Awaiting US CPI print

Notes/Observations

- Markets continue focusing on the monetary policy implications of high inflation.

- German March CPI confirms highest annual pace since 1993 reunification.

- German Apr ZEW Survey improves.

- Focus on US CPI reading due out later today; inflation to continue to show acceleration to fresh 40-year highs.

Asia

- Japan Mar PPI M/M: 0.8% v 0.9%e; Y/Y: 9.5% v 9.3%e.

- Japan Fin Min Suzuki stated that govt to monitor impact of FX with 'vigilance'; reiterates excess FX volatility and disorderly FX movements could have adverse impact on economy and 'financial stability'. Reiterated no comment on FX levels but that sudden moves in FX were undesirable. Stressed that stability in FX was important.

- US State Dept: ordered the departure of non-emergency U.S. government employees and all family members from the Consulate General Shanghai consular district due to a surge in COVID-19 cases and the impact of restrictions related to the PRC’s response.

- Shanghai said to have eased lockdown restrictions on 43% of housing complexes after they reported no new Covid-19 cases over the past 2 weeks.

Russia/Ukraine

- Ukrainian Telegram channels circulating unverified reports by Azov battalion that chemical weapons were used in Mariupol.

- Pentagon Press Secretary Kirby stated that were aware of social media reports which claim Russian forces deployed a potential chemical munition in Mariupol, Ukraine. Could not confirm at this time and would continue to monitor the situation closely.

- Austria Chancellor Nehammer stated that he had generally no positive impression from talks with Pres Putin.

Americas

- Fed's Evans (dove, non-voter) stated that a 50bps rate hike was worthy of consideration, possibly highly likely; Needed to position much closer to neutral; Neutral setting for monetary policy was between 2.25-2.5%.

- Former Treasury Dept Official Michael Barr said to be the frontrunner for the Bank oversight job at the US Federal Reserve.

Energy

- OPEC Sec Gen Barkindo stated that could potentially see the loss >7M bpd of Russian Oil and other liquids exports, resulting from current and future sanctions or other voluntary action. Current market volatility was the result of non-fundamental factors that are totally out of OPEC control.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.55% at 455.76, FTSE -0.43% at 7,585.62, DAX -1.09% at 14,038.50, CAC-40 -0.81% at 6,502.59, IBEX-35 -0.21% at 8,566.65, FTSE MIB -0.47% at 24,633.00, SMI -0.90% at 12,415.50, S&P 500 Futures -0.02%].

Market Focal Points/Key Themes: European indices open broadly lower but moderated some of the losses as session progressed; only two sectors managed to stay in the green, which are materials and energy; sectors among those leading to the downside are financials and utilities; oil & gas subsector supported after Brent pops above $100/bbl; Diploma buys R&L; earnings expected in the upcoming US session include CarMax and LVMH.

Equities

- Consumer discretionary: Electrocomponents [ECM.UK] +1% (trading update), Warpaint [W7L.UK] +11% (trading update), EasyJet [EZJ.UK] -3% (trading update), Asos [ASC.UK] -1% (earnings), Deliveroo [ROO.UK] -3% (trading update).

- Financials: Plus500 [PLUS.UK] +4% (trading update), Deutsche Bank [DBK.DE] -10%, Commerzbank [CBK.DE] -9% (placement).

Speakers

- ECB Q1 lending survey noted that banks indicated a net tightening of credit standards on loans to enterprises and households in Q1. Banks expect a considerably stronger net tightening of credit standards for loans to firms in Q2 and a continued net easing for consumer credit and other lending to household.

- UK Junior Defense Min Heappey stated that if chemical weapons were used in Ukraine then all possible options were on the table in terms of how the West could respond.

- Czech Central Bank Dep Gov Nidetzky stated that he was open to interest rates moving higher but must take into account the economy.

- German ZEW Economists commented that a decline in inflation expectations gave some cause for hope but prospects for stagflation remained.

- Russia President Putin reiterated stance that had no doubt military operation in Ukraine would reach its objectives.

- South Korea Fin Min Hong stated that was prepared to take measures to stabilize FX, KRW currency (Won) was very high compared to previous level.

- Philippines Central Bank (BSP) Gov Diokno reiterated belief that CPI forecast showed a return to target in 2023; reiterated that stand ready to deploy timely monetary measures.

- Taiwan Central Bank stated in a report to Parliament that it would make appropriate use of monetary policy (**Reminder: On Mar 17th Taiwan Central Bank (CBC) raised the Benchmark Interest rate by 25bps to 1.365% for its 1st hike since Jun 2011).

- China Vice Fin Min said to have asked local govt to speed up special bond issuance to minimize covid impact and spur investment. To prioritize local govt with lower debt and key projects in bond fund allocation.

- President Biden said to allow expanded sales of higher-ethanol gas with formal announcement as soon as today, Apr 12th.

Currencies/Fixed income

- USD was holding onto recent gains as markets continue to focus on the monetary policy implications of high inflation.

- EUR/USD steady in session around 1.0870 area. Dealers noted that the upcoming ECB meeting this week would likely serve to advance its debate ahead of actual decisions in June.

- Yield differentials continued to push USD/JPY to fresh 7-year highs. A break above 125.90 would then see the pair register a 20-year high.

Economic data

- (SE) Sweden Mar PES Unemployment Rate: 3.2% v 3.4% prior.

- (FI) Finland Feb Current Account Balance: -€0.1B v +€0.1B prior.

- (UK) Mar Jobless Claims Change: -46.9K v -58.0K prior; Claimant Count Rate: % v 4.4% prior.

- (UK) Feb Average Weekly Earnings 3M/Y: 5.4% v 5.4%e; Weekly Earnings (ex-bonus) 3M/Y: 4.0% v 4.0%e.

- (UK) Feb ILO Unemployment Rate: 3.8% v 3.8%e; Employment Change 3M/3M: +10K v +52Ke.

- (DE) Germany Mar Final CPI M/M: 2.5% v 2.5% prelim; Y/Y: 7.3% v 7.3% prelim.

- (DE) Germany Mar Final CPI EU Harmonized M/M: 2.5% v 2.5% prelim; Y/Y: 7.6% v 7.6% prelim.

- (DE) Germany Mar Wholesale Price Index M/M: 6.9% v 1.7% prior; Y/Y: 22.6% v 16.6% prior.

- (RO) Romania Mar CPI M/M: 1.9% v 1.4%e; Y/Y: 10.2% v 9.6%e.

- (FR) France Feb Trade Balance: -€10.3B v -€8.0B prior; Current Account Balance: -€1.1B v -€1.3B prior.

- (TR) Turkey Feb Industrial Production M/M: 4.4% v 2.7%e; Y/Y: 13.3% v 7.5%e.

- (DE) Germany Apr ZEW Current Situation Survey: -30.8 v -35.0e; Expectations Survey: -41.0 v -48.5e.

- (EU) Euro Zone Apr ZEW Expectations Survey: -43.0 v -38.7 prior.

Fixed income issuance

- (IN) India sold INR340B vs. INR340B indicated in 3-month, 6-month and 12-month bills.

- (ID) Indonesia sold total IDR11.05T vs. IDR9.0T target in bills and bond.

- (NL) Netherlands Debt Agency (DSTA) sold total €B vs. €1.5-2.5B indicated range in 0.5% July 2032 DSL Bonds; Avg Yield: 1.131%.

- (UK) DMO to sell £2.5B in 1.0% Jan 2032 Gilts; Avg Yield: 1.925% v 1.598% prior; bid-to-cover: 2.64x v 2.51x prior; Tail: 0.2bps v 0.7bps prior.

- (IT) Italy Debt Agency (Tesoro) sold €B vs. €6.5B indicated in 12-month Bills; Avg Yield: -0.105% v -0.436% prior; Bid-to-cover: 1.33x v 1.52x prior.

Looking ahead

- (FR) Bank of France Mar Industrial (Business) Sentiment: 104e v 107 prior.

- (DE) Germany Feb Current Account Balance: No est v €11.0B prior.

- (MX) Mexico Mar ANTAD Same-Store Sales Y/Y: No est v 11.7% prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €5.5B in 0% Mar 2024 Schatz.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell HUF50B in 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2035, 2044 and 2048 bonds.

- 05:30 (PL) Poland to sell 2024, 2027, 2031, 2032 Bonds (5 tranches).

- 06:00 (US) Mar NFIB Small Business Optimism Index: 95.0e v 95.7 prior.

- 06:00 (PT) Portugal Mar Final CPI M/M: No est v 2.5% prelim; Y/Y: 5.3%e v 5.3% prelim.

- 06:00 (PT) Portugal Mar Final CPI EU Harmonized M/M: No est v 2.6% prelim; Y/Y: No est v 5.5% prelim.

- 06:00 (RO) Romania to sell €100M in Apr 2025 bonds.

- 06:30 (EU) ESM to sell €1.1B in 12-Month Bills.

- 06:45 (US) Daily Libor Fixing.

- 08:00 (IN) India Feb Industrial Production Y/Y: 2.7%e v 1.3% prior.

- 08:00 (IN) India Mar CPI Y/Y: 6.4%e v 6.1% prior.

- 08:00 (BR) Brazil Feb IBGE Services Volume M/M: +0.7%e v -0.1% prior; Y/Y: 8.7%e v 9.5% prior.

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

- 08:00 (TR) Turkey to sell Bonds.

- 08:30 (US) Mar CPI M/M: 1.2%e v 0.8% prior; Y/Y: 8.4%e v 7.9% prior.

- 08:30 (US) Mar CPI (ex-food/energy) M/M: 0.5%e v 0.5% prior; Y/Y: 6.6%e v 6.4% prior.

- 08:30 (US) Mar CPI Index NSA: 287.410e v 283.716 prior; CPI Core Index SA: 289.188e v 287.878 prior.

- 08:30 (US) Mar Real Avg Hourly Earning Y/Y: No est v -2.5% prior )(revised from -2.6%); Real Avg Weekly Earnings Y/Y: No est v -2.2% prior (revised from -2.3%).

- 08:30 (CL) Chile Central Bank Economist Survey.

- 08:55 (US) Weekly Redbook LFL Sales data.

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

- 09:00 (EU) ECB weekly QE bond buying update.

- 09:30 (ZA) South Africa Central Bank (SARB) Monetary Policy Review.

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

- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month bills.

- 12:10 (US) Fed's Brainard.

- 13:00 (US) Treasury to sell $34B in 10-Year Notes Reopening.

- 14:00 (US) Mar Monthly Budget Statement: -$185.5Be v -$216.6B prior.

- 16:30 (US) Weekly API Oil Inventories.

- 18:45 (NZ) New Zealand Mar Food Prices M/M: No est v -0.1% prior.

- 18:45 (US) Fed’s Barkin to discuss the economy.

- 19:00 (KR) South Korea Mar Unemployment Rate: 3.0%e v 2.7% prior.

- 19:50 (JP) Japan Mar M2 Money Supply Y/Y: 3.6%e v 3.6% prior; M3 Money Supply Y/UY: 3.2%e v 3.2% prior.

- 19:50 (JP) Japan Core Machine Orders M/M: -1.5%e v -2.0% prior; Y/Y: 14.3%e v 5.1% prior.

- 20:30 (AU) Australia Apr Consumer Confidence Index: No est v 96.6 prior.

- 21:10 (JP) BOJ Outright Bond Purchase Operation for1~3 Years; 5~10 Years; 25 Years.

- 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to raise the Official Cash Rate (OCR) by 25bps to 1.25%.

- 23:00 (KR) South Korea Mar Total Bank Lending to Households (KRW): No est v 1,060T prior.

- 23:00 (HK) Hong Kong to sell HK$4.0B in 1.79% 3-Year Bonds.