Yields remain in focus; UK Jan GDP beats expectations

Notes/Observations

- UK Jan GDP beat expectations with small contraction despite the country’s 3rd lockdown

Asia:

- US State Dept: Sec State Blinken stated that would not pull any punches when he meets with his Chinese counterpart next week; there would be some difficult conversations

Europe:

- ECB reportedly does not intend for faster bond buying to lead to more stimulus

Americas:

- President Biden signed $1.9T relief bill into law

- White House Spokesperson: To set date of July 4th for US to get closer to normal; US President Biden to give remarks on the US rescue plan on Friday (at 2:30 PM ET)

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.55% at 421.86, FTSE -0.29% at 6,717.51, DAX -0.69% at 469, CAC-40 -0.20% at 6,021.53, IBEX-35 -0.10% at 8,584.00, FTSE MIB -0.28% at 24,053.50, SMI -0.28% at 10,852.70, S&P 500 Futures -0.64%]

Market Focal Points/Key Themes: European indices open generally lower and stayed under pressure through the session; sectors among better performers are financials and health care; sectors leading to the downside include technology and industrials; AstraZeneca cut outlook on vaccine supply to EU, while several countries paused its use; Renault sells stake in Daimler; Fortum sells its distric heating business in the baltics; Sanofi initiates covid vaccine trial; earnings expected in the upcoming US session include Buckle

Equities

- Consumer discretionary: Burberry [BRBY.UK] +8% (trading update), Autogrill [AGL.IT] -6% (earnings)

- Financials: Deutsche Bank [DBK.DE] +1% (outlook)

- Healthcare: Sanofi [SAN.FR] +1% (vaccine trial)

- Industrials: Daimler [DAI.DE] -2% (Renault's placement; recall vehicles)

- Technology: DBV Technologies [DBV.FR] +15% (earnings), u-blox [UBXN.CH] -14% (earnings)

Speakers

- ECB's Villeroy (France) reiterated stance of no danger at this time of overheating in Europe on growth or inflation. To maintain accommodative monetary policy for as long as necessary. Had no discussion on size of PEPP envelope

- ECB's Vasiliauskas (Lithuania) stated that was difficult to see economy turning a corner before autumn. Turning point for PEPP purchases was when the economy can breathe on its own

- ECB’s Muller (Estonia) reiterated Council view that faster pace of PEPP purchases to be temporary, planned size of program 'would remain the same'

- Italy govt said to possibly put Milan and Rome regions back into lockdown

- Germany Public Health RKI Institute chief Wieler: Germany at the beginning of a 3rd wave for pandemic

- BOJ said to be considering releasing analysis of impact of lowering its negative interest rate to show its determination to use this option if needed. Considering specifying 0.2% band of either side of YCC target

Currencies/Fixed Income

- USD was former with the green back taken its que from higher yields.

- EUR/USD was approaching the 1.1930 area in the aftermath of ECB’s rate decision. Dealers noted that ECB would look through any mid-year spike in inflation as economies opened up again. Traders still had some questions on the ECB increase in PEPP purchases and it the intention was to stabilize yields or bring them back to lower levels.

- GBP drifted lower in quiet trade despite Jan GDP data showing the economy holding up significantly better than expected.

- USD/JPY tested 9-month highs aided by the spike in US bond yields.

Economic data

- (NL) Netherlands Jan Trade Balance: €5.0B v €5.3B prior

- (FI) Finland Jan Current Account Balance: -€0.1B v +€2.0B prior

- (UK) Jan Monthly GDP M/M: -2.9% v -4.9%e; GDP 3M/3M: -1.7% v -2.6%e

- (UK) Jan Industrial Production M/M: -1.5% v -1.0%e; Y/Y: -4.9% v -4.4%e

- (UK) Jan Manufacturing Production M/M: -2.3% v -1.0%e; Y/Y: -5.2% v -3.7%e

- (UK) Jan Construction Output M/M: +0.9% v -1.0%e; Y/Y: -2.9% v -4.8%e

- (UK) Jan Index of Services M/M: -3.5% v -5.5%e; 3M/3M: -2.4% v -3.3%e

- (UK) Jan Visible Trade Balance: -£9.8B v -£12.5Be; Overall Trade Balance: -£1.6B v -£4.6Be; Trade Balance Non EU: -£1.8B v -£4.9Be

- (DE) Germany Feb Final CPI M/M: 0.7% v 0.7%e; YoY: 1.3% v 1.3%e

- (DE) Germany Feb Final CPI EU Harmonized M/M: 0.6% v 0.6%e; YoY: 1.6% v 1.6%e

- (TR) Turkey Central Bank Feb TCMB Survey of Expectations: Next 12 Months: 10.5% v 10.4% prior

- (TR) Turkey Jan Industrial Production M/M: 1.0% v 1.2% prior; Y/Y: % v 9.2% prior

- (CN) Weekly Shanghai copper inventories (SHFE): 171.8K v 163.0K tons prior

- (ES) Spain Feb Final CPI M/M: -0.6% v -0.6%e; Y/Y: 0.0% v 0.0%e

- (ES) Spain Feb Final CPI EU Harmonized M/M: -0.6% v -0.6%e; Y/Y: -0.1% v -0.1%e

- (ES) Spain Feb CPI Core M/M: 0.0% v -1.0% prior; Y/Y: 0.3% v 0.3%e

- (ES) Spain Jan Adjusted Retail Sales Y/Y: -9.5%e v -2.8%e; Retail Sales (unadj) Y/Y: -10.9% v -0.6% prior

- (RU) Russia Narrow Money Supply w/e Mar 5th (RUB): 13.83T v 13.73T prior

- (CZ) Czech Jan Industrial Output Y/Y: -4.4% v -4.35e; Construction Output Y/Y: -5.2% v -11.4% prior

- (HK) Hong Kong Q4 PPI Y/Y: 2.9% v 3.8% prior

- (HK) Hong Kong Q4 Industrial Production Y/Y: -6.0% v -7.4% prior

- (IT) Italy Q4 Unemployment Rate: 9.2% v 9.6% prior

- (IS) Iceland Feb International Reserves (ISK): 886B v 805B prior

- (EU) Euro Zone Jan Industrial Production M/M: 0.8% v 0.5%e; Y/Y: +0.1% v -1.9%e

Fixed income Issuance

- (ZA) South Africa sold total ZAR1.675B vs. ZAR2.0B indicated in I/L 2029, 2033 and 2046 Bonds

Looking Ahead

- (IN) India to sell combined INR240B in 2022, 2025, 2030 and 2033 bonds

- 05:10 (EU) Daily ECB Liquidity Stats

- 06:00 (IE) Ireland Jan Property Prices M/M: No est v 0.8% prior; Y/Y: No est v 2.2% prior

- 06:00 (PT) Portugal Jan Trade Balance: No est v -€1.4B prior

- 06:00 (UK) DMO to sell £3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively)

- 06:30 (IN) India Weekly Forex Reserve w/e Mar 5th: No est v $584.6B prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (IN) India Feb CPI Y/Y: 5.0%e v 4.1% prior

- 07:00 (IN) India Jan Industrial Production Y/Y: 1.0%e v 1.0% prior

- 07:00 (BR) Brazil Jan Retail Sales M/M: -0.3%e v -3.7% prior; Y/Y: 0.0%e v 1.2% prior

- 07:00 (BR) Brazil Jan Broad Retail Sales M/M: -0.7%e v -6.1% prior; Y/Y: -1.5%e v +2.6% prior

- 07:00 (MX) Mexico Jan Industrial Production M/M: 0.2%e v 0.1% prior; Y/Y: -4.2%e v -2.1% prior; Manufacturing Production Y/Y: -0.9%e v +2.5% prior

- 08:00 (RU) Russia Jan Trade Balance: $9.9Be v $10.6B prior; Exports: 28.7Be v $35.5B prior; Imports: $17.5Be v $24.9B prior

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

- 08:00 (IN) India announces upcoming bill issuance (held on Wed)

-08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond issuance

- 08:30 (US) Feb PPI Final Demand M/M: 0.5%e v 1.3% prior; Y/Y: 2.7%e v 1.7% prior

- 08:30 (US) Feb PPI (ex-food/energy) M/M: 0.2%e v 1.2% prior; Y/Y: 2.6%e v 2.0% prior

- 08:30 (US) Feb PPI (ex-food/energy/trade) M/M: 0.3%e v 1.2% prior; Y/Y: 2.5%e v 2.0% prior

- 08:30 (CA) Canada Feb Net Change in Employment: +75.0Ke v -212.8K prior; Unemployment Rate: 9.2%e v 9.4% prior; Full Time Employment Change: No est v +12.6K prior; Part Time Employment Change: No est v -225.4K prior; Participation Rate: 64.7%e v 64.7% prior; Hourly Wage Rate: 5.1%e v 5.9% prior

- 08:30 (CA) Canada Jan Wholesale Trade Sales M/M: +5.2%e v -1.3% prior

- 08:30 (CA) Canada Q4 Capacity Utilization Rate: 77.8%e v 76.5% prior

- 10:00 (US) Mar Preliminary University of Michigan Confidence: 78.5e v 76.8 prior

- 11:00 (EU) Potential sovereign ratings after European close

- 13:00 (MX) Mexico Feb Total Formal Job Creation: No est v +47.9K prior

- 13:00 (US) Weekly Baker Hughes Rig Count