India and Iceland hike rates in session citing inflation

EU Mid-Market Update: EU details the 6th round of Russian sanctions; India and Iceland hike rates in session citing inflation; focus on FOMC decision.

Notes/Observations

- EU details the 6th round of Russian sanctions.

- Focus on Fed policy decision later Wednesday and expected to raise rates by 50bps (largest hike since 2000).

- German exports registered a sharp drop in March is the first hard evidence of the negative impact the Ukraine war.

- Iceland Central Bank hikes again on inflation concerns.

- India RBI’s hikes key rate by 40bps to 4.40% following an emergency meeting.

Asia

- New Zealand Q1 Unemployment Rate: 3.2% v 3.2%e.

- Australia Apr Final PMI Services: 56.1 v 56.6 prelim (confirms 3rd month of expansion).

- Australia Mar Retail Sales M/M: 1.6% v 0.5%e; Q/Q.

- RBNZ Gov Orr: Aiming to head off rising inflation costs.

- North Korea said to have has fired 1 unidentified projectile towards East Sea (14th projectile in 2022).

Europe

- ECB's Schnabel (Germany): An interest rate hike was possible in July.

- Shadow BOE had 6 of its 9 members suggest BOE should raise rates by 50bps this week.

- UK Apr BRC Shop Price Index Y/Y: 2.7% v 2.1% prior (highest since 2011).

Energy

- Weekly API Crude Oil Inventories: -3.5M v +4.8M prior.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.48% at 444.08, FTSE -0.29% at 7,539.49, DAX -0.17% at 14,015.42, CAC-40 -0.35% at 6,453.20, IBEX-35 -0.34% at 8,561.23, FTSE MIB -0.34% at 24,161.00, SMI -0.60% at 11,929.56, S&P 500 Futures +0.25%].

Market Focal Points/Key Themes: European indices open modestly higher but later turned around to trade slightly in the red; better performing sectors include industrials and financials; while underperforming sectors include materials and technology; Israel and Turkey closed for holidays; Solvay takes stake in AGC; focus on upcoming conclusion of FOMC meeting, and details of 6th sanctions package against Russia from the EU targeting oil industry; earnings expected during the upcoming Americas session include Marriott, Moderna, Barrick, and Enel.

Equities

- Consumer discretionary: Hugo Boss [BOSS.DE] -4% (earnings).

- Energy: Equinor [EQNR.NO] +1.5% (earnings; EU details on 6th sanctions package against Russia), Electricite de France [EDF.FR] -4% (sales).

- Industrials: Maersk [MAERSKB.DK] +2% (final earnings; comments on shipping and Russia business), Aston Martin Lagonda [AML.UK] +9% (earnings; new CEO), Volkswagen [VOW3.DE] +1% (final earnings).

- Technology: TeamViewer [TMV.DE] +8% (earnings).

Speakers

- ECB’s Muller (hawk, Estonia) stated that interest rates could be raised as soon as July. ECB should consider raising interest rates as soon as July as inflation accelerated. Rates could be lifted as soon as asset purchases end.

- EU Commission President Von der Leyen presented details on 6th sanction package against Russia. Confirmed to exclude Sberbank and 2 other major banks from Swift payment system (reportedly Credit Bank of Moscow and Russian Agricultural Bank). To phase out Russian supply of crude oil with 6 months and refined products by end of the year.

- EU Commission said to have proposed Hungary and Slovakia can continue to buy Russian crude oil until end-2023.

- Hungary govt official stated that it had yet to see plans or guarantees based on current EU oil sanctions on how transitionary period could be managed.

- EU Council President Michel stated that EU was considering additional military support to Moldova.

- Finland Central Bank stated that financial stability risks had increased after Russia started its invasion of Ukraine. Measures were needed to increase the resilience of the financial system.

- Iceland Central Bank (Sedibanki) Policy Statement noted that inflation measured in 7.2% in April and outlook had deteriorated markedly. Inflation expectations had risen by all measures; Outlook was for inflation to rise above 8% in Q3. Monetary stance would have to be tightened even further in coming months so as to ensure than inflation eased back to target. Economic outlook had deteriorated owing to adverse impact from Russia's invasion of Ukraine. Slack in the economy appeared to have disappeared, and labour market was tightening.

- South Korea Foreign Ministry Statement: North Korea missile test was a serious threat. Country needed to halt escalation and return to talk.

- India Central Bank (RBI) raises Repo Rate by 40bps to 4.40% (intra-policy move). Statement stressed to look to contain 2nd round effects of inflation. Policy remained accommodative and would focus on withdrawal of accommodation. Domestic economy progressing was progressing as envision back in April.

- RBI Gov Das pre-rate decision comments: announced a withdrawal of accommodation as MPC was not bound by rule book on policy conduct. Inflation challenges were widespread and saw persistent inflationary pressures becoming more acute every day. Recent data suggested global economic recovery was losing pace but domestic economy was showing resilience.

- OPEC+ JTC panel said to see 2022 oil surplus rising by 600K bpd to 1.9M bpd.

Currencies/Fixed income

- USD steady ahead of the FOMC. The greenback has risen substantially in anticipation of an aggressive hike of 50bps with the USD Index just off recent 20-year highs. Rate divergence aid the USD sentiment as markets expect the Fed to aggressively front-load its tightening cycle.

- EUR/USD at 1.0525. German trads data highlighted the headwinds for the region with exports registering a sharp drop in showing the first hard evidence of the negative impact the Ukraine war.

- GBP/USD at 1.2525 by mid-session with focus on Thursday BOE decision.

Economic data

- (DE) Germany Mar Trade Balance: €9.7B v €10.0Be; Exports M/M: -3.3% v -2.1%e; Imports M/M: 3.4% v 0.7%e.

- (RU) Russia Apr Manufacturing PMI: 48.2 v 41.5e (3rd straight contraction).

- (SE) Sweden Apr PMI Services: 68.1 v 63.0e (23rd month of expansion); PMI Composite: 64.4 v 61.2 prior.

- (ES) Spain Apr Net Unemployment Change: -86.3K v -74.0Ke.

- (HU) Hungary Mar Retail Sales Y/Y: 16.2% v 11.6%e.

- (ES) Spain Apr Services PMI: 57.1 v 55.9e (3rd straight expansion); Composite PMI: 55.7 v 54.9e.

- (IT) Italy Apr Services PMI: 55.7 v 54.5e (3rd month of expansion); Composite PMI: 54.5 v 54.5e.

- (FR) France Apr Final PMI Services: 58.9 v 58.8 prelim (confirmed 13th straight expansion and highest reading since Jan 2018)); PMI Composite: 57.5 v 57.5 prelim.

- (DE) Germany Apr Final PMI Services: 57.6 v 57.9 prelim (confirmed 4th month of expansion); PMI Composite: 54.3 v 54.5 prelim.

- (EU) Euro Zone Apr Final PMI Services: 57.7 v 57.7 prelim (confirmed 13th month of expansion); PMI Composite: 55.8 v 55.8 prelim.

- (BR) Brazil Apr FIPE CPI (Sao Paulo) M/M: 1.6% v 1.6%e..

- (IS) Iceland Central Bank (Sedibanki) raised 7-Day Term Deposit Rate by 100 bps to 3.75%.

- (UK) Mar Net Consumer Credit: £1.3B v £1.3Be; Net Lending: £7.0B v £4.7Be.

- (UK) Mar Mortgage Approvals: 70.7K v 70.0Ke.

- (UK) Mar M4 Money Supply M/M: 0.1% v 1.0% prior; Y/Y: 5.4% v 6.0% prior; M4 (ex IOFCs) 3-Month Annualized: 5.7% v 2.3% prior.

- (EU) Euro Zone Mar Retail Sales M/M: -0.4% v -0.3%e; Y/Y: 0.8% v 1.8%e.

Fixed income issuance

- (IN) India sold total INR 330B vs. INR330B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK1.89B in 2024, 2031 and 2052 DGB bonds.

- (SE) Sweden sold SEK2.5B vs. SEK2.5B indicated in new 1.75% Nov 2033 Bonds; Avg Yield: 1.9552%, bid-to-cover: 2.87x.

Looking ahead

- (EU) European Finance Ministers (Eurogroup).

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

- 05:30 (DE) Germany to sell €1.5B in 0.0% Aug 2031 green Bunds.

- 05:30 (GR) Greece Debt Agency (PDMA) to sell 13-week Bills.

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

- 06:00 (EU) EU Commission to sell combined €2.5B in 3-month and 6-month bills.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (US) MBA Mortgage Applications w/e Apr 29th: No est v -8.3% prior.

- 07:00 (MX) Mexico Apr Consumer Confidence: 44.2e v 43.9 prior.

- 07:00 (MX) Mexico Mar Leading Indicators M/M: No est v -0.1 prior.

- 07:00 (MX) Mexico Apr Vehicle Domestic Sales: No est v 95.2K units prior.

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

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

- 08:15 (US) Apr ADP Employment Change: +383Ke v +455K prior.

- 08:30 (US) Mar Trade Balance: -$107.1Be v -$89.2B prior.

- 08:30 (CA) Canada Mar Int'l Merchandise Trade (CAD): 3.8Be v 2.7B prior.

- 08:30 Treasury's Quarterly Refunding announcement.

- 09:00 (SG) Singapore Apr Purchasing Managers Index (PMI): 50.0e v 50.1 prior; Electronics Sector Index: No est v 50.4 prior.

- 09:00 (BR) Brazil Apr Services PMI: No est v 58.1 prior; Composite PMI: No est v 56.6 prior.

- 09:45 (US) Final Apr Final Markit PMI Services: 54.7e v 54.7 prelim; PMI Composite: No est v 55.1prelim.

- 10:00 (US) Apr ISM Services Index: 58.5e v 58.3 prior.

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

- 14:00 (US) FOMC Interest Rate Decision: Expected to raise the Target Range by 50bps to 0.75 to 1.00% range; Expected to raise Interest on Reserve Balances Rate (IOER) by 50bps to 0.90%.

- 14:30 (US) Fed Chair Powell post rate decision press conference.

- 17:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise the Selic Rate Target by 100bps to 12.75%.

- 18:00 (NZ) New Zealand Government 9-Month Financial Statements.

- 20:01 (IE) Ireland Apr PMI Services: No est v 63.4 prior; PMI Composite: No est v 61.0 prior.

- 20:30 (MY) Malaysia Apr PMI Manufacturing: No est v 49.6 prior.

- 20:30 (HK) Hong Kong Apr PMI Manufacturing: No est v 42.0 prior.

- 20:30 (SG) Singapore Apr PMI (whole economy): No est v 52.9 prior.

- 21:00 (PH) Philippines Apr CPI Y/Y: 4.6%e v 4.0% prior.

- 21:30 (AU) Australia Mar Trade Balance: A$8.4Be v A$7.5B prior; Exports M/M: 3%e v 0% prior; Imports M/M: -5%e v +12% prior.

- 21:30 (AU) Australia Mar Building Approvals M/M: -12.0%e v +43.5% prior; Private Sector Houses M/M: No est v 16.5% prior.

- 21:45 (CN) China Apr Caixin PMI Services: 40.0e v 42.0 prior; PMI Composite: No est v 43.9 prior.

- 23:30 (TH) Thailand Apr CPI M/M: 0.6%e v 0.7% prior; Y/Y: 4.9%e v 5.7% prior; CPI Core Y/Y: 2.0%e v 2.0% prior.