Yields continue their ascent with focus on upcoming US, UK inflation data

Notes/Observations

- UK’s February GDP data held up but headwinds persists as cost-of-living crisis and war in Ukraine likely to mean a slowdown in activity.

- EU inflation data remaining hot (Norway, Denmark, Czech readings in session); focus turns to US CPI data on Tuesday; UK on Wed.

- ECB decision on Thursday with some hope it might mention a date for the end of net asset purchases which would pave the way for rate hikes.

- China saw strong credit data for March with M2 Money supply, New Yuan loans and aggregate financing all beating consensus.

Asia

- China Mar CPI YoY: 1.5% v 1.3%e.

- China Shanghai continued to report high virus infection readings with over 26K reported; Guangzhou shuts schools.
Australia PM calls for National elections to take place on May 21st, PM Morrison running for another term; expected to focus on cost of living/inflation.

- BOJ Gov Kuroda reiterated overall assessment that domestic economy was picking up as a trend, to maintain ultra-loose policy to stably achieve 2.0% CPI.

- Pakistan parliament voted to remove Prime Minister Khan in no confidence vote.

Russia/Ukraine

- Russia said to have reorganized commanders in Ukraine war, appointed Aleksandr Dvornikov as the top battlefield commander.

- NATO Sec Gen Stoltenberg: developing plans to deploy forces in Eastern Europe that can withstand a full-fledged invasion.

- Finland and Sweden said to be set to join Nato as soon as summer.

- UK and EU pledged more support for Ukraine as UK PM Johnson visits Kyiv. UK to send Ukraine 120 armored vehicles, anti-ship missile systems and provide further economic support.

Europe

- Macron set to face Le Pen in 2nd round of French Presidential elections. Several polls show Macron leading 54-46%.

- S&P cut Russia sovereign rating to "Selective Default (SD). Move comes after Russia arranged to make foreign bond payments in rubles.

- Russia Fin Min Siluanov stated that the govt not issue local or foreign debt in 2022.

- UK Chancellor of the Exchequer Sunak (Fin Min) requested formal review into whether he properly declared his financial interests, hoped a probe will help public ‘retain confidence’.

Americas

- Fed's Mester (FOMC voter, hawk): Optimistic the Fed could remove emergency levels accommodation and reduce excess demand without triggering a recession.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.59% at 458.42, FTSE -0.44% at 7,636.02, DAX -0.73% at 14,178.92, CAC-40 +0.37% at 6,572.18, IBEX-35 -0.08% at 8,599.26, FTSE MIB -0.27% at 24,751.00, SMI -0.03% at 12,503.80, S&P 500 Futures -0.57%].

Market Focal Points/Key Themes: European indices open generally lower and leaned into the downside as the session wore on; poor market sentiment reflectied in higher yields across the curve; better performing sectors include financials and materials; sectors among those leading to the downside are technology and industrials; reportedly Atlantia not likely subject of takeover from GIP, Brookfield; SocGen announces sale of Rosbank; earnings expected during the upcoming US session include Piaggio.

Equities

- Real Estate: Alstria Office REIT [AOX.DE] +11% (intends to take up debts).

- Financials: Societe Generale [GLE.FR] +5% (exits Russia).

- Materials: Rheinmetall [RHM.DE] +4.5% (order).

- Industrials: Nokian Renkaat [TYRES.FI] -13% (comments on EU sanctions against Russia), John Wood Group [WG.UK] +13% (trading update).

- Technology: Audioboom [BOOM.UK] -5.5% (trading update).

- Telecom: Ericsson [ERICB.SE] -1.5% (exits Russia).

Speakers

- Various EU Foreign Ministers commented ahead of meeting on Ukraine.

- EU Foreign Policy Chief Borrell stated that sanctions were always on the table; EU foreign ministers to discuss how to improve help for Ukrainian people.

- Germany Foreign Min Baerbock stated that Ukraine needed heavy weapons and now was not the time for excuses. EU needed joint plan to exist Russian fossil fuels.

- Ireland Foreign Min Coveney stated that the EU was working on sanctions that include oil.

- Austria Central Bank (ONB) raised its inflation outlook citing higher oil, gas and power prices. Raised the 2022 CPI forecast from 5.3% to 5.6%. Saw CPI peaking at 7.3% in April.

- China Foreign Min spokesperson Zhao Lijian stated that NATO claimed to be defensive, but had been making trouble.

- Japan Ruling LDP party said to be seeking cash handouts for people in need as part of the govt's upcoming economic package.

- Iran Foreign Min Amirabdollahian stated that nuclear talk were in dire position with its fate unclear.

Currencies/Fixed income

- USD began the session on form footing with focus on upcoming US CPI reading this week. Dealers noted that it seemed that the Fed was prepared to deal with surging inflation through expeditious monetary policy normalization with 250bps of hikes seen before year-end. US 10-year yield rose by 8bps during the Asian electronic session to test above 1.82%.

- EUR/USD clawed its way back in the session to regain a foothold above the 1.09 level. Dealers noted that the outcome of the 1st round of the French presidential election showed President Macron holding a substantial advantage over contender Le Pen going into the second round. ECB meets on Thursday and could mention a date for the end of net asset purchases which would pave the way for rate hikes.

- USD/JPY hit a fresh 7-year high above 125.40 as participants focused on yield differentials.

Economic data

- (NL) Netherlands Feb Trade Balance: €6.0B v 4.6B prior.

- (SE) Sweden SEB Apr Housing-Price Indicator: 39 v 29 prior.

- (JP) Japan Mar Preliminary Machine Tool Orders Y/Y: 30.2% v 31.6% prior.

- (NO) Norway Mar CPI M/M: 0.6% v 1.1%e; Y/Y: 4.5% v 5.0%e.

- (NO) Norway Mar CPI Underlying M/M: 0.3% v 0.4%e; Y/Y: 2.1% v 2.4%e.

- (NO) Norway Mar PPI (including oil) M/M: 16.9% v 2.1% prior; Y/Y: 79.4% v 53.2% prior.

- (DK) Denmark Mar CPI M/M: 0.6% v 1.0% prior; Y/Y: 5.4% v 4.8% prior.

- (DK) Denmark Mar CPI EU Harmonized M/M: 0.7% v 0.9% prior; Y/Y: 6.0% v 5.3% prior.

- (DK) Denmark Feb Current Account Balance (DKK): 20.4B v17.3B prior; Trade Balance: 4.6B v 2.5B prior.

- (UK) Feb Monthly GDP M/M: 0.1% v 0.2%e GDP 3M/3M: 1.0% v 0.9%e.

- (UK) Feb Industrial Production M/M: -0.6% v +0.3%e; Y/Y: 1.6% v 2.1%e.

- (UK) Feb Manufacturing Production M/M: -0.4% v +0.3%e; Y/Y: 3.6% v 3.0%e.

- (UK) Feb Construction Output M/M: -0.1% v +0.5%e; Y/Y: 6.1% v 6.8%e.

- (UK) Feb Index of Services M/M: 0.2% v 0.2%e; 3M/3M: 0.8% v 0.7%e.

- (UK) Feb Visible Trade Balance: -£20.6B v -£16.7Be; Overall Trade Balance: -£9.3B v -£7.2Be; Trade Balance Non EU: -£12.1B v -£11.6B prior.

- (CZ) Czech Mar CPI M/M: 1.7% v 1.4%e; Y/Y: 12.7% v 12.4%e.

- (CZ) Czech Feb Export Price Index Y/Y: 10.4% v 10.0% prior; Import Price Index Y/Y: 14.0% v 12.8% prior.

- (TR) Turkey Feb Current Account Balance: -$5.2B v -$5.3Be.

- (TR) Turkey Feb Unemployment Rate: 10.7% v 11.2% prior.

- (CH) Swiss weekly Total Sight Deposits (CHF): 739.4B v 737.2B prior; Domestic Sight Deposits: 666.5B v 664.1B prior.

- (CN) China Mar Aggregate Financing (CNY): 4.650T v 3.550Te.

- (CN) China Mar New Yuan Loans (CNY): 3.130T v 2.750Te.

- (CN) China Mar M2 Supply Y/Y: 9.7% v 9.2%e.

- (IT) Bank of Italy (BOI) Banks and Money Monthly Statistics: Mar Gross Non-performing Loans (NPLs): €41.9B v €41.5B prior.

Fixed income issuance

- (DK) Denmark sold total DKK0B (nil) in 3-month, 6-month and 9-month bills; rejected all bids.

Looking ahead

- (CO) Colombia Mar Consumer Confidence Index: -19.6e v -17.5 prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €6.0B in 6-month and 12-month BuBills.

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

- 06:00 (IL) Israel to sell combined ILS1.0B in 2024, 2026, 2031, 2032 and 2051 bonds.

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month bills.

- 06:45 (US) Daily Libor Fixing.

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

- 07:00 (MX) Mexico Feb Industrial Production M/M: 0.3%e v 1.0% prior; Y/Y: 4.2%e v 4.3% prior; Manufacturing Production Y/Y: 5.0%e v 3.8% prior.

- 07:00 (ZA) South Africa Feb Manufacturing Production M/M: -0.1%e v +1.9% prior; Y/Y: 2.8%e v 2.9% prior.

- 07:00 (CZ) Czech Central Bank to comment on CPI data.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

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

- 09:00 (FR) France Debt Agency (AFT) to sell €4.1-5.3B in 3-month, 6-month and 12-month bills.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to raise Base Rate by 15bps to 0.25%.

- 09:00 (RU) Russia Feb Trade Balance: $25.1Be v 21.2B prior; Exports: $50.7Be v $45.9B prior; Imports: $25.6Be v $24.8B prior.

- 09:00 (RU) Russia Q1 Preliminary Current Account Balance: No est v $46.6B prior.

- 09:00 (RU) Russia Mar Official Reserve Assets: No est v $630.2B prior.

- 09:30 (US) Fed’s Bostic opening remarks at Fed Listens Event.

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

- 12:40 (US) Fed’s Evans discusses Economy and Monetary Policy.

- 13:00 (US) Treasury to sell $46B in 3-Year Notes.

- 16:00 (US) Weekly Crop Progress Report.

- 18:00 (NZ) New Zealand Shadow Board (NZIER) Business Opinion Survey.

- 18:45 (NZ) New Zealand Feb Net Migration: No est v -0.6K prior.

- 19:00 (AU) Australia Mar Household Spending M/M: No est v 1.8% prior; Y/Y: No est v 5.5% prior.

- 19:01 (UK) Mar BRC Sales Like-For-Like Y/Y: No est v 2.7% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 93.4 prior.

- 19:50 (JP) Japan Mar PPI M/M: 0.9%e v 0.8% prior; Y/Y: 9.2%e v 93% prior.

- 19:50 (JP) Japan Mar Bank Lending Y/Y: No est v 0.4% prior; Bank Lending (ex-trust) Y/Y: No est v 0.3% prior.

- 21:30 (AU) Australia Mar Business Confidence: No est v 13 prior; Business Conditions: No est v 9 prior.

- 22:30 (KR) South Korea to sell 1.0T in 2-Year Bonds.

- 23:00 (SK) South Korea Feb M2 Money Supply M/M: No est v 0.9% prior; “L” Money Supply M/M: No est v 0.7% prior.

- 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.

- 22:35 (JP) Japan to sell 5-year JGB bonds.