Situation in Yemen puts risk aversion back on the front burner

Notes/Observations

- Oil futures soar after Saudi Arabia leads a 10-nation coalition in air strikes on Yemen's Houthis in Yemen; WTI crude Oil spikes by $3 to $52/barrel; (**Note: US will authorize logistical and intelligence support but would not be taking any direct military action)

- Iran Foreign Ministry: Condemns Saudi airstrikes in Yemen

- UK Feb Retails Sales data beats expectations with back month upward revisions

Economic data

- (SG) Singapore Feb Industrial Production M/M: 4.1% v 1.3%e; Y/Y: -3.6% v -2.2%e

- (DE) Germany Apr GfK Consumer Confidence (beat): 10.0 v 9.8e (highest since 2001)

- (FR) France Q4 Final GDP (inline); Q/Q: 0.1% v 0.1%e; Y/Y: 0.2% v 0.2%e

- (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 4.00% (as expected)

- (SE) Sweden Feb Trade Balance (SEK): 4.6B v 4.0Be

- (SE) Sweden Feb Household Lending Y/Y: 6.2% v 6.2%e

- (SE) Sweden Feb PPI M/M: 1.1 v 0.2% prior; Y/Y: 1.9% v 0.2% prior

- (HK) Hong Kong Feb Trade Balance (HKD): -35.9B v -55.0Be; Exports Y/Y: 7.2% v 3.0%e; Imports Y/Y: -0.9% v 4.7%e

- (TW) Taiwan Central Bank (CBC) left its Interest Rate unchanged at 1.875% (as expected)

- (NO) Norway Jan AKU Unemployment Rate: 3.9% v 3.7%e

- (EU) Euro Zone Feb M3 Money Supply (miss) Y/Y: 4.0% v 4.3%e; M3 3-month average (miss): 3.8% v 4.0%e

- (ZA) South Africa Feb PPI M/M: 0.4% v 0.2%e; Y/Y: 2.6% v 2.8%e

- (UK) Feb Retail Sales Ex Auto (beat); M/M: 0.7% v 0.4%e; Y/Y: 5.1% v 4.2%e

- (UK) Feb Retail Sales (Including Auto) M/M: 0.7% v 0.4%e; Y/Y: 5.7% v 4.7%e

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 -1.5% at 3,627, FTSE 100 Index -0.9% at 6,925, DAX -1.7% at 11,655, CAC-40 -1.4% at 4,949, IBEX-35 -1.1% at 11,333, FTSE MIB -1.5% at 22786, SMI -1.7% at 9,031, Athens Stock Exchange -1.8% at 483, S&P 500 Futures -0.1% at 2,037]

- Market Focal Points/Key Themes: Equity markets continue second day of losses; drop lead by tech stocks; energy stocks move higher following escalation in Yemen; Airbus dips after confirms to sell a portion of stake in Dassault

By Sector

- Consumer Discretionary [Havas HAV.FR -8.1% (Bollore places shares), Supergroup SGP.UK +7.2% (strategy update), Adidas ADS.DE -1.6% (strategy presentation)]

- Industrials [Jenoptik JEN.DE -5.2% (disappointing FY14 results), Dassault Aviation AM.FR -10.6% (Airbus cuts stake), Airbus AIR.FR -1.4% (stake sale in Dassault Aviation)]

- Healthcare [Bayer BAYN.DE -2.0% (UBS downgrade)]

- Financials [London Stock Exchange LSE -10.3% (Borse Dubai sells stake)

Speakers

- Iran Foreign Ministry: Condemns Saudi airstrikes in Yemen

- Reports circulated that a Saudi ground offensive might be necessary to restore order in Yemen

- France Fin Min Sapin: 2015 Budget Deficit to GDP seen at 3.8% vs. 4.1% prior

- France Stats Agency (INSEE): 2014 Budget Deficit to GDP Ratio at 4.0% vs. 4.1% y/y

- SNB annual report: Purchased CHF25.8B in 2014 to defend floor at 1.2000

- Bank of Spain (BOS) Economic Bulletin raised its 2015 GDP growth forecasts from 2.0% to 2.8%

- Fed's Bullard (moderate, non voter): Should begin normalizing of US monetary policy or risk asset bubbles. Saw US GDP near 3% over medium term. Labor market approaching or exceeding normal levels

- Poland Central Bank Rzonca stated that deflation in Poland had bottomed in Feb and March period but would persist until Q4. He saw GDP growth speeding up

- Thailand Dep PM Devakula stated that it could hold elections in either Feb or March 2016 but the schedule depended on successful completion of constitutional reforms

- World Gold Council Exec: China's 2015 Gold imports seen at 900 Metric Ton, +11% y/y

- BOJ's Harada: Commitment to 2% inflation target is important. Hard to anchor CPI in rigid time frame. Possible to buy more govt bonds but no need to ease at this time

Currencies

- The JPY and CHF currency pairs benefited from risk aversion stemmed by the spike in oil prices and recent soft US economic data. USD softer while oil and precious metals are bid due to the situation in Yeman and the Saudi-led airstrikes inside the country. USD/JPY at 1-month low below 118.40 while EUR/USD inched above the post FOMC high of 1.1043.

- The GBP approached the 1.50 area after UK Feb Retails Sales data beats expectations with back month upward revisions

- Spot gold at $1,213/oz, higher by over 1.5% while WTI futures traded above $52/contract, higher by over $3

Political/In the Papers:

- (GR) ECB said to be planning to increase the Greek bank ELA ceiling to €71B (€69.8B last week)

- (SR) Saudi Arabia Launches Military Operations in Yemen. Saudi Arabia and other Gulf nations launched airstrikes against Houthi rebels in the Yemeni capital San'a in defence of what the Riyadh government called the country's legitimate government

Looking Ahead

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

- (CH) Swiss KOF Institute Spring Economic Forecast

- (AR) Argentina Mar Consumer Confidence Index: No est v 50.5 prior

- 06:00 (EU) Daily Euribor Fixing

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell combined €1.5-2.0B in Zero Coupon 2017 CTZ

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell combined €2.0-3.0B in I/L 2024 and 2026 BTPei Bonds

- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

- 06:30 (HU) Hungary Debt Agency (AKK) to sell Floating Rate Bond

- 07:00 (UK) Mar CBI Industrial Reported Sales: 18e v 1e

- 07:00 (BR) Brazil Mar FGV Construction Costs M/M: 0.2%e v 0.5% prior

- 07:00 (IL) Israel Feb Unemployment Rate: No est v 5.6% prior

- 07:00 (RO) Romania to sell 12-month Bills

- 07:45 (US) Daily Libor Fixing

- 08:00 (RU) Russia Gold and Forex Reserve w/e Mar 20th: No est v $351.7B prior

- 08:00 (CZ) Czech Central Bank (CNB) Interest Rate Decision: expected to leave both Repurchase Rate and EUR/CZK cross floor unchanged at 0.05% and 'around 27.00 respectively

- 08:00 (BR) Brazil Feb Unemployment Rate: 5.7%e v 5.3% prior

- 08:00 (CA) Bank of Canada (BOC) Gov Poloz

- 08:30 (US) Initial Jobless Claims: 290Ke v 291K prior; Continuing Claims: 2.40Me v 2.417M prior

- 08:30 (IT) ECB Draghi to address Italy's Chamber of Deputies (Lower House) with Speaker Boldrini

- 09:00 (US) Fed's Lockhart (moderate, FOMC voter) speaks on Economy, Monetary Policy in Detroit

- 09:00 (ZA) South Africa Central Bank (SARB) Gov Kganyago pre-Rate decision press conference

- 09:00 (DE) German Fin Min Schaeuble

- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave Interest Rates unchanged at 5.75%

- 09:15 (CZ) Czech Central Bank Gov Singer post rate decision press conference

- 09:15 (US) Baltic Dry Bulk Index

- 09:30 (CA) Bank of Canada (BOC) Gov Poloz

- 09:45 (US) Mar Preliminary Markit Services PMI: 57.0e v 57.1 prior; Composite PMI: No est v 57.2 prior

- 10:15 (NL) Netherlands Q4 Final GDP Q/Q: 0.5%e v 0.5% prior; Y/Y: 1.0%e v 1.0% prior

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

- 11:00 (US) Mar Kansas City Fed Manufacturing Activity: 1e v 1 prior

-11:15 (BR) Brazil to sell 2016, 2017 and 2019 Bills

- 12:15 (FR) France Fin Min Sapin in Tallinn

- 13:00 (CH) SNB's Zurbruegg in Zurich

- 13:00 (US) Treasury to sell $29B in 7-Year Notes

- 13:30 (UK) BOE Gov Carney Financial Stability Board press conference

- 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 3.00%

- 15:00 (AR) Argentina Feb Industrial Production M/M: No est v 1.1% prior; Y/Y: -1.8%e v -2.1% prior

- 19:30 (JP) Japan Feb Jobless Rate: 3.5%e v 3.6% prior

- 19:30 (JP) Japan Feb National CPI Y/Y: 2.3%e v 2.4% prior; CPI Ex Fresh Food Y/Y: 2.1%e v 2.2% prior; CPI Ex Food, Energy Y/Y: 2.1%e v 2.1% prior

- 19:30 (JP) Japan Mar Tokyo CPI Y/Y: 2.3%e v 2.3% prior; CPI Ex Fresh Food Y/Y: 2.2%e v 2.2% prior; CPI Ex Food, Energy Y/Y: 1.7%e v 1.7% prior

- 19:50 (JP) Japan Feb Retail Sales M/M: +1.0%e v -1.9% prior (revised from -1.3%); Retail trade Y/Y: -1.4%e v -2.0% prior; Large Retailers' Sales: 0.9%e v 0.0% prior

- 21:30 (CN) China Feb Industrial Profits Y/Y: No est v -8.0% prior