Quiet start to busy week

Notes/Observations

- Market looking towards the phased end to lockdowns but concerns linger over a potential 2nd wave of outbreaks

- Oil continued its soft footing over continued concerns over demand

Asia:

- New Zealand PM Ardern stated that the country to move out of lockdown in 1-week time (Apr 27th)

- Japan Govt said to revise its stimulus package to ¥117.1T from ¥108.2T, Extra Budget revised to ¥25.6T from ¥16.8T. To raise issuance of JGBs by more than ¥5T to ¥152-153T with the extra bond sales to fund stimulus

- China lowered its 1-Year Loan Prime Rate (LPR) by 15bps to 3.85% and 5-Year LPR by 10bps to 4.65%

Coronavirus:

- Global cases: Total cases 2,404,071 (+11.4% from Friday); Total deaths: 165.2K (+14.6% from Friday)

- France govt said to unveil end-of-lockdown plans within two weeks

- UK Govt Cabinet member Gove: Not thinking of easing lockdown measures yet

Europe:

- ECB said to want the euro zone bad bank to 'clean up' non-performing loans (NPLs). Plan said to deal with debts left over from 2008 great financial crisis as ECB officials are worried Covid-19 would trigger another rise in bad loans. Some opposition said to come from the EU Commission on the topic

- Canadian ratings agency DBRS affirms France sovereign rating at AAA; revises trend to Negative from Stable

Americas:

- Treasury Sec Munchin: making a lot of progress on negotiating next lot of SBA loans

- US Treasury Dept confirmed 90-day deferral of certain tariff payments, move aimed at providing relief to US companies

- President Trump stated that he was not happy with China; there should be consequences if it was knowingly responsible for Covid-19 outbreak; the question was whether it was a mistake that got out of control or whether they did this deliberately

- Fed to purchase $15B (prior week was $30B) in Treasury securities per day from April 20th through the 24th

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.15% at 333.98, FTSE +0.29% at 5,803.63, DAX +0.19% at 10,646.29, CAC-40 -0.13% at 4,492.93, IBEX-35 -0.94% at 6,811.00, FTSE MIB +0.03% at 17,060.50, SMI +0.72% at 9,681.86, S&P 500 Futures -0.69%]

Market Focal Points/Key Themes: European indices open generally higher but later declined as the session progressed; better performing sectors include financials; materials and energy sectors under pressure, following further weakness in crude prices; EU Economy Chief said up to €1.5T in aid might be necessary; major European countries issue lockdown easing plans, with UK notable exception; upcoming earnings expected in the US session include Ally Financial, Halliburton and IBM.

Equities

- Consumer discretionary:Faurecia [EO.FR] +1% (earnings), Fnac [FNAC.FR] +8% (earnings), Premier Foods [PFD.UK] +18% (trading update)

- Healthcare: Koninklijke Philips [PHIA.NL] +5% (earnings), Midatech [MTPH.UK] -15% (appoints financial advisers)

- Industrials: Ceconomy [CEC.DE] -1.5% (earnings)

Speakers

- ECB SSM chief Enria: after crisis, ECB will decide on a bank-by-bank basis on to return to the normal capital and liquidity levels

- BOE's Haldane (chief economist): Govt and BOE coordination was defining the response but it could prevent a sharp downturn in the shortrun

- BOE Dep Gov Broadbent: Coronavrus impact is very, very material; it is hitting economic supply chain. The assumption of a 3-month lockdown seemed reasonable. BOE i=was buying debt to meet CPI target and NOT to fund the govt

- Italy PM Conte: Full firepower of the European Union was needed; reiterated stance for joint issuance of bonds by EU (**Reminder: On Thursday, Apr 23rd EU leaders to discuss coronavirus recovery package via tele-conference)

-EU Commissioner Gentiloni (Italy) reiterated stance EU budget was the best way to fund rebuilding of the economy aid worth €1.5T could be necessary to tackle coronavirus crisis

- Spain govt said to propose €1.5T virus fund for Europe

- Bank of Spain (BOS) updated economic forecasts which its 2020 GDP outlook to range between -12.4% to -6.8%

- Czech Central Banker Michl: To propose a 50bps rate cut from the current 1.00% level

- Japan Economic Ministry formally released details of economic package. FY20/21 bond issuance to be ¥152.8T and complied ¥25.7T in extra budget for stimulus measures (as speculated). To spend ¥12.9T on cash handouts to households

- Japan govt said to increase its FY20/21 JGB issuance by JPY5.8T to fund stimulus. To increase issuance of 6-month bills by ¥3.1Y and increase issuance in 1-year, 2-year and 5-year JGB bonds by ¥2.7T (**Reminder: Earlier reports circulated that Japan Govt draft of stimulus bill would raise issuance of JGBs by more than ¥5T to ¥152-153T)

- China Foreign Ministry spokesperson Geng Shuang: China is a victim of virus, not a culprit. Reiterated stance that govt had been acting in a transparent and responsible manner

Currencies/Fixed Income

- USD began the session slightly firmer aided by Friday;s FED announcement that it slowed the pace of bond purchases under its quantitative-easing program with the pace in half from $30B in the week. However, the greenback saw the bulk of its gains evaporate by mid-session.

- EUR/USD higher by 0.2% as the pair tried to approach the 1.09 level. Dealer saw the pair likely as round bound until the release of upcoming Euro Zone PMI data mid-week and any concrete details by EU leaders on how the fund the regions's recovery from the coronavirus crisis

- USD/JPY higher by 0.1% at 107.65

Economic Data

- (DE) Germany Mar PPI M/M: -0.8% v -0.7%e; Y/Y: -0.8% v -0.8%e

- (TW) Taiwan Mar Export Orders Y/Y: +4.3% v -7.8%e

- (EU) Euro Zone Feb Current Account: €40.2B v €31.8B prior

- (CH) Swiss weekly Total Sight Deposits (CHF): 637.2B v 634.1B prior; Domestic Sight Deposits: 560.0B v 552.0B prior

- (PL) Poland Mar Employment M/M: -0.5% v 0.0%e; Y/Y: 0.3% v 0.8%e

- (PL) Poland Mar Average Gross Wages M/M: 3.0% v 2.9%e; Y/Y: 6.3% v 6.5%e

- (IT) Italy Feb Current Account Balance: +€4.8B v -€0.3B prior

- (GR) Greece Feb Current Account Balance: -€1.1B v -€1.3B prior

- (HK) Hong Kong Mar Unemployment Rate: 4.2% v 4.0%e

- (EU) Euro Zone Feb Trade Balance (Seasonally Adj): €25.8B v €20.0Be; Trade Balance NSA (unadj): €23.0B v €1.3B prior

Fixed Income Issuance

- (EU) EFSF opened its book to sell EUR-denominated 3-year and 10-year bonds

- (NO) Norway sold NOK6.0b vs. NOK6.0B indicated in 3-month Bills; Avg Yield: 0.33% v 0.24% prior; Bid-to-cover: 1.74x v 1.94x prior

Looking Ahead

- (CO) Colombia Mar Consumer Confidence Index: No est v -11.2 prior

- (IL) Israel Central Bank (BOI) Apr Minutes

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell combined €3.0B in 3-month and 6-month bills

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 2029, 2033 and 2066 OLO Bonds

- 05:30 (DE) Germany to sell €4.0B in 3-month BuBills

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)

- 05:45 (SE) Sweden Central Bank (Riksnbank) weekly extraordinary market operation

- 06:00 (PT) Portugal Mar PPI M/M: No est v -1.1% prior; Y/Y: No est v -3.0% prior

- 06:00 (IL) Israel to sell bonds - 06:45 (US) Daily Libor Fixing

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

- 07:00 (ZA) South Africa Mar Electricity Production Y/Y: No est v 1.0% prior; Electricity Consumption Y/Y: No est v 0.0% prior

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey - 07:30 (CL) Chile Central Bank Traders Survey

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

- 08:00 Spain Debt Agency (Tesoro) size announcement on upcoming issuance

- 08:30 (US) Mar Chicago Fed National Activity Index: -3.00e v +0.16 prior

- 08:30 (CA) Canada Mar Teranet House Price Index (HPI) M/M: No est v 0.4% prior; Y/Y: No est v 2.9% prior; House Price Index (HPI): No est v 229.41 prior

- 08:30 (CA) Canada Feb Wholesale Trade Sales M/M: -0.4%e v +1.8% prior

- 08:50 (FR) France Debt Agency (AFT) to sell €7.4-9.0B in 3-month, 6-month and 12-month bills (4 tranches)

- 09:00 (RU) Russia Mar Unemployment Rate: 4.8%e v 4.6% prior; Real Wages Y/Y: 5.6%e v 6.5% prior

- 09:00 (RU) Russia Mar Real Retail Sales Y/Y: 1.8%e v 4.7% prior

- 09:45 (EU) ECB weekly QE bond buying update

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills

- 16:00 (US) Weekly Crop Progress Report

- 18:30 (NZ) New Zealand Mar Performance Services Index: No est v 52 prior

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 78.2 prior

- 21:30 (AU) RBA Apr Minutes

- 23:00 (NZ) New Zealand Mar Non Resident Bond Holdings: No est v 52.1% prior

- 23:30 (TH) Thailand Mar Customs Trade Balance: $2.8Be v $3.9B prior; Exports Y/Y: -5.8%e v -4.5% prior; Imports Y/Y: -5.8%e v -4.3% prior

- 23:30 (HK) Hong Kong to sell 3-month and 6-month bills

- 23:35 (JP) Japan to sell 20-Year JGB Bonds