Focus remains on various central bank policy decisions

Notes/Observations

- Various EU data for March highlighting the uncertainty triggered by Russia's war against Ukraine (German Factory Orders and French Production data missed consensus).

- Swiss CPI stays above SNB target for the 3rd straight month.

- Focus on upcoming rate decisions in session (BOE, Czech and Polish and Chile central banks all expected to hike).

- More Chinese PMI readings provide further evidence that the country's services activities are depressed.

- Corporate earning season in full swing. Companies due to report during the NY morning include Atlas Air, AMC Networks, Air Products, Apollo Global, Arrow Electronics, Bombardier, BCE Inc, Becton Dickinson, Berry Global, Cardinal Health, Cars.com, CBRE Group, Cameco, ConocoPhillips, Crocs, Datadog, Hain Celestial, Hanesbrands, Intercontinental Exchange, Ingredion, Kellogg, Lazydays, Nikola, NetScout, Penn National Gaming, Parker-Hannifin, Quanta Services, Papa John’s, Royal Caribbean, Sally Beauty, SeaWorld, Shopify, Silicon Motion, SolarWinds, LendingTree, Trimble, Wayfair, World Wrestling Entertainment, Yelp, Zillow.

Asia

- China Apr Caixin PMI Services registered its 2nd straight contraction and lowest since Feb 2020 (36.2 v 40.0e).

- Reports circulated that China might announce policies to promote investment, consumption and exports to help ensure ~5.5% GDP target is met in 2022.

- Australia Mar Trade Balance (A$): 9.3B v 8.5Be.

- RBNZ Gov Orr stated in Parliament that had no regrets on monetary policy, its business as usual on monetary policy; being too out of step with others had its own risks; Did not see stagflation as a core risk.

Americas

- FOMC raised the Target Range by 50bps to 0.75 to 1.00% range (as expected).

- Fed Chair Powell post rate decision press conference noted that there was broad sense on the committee that additional 50bps increases should be on the table at the next couple of meetings, 75bps rate rise was not something that the committee is actively considering.

- Brazil Central Bank (BCB) raised the Selic Rate Target by 100bps to 12.75% (as expected) for its 10th straight rate hike. Saw a smaller hike at the next policy meeting in Jun.

- Sec of State Blinken to postpone China speech that had been planned for Thurs after testing positive for COVID.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.97% at 445.65, FTSE +0.90% at 7,560.97, DAX +1.37% at 14,162.00, CAC-40 +1.46% at 6,489.37, IBEX-35 +1.19% at 8,601.56, FTSE MIB +1.00% at 24,141.00, SMI +0.62% at 11,953.90, S&P 500 Futures -0.70%].

Market Focal Points/Key Themes: European indices opened higher across the board and remained upbeat through the early part of the session; all sectors start the day in the green; sectors among those leading to the upside are technology and industrials; laggard sectors include financials and telecom; automotive subsector supported after better than expected results from BMW, Stellantis; banking subsector weight on by disappointing results from Credit Agricole; consumer staples sector supported by AB InBev results; Latecoere to acquire Acvorp; focus on BOE interest rate decision, OPEC+ meeting later in the session; earnings expected in the upcoming US session include Air Products, Ball, Leonardo and EchoStar.

Equities

- Consumer discretionary: Next plc [NTX.UK] +1% (trading update).

- Consumer staples: AB InBev [ABI.BE] +1.5% (earnings).

- Energy: Shell plc [SHEL.UK] +3% (earnings; buyback. raises dividend).

- Financials: Societe Generale [GLE.FR] +2% (earnings), Credit Agricole [ACA.FR] -2% (earnings).

- Industrials: Airbus [AIR.FR] +7.5% (earnings), Henkel [HEN.DE] +1% (final earnings), Lufthansa [LHA.DE] +2% (earnings), Stellantis [STLA.NL] +2.5% (earnings), BMW [BMW.DE] +2% (earnings).

- Materials: ArcelorMittal [MT.NL] +5% (earnings; buyback).

Speakers

- ECB's Panetta (Italy) stated that a digital Euro would be reliable and could be issued within 4-5 years if such path was decided upon. : Could end negative rate cycle after deciding when to end AP program in Q3. Would be incautious to act on rates before seeing Q2 economic data.

- Norway Central Bank Policy Statement reiterated its forward guidance that saw rate as most likely being raised further at the June meeting. Domestic prices had recently increased somewhat less than expected. Rising wage growth and imported goods inflation were expected to push up underlying inflation ahead. Upswing in domestic economy continued during the winter but did see substantial uncertainty over potential economic impact of war in Ukraine.

- Japan PM Kishida commented that ¥150T would be raised in next decade to meet energy needs; To develop Internet 3.0 like blockchain.

- China FX Regulator SAFE reiterated vow to deepen reforms and open up forex sector.

Currencies/Fixed income

- USD exhibited some profit-taking in the aftermath of Thursday’s FOMC rate hike after fed Chair Powell stated that a 75bps rate rise was not something that the committee was actively considering.

- EUR/USD tested above 1.06 but drifted back below the level as markets pared ECB rate-hike bets after the Fed played down the possibility of a more aggressive rate hikes and keep the current pace of 50bps for the upcoming meetings.

- GBP/USD BOE policy decision hovered around the 1.2540 area.

- AUD/USD was softer as weaker-than-expected Chinese economic data raised concerns over demand for the Australia commodity exports.

Economic data

- (DE) Germany Mar Factory Orders M/M: -4.7% v -1.1%e; Y/Y: -3.1% v -0.7%e.

- (CH) Swiss Apr CPI M/M: 0.4% v 0.3%e; Y/Y: 2.5% v 2.6%e; CPI Core Y/Y: 1.5% v 1.6%e.

- (CH) Swiss Apr CPI EU Harmonized M/M: 0.4% v 0.5% prior; Y/Y: 2.3% v 2.2% prior.

- (FR) France Mar Industrial Production M/M: -0.5% v -0.2%e; Y/Y: 0.1% v 1.4%e.

- (FR) France Mar Manufacturing Production M/M: -0.3% v +0.3%e; Y/Y: 1.5% v 2.9% prior.

- (TR) Turkey Apr PMI Manufacturing: 49.2 v 49.4 prior (2nd straight contraction).

- (TR) Turkey Apr CPI M/M: 7.3% v 5.8%e; Y/Y: 70.0% v 67.8%e (inflation accelerated for an 11th straight month for a fresh 20-year high); CPI Core Index Y/Y: 52.4% v 52.9%e.

- (TR) Turkey Apr PPI M/M: 7.7% v 9.2% prior; Y/Y: 121.8% v 121.9%e.

- (HU) Hungary Central Bank left the One Week Deposit Rate unchanged at 6.45%; as expected.

- South Africa Apr PMI (whole economy): 50.3 v 51.4 prior (4th straight expansion).

- (DE) Germany Apr Construction PMI: 46.0 v 50.9 prior.

- (NO) Norway Central Bank (Norges) left Deposit Rates unchanged at 0.75% (as expected).

- (UK) Apr New Car Registrations Y/Y: -15.8% v -14.3% prior.

- (TW) Taiwan Apr Foreign Reserves: $545.1B v $548.8B prior.

- (UK) Apr Final PMI Services: 58.9 v 58.3e prelim (confirmed 14th month of expansion); PMI Composite: 58.2v 56.6 prelim.

- (UK) Apr Official Reserves Changes: -$3.1B v -$1.7B prior.

- (HK) Hong Kong Mar Retail Sales Value Y/Y: -13.8% v -12.6%e; Retail Sales Volume Y/Y: -16.8% v -16.7%e.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €5.03B vs. €4.5-5.0B indicated range in 2027, 2029 and 2071 bonds.

- Sold €2.74B in 0.00% Jan 2027 SPGB; Avg yield: 1.387% v 0.581% prior; Bid-to-cover: 1.38x v 1.51x prior.

- Sold €1.50B in 0.80% July 2029 SPGB bond; Avg Yield: 1.694% v 1.227% prior; bid-to-cover: 1.74x v 1.83x prior.

- Sold €1.242B in 1.45% Oct 2071 SPGB bonds; Avg Yield: 2.851%; bid-to-cover: 1.59x (no prior history).

- (ES) Spain Debt Agency (Tesoro) sold €M vs. €250-750M indicated range in 0.70% Nov 2033 inflation-linked bonds (SPGBei); Real Yield: -0.456% v -0.852% prior; Bid-to-cover: 1.64x v 1.78x prior.

- (FR) France Debt Agency (AFT) sold total €10.999B vs. €10.0-11.0B indicated range in 2032, 2040 and 2052 Bonds.

- Sold €6.28B in 0.00% May 2032 Oat; Avg Yield: 1.51% v 1.17% prior; Bid-to-cover: 1.78x v 1.82x prior.

- Sold €2.27B in 0.50% May 2040 Oat; Avg Yield: 1.83% v 0.69% prior; bid-to-cover: 2.01x v 2.29x prior.

- Sold €2.45B in 0.75% May 2053 Oat; Avg Yield: 1.96% v 1.18% prior; bid-to-cover: 1.97x v 2.06x prior.

Looking ahead

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to raise Base Rate by 100bps to 5.50%.

- OPEC and Non-OPEC Ministerial Meeting by Videoconference.

- (MX) CitiBanamex Survey of Economists.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 5-year, 10-year and 15-year bonds.

- 06:00 (IE) Ireland Apr Unemployment Rate: No est v 5.5% prior.

- 06:00 (IE) ECB’s Lane (Ireland, chief economist).

- 06:00 (PT) ECB's Centeno (Portugal).

- 06:45 (US) Daily Libor Fixing.

- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to raise Bank Rate by 25bps to 1.00%.

- 07:00 (UK) BOE May Minutes.

- 07:00 (UK) BOE Quarterly Monetary Policy Report.

- 07:00 (ZA) South Africa Mar Electricity Consumption Y/Y: No est v 0.0% prior; Electricity Production Y/Y: No est v -0.3% prior.

- 07:30 (US) Apr Challenger Job Cuts: No est v -22.8K prior; Y/Y: No est v -30.1% prior.

- 07:30 (UK) BOE Gov Bailey post rate decision press conference.

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

- 08:30 (US) Q1 Preliminary Nonfarm Productivity: -5.3%e v +6.6% prior; Unit Labor Costs: 10.0%e v 0.9% prior.

- 08:30 (US) Initial Jobless Claims: 180Ke v 180K prior; Continuing Claims: 1.40Me v 1.408M prior.

- 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to raise 2-Week Repurchase rate by 50bps to 5.50%.

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

- 09:00 (CL) Chile Mar Nominal Wage Y/Y: No est v 7.7% prior.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 29th: No est v $607.1B prior.

- 09:40 (CA) Bank of Canada (BOC) Schembri.

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

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

- 12:00 (AT) ECB’s Holzmann.

- 14:30 (BR) Brazil Apr Trade Balance: $9.9Be v $7.4B prior; Total Exports: $29.2Be v $29.1B prior; Total Imports: $19.3Be v $21.7B prior.

- 15:00 (AR) Argentina Mar Industrial Production Y/Y: No est v 8.7% prior; Construction Activity Y/Y: 7.3%e v 8.6% prior.

- 18:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to raise Overnight Rate Target by 100bps to 8.00%.

- 19:30 (JP) Japan Apr Tokyo CPI Y/Y: 2.3%e v 1.3% prior; CPI (ex-fresh food) Y/Y: 1.8%e v 0.8% prior; CPI (ex-fresh food/energy) Y/Y: 0.6%e v -0.4% prior.

- 19:50 (JP) Japan end-Apr Monetary Base: No est v ¥688.0T prior.

- 20:00 (CO) Colombia Apr CPI M/M: 0.9%e v 1.0% prior; Y/Y: 8.8%e v 8.5% prior.

- 20:00 (CO) Colombia Apr CPI Core M/M: No est v 0.6% prior; Y/Y: No est v 5.3% prior.

- 21:00 (PH) Philippines Mar Unemployment Rate: No est v 6.4% prior.

- 21:00 (PH) Philippines Mar Trade Balance: -$4.4Be v -$3.5B prior; Exports Y/Y: 2.1%e v 15.0% prior; Imports Y/Y: 18.1%e v 20.1% prior.

- 21:30 (AU) RBA-Statement on Monetary Policy (SOMP).

- 23:30 (JP) Japan to sell 3-Month Bills.