Risk appetite continues to find momentum on signs the coronavirus may be easing in China

Notes/Observations

- Signs the coronavirus may be easing as China's Hubei recorded the fewest new cases on Tuesday since late January (Total cases: 44.7K; deaths at 1.1K); China's production capacity gradually normalizing

- Analysts believe China will probably enhance fiscal stimulus this year to combat effects of virus effect on targets

- Euro Zone Dec Industrial Production data continued its soft tone

Asia:

- New Zealand Central Bank (RBNZ) left the Official Cash Rate (OCR) unchanged at 1.00% (as expected); slightly raises rate path; suggests no more rate cuts in 2020

- South Korea Jan Unemployment Rate: 4.0% v 3.8%e (5th consecutive increase and matches the highest level since July 2019)

Europe:

- ECB's Schnabel (Germany): A fundamental departure from current policy does not seem appropriate

- BOE's Haskel (dovish dissenter): limited policy room justifies an immediate rate cut

- Ireland Central Bank raised its 2019 and 2020 GDP growth forecasts. Raised 2019 GDP growth from 5.0% to 6.1% and 2020 GDP growth from 4.3% to 4.5%. Advised the next government not to add to demand in the fast growing economy

Americas:

- Bernie Sanders wins Democratic New Hampshire primary with ~25.7% followed by Pete Buttigieg at 24.4%; race turns towards the West and South - Fed's Kashkari (dove, voter): Fed policy is close to neutral or slightly accommodative

- Argentina Economy Ministry Statement: To delay payment of principal on AF20 bond until Sept 30th. Payment had been due on Thursday, Feb 13th. Govt planned to continue making scheduled interest payments on the bond

Mid-East/Energy:

- Weekly API Crude Oil Inventories: +6.0M v +4.2M prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.33% at , FTSE +0.22% at 7,515.99, DAX +0.62% at 13,712.57, CAC-40 +0.31% at 6,073.33, IBEX-35 +0.29% at 9,911.00, FTSE MIB +0.42% at 24,793.35, SMI -0.15% at 11,085.00, S&P 500 Futures +0.33%]

Market Focal Points/Key Themes: European indices in the green following Asia indices higher and higher US futures. Heineken jumps following strong FY19 earnings and FY20 operating profit guidance of mid-single digit growth, as well as naming new CEO. Other risers following earnings include Akzo Nobel, Kering, Ahold Delhaize, Swedish Match, Jenoptik, Vontobel and Voltabox. In the UK, Dunelm rallying following reporting strong 1H results and SSS of +5.6%. Decliners on earnings include ABN Amro, Amundi, Telenet Group and BIC. Notable earners today include Bunge, CVS Health, Molson Coors, Teva Pharmaceuticals and Noble Energy.

Equities

- Consumer discretionary: Heineken [HEIA.NL] +6% (earnings), Kering [KER.FR] +2% (earnings), Evolution Gaming Group [EVO.SE] +11% (earnings), Rovio Entertainment [ROVIO.FI] -16% (earnings; ends financing round)

- Consumer staples: Ahold Delhaize [AD.NL] +1% (earnings)

- Materials: Akzo Nobel [AKZA.NL] +3% (earnings)

- Financials: Vontobel [VONN.CH] +1% (earnings), ABN AMRO [ABN.NL] -7% (earnings)

- Industrials: Voltabox [VBX.DE] +7% (earnings), Babcock International Group [BAB.UK] -4% (trading update)

Speakers

- ECB's Makhlouf (Ireland): Needed to watch for any negative short-term effects from coronavirus on global growth

- Sweden Central Bank (Riksbank) Policy Statement maintained its forward guidance to Repo Rate was expected to remain at 0% in coming years. Improved prospects could justify a higher interest rate. If economy developed more weakly than forecast, then Board could cut Repo Rate and take other measures to make policy more expansive Sweden Central Bank (Riksbank) Gov Ingves Post rate decion press conference reiterates view that was hard to see any rate cut as decline in 2020 inflation was mostly due to low energy prices

- Turkey President Erdogan: Trend of falling interest rates to continue. Hopefully inflation to move below the 8.5% target for end-2020. Stressed that inflation did not jump nor did the TRY currency (Lira) fall) as interest rates declined

Currencies/Fixed Income

- Risk appetite continued to find tailwinds as signs emerged that the coronavirus might be easing and China's production capacity was gradually normalizing

- USD/JPY moved back above the 110 level as safe-haven flows continued to ebb.

- EUR/USD moved off recent 4-month lows to regain a foothold above the 109 level. Euro Zone Dec Industrial Production data continued its soft tone and keeping the door open for more ECB easing down the road.

- NZD currency find traction during the Asia session after the RBNZ indirectly hinted it was on hold for the course of 2020. NZD/USD higher by 1% to test above 0.6470.

Economic Data

- (NL) Netherlands Jan CPI M/M: -0.8% v +0.1% prior; Y/Y: 1.8% v 2.7% prior

- (NL) Netherlands Jan CPI EU Harmonized M/M: -1.3% v +0.2% prior; Y/Y: 1.7% v 1.6%e - (NO) Norway Q4 Average Monthly Earnings Y/Y: 3.6% v 3.5% prior

- (ES) Spain Dec House transactions Y/Y: +1.8% v -9.3% prior

- (TW) Taiwan Q4 Final Y/Y: 3.3% v 3.4%e

- (SE) Sweden Central Bank (Riksbank) left Repo rate unchanged at 0.00% (as expected); maintained rate path for the forecast horizon.

- (IS) Iceland Jan International Reserve s(ISK): 835B v 822B prior

- (EU) Euro Zone Dec Industrial Production M/M: -2.1% v -2.0%e; Y/Y: -4.1% v -2.5%e

**Fixed Income Issuance**

- (DK) Denmark sold DKK260M in 3-month bills, Avg Yield: -0.735% v -0.750% prior; bid-to-cover: 2.92x v 1.1x prior

- (IN) India sold total INR130B v INR130B indicated in 3-month, 6-month and 12-month bills

- (SE) Sweden sold SEK2.0B vs. SEK2.0B indicated in 2026 and 2029 bonds

- (IT) Italy Debt Agency (Tesoro) sold €6.0B v €6.0B in 12-month Bills; Avg Yield: -0.319% v -0.242% prior; Bid-to-cover: 1.75x v 1.51x prior

- (CH) Switzerland sold total CHF203.4M in 2030 and 2039 Bonds

Looking Ahead

- OPEC Monthly Oil Report

- 05:30 (DE) Germany to sell €4.0B in 0.0% Feb 2030 Bunds

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2026 and 2034 OT bonds

- 06:00 (ZA) South Africa Dec Retail Sales M/M: -5.3%e v +3.1% prior; Y/Y: 2.0%e v 2.6% prior

- 06:00 (PT) Portugal Jan Final CPI M/M: No est v -0.9% prelim; Y/Y: No est v 0.8% prelim

- 06:00 (PT) Portugal Jan Final CPI EU Harmonized M/M: No est v -0.8% prelim; Y/Y: No est v 0.8% prelim

- 06:00 (IL) Israel Jan Trade Balance: No est v -$2.2B prior

- 07:00 (US) MBA Mortgage Applications w/e Feb 7th: No est v 5.0% prior

- 07: 00 (IN) India Jan CPI Y/Y: 7.4%e v 7.4% prior

- 07:00 (IN) India Dec Industrial Production Y/Y: 1.7%e v 1.8% prior

- 07:00 (BR) Brazil Dec Retail Sales M/M: 0.2%e v 0.6% prior; Y/Y: 3.3%e v 2.9% prior

- 07:00 (BR) Brazil Dec Broad Retail Sales M/M: -0.4%e v-0.5 % prior; Y/Y: 4.9%e v 3.8% prior

- 07:00 (UK) Weekly PM question time in House of Commons

- 07:00 (RU) Russia to sell OFZ bonds (2 tranches)

- 08:00 (HU) Hungary Central Bank Feb Minutes

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

- 08:30 (US) Fed's Harker (voter in 2020) on economic outlook

- 10:00 (US) Fed chair Powell testifies in Congress

- 10:30 (US) Weekly DOE Oil Inventories

- 14:00 (AR) Argentina Dec Capacity Utilization: No est v 60.7% prior

- 14:00 (US) Jan Monthly Budget Statement: -$10.0Be v -$13.3B prior

- 14:10 (NZ) New Zealand Central Bank (RBNZ) Gov Orr in parliament

- 18:50 (JP) Japan Jan PPI M/M: 0.0%e v 0.1% prior; Y/Y: 1.5%e v 0.9% prior

- 19:00 (AU) Australia Feb Consumer Inflation Expectation Survey: No est v 4.7% prior

- 19:01 (UK) Jan RICS House Price Balance: +3%e v -2% prior

- 19:15 (AU) RBA Gov Lowe on panel

- 20:05 (NZ) New Zealand to sell NZD250M in 1.5% 2031 Bonds