Euro Zone GDP, employment and inflation data beats consensus across the board

Notes/Observations

- A spree of economic releases saw European economic data beat expectations on both the growth and inflation fronts (euro zone, Italian and Spanish GDP data; Italian unemployment, French, German, Spanish, Italian CPI readings)

- Turkey Central bank vowed to use all tools to curb inflation as it sought to reassure markets that it would not soften its monetary policy. (Reminder: dropped its pledge to deliver further tightening if needed at its last decision)

- US-China trade talks underway in Beijing

- China PMI barely holds onto expansion; data adds uncertainty whether growth was strong enough to withstand any erosion of policy support

Asia:

- China Apr Manufacturing PMI: 50.1 v 50.6e (2nd month of expansion)

- China Apr Caixin PMI Manufacturing: 50.2 v 50.9e

Europe/Mideast:

- UK cross-party talks with government said to be more positive than expected from last week's discussions

- Grassroots Conservative Party local chairmen and activist said to have called for an extraordinary meeting with the PM to demand her resignation (1st such attempt by a grassroot effort in 185 years). The vote was not binding, but would add to the overwhelming pressure for her to stand down.

Americas:

- White House Econ Adviser Kudlow: next two weeks should give clarity on US-China trade talks; we were 'pretty close' to a deal. White House still supported Stephen Moore for nomination to the Fed. Pres Trump had not decided on whether to support higher fuel tax as part of an infrastructure package

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.14% at 390.68, FTSE -0.14% at 7,430.25, DAX -0.10% at 12,315.72, CAC-40 -0.40% at 5,558.48, IBEX-35 -0.32% at 9,487.06, FTSE MIB +0.15% at 21,821.50, SMI +0.31% at 9,770.50, S&P 500 Futures -0.06%]

Market Focal Points/Key Themes: European Indices trade mostly lower after mixed session in Asia and mixed US futures. The tech heavy Nasdaq underperforms, weighed upon by shares of Alphabet which falls ~8% following a Revenue miss. On a busy morning on the macro front, European nation GDP and Inflation data mostly came ahead of forecasts pushing the Euro higher. On a busy morning for corporate earnings, shares of Swiss traded AMS outperforms following a strong Revenue beat and strong Q2 guidance, with the shares up over 20%; DSV outperforms on strong earnings and share buyback, as well as progress on its acquisition of Panalpina, with Panalpina shares up over 6%, while StanChart rises over 5% on earnings and a $1B share buyback. Elsewhere other risers include Beiersdorf, Spie and Deutsche Boerse. Meanwhile shares of Danske Bank trades sharply lower after a decline in profits and Revenue and downgraded outlook; while Airbus trades lower following in line results. Glencore, Orange, Thales, Whitbread and Lufthansa other notable names declining on earnings. In other news Ceconomy rises significantly after thee Board approves reorganization and efficiency program; Greenyard gains on a strategic partnership with Tesco. Looking ahead notable earners include Lumber Liquidators, General Electric, Mastercard, McDonalds, General Motors, Pfizer, Merck, Eli Lily and Ecolabs among others.

Equities

- Consumer discretionary: Lufthansa [LHA.DE] -1.5% (earnings), Clariant [CLN.CH] -3% (earnings), Ceconomy [CEC.DE] +11% (efficiency program), Straumann [STMN.CH] -4% (earnings), Whitbread [WTB.UK] -3% (earnings), WM Morrison Supermarkets [MRW.UK] +1.5%, Sainsbury [SBRY.UK] -0.5% (Kantar, Nielsen data)

- Consumer staples: Greene King [GNK.UK] -5.5% (earnings)

- Energy: BP [BP.UK] +0.5% (earnings)

- Financials: Danske Bank [DANSKE.DK] -7% (earnings; cuts outlook), Standard Chartered [STAN.UK] +4% (earnings; buyback program), SEB [SEBA.SE] -0.5% (earnings), Nordea Bank [NDA.SE] -3% (earnings)

- Materials: Glencore [GLEN.UK] -3% (production)

- Industrials: Airbus [AIR.FR] -1% (earnings), Thales [HO.FR] -3.0% (sales), Aixtron [AIXA.DE] -1% (earnings), Symrise [SY1.DE] +1% (earnings), DS Smith [SMDS.UK] -3% (trading update)

- Technology: Logitech [LOGN.CH] -3.5% (earnings; CFO departs), AMS [AMS.CH] +21% (earnings), Rexel [RXL.FR] +4.5% (earnings)

- Telecom: Orange [ORA.FR] -2.5% (earnings)

Speakers

- France Fin Min Le Maire stated that the govt would not change its 2019 GDP growth forecast after data. Noted that the Total cost of yellow vest measures around €17B

- EU Court on CETA trade accord; ruled the agreement as valid (binding decision)

- Greece govt official: To use cash buffer for reduction of debt and non-performing loans (NPLs)

- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) stated that aggregate demand worked to slow CPI in Q1 with current CPI in-line with path predicted back in Jan. It saw CPI slowing to single digits in Q2 2020 and reiterated view that saw CPI slowing to 5% in the medium term. Maintained 2019 CPI at 14.6% and maintained 2020 CPI at 8.2%. Raised end-2019 Food price inflation from 13.0% to 16.0%

- S&P raised Philippines sovereign rating to BBB+; outlook stable

- Saudi Energy Min Al-Falih reiterates stance that would not exceed OPEC+ production limit agreement; extension was possible to end of 2019. Saudi exports seen below 7M bpd until end of May

Currencies/Fixed Income

- USD was at 1-week lows against the major pairs as the NY morning approached. The greenback retreated from its recent cycle highs as US inflation data has been below expectations.

- EUR/USD edged above the 1.12 level as a spree of European economic releases beat expectations on both the growth and inflation fronts (Euro Zone, Italian and Spanish GDP data; Euro Zone, German, Italian unemployment; French, German, Spanish, Italian CPI readings all exceeded consensus).

- Rounding out the majors: USD/JPY at 111.40, lower by 0.2%; GBP/USD at 1.2980, higher by 0.4%; USD/CHF at 1.0180, lower by 0.1%

Economic Data

- (FR) France Q1 Preliminary GDP Q/Q: 0.3% v 0.3%e; Y/Y: 1.1% v 1.1%e

- (DE) Germany May GfK Consumer Confidence: 10.4 v 10.3e

- (DE) Germany Mar Import Price Index M/M: 0.0% v 0.4%e; Y/Y: 1.7% v 2.1%e

- (FI) Finland Feb Final Trade Balance: -€0.1B v -€0.1B prelim

- (NO) Norway Mar Retail Sales (includes auto/fuel) M/M: 0.6% v 0.6%e

- (RU) Russia Apr PMI Manufacturing: 51.8 v 51.9e (7th straight expansion)

- (NO) Norway Feb AKU Unemployment Rate: 3.8% v 3.8%e

- (ZA) South Africa Mar M3 Money Supply Y/Y: 7.0% v 5.3%e; Private Sector Credit Y/Y: 6.1% v 6.0%e

- (FR) France Apr Preliminary CPI M/M: 0.2% v 0.3%e; Y/Y: 1.2% v 1.2%e

- (FR) France Apr Preliminary CPI EU Harmonized M/M: 0.3% v 0.3%e; Y/Y: 1.4% v 1.4%e

- (FR) France Apr PPI M/M: 0.0% v 0.4% prior; Y/Y: 1.9% v 2.1% prior

- (FR) France Apr Consumer Spending M/M: -0.1% v +0.5%e; Y/Y: -1.9% v -1.4%e

- (FR) France Mar YTD Budget Balance: -€40.7B v -€36.9B prior

- (DE) Germany Apr CPI Saxony M/M: 0.9% v 0.5% prior; Y/Y: 1.9% v 1.4% prior

- (ES) Spain Q1 Preliminary GDP Q/Q: 0.7% v 0.6%e; Y/Y: 2.4% v 2.3%e

- (ES) Spain Apr Preliminary CPI M/M: 1.0% v 1.1%e; Y/Y: 1.5% v 1.5%e

- (ES) Spain Apr Preliminary CPI EU Harmonized M/M: 1.1% v 1.1%e; Y/Y: 1.6% v 1.5%e

- (ES) Spain Mar Adjusted Retail Sales Y/Y: 1.7% v 1.4%e; Retail Sales (unadj) Y/Y: 0.3% v 1.7% prior

- (CH) Swiss Apr KOF Leading Indicator: 96.2 v 97.0e

- (HU) Hungary Feb Average Gross Wages Y/Y: % v 11.1%e

- (HU) Hungary Mar PPI M/M: 0.0% v -0.3% prior; Y/Y: 2.7% v 2.7% prior

- (AT) Austria Q1 Preliminary GDP Q/Q: 0.3% v 0.3% prior; Y/Y: 1.1% v 2.4% prior

- (AT) Austria Mar PPI M/M: -0.1% v 0.0% prior; Y/Y: 1.5% v 1.6% prior

- (TR) Turkey Mar Trade Balance: -$2.1B v -$2.1Be

- (TH) Thailand Mar Current Account Balance: $6.1B v $4.4Be; Overall Balance of payments (BOP): -$0.1B v +$3.3B prior; Trade Account Balance: $3.6B v $3.5B prior Exports Y/Y: -4.2% v -1.7% prior; Imports Y/Y: -5.8% v -7.3% prior

- (DE) Germany Apr Unemployment Change: -12K v -7Ke; Unemployment Claims Rate: 4.9% v 4.9%e

- (TW) Taiwan Q1 Preliminary GDP Y/Y: 1.7% v 1.4%e

- (DE) Germany Apr CPI Brandenburg M/M: 0.8% v 0.4% prior; Y/Y: 1.9% v 1.4% prior

- (DE) Germany Apr CPI Hesse M/M: 0.9% v 0.5% prior; Y/Y: 1.8% v 1.1% prior

- (DE) Germany Apr CPI Bavaria M/M: 0.7% v 0.5% prior; Y/Y: 2.0% v 1.5% prior

- (IT) Italy Mar Preliminary Unemployment Rate: 10.2% v 10.7%e

- (NO) Norway Central Bank (Norges) May Daily FX Purchases (NOK): -600M v -600M prior

- (PL) Poland Apr Preliminary CPI M/M: 1.1% v 0.6%e; Y/Y: 2.2% v 1.8%e

- (CZ) Czech Mar M2 Money Supply Y/Y: 5.7% v 5.9% prior

- (ES) Spain Feb Current Account Balance: -€2.8B v -€1.5B prior

- (DE) Germany Apr CPI North Rhine Westphalia M/M: 1.0% v 0.4% prior; Y/Y: 2.1% v 1.5% prior

- (PT) Portugal Apr Preliminary CPI M/M: 0.6% v 1.8% prior; Y/Y: 0.8% v 0.8% prior

- (PT) Portugal Apr Preliminary EU Harmonized CPI M/M: 1.0% v 2.1% prior; Y/Y: 0.9% v 0.8% prior

- (EU) Euro Zone Q1 Advance GDP Q/Q: 0.4% v 0.3%e; Y/Y: 1.2% v 1.1%e

- (EU) Euro Zone Mar Unemployment Rate: 7.7% v 7.8%e (lowest since 2008)

- (IT) Italy Apr Preliminary CPI NIC (including tobacco) M/M: 0.2% v 0.2%e; Y/Y: 1.1% v 1.1%e

- (IT) Italy Apr Preliminary CPI EU Harmonized M/M: 0.6% v 0.7%e; Y/Y: 1.2% v 1.3%e

- (BE) Belgium Mar Unemployment Rate: 5.7% v 5.8% prior

- (IS) Iceland Mar Final Trade Balance (ISK): B v -13.2B prelim

**Fixed Income Issuance**

- (IT) Italy Debt Agency (Tesoro) sold total €B vs. €4.5-5.5B indicated range in 5-year and 10-year BTP bonds

- Sold €2.5B vs. €2.0-2.5B indicated range in 1.75% July 2024 BTP bonds; Avg Yield: 1.72% v 1.71% prior; Bid-to-cover: 1.52x v 1.31x prior

- Sold €3.0B vs. €2.5-3.0B indicated range in 3.00% Aug 2029 BTP; Avg Yield: 2.59% v 2.61% prior; Bid-to-cover: 1.40x v 1.40x prior

- (IT) Italy Debt Agency (Tesoro) sold €1.0B vs. €0.5-1.0B indicated range in 2025 CCTeu (Floating rate Note); Avg Yield: % v 1.83% prior; Bid-to-cover: x v 1.67x prior (Mar 28th 2019

- (ZA) South Africa sold total ZAR vs. ZAR3.3B indicated in 2030, 2040 and 2044 bonds

- (CH) Switzerland sold CHF419.7M in 3-month Bills; Avg Yield: -0.793% v -0.778% prior

Looking Ahead

- (SE) Swedish Opposition Budget Deadline

- (DE) Germany Apr CPI Baden Wuerttemberg M/M: No est v 0.3% prior; Y/Y: No est v 1.5% prior

- (IL) Israel Mar Leading 'S' Indicator M/M: No est v 0.3% prior

- 05:30 (UK) Weekly John Lewis LFL sales data

- 05:30 (SL) Sri Lanka Apr CPI Y/Y: No est v 4.3% prior

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €6.0B with 29 bids recd)

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

- 05:30 (GR) Greece Debt Agency (PDMA) to sell €875M in 26-week bills; Avg Yield: % v 0.58% prior; Bid-to-cover: x v 2.53x prior (Apr 3rd 2019)

- 05:30 (DE) Germany to sell €4.0B in 0% Mar 2021 Schatz

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)

- 06:00 (IT) Italy Q1 Preliminary GDP Q/Q: +0.1%e v -0.1% prior; Y/Y: -0.1%e v 0.0% prior

- 06:00 (IE) Ireland Apr Unemployment Rate: No est v 5.4% prior

- 06:00 (PT) Portugal Mar Industrial Production M/M: No est v -1.5% prior; Y/Y: No est v -2.5% prior

- 06:00 (PT) Portugal Mar Retail Sales M/M: No est v -1.0% prior; Y/Y: No est v 4.5% prior

- 06:00 (IL) Israel Mar Unemployment Rate: No est v 4.1% prior

- 06:45 (US) Daily Libor Fixing

- 07:30 (IN) India Mar Eight Infrastructure(key) Industries: No est v 2.1% prior

- 07:45 (US) Weekly Chain Store Sales data

- 08:00 (DE) Germany Apr Preliminary CPI M/M: 0.5%e v 0.4% prior; Y/Y: 1.5%e v 1.3% prior

- 08:00 (DE) Germany Apr Preliminary CPI EU Harmonized M/M: 0.5%e v 0.5% prior; Y/Y: 1.7%e v 1.4% prior

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: expected to leave Base Rate unchanged at 0.90% and leaves Overnight Deposit Rate unchanged at -0.05%

- 08:00 (ZA) South Africa Mar Trade Balance (ZAR): No est v 4.0B prior

- 08:00 (ZA) South Africa Mar Budget Balance (ZAR): No est v 10.9B prior

- 08:00 (BR) Brazil Mar National Unemployment Rate: 12.9%e v 12.4% prior

- 08:00 (BR) Brazil Mar PPI Manufacturing M/M: No est v 0.1% prior; Y/Y: No est v 7.8% prior

- 08:00 (UK) Baltic Bulk Index

- 08:00 (RU) Russia announces upcoming OFZ Bond issuance

- 08:30 (US) Q1 Employment Cost Index (ECI): 0.7%e v 0.7% prior

- 08:30 (CA) Canada Feb GDP M/M: 0.0%e v 0.3% prior; Y/Y: 1.4%e v 1.6% prior

- 08:30 (CA) Canada Industrial Product Price M/M: No est v 0.3% prior; Raw Materials Price Index M/M: No est v 4.6% prior

- 08:55 (US) Weekly Redbook Retail Sales data

- 09:00 (US) Feb S&P/Case-shiller 20-City M/M: 0.20%e v 0.11% prior; Y/Y: 3.10%e v 3.58% prior; House Price Index (HPI): 213.08e v 212.41 prior

- 09:00 (US) Feb S&P Case-Shiller (overall) HPI YoY: No est v 4.26% prior; Overall HPI Index: No est v 204.71 prior

- 09:00 (MX) Mexico Q1 Preliminary GDP Q/Q: 0.3%e v 0.2% prior; Y/Y: 1.4%e v 1.7% prior

- 09:00 (MX) Mexico Feb Gold Production: No est v 6.8K kilograms prior; Silver Production: No est v 282.4K kilograms prior; Copper Production: No est v 44.8K tons prior - 09:00 (CL) Chile Mar Unemployment Rate: 6.9%e v 6.7% prior

- 09:00 (CL) Chile Mar Industrial Production Y/Y: -0.2%e v -3.6% prior; Manufacturing Production Y/Y: 1.5%e v 0.8% prior; Total Copper Production: No est v 417.1K tons prior - 09:00 (EU) Weekly ECB Forex Reserves

- (MX) Mexico Mar YTD Budget Balance (MXN): No est v -27.6B prior

- 09:30 (BR) Brazil Mar Primary Budget Balance (BRL): -22.4Be v -14.9B prior; Nominal Budget Balance: -52.9Be v -45.0B prior; Net Debt to GDP Ratio: 54.5%e v 54.4% prior

- 09:45 (US) Apr Chicago Purchasing Managers (PMI): 59.0e v 58.7 prior

- 10:00 (US) Mar Pending Home Sales M/M: +0.9%e v -1.0% prior; No est v -5.0% prior

- 10:00 (US) Apr Consumer Confidence: 126.5e v 124.1 prior

- 10:00 (MX) Mexico Mar Net Outstanding Loans (MXP): No est v 4.475T prior

- 10:00 (MX) Mexico Weekly International Reserves data

- 11:00 (CO) Colombia Mar National Unemployment Rate: No est v 11.8% prior; Urban Unemployment Rate: 11.3%e v 12.4% prior

- 11:00 (CA) Bank of Canada (BOC) Gov Poloz with member Wilkins

- 15:00 (US) Mar Agricultural Prices Paid: No est v 0.8% prior; Agriculture Prices Received: No est v 2.0% prior

- 15:00 (AR) Argentina Feb Economic Activity Index (Monthly GDP) M/M: No est v 0.6% prior; Y/Y: -5.0%e v -5.7% prior

- 16:30 (US) Weekly API Oil Inventory data