PM May in key meetings ahead of tomorrow’s summit that will decide on the UK extension request

Notes/Observations

Asia:

- PM May travelling to meet Merkel and Macron today ahead of tomorrow's summit that will decide on the UK extension request

- USTR released a list of EU goods which will be subjected to additional tariffs if the EU continued to provide subsidies to Airbus; EU said to be planning to retaliate

- World Bank/IMF Spring Meetings kicking off later today

- Focus on key events for Wednesday with ECB meeting, the emergency EU Council meeting to discuss the Brexit extension, the FOMC minutes and US CPI data

Asia:

- South Korea President Moon and US President Trump expected to produce a "meaningful" outcome on North Korea's denuclearization process when they hold talks in Washington later this week

- China PBoC Open Market Operation (OMO) skipped for 14th consecutive session:

Europe:

- EU said to be settling on the idea of offering an extension to Britain despite the lack of progress at home. EU would set a high price for delaying Brexit including UK to give up rights in future EU budget and trade talks; Would force UK into no deal Brexit if it sought to cancel election to European parliament May 23rd. PM May currently seeking an extension to June 30th, EU might insist on longer extension to March 31, 2020. UK could seek to cancel elections to the European parliament if Tories suffer heavy defeats in local elections on May 2nd

- UK PM May to meet German Chancellor Merkel and France President macron on Tuesday, Apr 9th. She would be told today that the UK would lose its voice in future EU budget talks and trade deals as the price to pay for another Brexit delay

- UK Govt Spokesperson: Ministers to resume Brexit talks with Labour party Tuesday

- PM May said to be considering giving MPs a vote on a 2nd Referendum in an attempt to break the deadlock with Labour over Brexit talks. Tory Chief Whip said to be confident the govt has the numbers to defeat a bid by Labour to hold a 2nd Referendum

Americas:

- US Trade Representative (USTR) proposed tariffs in response to EU subsidies for Airbus deemed illegal by the WTO. USTR estimated the harm from the EU subsidies of $11B/year. Proposed tariffs include new passenger helicopters, various cheeses and wines, ski-suits and certain motorcycles.

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.25% at 388.48, FTSE -0.08% at 7,445.65, DAX +0.08% at 11,974.36, CAC-40 +0.21% at 5,483.17, IBEX-35 +0.40% at 9,480.95, FTSE MIB +0.48% at 21,876.50, SMI +0.58% at 9,603.10, S&P 500 Futures -0.06%]

Market Focal Points/Key Themes: European Indices trades mostly higher, trading towards the upper end of today's range with he the FTSE100 trading lower then recently higher in Cable volatility on reports of a Brexit backstop compromise from German Chancellor Merkel, which was then denied. On the corporate front shares of Societe Generale trades over 3% higher after the company confirms a potential cut of 1.6K jobs; Finish traded DNA Oyj trades over 7% higher following Telenors majority stake acquisition at €20.50/shr. On the earnings front City Pub Group gains on a rise in profits and Revenues with Amerisur Resources also gaining on earnings. Meanwhile Stride Gaming trades lower after warning that it does not expect to recover H1 Rev shortfall for the full year, with Gooch & Housego also declining on a trading update. In other news Novartis shares fall ~10% after the completion of the spin-off of its Alcon unit, with Alcon trading 5% following its IPO; WPP also gains on reports EQT could also be looking into it's Kantar unit, while Airbus declines on talk that the US may impose tariff counter measures to counter EU aircraft subsidies. Looking ahead notable earners include Lindsay Manufacturing and Shaw Communication.

 

Equities

- Consumer discretionary: Givaudan [GIVN.CH] -1% (earnings), The City Pub [CPC.UK] +5% (earnings), WPP [WPP.UK] +1.% (divestment spe5culation)

- Financials: Societe Generale [GLE.FR] +0.5% (job cuts), Industrivarden [INDUA.SE] -0.5% (earnings)

- Healthcare: Novartis [NOVN.CH] -10% (completes Alcon spin-off), Poxel [POXEL.FR] % (positive study update)

- Industrials: Airbus [AIR.FR] -2%, Dassault Aviation [AM.FR] -1% (US Trade Representative (USTR) proposes tariffs to counter EU aircraft subsidies)

- Technology: Stride Gaming [STR.UK] -15% (trading update), Gooch & Housego [GHH.UK] -4% (trading update)

- Telecom: DNA [DNA.FI] +8%, Telenor [TEL.NO] -1% (DNA's stake sold to Telenor)

 

Speakers

- EU Brexit Negotiator Barnier reiterated stance that an orderly withdrawal of UK from the EU remained the objective, reaffirmed withdrawal deal would not be reopened. EU needed a roadmap for Brexit from PM May

- UK Brexiteer lawmaker said to have been told that German Chancellor Merkel was willing to put a five year time limit on the Northern Ireland backstop (**Note: such a case would make it difficult for Parliament to reject May's Brexit deal but would likely need some extra assurances)

- Germany said to deny press speculation on Chancellor Merkel was considering a 5-year time limit on the Irish backstop

- ECB Q1 Lending Survey: Credit standards for corporate loans stable in quarter

- Italy Fin Min Tria: Domestic growth was positive in the short-term but risks remained. Reiterated that Italy's debt needed to be reduce but was not a threat to other countries. Needed to reduce taxes and spending in 2020

- UK Justice Min Gauke: PM May had made it clear she did not want a 2nd referendum, topic not mentioned in meetings. PM May to make the case to EU that extra time would be used to find a constructive way forward

- Italy said to potentially delay new economic forecasts into week of Apr 15th due to ongoing differences between coalition partners

- Italy official refuted press reports that economic outlook would be delayed and was set for cabinet approval later today

- Ireland Foreign Min Coveney reiterated EU stance that need clarity on how Britain would use the extra time for Brexit; a real plan would be required

- EU and China officials said to be issuing a joint statement after achieving an 11th hour accord; to show a united front against President Trump on trade. EU and China settled splits on trade and investment and paves the way for a joint statement

- EU said to be preparing its own possible retaliation over Boeing aid

- Russia Fin Min Siluanov: Russia 2019 GDP growth may be above 1.3%

- Russia Central Bank 1st Dep Gov Yudaeva: Not seeing any significant inflationary risks

- China Foreign Ministry Spokesman Lu Kang reiterated China, U.S. made substantial progress in latest trade talks

 

Currencies/Fixed Income

- FX markets continued to remain quite subdues with focus on key events for Wednesday with ECB meeting, the emergency EU Council meeting to discuss the Brexit extension, the FOMC minutes and US CPI data

- GBP/USD was initially steady around the 1.3075 area as PM May prepared to travel to meet Merkel and Macron later today ahead of tomorrow's summit that would decide on the UK extension request. However, the GBP strengthened to test above 1.31 after reports circulated that German Chancellor Merkel was willing to put a five year time limit on the Northern Ireland backstop. Dealers noted that such a limit would make it difficult for UK parliament to reject May's Brexit deal . The speculation was refuted by a German official

- EUR/USD drifting higher over the past 24 hours but well contained in the 6-month trading range. Piar last at 1.1275 just ahead of the NY morning.

 

Economic Data

- (NL) Netherlands Feb Manufacturing Production M/M: 0.1% v 2.8% prior; Y/Y: 0.5% v 0.1% prior; Industrial Sales Y/Y: -2.0% v -7.8% prior

- (CH) Swiss Mar Unemployment Rate: 2.5% v 2.5%e; Unemployment Rate (Seasonally adj): 2.4% v 2.4%e

- (DK) Denmark Feb Current Account (DKK): B v 13.0B prior; Trade Balance: B v 6.9B prior

- (NO) Norway Feb GDP M/M: -0.4% v +0.2% prior; GDP Mainland M/M: -0.3% v +0.1%e

- (FI) Finland Feb Preliminary Trade Balance: -€0.1B v +€0.5B prior

- (HU) Hungary Mar CPI M/M: 0.7% v 0.5%e; Y/Y: 3.7% v 3.5%e

- (IT) Italy Feb Retail Sales M/M: +0.1% v -0.2%e; Y/Y: 0.9% v 1.2% prior

- (CZ) Czech Mar International Reserves: $142.9B v $143.5B prior

- (TW) Taiwan Mar CPI Y/Y: 0.6% v 0.6%e; CPI Core Y/Y: 0.5% v 0.5%e; WPI Y/Y: 1.2% v 0.7% prior

- (GR) Greece Feb Industrial Production Y/Y: 2.3% v 4.2% prior

**Fixed Income Issuance**

- (ES) Spain Debt Agency (Tesoro) sold total €1.273B vs. €1.5-2.0B indicated in 3-month and 6-month bills

- (ID) Indonesia sold total IDR15.72B vs. IDR15.0T target in 3-month,12-months; 5-year,10-year,15-year and 20-year Bonds

- (AT) Austria Debt Agency (AFFA) sold total €B vs. €1.15B indicated in 2023 and 2029 RAGBs

- (ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2023, 2035 and 2044 bonds

 

Looking Ahead

- (PT) Bank of Portugal Feb ECB financing to Portuguese Banks: No est v €18.7B prior

- (UR) Ukraine Mar CPI M/M: No est v 0.5% prior; Y/Y: No est v 8.8% prior

- (SI) Slovenia Debt Agency to sell 3-month, 6-month and 18-month Bills

- (EU) China/EU summit in Brussels

- (UK) PM May to meet German Chancellor Merkel in Berlin

- 05:30 (UK) Weekly John Lewis LFL Sales data

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)

- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills

- 05:30 (DE) Germany to sell €750M in 0.5% Apr 2030 I/L Bonds

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month Bills

- 05:30 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)

- 06:00 (US) Mar NFIB Small Business Optimism Index: 102.0e v 101.7 prior

- 06:00 (PT) Portugal Feb Trade Balance: No est v -€2.0B prior

- 06:45 (US) Daily Libor Fixing

- 07:45 (US) Weekly Chain Store Sales data

- 08:00 (RO) Romania Central Bank Apr Minutes

- 08:00 (BR) Brazil Feb Retail Sales M/M: -0.2%e v +0.4% prior; Y/Y: 2.9%e v 1.9% prior

- 08:00 (BR) Brazil Feb Broad Retail Sales M/M: -0.3%e v +1.0% prior; Y/Y: 7.6%e v 3.5% prior

- 08:00 (UK) Baltic Bulk Index

- 08:00 (RU) Russia announces upcoming OFZ Bond issuance

- 08:05 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson

- 08:55 (US) Weekly Redbook Retail Sales data

- 09:00 IMF updates its World Economic Outlook (WEO)

- 09:00 (MX) Mexico Mar CPI M/M: 0.4%e v 0.0% prior; Y/Y: 4.0%e v 3.9% prior; CPI Core M/M: 0.3%e v 0.4% prior

- 09:00 (RU) Russia Q1 Preliminary Current Account balance: $31.0Be v $38.4B prior

- 09:00 (EU) Weekly ECB Forex Reserves

- 10:00 (US) Feb JOLTS Job Openings: 7.566Me v 7.581M prior

- 10:00 (MX) Mexico weekly International Reserve data

- 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE)

- 13:00 (US) Treasury to sell 3-Year Notes

- 16:30 (US) Weekly API Oil Inventory data

- 18:45 (US) Fed's Clarida (hawk, voter) at event in Minneapolis