UK retail sales handily exceeds estimates; focus on upcoming US House on on Obamacare repeal

Notes/Observations

- Markets await for the outcome of the vote on repeal of Obamacare (expected late Thursday); Republican leaders need time to gather votes

- UK Feb Retail sales handily beat expectations while back month revised slightly lower

 

Overnight:

Asia:

- New Zealand Central Bank (RBNZ) leaves Benchmark Rate unchanged at record low; signaled no rush to tighten highlighting external uncertainties

- US preparing cases linking North Korea to cyber theft at the NY Fed (regarding $81M in thefts)

Europe:-

- Metropolitan Polices Dep Commissioner: London attack "inspired by international Islamist terrorism" results in 5 deaths and 40 injured; PM May vowed that Parliament will open as usual on Thursday

- German Feb Finance Ministry monthly report: Incoming data suggesting continuation of economic upturn

Americas:

- Trump administration reportedly considering making last minute changes to House healthcare bill to appease Freedom Caucus (reducing some of the "essential benefit" requirements of Obamacare)

 

Economic Data

- (DE) Germany Apr GfK Consumer Confidence (miss): 9.8 v 10.0e

- (TR) Turkey Mar Consumer Confidence: 67.8 v 65.6e

- (FR) France Mar Business Confidence: 104 v 104e; Manufacturing Confidence: 104 v 107e

- (DK) Denmark Mar Consumer Confidence Index: 6.2 v 5.0e

- (TW) Taiwan Feb Industrial Production Y/Y: 10.6% v 10.0%e

- (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 3.00% (as expected)

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

- (UK) Feb Retail Sales (Ex-Auto Fuel) M/M: 1.3% v 0.3%e; Y/Y: 4.1% v 3.2%e

- (UK) Feb Retail Sales (Including Auto/Fuel) M/M: 1.4% v 0.4%e; Y/Y: 3.7% v 2.6%e

**Fixed Income Issuance:

- None seen

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Index snapshot (as of 09:30 GMT)**

Indices [Stoxx50 -0.1% at 3,420, FTSE flat at 7,322, DAX +0.2% at 11,925, CAC-40 -0.1% at 4,989, IBEX-35 +0.1% at 10,235, FTSE MIB +0.2% at 19,999, SMI +0.2% at 8,581, S&P 500 Futures +0.2%]

Market Focal Points/Key Themes: European equity indices are trading mixed across the board as market participants remain jittery after the recent terror attack in London yesterday; Banking stocks mixed but generally lower across the board at the time of writing; shares of Next the notable gainer in the FTSE 100 after releasing its FY16 results, with consumer discretionary stocks Marks & Spencer, Dixons Carphone, and Tesco also notably higher in the index; Energy, commodity and mining stocks mixed as copper and oil prices trade flat intraday.

Upcoming scheduled US earnings (pre-market) include Accenture, ConAgra Foods, Commercial Metals, Hanwha Q Cells, and Scholastic Corp.

 

Equities (as of 09:25 GMT)

- Consumer Discretionary: [Hornbach Holding HBH3.DE -0.5% (prelim FY16/17 results), Intelligent Energy IEH.UK +126% (deal signed to deliver fuel cell systems), Next PLC NXT.UK +8.1% (FY16 results), Ted Baker TED.UK -5.1% (FY16 results)]

- Financials: [Baloise Holding BALN.CH +0.4% (FY16 results, div increase), Crest Nicholson CRST.UK -0.5% (AGM statement), Wendel MF.FR +4.0% (FY16 results), Vienna Insurance VIGR.AT +2.8% (FY16 results, raises div)]

- Healthcare: [Ion Beam IBAB.BE +2.7% (FY16 results), UCB UCB.BE +0.9% (USPTO confirms the validity of U.S. patent 38,551)]

- Industrials: [Kier Group KIE.UK +0.7% (H1 results, names Chairman designate, launches JV with Cross Key Homes), Leoni LEO.DE +5.3% (FY17 outlook), WYG WYG.UK -18.8% (trading update, cuts outlook)]

- Materials: [Metall Zug METN.CH -0.5% (FY16 results, div increase)]

- Technology: [United Internet UTDI.DE +0.3% (FY16 results, div increase)]

 

Speakers

- ECB Publishes Economic Bulletin reiterated its March monetary policy stance that a very substantial degree of monetary accommodation was still needed to support headline inflation in the medium term. Governing Council to continue to look through changes in HICP inflation if judged to be transient. Conditions necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2%.

- ECB Single Supervisory Mechanism Annual Report with ECB's Draghi noting that low bank profitability weakened the support to the recovery

- ECB's Nouy (SSM Chief) noted that it would be most welcome' if global regulatory reform was finalized as planned. Finance transcends national borders and so must the rule that govern it

- ECB raised its emergency liquidity assistance (ELA) cap for Greece banks from €46.2B to €46.6B (1st hike since Jun 2015)

- Spain Fin Min de Guindos reiterated govt view that 2017 GDP growth target of 2.5% and would update its forecast for unemployment

- German Finance Ministry comments on Q2 issuance: To sell €44B in bills and bonds in quarter

- Scotland Referendum vote said to be delayed to Tuesday, Mar 28th (**Note: Debate was suspended on Wed, Mar 22nd due to the terror-related incidence near London's Westminster)

- Philippines Central Bank Policy Statement reiterated that its current policy settings remained appropriate and that inflation to remain within the target range for both 2017 and 2018. It noted that ; the latest CPI forecast were slightly lower than prior view with risks tilted to the upside

- Taiwan Central Bank Policy Statement noted that inflation was mild and the output gap remained negative, TWD currency (NT$ dollar) gains helping to ease imported inflation. Fiscal expansion was needed for economy

- Japan Cabinet Office (Govt) Monthly Report maintained its overall assessment that domestic economy was continuing a moderate recovery although with a delay in some areas. Raised its views on retail consumption and corporate earnings

- Malaysia Central Bank saw 2017 GDP growth seen between 4.3-4.8% range. Monetary policy to focus on supporting sustainable growth for economy and maintaining price stability and to introduce new measures to help small businesses to hedge their exposure against MYR currency (Ringgit) volatility

 

Currencies

- Some of the risk aversion sentiment from Wednesday dissipated but market awaits the US House vote on the repeal of Obamacare.A r ejection of the bill could deliver potential setbacks to President Trump plans for tax cuts and spending increase thus undermining the rally in risk assets.

- The USD/JPY pair climbed back above the key 111 support area but upside did face some headwinds for now. USD sell-stops said to be placed below the 110.70 area and could open the door for more retracement of the post Trump election rally with 105 seen as the next key level on any sustained one-way price move.

- The GBP/USD firmed in the aftermath of better headline UK retails data for Feb. GBP/USD rose over 40 pips to test 1.2525 while EUR/GBP cross probed the 0.8600 area. UK 10-Gilt yield was higher and briwfly tested above 1.19%

**Fixed Income:

- Bund futures trade at 160.33 up 13 ticks with peripheral bonds outperforming, as futures consolidate above 160.00. Resistance remains near session highs at 160.45 followed by 160.66. Support moves to 159.96 followed by 159.41 then contract low of 158.73.

- Gilt futures trade at 126.78 down 16 ticks trading lower on the back of stronger Feb retail sales figures out of the UK, fading some of the sharp move higher seen yesterday. Support moves to 126.34 followed by 126.07 then 125.80. Resistance moves to 127.35 followed by 127.89. Short Sterling futures trade down 1 to 2bp with Jun17Jun18 spread widening to 22/22.5Bp.

- Thursday's liquidity report showed Wednesday's excess liquidity rose to €1.329B a rise of €7B from €1.322T prior. Use of the marginal lending facility rise to €232M from €117M prior.

- Corporate issuance saw six issuers announce deals yesterday including Goldman Sachs, Ventas Realty, and Santander USA. Volume is expected be quiet for the rest of the week with weekly volume expected to be the lowest in the past 4 weeks, and towards the low end of this weeks $20-30B forecast.

 

Looking Ahead

- (UR) Ukraine Feb Industrial Production M/M: No est v -17.5% prior; Y/Y: 2.5%e v 5.6% prior

- (CO) Colombia Feb Industrial Confidence: No est v 1.9 prior; Retail Confidence: No est v 24.8 prior

- (AR) Argentina Mar Consumer Confidence Index: No est v 40.7 prior

- 06:00 (EU) Daily Euribor Fixing - 06:00 (RO) Romania to sell Bills

- 06:30 (EU) ECB allotment in TLTRO-2 operation

- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

- 06:30 (HU) Hungary Debt Agency (AKK) to sell Floating Rate bonds

- 06:30 (PL) Poland to sell 2019, 2022, 2026 and 2027 bonds (5 tranches)

- 07:00 (UK) Mar CBI Retailing Reported Sales: 4e v 9 prior, Total Distribution: 20e v 25 prior

- 07:00 (IL) Israel Feb Unemployment Rate: No est v 4.3% prior

- 07:45 (US) Daily Libor Fixing

- 08:00 (US) Fed Chair Yellen speaks at Community Development Conference

- 08:30 (US) Initial Jobless Claims: 240Ke v 241K prior; Continuing Claims: 2.04Me v 2.030M 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 17th: No est v $391.4B prior

- 09:15 (UK) Baltic Dry Bulk Index

- 10:00 (US) Feb New Home Sales: 565Ke v 555K prior

- 10:00 (BE) Belgium Mar Business Confidence: -0.5e v -1.1 prior

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

- 11:00 (US) Mar Kansas City Fed Manufacturing Activity: 14e v 14 prior

- 11:00 (EU) Euro Zone Mar Advance Consumer Confidence: -5.9e v -6.2 prior

- 11:00 (BR) Brazil to sell 2023 LFT - 03/01/2023

- 11:00 (BR) Brazil to sell 2018, 2019 and 2020 LTN Bills

- 12:30 (US) Fed's Kashkari (dove, dissenter) on education in DC

- 13:00 (CH) SNB's Maechler speaks in Zurich

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

- 14:00 (US) Fed's Kashkari (Dove, dissenter) speaks at Community Development Event

- 19:00 (US) Fed's Kaplan (moderate, voter) speaks on economy in Chicago

- 19:00 (US) House of Representatives vote on Healthcare Bill (Thursday evening)