Germany's regional CPIs decline slightly

EU Market Update: Germany's regional CPIs decline slightly; Markets looks ahead to ECB rate decision next week

Notes/Observations

- (CH) Swiss KOF Institute Spring Economic Forecast lowers forecast for 2014 and 2015 GDP and lowers 2014 inflation forecast.

- (ZA) South Africa AMCU union plans to extend current strike to gold and coal mining companies - press

- (JP) Japan Jobless rate at a 6-year low (3.6% vs. 3.7%e) while its CPI registers its ninth straight annual gain.

- USD strength focused against currencies where deflationary risks were likely to drive central-bank dovishness; market believes ECB is becoming sensitive to Euro currency levels

Equities

- Market Focal Points: Equities markets opened higher amid continued hope that Chinese officials will launch stimulus measures, DAX and FTSE MIB outperform, Intesa rises over 3% after presenting business plan, UK insurance companies trade broadly lower (Aviva -6%, Resolution -10%)

- Indices [Stoxx50 +0.6%, FTSE 100 +0.6% at 6,628, DAX +0.8% at 9,531, CAC-40 +0.4% at 4,398, IBEX-35 +0.6% at 10,261, FTSE MIB +0.8% at 21,344, SMI +0.5% at 8,366, S&P 500 Futures +0.3% at 1,846]

By Sector

- Financials [Intesa ISP.IT +3.5% (presented business plan)]

- Industrials [Pirelli PC.IT (FY profits above ests)

- Stoxx50 Sectors [Telecom +1.1%, Utilities +0.8%, Consumer Cyclical +0.7%, Basic Materials +0.7%, Industrials +0.6%, Consumer Non-Cyclical +0.5%, Technology +0.3%, Financials flat, Energy flat]

Currencies/Fixed Income

- The looming ECB rate decision next week has analysts debating whether the timing was right for its next move. The ECB previously indicated it was increasingly sensitive to further gains in the Euro (**Note: In Mar Draghi explained the impact of the exchange rate on inflation, saying that the ECB assumed that a 10% rise in the trade-weighted EUR would reduce inflation by 0.5%). Today's numerous CPI readings seemed to reinforce the implications of a strong Euro.

- Also the Euro was facing headwinds on the yield differential front. Dealers were noting that real yields do matter for currency trend. Real rate strength supported EUR/USD over the last year, and a decline in real rates seen recently has helped to weaken the EUR/USD pair. Dealer focused on premium that US two-year debt pays over German paper widened to the most since late 2012.

- The fiscal year end for Japan has potential implications for the yen. The historical repatriation pressures would subside. The implementation of the sales tax rise form 5% to 8% takes effect April 1st. The question going forward would be whether a restored confidence in Abenomics could see a return trend of outflows

Rating Agency Actions

- (AT) S&P affirms Austria AA+ sovereign rating; outlook stable

- (FI) Fitch affirms Finland AAA sovereign rating; Outlook stable

- (LU) S&P affirms Luxembourg AAA sovereign rating; Outlook stable

- (SE) S&P affirms Sweden AAA sovereign rating; Outlook Stable

- (RU) S&P affirms City of Moscow, Russia at BBB; outlook negative

- (DE) S&P affirms German State of Bavaria at AAA; Outlook Stable

- (HU) S&P affirms Hungary Sovereign Rating at BB; revised outlook to stable from negative

- (IL) S&P affirms Israel A+ sovereign rating; Outlook Stable

Economic Data

- (UK) Retailer John Lewis reports weekly LFL sales for week ending Mar 22nd (y/y): +6.5% v +5.3% prior

- (DE) Germany Feb Import Price Index M/M: -0.1% v +0.2%e; Y/Y: -2.7% v -2.4%e

- (FI) Finland Feb House Price Index M/M: +0.5 v +0.1% prior; Y/Y: -0.1 v +0.6% prior

- (FR) France Feb Consumer Spending M/M: +0.1% v +0.8%e; Y/Y: -0.3% v +0.7%e

- (FR) France Feb PPI M/M: -0.1% v +0.3%e; Y/Y: -1.7% v -1.4%e

- (CN) Shanghai Futures Exchange (SHFE) Weekly Copper Stockpiles: 193.7K v 209.9K tons prior

- (ES) Spain Feb Adjusted Retail Sales Y/Y: -0.5% v -0.5%e; Retail Sales Y/Y: -0.4% v -0.2% prior

- (ES) Spain Mar Preliminary CPI Y/Y: -0.2% v 0.0%e; CPI EU Harmonized Y/Y: -0.2% v +0.1%e

- (AT) Austria Feb PPI M/M: -0.1% v -0.2% prior; Y/Y: -1.3% v -1.2% prior

- (DE) Germany Mar CPI Saxony M/M: 0.3% v 0.3% prior; Y/Y: 0.9% v 1.2% prior

- (TR) Turkey Mar Consumer Confidence Index: 72.7 v 69.2 prior

- (HU) Hungary Feb Unemployment Rate: 8.6% v 9.0%e

- (EU) ECB €205M borrowed in overnight loan facility vs. €119M prior; €27.6B parked in deposit facility vs. €28.4B prior - Daily Eurosystem Liquidity Conditions

- (SE) Sweden Feb Retail Sales M/M: 0.4% v 0.5%e; Y/Y: 2.4% v 2.3%e

- (NO) Norway Mar Unemployment Rate: 2.9%e v 2.9% prior

- (DE) Germany Mar CPI Brandenburg M/M: 0.2 v 0.4% prior; Y/Y: 1.0 v 1.2% prior

- (DE) Germany Mar CPI Hesse M/M: 0.3 v 0.4% prior; Y/Y: 1.0 v 1.0% prior

- (DE) Germany Mar CPI Bavaria M/M: 0.3 v 0.5% prior; Y/Y: 0.9 v 0.9% prior

- (UK) Mar Lloyds Business Barometer: 44 v 53 prior

- (UK) Q4 Final GDP Q/Q: 0.7% v 0.7%e; Y/Y: 2.7% v 2.7%e

- (UK) Q4 Current Account Balance: -£22.4B v -£14.0Be

- (UK) Q4 Final GDP Total Business Investment Q/Q: 2.4% v 2.4%e; Y/Y: 8.7% v 8.5%e

- (PT) Portugal Mar Consumer Confidence Index: -30.7 v -32.6 prior; Economic Climate Indicator: -0.3 v -0.6 prior

- (DE) Germany Mar CPI North Rhine Westphalia M/M: 0.3% v 0.5% prior; Y/Y: 1.4% v 1.6% prior

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (IN) India Finance Ministry and RBI to meet to discuss FY15 borrowing

- Estonia Sovereign Debt Rating May Be Published by Moody's

- (DK) Denmark Sovereign Debt Rating May Be Published by Moody's

- OECD Sovereign Borrowing Outlook

- (DE) ECB's Weidmann (Germany) in Frankfurt

- (DE) Germany Mar CPI Baden Wuerttemberg M/M: No est v 0.5% prior; Y/Y: No est v 1.1% prior

- (BE) Belgium Mar CPI M/M: No est v 0.2% prior; Y/Y: No est v 1.0% prior

- (RO) Romania Central Bank Interest Rate Decision: Expected to leave Interest Rates unchanged at 3.50%

- (CL) Chile Central Bank Meeting Minutes

- 06:00 (EU) Euro Zone Mar Business Climate Indicator: 0.38e v 0.37 prior; Consumer Confidence: -9.3e v -9.3 prelim; Economic Confidence: 101.4e v 101.2 prior; Industrial Confidence: -3.5e v -3.4 prior; Services Confidence: 3.7e v 3.2 prior

- 06:00 (EU) Daily Euribor Fixing

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell combined €6.75B in 5-year and 10-year bonds (Prior Feb 27th)

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell €3.25B in Nov 2019 CCTeu

- 06:00 (FR) France Debt Agency (AFT) to announce Bills/Bonds auctions for next week

- 07:00 (IE) Ireland Feb Retail Sales M/M: No est v 2.3% prior; Y/Y: No est v 8.9% prior

- 07:00 (BR) Brazil Mar FGV Inflation IGPM M/M: 1.5%e v 0.4% prior; Y/Y: No est v 5.8% prior

- 07:00 (IS) Iceland cancelled Bond auction

- 07:00 (EU) ECB announces weekly 3-Year LTRO Repayment

- 07:10 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month Bills

- 07:30 (IN) India Forex Reserves w/e Mar 21st: No est v $297.3B prior

- 07:45 (US) Daily Libor Fixing

- 08:00 (ZA) South Africa Feb Budget Balance (ZAR): +9.5Be v -26.3B prior

- 08:30 (US) Feb Personal Income: 0.3%e v 0.3% prior; Personal Spending: 0.3%e v 0.4% prior

- 08:30 (US) Feb PCE Deflator M/M: 0.1%e v 0.1% prior; Y/Y: 0.9%e v 1.2% prior

- 08:30 (US) Feb PCE Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.1%e v 1.1% prior

- 09:00 (DE) Germany Mar Preliminary CPI M/M: 0.4%e v 0.5% prior; Y/Y: 1.1%e v 1.2% prior

- 09:00 (DE) Germany Mar Preliminary CPI EU Harmonized M/M: 0.4%e v 0.5% prior; Y/Y: 0.9%e v 1.0% prior

- 09:00 (ES) Spain Debt Agency (Tesoro)

- 09:15 (US) Baltic Dry Bulk Index

- 09:30 (BR) Brazil Feb Nominal Budget Balance (BRL): -23.9Be v -10.5B prior; Primary Budget Balance: -0.4Be v +19.9B prior; Net Debt % GDP: 33.5%e 33.3% prior

- 09:45 (IT) ECB's Visco (Italy) with Fin Min Padoan in Rome

- 09:55 (US) Mar Final University of Michigan Confidence: 80.5e v 79.9 prelim

- 11:00 (US) Fed to purchase $1.00-1.25B in Notes

- 12:45 (US) Fed's George Speaks on U.S. Economic Outlook in Kansas

- 16:30 (MX) Mexico Feb YTD Budget Balance (MXN): No est v -4.9B prior

- 17:30 (CN) China President Xi Jinping speech

- 17:45 (US) Fed's George on US economic outlook in Kansas City