Germany’s top court cleared the road for ratification of the EU recovery package

Notes/Observations

- Inflation data edges higher for various countries amid a recovery in oil prices but remain below central bank target level (UK, New Zealand, South Africa).

- EU Recovery Fund ratification cleared a major legal hurdle after German court rejected an injunction.

Asia:

- Australia Preliminary Mar Retail Sales M/M: 1.4% v 1.0%e.

- New Zealand Q1 CPI saw inflation strengthen but in-line with expectations (Q/Q: 0.8% v 0.8%e; Y/Y: 1.5% v 1.5%e).

- China President Xi to virtually attend a US-led climate change summit on Thursday (Apr 22nd) (Note: Would be the first meeting between Presidents Biden and Xi).

- BOJ bought ¥70.1B in ETFs (Note: 1st time since March).

Europe:

- German national poll: Green party ahead in polls at 28%, moving ahead of Merkel's CDU/CSU bloc at 21% (Reminder: Germany elections in Sept).

- Italy Econ Min Giorgetti stated that the govt’s recovery plan would be presented on time to the European Commission (Reminder: On Apr 19th EU Commission was said not to be not satisfied with several aspects of Italy’s draft recovery plan. Italy could risk missing the April 30th deadline for submitting a final version of its Recovery Plan to the European Commission).

Americas:

- Fed Chair Powell responded to questions that the Fed did not seek inflation that substantially exceeds 2% or above 2% inflation for a prolonged period. Did not anticipate high inflation but had the tools to address 1970s type pressures if they arose.

Energy:

- Weekly API Crude Oil Inventories: +0.4M v -3.6M prior.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.39% at 435.48, FTSE +0.31% at 6,881.25 , DAX +0.26% at 15,168.85 , CAC-40 +0.42% at 6,190.84, IBEX-35 +0.55% at 8,506.00 , FTSE MIB +0.17% at 24,129.50 , SMI +0.59% at 11,144.80 , S&P 500 Futures -0.02%].

Market Focal Points/Key Themes: European indices open higher across the board and stayed bid as the session progressed; sectors leading to the upside include technology and consumer discretionary; while real estate and industrials among underperformers; reportedly Hugo Boss could receive potential takeover offer; earnings expected during the upcoing US session include Iberdrola, Whirlpool and Halliburton.

Equities

- Consumer discretionary: Heineken [HEIA.NL] +4% (Q1 update), Carrefour [CA.FR] +4% (earnings), Hugo Boss [BOSS.DE] +8% (bid speculation), Juventus [JUVE.IT] -12% (Super League plans to be amended).

- Healthcare: Roche [ROG.CH] +2% (earnings).

- Technology: ASML [ASML.NL] +4% (earnings).

- Telecom: Ericsson [ERICB.SE] -1% (earnings).

Speakers

- German Court said to reject EU Recovery Fund related injunction which now cleared the path for EU Recovery Fund ratification.

- EU Commission President Von Der Leyen stated that the economic recovery is on track.

- Israel Fin Min Kahlon stated that the 2022 budget will remain expansionary. Saw no need for tax increase in 2021.

- S&P affirmed Japan sovereign rating at A+; outlook stable.

Currencies/Fixed Income

- USD moved off its recent 7-week lows that was registered against numerous pairs over the past 24 hours. Greenback aided by higher US yields during the electronic session.

- EUR/USD was soft and retesting the 1.20 handle in quiet trade.

- GBP/USD moved off its 7-week highs after Mar CPI data slightly missed expectations.

- Focus on peripheral yields after Germany’s top court cleared the road for ratification of the EU recovery package. Upcoming ECB meeting was also eyed for clarity on its Pandemic bond buying scheme.

Economic Data

- (UK) Mar CPI M/M: 0.3% v 0.4%e; Y/Y: 0.7% v 0.8%e; CPI Core Y/Y: 1.1% v 1.1%e; CPIH Y/Y: 1.0% v 1.0%e.

- (UK) Mar RPI M/M: 0.3% v 0.4%e; Y/Y: 1.5% v 1.6%e; RPI-X (ex-Mortgage Interest Payments) Y/Y: 1.6% v 1.8%e; Retail Price Index: 296.9 v 297.2e.

- (UK) Mar PPI Input M/M: 1.3% v 0.5%e; Y/Y: 5.9% v 4.3%e.

- (UK) Mar PPI Output M/M: 0.5% v 0.3%e; Y/Y: 1.9% v 1.7%e.

- (ES) Spain Feb House transactions Y/Y: -4.3% v -15.4% prior.

- (CH) Swiss Mar M3 Money Supply Y/Y: 5.6 v 6.8% prior.

- (ZA) South Africa Mar CPI M/M: 0.7% v 0.8%e; Y/Y: 3.2% v 3.3%e.

- (ZA) South Africa Mar CPI Core M/M: 0.5% v 0.6%e; Y/Y: 2.5% v 2.7%e.

- (PL) Poland Mar Sold Industrial Output M/M: 18.6% v 13.2%e; Y/Y: 18.9% v 13.1%e.

- (PL) Poland Mar Employment M/M: -0.1% v 0.0%e; Y/Y: -1.3% v -1.2%e.

- (PL) Poland Mar Average Gross Wages M/M: 6.5% v 4.0%e; Y/Y: 8.0% v 5.3%e.

- (PL) Poland Mar PPI M/M: 1.3% v 1.1%e; Y/Y: 3.9% v 3.6%e.

- (UK) Feb House Price Index Y/Y: 8.6% v 8.0%e I( highest since Oct 2014).

Fixed income Issuance

- (PH) Philippines opened it book to sell EUR-denominated 4-year, 12-year and 20-year bonds via syndicate.

- (DK) Denmark sold total DKK2.12B in 2030 and 2031 DGB Bonds.

- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2023 and 2031 Bonds.

- (UK) DMO sold £2.5B in 0.625% July 2035 Gilts; Avg Yield: 1.105% v 1.179% prior; bid-to-cover: 2.46x v 2.64x prior; Tail: 0.2bps v 0.1bps prior.

Looking Ahead

- (IL) Israel Apr 12-month CPI Forecast: No est v 1.0% prior.

- 05:20 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €4.0B in 0% Feb 2031 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 3-month and 12-month Bills.

- 06:30 (UK) BOE Gov Bailey.

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

- 06:00 (CZ) Czech Republic to sell 2024, 2032 bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (RU) Russia OFZ Bond auction (if any).

- 07:00 (US) MBA Mortgage Applications w/e Apr 16th: No est v -3.7% prior.

- 07:00 (UK) Weekly PM Question time in House.

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

- 08:30 (CA) Canada Mar CPI M/M: 0.6%e v 0.5% prior; Y/Y: 2.3%e v 1.1% prior; Consumer Price Index: 139.8e v 138.9 prior.

- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (7-20 years).

- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.25%.

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

- 11:00 (CA) Bank of Canada (BOC) Gov Macklem.

- 13:00 (US) Treasury to sell 20-Year Bonds Reopening.

- (CO) Colombia Mar Industrial Confidence: No est v 8.2 prior; Retail Confidence: No est v 34.2 prior.

- 21:00 (CN) China Mar Swift Global Payments (CNY): No est v 2.2% prior.

- 21:30 (AU) Australia Q1 Business Confidence: No est v 14 prior.

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