German ZEW survey misses with trade conflict cited as a factor

EU Mid-Market Update: UK wage data mixed but at the fastest pace in 3 years; German ZEW survey misses with trade conflict cited as a factor


- China's economic momentum remained steady

- UK wage data mixed but at the fastest pace in 3 years; keeps door open for BOE May hike

- Trade conflict cited as the main reason for decline in German confidence data


- RBA April Minutes reiterated view that no strong case for near term adjustment
But the more likely next move was up

- China Q1 GDP Q/Q: 1.4% v 1.5%e; Y/Y: 6.8% v 6.8%e

- China Mar Industrial Production Y/Y: 6.0% v 6.3%e

- China Mar Retail Sales Y/Y: 10.1% v 9.7%e

- North and South Korea said to discuss announcing end to military conflict (Note: expected to hold their 3rd summit in late April at the border)


- ECB's Praet (Belgium) reiterated view that an ample amount of monetary stimulus remains necessary; must be patient, persistent, prudent with our policy

- Germany Fin Min Scholz: Germany will maintain its budget without new borrowing. Must take the next steps to have Europe grow together and need to move from the stage of talking about banking union to acting


- Fed's Kaplan (dove, non-voter): very concerned that fiscal stimulus will turn into a headwind in 3-5 years. US could not both cut immigration and also grow the workforce and GDP. Did not expect to see runaway inflation, though do expect to see wage pressure

- Fed's Kashkari (dove, non-voter): Main Street hasn't fully recovered from the financial crisis. We are forgetting the lessons of the 2008 crisis

- President Trump to nominate Richard Clarida as Fed Vice Chair and Kansas banking regulator Michelle Bowman to Fed Board

- President Trump reportedly halts plan to implement new sanctions on Russia. Unlikely to approve them unless Moscow carried out new cyberattacks or some other provocation

- US Trade Rep said to be putting together new trade complaint against China over cloud computing and other high-tech services

Economic Data:

- (NO) Norway Q1 House Price Index Q/Q: -0.3 v +0.7% prior

- (IT) Italy Mar Final CPI M/M: 0.3% v 0.4% prelim; Y/Y: 0.8% v 0.9% prelim

- (IT) Italy Mar Final CPI EU Harmonized M/M: 2.3% v 2.5% prelim; Y/Y: 0.9% v 1.1%e, CPI FOI Index Ex Tobacco: 101.7 v 101.5 prior

- (UK) Feb Average Weekly Earnings 3M/Y: 2.8% v 3.0%e; Weekly Earnings (Ex Bonus) 3M/Y: 2.8% v 2.8%e

- (UK) Mar Jobless Claims Change: +11.6K v +15.1K prior; Claimant Count Rate: 2.4% v 2.4% prior

- (UK) Feb ILO Unemployment Rate: 4.2% v 4.3%e (lowest since 1975); Employment Change: +55K v +55Ke

- (DE) Germany Apr ZEW Current Situation Survey: 87.9 v 88.0e, Expectations Survey: -8.2 v -1.0e

- (EU) Euro Zone Apr ZEW Expectations Survey: 1.9 v 13.4 prior

- (IT) Italy Feb Total Trade Balance: +€3.1B v -€0.1B prior; Trade Balance EU: €1.1B v +€0.4B prior

Fixed Income Issuance:

- (ZA) South Africa sold total ZAR2.4B vs. ZAR2.4B indicated in 2031, 2040 and 2048 bonds




Indices [Stoxx600 +0.3% at 378.7, FTSE flat at 7199, DAX +0.7% at 12472, CAC-40 +0.3% at 5329, IBEX-35 +0.4% at 9807, FTSE MIB +0.6% at 23467, SMI +0.4% at 8764, S&P 500 Futures +0.3%]

Market Focal Points/Key Themes:

European Indices trade higher across the board following on from a stronger US trade overnight and stronger futures this morning. The FTSE under performs on overall strength in Sterling over the past few sessions, although weaker earnings data out of the UK has pared some of these gains.

On the corporate front TomTom trades higher after substantial increase in profits, ABF, JD Sports and Casino among other names trading higher after earnings. Draegerwerk is a notable decliner after reporting a bigger loss; Breedon trades higher after acquiring Lagan Group for £455M; Immupharma trades lower by over 80% after its Lupuzor phase III trial failed to meet it primary endpoint.

In the US Netflix shares rise in the premarket after beating on the top and bottom line and reporting subscriber growth which came ahead of estimates.
Looking ahead notable earners include DOW components Goldman Sachs, Johnson & Johnson and United Health.


-Consumer Discretionary [TomTom [TOM2.NL] +3.1% (Earnings), ABF [ABF.UK] +3.1% (Earnings), JD Sports [JD.UK] +5.8% (Earnings)]

-Industrials [ SIK [SIK.CH] +1.2% (Earnings), Draergerwerk [DRW3.DE] -11% (Earnings), Solstad Farstad [SOFF.NO] -8.5% (Farstad Shipping expected to breach debt covenant in Q1) ]

-Financials [ Breedon [BREE.UK] +6.0% (Acquisition)]

-Healthcare [ Immupharma [IMM.UK] -85% (Lupuzor Phase III trial failed to meet primary endpoint) ]


- ECB's Hansson (Estonia) stated that was seeing more confidence on inflation developments

- France President Macron commented that EU faced challenges tied to division and doubt, nationalism could lead the region into the abyss - EU Parliament comments

- Italy Senate Speaker Casellati could be slected by President Mattarella for an exploratory mandate aimed at building a parliamentary majority for the next govt

- German ZEW Economists stated that the trade conflict the main reason foe decline in confidence

- Turkey President Erdogan: Constitutional change to be enacted after Nov 2019

- Turkey MHP Party leader Bahceli (Opposition): General election should be held on Aug 26th 2018 (**Note: calls for early election)

- Turkey Dep PM Bozdag: Opposition call for early election to be debated at AKP (ruling party)

- China Foreign Ministry reiterated govt to continue moving forward on its currency reform; US has sent mixed signals on FX. Was prepared and ready to begin trade countermeasures

- China govt said to allow foreign auto companies to set up more than two ventures

- China to begin anti-dumping measures on US grain Sorghum; to collect 178.6% deposit on US grain Sorghum, effective April 18th


- USD was softer against the major trading pairs. Dealers took note of US President Trump’s recent tweet on Russian and Chinese currencies. Analysts noted that this was not the first time the administration had evinced support for a weaker currency

- EUR/USD probed 3-week highs above the 1.24 level before consolidating. Key resistance seen at 1.2470 and break above could ignite upside momentum.

- GBP/USD probed its highest level since the Brexit as it tested the 1.4375 area. The GBP/USD saw gains evaporate after Feb earnings data missed expectations but still registered a 3-year high. Bank of England was widely expected to raise interest rates in May. Dealers noted that UK CPI pressures might have peaked but the upcoming inflation report was expected to underscore its stickiness.

Fixed Income

- Bund Futures trade 11 ticks lower at 159.05 as Germany's 10-year bond yield stays above the 0.50% level. Upside targets 159.75, while a return lower targets the158.25 level.

- Gilt futures trade at 121.65 lower by 16 ticks, extending its gains after the UK labor data. Support continues stands at 121.25 then 120.85, with upside resistance at 123.35 then 123.85.

- Tuesday’s liquidity report showed Monday's excess liquidity fell to €1.868T from €1.869T prior. Use of the marginal lending facility decreased from €561M to €133M.

Looking Ahead

- (IL) Israel Apr CPI 12-month CPI Forecast: No est v 0.8% prior

- (BE) Belgium Debt Agency (BDA) announces upcoming OLO bond issuance for Thursday, Apr 19th

- 05.30 (UK) Weekly John Lewis LFL sales data

- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills

- 05:30 (EU) ECB allotment in 7-day Main Financing Tender

- 06:00 (TR) Turkey to sell 2023 Bonds

- 06:30 (EU) ESM to sell €2.0B in 6-month bills

- 06:45 (US) Daily Libor Fixing

- 07:00 (RU) Russia announces upcoming OFZ bond auction (held on Wed)

- 07:45 (US) Weekly Goldman Economist Chain Store Sales

- 08:00 (BR) Brazil CONAB Crop Report

- 08:05 (UK) Baltic Dry Bulk Index

- 08:30 (US) Mar Housing Starts: 1.267Me v 1.236M prior; Building Permits: 1.321Me v 1.321 prior (revised from 1.298M)

- 08:30 (CA) Canada Feb Int'l Securities Transactions (CAD): No est v 5.7B prior

- 08:30 (CA) Canada Feb Manufacturing Sales M/M: +0.8%e v -1.0% prior

- 08:55 (US) Weekly Redbook Sales

- 09:00 (EU) Weekly ECB Forex Reserves

- 09:15 (US) Industrial Production M/M: 0.3%e v 1.1% prior; Capacity Utilization: 77.9%e v 78.1% prior, Manufacturing Production: 0.1%e v 1.2% prior

- 09:15 (US) Fed's Williams (moderate, voter) speaks at NABE Conference in Madrid

- 09:30 (NZ) Fonterra Global Dairy Trade Auction

- 09:45 (UK) BOE to buy £1.22B in in APF Gilt purchase operation (over 15-years)

- 10:00 (US) Fed's Quarles (hawk, FOMC voter) to testify Before House Financial Services panel

- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month bills

- 11:00 (US) Fed’s Harker (non-voter, moderate)

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

- 12:00 (DE) German Chancellor Merkel in Berlin

- 13:10 (US) Fed's Evans (non-voter, dove) discusses Economic Outlook

- 16:30 (US) Weekly API Oil Inventories

- 17:40 (US) Fed's Bostic (FOMC voter, dove) on economy in Atlanta

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