Focus on ECB rate decision

Notes/Observations

- Focus remains on bond yields, with recent stabilization seen as supportive for risk appetite

- Focus on ECB rate decision and whether rising bond yields was a threat to the region recovery

Asia:

- Bank of Korea (BOK) noted that inflation could increase faster than expected; To closely monitor local bond yields with long term maturity

- Taiwan Central Bank Gov Yang stated that US might label the country as currency manipulator

- US officials confirmed US Secretary of State Blinken and National Security Advisor Sullivan to meet with their China counterparts Yang Jiechi and Wang Yi in Alaska next week (March 18-19th)

Europe:

- ECB draft document only assumed a small inflation increase. Any inflation pickup would be fleeting, and that savings would not fuel a spending boom

Americas:

- President Biden to plan on signing the $1.9T coronavirus stimulus bill at the White House

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.24% at 423.10. FTSE +0.06% at 6,729.65, DAX -0.05% at 14,532.15, CAC-40 +0.21% at 6,002.81, IBEX-35 +0.40% at 8,559.00, FTSE MIB +0.68% at 24,089.50, SMI -0.20% at 10,886.16, S&P 500 Futures +0.72%]

Market Focal Points/Key Themes: European indices open higher across the board and remained in the green as the session wore on; sectors among those trading upwards are technology and consumer discretionary; health care the lone sector starting the day in the red; BNP to acquire remaining state In Exane; focus on upcoming ECB meeting; earnings expected later in the US session include De Longhi and T-Mobile

Equities

- Consumer discretionary: WPP [WPP.UK] +1% (earnings), Hugo Boss [BOSS.DE] -3% (earnings)

- Financials: Eurazeo [RF.FR] +6% (earnings), Generali [G.IT] +2% [earnings)

- Healthcare: Glaxosmithkline [GSK.UK] -1% (trial data)

- Industrials: Rolls-Royce [RR.UK] +1.5% (earnings)

- Technology: WANdisco [WAND.UK] +5% (partnership with Snowflake)

Speakers

- Swiss SECO March Economic Forecasts maintained its 2021 GDP growth forecast at 3.0% while raising the 2022 GDP growth from 3.1% to 3.3%. Raised 2021 CPI from 0.1% to 0.4% and raised the 2022 CPI from 0.3% to 0.4%

- Greece PM Mitsotakis: To take further measures to support economy

- BOJ might tweak a three-tier deposit system at next week's policy review to exempt a larger portion of reserves from negative interest rates (**Note: move would aim to mitigate the pain negative rates inflict on financial institutions' profits). To debate whether 10-year JGB yields should be allowed to move flexibly around the 0% target

- China Premier Li Keqiang stated that the domestic recovery would create more jobs but employment pressures remain large in 2021. Pro-job policies to be maintained and in some ways strengthened. To create more jobs through market forces and hope to exceed job creation target for 2021. Wanted to promote high quality and sustainable growth; too fast a pace will not be steady. No need to suddenly shift economic policy in year

- China Parliament approved overhaul of Hong Kong Election process (as expected)

Currencies/Fixed Income

- USD was on softer footing during the session as risk appetite found some tailwinds. USD Index at a 1-week low. Focus remained on bond yields, with recent stabilization seen as supportive for risk appetite

- EUR/USD was edging back to the 1.20 neighborhood. Focus was on upcoming ECB rate decision and whether rising bond yields would be perceived as a threat to the region’s recovery. The recent weakness in the Euro was attributed to timing of the recovery in the Euro Zone due to the slow rate of vaccinations. The key on today’s ECB decision will be whether the central bank assessment of the recent rise in yields would signal possible adjustments in its asset purchases

Economic data

- (SE) Sweden Feb PES Unemployment Rate: 4.4% v 4.6% prior

- (DE) Germany Q4 Labor Costs Q/Q: +2.1% v -1.7% prior; Y/Y: 3.5% v 1.7% prior

- (DK) Denmark Jan Current Account Balance (DKK): 16.8B v 15.0B prior; Trade Balance: 7.0B v 7.0B prior

- (RO) Romania Feb CPI M/M: 0.4% v 0.4%e; Y/Y: 3.2% v 3.2%e

- (TR) Turkey Jan Current Account Balance: -$1.9B v -$1.6Be

- (HU) Hungary Jan Preliminary Trade Balance: €0.8B v €0.4Be

- (ZA) South Africa Q4 Current Account Balance (ZAR): 198B v 213Be; Current Account to GDP Ratio: 3.7% v 4.4%e

- (ZA) South Africa Jan Total Mining Production M/M: 4.5% v 0.4%e; Y/Y: -6.2% v -3.0%e; Gold Production Y/Y: -14.1% v -0.9% prior; Platinum Production Y/Y: -14.5% v -20.0% prior

Fixed income Issuance

- (IT) Italy Debt Agency (Tesoro) sold total €8.0B vs. €7.0-8.0B indicated range in 3-year and 7-year BTP bonds

- Sold €5.0B vs. €4.5-5.0B indicated range in 0.00% Apr 2024 BTP; Avg Yield: -0.22% v -0.33% prior Bid-to-cover: 1.6x v 1.66x prior

- Sold €3.0B vs. €2.5-3.0B indicated range in 0.25% Mar 2028 BTP; Avg Yield: 0.31% v 0.18% prior; bid-to-cover: 1.53x v 1.47x prior

Looking Ahead

- (IE) Ireland Debt Agency (NTMA) to sell €1.0-1.5B in 2031 and 2050 IGB bonds

- (EU) Daily ECB Liquidity Stats

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

- 05:50 (HU) Hungary Central Bank One-Week Deposit Rate tender

- 06:00 (IE) Ireland Feb CPI M/M: No est v 0.1% prior; Y/Y: No est v -0.2% prior

- 06:00 (IE) Ireland Feb CPI EU Harmonized M/M: No est v 0.1% prior; Y/Y: No est v 0.2% prior

- 06:00 (IL) Israel Feb Trade Balance: No est v -$2.6B prior

- 06:00 (IL) Israel Chain Store Sales M/M: No est v 0.6% prior

- 06:00 (ZA) South Africa Jan Manufacturing Production M/M: -0.7%e v -0.1% prior; Y/Y: -1.1%e v +1.8% prior

- 06:00 (CZ) Czech Republic to sell CZK5.0B in 9-month Bills

- 06:00 (RO) Romania to sell RON400M in 12-month bills

- 06:00 (RO) Romania to sell RON400M in 3.7% 2024 Bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Feb IBGE Inflation IPCA M/M: 0.7%e v 0.3% prior; Y/Y: 5.0%e v 4.6% prior

- 07:45 (EU) ECB Interest Rate Decision: Expected to leave Main 7-Day Refinancing Rate unchanged at 0.00%; Expected to leave Marginal Lending Facility unchanged at 0.25%; Expected to leave Deposit Facility Rate at -0.50%

- 08:00 (RU) Russia Gold and Forex Reserve w/e Mar 5th: No est v $589.6B prior

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

- 08:30 (US) Initial Jobless Claims: 725Ke v 745K prior; Continuing Claims: 4.20Me v 4.295M prior

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

- 08:30 (EU) ECB chief Lagarde to hold poat rate decision press conference

- 10:00 (US) Jan JOLTS Job Openings: 6.65Me v 6.646M prior

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

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills

- 12:00 (US) Q4 Financial Account Household Change in Net Worth: No est v $3.817T prior

- 13:00 (US) Treasury to sell 30-Year bonds

- 14:00 (AR) Argentina Feb National CPI M/M: 3.7%e v 4.0% prior; Y/Y: 40.7%e v 38.5% prior

- 16:30 (NZ) New Zealand Feb Business Manufacturing PMI: No est v 57.5 prior

- 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 0.25%

- 18:50 (JP) Japan Q1 BSI Large All Industry Q/Q: No est v 11.6 prior; Large Manufacturing Q/Q: No est v 21.6 prior

- 20:00 (PH) Philippines Jan Trade Balance: -$2.3Be v -$2.2B prior; Exports Y/Y: +3.6%e v -0.2% prior; Imports Y/Y: -11.8%e v -9.1% prior

- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years and 25 Years~ maturities

- 22:00 (CN) China to sell 3-month bills

- 22:30 (JP) Japan to sell 3-Month Bills

- 23:00 (MY) Malaysia Jan Industrial Production Y/Y: 1.2%e v 1.7% prior; Manufacturing Sales Value Y/Y: No est v 4.5% prior