European market Update: Euro Zone economy Q4 GDP revised lower; China confirms to resume issuance of 3-year Bills
- (RU) Russia Mar Official reserve Assets: $447.0B v $446.5e
- (HU) Hungary Feb Preliminary Industrial Output M/M: -1.7% v 8.8% prior; Y/Y: 8.4% v 6.3%e
- (IR) Ireland Mar Services PMI: 49.6 v 48.8 prior; highest reading in 26 months
- (SZ) Swiss Feb Retail sales Y/Y: 3.1% v 3.7% prior
- (SP) Spain Mar Services PMI: 51.3 v 47.1 prior
- (AS) Austria Mar Wholesale Price Index M/M: 0.8%; Y/Y: 3.1%
- (IT) Italy Mar Services PMI: 55.3 v 52.0e
- (FR) France Mar Final Services PMI: 53.8 v 53.0e; lowest reading in six months
- (GE) Germany Mar Final Services PMI: 54.9 v 54.7e; fastest rise since April 2008
- (EU) Euro-Zone Mar Final Services PMI: 54.1 v 53.7e (highest since Nov 2007); PMI Composite: 55.9 v 55.5e (highest since Aug 2007)
- (UK) Mar Services PMI: 56.5 v 58.0e; Employment component at 50.3 v 48.8 (first reading above 50 since April 2008)
v 58.4 prior
- (UK) Jan Index of Services 3M/3M: 0.6% v 0.7%e
- (EU) Euro-Zone Q4 Final GDP Q/Q: 0.0% v 0.1%e; Y/Y: -2.2% v -2.1%e
- (EU) Euro-Zone Q4 Final Gross Fixed capital: -1.3% v -0.8%e; Gov't Expenditures: -0.1% v -0.1%e; Household Consumption: 0.0% v 0.0%e
- (EU) Euro-Zone Feb PPI M/M: 0.1% v 0.2%e; Y/Y: -0.5% v -0.4%e
(HK) Hong Kong: March home sales 10.9K units, volume -7.4% m/m, value +18.6% m/m
- Equities: European markets opened on a flat theme before rotating lower. Markets in Europe are coming off three consecutive positive sessions and showed hesitation ahead of final Q4 Euro-zone GDP numbers along with a number of March service PMI reads. Trading in Asia was mixed with the Hang Seng printing strong gains as it sought to catch up (first full trading day since April 1) while the rest of Asia was flat to negative. Key corporate flows in the pre-market session were 'driven' by formal terms between Daimler [DAI.GE]/Renault [RNO.FR] and Nissan [NSANY]. Entering a strategic alliance in which all three firms will hold a 3.1/3.1/3.1% stake in the others, the auto makers will share tech in relation to gas, diesel and electric engines for a wide range of vehicle classes. With a pull back in metal and commodity prices, the basic resources related shares have taken a breather, despite commentary from BHP Billiton [BHP.AU] securing at 99.7% iron ore price increase for the April-June quarter. Equity markets have continued to trend lower in light turnover. A revised lower GDP read at 5:00EST has served as a temporary equity bottom but a slew of sovereign supply results have stabilized markets into 6:00EST.
- Individual equities:Daimler/Renault/Nissan [DAI.GE]: Announces formal terms of Daimler/Renault-Nissan JV; To hold one-time cross-shareholding amounting to 3.1% of each partner's equity capital. ||Man Group [EMG.UK]: Weekly Net Asset Value (NAV): $37.63 v $36.52 w/w. || Marston's [MARS.UK]: Trading Statement; Reports SSS +1.4% in 26-week period ending April 3. || SGL Carbon [SGL.GE]: Firm in JV with BMW is planning to build new carbon-fiber parts facility in the US. ||
- Speaker: China PBoC confirmed it would sell CNY15B in 3 year bills on Thursday, the first sale since Mid 2008 (pre-economic crisis) **Tsy Sec Geithner reiterated the G20 theme on global imbalances and that the US was attempting to generate support for global growth to more domestic sources . The rise in US Treasury yield was a reflection on higher risk appetite and higher confidence. The US needed to find the political will to cut the deficits over time ***Japan's BOJ Shirakawa held a post rate decision press conference. The BOJ chief commented that the recovery trend in Japan was becoming clearer with signs of a sustainable recovery taking form. He noted that the risk of double dip recession in Japan had receded and the BOJ economic view were now somewhat more positive. He added that the central bank would know by the end of the month if the economic outlook would be upgraded. He stressed that it would maintain an extremely accommodative monetary policy but added that it was important to check side effects of low rates. Monetary policy was not dictated by fiscal stance. He believed that a Yen carry trade was growing in major way at this time. He believed deterioration of job market has come to an end *** Poland Central Bank member Rzonca viewed Zloty appreciation and external factors as potential threats to the country's economic growth outlook. The member also stated that inflation was seen at low end of the central bank's target by summer but accelerating in 2011 *** OECD commented on major economies. It raised its Q1 GDP forecasts annualized for G7 to 1.9% from 1.5% prior, but noted that G7 economic growth to slow in 1H 2010. It raised US Q1 GDP annualized forecast to 2.4% from 1.6% prior view and lowered several European countries. UK Q1 GDP annualized forecast cut to 2.0% from 2.4%, France Q1 GDP annualized forecast cut to 2.3% from 2.7% prior. It noted that central banks should not rush to hike interest rates and that governments should cut budget deficits in 2011 *** Greek official commented that 2009 Non performing loans were at 7.9% compared to 7.2% seen at the end of Sept *** German Fin Min Spokesperson stated that there was no change in plans for last resort aid to Greece
- Currencies/Fixed Income: The USD maintained a steady tone in the European morning with dealers focusing on the recent retreat in U.S. Treasury yields in the wake of the FOMC minutes from late yesterday in NY. The EUR/USD remained just under the 1.34 handle but locked in a tight range as the pair failed to move below yesterday's intraday low of 1.3350. *** The JPY was steady in the European morning after weakening in the latter part of the Asian session. USD/JPY just below the 94 handle after testing 94.24 earlier. BoJ Governor Shirakawa's press conference revealed the view that that the sustainability of the Japanese economic pickup was becoming clearer. ***GBP moved in to session lows of 1.5205 following the weaker-than-expected UK services PMI data. And Gilt auction results. The markets seemed to ignore that the employment component registered its first move above the 50 level since April 2008 ***European fixed income auction results seemed to disappoint. The German 2-year Schatz sold just over €5B in the additional 2-year auction with a bid-to-cover of 1.8 times. The UK DMO sold £4.5B in 4.75% 2015 Gilts; avg yield 2.91%; Bid-to-cover 1.88x v 2.1x prior avg; tail 0.6 bps. Yields in UK bonds rose in the after math of the auction with the 10-year Gilt back above 4%
- Geo-political: A powerful 7.8 magnitude earthquake struck the Indonesian island of Sumatra. With an epicenter over 45km below ground, the effects have been limited. An initial tsunami warning has since been called off. A similar earthquake in the region in 2004 killed over 230K people *** Despite accelerating levels of violence in Iraq, former PM Ayad Allawi has continued electoral victory claims along with the intention to hasten coalition forming. Allawi holds a narrow 91-89 seat victory with his Iraqiya block over his main rival from al-Maliki's State and Law Coalition. The highly fractured party nature in Iraq means that both parties will need to negotiate other factions into their fold in order to form a majority or minority government.
- BoJ maintains interest rates at 0.10% (as expected); BOJ Gov days Japanese economic pickup was becoming clearer.
- China confirms to resume issuance of 3-year Bills. Dealers note that implications are more permanent withdrawal of liquidity.
- US Tsy Sec Geithner: The rise in US Treasury yield was a reflection on higher risk appetite and higher confidence in economy. .
- Fed's Bernanke speech later today being touted as "key" to see if he starts to drift towards a tighter end of the spectrum.
- World Bank raises China and developing Asia 2010 growth forecast.
- 7:00 (US) MBA Mortgage Applications w/e Apr 2nd: No est v 1.3% prior
- 8:30 (CA) Canada Feb Building Permits M/M: 2.0%e v -4.9% prior
- 8:30 (CL) Chile Mar Trade Balance: $1.5Be v $1.3B prior
- 8:30 (EU) Van Rompuy and Barroso on EU Summit outcome
- 9:00 (BZ) Brazil Feb CNI Capacity Utilization: 81.7%e v 81.4 prior
- 9:30 (BZ) Brazil Mar Vehicle Production: No est v 253.2K prior; Vehicle Sales: No est v 221.0K prior; Vehicle Exports: No est v 57.5K prior
- 10:00 (CA) Canada Mar Ivey Purchasing Managers Index: 55.0e v 51.9 prior
- 10:30 (US) DOE weekly energy inventories
- 11:00 (HU) Hungary Mar Budget balance YTD (HUF): No est v -350.6B prior
- 12:15 (US) Fed's Dudley at Economic Club in NY
- 13:00 (US) US Treasury to sell $21B in 10-year reopening
- 13:30 (US) Fed's Bernanke in Dallas
- 14:00 (US) Fed's Hoenig speaks on US economic outlook
- 15:00 (US) Feb Consumer Credit: -$0.2Be v $5.0B prior
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