EU data pointing towards a stronger recovery

Notes/Observations

- Rising coronavirus vaccination rates and an improving economic outlook in EU prompts optimism.

- UK March Retail Sales handily beats expectations.

- European PMI data better-than-expected and at or near record highs (Beats: France, Germany, Euro Zone and UK);

Asia:

- Australia Apr Preliminary PMI Manufacturing registered its 1th month of expansion and a record high (59.6 v 56.8 prior).

- Japan Apr Preliminary PMI Manufacturing registered its 3rd month of expansion and highest since Oct 2018 (53.3 v 52.7 prior).

- Japan Mar National CPI Y/Y: -0.2% v -0.2%e; CPI ex-fresh food (core) Y/Y: -0.1% v -0.2%e.

- China SAFE (FX Regulator): - Risks from foreign debt manageable; China did not accumulate excessive foreign debt during US Fed easing. To keep close eye on risks from pandemic and tensions.

- Japan Fin Min Aso reiterated the view that did not think BOJ was conducting a negative rate policy because of large public debt or that negative policy iwa cooling economy.

Coronavirus:

- Japan recommends declaring state of emergency in Tokyo, Osaka, Kyoto, and Hyogo from Apr 25 - May 11th.

- India Health Ministry: Daily COVID cases rise by record 332,730; daily COVID-related deaths rise by a record 2,263.

- COVID-19 said to no longer be considered a pandemic in UK as real world data showed the vaccine rollout has cut symptomatic infections by 90%.

Americas:

- Biden Administration said to be looking into nearly doubling the capital-gains tax for Americans earning more than $1 million a year to 39.6% from the current base rate of 20%.

- Republicans unveil their 5-year infrastructure framework. The plan caps out at around $568, around 1/4 the cost of Biden's, focused entirely on what GOP say is "traditional infrastructure.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.28% at 438.38, FTSE -0.30% at 6,917.59, DAX -0.28% at 15,278.40, CAC-40 -0.14% at 6,258.55, IBEX-35 -0.33% at 8,627.00, FTSE MIB -0.11% at 24,365.50, SMI -0.49% at 11,170.00, S&P 500 Futures +0.21%].

Market Focal Points/Key Themes: European indices open generally lower but moderated losses as the session progressed; better-performing sectors include utilities and consumer discretionary; industrials and materials sectors among those leading to the downside; FirstGroup divests student and transit units; earnings expected in the upcoming US session include Autoliv, Regions Financial, Honeywell and Schlumberger.

Equities

- Consumer discretionary: FirstGroup [FGP.UK] +10% (divestment), Tod's [TOD.IT] +7% (LVMH raises stake), Moncler [MONC.IT] -6% (sales).

- Industrials: Daimler [DAI.DE] +1% (earnings), SAAB [SAABB.SE] +7% (earnings), Air Liquide [AL.FR] -1% (sales).

Speakers

- German Fin Min Scholz: Country has weathered the pandemic better than others - comments from parliament.

- UK Debt Management Office (DMO) cut its FY21/22 net financing requirement to £252.6B ( reduction of £43.3B) from its March Budget).

- ECB, BOE, SNB, BoJ, Fed and other central banks said to discontinue 3-month USD liquidity operations from July 1st.

- Russian Defense Ministry stated that it had begun to have troops return from Crimea following exercises (as speculated).

- Indonesia Economic Ministry updated its GDP outlook which forecasted 2021 GDP growth between 5.4-6.0% range.

- Singapore PM Lee announced a Cabinet reshuffle that would be effective from May 15th. Named Lawrence Wong as finance minister (replacing Heng Swee Keat) and named Gan Kim Yong as Trade Minister.

Currencies/Fixed Income

- USD remained on soft footing as various EU PMI data remained in expansionary territory and hinted of a strong recovery for the region.

- EUR/USD edging back towards 7-week higher after a string of better PMI data. The data helped to shrug off cautious ECB comments on the outlook on Thursday.

- GBP/USD edged back towards the 1.39 area after UK March Retail Sales handily beats expectations. Continued optimism over the reopening of the UK economy after reports circulated that COVID-19 was no longer be considered a pandemic in UK as real-world data showed the vaccine rollout has cut symptomatic infections by 90%.

- RUB currency (ruble) was former as Russia formally began moving troops away from the Ukraine border. USD/RUB moved below the 75 handles as the threat of more sanctions against Russia faded for the time being.

- Bitcoin fell below $50,000 for the first time since March on the back of reports over President Biden’s capital tax plan.

- The 10-year Gilt yield was lower after DMO cut the remit for FY21/22. Yield tested below 0.72 initially.

Economic data

- (UK) Mar Retail Sales (ex-auto/fuel) M/M: 4.9% v 2.0%e; Y/Y: 7.9% v 4.5%e.

- (UK) Mar Retail Sales (includes auto/fuel) M/M:5.4% v 1.5%e; Y/Y: 7.2% v 3.5%e.

- (UK) Mar Public Finances (PSNCR): £19.2B v £14.4B prior; Public Sector Net Borrowing: £27.3B v £21.3Be; Central Government NCR: £20.8B v £6.4B prior; PSNB (ex-banking groups): £28.0B v £22.0Be.

- (AT) Austria Feb Industrial Production M/M: 3.7% v 2.6% prior; Y/Y: +1.9% v -3.6% prior.

- (FR) France Apr Preliminary PMI Manufacturing: 59.2 v 59.0e; PMI Services: 50.4 v 46.7e; PMI Composite: 51.7 v 49.4e.
(DE) Germany Apr Preliminary PMI Manufacturing: 66.4 v 65.8e (10th month of expansion); PMI Services: 50.1 v 51.0e; PMI Composite: 56.0 v 57.0e.

- (CN) Weekly Shanghai copper inventories (SHFE): 202.4K v 202.5K tons prior.

- (EU) Euro Zone Apr Preliminary PMI Manufacturing: 63.3 v 62.0e (10th month of expansion and record high); PMI Services: 50.3 v 49.1e; PMI Composite: 53.7 v 52.9e.

- (RU) Russia Narrow Money Supply w/e Apr 16th (RUB): 14.01T v 13.90T prior.

- (TW) Taiwan Mar Industrial Production Y/Y: 16.8% v 9.7%e.

- (TW) Taiwan Mar M2 Money Supply Y/Y: 8.9% v 9.1% prior; M1 Money Supply Y/Y: 18.2% v 18.6% prior.

- (HK) Hong Kong Mar CPI Composite Y/Y: 0.5% v 0.8%e.

- (UK) Apr Preliminary PMI Manufacturing: 60.7 v 59.0e (11th straight expansion and highest reading since July 1994); PMI Services: 60.1 v 58.9e; PMI Composite: 60.0 v 58.1e.

- (IS) Iceland Mar Wage Index M/M: 0.4% v 0.3% prior; Y/Y: 10.6% v 10.6% prior.

Fixed income Issuance

None seen.

Looking Ahead

- (EU) Daily ECB Liquidity Stats.

- 05:30 (IN) India to sell combined INR210B in 2033, 2035 and 2050 bonds.

- 05:30 (ZA) South Africa to sell combined ZAR1.2B in 2025, 2033 and 2046 I/L Bonds.

- 05:30 (PL) Poland to sell Bonds.

- 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 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to raise Key 1-Week Auction Rate by 25bps to 4.75%.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (MX) Mexico Feb Retail Sales M/M: 1.5%e v 0.1% prior; Y/Y: -5.7%e v -7.6% prior.

- 07:30 (IN) India Weekly Forex Reserve w/e Apr 16th: No est v $581.2B prior.

- 08:00 (PL) Poland Mar M3 Money Supply M/M: 1.5%e v 0.9% prior; Y/Y: 14.1%e v 16.3% prior.

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

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

- 09:00 (CL) Chile Mar PPI M/M: No est v 3.5% prior.

- 09:45 (US) Apr Preliminary Markit PMI Manufacturing: 61.0e v 59.1 prior; PMI Services: 61.5e v 60.4 prior; PMI Composite: No est v 59/7 prior.

- 10:00 (US) Mar New Home Sales: 885Ke v 775K prior.

- 10:30 (EU) ECB chief Lagarde.

- 11:00 (EU) Potential sovereign ratings after European close (S&P on Italy).

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