Notes/Observations

- German May IFO survey beat consensus, improves m/m.

-ECB Chief Lagarde turns hawkish with a blog post outlining that it is likely they will exit negative interest rates by the end of Q3 2022. EUR spiked on the back of the news.

-China's COVID outbreak appears to trend into a steady decline, but large pressure remains on further outbreaks as Beijing and Tianjin undo the positive results out of Shanghai.

-China/US tensions escalated as Biden confirms that the US would defend Taiwan. China responded with aggressive remarks about the US playing with fire and reiterating that Taiwan is a part of the 'One China' policy.

-Overall risk appetite seems alive. Although Asia indices closed mixed, with the Hang Seng underperforming at -1.1%, Europe holds onto slight gains between 0-0.7%, US futures point to an un-fazed positive outlook at roughly 0.5% up, potentially seeing the value in prices now that the S&P approaches bear market territory.

- Weekend Australian federal election resulted in a change of government.

Asia

- Australia Labour coalition won 72 seats in Parliament to 52 of the Liberal coalition; Anthony Albanese to become PM.

- PM Albanese later sworn into position; Appointed Calmers as Treasurer; Gallagher Fin Min, Wong as Foreign Min.

- RBA Assistant Gov Kent reiterated RBA had no plans to sell bonds from portfolio, holdings would remain substantial for some years to come.

- Japan PM Kishida stated that currently seeing a change in the international order due to unilateral action by Russia. Reaffirmed no change on Taiwan policy (Note: comments after meeting US Pres Biden).

Ukraine conflict

- Russia’s Gazprom cut off Finland from receiving Russian gas after Finland refused to pay in RUB currency (rubles) (Insight: Move coincides as Finland formally applied to join NATO).

- Finland Econ Min stated that situation was under control as Russia cut off gas; Saw some companies halting operations when Russian gas is cut.

Europe

- ECB chief Lagarde reiterated the ECB sequence that will follow the path of stopping net asset purchases, then sometime after that [which could be a few weeks] hike interest rates.

- Germany Fin Min Lindner stated that saw external depreciation risks to the Euro, but welcomed the prospect of rising interest rates. Took inflation very seriously and must end our expansive finance policy.

Americas

White House Economic Advisor Deese: Domestic economy can withstand the Fed hiking cycle. Fed needed space to do their job and fight inflation.

Energy

- Last Friday (May 20th) was the deadline for a number of EU companies to send payments to Gazprom.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.26% at 432.24, FTSE +0.63% at 7,436.35, DAX +0.49% at 14,050.78, CAC-40 -0.22% at 6,271.33, IBEX-35 +0.51% at 8,527.50, FTSE MIB -1.14% at 23,821.00, SMI +0.47% at 11,361.88, S&P 500 Futures +0.48%].

Market Focal Points/Key Themes: European indices open higher across the board, but later French and Italian indices fell into negative; all sectors start the day positive; sectors leading to the upside include consumer discretionary and materials; while financials and telecom sectors lagged; Siemens Energy makes offer for remaining interest in Siemens Gamesa; Deutsche Euroshop receives takeover offer from Hercules; reportedly Broadcom in talks to acquire VMware; earnings expected in the upcoming US session include Advance Auto Parts.

Equities

- Consumer discretionary: Kingfisher [KING.UK] +2.5% (trading update).

- Financials: Deutsche EuroShop [DEQ.DE] +41% (offer).

- Healthcare: Orphazyme [ORPHA.DK] -12% (board of directors changes).

- Technology: Kainos [KNOS.UK] +16% (earnings).

Speakers

- ECB Chief Lagarde commented in a blog post that eas likely in a position to exit negative rates by end of Q3.

- President Biden stated that a recession was not inevitable. Higher gas prices was impacting families. Release of the strategic oil reserve had helped, but was not enough. Confirmed that was considering reducing the current tariffs on China and would discuss issue with Yellen after his return to US.

- EU Commission confirmed to extend EU debt-rule suspension into 2023; Proposes to reinstate limits in 2024.

- German IFO Economists stated that the domestic economy was resilient.

- India Central Bank (RBI) Gov Das stated that had entered into another phase of coordinated action to contain inflation. Coordinated action between fiscal and monetary authorities to have sobering impact on inflation. To have more action between now and October on inflation. To update inflation outlook at next monetary policy meeting. Look to continue with hikes at the coming meetings.

- India Oil Min Puri stated that oil prices staying at $110/barrel could lead to bigger problems other than inflation.

- Thailand Central Bank Gov Sethaput stated that it was in no rush to change monetary policy setting; confident that inflation to pull back to 1.7% in 2023. Needed to ensure that the recovery remains intact.

- China National Health Commission (NHC) official Zhenglong stated that the COVID situation in steady decline recently. Shanghai COVID outbreak was improving overall, but still had big pressure to prevent resurgence.

- China Foreign Min Wang Yi reiterated stance that it deplored and rejected US comments on Taiwan and would take firm actions to safeguard its sovereignty and interests; US was playing with fire on Taiwan issue.

Currencies/fixed income

- FX markets saw a continuation of the broad-based greenback weakness.as unwinding of risk aversion flows continued. USD at 2-week lows against various major pairs.

- EUR/USD in focus of trading as the German IFO survey was released and ECB Chief Lagarde clarified her position with hawkish remarks about exiting negative interest rates by end of Q3 2022. Pair rose to test 1.0640 after Lagarde's hawkish comments.

- GBP/USD - struggles to break 1.257, remains rangebound between 1.2550-1.2570 after poor UK data last week.

- USD/CAD - rangebound between 1.2785-1.2810.

- USD/CHF - slightly lower at 0.972.

- USD/JPY - pivoted after the Nikkei close, now declining towards 127.5.

- AUD/USD - trending higher to 0.7120 area. Country’s election results overnight..

- NZD/USD - trades higher at 0.6460.

Economic data

- (CH) Swiss Apr M3 Money Supply Y/Y: -0.1% v +0.7% prior.

- (TR) Turkey May Real Sector Confidence (seasonally adj): 107.0 v 107.7 prior; Real Sector Confidence NSA (unadj): 109.4 v 109.7 prior.

- (TR) Turkey Central Bank TCMB May Inflation Expectation Survey: Next 12 Months: 33.3% v 28.4% prior.

- (TR) Turkey May Capacity Utilization: 78.0% v 77.8% prior.

- (MY) Malaysia mid-May Foreign Reserves: $111.4B v $112.5B.

- (DE) Germany May IFO Business Climate Survey: 93.0 v 91.4e; Current Assessment Survey: 99.5 v 96.8e v 97.2 prior; Expectations Survey: 86.9 v 86.5e.

- (TW) Taiwan Apr Unemployment Rate: 3.7% v 3.8%e.

- (TW) Taiwan Apr Industrial Production Y/Y: 7.3% v 3.2%e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 754.1B v 753.5B prior; Domestic Sight Deposits: 664.9B v 666.5B prior.

- (PL) Poland Apr Real Retail Sales M/M: -0.1% v +0.9%e; Y/Y: 19.0% v 16.2%e; Retail Sales Y/Y: 33.4% v 25.7%e.

- (PL) Poland Apr Construction Output Y/Y: 9.3% v 18.4%e.

- (TR) Turkey Apr Foreign Tourist Arrivals Y/Y: 225.6% v 129.7% prior.

- (HK) Hong Kong Apr CPI Composite Y/Y: 1.3% v 2.0%e.

Fixed income issuance

- None seen.

Looking ahead

- (PE) Peru Q1 GDP Y/Y: 3.8%e v 3.2% prior.

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

- 05:30 ((DE) Germany to sell combined €6.0B in 3-month and 9-month BuBills.

- 05:30 (EU) European Union to sell €2.5B in 1.00% July 2032 NGEN Bonds.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel May Unemployment Rate: No est v 3.8% prior; Unemployment Rate (including Covid Effect): No est v 4.8% prior.

- 06:00 (BE) Belgium Debt Agency (BDA) to sell €2.8-3.8B in 2025, 2032 and 2066 OLO Bonds.

- 06:00 (IL) Israel to sell combined ILS700B in 2024, 2026 and 2032 bonds.

- 06:45 (US) Daily Libor Fixin.

- 07:00 (RO) Romania to sell RON200M in 4.85% 2026 Bonds.

- 07:00 (TR) Turkey to sell Bonds.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

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

- 08:30 (US) Apr Chicago Fed National Activity Index: 0.50e v 0.44 prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €4.4-5.6B in 3-month, 6-month and 12-month bills.

- 09:00 (IS) Israel Central Bank (BOI) Interest Rate Decision: Expected to raise Base Rate by 25bps to 0.60%.

- 09:00 (BE) Belgium May Business Confidence: 2.0e v 2.4 prior.

- 10:15 (EU) ECB's Holzmann (Austria) with ECB’s Nagel (Germany) and BOE' Gov Bailey in Vienna.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:00 (US) Fed's Bostic on economic outlook.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea May Consumer Confidence: No est v 103.8 prior.

- 18:45 (NZ) New Zealand Q1 Retail Sales (ex-inflation) Q/Q: 0.0%e v 8.6% prior.

- 19:00 (AU) Australia May Preliminary PMI Manufacturing: No est v 53.5 prior; PMI Services: No est v 56.1 prior; PMI Composite: No est v 55.9 prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: No est v 89.3 prior.

- 20:30 (JP) Japan May Preliminary PMI Manufacturing: No est v 53.5 prior; PMI Services: No est v 50.7 prior; PMI Composite: No est v 51.1 prior.

- 22:30 (KR) South Korea to sell KRW700B in 20-year Bonds.

- 23:00 (KR) South Korea Q1 Household Credit (KRW): No est v 1,862.1T prior.

- 23:00 (TH) Thailand Central Bank to sell THB50B in 3-month bills.

- 22:30 (JP) Japan to sell 6-Month Bills.

All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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