Market awaits details of ECB QE program

Notes/Observations

- China lowered its 2015 official economic growth target to "around 7.0%" from the 7.5% use the past three years (slowest annual pace in 24 years)

- Euro hitting fresh 11-year lows ahead of details of ECB €1.1T bond-buying program

Economic data

- (FR) France Q4 ILO Unemployment Rate (inline): 10.4% v 10.4%e; Mainland Unemployment Rate: 10.0% v 10.0%e; Mainland Unemployment Change: 36K v 8Ke

- (DE) Germany Jan Factory Orders (miss) M/M: -3.9% v -1.0%e; Y/Y: -0.1% v +2.6%e

- (UK) Feb Halifax House Prices (miss); M/M: -0.3% v -0.2%e; 3M/Y: 8.3% v 8.5%e

- (SE) Sweden Jan Industrial Production (beats) M/M: 1.0% v 0.4%e; Y/Y: +0.8% v -0.4%e

- (IT) Italy Q4 Final GDP Q/Q: 0.0% v 0.0%e; Y/Y: -0.5% v -0.3%e

- (GR) Greece Dec Unemployment Rate (miss): 26.0% v 25.7%e

- (MY) Malaysia Central Bank (BNM) leaves Overnight Policy Rate unchanged at 3.25%, as expected

Fixed Income:

- (ES) Spain Debt Agency (Tesoro) sold total € vs. €4.0-5.0B indicated range in 2017, 2020 and 2032 bonds

- Sold €1.08B in 0.50% Oct 2017 bono; Avg Yield: 0.180% (record low) v 0.384% prior; Bid-to-cover: 3.77x v 3.27x prior; Maximum Yield: 0.203% v 0.409% prior

- Sold €2.388B in 1.40% Jan 2020 bono; Avg Yield 0.517% (record low) v 0.849% prior; Bid-to-cover:1.87 x v 2.39x prior; Maximum Yield: 0.543% v 0.869%

- Sold €1.53B in 5.75% 2032 Bono; Avg Yield 1.927% (record low) v 3.503% prior; Bid-to-

- (FR) France Debt Agency (AFT) sold total €8.497B vs. €7.5-8.5B indicated range in 2023, 2025 and 2029 Oats

- Sold €2.427B in 4.25% Oct 2023 Oat; avg yield: 0.44% v 2.70% prior; Bid-to-cover: 2.20x v 2.55x prior

- Sold €4.60B in 0.5% 2025 Oat; Avg Yield: 0.67% v 0.61% prior; Bid-to-cover: 1.53x v 1.87x prior

- Sold €1.47B in 5.5% Apr 2029 Oat; Avg Yield 0.93% v 3.02% prior; Bid-to-cover:1.90 x v 2.09x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +0.4%, FTSE 100 +0.2% at 6,933, DAX +0.4% at 11,434, CAC-40 +0.5% at 4,942, IBEX-35 +0.2% at 11,070, FTSE MIB +0.2% at 22,172, SMI +0.2% at 9,015, Athens Stock Exchange -1%, S&P 500 Futures flat at 2,097]

- Market Focal Points/Key Themes: Equity markets open slightly higher ahead of ECB meeting; Various firms weighed down by ex-dividends (HSBC, Rio Tinto); Carrefour and Moncler FY profits beat ests; Greek equities trade lower

By Sector

- Financials [Aviva AV.UK +4% (raised dividend), Scor SCR.FR +2% (FY profits above ests, raised dividend); HSBC HSBA.UK -1.5% (ex-dividend)]

- Basic Materials/Resources [Rio Tinto RIO.UK -1% (ex-dividend)

- Consumer Discretionary [Moncler MONC.IT +8% (FY results above ests), Zalando ZALG.DE +3% (reported FY op profit), Adidas ADS.DE +2.5% (share buyback), Carrefour CA.FR +1.5% (FY profits above ests, raised dividend)

- Industrials [Andritz ANDR.AT +4.5% (FY profits rose, raised dividend), Continental CON.DE +3% (raised dividend by 30%); Evonik EVK.DE -4% (share placement)]

- Stoxx50 Sectors [Industrials +0.9%, Consumer Cyclical +0.8%, Consumer Non-Cyclical +0.5%, Financials +0.4%, Energy +0.1%, Technology +0.1%, Utilities +0.5%, Telecom +0.3%; Basic Materials -0.1%]

**Speakers**

- France Fin Min Sapin said to forecast domestic inflation at 0% in 2015 (0.9% prior forecast made in Oct)

- Sweden Central Bank (Riksbank) Gov Ingves reiterated view that domestic economy was doing well. He also reiterated view that it could act quickly with expanded measures with options that included further cut in repo rate or a delay in the first potential rate hike

- EU commission's Dombrovskis saw recovery in region but with divergences

- Russia Central Bank First Dep Gov Yudayeva: Not interested in keeping the Key Rate high. Focusing on inflation prospects for decisions

- India Central Bank (RBI) advisor saw a maximum of 50bps of more rate cuts in 2015; next one could come after Jun/July period

- Asian Development Bank (ADB) chief economist Wei: Might revise 2015 forecasts

- China Cabinet commented after issuing 2015 Forecasts: Fully confident about 2015 growth target of 7%; CPI target leaves room for acceleration of price reforms

Currencies

- The EUR/USD continued to hit fresh 11 year lows as traders positioned ahead of the ECB decision and looming details of its €1.1B QE program. Some dealers pondered whether the Euro might bounce in the aftermath of the formal announcement under the guise of profit-taking. Anticipation of the QE program has driven euro zone borrowing costs down to record lows - The USD/JPY crept back to retest the 120 level in the session. The area has been difficult to sustain after Japan govt advisor noted a few days ago that the pair might be at the upper limit of comfortable area

Political/In the Papers:

- (CH) Swiss govt spokesperson denied earlier press report that finance minister is pressuring SNB to set new currency cap -

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- (MX) Mexico Banamex Survey of Economists

- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds

- 06:00 (ZA) South Africa Jan Electricity Consumption Y/Y: No est v -1.6% prior; Electricity Production Y/Y: No est v -1.0% prior

- 06:00 (CZ) Czech Republic to sell Bills

- 06:30 (CL) Chile Jan Economic Activity Index (Monthly GDP) M/M: 0.6%e v 1.0% prior; Y/Y: 2.7%e v 2.9% prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave both Interest Rates and Asset Purchase Target (APT) at 0.50% and £375B respectively

- 07:00 (RU) Russia Gold and Forex Reserve w/e Feb 27th: No est v $364.6B prior

- 07:00 (BR) Brazil Jan PPI Manufacturing M/M: No est v 0.6% prior; Y/Y: No est v 4.4% prior

- 07:00 (CL) Chile Jan Nominal Wage M/M: No est v 1.3% prior; Y/Y: No est v 7.2% prior

- 07:20 (ES) Bank of Spain (BOS) Restoy

- 07:30 (US) Feb Challenger Job Cuts: No est v +53.0K prior; Y/Y: No est v 17.6% prior

- 07:45 (EU) ECB Interest Rate Decision expected to leave Key rates unchanged; Main Refinancing Rate seen unchanged at 0.05%; Deposit Facility Rate seen unchanged at -0.20%; Marginal Lending Facility seen unchanged at 0.30%

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Q4 Final Nonfarm Productivity: -2.4%e v -1.8% prelim; Unit Labor Costs: 3.3%e v 2.7% prelim

- 08:30 (US) Initial Jobless Claims: 295Ke v 313K prior; Continuing Claims: 2.40Me v 2.401M prior

- 08:30 (US) Weekly USDA Net Export Sales

- 08:30 (EU) ECB Draghi post rate decision press conference

- 09:00 (NO) Norway Central Bank (Norges) Gov Olsen and Sovereign Wealth CEO Slyngstad speak in Oslo

- 09:20 (BR) Brazil Feb Vehicle Production: No est v 204.8K prior; Vehicle Sales: No est v 253.8K prior; Vehicle Exports: No est v 16.3K prior

- 10:00 (US) Fed's Williams speaks on the Economic Outlook in Honolulu

- 10:00 (US) Jan Factory Orders: -0.5%e v -3.4% prior

- 10:00 (US) Possible revision to Jan Durable Goods data

- 10:00 (CA) Canada Feb Ivey Purchasing Managers Index (Seasonally Adj): No est v 45.4 prior; PMI Unadj: No est v 42.6 prior

- 10:00 (MX) Mexico Central Bank Economist Survey

- 10:00 (HU) Hungary Feb YTD Budget Balance (HUF): No est v -53.8B prior

- 10:15 (BR) Brazil to sell 2015, 2017 and 2019 Bills

- 10:15 (BR) Brazil to sell Fixed-rate 2021 and 2025 bonds

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 16:00 (CO) Colombia Jan Exports: No est v $3.8B prior

- 19:00 (CO) Colombia Feb CPI M/M: 0.7%e v 0.6% prior; Y/Y: 3.9%e v 3.8% prior

- 19:00 (CO) Colombia Feb CPI Core M/M: No est v 0.3% prior; Y/Y: No est v 3.2% prior

- 22:35 (JP) Japan to sell 6-Month Bill

- 23:00 (MY) Malaysia Jan Trade Balance (MYR): No est v 9.2B prior; Exports Y/Y: No est v 2.7% prior; Imports Y/Y: No est v 4.2% prior