Norway hikes rates and keeps a hawkish outlook; EU Leaders meet on Brexit

- Fed chief Powell signaled prolonged Fed pause citing global risks and muted inflation; announced updates to their balance sheet policy

- Norway Central bank raises its Deposit Rate (as expected) and maintained its forward guidance of another hike seen later this year

- SNB keeps policy unchanged as expected and again lowers its inflation outlook

- Various Far East Central banks keep policy steady (Indonesia, Philippines and Taiwan)

Asia:

-Australia Feb Employment saw its 7th straight month of growth but missed expectations: +4.6K v +15.0Ke; Unemployment Rate hits lowest level since June 2011 (4.9% v 5.0%e)

- New Zealand Q4 GDP Q/Q: 0.6% v 0.6%e; Y/Y: 2.3% v 2.5%e (annual pace matched slowest growth since 2015)

Europe:

- EU's Tusk confirmed receipt of letter from PM May; Short Brexit extension would be possible but extension was conditional on UK House of Commons approving the Brexit plan. Question remained on the duration of the Article 50 extension; June 30th extension proposed by PM May has its merits. At this time did not foresee extra EU leaders summit but did not exclude calling leaders back for an extra summit

- EU official stated that the letter from PM May today was not what EU bloc was expecting; letter came too late to make a full decision by Thursday's Leader Summit - UK official: govt may plan new 'meaningful vote' on Brexit deal for next week, suggesting Tues or Weds as potential dates

- PM May ruled out new general election during meeting just held with Brexiteer ERG group. UK would not leave EU on time on March 2th as previously expected but was not ready to delay Brexit any further than June 30th. Not leaving EU would be breach of public trust. To work night and day to get Tory and DUP party support

Americas:

- FOMC left interest rates unchanged between 2.25-2.50% (as expected) in an unanimous vote; saw no rate hikes this year and one in 2020 as economic growth slowed and inflation has declined. Balance sheet runoff taper to start in May and finish end of Sept

- Fed's Powell post rate decision press conference noted that US economy was strong and intended to use our policy to keep it there. Reiterated Fed would remain patient which meant there was no need to rush to judgment; might be some time before the outlook called for a policy change

- Brazil Central Bank (BCB) left the Selic Target Rate unchanged at 6.50% (as expected)

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.2% at 380.2, FTSE +0.3% at 7314, DAX -0.3% at 11570, CAC-40 +0.06% at 5,385.82, IBEX-35 -0.53% at 9,355.90, FTSE MIB +0.31% at 21,395.50, SMI -0.25% at 9,440.00, S&P 500 Futures -0.08%]

Market Focal Points/Key Themes: European Indices trade mixed this morning with the FTSE100 outperforming as Cable retreats below 1.32. The Dax continues to under perform following sharp losses seen yesterday. US Index futures trade little changed following the dovish hold by the FOMC yesterday. On the corporate front shares of Next trades lower after a slight miss in earnings, outlook was affirmed; IG Group declines on a decline in Q3 Revenues, while Koenig & Bauer, Basler, Wynstay and Renishaw are among other names declining on earnings. Game Digital, Enquest and Vienna Insurance among the names rising on earnings. In other news Stallergenes rises over 40% after its to be acquired by Ares Life Sciences for €730M; Wirecard declines on a report the COO was are of transaction in fraud investigation by Singapore. Looking ahead notable earners include Canagra Brands, Darden Restaurants, Lands End, GIII Apparel and Actuant among others.

 

Equities

- Consumer discretionary: Next [NXT.UK] -3.3% (earnings), Ted Baker [TED.UK] -2% (earnings)

- Consumer staples: Wynstay [WYN.UK] -22% (Profit warning)

- Materials: HeidelbergCement [HEI.DE] -1.5% (earnings)

- Financials: IG Group [IGG.UK] -7% (earnings)

- Healthcare: Stallergenes Greer [STAGR.FR] +40% (earnings; to be acquired)

- Industrials: Skanska [SKAB.CH] -3% (profit warning), Koenig & Bauer [SKB.DE] -5% (earnings)

- Technology: Renishaw [RSW.UK] -6% (trading update; outlook cut), Basler [BSL.DE] -12% (Guidance)

 

Speakers

- SNB Policy Statement reiterated the Swiss franc was highly valued, and the situation on the FX market was still fragile. Reiterated prepared to intervene in markets if needed. Measures kept its attractiveness of Swiss Franc investments low and reduce upward pressure on the currency. Data pointed to moderately positive growth momentum. New baseline scenario for global economy was a small downward revision to growth outlook for advance economies in H1 of 2019 . Saw risks in residential investment property market

- Norway Central Bank (Norges) Policy Statement noted that the decision to raise rates by 25bps was unanimous and reiterated view that next rate hike was seen in H2 2019. Upturn in domestic economy might prove more pronounced than envisioned; price and wage inflation might be higher than anticipated

- Norway Central Bank (Norges) Gov Olsen post rate decision press conference noted that the risks and outlook pointed to a gradual rate rise with new path forecasting a rate of 1.75% by 2022. The prospects that economic upswing would continue in country but growth among trading partners have slowed . Reiterated that SEK currency (Krona) weaker than expected

- ECB Economic Bulletin noted that the March decisions were aimed to lift inflation towards target. ECB data point to sizable moderation in growth momentum and underlying Euro-Area inflation continued to be muted

- UK Foreign Min Hunt: Expressing extreme frustration with Brexit process; Choice is Brexit deal or extreme unpredictability. Options were limited if deal did not pass next week. PM May would not accept a Brexit delay beyond Jun 30th

- German Chancellor Merkel stated in her Parliament ahead of the EU Leader Summit that positive discussion on Brexit delay was possible

- Indonesia Central Bank Policy Statement noted that interest rates were consistent with efforts to reduce current account deficit and maintain asset attractiveness for foreign investors. It would take more accomodative policy to support consumption and increase liquidity through monetary operation. Indonesia raised its liquidity guidance from 80-92% to 84-94%

- Indonesia Central Bank Gov Warjiyo commented ahead of rate decision that global economy was slowing down; monetary policy in advance economies was not as tight as initially thought

- Philippines Central Bank Policy Statement noted that the prevailing monetary settings were appropriate and it would ensure that policy stance was consistent with mandate. CPI was manageable and saw a downward trajectory continuing in both 2019 and 2020. Inflation to settle within the 2-4% target range in both 2019 and 2020 with outlook tilted to the downside in 2020

- Philippines Central Bank Dep Gov Guinigundo: RRR cut is a live issue, always on table. Board agreed of need to get timing right

- Taiwan Central Bank (CBC) Policy Statement noted that the decision to keep policy steady was unanimous and would continue with its accommodative monetary policy. Inflation outlook remained stable and growth mild. To watch for impact of economic slowdown from China

- China Ministry of Commerce (MOFCOM) stated that exports had good momentum in March and noted that spring festivals was a factor in Jan and Feb trade data (**Reminder: On Mar 7th China trade balance saw its smallest surplus in a year ($4.1B v $26.2Be) with both exports and imports registering their largest declines since 2016)

 

Currencies/Fixed Income

- Fed chief Powell reaffirmed its dovish policy stance; signaled prolonged Fed pause citing global risks and muted inflation. The USD was softer on Wednesday after the decision as 10-year Treasury yield hit its lowest level since January 2018

- The greenback fought its way back during the EU session to regain about 0.2% of its post-Fed losses

- GBP was softer towards 1-week lows as no-deal risk flared up again after PM May confirmed that she sought a Bexit delay until end of Jun so that her Parliament could vote for a third time on her Brexit deal. PM May was heading to Brussels later today to try to agree on a Brexit extension with EU Leaders. EUR/NOK was broadly lower after Norway Central bank raised its Deposit Rate (as expected) and maintained its forward guidance of another hike seen later this year. Cross testing below 9.5950 as the Norges was more hawkish than expected its if rate path

 

Economic Data

- (ID) Indonesia Central Bank (BI) left its 7-DayReverse Repo Rate unchanged at 6.00% (as expected)

- (NL) Netherlands Mar Consumer Confidence Index: -4 v -2 prior

- (NL) Netherlands Feb Unemployment Rate: 3.4% v 3.6% prior

- (NL) Netherlands Jan Consumer Spending Y/Y: 0.9% v 2.5% prior

- (NL) Netherlands Feb House Price Index M/: -0.1% v +1.8% prior; Y/Y: 7.5% v 8.7% prior

- (DK) Denmark Mar Consumer Confidence Indicator: 3.8 v 3.5e

- 04:00 (CH) Swiss Feb M3 Money Supply Y/Y: No est v 3.4% prior

- (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 4.75% (as expected)

- (TW) Taiwan Feb M2 money Supply Y/Y: 2.9% v 3.1% prior; M1 money Supply Y/Y: 6.0% v 6.6% prior

- (TW) Taiwan Central Bank (CBC) left its Benchmark Interest Rate unchanged at 1.375% (as expected)

- (CH) SNB Interest Rate Decision: left its Sight Deposit Interest Rate unchanged at -0.75% (as expected) maintained its 3-Month Libor between -1.25% to -0.25% range

- (HK) Hong Kong Feb CPI Composite Y/Y: 2.1% v 2.0%e

- (NO) Norway Central Bank (Norges) raised Deposit Rates by 25bps to 1.00% (as expected); maintained forward guidance of gradual rate hikes

- (PL) Poland Feb Retail Sales M/M: -3.1% v -2.9%e; Y/Y: 6.5% v 7.0%e; Real Retail Sales Y/Y: 5.6% v 5.4%e

- (PL) Poland Feb Construction Output Y/Y: 15.1% v 4.7%e

- (ES) Spain Jan Trade Balance: -€4.5B v -€3.3B prior

- (UK) Feb Public Finances (PSNCR): +£0.6B v -£25.4B prior; Net Borrowing: -£0.7B v -£0.8Be; Central Government NCR: -£1.7B v -£25.8B prior; PSNB (ex-Banking Groups): £0.2B v £0.4

- (UK) Feb Retail Sales (Ex Auto/Fuel) M/M: +0.% v -0.4%e ; Y/Y: % v 3.5%e

- (UK) Feb Retail Sales (Includes Auto/Fuel) M/M: % v -0.4%e; Y/Y: % v 3.3%e

- (SL) Sri Lanka Feb National CPI (NCPI) Y/Y: 2.4% v 1.2% prior

**Fixed Income Issuance**

- (ES) Spain Debt Agency (Tesoro) sold total €3.48B vs. €3.0-4.0B indicated range in 2021, 2029 and 2040 bonds

- Sold €1.64B in 0.05% Oct 2021 SPGB; Avg yield: -0.182% v -0.124% prior, Bid-to-cover: 2.06x v 3.25x prior

- Sold €1.23B in 1.45% Apr 2029 SPGB; Avg Yield: 1.100% v 1.222% prior, bid-to-cover: 1.55x v 1.19x prior

- Sold €610M in 4.9% July 2040 SPGB; Avg yield: 1.947% v 2.167% prior, bid-to-cover: 1.80x v 1.26x prior

- (FR) France Debt Agency (AFT) sold total €8.991B v €8.0-9.0B indicated range in 2022, 2024 and 2025 bonds

- Sold €1.997B in 0.00% Feb 2022 Oat; Avg Yield: -0.38% v -0.34% prior; Bid-to-cover: 5.14x v 2.67x prior (Feb 21st 2019)

- Sold €2.339B in 2.25% May 2022 Oat; Avg Yield: -0.38% v -0.29% prior; Bid-to-cover: 2.87x v 2.95x prior (Feb 21st 2019)

- Sold €2.996B in 0.00% Mar 2024 Oat; Avg Yield: -0.17% v -0.09% prior; Bid-to-cover: 2.48x v 2.50x prior (Feb 21st 2019)

- Sold €1.659B in 1.00% Nov 2025 Oat; Avg Yield: -0.02% v +0.39% prior; Bid-to-cover: 2.88x v 1.81x prior (Oct 18th 2018)

- (SE) Sweden sold total SEK500M vs. SEK500M indicated in 2027 and 2032 I/L Bonds

 

Looking Ahead

- (IT) China President Xi Jinping is due to visit Italy and meet with PM Conte on the Belt and Road initiative.

- (IT) Italy Debt Agency (Tesoro) announces details for upcoming CTA and BTPei auction for Tuesday, Mar 26th

- (UR) Ukraine Q4 Final GDP Q/Q: No est v 1.1% prelim; Y/Y: 3.4%e v 3.4% prelim

- (AR) Argentina Mar Consumer Confidence Index: No est v 36.04 prior

- 05:50 (FR) France Debt Agency (AFT) to sell €1.5-2.5B in new 0.10% Mar 2029 Inflation linked bond (Oatei

- 06:30 (PL) Poland switch auction

- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills; Avg Yield: % v 0.37% prior; bid-to-cover: x v 3.44x prior (Mar 7th 2019)

- 07:45 (US) Daily Libor Fixing

- 08:00 (UK) Bank of England Bank (BOE) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.75%

- 08:30 (US) Mar Philadelphia Fed Business Outlook: +4.8e v -4.1 prior

- 08:30 (US) Initial Jobless Claims: 225Ke v 229K prior; Continuing Claims: 1.77Me v 1.776M prior

- 08:30 (CA) Canada Jan Wholesale Trade Sales M/M: 0.6%e v 0.3% prior

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

- 09:00 (PL) Poland Central Bank (NBP) Mar Minutes

- 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 15th: No est v $479.3B prior

- 09:00 (UK) Baltic Dry Bulk Index

- 09:30 (BR) Brazil Feb Tax Collections (BRL): 109.5Be v 160.4B prior

- 10:00 (US) Feb Leading Index: +0.1%e v -0.1% prior

- 10:00 (MX) Mexico Q4 Aggregate Supply and Demand: 2.5%e v 3.6% prior

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

- 11:00 (EU) Euro Zone Mar Advance Consumer Confidence: -7.1e v -7.4 prior

- 11:00 (US) Treasury announcement for upcoming 2-year, 5-year and 7-year issuance

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

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

- 15:00 (AR) Argentina Q4 GDP Q/Q: No est v -0.7% prior; Y/Y: -6.4%e v -3.5% prior

- 15:00 (AR) Argentina Q4 Unemployment Rate: No est v 9.0% prior