Notes/Observations

- UK job data remained constructive; Stats Office noted that fewer unemployed people compared to job vacancies.

- Risk appetite finding some legs as hopes for a further economic recovery from the Covid-19 pandemic and the easing of the lockdown conditions in Shanghai.

- Chinese tech stocks higher as key meeting between the nation’s top regulators and corporate giants would result in Beijing dialing back its yearlong clampdown of the industry`.

Asia

- RBA May Minutes noted that it - considered a larger hike in rates. Determined that conditions set for an increase in the cash rate had been met and further rate increases would likely be needed. Inflation now above the target and was not forecast to return to the target range until mid-to-late 2024.

- BOJ Deputy Gov Amamiya reiterated stance that was important to continue current powerful easing to firmly back economy. Current inflation largely led by a rise in energy prices.

- Shanghai took the first steps towards lockdown exit but tensions rise in Beijing. Shanghai reported no new Covid-19 infections in the broader community for a third consecutive day which officials were looking for before loosening restrictions.

- China State Planner (NDRC) stated that it would increase support for manufacturing companies and contact intensive services as the domestic economy faced increasing downward pressure (Note: Chinese tech stocks jumped as traders bet a key meeting would result in Beijing dialing back its yearlong clampdown of the industry).

- CPPCC National Committee's Committee for Economic Affairs [top political advisory body] holding symposium on digital economy and sustainable and healthy development during May 17th, Vice Premier Liu to speak at meeting.

Russia/Ukraine

- Russia Pres Putin stated on Monday during a speech that Russia had no problems with Finland and Sweden joining NATO, but would react to expansion of military infrastructure to these countries.

- UN Sec Gen Guterres to attempt to broker deal with Russia to remove barriers for Russian-Belarus potash exports in exchange for loosened Ukraine grain shipment restrictions.

- US Sen GOP Leader McConnell (R-KY) expected the Senate to vote on $40B in Ukraine aid on Wednesday, May 18th after holding a related procedural vote on Monday, May 16th.

Europe

- BOE Gov Bailey testified that MPC was not at all happy about inflation outlook and was a bad situation. Over 80% of UK inflation overshoot was due to energy and tradeable goods. 2nd round effects were a major concern to us.

- UK to tell the EU to tear up its negotiating mandate on Northern Ireland Protocol on Tues (May 17th) or face unilateral action on rule changes.

- UK Foreign Sec Truss (Brexit negotiator) said to drawn up laws to override parts of the post-Brexit deal which would come into force over summer unless the EU gave ground.

- Turkey President Erdogan: Sweden and Finland lacked a clear stance against terrorism and could not allow those who sanctioned Turkey to enter NATO ( Reminder: All 30 NATO member states have veto power for new members).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +1.64% at 440.80, FTSE +0.80% at 7,524.60, DAX +1.55% at 14,180.93, CAC-40 +1.56% at 6,446.77, IBEX-35 +1.45% at 8,474.50, FTSE MIB +1.67% at 24,434.00, SMI +1.10% at 11,800.58, S&P 500 Futures +1.62%].

Market Focal Points/Key Themes: European indices open higher across the board and advanced into the green as the session progressed; Norway closed for holiday; sectors among those leading to the upside are consumer discretionary and materials; laggard sectors include telecom and health care; telecom sector underperforming after Vodafone results disappoint; ContourGlobal to be acquired by KKR; M&C receives improved offer from Advancedadvt; focus on speeches by Fed Chair Powell and ECB President Lagarde later in the day; earnings expected in the upcoming Americas session include Moderna, Walmart, Home Depot and Caterpillar.

Equities

- Consumer discretionary: DCC [DCC.UK] +3% (earnings).

- Consumer staples: Imperial Brands [IMB.UK] +6% (trading update), Nestle [NESN.CH] -0.5% (reportedly flying baby formula supplies to US from Europe to alleviate the shortage).

- Energy: Engie [ENGI.FR] +5% (earnings; raises outlook), ContourGlobal [GLO.UK] +34% (to be acquired).

- Industrials: Daimler Truck [DTG.DE] +4% (earnings).

- Telecom: Vodafone [VOD.UK] -1.5% (earnings).

Speakers

- Germany Fin Min Lindner stated that he could not support a softening of the EU's Masstricht criteria but the fiscal rules should be more realistic and effective.

- EU Official McGuinness (financial stability and capital markets) stated that EU had the political will to resolve Northern Ireland protocol issues.

- Turkey Fin Min Nebati stated that looked to tame inflationary expectations.

- Czech Central Bank (CNB) Gov Rusnok (outgoing) stated that was too early to predict outcome of the next policy decision. Expect a debate on size of rate hike at the Jun meeting.

- Hungary Central Bank Dep Gov Virag stated that inflation was poised to test double figures.

- India said to have relaxed some wheat export restrictions.

- China FX Regulator SAFE stated that it was capable of keeping cross-border flows stable.

Currencies/fixed income

- Session saw a reversal of safe-haven flows that helped to weaken both the USD and JPY currencies. Better sentiment on several fronts in China were seen as the catalyst. An improvement on the Shanghai covid scene coupled with high expectations of a key meeting between Chinese govt regulators and corporate entities would see the govt dial back its yearlong clampdown of the tech industry.
Overall the USD on soft footing. Additional Goldman Sachs overnight commented that the USD was 18% overpriced. DXY (USD index) has been bleeding off as risk aversion took a break.

- The cable is the most active with a push to the upside >1% this morning at 1.2460 area after UK unemployment and job data came in showcasing an extremely tight labor market.

- EUR/USD - climbs higher into the 1.047 level after bouncing off 1.035 last week’s 5-year low.

- USD/CAD - trades flat to slight decline around 1.282 level (highest since Dec 2020).

- USD/CHF - tests critical 1.000 level after 1 month bull run (highest since Dec 2019).

- USD/JPY - slightly higher but still hovers between 128.8-129.5 after pulling back from 130.0-131.0 levels (20 year highs).

- AUD/USD - trades around 0.700 level (lowest since Jan 2022).

- NZD/USD - steady climb into the 0.635 level (2 year lows).

Economic data

- (FI) Finland Mar GDP Indicator Y/Y: 5.4% v 3.6% prior.

- (FR) France Q1 ILO Unemployment Rate: 7.3% v 7.4%e; Mainland Unemployment Rate: 7.1% v 7.2%e.

- (UK) Apr Jobless Claims Change: -56.9K v -81.6K prior; Claimant Count Rate: 4.1% v 4.2% prior.

- (UK) Mar Average Weekly Earnings 3M/Y: 7.0% v 5.4%e; Weekly Earnings ex-Bonus 3M/Y: 4.2% v 4.1%e.

- (UK) Mar ILO Unemployment Rate: 3.7% v 3.8%e; Employment Change 3M/3M: +83K v +4Ke.

- (UK) Q1 Output Per Hour Y/Y: -0.8% v +0.7% prior.

- (RO) Romania Q1 Advance GDP (1st reading) Q/Q: 5.2% v 1.0%e; Y/Y: 6.5% v 2.2%e.

- (IN) India Apr Wholesale Prices (WPI) Y/Y: 15.1% v 14.9%e.

- (HU) Hungary Q1 Preliminary GDP Q/Q: 2.1% v 1.5%e; Y/Y: 8.2% v 7.3%e.

- (NL) Netherlands Q1 Preliminary GDP Q/Q: 0.0% v 0.1%e; Y/Y: 7.0% v 7.1%e.

- (NL) Netherlands Mar Trade Balance: €4.8B v €4.4B prior (revised from €6.0B).

- (NL) Netherlands Mar Consumer Spending Y/Y: 11.2% v 13.4% prior.

- (EU) Euro Zone Q1 Preliminary GDP (2nd reading) Q/Q: 0.3% v 0.2% advance; Y/Y: 5.1% v 5.0% advance.

- (EU) Euro Zone Q1 Preliminary Employment Q/Q: 0.5% v 0.4% prior; Y/Y: 2.6% v 2.1% prior.

- (IT) Italy Apr Final CPI M/M: 0.0% v 0.2% prelim; Y/Y: 6.0% v 6.2% prelim; CPI Index (ex-tobacco): 109.7v 109.9 prior.

- (IT) Italy Apr Final CPI EU Harmonized M/M: 0.3% v 0.6% prelim; Y/Y: 6.3% v 6.6% prelim.

- (CY) Cyprus Q1 Preliminary GDP Q/Q: 0.7% v 0.7% prior; Y/Y: 5.8% v 6.4% prior.

Fixed income issuance

- (ID) Indonesia sold total IDR4.28T vs. IDR9.0T target in Islamic bills and bonds (sukuk).

- (UK) DMO sold £1.75B in 1.25% July 2051 Gilts; Avg Yield: 2.040% v 1.580% prior; bid-to-cover: 2.91x v 2.31x prior ; Tail: 0.2bps v 0.4bps prior.

Looking ahead

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

- 05:30 (DE) Germany to sell €6.0B in new 0% Jun 2024 Schatz.

- 05:30 (HU) Hungary Debt Agency (AKK) 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, 2035 and 2040 bonds.

- 06:00 (FI) Finland to sell €1.0B in 0.50% Apr 2043 RFGB Bonds.

- 06:05 (UK) BOE's Cunliffe.

- 06:30 (EU) ESM to sell €1.1B in 6-month Bills.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (BR) Brazil May FGV Inflation IGP-10 M/M: 0.3%e v 2.5% prior.

- 07:15 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson on Monetary Policy in Wartime.

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

- 08:00 (US) Fed’s Bullard on Economic Outlook.

- 08:30 (US) Apr Advance Retail Sales M/M: 1.0%e v 0.7% prior (revised from 0.5%); Retail Sales (ex-auto) M/M: 0.4%e v 1.4% prior (revised from 1.1%); Retail Sales (ex-auto/gas): 0.7%e v 0.7% prior (revised from 0.1%); Retail Sales (Control Group): 0.8%e v 0.7% prior (revised from 0.1%).

- 08:30 (CA) Canada Mar Int'l Securities Transactions (CAD): No est v 7.4B prior.

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

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (EU) ECB weekly QE bond buying update.

- 09:15 (US) Apr Industrial Production M/M: 0.4%e v 0.9% prior; Capacity Utilization: 78.5%e v 78.3% prior; Manufacturing Production: 0.4%e v 0.9% prior.

- 09:15 (US) Fed’s Harker.

- 10:00 (US) May NAHB Housing Market Index: 75e v 77 prior.

- 10:00 (US) Mar Business Inventories: 1.9%e v 1.5% prior.

- 13:00 (EU) ECB chief Lagarde.

- 14:00 (US) Fed Chair Powell.

- 14:30 (US) Fed’s Mester participates on panel.

- 15:00 (AR) Argentina Mar Capacity Utilization: No est v 64.3% prior.

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

- 18:45 (US) Fed’s Evans on Economic Outlook.

- 19:50 (JP) Japan Q1 Preliminary GDP Q/Q: -0.4%e v +1.1% prior; GDP Annualized Q/Q: -1.8%e v +4.6% prior; GDP Nominal Q/Q: -0.3%e v +0.3% prior.

- 20:30 (AU) Australia Apr Leading Index M/M: No est v 0.4% prior.

- 21:30 (AU) Australia Q1 Wage Price Index Q/Q: 0.8%e v 0.7% prior; Y/Y: 2.5%e v 2.3% prior.

- 21:30 (CN) China Apr New Home Prices M/M: No est v -0.1% prior.

- 21:30 (KR) Bank of Korea to sell KRW1.1T in 3-year Bonds.

- 22:35 (CN) China to sell 1-year and 5-year Upsized Bonds.

- 23:35 (JP) Japan to sell 5-Year JGB Bonds.

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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