Notes/Observations

Overnight:

Asia:

- China said to have no reason to raise interest rates in the short term

Europe:

- German Infratest Election Poll: Merkel's bloc overtaken by SPD. German Social Democrats rose by 4% to 32% while Cancellor Merkel's CDU/CSU lost 3% to 31%

- German Bundesbank's Dombret (ECB SSM member):Bundesbank was leading by example with regard to risk provisions and banks should take their cue from it (**Reminder: On Feb 23rd the German Bundesbank annual report noted that it boosted risk provisions by €1.8B to €15.4B in 2016)

- France Green Party candidate Jadot withdraws from presidential race; throws support to Socialist candidate Hamon

- UK By-Elections: Conservatives win seat of Copeland, held by Labour since 1935 while labour hold onto its seat of Stoke On Trent Central

Americas:

- President Trump: China is a "grand champion" of currency manipulation; China is the big winner in exchange rate manipulation. A border adjustment tax would result in a lot of US jobs.

Energy:

- OPEC/non-OPEC technical committee said to see total deal compliance for OPEC and non-OPEC at 86%

 

Economic data

- (FR) France Feb Consumer Confidence: 100 v 100e

- (SE) Sweden Feb Consumer Confidence: 104.5 v 104.1e; Manufacturing Confidence: 117.7 v 117.8e, Economic Tendency Survey: 111.6 v 111.1e

- (UK) Jan BBA Loans for House Purchase: 42.6Ke

- (IT) Italy Feb Consumer Confidence: 106.6 v 108.8e; Manufacturing Confidence: 106.3 v 104.6e, Economic Sentiment: 104.0 v 103.3 prior

**Fixed Income Issuance:

- (IT) Italy Debt Agency (Tesoro) sold €6.0B vs. €6.0B indicated 6-month Bills; Avg yield: %-0.294 v -0.286% prior; Bid-to-cover: 1.52x v 1.56x prior

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Index snapshot (as of 10:00 GMT)**

Indices [Stoxx50 % at XXX, FTSE % at XXX, DAX % at XXX, CAC-40 % at XXX, IBEX-35 % at XXX, FTSE MIB % at XXX, SMI % at XXX, S&P 500 Futures %]

Market Focal Points/Key Themes: European equity indices are trading lower paring back some of the weekly gains amid ongoing political uncertainty in France, and as a raft of corporate earnings pre-market weigh on some of the major European indices; Banking stocks generally lower in the Eurostoxx; shares of RBS and Standard Chartered trading notably lower in the FTSE 100 after releasing their fiscal year results; commodity and mining stocks also trading lower in the index as copper prices consolidate near yesterday's sell-off lows; shares of Vivendi, Saint Gobain and BASF leading the losses in the Eurostoxx after releasing their year-end results; The Italian FTSE MIB underperforming as the heavily weighted peripheral lenders weigh in the index, with shares of Saipem the notable laggard in large volume after releasing their Q4 results.

Upcoming scheduled US earnings (pre-market) include Boise Cascade, Calumet Specialty, Cabot Oil & Gas, Foot Locker, Harsco, JC Penney, KBR, Coca-Cola FEMSA, Magna International, Magellan Health Services, Public Service Enterprise, Pharmerica, Rowan Companies, Realogy Holdings, Echostar, EW Scripps, Telephone & Data Systems, US Cellular, and VWR Corp.

 

Equities (as of 09:50 GMT)

- Consumer Discretionary: [Amadeus IT AMS.ES -0.1% (FY16 results), International Consolidated Airlines IAG.UK +2.0% (FY16 results), Pearson PSON.UK +2.1% (FY16 results), Swatch UHR.CH -1.3% (analyst downgrade), Vivendi VIV.FR -5.9% (FY16 results), William Hill WMH.UK +1.6% (FY16 results)]

- Energy: [Saipem SPM.IT -4.9% (Q4 results)]

- Financials: [Royal Bank of Scotland RBS.UK -2.9% (FY16 results), Saint-Gobain SGO.FR -2.7% (FY16 results), Standard Chartered STAN.UK -4.2% (FY16 results), Standard Life SL.UK -0.1% (FY16 results)]

- Healthcare: [Solvay SOLB.BE -2.0% (Q4 results)]

- Industrials: [Aurubis NDA.DE +0.3% (analyst upgrade), BASF BAS.DE -2.6% (Q4 results), Safran SAF.FR -0.5% (FY16 results)]

- Materials: [Salzgitter SZG.DE -4.2% (analyst downgrade)]

- Technology: [Fugro FUR.NL +4.3% (FY16 results), Micro Focus International MCRO.UK -2.5% (Q1 HPE Software results)]

 

Speakers

- ECB's Stournaras (Greece): Greece needed to close current bailout review asap otherwise conditions will worsen

- German Bundesbank's Dombret (ECB SSM member): UK market access post Brexit looks dim but would be a mistake for UK to roll back regulation

- Greece PM Tsipras: Greece's fiscal targets have outperformed with 2016 primary surplus to exceed 2% and GDP growth seen at 0.3%. No more demand for extra 2% of GDP in austerity. Eurogroup decision was a decisive step for conclusion of bailout review

- French President Candidate Macron on election platform: Tackling mass unemployment was priority and would cut spending by 3% of GDP during term and launch €50B public investment fund if elected

- France Socialist Candidate Hamon: Still ready to meet far-left rival Jean-Luc Melenchon for talks on a possible joint bid for President

- Austrian Chancellor Kern: UK faces €60B Brexit bill

- EU's Dombrovskis: Important that Portugal's debt move on a downward trajectory

- Turkey Econ Min Zeybekci: Current Account deficit and inflation were more important than TRY currency (Lira) level

- China Foreign Ministry reiterated govt pledge of not having any intention of using currency devaluation to seek trade advantages (**Note: response to President Trump comments that China was a "grand champion" of currency manipulation)

 

Currencies

- FX markets were quiet in the session and locked within recent 2017 ranges. The USD was on soft footing and set for it's for first week of decline in almost a month.

- EUR/USD was hovering around the 1.06 area and lifted by the French political situation of the upcoming elections. A new French alliance aided the currency after France Green Party candidate Jadot withdrawal from presidential race and threw his support to Socialist candidate Hamon

- Gold climbed to 3-1/2 month high above $1,250/oz amid overall political worries

**Fixed Income:

- Bund futures trade at 166.04 up 25 ticks trading mid range as futures consolidate the recent move higher. German government bond yields have almost retraced all of this year's move higher, falling to their lowest level Friday.

- Gilt futures trade at 127.53. up 32 ticks approaching the highest level since November 2016

 

Looking Ahead

- (BR) Brazil Feb CNI Consumer Confidence: No est v 103.8 prior

- (PT) Portugal Year-to-Date Budget Report

- 06:00 (UK) DMO to sell combined £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively)

- 06:30 (IN) India Weekly Forex Reserves

- 06:45 (US) Daily Libor Fixing - 07:00 (BR) Brazil Jan National Unemployment Rate: 12.5%e v 12.0% prior

- 07:00 (CL) Chile Jan PPI M/M: No est v 2.0% prior

- 08:15 (UK) Baltic Dry Bulk Index

- 08:30 (CA) Canada Jan CPI M/M: +0.4%e v -0.2% prior; Y/Y: 1.6%e v 1.5% prior; Consumer Price Index: 128.7e v 128.4 prior

- 08:30 (CA) Canada Jan CPI Common Core Y/Y: No est v 1.4% prior; CPI Medium Core Y/Y: No est v 2.0% prior; CPI Trim Core Y/Y: No est v 1.6% prior

- 08:30 (BR) Brazil Jan Nominal Budget Balance (BRL): -13.2Be v -105.2B prior; Primary Budget Balance: +13.1Be v -70.7B prior, Net Debt to GDP: No est v 45.9% prior

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

- 09:00 (MX) Mexico Dec Retail Sales M/M: 0.2%e v 1.0% prior; Y/Y: 9.2%e v 11.2% prior

- 10:00 (US) Jan New Home Sales: 571Ke v 536K prior

- 10:00 (US) Feb Final Michigan Confidence: 96.0e v 95.7 prelim

- 10:00 (MX) Mexico Q4 Current Account: -$5.2Be v -$7.6B prior

- 11:00 (EU) Potential sovereign rating - (IQ) Iraq Sovereign Debt to be rated by S&P

- (HU) Hungary Sovereign Debt to be rated by S&P - (AT) Austria Sovereign Debt to Be Rated by Moody's

- (DE) Germany Sovereign Debt to be rated by Moody's

- (GR) Greece Sovereign Debt to be rated by Moody's

- (GR) Greece Sovereign Debt to be rated by Fitch - (BE) Belgium Sovereign Debt to be rated by DBRS

- (IE) Ireland Sovereign Debt to be rated by DBRS

- 12:00 (FR) France Jan Net Change in Jobseekers: -10.0Ke v +26.1K prior; Total Jobseekers: 3.446Me v 3.473M prior

- 13:00 (US) Weekly Baker Hughes Rig Count data

- 14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: No est v 1.4% prior; Y/Y: No est v -1.4% prior

- 15:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 7.50%

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