Yields remain in focus; OPEC+ meeting taking place

Notes/Observations

- Euro Zone Jan Retail Sales registers its largest declines since last April

- Global yields find a reprieve after recent rise but continuation of upward trend to weigh on global risk sentiment

- US Senate prepared to take up $1.9T COVID relief bill; markets perceive bill to boost economic growth and inflation

Asia:

- South Korea Feb CPI data saw the annual pact at a 1-year high (M/M: 0.5% v 0.4%e); Y/Y: 1.1% v 1.0%e)

- South Korea Q4 Final GDP revised higher (Q/Q: 1.2% v 1.1%e; Y/Y: -1.2% v -1.4%e)

- Japan 30-year JGB auction has lowest bid-to-cover since 2016

- Chinese Premier Li due to issue China’s 2021 work report on Friday, March 5th

- China Securities Journal: China Market rates unlikely to have surges in short term; market rates might rise in Q2 amid an acceleration in gov't bond sales

Coronavirus:

- Total global cases 115.2M (+0.4% d/d); total deaths: 2.56M (+0.4% d/d)

Europe:

- German Chancellor Merkel confirmed reached agreement with state leaders on a five stage plan to ease COVID restrictions

Americas:

- Fed’s Harker (non-voter) stated that was not looking at a rate increase any time in 2022; if a rate hike happened it might be toward end of 2023

- Fed's Evans (dove, voter): looking for 2021 to deliver a strong economic rebound; there was still quite a gap on employment. Did not expect we will need to change duration of bond buys

- Senate prepared to take up $1.9T COVID relief bill. Republicans said to be demanding a full reading of the 600 page relief package

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.71% at 410.30, FTSE -1.05% at 6,605.65, DAX -0.54% at 14,004.60, CAC-40 -0.36% at 5,809.21, IBEX-35 -0.22% at 8,311.00, FTSE MIB -0.69% at 22,888.50, SMI -0.52% at 10,715.50, S&P 500 Futures -0.51%]

Market Focal Points/Key Themes: European indices open lower across the board and stayed under pressure through the session; sectors among the few trading higher are utilities and consumer discretionary; materials and technology sectors are leading to the downside; Siemens Energy to be promoted to DAX, replacing Beiersdorf, effective March 22; earnings expected in the upcoming US session include Costco, Gap and Broadcom

Equities

- Consumer discretionary: Aviva [AV.UK] +2% (divestment), Lufthansa [LHA.DE] -1.5% (earnings), Vivendi [VIV.FR] -3% (earnings)

- Healthcare: Merck [MRK.DE] +2% (earnings)

- Industrials: CRH PLC [CRH.UK] +1% (earnings), Henkel [HEN.DE] -1% (earnings), Thales [HO.FR] -1.5% (earnings)

Speakers

- ECB's Knot (Netherlands) stated at could be optimistic on recovery in H2 and added that higher yields reflected this cautious optimism

- ECB's Centeno (Portugal) stated that trade was almost recovered to pre-pandemic levels. Noted that the recovery was quite uneven across sectors

- Malaysia Central bank (BNM) Policy Statement reiterated stance that monetary policy was appropriate and would to use policy levers as appropriate. Re-imposing virus curbs to affect growth in Q1. Growth was projected to improve from Q2 but downside risks remained. Headline inflation anticipated to temporarily spike in Q2

- Singapore Central Bank (MAS) Dep Robinson: Fiscal stance in 2021 to support economic activity; rebound to pick up in mid-2021

- France, Britain and Germany said not planning to submit draft resolution to IAEA Board to criticize Iran

- IAEA chief Grossi: Planning technical discussions with Iran in April

Currencies/Fixed Income

- USD was on firmer footing despite a reprieve in the recent yield rise. Dealers cited the prospect of increased US fiscal stimulus as a factor as it would likely raise inflation expectations. The USD saw some safe-haven demand over the past 24 hours as a renewed selloff in US Treasuries weighed on the global risk sentiment.

- EUR/USD remained in the lower quarter of its recent quarterly trading range. Pair at 1.2030 with the 1.20 level again remaining key psychological support.

- GBP/USD at 1.3930 in the aftermath of Chancellor of the Exchequer Sunak budget speech on Wed.

Economic data

- (NL) Netherlands Feb CPI M/M: +0.9% v -0.2% prior; Y/Y: 1.8% v 1.6% prior

- (NL) Netherlands Feb CPI EU Harmonized M/M: +1.2% v -0.7% prior; Y/Y: 1.9% v 1.6% prior

- (Malaysia Central Bank (BNM) left the Overnight Policy Rate unchanged at 1.75% (as expected)

- (DK) Denmark Jan Gross Unemployment Rate: 4.0% v 4.4% prior; Unemployment Rate (seasonally Adj): 4.0% v 3.9% prior

- (HU) Hungary Jan Retail Sales Y/Y: -1.8% v -2.5%e

- (HU) Hungary Dec Final Trade Balance: €0.4B v €0.3B prior

- (DE) Germany Feb Construction PMI: 41.0 v 46.6 prior

- (UK) Feb New Car Registrations Y/Y: -35.5% v -39.5% prior

- (IS) Iceland Feb Preliminary Trade Balance (ISK): -12.0B v -4.8B prior

- (UK) Feb Construction PMI: 53.3 v 51.0e (moved back into expansion)

- (EU) Euro Zone Jan Unemployment Rate: 8.1% v 8.3%e

- (EU) Euro Zone Jan Retail Sales M/M: -5.9% v -1.4%e; Y/Y: -6.4% v -1.2%e

- (BE) Belgium Jan Unemployment Rate: 5.6% v 5.8% prior

Fixed income Issuance

- (ES) Spain Debt Agency (Tesoro) sold total €5.45B vs. €5.0-6.0B indicated range in 2026, 2028, 2031 and 2035 bonds

- Sold €1.12B in 0.0% Jan 2026 SPGB bonds; Avg Yield: -0.250% v -0.360% prior; bid-to-cover: 2.40x v 2.39x prior

- Sold €1.17B in 1.40% July 2028 SPGB bonds; Avg yield: 0.024% v 0.047% prior, Bid-to-cover: 2.20x v 2.38x prior

- Sold €1.87B in 0.10% Apr 2031 SPGB bonds; Avg Yield: 0.351% v 0.271% prior; bid-to-cover: 1.59x v 2.12 prior

- Sold €1.29B in 1.85% July 2035 SPGB bonds; Avg Yield: 0.663% v 0.366% prior, bid-to-cover: 1.38x v 1.30x prior

- (ES) Spain Debt Agency (Tesoro) sold €731M vs. €0.5-1.0B indicated range in 1.00% Nov 2030 inflation linked bonds (SPGBi); Real Yield: -0.889% v -0.784% prior; Bid-to-cover: 1.39x v 1.74x prior

- (FR) France Debt Agency (AFT) sold total €10.999B vs. €10.0-11.0B indicated range in 2030, 2040 and 2052 Bonds

- Sold €6.272B in 0.00% Nov 2030 Oat; Avg Yield: -0.07% v -0.25% prior; Bid-to-cover: 2.05x v 2.19x prior (Feb 4th 2021)

- Sold €2.344B in 0.50% May 2040 Oat; Avg Yield: 0.43% v 0.10% prior; bid-to-cover: 2.30x v 2.01x prior (Jan 7th 2021)

- Sold €2.383B in 0.75% May 2052 Oat; Avg Yield: 0.72% v 0.50% prior; Bid-to-cover: 2.10x v 2.21x prior

- (SE) Sweden sold total SEK1.25B vs. SEK1.25B indicated in 2026 and 2030 inflation linked bonds

- (UK) DMO sold £2.75B in 0.25% July 2031 Gilts; Avg Yield: 0.868% v 0.441% prior; bid-to-cover: 2.75x v 2.95x prior; Tail: 0.2bps v 0.1bps prior

Looking Ahead

- OPEC+ Ministers meeting

- 05:10 (EU) Daily ECB Liquidity Stats

- 05:30 (HU) Hungary Debt Agency (AKK) to sell HUF55B in 5-year, 10-year and 20-year bonds

- 05:50 (HU) Hungary Central Bank One-Week Deposit Rate tender

- 06:00 (ZA) South Africa Jan Electricity Production Y/Y: No est v 1.1% prior;
Electricity Consumption Y/Y: No est v 1.7% prior

- 06:00 (RO) Romania to sell RON400M in 4.25% 2023 Bonds

- 06:30 (TR) Turkey Feb Real Effective Exchange Rate (REER): No est v 66.28 prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 6.00%

- 07:30 (UK) Feb Challenger Job Cuts: No est v +79.6K prior; Y/Y: No est v 17.4% prior

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 26th: No est v $585.7B prior

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

- 08:30 (US) Q4 Final Nonfarm Productivity: -4.7%e v -4.8% prior; Unit Labor Costs: 6.6%e v 6.8% prior

- 08:30 (US) Initial Jobless Claims: 755Ke v 730K prior; Continuing Claims: 4.30Me v 4.419M prior

- 08:30 (CA) Canada Q4 Labor Productivity Q/Q: -1.9%e v -10.3% prior

- 08:30 (US) Weekly USDA Net Export Sales

- 10:00 (US) Jan Factory Orders: 2.1%e v 1.1% prior; Factory Orders (ex-transportation): No est v 1.4% prior

- 10:00 (US) Jan Final Durable Goods Orders: 3.4%e v 3.4% prelim; Durables (ex-transportation): 1.4%e v 1.4% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.5% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 2.1% prelim

- 10:00 (CO) Colombia Jan Exports: $2.7Be v $3.0B prior

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

- 10:30 (SE) Sweden Central Bank (Riksbank) Dep Gov Skingsley participates in panel discussion

- 11:30 (TR) Treasury to sell 4-Week and 8-WeekBills

- 12:00 (CA) Canada to sell C$5.0B in 0.5% 2030 Bonds

- 12:05 (US) Fed Chair Powell on US Economy

- 14:00 (AR) Argentina Jan Industrial Production Y/Y: No est v 4.9% prior; Construction Activity Y/Y: No est v 27.4% prior

- 16:30 (AU) Australia Feb Performance of Services Index: No est v 54.3 prior

- 16:45 (NZ) New Zealand Q4 Volume of All Buildings Q/Q: 3.0%e v 34.6% prior

- 19:00 (AU) Australia to sell A$1.0B in 1.5% 2031 Bonds

- 20:00 (PH) Philippines Feb CPI Y/Y: 4.7%e v 4.2% prior

- 20:10 (JP) BOJ Outright Bond Purchase Operation; to buy 1~3 Years; 3~5 Years; 5~10 Years

- 21:35 (CN) China to sell CNY20B in 3-month and 5-month Bills

- 22:00 (ID) Indonesia Feb Foreign Reserves: No est v $138.0B prior

- 22:30 (JP) Japan to sell 3-Month Bills

- 22:30 (TH) Thailand Feb CPI M/M: 0.1%e v 0.1% prior; Y/Y: -0.2%e v -0.3% prior; CPI Core Y/Y: 0.2%e v 0.2% prior

- 22:35 (JP) Japan to sell 30-Year JGB Bonds