European policy shift continues with Riksbank easing – BoE decision looms

Notes/observations

- Sweden Central Bank (Riksbank) starts easing for first time since 2016, amid inflation approaching target and weaker economic activity; Sees two more cuts in H2 of 2024. Swedish Krona is weaker on guidance of further cuts; Bank of England (BOE) decision tomorrow, widely expected to leave policy unchanged.

- Overnight Asia session was subdued for news, lacking significant catalysts.

- EU Key Morning Earnings: Continental, Siemens Energy, AB InBev, Puma, Alstom.

- Upcoming US Premarket Earnings: Broadridge, HF Sinclair, Emerson, Global Partners, NiSource, New York Times, ODP, Qurate Retail, EchoStar, Teva.

-Asia closed mixed with Nikkei225 underperforming -1.5%. EU indices are -0.4% to +0.8%. US futures are little changed. Gold -0.2%, DXY +0.2%; Commodity: Brent -1.5%, WTI -1.6%; Crypto: BTC -2.9%, ETH -3.8%.

Asia

- More speculation that PBOC might cut RRR in Q2 (**Note: last cut in Jan 2024).

- Japan Fin Min Suzuki reiterated there was no 'absolute line' for FX levels but focused on the fluctuations and that rapid FX moves were undesirable. Would not confirm if intervention took place.

- Japan BOJ Gov Ueda testified in Parliament and reiterated that monetary policy was not meant to control FX. Stressed that FX was an important factor that impacted inflation and would scrutinize Yen moves' impact on economy in guiding monetary policy.

Global conflict/tensions

- Hamas presented a revised ceasefire proposal and the US said to be hopeful this would overcome remaining differences with Israel.

- White House said to believe the Israeli operation to capture the Rafah crossing did not cross President Biden's "red line".

- Biden Admin said to be holding shipments of Boeing-made precision bombs to send a political message to Israel.

Americas

- Fed's Kashkari (non-voter) noted that most likely scenario was to stay put on rates for extended period. Too soon to declare that inflation progress has stalled.

- US Mar Consumer Credit: $6.3B v $15.0Be.

Energy

- Weekly API Crude Oil Inventories: +0.5M v +4.9M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.30% at 515.54, FTSE +0.27% at 8,336.50, DAX +0.51% at 18,532.75, CAC-40 +0.77% at 8,138.04, IBEX-35 +0.28% at 11,111.97, FTSE MIB -0.33% at 34,129.00, SMI +0.50% at 11,570.10, S&P 500 Futures -0.04%].

Market focal points/key themes: European indices open generally higher but faltered as the session wore on; Sweden, Czechia and Slovakia closed for holiday; among sectors trending higher are consumer discretionary and financials; while lagging sectors include industrials; oil & gas subsector dragged down with the price of Brent; reportedly Ferrovial reding sale of UK airports; BBVA says it won’t increase offer for Sabadell; earnings expected in the upcoming US session include Uber, Arm, Airbnb and Shopify.

Equities

- Consumer discretionary: Puma [PUM.DE] +3.5% (earnings, bottom line beat) - Consumer staples: Anheuser-Busch InBev [ABI.BE] +5.0% (earnings, beats estimates), Ahold Delhaize [AD.NL] +4.0% (earnings), Carl Zeiss [AFX.DE] -3.0% (earnings) - Energy: Siemens Energy [ENR.DE] +9.5% (earnings, raises guidance).

- Healthcare: AstraZeneca [AZN.UK] +1.5% (said to withdraw Covid vaccine Vaxzevria worldwide citing commercial reasons and surplus of newer vaccines), Bavarian Nordic [BAVA.DK] -4.5% (earnings) - Industrials: Alstom [ALO.FR] +5.0% (earnings; rights issue), Skanska [SKAB.SE] -4.5% (earnings, misses estimates).

- Materials: Lanxess [LXS.DE] +1.5% (earnings; outlook).

Speakers

- Sweden Central Bank Policy Statement noted that it saw two more rate cuts in H2 of 2024 if the outlook for inflation held. Future cuts should be cautious and gradual. Saw uncertainty on both upside and downside with risks primarily linked to the strong US economy, the geopolitical tension and the krona exchange rate.

- Sweden Central Bank (Riksbank) Gov Thedeen post rate decision press conference noted that today’s decision was in line with rate path from March . Data confirmed inflation was moving towards target.

- Iceland Central Bank (Sedibanki) Policy Statement noted Current monetary stance was sufficient to bring inflation back to target within an acceptable time frame. Inflation had continued to ease while inflation expectations remain above target. Growth in domestic demand had subsided.

- BOJ Gov Ueda reiterated BOJ would adjust degree of easing if price trend rose; Hard to say what neutral interest rate was. A rise in crude oil prices and depreciation of JPY (yen) could weaken the premise of the outlook that cost-push pressure led by the rise in import prices would subside. Saw signs that virtuous cycle was strengthening. Reiterated overall assessment that domestic economy was recovering moderately albeit with some weaknesses.

- Indonesia Central Bank (BI) maintained both 2024 and 2025 CPI forecast between 1.5-3.5% range (within target band). Saw no need for further interest rate hikes but would await for next meeting for any final decision.

- Iran Oil Min Owji stated that it planned to raise oil production by 300-400Kbpd in 2024; Country’s exports at highest level since 2018.

Currencies/fixed income

- USD was steady as markets await continued comments from various Fed officials.

- Sweden Riksbank moved into easing with its 1st rate cut since early 2016. Moved aided risk appetite. SEK currency was weaker in the aftermath of move and policy statement.

- EUR/USD steady at 1.0745.

- USD/JPY drifting higher at 155.40.

- GBP/USD at 1.2475 as focus turned to Thursday’s BOE rate decision and on any clues about when UK rates could be cut.

Economic data

- (SE) Sweden Apr Maklarstatistik Housing Prices Y/Y: 0.7% v 0.0% prior; Apartment Prices Y/Y: 1.6% v 1.4% prior.

- (NL) Netherlands Mar Manufacturing Production M/M: -1.5% v +1.0% prior; Y/Y: -6.0% v -2.8% prior; Industrial Sales Y/Y: -8.4% v +0.7% prior.

- (FI) Finland Mar Industrial Production M/M: -3.9% v -0.3% prior; Y/Y: -7.7% v +1.5% prior.

- (DE) Germany Mar Industrial Production M/M: -0.4% v -0.7%e; Y/Y: -3.3% v -3.6%e.

- (FI) Finland Mar Preliminary Trade Balance: -€0.8B v -€0.6B prior.

- (SE) Sweden Apr Budget Balance (SEK): -30.6B v -0.3B prior.

- (NO) Norway Mar Industrial Production M/M: +3.8% v -4.2% prior; Y/Y:4.6% v 2.0% prior.

- (NO) Norway Mar Manufacturing Production M/M: +5.4% v -1.0% prior; Y/Y: +5.7% v -2.0% prior.

- (NO) Norway Q1 Average Monthly Earnings Y/Y: 6.1% v 6.3% prior.

- (DK) Denmark Mar Industrial Production M/M: -5.2% v +1.9% prior.

- (DK) Denmark Mar Current Account (DKK): 22.1B v 28.4B prior; Trade Balance (ex-shipping): 8.7B v 9.6B prior.

- (ZA) South Africa Apr Gross Reserves: $61.8B v $62.3B prior; Net Reserves: $57.9B v $57.5B prior.

- (HU) Hungary Mar Industrial Production M/M: -3.0% v -1.0%e; Y/Y: -2.8% v -0.6%e.

- (ES) Spain Mar Industrial Production M/M: -0.7% v +0.7% prior; Y/Y: -1.2% v +1.3% prior; Industrial Output (unadj) Y/Y: -11.3% v 4.3% prior.

- (MY) Malaysia end-Apr Foreign Reserves: $112.8B v $113.4B prior.

- (SE) Sweden Central Bank (Riksbank) cut Repo Rate by 25bps to 3.75% (as expected) for its 1st cut since Feb 2016.

- (TW) Taiwan Apr Trade Balance: $6.5B v $8.0Be; Exports Y/Y: 4.3% v 9.4%e; Imports Y/Y: 6.6% v 7.9%e.

- (IT) Italy Mar Retail Sales M/M:0.0% v 0.1%e; Y/Y: 2.0% v 2.4% prior.

- (RU) Russia Narrow Money Supply w/e May 3rd (RUB): 18.25T v 18.24T prior.

- (IS) Iceland Central Bank (Sedibanki) left 7-Day Term Deposit Rate unchanged at 9.25% for its 5th straight pause in the current tightening cycle.

Fixed income issuance

- (DK) Denmark sold total DKK3.05B in 2026 and 2033 DGE Bonds.

- (UK) DMO sold £2.5B in 1.5% July 2053 Green Gilts; Avg Yield: 4.545% v 4.565% prior; Bid-to-cover: 3.26x v 3.05x prior; Tail: 0.6bps v 0.3bps prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (CH) Switzerland to sell new 0.875% 2047 Bonds.

- 05:30 (PT) Portugal Debt Agency (IGPT) to sell €1.25B in 2034 and 2038 OT bonds

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (PT) Portugal Q1 Unemployment Rate: No est v 6.6% prior.

- 06:00 (EU) EU Commission to sell combined €3.0B in 3-month and 6-month Bills.

- 06:00 (RU) Russia OFZ Bond auction (if any).

- 07:00 (US) MBA Mortgage Applications w/e May 3rd: No est v -2.3% prior.

- 08:00 (HU) Hungary Central Bank (MNB) Apr Minutes.

- 08:00 (CL) Chile Apr CPI M/M: 0.3%e v 0.4% prior; Y/Y: 3.7%e v 3.7% prior.

- 08:00 (BR) Brazil Mar Retail Sales M/M: -0.4%e v +1.0% prior; Y/Y: 5.1%e v 8.2% prior.

- 08:00 (BR) Brazil Mar Broad Retail Sales M/M: 0.7%e v 1.2% prior; Y/Y: -0.1%e v +9.7% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (NL) ECB’s Wunsch (Netherlands).

- 09:00 (RU) Russia Apr Official Reserve Assets: No est v 590.4B prior.

- 10:00 (US) Mar Final Wholesale Inventories M/M: -0.4%e v -0.4% prelim; Wholesale Trade Sales M/M: 0.9%e v 2.3% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (US) Fed’s Jefferson.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 11:45 (US) Fed’s Collins.

- 12:00 (CA) Canada to sell 5 Year Bonds.

- 13:00 (US) Treasury to sell 10-Year Notes.

- 13:30 (US) Fed’s Cook.

- 14:00 (BR) Brazil Apr Trade Balance: $9.3Be v $7.5B prior; Exports: $31.3Be v $28.0B prior; Imports: $21.7Be v $20.5B prior.

- 15:00 (AR) Argentina Mar Industrial Production Y/Y: -13.5%e v -9.9% prior; Y/Y: No est v -24.6% prior.

- 17:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to cut Selic Target Rate by 25bps to 10.50%.

- 19:00 (KR) South Korea Mar Current Account Balance: No est v $6.9B prior; Balance of Goods (BoP): No est v $6.6B prior.

- 19:00 (CO) Colombia Apr CPI M/M: 0.6%e v 0.7% prior; Y/Y: 7.2%e v 7.4% prior.

- 19:00 (CO) Colombia Apr CPI Core M/M: 0.5%e v 0.7% prior; Y/Y: 8.3%e v 8.8% prior.

- 19:01 (UK) Apr RICS House Price Balance: -2%e v -4% prior.

- 19:30 (JP) Japan Mar Labor Cash Earnings Y/Y: 1.4%e v 1.4% prior (revised from 1.8%); Real Cash Earnings Y/Y: -1.5%e v -1.8% prior(revised from -1.3%).

- 19:50 (JP) BOJ Summary of Opinions for April.

- 22:00 (PH) Philippines Q1 GDP Q/Q: 1.0%e v 2.1% prior; Y/Y: 5.9%e v 5.5% prior (revised from 5.6%).

- 22:00 (JP) Japan Apr Tokyo Avg Office Vacancies: No est v 5.5% prior.

- 23:30 (TH) Thailand Apr Consumer Confidence: No est v 63.0 prior; Economic Confidence: No est v 56.9 prior.

- 23:30 (JP) Japan to sell 6-Month Bills.