EU data dump sees disinflation proceeding but on a bumpy road – Focus on US PCE data

EU mid-market update: EU data dump sees disinflation proceeding but on a bumpy road; Focus on US PCE data; Putin back to nuclear saber-rattling.

- EU CPI hitting its lowest annual pace since end-2021 but rising energy component raising some red flags. Further disinflation should prove bumpy.

- Russia Pres Putin in his annual parliament address ahead of reelection in few weeks gave his most explicit threat to use nuclear weapons since Ukraine war started two years ago, saying the talk about NATO troops deployment in Ukraine runs the risk of starting a world war, which means the destruction of all of civilization.

- Awaiting US PCE data - Fed’s preferred gauge of underlying inflation.

Asia

- Japan Jan Retail Sales M/M: 0.8% v 0.5%e; Y/Y: 2.3% v 2.0%e.

- Japan Jan Preliminary Industrial Production M/M: -7.5% v -6.8%e; Y/Y: -1.5% v -1.6%e.

- Australia Jan Retail Sales M/M: 1.1% v 1.5%e.

- Australia Q4 Private Capex: 0.8% v 0.5%e.

- New Zealand Feb ANZ Business Confidence: 34.7 v 36.6 prior.

- BOJ Takata stated that price target was finally coming into sight; Need to watch outcome of spring wage talks after mid-March. Many companies are offering higher-than-2023 wage hikes.

- Japan Top FX Diplomat Kanda told G20 that excessive volatility in FX is undesirable; would not comment on recent FX moves.

- RBNZ Gov Orr testified that needed to have patience with policy; current level of cash rate was restricting demand. Outlook for inflation was very balanced.

Europe

- ECB's Vasle (Slovenia, hawk): ECB looking at rate-cutting phase if no big surprises.

- UK Feb Lloyds Business Barometer: 58 v 44 prior.

Americas

- US Congressional leaders said have reached an agreement regarding government funding to avert a government shutdown this week.

- Fed's Williams (voter) stated that would let incoming economic data decide on monetary policy path; Still some ways to go to get to 2% inflation target.

- Fed’s Bostic (dove, voter) reiterated sees first rate cut in Summer; Still had work to do on inflation, haven't declared victory.

- Fed's Collins (non-voter) stated that premature to think Fed could cut in May; Reiterated would be appropriate to begin easing policy later this year.

- US Supreme Court to review whether Donald Trump has immunity from prosecution in the Special Counsel's federal election interference case.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.18% at 495.48, FTSE +0.18% at 7,638.75, DAX +0.45% at 17,681.25, CAC-40 +0.12% at 7,963.62, IBEX-35 -0.08% at #, FTSE MIB +0.38% at 32,742.00, SMI +0.23% at 11,440.50, S&P 500 Futures -0.26%].

Market focal points/key themes: European indices open generally higher and remained upbeat through the early part of the session; among sectors leading the way higher are real estate and communication services; lagging sectors include technology and telecom; Wincanton receives takeover offer from GXO, above CEVA's final offer; reportedly ABN Amro to sell its card payment processing unit to Buckaroo; focus on release of German flash CPI and US PCE deflator later in the day; earnings expected in the upcoming US session include Banca Monte Paschi, Bath Body Works, Dole and Hormel.

Equities

- Consumer discretionary: Ocado [OCDO.UK] +2.5% (earnings), International Consolidated Airlines Group [IAG.UK] +1.0% (earnings; no dividend), Air France-KLM [AF.FR] -8.5% (earnings), Wincanton [WIN.UK] +20.0% (new offer from GXO).

- Consumer staples: Anheuser-Busch InBev [ABI.BE] -0.5% (earnings; dividend hike).

- Utilities: Veolia Environment [VEI.FR] +1.5% (earnings; plans to raise dividend).

- Financials: London Stock Exchange [LSEG.UK] -2.5% (earnings).

- Healthcare: Grifols [GRF.ES] -5.0% (earnings), Haleon [HLN.UK] +7.0% (earnings).

- Technology: ams-Osram [AMS.CH] -40.0% (cancels Microled Project), Darktrace [DARK.UK] -0.5% (Snowflake guidance).

- Materials: Clariant [CLN.CH] -0.5% (earnings), Covestro [1COV.DE] +0.5% (earnings; no dividend; ADNOC talks).

Speakers

- ECB said to be planning to narrow corridor between lending and deposit rates, bringing lending rate closer to its 4.0% deposit rate; To continue putting a "floor" under market interest rates in the years to come, but banks will play a greater role in deciding how much liquidity they want.

- UK Treasury appointed Clare Lombardelli as Dep Gov (replaces Broadbent); effective July 1st.

- France Fin Min Le Maire commented that the govt was winning the battle against inflation; CPI should be near target by end-2024.

- Hungary Central Bank Gov Matolcsy commented that the govt economic policy was on the wrong track.

- Russia Pres Putin annual parliament address noted that the absolute majority of Russians supported the military operation in Ukraine; Out military has gained colossal combat experience (**Note: Russia holds presidential elections in about two weeks).

- China Politburo said to seek progress in stability and expand domestic demand and high-level opening up (**Note: China’s National People’s Congress where it sets annual GDP growth goals starts next week).

Currencies/fixed income

- USD was slightly softer during the EU session that saw a plethora of inflation and GDP data for Europe. Focus turns to US PCE data which is the Fed’s preferred gauge of underlying inflation.

- EUR/USD inched higher as French & Spanish CPI did not improve as much as expectations for the Preliminary Feb reading. Dealers noted that higher-than-expected euro zone inflation could validate expectations that the ECB would likely to wait some more before starting cutting interest rates.

- USD/JPY holding below the 150 level after BOJ member Takata expressed optimism that the 2% price target was finally coming into sight.

Economic data

- (NL) Netherlands Jan Retail Sales Y/Y: 1.8% v 1.9% prior.

- (ZA) South Africa Jan M3 Money Supply Y/Y: 6.6% v 7.3%e; Private Sector Credit Y/Y: 3.2% v 4.4%e.

- (FI) Finland Q4 GDP Q/Q: -0.7% v -1.1% prior; Y/Y: -1.8% v -1.6% prior.

- (FI) Finland Jan Preliminary Retail Sales Volume Y/Y: -2.9% v +0.7% prior.

- (FR) France Q4 Final Private Sector Payrolls Q/Q: -0.1% v 0.0% prelim.

- (DE) Germany Jan Retail Sales M/M: -0.4% v +0.5%e; Y/Y: -1.6% v -1.7%e.

- (SE) Sweden Q4 GDP Q/Q: -0.1% v +0.1%e; Y/Y: -0.2% v -1.1% prior.

- (SE) Sweden Jan Retail Sales M/M: 0.4% v 0.0% prior; Y/Y: -1.2% v -2.2% prior.

- (SE) Sweden Dec Non-Manual Workers Wages Y/Y: 4.9% v 4.9% prior.

- (NO) Norway Jan Retail Sales M/M: -0.1% v +0.2%e.

- (DK) Denmark Jan Unemployment Rate :2.5 % v 2.5% prior; Gross Unemployment Rate: 2.9% v 2.9% prior.

- (TR) Turkey Q4 GDP Q/Q: 1.0% v 0.3%e; Y/Y: 4.0% v 3.5%e.

- (TH) Thailand Jan Current Account Balance: -$0.2B v -$0.4Be; Overall Balance of Payments (BoP): $0.8B v $0.5B prior; Trade Account Balance: -$1.1B v +$2.3B prior; Exports Y/Y: 7.2% v 3.0% prior; Imports Y/Y: +1.5% v -1.7% prior.

- (HU) Hungary Jan PPI M/M: +0.3% v -0.7% prior; Y/Y: -6.8% v -7.2% prior.

- (FR) France Q4 Final GDP Q/Q: 0.1% v 0.0% prelim; Y/Y: 0.7% v 0.7% prelim.

- (FR) France Feb Preliminary CPI M/M: 0.8% v 0.7%e; Y/Y: 2.9% v 2.8%e.

- (FR) France Feb Preliminary CPI EU Harmonized M/M: 0.9% v 0.8%e; Y/Y: 3.1% v 3.1%e.

- (FR) France Jan PPI M/M: -1.3% v -0.1% prior; Y/Y: -5.1% v -1.3% prior.

- (FR) France Jan Consumer Spending M/M: -0.3% v -0.2%e; Y/Y: -0.7% v +1.2% prior.

- (ES) Spain Feb Preliminary CPI M/M: 0.3% v 0.4%e; Y/Y: 2.8% v 2.8%e.

- (ES) Spain Feb Preliminary CPI EU Harmonized M/M: 0.4% v 0.2%e; Y/Y: 2.9% v 2.8%e; CPI Core Y/Y: 3.4% v 3.3%e.

- (CH) Swiss Q4 GDP Q/Q: 0.3% v 0.1%e; Y/Y: 0.6% v 0.6%e.

- (CH) Swiss Feb KOF Leading Indicator: 101.6 v 101.7e.

- (AT) Austria Jan PPI M/M: -1.0% v -0.7% prior; Y/Y: -7.2% v -3.0% prior.

- (TW) Taiwan Jan Unemployment Rate: 3.4% v 3.4%e.

- (TW) Taiwan Jan Industrial Production Y/Y: 16.0% v 10.9%e.

- (TW) Taiwan Q4 Preliminary GDP (2nd reading) Y/Y: 4.9% v 5.1% advance.

- (HK) Hong Kong Jan Budget Balance (HKD): 41.4B v 21.8B prior.

- (HK) Hong Kong Jan M3 Money Supply Y/Y: -0.7% v +1.9% prior; M2 Money Supply Y/Y: -0.7% v +1.9% prior; M1 Money Supply Y/Y: -13.7% v -10.3% prior.

- (DE) Germany Feb Unemployment Change: +11.0K v +5.0Ke; Unemployment Claims Rate: 5.9% v 5.8%e.

- (ES) Spain Dec Current Account Balance: €1.1B v €2.8B prior.

- (DE) Germany Feb CPI North Rhine Westphalia M/M: 0.6% v 0.3% prior; Y/Y: 2.6% v 3.0% prior.

- (DE) Germany Feb CPI Hesse M/M: 0.5% v 0.0% prior; Y/Y: 2.1% v 2.2% prior.

- (DE) Germany Feb CPI Bavaria M/M: 0.5% v 0.2% prior; Y/Y: 2.6% v 2.9% prior.

- (DE) Germany Feb CPI Brandenburg M/M: 0.5% v 0.1% prior; Y/Y: 3.5% v 3.7% prior.

- (DE) Germany Feb CPI Saxony M/M: 0.3% v 0.4% prior; Y/Y: 3.0% v 3.5% prior.

- (DE) Germany Feb CPI Baden Wuerttemberg M/M: 0.3% v 0.2% prior; Y/Y: 2.7% v 3.2% prior.

- (IT) Italy Dec Industrial Sales M/M: % v -1.0% prior; Y/Y: % v -3.4% prior.

- (PL) Poland Q4 Final GDP Q/Q: 0.0% v 0.0% prelim; Y/Y: 1.0% v 1.0% prelim.

- (CZ) Czech Jan M2 Money Supply Y/Y: 8.4% v 8.3% prior.

- (IS) Iceland Q4 GDP Q/Q: +0.9% v -2.5% prior; Y/Y: 0.6% v 2.1% prior.

- (IS) Iceland Jan Final Trade Balance (ISK): -20.0B v -10.8B prelim.

- (NO) Norway Central Bank (Norges) Mar Daily FX Purchases: 350M v 350M prior.

- (UK) Jan Net Consumer Credit: £1.9B v £1.5Be; Net Lending: -£1.1B v +£0.2Be.

- (UK) Jan Mortgage Approvals: 55.2K v 52.0Ke.

- (UK) Jan M4 Money Supply M/M: -0.1% v +0.5% prior; Y/Y: -2.2% v -0.9% prior; M4 (ex-IOFCs) 3-month Annualized: 2.2% v 4.3% prior.

- (ZA) South Africa Jan PPI M/M: 0.1% v 0.2%e; Y/Y: 4.7% v 4.7%e.

- (GR) Greece Dec Retail Sales Value Y/Y: +0.7% v -4.2% prior; Retail Sales Volume Y/Y: 7.3% v 1.7%.

Fixed income issuance

- None seen.

Looking ahead

- (AR) Argentina Feb Consumer Confidence: No est v 35.6 prior.

- (BR) G20 Finance Ministers meeting in Sao Paulo.

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

- 05:30 (IN) India Jan Fiscal Deficit (INR): No est v 756.9B prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bill.

- 06:00 (PT) Portugal Q4 Final GDP Q/Q: 0.8%e v 0.8% prelim; Y/Y: 2.2%e v 2.2% prelim.

- 06:00 (PT) Portugal Feb Preliminary CPI M/M: No est v 0.0% prior; Y/Y: No est v 2.3% prior.

- 06:00 (PT) Portugal Feb Preliminary CPI EU Harmonized M/M: No est v -0.2% prior; Y/Y: No est v 2.5% prior.

- 06:00 (IE) Ireland Feb Preliminary CPI EU Harmonized Y/Y: No est v 2.7% prior.

- 06:01 (NZ) New Zealand Feb CoreLogic House Prices Y/Y: No est v -2.7% prior.

- 06:00 (CZ) Czech Republic to sell Bills.

- 06:00 (RO) Romania to sell RON500M in 5% 2029 Bonds.

- 06:30 (IN) India Jan Eight Infrastructure (Key) Industries: No est v 3.8% prior.

- 07:00 (IN) India Q4 GDP Y/Y: 6.6%e v 7.6% prior; GVA Y/Y: 6.4%e v 7.4% prior.

- 07:00 (IN) India Preliminary FY23/24 GDP Annual Estimate (2nd of 3 readings) Y/Y: 7.0%e v 7.3% advance.

- 07:00 (ZA) South Africa Jan Trade Balance (ZAR): -5.5Be v +14.1B prior.

- 07:00 (ZA) South Africa Jan Monthly Budget Balance (ZAR): -75.0Be v +19.5B prior.

- 07:00 (CL) Chile Jan Retail Sales Y/Y: -1.4%e v -1.6% prior; Commercial Activity Y/Y: No est v -3.0% prior.

- 07:00 (CL) Chile Jan Manufacturing Production Y/Y: +1.6%e v -1.8% prior; Industrial Production Y/Y: -0.4%e v -2.7% prior; Total Copper Production: No est v 495.5K prior.

- 07:00 (BR) Brazil Jan National Unemployment Rate: 7.8%e v 7.4% prior.

- 07:00 (MX) Mexico Jan Unemployment Rate: 2.8%e v 2.6% prior.

- 07:00 (CA) Canada Feb CFIB Business Barometer: No est v 49.0 prior.

- 08:00 (DE) Germany Feb Preliminary CPI M/M: 0.5%e v 0.2% prior; Y/Y: 2.6%e v 2.9% prior.

- 08:00 (DE) Germany Feb Preliminary CPI EU Harmonized M/M: +0.6%e v -0.2% prior; Y/Y: 2.7%e v 3.1% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 23rd: No est v $573.8B prior.

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

- 08:01 (AU) Australia Feb CoreLogic House Price Index M/M: No est v 0.4% prior.

- 08:30 (US) Jan Personal Income: 0.4%e v 0.3% prior; Personal Spending: 0.2%e v 0.7% prior; Real Personal Spending (PCE): -0.1%e v +0.5% prior.

- 08:30 (US) Jan PCE Deflator M/M: 0.3%e v 0.2% prior; Y/Y: 2.4%e v 2.6% prior- 08:30 (US) Jan PCE Core Deflator M/M: 0.4%e v 0.2% prior; Y/Y: 2.8%e v 2.9% prior.

- 08:30 (US) Initial Jobless Claims: 210Ke v 201K prior; Continuing Claims: 1.87Me v 1.862M prior.

- 08:30 (CA) Canada Dec GDP M/M: 0.2%e v 0.2% prior; Y/Y: 1.6%e v 1.1% prior; Q4 Quarterly GDP Annualized: No est v -1.1% prior.

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

- 09:45 (US) Feb Chicago Purchase Manager’s Index (PMI): 48.0e v 46.0 prior.

- 10:00 (US) Jan Pending Home Sales M/M: 1.5%e v 8.3% prior; Y/Y: -4.4%e v -1.0% prior.

- 10:00 (MX) Mexico Jan Net Outstanding Loans (MXN): No est v 6.022T prior.

- 10:00 (CO) Colombia Jan National Unemployment Rate: No est v 10.0% prior; Urban Unemployment Rate: 13.5%e v 10.2% prior.

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

- 10:50 (US) Fed’s Bostic.

- 11:00 (US) Feb Kansas City Fed Manufacturing Activity: -2e v -9 prior.

- 11:00 (US) Fed’s Goolsbee.

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

- 12:00 (CA) Canada to sell 2-year Bonds.

- 13:15 (US) Fed’s Mester.

- 16:00 (NZ) New Zealand Feb ANZ Consumer Confidence: No est v 93.6 prior.

- 16:45 (NZ) New Zealand Jan Building Permits M/M: No est v 3.7% prior.

- 17:00 (AU) Australia Feb Final PMI Manufacturing: No est v 47.7 prelim.

- 18:30 (JP) Japan Jan Jobless Rate: No est v 2.4% prior; Job-To-Applicant Ratio: 1.27e v 1.27 prior.

- 19:00 (KR) South Korea Feb Trade Balance: -$2.0Be v $0.3B prior; Exports Y/Y: 1.4%e v 18.0% prior; Imports Y/Y: -11.7%e v -7.8% prior.

- 19:30 (JP) Japan Feb Final PMI Manufacturing: No est v 47.2 prelim.

- 19:30 (TW) Taiwan Feb PMI Ma Manufacturing: No est v 48.8 prior.

- 19:30 (ID) Indonesia Feb PMI Manufacturing: No est v 52.9 prior.

- 19:30 (MY) Malaysia Feb PMI Manufacturing: No est v 49.0 prior.

- 19:30 (PH) Philippines Feb PMI Manufacturing: No est v 50.9 prior.

- 19:30 (TH) Thailand Feb PMI Manufacturing: No est v 46.7 prior.

- 19:30 (VN) Vietnam Feb PMI Manufacturing: No est v 50.3 prior.

- 20:01 (IE) Ireland Feb PMI Manufacturing: No est v 49.5 prior.

- 20:30 (CN) China Feb Manufacturing PMI (Govt Official): 49.0e v 49.2 prior; Non-Manufacturing PMI: 50.9e v 50.7 prior; Composite PMI: No est v 50.9 prior.

- 20:45 (CN) China Feb Caixin PMI Manufacturing: 50.7e v 50.8 prior.

- 21:00 (ID) Indonesia Feb CPI M/M: 0.2%e v 0.0% prior; Y/Y: 2.6%e v 2.6% prior; CPI Core Y/Y: 1.7%e v 1.7% prior.

- 21:35 (CN) China to sell 3-month and 6-month bills.

- 22:30 (JP) Japan to sell 3-Month Bills.