Optimism Persists That The Coronavirus Outbreak May Be Slowing In Key Hot Spots

Notes/Observations

• Optimism persists that the coronavirus outbreak may be slowing in key hot spots
• Eurogroup later today with focus on whether member States can achieve solidarity on the necessary measures to address the economic impact of the virus outbreak

Asia:

• RBA left the Cash Rate Target unchanged at 0.25% (as expected)
• Japan Feb Household Spending Y/Y: -0.3% v -3.3%e

Coronavirus:

• Global cumulative cases: 1,347,803 (+5.7% d/d); cumulative deaths 74.8K (+7.7% d/d)
• China National Health Commission Coronavirus Update for April 6th saw its 1st day with no deaths with 32 additional cases (all imported) v 39 prior
• Korea Centers for Disease Control and Prevention (KCDC): More than 50 people who recovered after contracting COVID-19 have tested positive again, but the results might have been due to the reactivation of coronavirus

Europe:

• UK PM Johnson spend night in intensive care after symptoms worsen (currently receiving oxygen in the hospital but he was not on a ventilator)
• IMF said to be considering more dollar funding programs that could launch soon

Americas:

• President Trump stated that a second round of direct payments was under discussion. Businesses had applied for more than $40B in relief through 3K lenders via Paycheck Protection Program
• House Speaker Pelosi said to have told Democrats that she wanted the next coronavirus aid bill to be at least $1T

Mid-East/Energy:

• OPEC+ was likely to agree to deepening of oil production cuts on Thursday, Apr 9th as long as US also joins cut
• President Trump: No one has asked him to cut US oil production (Note On Apr 2nd Trump said US made no concessions on oil cuts). US oil producers had cut back automatically due to lower demand, prices

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +2.21% at 327.68, FTSE +2.81% at 5,698.06, DAX +3.36% at 10,411.00, CAC-40 +2.90% at 4,472.26, IBEX-35 +2.62% at 7,023.50, FTSE MIB +4.64% at 17,675.50, SMI +1.08% at 9,564.50, S&P 500 Futures +2.36%]
• Market Focal Points/Key Themes: European indices open higher across the board and remained upbeat through the session; Consumer discretionary and financials among better performing sectors; healthcare among leading underperformers; reportedly Italy could start relaxing lockdown measures starting May 4; Focus on Eurogroup meeting to decide economic support; upcoming earnings expected in the US session include Greenbrier and AngioDynamics

Equities

• Consumer discretionary: Cineworld [CINE.UK] +27% (COVID-19 update), Home24 [H24.DE] +8% (earnings)
• Financials: Assura [AGR.UK] -9% (placement)
• Industrials: Thales [HO.FR] +4% (withdraws outlook and dividend), Fraport [FRA.DE] +7% (stats update)

Speakers

• Austria Fin Min Bluemel commented ahead of key Eurogroup meeting that was prepared to use much flexibility with ESM. No one has used any of the existing instruments so he did not understanding why the debate over coronabonds
• Germany RKI Institute stated that it could not yet speak about easing of new coronavirus cases, must wait to see what happens in coming days
• Thailand Fin Min Uttama Savanayana: To review 2020 GDP growth forecast
• FDIC and Comptroller of the Currency (OCC) said to have held off joining Fed in relaxing leverage rule with the decision keeping billions locked up at US banks ( **Reminder: On Apr 1st Fed announced a temporary change to supplementary leverage ratio rule to ease strains in the Treasury market resulting from the coronavirus)
• China FX Regulator SAFE: Domestic real economy is improving steadily, which will help keep its forex reserves stable overall
• Japan Cabinet formally approves ¥10T economic package to respond to coronavirus impact. Complies ¥16.8T extra budget in package. To spend ¥4.0T on cash handouts to households and ¥2.3T in handouts to small companies
• Japan PM Abe noted that the State of Emergency to run from Apr 7th until May 6th in the 7 prefectures. To lift measures quickly when no longer needed and asked people to cooperate on not going out. PM stressed that reducing movement by 70-80% would help ensure the virus peaks in two weeks
• Japan Ministry of Finance (MOF) issued new bond issuance plan following extra budget: To sell additional ¥1.8T in 10-year JGBs with total calendar-based bond issuance at ¥147T
• Russia and Saudi Arabia said to be getting closer to an agreement on deepening production cuts
• Russia confirmed it would participate in Thursdays (April 9th) OPEC + meeting

Currencies/Fixed Income

• The USD was softer against the major pairs and commodity-related currencies as optimism blossomed that the coronavirus pandemic might be peaking in Europe and the US. The sentiment responded with the unwinding of safe-haven flows (higher equity prices and bond yields on the back of the softer greenback).
• EUR/USD was higher by 0.5% at 1.0850 by mid-session. Focus remained on the upcoming Eurogroup meeting to see if solidarity could emerge on the necessary measures to address the economic impact of the virus outbreak on the EU region.
• The unwinding of safe-haven flows seemed to benefit Commodity-linked and other riskier currencies (NOK, CAD and AUD among the best-performing)

Economic Data

• (NL) Netherlands Mar CPI M/M: 0.2% v 0.6% prior; Y/Y: 1.4% v 1.6% prior
• (NL) Netherlands Mar CPI M/M: 0.3% v 0.9% prior; Y/Y: 1.1% v 1.3% prior
• (CH) Swiss Mar Unemployment Rate: 2.9% v 2.6%e; Unemployment Rate (seasonally adj): 2.8% v 2.7%e
• (DE) Germany Feb Industrial Production M/M: +0.3% v -0.8%e; Y/Y: -1.2% v -2.9%e
• (RO) Romania Q4 Final GDP (3rd reading) Q/Q: 1.5% v 1.5%e; Y/Y: 4.3% v 4.3%e
• (FI) Finland Feb Preliminary Trade Balance: -€0.8B v -€0.3B prior
• (ZA) South Africa Mar Gross Reserves: $52.4B v $54.7B prior; Net Reserves: $44.8B v $45.4B prior
• (NO) Norway Feb GDP M/M: +0.6% v -0.5% prior; GDP Mainland M/M: 0.3% v 0.2%e
• (NO) Norway Feb Industrial Production M/M: +2.6% v -2.2% prior; Y/Y: 5.4% v 0.3% prior
• (NO) Norway Feb Manufacturing Production M/M: -0.5% v +0.4% prior; Y/Y: 0.6% v 1.2% prior
• (AU) Australia Mar Foreign Reserves: A$90.6B v A$83.6B prior
• (FR) France Feb Trade Balance: -€5.2B v -€5.1Be
• (FR) France Feb Current Account Balance: -€3.8B v -€3.1B prior
• (CH) Swiss Mar Foreign Currency Reserves (CHF): 765.6B v 768.8B prior
• (AT) Austria Mar Wholesale Price Index M/M: -3.2% v -1.2% prior; Y/Y: -4.7% v -1.2% prior
• (CZ) Czech Feb Retail Sales Y/Y: 3.6% v 2.4%e; Retail Sales (ex-auto) Y/Y: 7.4% v 4.5%e
• (HU) Hungary Feb Industrial Production M/M: 0.2% v 4.6% prior; Y/Y: 1.7% v 0.6%e
• (MY) Malaysia end-Mar Foreign Reserves: $101.7B v $103.0B prior
• (SE) Sweden Mar Budget Balance (SEK): -42.1B v +58.9B prior
• (SE) Sweden Feb Private Sector Production M/M: -0.3% v +0.9% prior; Y/Y: 0.6% v 1.9% prior
• (SE) Sweden Feb Industrial Orders M/M: 1.2% v 2.2% prior; Y/Y: 5.9% v 2.2% prior
• (SE) Sweden Feb Industry Production Value Y/Y: -0.2% v +0.3% prior; Service Production Value Y/Y: 2.2% v 3.7% prior
• (UK) Mar Halifax House Price index M/M: 0.0% v 0.1%e; 3M/Y: 3.0% v 2.8% prior
• (IT) Italy Feb Retail Sales M/M: +0.8% v -0.5%e; Y/Y: 5.7% v 1.6%e
• (TW) Taiwan Mar Foreign Reserves: $480.4B v $479.7B prior
• (UK) Q4 Unit Labor Costs Y/Y: 2.4% v 3.2% prior; Output per hour (final): 0.3% v 0.3% prelim
• (SG) Singapore Mar Foreign Reserves: $279.1B v $283.0B prior

Fixed Income Issuance

• (IE) Ireland Debt Agency (NTMA) opened its book to sell IGB bonds via syndicate; guidance seen +35bps to mid-swaps
• (CY) Cyprus opened its books to sell EUR-denominated 7-year and 30-year bonds
• (ID) Indonesia sold total IDR6.29T vs. IDR7.0T target in 6-month Islamic bills and 2-year, 4-year, 15-year and 25-year Bonds
• (SI) Sloveniaopened its book to sell EUR-denominated 3-year, 10-year and 25-year bonds
• (AT) Austria Debt Agency (AFFA) sold total €1.035B vs. €1.035B indicated in 2024 and 2030 RAGB bonds
• (UK) DMO sold £3.25B in new 0.125% Jan 2023 Gilt; Avg Yield: 0.204%; Bid-to-cover: 3.05x; tail: 0.6bps
• (ZA) South Africa sold total ZAR4.53B vs. ZAR4.53B indicated in 2023, 2030 and 2032 bonds

Looking Ahead

• (EU) Eurogroup meeting on coronavirus measures
• (IT) Bank of Italy Report on Balance-Sheet Aggregates
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €0.4B with 18 bids recd); €0.4Be)
• 05:30 (DE) Germany to sell combined €500M in 2030 and 2046 Inflation-linked Bonds (Bundei)
• 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.9-2.3B in 3-month and 6-month Bills
• 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 06:00 (US) Mar NFIB Small Business Optimism Index: No est v 104.5 prior
• 06:30 (UK) DMO to sell £1.25B in 1.75% July 2057 Gilts; Avg Yield: % v 0.858% prior; Bid-to-cover: x v 3.88x prior; Tail: bps v bps prior (Feb 27th 2020)
• 06:30 (EU) ESM to sell 3-month bills; Avg Yield: % v -0.5505% prior; Bid-to-cover: x v 4.2x prior (Mar 3rd 2020)
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Mar CPI M/M: 0.1%e v 0.4% prior; Y/Y: 3.4%e v 3.7% prior; CPI Core M/M: 0.3%e v 0.4% prior
• 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
• 07:45 (US) Goldman Economist Chain Store Sales
• 07:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (3-7 years)
• 08:00 (PL) Poland Mar Official Reserves: No est v $128.2B prior
• 08:00 (BR) Brazil Feb Retail Sales M/M: -0.5%e v -1.0% prior; Y/Y: 2.3%e v 1.3% prior
• 08:00 (BR) Brazil Feb Broad Retail Sales M/M: 0.3%e v 0.6% prior; Y/Y: 2.9%e v 3.5% prior – 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (CL) Chile Mar Trade Balance: $1.3Be v $0.8B prior; Total Exports: No est v $5.1B prior; Total Imports: No est v $4.3B prior; Copper Exports: No est v $2.5B prior –
• 08:30 (CL) Chile Mar International Reserves: No est v $36.2B prior
• 08:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (7-20 years)
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (RU) Russia Mar Official Reserve Assets: $560.0Be v $570.4B prior
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (CL) Chile Feb Nominal Wage M/M: No est v 0.9% prior; Y/Y: No est v 4.7% prior
• 09:45 (UK) BOE to buy £1.5B in APF Gilt purchase operation (20+ years)
• 10:00 (US) Feb JOLTS Job Openings: 6.500Me v 6.963M prior
• 10:00 (CA) Canada Mar Ivey Purchasing Managers Index (Seasonally Adj: No est v 54.1 prior; PMI (unadj): No est v 53.2 prior
• 10:30 (TR) Turkey Mar Cash Budget Balance (TRY): No est v -9.0B prior
• 13:00 (US) Treasury to sell 3-Year Notes
• 15:00 (US) Feb Consumer Credit: $14.0Be v $12.0B prior
• 15:00 (AR) Argentina Feb Industrial Production Y/Y: No est v -0.1% prior; Construction Activity Y/Y: No est v -13.5% prior
• 16:30 (US) Weekly API Oil Inventories
• 19:50 (JP) Japan Feb Core Machine Orders M/M: -3.0%e v +2.9% prior; Y/Y: -3.0%e v -0.3% prior
• 19:50 (JP) Japan Feb Current Account Balance: ¥3.066Te v ¥612.3B prior; Adjusted Current Account Balance: ¥2.022Te v ¥1.627T prior; Trade Balance (BoP Basis): ¥1.214Te v -¥985.1B prior
• 21:00 (PH) Philippines Feb Trade Balance (PHP): -$2.8Be v -$3.5B prior; Exports Y/Y: 3.5%e v 9.7% prior; Imports Y/Y: 1.0%e v 1.0% prior
• 21:30 (AU) Australia Feb Investor Loan Value M/M: 1.5%e v 3.6% prior; Home Loans Value M/M: 2.5%e v 4.6% prior
• 23:00 (CN) China to sell 2-year and 5-year Upsized Government Bond
• (US) Wisconsin Primary