EU PMI data shows the severity of the coronavirus impact

Notes/Observations

- Markets fret over prospects of a global recovery as severity of the coronavirus impact looks greater

- European Apr PMI Services data registers record lows for Spain, Italy, France, Germany, Euro Zone and UK (as expected)

Asia:

- Australia Mar Final Retail sales revised better aided by pre-lockdown buying (MoM: 8.5% v 8.0% prelim)

- Bank of Korea (BOK) to halt USD backed loan offerings due to forex liquidity

- Reserve Bank of New Zealand (RBNZ) research paper noted that an extreme Level 4 lockdown would cut GDP by 37% than it would have been without any coronavirus restrictions

- North Korea said to appear to be nearing completion of a ballistic missile facility with the capacity to test-fire intercontinental ballistic missiles

Coronavirus:

- Total Global cases: 3,663,824 (+2.2%); Total death: 257.3K (+2.3%)

Europe:

- ECB took note of German Federal Constitutional Court Ruling on quantitative easing; remained fully committed to mandate and doing anything necessary

- German Govt and Federal States said to have reach agreement regarding gradually opening aspects of public life. Agree that States can decide for themselves about gradually opening aspects of public life like restaurants, bars and hotels. Large events in sports arenas, concerts and festivals would be banned until at least Aug 31st

Americas:

- President Trump: want to see schools open next season on time, possible there will be some deaths with re-opening. People should not accept keeping the country closed . Dr. Fauci and Dr. Birx would still be advising after the coronavirus task force was phased out

- Fed Vice Chair Clarida (moderate, voter): recovery could begin in H2 of this year; it's important to make sure the rebound is as robust as possible

Mid-East/Energy:

- Weekly API Crude Oil Inventories: +8.4M v +10.0M prior

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.24% at 336.32, FTSE +0.47% at 5,876.99, DAX +0.02% at 10,731.32, CAC-40 +0.45% at 5,876.00, IBEX-35 -0.28% at 6,729.00, FTSE MIB +0.22% at 17,426.50, SMI +0.57% at 9,566.67, S&P 500 Futures +0.70%]

Market Focal Points/Key Themes: European indices open slightly lower and then traded mixed as the session progressed; energy sector worst performer following renewed weakness in crude; healthcare and financials among better performing sectors; Germany draft document allows states to gradually reopen; upcoming earnings expected in the US session include Gerneral Motors, Enel, Paypal and KKR

 

Equities

- Financials: Credit Agricole [ACA.FR] +2% (earnings), Unicredit [UCG.IT] +1% (earnings), Metro Bank [MTRO.UK] -6% (trading update)

- Industrials: BMW [BMW.DE] -3% (earnings), Siemens Gamesa [SGRE.ES] -3% (earnings)

 

Speakers

- ECB's Muller (Estonia): ECB is certainly able to show QE measures are proportional

- Italy PM Conte stated that it was hard for EU recovery fund to begin before summer. Country did not need ESM. Stressed that ECB independence was at the heart of European treaties and not enforced by national constitutional courts. Lastly he noted that Italy Parliamentto approve new €55B stimulus package by Friday, May 8th

- EU Commission Spring Forecasts slashes 2020 GDP to contraction territory for member states. Warned that EU was facing the deepest economic downturn in its history, which threatened the very future of the euro currency if the crisis was badly handled

- China Foreign Ministry Spokesman Hua Chunying: Open to working with World Health Organization (WHO) regarding origins of coronavirus outbreak. China govt rejected the presumption of guilt by some in the US

- Russia oil production between May 1st thru May 5th period said to be 9.5Mbpd (**Reminder: Formal start to OPEC+ deepening of production cuts took effect on May 1st)

Currencies/Fixed Income

 

Economic Data

- (DE) Germany Mar Factory Orders M/M: -15.6% v -10.0%e; Y/Y: -16.0% v -10.2%e

- (NO) Norway Q1 Average Monthly Earnings Y/Y: 3.5% v 3.6% prior

- (CH) Swiss Q1 UBS Real Estate Bubble Index: 1.30 v 1.26 prior

- (SE) Sweden Apr PMI Services: 39.0 v 46.1 prior; Composite PMI: 38.3 v 45.1 prior

- (CZ) Czech Mar Retail Sales Y/Y: -15.5% v -12.0%e; Retail Sales (ex-auto) Y/Y: -8.9% v -7.1%e

- (HU) Hungary Mar Retail Sales Y/Y: 3.5% v 1.3%e

- (ZA) South Africa Apr (whole economy): 35.1 v 38.0e (12th straight contraction and record low)

- (ES) Spain Apr Services PMI: 7.1 v 10.0e (2nd straight contraction and a record low); Composite PMI: 9.2 v 10.5e

- (IT) Italy Apr Services PMI: 10.8 v 9.0e (2nd straight contraction and a record low); Composite PMI: 10.9 v 10.4e

- (FR) France Apr Final Services PMI: 10.2 v 10.4e (confirms 2nd straight contraction and a record low); Composite PMI: 11.1 v 11.2e

- (DE) Germany Apr Final Services PMI: 16.2 v 15.9e (confirms 2nd straight contraction and a record low); Composite PMI: 17.4 v 17.1e

- (EU) Euro Zone Apr Final Services PMI: 12.0 v 11.7e (confirms 2nd straight month and record low); Composite PMI: 13.6 v 13.5e

- (TW) Taiwan Apr CPI Y/Y: -1.0% v -0.4%e; CPI Core Y/Y: 0.1% v 0.3%e; WPI Y/Y: -10.8% v -9.7%e

- (UK) Apr Construction PMI: 8.2 v 21.7e (2nd straight contraction and record low)

- (NG) Nigeria Apr PMI (whole economy): 37.1 v 53.8 prior

- (EU) Euro Zone Mar Retail Sales M/M: -11.2% v -10.6%e; Y/Y: -9.2% v -5.0%e

Fixed Income Issuance

- (IN) India sold total INR450B vs. INR450B indicated in 3-month, 6-month and 12-month bills

- (DE) Germany opened its book to sell EUR-denominated 15-year bonds; guidance seen +24bps to Bunds (**Note: 1st German syndication in since mid-2015)

- (SE) Sweden sold SEK5.0B vs. SEK 5.0B indicated in 0.125% 2031 Bonds; Avg Yield: 0.0538% v 0.1176% prior; Bid-to-cover: 2.75x v 2.56x prior

- (UK) DMO sold £3.75B in 0.125% Jan 2023 Gilts; Avg Yield: 0.101% v 0.204% prior; Bid-to-cover: 2.59x v 3.05x prior; Tail: 0.3bps v 0.6bps prior (Apr 7th 2020)

 

Looking Ahead

- (PT) Bank of Portugal May Economic Bulletin

- (RU) Russia Central Bank (CBR) quarterly monetary report

- 05:30 (DE) Germany to sell €4.0B in 0% Apr 2025 BOBL

- 05:30 (GR) Greece Debt Agency (PDMA) to sell £625M in 13-week bills - 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)

- 06:00 (IE) Ireland Mar Industrial Production M/M: No est v -1.3% prior; Y/Y: No est v -1.1% prior

- 06:00 (PT) Portugal Q1 Unemployment Rate: No est v 6.7% prior

- 06:00 (CZ) Czech Republic to sell 2028, 2030 and 2033 bonds

- 06:30 (UK) DMO to sell £1.75B in 1.625% 2054 Gilt; Avg Yield: % v 0.584% prior; Bid-to-cover: x v 2.53x prior; Tail: bps v 0.2bps prior (Apr 21st 2020) - 06:45 (US) Daily Libor Fixing

- 07:00 (US) MBA Mortgage Applications w/e May 1st: No est v -3.3% prior

- 07:00 (MX) Mexico Mar Leading Indicators M/M: No est v -0.11 prior

- 07:00 (MX) Mexico Apr Domestic Vehicle Sales: No est v 87.5K prior

- 07:00 (UK) Weekly PM Question time in House

- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)

- 08:00 (UK) Baltic Dry Bulk Index

- 08:15 (US) Apr ADP Employment Change: -21.0Me v -27K prior

- 09:00 (BR) Brazil Apr PMI Services: No est v 34.5 prior; PMI Composite: No est v 37.6 prior

- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years); bid-to-cover: x - 09:30 (FR) ECB's Villeroy (France)

- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)

- 10:00 (PL) Poland Central Bank Gov Glapinski to hold post rate decision press conference

- 10:30 (US) Weekly DOE Crude Oil Inventories

- 12:00 (CA) Canada to sell 1.25% 2030 Bonds

- 13:30 (US) Fed's Bostic Discusses Response to Virus

- 15:00 (AR) Argentina Mar Industrial Production Y/Y: No est v -0.8% prior; Construction Activity Y/Y: No est v -22.1% prior

- 16:00 (CO) Colombia Central Bank Quarterly Report

- 17:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to leave Overnight Rate Target unchanged at 0.50%

- 17:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to cut Selic Rate Target by 50bps to 3.25%

- 17:00 (KR) South Korea Apr Foreign Reserves: No est v $400.2B prior

- 18:30 (AU) Australia Apr Performance of Services: No est v 38.7 prior

- 19:00 (KR) South Korea Mar Current Account Balance: No est v $6.4B prior; Balance of Goods (BOP): No est v $6.6B prior

- 19:01 (UK) Apr Final GfK Consumer Confidence: -37e v -34 prelim 05/06/2020 19:50 JN 698) Monetary Base YoY Apr -- -- 2.80% --

- 19:50 (JP) Japan End-Apr Monetary Base: No est v ¥509.8T prior

- 20:00 (NZ) New Zealand Fin Min Pre-Budget Speech

- 21:10 (JP) BOJ Outright Bond Purchase operation for 1~3 Years and 5~10 Years maturities

- 21:30 (AU) Australia Mar Trade Balance: A$6.0Be v A$4.4B prior; Exports M/M: No est v -4.7% prior; Imports M/M: No est v -4.3% prior

- 21:30 (KR) South Korea Central Bank to sell KRW 2.4T in 2-Year bonds

- 21:45 (CN) China Apr Caixin PMI Services: 50.1e v 43.0 prior; PMI Composite: No est v 46.7 prior

- 22:00 (JP) Japan Apr Tokyo Avg Office Vacancies: No est v 1.5 prior

- 22:00 (PH) Philippines Q1 GDP Q/Q: -2.0%e v +2.2% prior; Y/Y: 2.9%e v 6.4% prior

- 22:05 (NZ) New Zealand to sell 2025, 2027 and 2033 Bonds

- 23:00 (NZ) New Zealand Q2 2-year Inflation Expectation Survey: No est v 1.93% prior

- 23:00 (TH) Thailand Central Bank to sell THB30B in 2023 Bonds

- 23:30 (JP) Japan to sell 6-Month Bills