Gold hits record high – Attention on US CPI tomorrow

Notes/observations

- Softer European equities for the most part, with exception of FTSE100, the only major index in the green, after overnight beat in UK Mar BRC LFL sales, for fastest pace since Aug 23’. Analysts attributing some of the surprise to Easter holiday consumer spending.

- Similar story for EU yields, with UK gilt yields marginally outperforming.

- Lack of fresh macro catalysts leaves FX market stuck trading sideways. BoJ Gov Ueda testimony in Parliament did not provide any new color, as senior Japan officials ‘continue to watch FX levels’.

- Main focus remains on US CPI reading tomorrow, Apr 10th, and ECB decision on Thurs.

- Asia closed mixed with Nikkei225 outperforming +1.1%. EU indices are -0.7% to +0.2%. US futures are -0.1% to +0.1%. Gold +0.8%, DXY 0.0%; Commodity: Brent +0.5%, WTI +0.5%; Crypto: BTC -2.0%, ETH +0.9%.

Asia

- Australia Apr Westpac Consumer Confidence: 82.4 v 86.0 prior.

- Australia Mar NAB Business Confidence: 1 v 0 (nil) prior.

- Japan Fin Min Suzuki reiterated that FX should move stably and reflect fundamentals. Watching FX with a high sense of urgency.

- BOJ Gov Ueda testimony in Parliament reiterated overall assessment that domestic economy showed some weakness but recovering moderately. Chance of solid wage growth this year was heightening. Inflation is likely to exceed 2% this fiscal year and slow thereafter. Must watch FX, market developments and their impact on economy and prices. BOJ to guide policy appropriately with eye on the economy, price developments with short-term rates as policy target.

Global conflict/tensions

- Hamas Official stated that it rejected the latest cease-fire proposal; Israeli position during last round of negotiations in Cairo remained stubborn and did not meet any demands of Palestinians.

- Israeli PM Netanyahu stated that a date had been set for a Rafah invasion in Gaza.

- EU Top Diplomat Borrell said a war is certainly looming around Europe and that it must prepare for potential war, as a full-scale conflict on the continent beyond Ukraine is no longer a fantasy [**Note: the first time Borrell has laid out the Russian threat so explicitly].

Europe

- UK Mar BRC LFL Sales Y/Y: 3.2% v 1.8%e [fastest rise since Aug].

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.17% at 508.08, FTSE +0.12% at 7,952.81, DAX -0.48% at 18,225.95, CAC-40 -0.49% at 8,079.68, IBEX-35 -0.42% at 10,866.16, FTSE MIB -0.54% at 34,131.00, SMI -0.11% at 11,534.60, S&P 500 Futures -0.03%]

Market focal points/key themes: European indices open generally lower with FTSE-100 slightly outperforming other indices; sectors trending to the upside include energy, media and financials, while industrials and materials are among those trending lower; on corporate front, shares of Fincantieri in Milan trade sharply higher in Milan following the contract to build ships with Norwegian Cruise Line. Shares of Imperial Brands in London are slightly higher after releasing trading update, while Atos stock turned lower following long-awaited restructuring plan. On M&A front, shares of Gresham Technologies rise over 25% after takeover offer; earnings expected in the upcoming US session include Tilray and Cognyte.

Equities

- Consumer staples: Imperial Brands [IMB.UK] +0.5% (trading update).

- Energy: BP plc [BP.UK] +2.0% (trading update; oil prices on watch as Israeli PM sets a date for a Rafah invasion in Gaza), Tethys Oil [TETY.SE] +8.0% (exploring options), Nordex [NDX1.DE] +3.5% (receives order), OMV AG [OMV.AT] -1.0% (Q1 metrics), PGS [PGS.NO] +11.5% (Q1 trading update).

- Healthcare: Lundbeck [LUN.DK] +0.5% (submits sNDA for brexpiprazole and sertraline combination).

- Industrials: Fincantieri [FCT.IT] +7.0% (contract with NCLH), Thales [HO.FR] -1.0% (space contract to search for life on Mars).

- Technology: Atos [ATO.FR] -4.5% (refinancing plan parameters), Gresham Technologies [GHT.UK] +25.5% (to be acquired).

Speakers

- ECB Q1 Bank Lending Survey noted that credit standards for firms tightened a little during the quarter; For Q2, EU banks saw tighter credit standards for corporates but no change for households.

- EU Economic Commissioner Gentiloni commented that it should establish EU-wide central fiscal capacity. Stressed that EU would benefit from permanent safe asset.

- China President Xi said to be planning to meet with Russia Foreign Min Lavrov soon.

Currencies/fixed income

- USD was steady in quiet trade with focus on Wed’s CPI data. Dealers noted that the greenback was unable to build on gains following Friday's better Non-farm payroll report.

- EUR/USD at 1.0850 area by mid-session. ECB likely to signal that a rate cut in June is still planned. Citigroup analysts on ECB saw four 25bps rate cuts by end-2024 (previously saw five 25bps rate cuts).

- USD/JPY continued to hover below the 152 level.

Economic data

- (SE) Sweden Mar Maklarstatistik Housing Prices Y/Y: 0.0% v -0.5% prior.

- (NL) Netherlands Feb Consumer Spending Y/Y: 0.3% v 0.5% prior.

- (NL) Netherlands Mar CPI M/M: 0.5% v 0.7%e; Y/Y (final): 3.1% v 3.1% prelim.

- (NL) Netherlands Mar Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 3.1% v 3.1% prelim.

- (DK) Denmark Feb Current Account Balance (DKK): 29.7B v 21.6B prior; Trade Balance (ex-shipping): B v 10.5B prior.

- (RO) Romania Q4 Final GDP (3rd reading) Q/Q: -0.5% v -0.5% prelim; Y/Y: 3.0% v 3.0% prelim.

- (JP) Japan Mar Preliminary Machine Tool Orders Y/Y: % v -8.0% prior.

- (FR) France Feb Trade Balance: -€5.2B v -€7.2B prior; Current Account: +€0.9B v -€0.5B prior.

- (CZ) Czech Mar Unemployment Rate: 3.9% v 3.9%e.

- (TW) Taiwan Mar CPI Y/Y: 2.1% v 2.5%e; CPI Core Y/Y: 2.1% v 2.9% prior; PPI Y/Y: 0.3% v 0.1% prior.

- (CZ) Czech Mar International Reserves: $148.0B v $146.3B prior.

- (HK) Hong Kong Mar Foreign Reserves: $423.6B v $425.2B prior.

- (HU) Hungary Mar YTD Budget Balance (HUF): -2.321T v -1.704T prior.

Fixed income issuance

- (BE) Belgium Debt Agency (BDA) opened book to sell EUR-denominated new Oct 2029 OLO bond via syndicate; guidance seen +1bp to mid-swaps.

- (ES) Spain Debt Agency (Tesoro) sold total €5.232B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.

- (UK) DMO sold £2.25B in 4.75% Oct 2043 Gilts; Avg Yield: 4.495% v 4.467% prior; Bid-to-cover: 3.67x (record level) v 3.41x prior; Tail 0.1bps v 0.4bps prior.

- (AT) Austria Debt Agency (AFFA) sold total €2.013B vs. €2.013B indicated in 2029 and 2033 RAGB Bonds.

Looking ahead

- (IT) Italy govt possible submission of budget to EU.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €4.0B of 2.1% Apr 2029 BOBL.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.0B in 3-month and 12-month bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2032, 2037 and 2040 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (US) Mar NFIB Small Business Optimism Index: 90.0e v 89.4 prior.

- 06:00 (IE) Ireland Feb Industrial Production M/M: No est v -28.9% prior; Y/Y: No est v -31.9% prior.

- 06:00 (PT) Portugal Feb Trade Balance: No est v -€1.7B prior.

- 06:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Floden.

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month bills.

- 07:00 (ZA) South Africa Feb Manufacturing Production M/M: 0.7%e v 0.8% prior; Y/Y: 3.7%e v 2.6% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (MX) Mexico Mar CPI M/M: 0.5%e v 0.1% prior; Y/Y: 4.5%e v 4.4% prior.

- 08:00 (MX) Mexico Mar CPI Core M/M: 0.5%e v 0.5% prior; Y/Y: 4.6%e v 4.6% prior.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (UR) Ukraine Mar CPI M/M: 1.1%e v 0.3% prior; Y/Y: 3.5%e v 4.3% prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 12:30 (CH) SNB's Schlegel in Geneva.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 15:00 (AR) Argentina Feb Industrial Production Y/Y: No est v -12.4% prior; Construction Activity Y/Y: No est v -21.7% prior.

- 16:30 (US) Weekly API Oil Inventories.

- 19:50 (JP) Japan Mar PPI (Domestic CGPI) M/M: 0.3%e v 0.2% prior; Y/Y: 0.8%e v 0.6% prior.

- 19:50 (JP) Japan Mar Bank Lending Y/Y: No est v 3.0% prior; Bank Lending (ex-trusts) Y/Y: No est v 3.4% prior.

- 20:00 (AU) Australia to sell A$800M indicated in 4.75% Apr 2027 bonds.

- 21:00 (PH) Philippines Feb Unemployment Rate: No est v 4.5% prior.

- 22:00 (NZ) Reserve Bank of New Zealand (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate (OCR) unchanged at 5.50%.