BoJ failed to stop collapsing Yen, triggering a fake out move lower

EU Mid-Market Update: BOJ failed to stop collapsing yen, triggering a fake out move lower; Big US tech earnings lift futures on Wall Street.

Notes/observations

- Traders attempt to call bluff on intervention talk after uneventful BOJ decision and lack of firm commentary from Gov Ueda, as yen weakened further above 156.50 before sharply dropped ~170 pips and bouncing back. Tokyo CPI came in substantially below estimates

- US futures are bidding, led by tech after Microsoft and Alphabet reported earnings

- Macro focus turns to US PCE and Core Deflator data at 08:30 ET; Atlanta Fed also set to provide its first GDPNow forecast for US’s Q2 GDP later today

- EU Earnings Recap: Natwest higher after affirming FY guidance; Electrolux lower after better top and bottom but doesn’t see improving demand yet; Airbus lower after missing rev estimates

- Asia closed mixed with Hang Seng outperforming+2.1%. EU indices are +0.3-0.9%. US futures are +0.2-0.9%. Gold +0.7%, DXY -0.1%; Commodity: Brent -0.1%, WTI +0.1%; Crypto: BTC +0.8%, ETH +0.3%

Asia

- Bank of Japan (BoJ) leaves Target Range unchanged between 0.0-0.1%, as expected and provided quarterly outlook for economic activity and prices.

- BoJ Gov Ueda: Declines to comment on short-term fx moves; weak yen so far not having big impact on trend inflation; impact of fx moves on inflation is usually temporary.

- Japan Apr Tokyo CPI Y/Y: 1.8% v 2.5%e; CPI (ex-fresh food ) Y/Y: 1.6% v 2.2%e (All 3 readings below BOJ 2.0% target, first time since Sep 2022); CPI (ex-fresh food, energy) Y/Y: 1.8% v 2.7%e.

- Judo Bank’s Warren Hogan [top forecaster] says RBA to raise cash rate to 5.10% [currently 4.35%]; the bond market has also completely removed any chance of RBA easing in 2024 - AFR.

- South Korea Minister of Trade: Warns that US Pres Biden's EV subsidy scheme is at risk of 'collapse' - FT.

- Fitch: South Korea's public finances no longer a rating strength but now a neutral factor requiring near-term efforts to contain the rise in debt.

- Singapore Central Bank (MAS) Macroeconomic Review: Current monetary policy settings remain appropriate.

- Indonesia: Rupiah (IDR) depreciation impact on government debt is 'manageable'.

- China Commerce Ministry (MOFCOM): Details EV buyer subsidies with one-off payment of CNY7-10K.

- China Gaming Regulator (NPPA) approves 95 domestic online games in Apr v 107 m/m - press.

Global conflict/tensions

- US said to be prepping a $6B weapons contract for Ukraine - press.

- China Pres Xi: There is a room for China and US ties to improve - comments to US Sec of State Blinken.

- China Foreign Ministry Daily Briefing: Taiwan debate is a red line for us; Our trade with Russia should not be interfered with.

- China Foreign Min Wang Yi: US and China ties have stabilized, but negative factors building; Taiwan is the red line.

Europe

- Sweden Defence Ministry proposes increasing defense/GDP ratio to 2.6%.

- UK Apr GfK Consumer Confidence: -19 v -20e (two-year high).

- Scotland's Labour party reportedly issues motion of no confidence in leader Yousaf - UK press.

- Turkey Fin Min Simsek: Extra steps to focus on fiscal policy and support disinflation.

Americas

- US Sec of State Blinken to meet China Pres Xi in Beijing on Fri, Apr 26th - press.

- US Trump advisors are discussing imposing penalties on countries that 'de-dollarize' - press.

- S&P cuts Peru Long-term Sovereign Rating to BBB- [lowest level of investment grade] from BBB; Outlook Stable.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.62% at 505.48, FTSE +0.36% at 8,107.73, DAX +0.70% at 18,049.55, CAC-40 +0.33% at 8,043.05, IBEX-35 +0.75% at 11,066.54, FTSE MIB +0.77% at 34,200.00, SMI +0.40% at 11,306.20, S&P 500 Futures +0.73%].

Market focal points/key themes: European indices opened higher across the board and advanced through the early part of the session; among sectors leading the way higher are materials and technology; lagging sectors include health care and financials; alphabet and Microsoft results seen boosting the tech sector; materials sector supported as commodity prices trend higher; Anglo American rejects merger proposal from BHP; Sarktrace to be acquired by Thoma Bravo; ThyssenKrupp sells stake in steel business to EPCG; focus on release of US PCE price index later in the day; earnings expected in the upcoming Americas session include Exxon Mobil, Chevron, AbbVie and Colgate-Palmolive.

Equities

- Consumer discretionary: Electrolux [ELUXB.SE] +6.0% (earnings; CEO to step down), Remy Cointreau [RCO.FR] +1.5% (earnings, guidance and cost cutting confirmed) - Financials: Natwest [NWG.UK] +3.5% (earnings) - Energy: TotalEnergies [TTE.FR] +0.5% (earnings; buyback) - Materials: Anglo American [AAL.UK] -1.0% (rejects BHP bid) - Healthcare: Natwest [NWG.UK] +3.5% (earnings) - Industrials: Thyssenkrupp [TKA.DE] +10.5% (to sell 20% stake in steel business to EP corp), Airbus [AIR.FR] -2.5% (earnings), Maersk [MAERSKB.DK] +6.5% (press speculation on earnings), Vinci [DG.FR] -1.5% (earnings), Safran [SAF.FR] -2.0% (earnings) - Technology: Darktrace [DARK.UK] +19.5% (to be acquired) - Telecom: - Pearson [PSON.UK] -1.5% (earnings).

Speakers

- BOJ Gov Ueda: Declines to comment on short-term fx moves; weak yen so far not having big impact on trend inflation; impact of fx moves on inflation is usually temporary; Must pay due attention to financial and FX market moves and their impact on inflation; o adjust the degree of monetary easing if price trend rises - post rate decision comments.

- Japan Fin Min Suzuki: FX trend may depend on "how long" the rate differentials persist.

- Japan Econ Min Shindo: Extremely important that govt and BOJ closely communicate as macroeconomic policy enters a crucial phase exiting from deflation - Japanese press.

- Outgoing SNB Chairman Jordan: New inflation shocks could hit at any time.

Currencies/fixed income

- All attention remains on weakened yen, launching higher after BOJ decision which was uneventful and commentary from officials which was indecisive. USD/JPY did drop heavily from 156.8 to 155.0 before bouncing back as speculation over intervention mounts. Typically, intervention is several hundred pips.

- Elsewhere, a slight pullback in dollar index pushes cable (GBP/USD) and fiber (EUR/USD higher

Economic data

- (IE) Ireland Apr Consumer Confidence: 67.8 v 69.5 prior.

-(SG) Singapore Mar Industrial Production M/M: -16.0% v -8.8%e; Y/Y: -9.2% v -1.5%e.

- (SE) Sweden Mar Trade Balance (SEK): 4.8B v 10.9B prior.

- (SE) Sweden Mar Household Lending Y/Y: 0.6% v 0.4% prior.

- (NO) Norway Mar Retail Sales M/M: 0.3% v 0.3%e.

- (HU) Hungary Mar Unemployment Rate: 4.4% v 4.6%e.

- (FR) France Apr Consumer Confidence: 90 v 92e.

- (ES) Spain Q1 Unemployment Rate: 12.3% v 11.9%e.

- (ES) Spain Mar Adjusted Retail Sales Y/Y: 0.6% v 2.2%e; Retail Sales (unadj) Y/Y: -1.6% v 4.9% prior.

- (EU) ECB Mar Consumer Expectation Survey: 1-year CPI Expectations: 3.0% v 3.1% prior.

- (RU) Russia Narrow Money Supply w/e Apr 19th (RUB): 18.26T v 18.21T prior.

- (EU) Euro Zone Mar M3 Money Supply Y/Y: 0.9% v 0.6%e.

- (TW) Taiwan Mar Leading Monitoring Indicator: 30 v 29 prior.

- (IS) Iceland Mar Final Trade Balance (ISK): -32.5B v -33.3B prelim.

Fixed income issuance

- (IN) India sells total INR320B vs. INR320B indicated 2034 and 2073 bonds.

- (IL) Israel to sell ILS2.95B in 2027, 2029, 2033, 2034 and 2051 bonds and linkers on Mon, Apr 30th (5 tranches).

- (FR) France Debt Agency (AFT) announces upcoming issuance; To sell €10.5-12.0B in 2033, 2034, 2043 and 2055 bonds (4 tranches) on Thurs, May 2nd.

- (FR) France Debt Agency (AFT) announces upcoming issuance; To sell €5.6-7.2B in 3-month, 6-month, 9-month and 12-month bills on Mon, Apr 29th (4 tranches).

Looking ahead

- 05:30 (IN) India to sell combined INR320B in 2034 and 2073 bonds.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2043 and 2050 Bonds.

- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£1.0B, £2.0B and £3.0B respectively).

- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave Key One-Week Auction Rate unchanged at 16.00%.

- 07:30 (IN) India Forex Reserve w/e Apr 19th: No est v $643.2B prior.

- 08:00 (MX) Mexico Mar Trade Balance: +$0.5Be v -$0.6B prior.

- 08:00 (MX) Mexico Mar Unemployment Rate: 2.5%e v 2.5% prior; Unemployment Rate (seasonally adj): No est v 2.6% prior.

- 08:00 (BR) Brazil mid-Apr IBGE Inflation IPCA-15 M/M: 0.3%e v 0.4% prior; Y/Y: 3.9%e v 4.1% prior.

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

- 08:30 (US) Mar Personal Income: 0.5%e v 0.3% prior; Personal Spending: 0.6%e v 0.8% prior; Real Personal Spending (PCE): 0.3%e v 0.4% prior.

- 08:30 (US) Mar PCE Deflator M/M: 0.3%e v 0.3% prior; Y/Y: 2.6%e v 2.5% prior.

- 08:30 (US) Mar Core Deflator M/M: 0.3%e v 0.3% prior; Y/Y: 2.7%e v 2.8% prior.

- 09:00 (IN) India announces upcoming bill issuance (held on Wed).

- 10:00 (US) Apr Final University Michigan Confidence: 77.9e v 77.9 prelim.

- 11:00 (US) Apr Kansas City Fed Services Activity: No est v 7 prior.

- 11:00 (CO) Colombia Mar National Unemployment Rate: No est v 11.7% prior; Urban Unemployment Rate: 11.0%e v 11.6% prior.

- 12:00 (RU) Russia Mar Real Retail Sales Y/Y: 8.6%e v 12.3% prior.

- 12:00 (RU) Russia Mar Unemployment Rate: 2.8%e v 2.8% prior; Feb Real Wages Y/Y: 8.0%e v 8.5% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 15:00 (AR) Argentina Feb Wages M/M: No est v 16.4% prior.

- 21:30 (CN) China Mar YTD Industrial Profits Y/Y: No est v 10.2% prior; Mar Industrial Profits Y/Y: No est v % prior.