Correction in recent spike in bond yields continues

Notes/Observations

- Major European PMI Manufacturing data at 3-year highs) (Beats: France, Germany, Italy, Spain, UK)

- Focus remain on the bond yield front and for the moment the global bond spike in yield had eased. Dealers contemplated just how central Banks could contain the yield rise if needed

- ECB bond-buying figures on Monday will show how serious central bank is about countering rising bond yields

Asia:

- China Feb Manufacturing PMI (Govt official) registered it 12th month of expansion ( 50.6 v 51.0e)

- China Feb Caixin PMI Manufacturing registered its 10th month of expansion (50.9 v 51.4e)

- Japan Feb Final PMI Manufacturing reading confirmed its 1st expansion in 21 months (51.4 v 50.6 prelim)

- Australia Feb Final PMI Manufacturing confirmed its 9th month of expansion (56.9 v 57.2 prelim)

Coronavirus:

- Total global cases 114.1M (+1.0%); total deaths: 2,53M (+0.9%)

Europe:

- Chancellor of the Exchequer Sunak (Fin Min) stated that more covid support to come in budget. If we do not do anything then debt would carry on rising. Low interest rate levels could change; must be aware of possibility of higher rates. Could not comment on pre-election pledges not to raise key taxes and stressed that govt must keep supporting the economy

- Speculation on the upcoming UK budget has Chancellor of the Exchequer Sunak (Fin Min) to announce £5.0B in additional grants to help pandemic impacted businesses as part of budget announcement.. Govt said to be in talks with hospitality sector to extend covid support (Note: currently to end on Jun 21st)

Americas:

- US House approved $1.9T stimulus package (vote 219-212) Two Democrats voted against the package as well as all Republicans

- Senate Democrats confirmed removing minimum wage increase from coronavirus bill

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +1.62% at 411.54, FTSE +1.71% at 6,594.05, DAX +1.08% at 13,935.35, CAC-40 +1.55% at 5,791.72, IBEX-35 +1.64% at 8,360.00, FTSE MIB +1.53% at 23,198.50, SMI +1.38% at 10,667.62, S&P 500 Futures +1.14%]

Market Focal Points/Key Themes: European indices open broadly higher and advanced through the session; consumer discreationary and technology sectors among those leading to the upside; less positive sectors include real estate and telecom; Danone makes first step to divest stakein Mengniu; AstraZeneca divests stake in Modernaearnings expected during the upcoming US session include Core-Mark, Femsa and Perrigo

Equities

- Consumer discretionary: Halfords [HFD.UK] +17% (trading update), PostNL [PNL.NL] +7% (earnings), Reach [RCH.UK] -2% (earnings)

- Financials: Tryg [TRYG.DK] -3% (rights issue)

- Healthcare: Eurofins Scientific [ERF.FR] +3% (earnings)

- Technology: Logitech [LOGN.CH] +1% (raises outlook)

Speakers

- German Chancellor Merkel said to be under pressure to lay out a path to ease Germany’s coronavirus lockdown

- France Fin Min Le Maire stated that he was not concerned about the recent increase in borrowing rates. Govt had spent €16B of the stimulus plan. Would not raise taxes or tax household savings

- BOJ said to be prepared to defend Yield Curve (YCC) range before its March policy review. BOJ had no pre-set level for stopping yield rise and would depend on the speed of gains. Could act before yield hits 0.3%

- OPEC said to plan for increasing oil production by 1.6M bpd from April

Currencies/Fixed Income

- USD was slightly firmer in the session despite better EU data on the PMI Manufacturing front.

- EUR/USD at 1.2040 area and near the lower end of its 3-month trading range.

- GBP/USD drifted lower ahead of Wed’s budget speech by Chancellor Sunak. Markets to carefully watch to see if the Finance Ministry raises taxes in the speech. GBP/USD at 1.3945 area by mid-session.

- USD/JPY at 106.70 area.

- Focus continued on the yield front and for the moment the global bond spike in yield had eased. Dealers contemplated just how central Banks could contain the yield rise if needed but concluded that it was likely to be premature to expect intervention against rising yields, verbally or otherwise. ECB bond-buying figures on Monday would give an insight how serious the central bank was about countering rising bond yields. BOJ said to be prepared to defend Yield Curve (YCC) range before its March policy review

Economic data

- (DE) Germany Feb CPI North Rhine Westphalia M/M: 0.8% v 0.9% prior; Y/Y: 1.3% v 1.0% prior

- (RU) Russia Feb PMI Manufacturing: 51.5 v 51.3e (2nd straight expansion and highest since Apr 2019)

- (NO) Norway Jan Retail Sales M/M: -0.1% v -5.7% prior

- (TR) Turkey Feb PMI Manufacturing: 51.7 v 54.4 prior (9th month of expansion)

- (TR) Turkey Q4 GDP Q/Q: 3.9%e; Y/Y: 5.9% v 6.9%e

- (CH) Swiss Jan Real Retail Sales Y/Y: -0.5% v +5.4% prior

- (SE) Sweden Feb PMI Manufacturing: 61.6 v 62.5 prior (9th month of expansion)

- (TH) Thailand Feb Business Sentiment Index: 45.6 v 44.2 prior

- (DE) Germany Feb CPI Saxony M/M: 0.8% v 0.5% prior; Y/Y: 1.3% v 1.0% prior

- (NL) Netherlands Feb Manufacturing PMI: 59.6 v 58.8 prior (7th straight expansion)

- (HU) Hungary Feb Manufacturing PMI: 49.4 v 54.6e (1st contraction in 5 months)

- (PL) Poland Feb PMI Manufacturing: 53.4 v 52.9e (7th straight expansion)

- (ES) Spain Feb Manufacturing PMI: 52.9 v 51.5e (moved back into expansion territory)

- (CH) Swiss Feb PMI Manufacturing: 61.3 v 60.1e (7th straight expansion)

- (CZ) Czech Republic Feb PMI Manufacturing: 56.5 v 58.4e (6th straight expansion)

- (SE) Sweden Dec Non-Manual Workers Wages Y/Y: 2.1% v 2.0% prior

- (IT) Italy Feb Manufacturing PMI: 56.9 v 56.8e (8th month of expansion and highest since Jan 2018)

- (FR) France Feb Final Manufacturing PMI: 56.1 v 55.0e (confirmed 3rd month of expansion and highest since Jan 2018)

- (DE) Germany Feb Final Manufacturing PMI: 60.7 v 60.6e (confirmed 8th month of expansion and highest since Jan 2018)

- (EU) Euro Zone Feb Final Manufacturing PMI: 57.9 v 57.7e (confirmed 8th month of expansion and highest since Feb 2018)

- (GR) Greece Feb Manufacturing PMI: 49.4 v 50.0 prior (moved back into contraction)

- (NO) Norway Feb PMI Manufacturing: 56.1 v 52.5 prior (6th straight expansion)

- (ZA) South Africa Feb Manufacturing PMI: 53.0 v 51.0e (10th month of expansion)

- (CZ) Czech Jan M2 Money Supply Y/Y: 11.0% v 10.5% prior

- (DE) Germany Feb CPI Brandenburg M/M: 0.6% v 0.9% prior; Y/Y: 1.4% v 1.3% prior

- (DE) Germany Feb CPI Hesse M/M: 0.8% v 0.7% prior; Y/Y: 1.0% v 0.9% prior

- (DE) Germany Feb CPI Bavaria M/M: 0.6% v 0.9% prior; Y/Y: 1.3% v 1.4% prior

- (CH) Swiss weekly Total Sight Deposits (CHF): 704.1B v 704.4B prior; Domestic Sight Deposits: 640.8B v 642.2B prior

- (UK) Jan Net Consumer Credit: -£2.4B v -£2.0Be; Net Lending: £5.2B v £5.0Be

- (UK) Jan Mortgage Approvals: 99.0K v 98.0Ke

- (UK) Jan M4 Money Supply M4 M/M: 0.7% v 0.6% prior; Y/Y: 13.3% v 13.5% prior; M4 (ex-IOFCs) 3M Annualized: 12.8% v 13.7% prior

- (UK) Feb Final PMI Manufacturing: 55.1 v 54.9e (confirmed 9th straight expansion)

- (BE) Belgium Q4 Final GDP Q/Q: -0.1% v +0.2% prelim; Y/Y: -5.1% v -4.8% prelim

- (IT) Italy Feb Preliminary CPI M/M: 0.1% v 0.7% prior; Y/Y: 0.6% v 0.4%e

- (IT) Italy Feb Preliminary CPI EU Harmonized M/M: -0.2% v -0.4%e v; Y/Y: 1.0% v 0.7%e

- (DK) Denmark Feb PMI Survey: 40.8 v 42.1 prior (4th straight contraction)

Fixed income Issuance

- None seen

Looking Ahead

- (DE) Germany Feb CPI Baden Wuerttemberg M/M: No est v 0.4% prior; Y/Y: No est v 1.1% prior

- (ZA) South Africa Feb Naamsa Vehicle Sales Y/Y: -15.0%e v -13.9% prior

- (RO) Romania Feb International Reserves: No est v $42.6B prior

- (CO) Colombia Q4 Current Account Balance: -$2.7Be v -$1.8 prior

- (AR) Argentina Feb Government Tax Revenue (ARS): No est v 772.9B prior

- (IT) Italy Feb Budget Balance: No est v -€3.9B prior

- 05:10 (EU) Daily ECB Liquidity Stats

- 05:30 (DE) Germany to sell combined €6.0B in 3-month and 9-month BuBills

05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-3.0B indicated range in 3-month and 6-month bills

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

- 06:00 (IE) Ireland Jan Retail Sales Volume M/M: No est v 14.3% prior; Y/Y: No est v 8.2% prior

- 06:00 (IT) Italy 2020 GDP Annual Y/Y: -8.9%e v +0.3% prior; Budget Deficit to GDP: No est v 1.6% prior

- 06:00 (IL) Israel to sell 2023, 2025, 2026, 2030, 2031 and 2047 bonds

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey

- 06:30 (CL) Chile Jan Economic Activity Index (Monthly GDP) M/M: 0.0%e v 3.5% prior; Y/Y: -1.4%e v -0.4% prior

- 06:45 (US) Daily Libor Fixing

- 08:00 (BR) Brazil Feb PMI Manufacturing: No est v 56.5 prior

- 08:00 (DE) Germany Feb Preliminary CPI M/M: 0.5%e v 0.8% prior; Y/Y: 1.2%e v 1.0% prior

- 08:00 (DE) Germany Feb Preliminary CPI EU Harmonized M/M: 0.6%e v 1.4% prior; Y/Y: 1.6%e v 1.6% prior

- 08:00 (CZ) Czech Feb Budget Balance (CZK): No est v -31.5B prior

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)

- 08:30 (CA) Canada Q4 Current Account Balance: -$8.0Be v -$7.5B prior

- 08:30 (CA) Canada Jan MLI Leading Indicator M/M: No est v 0.7% prior

- 09:00 (US) Fed’s Williams makes opening remarks at conference

- 09:00 (FR) France Debt Agency (AFT) to sell €5.0-6.2B in 3-month, 6-month and 12-month bills (4 tranches)

- 09:30 (CA) Canada Feb Manufacturing PMI: No est v 54.4 prior

- 09:45 (US) Feb Final Markit Manufacturing PMI: 58.5e v 58.5 prelim

- 09:45 (EU) ECB weekly QE bond buying update

- 10:00 (US) Jan Construction Spending M/M: 0.7%e v 1.0% prior

- 10:00 (US) Feb ISM Manufacturing: 58.6e v 58.7 prior; Prices Paid: 80.0e v 82.1 prior

- 10:00 (MX) Mexico Jan Total Remittances: $3.2Be v $3.7B prior

- 10:00 (CO) Colombia Feb PMI Manufacturing: No est v 53.3 prior

- 10:00 (PE) Peru Feb CPI M/M: 0.2%e v 0.7% prior; Y/Y: No est v 2.7% prior

- 10:20 (EU) ECB Conference with Guindos (Spain), Makhlouf (Ireland) and Villeroy (France)

- 10:30 (MX) Mexico Feb PMI Manufacturing: No est v 43.0 prior

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

- 12:00 (IT) Italy Feb New Car Registrations Y/Y: No est v -14.0% prior

- 13:00 (BR) Brazil Feb Trade Balance +$0.8Be v -$1.1B prior; Total Exports: $15.7Be v $14.8B prior; Total Imports: $14.9Be v $15.9B prior

- 13:00 (MX) Mexico Feb IMEF Manufacturing Index: No est v 50.2 prior; Non-Manufacturing Index: No est v 47.6 prior

- 14:00 (US) Fed’s Bostic, Mester and Kashkari discuss racism and economy

- 16:45 (NZ) New Zealand Q4 Terms of Trade Index Q/Q: +1.0%e v -4.7% prior

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 109.2 prior

- 18:00 (KR) South Korea Jan Industrial Production M/M: 0.7%e v 3.7% prior; Y/Y: 5.9%e v 3.4% prior

- 18:30 (JP) Japan Jan Jobless Rate: 3.0%e v 2.9% prior; Job-To-Applicant Ratio: 1.06e v 1.06 prior

- 18:50 (JP) Japan End-Feb Monetary Base: No est v ¥616.5T prior

- 19:30 (AU) Australia Q4 Current Account Balance: A$13.1Be v A$10.0B prior

- 19:30 (AU) Australia Jan Building Approvals M/M: -2.0%e v +10.9% prior

- 19:30 (KR) South Korea Feb PMI Manufacturing: No est v 53.2 prior

- 19:30 (TW) Taiwan Feb PMI Manufacturing: No est v 60.2 prior

- 20:30 (KR) Bank of Korea (BOK) to sell KRW250B in 6-month bills

- 21:30 (KR) Bank of Korea (BOK) to sell KRW3.3T in 30-year Bonds

- 22:00 (TH) Thailand Central Bank to sell combined THB95B in 3-month and 12-month bills

- 22:30 (AU) Reserve Bank of Australia (RBA) Interest Rate Decision: Expected to leave Cash Rate Target unchanged at 0.10% and maintain 3-year Yield Target at 0.10%

- 22:35 (JP) Japan to sell 10-year JGB Bonds

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