- Major European PMI data move off record low level that were registered in April due to the lockdown restriction from the coronavirus outbreak

- President Trump escalated his rhetoric against China, heightening trade war fears and limiting appetite for risk

- Markets continue to gauge the impact of the coronavirus on economies

- Increasing speculation about negative rates in the UK


- Australia May Preliminary PMI Manufacturing registered its 3rd consecutive month of contraction and a record low ( 42.8 v 44.1 prior) PMI Composite: No est v # prior

- Japan May Preliminary PMI Manufacturing registered its 13th month of contraction and the lowest reading since 2009 (38.4 v 41.9 prior)

- Japan Apr Trade Balance registered a larger deficit as exports decline by most since 2009 (: -¥930.4B v -¥503.1Be; Exports Y/Y: -21.9% v -22.2%e; Imports Y/Y: -7.2% v -13.2%e

- RBA Gov Lowe: Still prepared to increase bond buying again if required. No change on thoughts to negative interest rates as they were "extraordinarily" unlikely


- Total global cases 4,996,634 (+2.0%); Total deaths: 328.1K (+1.5%)

- Japan lifted the state of emergency in Osaka, Kyoto Hyogo; state of emergency remains in Tokyo


- President Trump: China is on a massive disinformation campaign; Reiterates China could have stopped coronavirus, but did not

- US Senate passed the Holding Foreign Companies Accountable Act by unanimous consent; the bill gives regulators the ability to block foreign companies (including Chinese) from US exchanges, if certain conditions are not met. Bill that could make it harder for some Chinese companies to list their shares unless they follow standards for U.S. audits and regulations




Indices [Stoxx600 -0.8% at 340.2, FTSE -0.9% at 6011, DAX -1.3% at 11075, CAC-40 -1.0% at 4454, IBEX-35 -0.3% at 6667, FTSE MIB -0.8% at 17,076, SMI closed, S&P 500 Futures -0.7%]

Market Focal Points/Key Themes: European indices down across the board and remained under pressure as the session wore on; Swiss, Scandinavian markets closed for a holiday; underperforming sectors lead by consumer discretionary; telecom and healthcare better performing sectors; reportedly Italy to invest €15-20B in infrastructure this year; pcoming earnings expected in the US session include Hewlett Packard, NVIDIA and Agilent Technologies.



- Consumer discretionary: Lufthansa LHA.DE +4.8% (Confirms advanced talks with Economic Stabilization Fund and aid of up to €9.0B (includes €3.0B KFW loan), Pets at Home PETS.UK, -10% (Earnings), Whitebread WTB.UK, -11% (Earnings), Easyjet EZJ.UK, +5.5% (flight resumptions June 15th), Intertek ITRK.UK, +6.2% (Trading update)

-Industrials: OHL OHL.ES +46% (Grupo Villar Mir sell stake (Earnings)

- Healthcare: Astrazeneca AZN.UK -0.9%

- Telecom: Altice Europe [ATC.NL] -16% (Earnings)



- ECB's Panetta (Italy) noted that the Franco-German crisis recovery fund proposal was a considerable step forward but funds could not be linked to strict rules

- Italy Infrastructure Min De Micheli stated that saw €15-20B in projects being planned over the coming year

- Japan PM Abe: Could life the State of Emergency for Tokyo on Monday, May 25th if current trend continues

- China Foreign Ministry spokesperson reiterated Govt stance of being firmly opposed to US arm sales to Taiwan, Urged US to prevent any damage to US-China relations and uphold regional peace and stability

- China National People Congress (NPC) said to propose a national security law for Hong Kong


Currencies/Fixed Income

- USD a tad firmer against the major pairs as overall risk sentiment was hurt by rising tensions between US and China. Overall participation was lackluster as a public holiday in several European countries took effect.

- Major European PMI data for May rebounded from record low levels giving some hope that the global economy probably reached the bottom in April, providing some hope that the economy was now slowly on the road to recovery

- GBP/USD remained facing some headwinds as markets continue to contemplate the prospect of negative interest rates in the UK. BOE Gov Bailey said in testimony to MPs on Thursday that it would be "foolish" to rule them out. GBP off its worst levels of the session after may Preliminary PMI data beat expectations and moved off the prior record low level. GBP/USD at 1.2215 just ahead of mid-session.

- EUR/USD staying below the 1.10 level for the time being despite major European PMI data improving from record low readings. Dealers noted that the big picture remained consistent that economic activity in the region would remain very depressed

- Italy's new 'BTP Italia' attracted the greatest interest ever from retail investors. Three days of retail subscriptions for Italy's May 2025 BTP Italia bond amounted to €14B, which may rise to around €20B once institutional investors submitted their demand


Economic Data

- (FR) France May Preliminary PMI Manufacturing: 40.3 v 36.0e (4th straight contraction); Services PMI: 29.4 v 28.0e ; Composite PMI: 30.5 v 32.4e

- (DE) Germany May Preliminary PMI Manufacturing: 39.4e (17th month of contraction); Services PMI: 31.4 v 26.0e ; Composite PMI: 31.4 v 33.1e

- (EU) Euro Zone May Preliminary PMI Manufacturing: 39.5 v 38.0e (16th straight contraction); Services PMI: 28.7 v 25.0e; Composite PMI: 30.5 v 27.0e

- (PL) Poland Apr Sold Industrial Output M/M: -25.5% v -11.2%e; Y/Y:-24.6% v -12.0%e

- (PL) Poland Apr PPI M/M: -0.6% v -0.3%e; Y/Y: -1.4% v -1.3%e

- (UK) May Preliminary PMI Manufacturing: 40.6 v 37.2e (3rd straight contraction); Services PMI: 27.8 v 24.0e; Composite PMI: 28.9 v 25.7e

- (HK) Hong Kong Apr CPI Composite Y/Y: 1.9% v 1.8%e


Fixed Income Issuance

- (EG) Egypt to sell USD-denominated 4-year, 12-year amd 30-year bonds

- (ES) Spain Debt Agency (Tesoro) sold total €6.937B vs. €6.0-7.0B indicated range in 2023, 2025, 2030 and 2066 bonds

- Sold €1.311B in 0.35% July 2023 SPGB; Avg yield: -0.160% v +0.142% prior; Bid-to-cover: 3.79x v 2.13x prior (Mar 7th 2019)

- Sold €1.746B in 0.0% Jan 2025 SGPB bonds; Avg Yield: 0.053% v 0.254% prior; Bid-to-cover: 1.82x v 1.83x prior (May 7th 2020)

- Sold €2.532B in 1.25% Oct 2030 SPGB; Avg Yield: 0.711%; Bid-to-cover: 1.29x (no history)

- Sold €1.348B in 3.45% July 2066 SPGB; Yield: 1.691% v 1.622% prior; Bid-to-cover: 1.11x v 1.24x prior

- (UK) DMO sold £1.25B in 0.125% 2028 Inflation-linked Gilts (UKTei); Real Yield: -2.509% v -2.509% prior; Bid-to-cover: 2.77x v 3.38x prior

- (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month bills; Avg Yield: -0.430% v -0.250% prior; Bid-to-cover: 4.95x v 3.1x prior


Looking Ahead

- 05:30 (SL) Sri Lanka Apr National CPI (NCPI) Y/Y: No est v 7.0% prior

- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds

- 05:30 (PL) Poland to sell Bonds

- 06:00 (UK) May CBI Industrial Trends Total Orders: -50e v -56 prior; Selling Prices: No est v -11 prior

- 06:00 (PT) Portugal Mar Current Account Balance: No est v -€0.3B prior

- 06:00 (PT) Portugal Q1 labour Costs: No est v 4.0% prior

- 06:00 (RO) Romania to sell RON500M in 4% 2022 Bonds

- 06:30 (UK) DMO to sell £2.00B in 4.25% Jun 2032 Gilts

- 06:45 (US) Daily Libor Fixing

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 50bps to 8.25%

- 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)

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

- 08:30 (US) May Philadelphia Fed Business Outlook: -40.0e v -56.6 prior

- 08:30 (US) Initial Jobless Claims: 2.400Me v 2.981M prior; Continuing Claims: 23.50Me v 22.833M prior

- 08:30 (CA) ADP Releases Payroll Data

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

- 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)

- 09:00 (RU) Russia Gold and Forex Reserve w/e May 15th: No est v $562.4B prior

- 09:00 (RU) Russia Apr Industrial Production Y/Y: -10.0%e v +0.3% prior

- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest Rate by 50bps to 3.75%

- 09:30 (BR) Brazil Apr Tax Collections (BRL): 115.0Be v 109.7B prior

- 09:45 (US) May Markit Preliminary PMI Manufacturing: 38.5e v 36.1 prior; Services PMI: 32.0e v 26.7 prior Composite PMI: No est v 27.1 prior

- 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)

- 10:00 (US) Apr Leading Index: -5.7%e v -6.7% prior

- 10:00 (US) Apr Existing Home Sales: 4.25Me v 5.27M prior

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 11:30 (US) Treasury to sell 4-week and 8-week Bills

- 13:00 (US) Treasury to sell 10-Year TIPS

- (AR) Argentina May Consumer Confidence Index: No est v 39.3 prior

- 18:45 (NZ) New Zealand Q1Retail Sales Q/Q: -1.5%e v +0.7% prior

- 19:30 (JP) Japan Apr National CPI Y/Y: 0.2%e v 0.4% prior; CPI Ex-fresh food (core) Y/Y: -0.1%e v +0.4% prior; CPI Ex-fresh food/energy (core-core) Y/Y: 0.2%e v 0.6% prior

- 23:30 (TH) Thailand Apr Customs Trade Balance: -0.3Be v $1.6B prior; Customs Exports Y/Y: -2.0%e v 4.2% prior; Customs Imports Y/Y: -4.6%e v 7.3% prior

- 23:30 (JP) Japan to sell 3-Month Bills

- (JP) BOJ holds unsch

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