Riksbank hikes, BOJ defends its yield control, signs of possible easing in EU inflation spike

Notes/Observations

- Sweden Riksbank unexpectedly resumed its tightening cycle with a 25bps hike (prior guidance was for late 2024 period).

- Spain Apr Preliminary CPI gives hope that region was very close to peak inflation.

- BOJ doubles down on its aggressive easing as it will continues daily fixed rate operations to defend the yield control.

- Companies due to report during the NY morning include Asbury Automotive, A. O. Smith, Baxter International, Peabody Energy, Carrier Global, Caterpillar, Comcast, Domino’s Pizza, First Cash, Hershey, Huntsman Corp, International Paper, Interpublic, Iron Mountain, JinkoSolar, KBR, Keurig Dr. Pepper, Lazard, Laboratory Corp, Eli Lilly, Southwest Airlines, Mastercard, McDonald’s, Altria, Merck, Northrop Grumman, Overstock.com, PulteGroup, Reliance Steel, Sonic Automotive, SiriusXM, Stanley Black & Decker, Thermo Fisher, TempurSealy, Twitter, Textron, Virtu Financial, Weight Watchers.

Asia

- BOJ Interest Rate left Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintained policy framework of "QQE with Yield Control" around 0.00% with float +/-25bp; to conduct fixed rate operation of 10-year JGBS at 0.25% every business day (Insight: BOJ move highlights its defense of it ultra-loose policy).

- BOJ Quarterly Outlook for Economic Activity and Prices cuts current year GDP growth while raising core CPI forecast. Medium-term CPI still way below target range.

- Monetary Authority of Singapore (MAS): maintained its 2022 outlook with overall CPI between 4.5-5.5% range; core CPI forecast between 2.5-3.5% range and GDP growth between 3.0-5.0% range.

- China authorities to crack down on price gouging amid hoarding and Beijing lockdown concerns.

- Japan Mar Retail Sales M/M: 2.0% v 1.0%e; Y/Y: 0.9% v 0.3%e.

- Japan Mar Dept. Store, Supermarket Sales Y/Y: No est v 0.1% prior.

- Japan Mar Preliminary Industrial Production M/M: 0.3% v 0.5%e; Y/Y: -1.7% v -1.3%e.

Russia/Ukraine

- Russia President Putin stated that Russia would reach 'all its objectives' in Ukraine. If someone wanted to 'meddle in Ukraine', Russia's response would be 'quick' (Note: Press reports taking Putin's comments as a hint that any country trying to intervene in the Ukraine war could be on the receiving end of a nuclear strike).

- EU Energy companies said to be preparing to accept Russia President Putin terms on Russia gas purchases (reports circulated that Germany feared Russian gas blockade if Putin’s demands on Ukraine were ignored.

Europe

- ECB chief Lagarde stated that ECB had an 'unwavering commitment' to deliver on its price target. Reiterated stance that inflation was mainly energy driven.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +1.22% at 449.74, FTSE +0.93% at 7,494.80, DAX +1.97% at 14,065.56, CAC-40 +1.95% at 6,570.92, IBEX-35 +0.80% at 8,545.60, FTSE MIB +1.71% at 24,238.00, SMI +0.59% at 12,122.69, S&P 500 Futures +1.83%].

Market Focal Points/Key Themes: European indices open higher across the board and advanced further into the green as the session progressed; sectors leading to the upside include technology and industrials; materials and consumer discretionary sectors among the laggards; Albioma to be acquired by KKR; earnings expected during the upcoming US session include KBR, Huntsman, Linde and Thermo Fisher.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] -6% (sales), J Sainsbury [SBRY.UK] -3% (earnings).

- Consumer staples: Unilever [UNA.NL] +0.5% (earnings).

- Energy: TotalEnergies [TTE.FR] +2.5% (earnings; impairment).

- Financials: Standard Chartered [STAN.UK] +14% (earnings), Barclays [BARC.UK] +2% (earnings).

- Healthcare: Sanofi [SAN.FR] -0.5% (earnings).

- Industrials: Volvo Cars [VOLVARB.SE] +8% (earnings).

- Technology: Temenos [TEMN.CH] +16% (interest).

- Telecom: Nokia [NOKIA.FI] +3% (earnings).

Speakers

- ECB’s De Guindos (Spain) commented that the surge in energy prices was reducing demand and raising production costs. Developments pointed to slower growth in coming period. Did not expect negative 2022 growth even under its worst case scenario. Believed region was very close to peak inflation. ECB prepared to act on fragmentation if needed but have yet to see any significant widening of spreads at this time.

- ECB's Visco (Italy) stated that a Q3 interest rate hike could occur.

- Sweden Central Bank (Riksbank) Gov Ingves post rate decision press conference noted that it was hitting the brakes rather than taking its foot off the gas pedal.

- Norway Central bank (Norges) Gov Olsen stated that global growth might slow more than expected due to rising inflation thus facing more challenging monetary policy trade-off ahead.

- ECB Economic Bulletin noted that the Ukraine conflict was affecting economy.

- EU Economic Commissioner Gentiloni (Italy stated that 2022 growth would be much slower than forecast.

- Turkey Central Bank (CBRT) Gov Kavcioglu: stated that commodity prices, FX and supply issues were all factors behind inflation readings. Geopolitical developments increased food rice risks. Saw Q1 GDP growth around 7.0%. Did not aim to hold exchange rate at a level.

- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) which raised its end-2022 inflation from 23.2% to 42.8% and also raised the end-2023 inflation from 8.2% to 12.9%.

- BOJ Gov Kuroda post rate decision press conference stated that it was Appropriate to maintain current powerful easing. To conduct fixed rate operations every business day; to ensure defense of upper end of yield target. Stated that risks were to the downside for the economy and tilted to the upside for prices. Reiterated stance that will not hesitate to add to easing if necessary. To continue to seek the 2.0% inflation target. Believed 2.0% inflation would not be sustained as energy price impact on CPI faded. Would take more time to achieve price target in virtual easing cycle of rising corporate profits and wages. Desirable for FX to move in stable manner and reflect economic fundamental. Excessive currency movement would make it hard for businesses to plan. No need to seek a policy exit given the price outlook.

- China Commerce Ministry (MOFCOM) reiterated that US and China trade teams were maintaining normal communication.

- China govt cuts coal import tariffs to zero; effective from May 1st 2022 to end-Mar 2023.

Currencies/Fixed Income

- DXY dollar index rises to its highest since late 2002 again aided by safe-haven demand due to concerns about Russia's move to suspend gas supplies to Poland and Bulgaria and China coronavirus lockdowns. Diverging central bank policies also was a factor.

- EUR/USD hit fresh 5-year lows below 1.05 level as the session began bit moved off its worst level as various EU inflation data remained stubbornly high. Dealers noted that some of the high print of German inflation had already been well priced in. The break of 1.05 prompted speculation that ECB could up its rhetoric to defend the Euro from moving lower.

- USD/JPY hits fresh 20-year highs above 131 level. Yen currency weakened in aftermath of BOJ decision with focus on the continuation of its unlimited fixed rate JGP operation. BOJ move highlights its defense of it ultra-loose policy.

- GBP/USD moved below the 1.25 level for the 1st time since July 2020 but stabilized as the session progressed. Last at 1.2545 at mid-session.

- SEK currency (krona) was firmer after the Riksbank raised its benchmark repo rate to 0.25%.

Economic data

- (DE) Germany Apr CPI North Rhine Westphalia M/M: 0.6% v 2.7% prior; Y/Y: 7.7% v 7.6% prior.

- (NL) Netherlands Apr Producer Confidence Index: 10.8 v 8.7 prior.

- (SE) Sweden Q1 GDP Indicator Q/Q: -0.4% v -0.5%e; Y/Y: 3.0% v 3.8%e.

- (SE) Sweden Mar GDP Indicator M/M: +1.0% v -0.3% prior; Y/Y: 2.1% v 3.0% prior.

- (SE) Sweden Mar Retail Sales M/M: +0.2% v -0.1% prior; Y/Y: 1.2% v 2.7% prior.

- (NO) Norway Feb AKU Unemployment Rate: 3.1% v 3.2% prior.

- (DK) Denmark Mar Retail Sales M/M: -0.3% v -1.4% prior; Y/Y: -10.8% v 6.4% prior.

- (ES) Spain Q1 Unemployment Rate: 13.7% v 13.0%e.

- (ES) Spain Apr Preliminary CPI M/M: -0.1% v +0.4%e; Y/Y: 8.4% v 9.1%e; Core CPI Y/Y: 4.4% v 3.4% prior.

- (ES) Spain Apr Preliminary CPI EU Harmonized M/M:-0.2 % v +0.4%e; Y/Y: 8.3% v 9.0%e.

- (SE) Sweden Apr Consumer Confidence: 74.9 v 70.0e; Manufacturing Confidence: 121.4 v 124.7 prior; Economic Tendency Survey: 109.5 v 108.0e.

- (TR) Turkey Apr Economic Confidence: 94.7 v 95.7 prior.

- (HU) Hungary Mar Unemployment Rate:3.6%# v 3.8% prior.

- (HU) Hungary Central Bank raised its One Week Deposit Rate by 30bps to 6.45% (as expected).

- (SE) Sweden Central Bank (Riksbank) raised the Repo Rate by 25bps to 0.25bps (not expected).

- (TW) Taiwan Q1 Advance GDP (1st reading) Y/Y: 3.1% v 2.8%e.

- (DE) Germany Apr CPI Hesse M/M: 0.5% v 2.6% prior; Y/Y: 7.9% v 8.0% prior.

- (DE) Germany Apr CPI Bavaria M/M: 0.4% v 2.8% prior; Y/Y: 7.5% v 7.8% prior.

- (DE) Germany Apr CPI Baden Wuerttemberg M/M: 1.2% v 2.0% prior; Y/Y: 7.0% v 6.3% prior.

- (IT) Italy Apr Consumer Confidence Index: 100.0 v 100.0e; Manufacturing Confidence: 110.0 v 109.0e; Economic Sentiment: 105.5 v 105.3 prior.

- (PT) Portugal Apr Consumer Confidence Index: -27.2 v -22.1 prior; Economic Climate Indicator: # v 2.1 prior.

- (HK) Hong Kong Mar Trade Balance (HKD): -37.3B v 29.0Be; Exports Y/Y: -8.9% v +2.5%e; Imports Y/Y: -6.0% v +4.0%e.

- (DE) Germany Apr CPI Saxony M/M: 1.0% v 2.4% prior; Y/Y: 7.2% v 7.0% prior.

- (IT) Italy Feb Industrial Sales M/M: 2.8% v 2.3% prior; Y/Y: 20.9% v 16.9% prior.

- (BE) Belgium Q1 Preliminary GDP Q/Q: 0.3% v 0.4% prior; Y/Y: 4.6% v 5.7% prior.

- (IS) Iceland Apr CPI M/M: 1.3% v 0.9% prior; Y/Y: 7.2% v 6.7% prior.

Fixed income issuance

- (DK) Denmark sold total DKK1.1B in 3-month, 6-month and 9-month bills.

- (SE) Sweden sold SEK500M vs. SEK500M indicated in 0.125% Jun Inflation-linked 2039 bonds; Avg Yield: -1.2791% v -1.3750% prior; bid-to-cover: 1.57x v 1.78x prior.

Looking ahead

- (BE) Belgium Apr CPI M/M: No est v 0.5% prior; Y/Y: No est v 8.3% prior.

- (MX) Mexico Mar YTD Budget Balance (MXN): No est v -170.4B prior.

- (AR) Argentina Apr Consumer Confidence Index: No est v 36.91 prior.

- (DE) Germany Apr CPI Brandenburg M/M: No est v 2.6% prior; Y/Y: No est v 7.3% prior.

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

- 05:30 (ZA) South Africa PPI M/M: 1.5%e v 1.1% prior; Y/Y: 10.7%e v 10.5% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 06:00 (FR) France Q1 Total Jobseekers: No est v 3.102M prior.

- 06:00 (IT) Italy Mar Hourly Wages M/M: No est v 0.1% prior; Y/Y: No est v 0.7% prior.

- 06:00 (IE) Ireland Mar Retail Sales Volume M/M: No est v 0.9% prior; Y/Y: No est v 2.2% prior.

- 06:00 (IL) Israel Feb Manufacturing Production M/M: No est v 0.7% prior.

- 06:00 (IL) Israel Mar Unemployment Rate: No est v 3.9% prior; Unemployment Rate (including Covid Effect): No est v 5.4% prior.

- 06:00 (CZ) Czech Republic to sell CZK10B in 1-month Bills; Avg Yield: % v 4.68% prior; Bid-to-cover: x v 1.80x prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (BR) Brazil Apr FGV Inflation IGPM M/M: 1.7%e v 1.7% prior; Y/Y: 15.0%e v 14.8% prior.

- 07:00 (MX) Mexico Mar Unemployment Rate NSA (unadj): 3.4%e v 3.7% prior.

- 07:00 (CA) Canada Apr CFIB Business Barometer: No est v 65.1 prior.

- 08:00 (DE) Germany Apr Preliminary CPI M/M: 0.5%e v 2.5% prior; Y/Y: 7.2%e v 7.3% prior.

- 08:00 (DE) Germany Apr Preliminary CPI EU Harmonized M/M: 0.4%e v 2.5% prior; Y/Y: 7.6%e v 7.6% prior.

- 08:00 (BR) Brazil CONAB Sugar Production.

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

- 08:30 (US) Q1 Advance GDP Annualized Q/Q: 1.1%e v 6.9% prior; Personal Consumption: 3.5%e v 2.5% prior.

- 08:30 (US) Q1 Advance GDP Price Index: 7.2%e v 7.1% prior; Core PCE Q/Q: 5.5%e v 5.0% prior.

- 08:30 (US) Initial Jobless Claims: 180Ke v 184K prior; Continuing Claims: 1.40Me v 1.417M prior.

- 08:30 (BR) Brazil Mar Total Outstanding Loans (BRL): 4.700Te v 4.671T prior; M/M: 0.5%e v 0.0% prior; Personal Loan Default Rate: No est v 4.6% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (CL) Chile Mar Unemployment Rate: 7.8%e v 7.5% prior.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 22nd: No est v $611.1B prior.

- 09:30 (BR) Brazil Mar Tax Collections (BRL): 163.0Be v 148.7B prior.

- 10:00 (NL) ECB’s Elderson (SSM).

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Apr Kansas City Fed Manufacturing Activity Index: 35e v 37 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 13:30 (BR) Brazil Mar Total Formal Job Creation: +130.3Ke v +328.5K prior.

-14:00 (BR) Brazil Mar Central Govt Budget Balance (BRL): -10.3Be v -20.6B prior.

- 18:00 (NZ) New Zealand Apr Consumer Confidence Index: No est v 77.9 prior.

- 19:00 (KR) South Korea Mar Industrial Production M/M: -0.5%e v +0.6% prior; Y/Y: 4.0%e v 6.5% prior.

- 19:01 (UK) Apr Lloyds Business Barometer: No est v 33 prior.

- 21:30 (AU) Australia Q1 PPI Q/Q: No est v 1.3% prior; Y/Y: No est v 3.7% prior.

- 21:30 (AU) Australia Mar Private Sector Credit M/M: 0.6%e v 0.6% prior; Y/Y: 8.0%e v 7.9% prior.

- 22:00 (SG) Singapore Mar M1 Money Supply Y/Y: No est v 9.9% prior; M2 Money Supply Y/Y: No est v 3.5% prior.

- 23:00 (TH) Thailand Central Bank to sell THB50B in 3-month bills.