Euro Zone Apr CPI beats expectations; focus on US payroll data

Notes/Observations

- UK Apr Services PMI data moves back into expansion territory

- Euro Zone Apr flash CPI beats expectations; Swiss inflation stayed ultra-low

- Focus on upcoming US jobs report for Apr

Asia:

- China said to have reserved dates on President Xi Jinping's official calendar for a trip to Washington in June concerning a trade deal. (said to signal that govt believed it was close enough to a trade agreement being done that they could start planning a trip

Europe/Mideast:

- ECB's Weidmann (Germany): Expects slowdown in German growth to be temporary. German economy to pick up speed after slow down

- ECB's Rehn (Finland): ECB should not jump the gun after the first signs of stronger data

- EU's Juncker: ECB's Weidmann is a suitable candidate for the ECB president position when Draghi leaves

- Early results in the UK local elections showed that both the Conservatives and Labour have lost support due to Brexit with smaller parties and independents taking seats across the country

Americas:

- President Trump: Stephen Moore is withdrawing consideration for the Fed

- Congressional Budget office: sees US deficits averaging 4.3%/GDP from 2020-2029. US debt growing to 92% of GDP from 78% in 2019. Lower rates would still push up national debt because of large annual deficits

- Chamber of Commerce official: US and China were in the endgame of trade talks, continued to make progress on a range of issues in trade negotiations

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.41% at 390.38, FTSE +0.70% at 7,402.75, DAX +0.37% at 12,392.30, CAC-40 +0.33% at 5,556.86, IBEX-35 +0.25% at 9,442.16, FTSE MIB +0.19% at 21,751.50, SMI +0.26% at 9,771.80, S&P 500 Futures +0.36%]

 

Market Focal Points/Key Themes:

Equities

European Indices trades higher across the board, following on from a positive session in Asia and higher US futures.
Earnings continue to take center stage with Banking giant HSBC trading higher after a strong top and bottom line beat; French Banking name Societe General and Axa also higher after Revenues beat forecasts, German Chemical giant BASF trades little changed while Adidas trades sharply higher on earnings.
Meanwhile Air France falls after a higher then expected loss, Intercontinental Hotels also falls on a Q1 update, while Intu Group declines sharply following a cut in forecasts.
In other news Freenet falls on an analyst downgrade; Iliad rises almost 4% on an upgrade at Morgan Stanley; Duerr also gains on an upgrade at Commerzbank.
Looking ahead notable earners include Fiat Chrysler, Dish Network, Dominion Energy and American Axle among others.

- Consumer discretionary: adidas [ADS.DE] +7% (earnings), Air France-KLM [AF.FR] -4% (earnings), Intu Properties [INTU.UK] -6.5% (profit warning)

- Consumer staples: ICA Gruppen [ICA.SE] +6.5% (earnings)

- Energy: Equinor [EQNR.NO] +1.5% (earnings), Spectrum [SPU.NO] +17% (to be acquired)

- Healthcare: Novo Nordisk [NOVOB.DK] -0.5% (earnings)

- Financials: Societe Generale [GLE.FR] +2% (earnings), HSBC [HSBA.UK] +2.5% (earnings), Axa [CS.FR] +2% (earnings)

- Materials: Wienerberger [WIE.AT] +4.5% (earnings)

- Industrials: BASF [BAS.DE] -0.5% (earnings), DNB [DNB.NO] -2.5% (earnings)

- Technology: Siltronic [WAF.DE] +4% (earnings)

- Telecom: Iliad [ILD.FR] +3.5% (analyst action)

 

Speakers

- BoE Deputy Gov Broadbent reiterated MPC stance that expected rates to rise in a limited and gradual manner. Market expectations for rates were lower. Fall back in market interest rate expectations was main reason for stronger BoE forecasts

- ECB's Weidmann (Germany) stated that tiering debate could harm normalization expectations. Banks pay only marginal sums to ECB on negative rates thus relief from any tiering would be negligible. Reiterated despite solid Q1 GDP growth there was still no overall improvement in economy. German growth dip proving to be more persistent than initially thought and added that 2019 GDP growth of 0.5% as very plausible

- UK Labour Party Finance Spokesman Mcdonnell: Message from local election was that Brexit needs to be sorted, 'Message received'

- EU Leaders said to be planning a special summit on May 28th following the EU parliamentary elections

 

Currencies/ Fixed Income

- USD held onto gains in a quiet session ahead of the release of US payroll data. The greenback supported by speculation that US gains were solid in April

- A week of improving data for the Euro Zone failed to provide any sustainable momentum for the Euro currency and was unable to regain any position above the key 1.13 level. The Euro Zone flash CPI and Core readings beat expectation but did little to aid the Euro upside. Pair at 1.1160 just ahead of the NY morning.

- GBP was softer after local UK elections results showed that both the Conservatives and Labour parties have lost support due to Brexit. UK Apr PMI Services data moved back into expansion territory but could not provide the legs for a stronger GBP currency.

 

Economic Data

- (CH) Swiss Apr SECO Consumer Confidence: -6 v -3e

- (DK) Denmark Mar Gross Unemployment Rate: 3.7% v 3.7% prior; Unemployment Rate (Seasonally Adj): 3.1% v 3.1% prior

- (NO) Norway Mar Credit Indicator Growth Y/Y: 5.8% v 5.7%e

- (FI) Finland Mar House Price Index M/M: -1.1% v +2.0% prior; Y/Y: 0.7% v 1.4% prior

- (CH) Swiss Apr CPI M/M: 0.2% v 0.2%e; Y/Y: 0.7% v 0.7%e; CPI Core Y/Y: 0.5% v 0.5%e

- (CH) Swiss Apr CPI EU Harmonized M/M: 0.6% v 0.3% prior; Y/Y: 1.1% v 0.7% prior

- (TR) Turkey Apr CPI M/M: 1.7% v 2.4%e; Y/Y: 19.5% v 20.4%e; CPI Core Index Y/Y: 16.3% v 17.1%e

- (TR) Turkey Apr PPI M/M: 3.0% v 2.0%e; Y/Y: 30.1% v 28.9%e

- (NO) Norway Apr Unemployment Rate: 2.3% v 2.3%e

- (UK) Apr Services PMI: 50.4 v 50.3e (moves back into expansion); Composite PMI: 50.9 v 50.6e

- (UK) Apr Official Reserves Changes: $1.5B v -$172M prior

- (HK) Hong Kong Mar Retail Sales Value Y/Y: -0.2% v +2.5%e; Retail Sales Volume Y/Y: -0.8% v +1.5%e

- (EU) Euro Zone Apr CPI Estimate Y/Y: 1.7% v 1.6%e; Advance CPI Core Y/Y: 1.2% v 1.0%e

- (EU) Euro Zone PPI M/M: -0.1% v +0.1%e; Y/Y: 2.9% v 3.0%e

 

Fixed Income Issuance

- None seen

 

Looking Ahead

- (ZA) South Africa to sell ZAR760M in I/ L 2029, 2033 and 2050 bonds

- 05:30 (IN) India to sell combined INR170B in 2021, 2026, 2031, 2039 and 2059 bonds

- 06:00 (UK) DMO to sell €4.0B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.0B respectively)

- 06:45 (US) Daily Libor Fixing

- 08:00 (BR) Brazil Mar Industrial Production M/M: -0.7%e v +0.7% prior; Y/Y: -4.6%e v +2.0% prior

- 08:00 (UK) Baltic Bulk Index

- 08:00 (EU) ECB SSM chief SSM's Enria on panel in Florence

- 08:00 (IN) India announces upcoming bill issuance (held on Wed)

- 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond issuance for Thursday, may 9th

- 08:30 (US) Apr Change in Nonfarm Payrolls Apr +190Ke v +196K prior; Change in Private Payrolls: +188Ke v +182K prior; Change in Manufacturing Payrolls: +10Ke v -6K prior

- 08:30 (US) Apr Unemployment Rate: 3.8%e v 3.8% prior; Underemployment Rate: No est v 7.3% prior; Labor Force Participation Rate: 63.0%e v 63.0% prior

- 08:30 (US) Apr Average Hourly Earnings M/M: 0.3%e v 0.1% prior; Y/Y: 3.3%e v 3.2% prior; Average Weekly Hours: 34.5e v 34.5 prior

- 08:30 (US) Mar Advance Goods Trade Balance: -$73.0Be v -$79.5B prior (Dec)

- 08:30 (US) Mar Preliminary Wholesale Inventories M/M: 0.2%e v 0.2% prior; Retail Inventories M/M: 0.1%e v 0.3% prior

- 09:00 (SG) Singapore Apr Purchasing Managers Index (PMI): 50.6e v 50.8 prior; Electronics Sector Index: No est v 49.8 prior

- 09:00 (MX) Mexico Mar Leading Indicators M/M: No est v -0.02 prior

- 09:00 (MX) Mexico Apr Vehicle Domestic Sales: No est v 117.1K prior

- 09:00 (CL) Chile Mar Retail Sales Y/Y: 1.0%e v 0.7% prior; Commercial Activity Y/Y: No est v 4.8% prior

- 09:45 (US) Apr Final Markit Services PM: 52.9e v 52.9 prelim; Composite PMI: No est v 52.8 prelim

- 10:00 (US) Apr ISM Non-Manufacturing Index: 57.0e v 56.1 prior

- 10:15 (US) Fed's Evans (dove, voter)

- 11:00 (EU) Potential sovereign ratings after European close

- 11:30 (US) Fed's Clarida (moderate, voter)

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

- 13:45 (US) Fed's Williams (moderate, voter)

- 14:00 (CO) Colombia Central Bank Apr Minutes

- 15:00 (US) Fed's Bowman (voter)

- 19:45 (US) Fed members Bullard, Daly, Kaplan and Mester at Stanford University