PMI Services: Beats: France, Germany; Euro Zone, UK Misses: none)

- North Korea launch an ICBM for the 1st time in 4 years.

Asia

- Australia Mar Preliminary PMI Manufacturing: 57.3 v 57.0 prior (22nd month of expansion); PMI Services: 57.9 v 57.4 prior.

- Japan Mar Preliminary PMI Manufacturing: 53.2 v 52.7prior (14th month of expansion); PMI Services: 48.7 v 44.2 prior.

- BOJ Kataoka [outgoing dove] stated that CPI might increase over 1.5% temporarily but did not think CPI would stay high for long.

- BOJ Jan Meeting Minutes (two decisions ago) No change in BOJ's stance that maintaining powerful easing is appropriate.

- IMF spokesperson: stated that it supported a 'significant' near-term increase in RBNZ cash rate, given the country’s strong cyclical position and inflationary pressures.

Russia/Ukraine

- President Biden expected to announce major initiative to direct shipments of LNG to Europe as part of broader effort to reduce Europe’s dependence on Russian energy. President also expected to announce more Russian sanctions as well as a crackdown of the evasion on current measures.

- National Sec Adviser Sullivan stated that US govt assessed that members of Russia's forces had committed war crimes in Ukraine. US will look for ways to increase LNG supplies to Europe in coming weeks.

- Germany Econ Min Habeck stated that Russia demand that gas be paid for in RUB currency (Rubles) was a breach of the contracts.

- Ukraine President Zelensky said to have asked Biden not to sanction Abramovich in hopes that he could act as an intermediary in peace talks with Russia.

Americas

- Fed's Bullard (voter, hawk, dissenter noted that the direct macroeconomic effects on US from Russian invasion of Ukraine were not going to be that large; Europe could be pulled into recession. Had seen these kinds of oil prices before and it didn't cause a US recession.

Energy

- US will look for ways to increase LNG supplies to Europe in coming weeks.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.19% at 454.86, FTSE +0.33% at 7,484.90, DAX +0.35% at 14,333.51, CAC-40 +0.57% at 6,619.06, IBEX-35 -0.03% at 8,325.55, FTSE MIB +0.44% at 24,413.00, SMI +0.14% at 12,116.90, S&P 500 Futures +0.61%].

Market Focal Points/Key Themes: European indices open generally higher, but later returned to trading generally mixed a couple of hours into the session; better performing sectors include utilities and energy; while technology and telecom sectors were among the underperformers; Engi divests its stake in GTT; Renault latest firm to suspend activities in Russia; focus on upcoming G7, NATO meetings in Europe over Ukraine situation; earnings expected during the upcoming US session include Movado, Darden, Exor and TD SYNNEX.

Equities

- Consumer discretionary: Next [NXT.UK] -3% (earnings; cuts outlook).

- Energy: Rosneft [ROSN.RU] +19% (Moscow Stock Exchange opens).

- Industrials: Daimler Truck [DTG.DE] +8% (earnings; outlook), Renault [RNO.FR] +0.5% (stops Russia business; cuts outlook).

Speakers

- SNB Policy Statement reiterated language on FX; CHF currency remained highly valued and willing to intervene more strongly in the FX market. Higher commodity prices to lift inflation further in the short-term. Risks to growth seen to the downside and added that renewed deterioration in pandemic situation remained possible. To continue to monitor Swiss real estate market.

- SNB Quarterly Staff Projections raised the 2022 CPI from 1.0% to 2.1% and raised 2023 CPI from 0.6% to 0.9%. It set 2024 CPI at 0.9%. SNB cut the 2022 GDP growth from 3.0% to 2.5%.

- SNB's Jordan post rate decision press conference noted that it only intervenes in FX when necessary. Not powerless to tackle inflation and would take all measures to maintain price stability.

- Norway Central Bank (Norges) Policy Statement noted that it saw the Key Rate as most likely being raised further at the June meeting. Price and wage inflation had been higher than expected. Rising wage growth and imported good inflation are expected to push up underlying inflation ahead. Economic activity had continued to rise. Raised its countercyclical buffer from 2.0% to 2.5%.

- Norway Central Bank Staff Projections raised the 2022 Mainland GDP growth from 3.5% to 4.1% while cutting the 2023 Mainland GDP growth from 2.0% to 1.6%. It raised the 2022 Underlying CPI (core) from 1.7% to 2.5% while maintaining 2023 Underlying CPI(core) from 2.0%. Norges raised its rate path outlook with 2022 Key Rate revised from from 0.8% to 0.9%, 2023 Key Rate from 1.4% to 2.0% and end-2024 Key rate from 1.75% to 2.5%.

- ECB’s Elderson (Netherlands, SSM member) stated that present circumstances represented new headwinds to growth; stand prepared to adjust all instruments as needed. Committed to medium-term price stability was unwavering. Had yet to observe and 2nd round effects.

- ECB Economic Bulletin noted that the Russian invasion of Ukraine would have a material impact on economic activity and inflation through higher energy and commodity prices.

- German ruling coalition (FDP, Greens and SPD parties) said to agree on 2nd energy relief package.

- UK PM Johnson stated that Russia President Putin had crossed a red line and looking at ways to stop Russia from using its gold reserves.

- Philippines Central Bank Policy Statement noted that there was scope to maintain policy settings but ready to respond to buildup of inflationary pressures. Risk to inflation outlook was tilted to the upside in 2022 and balanced in 2023. CPI could average inside the target band in 2023. Economic growth has gained traction.

- Philippines Central Bank Staff Projections raised its 2022 CPI from 3.7% to 4.3% and also raised the 2023 CPI forecast from 3.3% to 3.6%.

- China said to have expanded coverage of VAT exemptions from April. To exempt 3% VAT for small-scale tax payers.

- South Korea President Moon: Strong condemn missile launch; Kim Jong Un broke his promise on ICBM moratorium.

- South Korea Military: Test fired multiple ballistic and guided missiles in response to North Korea launch. Ready and capable of precision strike against North Korea missile launch locations and control system if needed.

Currencies/Fixed income

- FX markets were relatively quiet with several key meetings on Ukraine taking place in Europe (EU Leaders, NATO and G7).

- EUR/USD steady just under the 1.10 level as various PMI data had little sway over the price action.

- USD/JPY continued with its march higher with the pair hitting fresh 6-year highs above 121.70.

- NOK currency was firmer in the aftermath of the Norges rate hike and more aggressive rate path. EUR/NOK was lower by 0.7% in the session.

Economic data

- (FI) Finland Feb PPI M/M: 0.9% v 1.5% prior; Y/Y: 22.4% v 23.4% prior.

- (NO) Norway Jan AKU Unemployment Rate: 3.2% v 3.3%e.

- (PH) Philippines Central Bank (BSP) left the Overnight Borrowing Rate unchanged at 2.00% (as expected).

- (FR) France Mar Business Confidence: 107 v 110e; Manufacturing Confidence: 106 v 108e; Production Outlook Indicator: -2 v +22 prior; Own-Company Production Outlook: 4 v 25 prior.

- (CZ) Czech Mar Business Confidence: 11.8 v 13.1 prior; Consumer Confidence Index: -25.0 v -16.5 prior; Composite Index (Consumer & Business Confidence): 4.4# v 7.2 prior.

- (TW) Taiwan Feb Unemployment Rate: 3.7% v 3.7%e.

- (HU) Hungary Central Bank raised One Week Deposit Rate by 30bps to 6.15% (as expected).

- (FR) France Mar Preliminary Manufacturing PMI: 54.8 v 55.1e (16th month of expansion); Services PMI: 57.4 v 55.0e; Composite PMI: 56.2 v 54.5e.

- (TW) Taiwan Feb M1 Money Supply Y/Y: 11.1% v 11.5% prior; M2 Money Supply Y/Y: 7.7% v 7.9% prior.

- (DE) Germany Mar Preliminary Manufacturing PMI: 57.6 v 56.0e (21st month of expansion); Services PMI: 55.0 v 53.8e; Composite PMI: 54.6 v 53.8e.

- (CH) SNB left its Key rates unchanged (as expected); Left both Policy Rate and Sight Deposit Interest Rate unchanged at -0.75%.

- (EU) Euro Zone Mar Preliminary Manufacturing PMI: 57.0 v 56.0e (21st month of expansion); Services PMI: 54.8 v 54.3e; Composite PMI: 54.5 v 53.8e.

- (NO) Norway Central Bank (Norges) raised the Deposit Rates by 25bps to 0.75% (as expected); raised the rate path outlook.

- (UK) Mar Preliminary Manufacturing PMI: 55.5 v 57.0e (22nd straight expansion); Services PMI: 61.0 v 58.0e; Composite PMI: 59.7 v 57.5e.

Fixed income issuance

- None seen.

Looking ahead

- (EU) NATO special meeting on Ukraine.

- (EU) EU leader summit, Brussels.

- G7 meeting.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (IE) Ireland Debt Agency (NTMA) to sell €750M in 6-month bills.

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (UK) BOE financial policy committee report.

- 06:30 (PL) Poland to sell 2024, 2027, 2031 and 2032 Bonds.

- 06:30 (HU) Hungary Debt Agency (AKK) to sell bonds.

- 07:00 (UK) Mar CBI Retailing Reported Sales: 10e v 14 prior; Total Distribution Reported Sales: 21e v 26 prior.

- 07:00 (BR) Brazil Central Bank (BCB) Quarterly Inflation Report (QIR).

- 07:00 (CZ) Czech Republic t sell CZK10B in 1-month bills.

- 07:00 (RO) Romania to sell RON400M in 3.25% 2026 Bonds.

- 07:30 (CL) Chile Central Bank bi-month Traders Survey.

- 07:45 (US) Daily Libor Fixing.

- 08:00 (CL) Chile Feb PPI M/M: No est v 0.1% prior.

- 08:00 (MX) Mexico Jan Retail Sales M/M: +0.2%e v -0.4% prior; Y/Y: 6.1%e v 4.9% prior.

- 08:30 (US) Q4 Current Account Balance: -$218.0Be v -$214.8B prior.

- 08:30 (US) Initial Jobless Claims: 210Ke v 214K prior; Continuing Claims: 1.40Me v 1.419M prior.

- 08:30 (US) Jan Preliminary Durable Goods Orders: -0.6%e v +1.6% prior; Durables (ex-transportation): 0.6%e v 0.7% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.5%e v 1.0% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.8%e v 1.9% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 08:30 (US) Fed’s Kashkari.

- 09:00 (UK) BOE’s Mann.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 18th: No est v $B prior.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to raise Interest Rate by 25bps to 4.25%.

- 09:10 (US) Fed’s Waller.

- 09:45 (US) Mar Markit Preliminary Manufacturing PMI: 56.6e v 57.3 prior; Services PMI: 56.0e v 56.5 prior; Composite PMI: 54.4e v 55.9 prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Mar Kansas City Fed Manufacturing Activity Index: 26e v 29 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 13:00 (US) Treasury to sell 10-Year TIPS.

- 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: expected to raise Overnight Rate by 50bps to 6.50%.

- 19:30 (JP) Japan Mar Tokyo CPI Y/Y: 1.2%e v 1.0% prior; CPI (ex-fresh food) Y/Y: 0.7%e v 0.5% prior; CPI (ex-fresh food/energy) Y/Y: -0.5%e v -0.6% prior.

- 19:50 (JP) Japan Feb PPI Services Y/Y: No est v 1.2% prior.

- 20:01 (UK) Mar GfK Consumer Confidence: -30e v -26 prior.

- 23:00 (CN) China to sell 3-month Bills.

- 23:30 (JP) Japan to sell 3-Month Bills.