Global bond yields moving higher, EU said to be poised to place more sanctions on Russia

Notes/Observations

- Global inflation data continued to run hot (Korea, Philippines and Thailand overnight); pressure on central banks to normalize policy.

- Major European Mar PMI Services data in session mixed but in expansion territory (Beats: Germany, Eurozone, UK; Misses: Spain, Italy; in-line: France).

- EU could implement new sanctions against Russia; Details may not emerge until Wednesday (Apr 6th).

- RBA likely to tighten its monetary policy in its upcoming meetings after hawkish hold.

Asia

- RBA left the Cash Rate Target unchanged at 0.10% (as expected); dropped the word ‘patient’ from its forward guidance; opens door for possible Jun rate hike.

- South Korea Mar CPI reading register its 12th month above target and highest annual pace since 2011 (YoY: 4.1% v 4.0%e.

- Australia Mar Final PMI Services confirmed 2nd consecutive expansion (55.6 v 57.9 prelim).

- Japan Mar Final PMI Services confirmed its 3rd straight contraction (49.4 v 48.7 prelim).

- Japan Feb Labor Cash Earnings 1.2% v 0.6%e; Real Cash Earnings Y/Y: 0.0% v -0.7%e.

- Japan Feb Household Spending YoY: 1.1% v 2.7%e.

- BOJ Gov Kuroda stated that the recent FX moves were ‘somewhat rapid’.

- BOK Lee Hwan-seok (acting Gov) stated that inflation might remain at 4% level for a while [above 2.0% target], upside risks to inflation path had risen since Feb Staff Projections.

- Hang Seng opened closed for holiday; Shanghai Composite opened closed for holiday.

Russia/Ukraine

- US Treasury Statement announced it would not permit any USD Denominated debt payments to be made by Russian Govt Accounts at US Financial institutions [refered to bonds due 2022 and 2042].

Europe

- ECB’s Knot (Netherlands): ECB should act in the fact of high inflation; Gradual but timely normalization is needed.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.35% at 463.80, FTSE -0.16% at 7,546.92, DAX +0.30% at 14,561.44, CAC-40 -0.30% at 6,711.29, IBEX-35 +0.72% at 8,582.25, FTSE MIB +0.20% at 25,227.00, SMI +0.04% at 12,346.06, S&P 500 Futures +0.02%].

Market Focal Points/Key Themes: European indices open mixed, but later turned to trade modestly higher; sectors among those trending higher are heath care and technology; while sectors among those trending lower are materials and financials; Atlantic gets support from major shareholders in bid for Aareal Bank; KKR won’t confirm bid for Telecom Italia; earnings expected in the upcoming US session include Lindsay.

Equities

- Consumer discretionary: Shop Apotheke [SAE.DE] +8% (sales).

- Financials: Grenke [GLJ.DE] +7.5% (earnings).

- Technology: ams Osram [AMS.CH] -5% (targets), Anoto Group [ANOT.SE] +45% (agreement with Samsung), Darktrace [DARK.UK] -7% (analyst action).

Speakers

- Sweden Central Bank (Riksbank) Dep Gov Floden stated that inflation was significantly higher than target and would need to re-evaluate monetary policy at the next meeting.

- EU's Dombrovskis stated that sanction discussions on Russia to include energy sector; Oil. Also coal sanctions were option for commission.

- Russia Deputy Foreign Min Andrey Rudenko stated that Russia and Ukraine to continue intensive talks via video conference. Ukraine President Zelenskiy stated that : It is possible there will be no meeting between him and Pres Putin.

- Philippines Central Bank (BSP) Gov Diokno reiterated stance that policy normalization (aka rate hikes) to begin in H2.

- President Biden said to expand health insurance subsidies for uninsured.

Currencies/Fixed income

- Overall major FX price action was subdues in Europe with focus remaining on rising bond yields. Inflation readings continued to put pressure on central banks to normalize policy.

- EUR/USD drifted higher but hovered around 1.0970 for most of the session. Dealers noted concern that EU could implement new sanctions against Russia and put more pressure on growth and inflation outlook.

- AUD currency was broadly firmer after the RBA adopted a hawkish tilt in its monetary policy statement.

Economic data

- (RU) Russia Mar PMI Services: 38.1 v 46.0e (moves back into contraction and lowest since May 2020); PMI Composite: 37.7 v 42.0e.

- (FI) Finland Feb Preliminary Trade Balance: -€1.1B v -€1.0B prior.

- (SE) Sweden Mar PMI Services: 65.3 v 67.7 prior (22nd month of expansion); PMI Composite: 63.1 v 65.0 prior.

- (FR) France Feb Industrial Production M/M: -0.9% v -0.3%e; Y/Y: 2.4% v 2.5%e.

- (FR) France Feb Manufacturing Production M/M: -0.5% v +2.2% prior; Y/Y: +3.4% v -0.6% prior.

- (CZ) Czech Feb Retail Sales Y/Y: % v 9.6% prior; Retail Sales (ex-auto) Y/Y: 4.6% v 5.0%e.

- (HU) Hungary Feb Industrial Production M/M: 1.6% v 3.1%e; Y/Y: 4.5% v 1.8%e.

- (ES) Spain Mar Services PMI: 53.4 v 54.3e (2nd straight expansion); Composite PMI: 53.1 v 53.9e.

- (ZA) South Africa Mar PMI (whole economy): 51.4 v 50.0e (3rd straight expansion).

- (IT) Italy Mar Services PMI: 52.1 v 51.5e; (2nd month of expansion) Composite PMI: 52.1 v 52.1e.

- (FR) France Mar Final PMI Services: 57.4 v 57.4 prelim (confirmed 12th month of expansion);; PMI Composite: 56.3 v 56.2 prelim.

- (DE) Germany Mar Final PMI Services: 56.1 v 55.0 prelim (confirmed 3rd month of expansion);; PMI Composite: 55.1 v 54.6 prelim.

- (EU) Euro Zone Mar Final PMI Services: 55.6 v 54.8 prelim (confirmed 12th month of expansion); PMI Composite: 54.9 v 54.5 prelim.

- (UK) Mar New Car Registrations Y/Y: -14.3% v 15.0% prior.

- (IT) Italy Q4 YTD Budget Deficit to GDP Ratio: 7.2% v 8.8% prior.

- (UK) Mar Final PMI Services: 62.6 v 61.0 prelim; (confirmed 13th month of expansion); PMI Composite: 60.9 v 59.7 prelim.

- (UK) Mar Official Reserves Changes: -$1.7B v +$1.2B prior.

Fixed income issuance

- (ID) Indonesia sold total IDR8.15T vs. IDR9.0T target in Islamic bills and bonds (sukuk).

- (EU) European Union opened its book to sell EUR-denominated Feb 2043 NextGeneration green Bonds (NGEU) via syndicate; guidance seen +11bps to mid-swaps.

- (ES) Spain Debt Agency (Tesoro) sold total €5.09B vs. €4.5-5.5B indicated range in 6-month and 12-month Bills.

- (UK) DMO sold £3.25B in 0.375% Oct 2026 Gilts; Avg Yield: 1.518% v 0.988% prior; bid-to-cover: 2.34x v 2.37x prior; Tail: 0.5bps v 0.3bps prior.

- (CH) Switzerland sold CHF536.85M in 3-month Bills; Avg Yield: -0.774% v -0.782% prior.

Looking ahead

- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to raise Interest Rate by 50bps to 3.00%.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (DE) Germany to sell combined €600M in inflation-linked 2030 and 2046 bonds (Bundei).

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2032, 2037 and 2040 bonds.

- 06:30 (EU) ESM to sell €1.1B in 3-Month Bills.

- 06:45 (US) Daily Libor Fixing.

- 07:30 (TR) Turkey Mar Real Effective Exchange Rate (REER): No est v 54.78 prior.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Feb Trade Balance: -$88.5Be v -$89.7B prior.

- 08:30 (CA) Canada Feb Int'l Merchandise Trade (CAD): 3.0Be v 2.6B prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (BR) Brazil Mar PMI Services: No est v 54.7 prior; PMI Composite: No est v 53.5 prior.

- 09:45 (US) Mar Markit Final PMI Services: 58.9e v 59.8 prelim; PMI Composite: No est v 58.5 prelim.

- 10:00 (US) Mar ISM Services Index: 58.4e v 56.5 prior.

- 10:00 (MX) Mexico Weekly International Reserve data.

- 10:00 (US) Fed’s Brainard.

- 16:30 (US) Weekly API Oil Inventories.

- 20:00 (CO) Colombia Mar CPI M/M: 1.0%e v 1.6% prior; Y/Y: 8.5%e v 8.0% prior.

- 20:30 (HK) Hong Kong Mar PMI (whole economy): No est v 42.9 prior.

- 21:00 (NZ) New Zealand Mar ANZ Commodity Price M/M: No est v 3.9% prior.

- 21:45 (CN) China Mar Caixin PMI Services: 49.8e v 50.2 prior; PMI Composite: No est v 50.1 prior.