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USD bears feel confident that the Fed gave the green light for continued benign neglect
(FI) Finland Q1 House Prices Q/Q: 1.0% v 0.2%e
(FI) Finland Mar Preliminary Retail Sales Volume Y/Y: 2.1% v 2.1%e
(FI) Finland Mar Unemployment Rate: 9.3% v 8.4%e
(GE) Germany Mar Import Price Index M/M: 1.1% v 1.1%e; Y/Y: 11.3% v 11.3%e
(GE) Germany Mar ILO Employment: 40.6M v 40.6M prior; Unemployment rate: 6.5% v 6.3% prior
(IN) India Primary Articles WPI w/e Apr 16th Y/Y: 12.1% v 12.0% prior; Food Articles WPI Y/Y: 8.3% v 8.7% prior
(FR) France Mar Consumer Spending M/M: -0.7% V 0.2%e; Y/Y: 2.6% V 3.7%e
(RU) Russia Gold & Forex Reserve w/e Apr 22nd: $517.9B v $512.8B prior
(HU) Hungary Mar Unemployment Rate: 11.6% V 11.5%e
(SA) South Africa Feb Leading Indicator: 136.1 v 134.7 prior
(SP) Spain Feb Mortgages-capital loaned Y/Y: -17.7% v -21.0% prior; Y/Y: -8.8% v -7.9% prior
(SW) Sweden Apr Consumer Confidence: 17.6 v 17.5e; Economic Tendency: 109.8 v 112.0e
(SW) Sweden Q1 Manufacturing Confidence: 7 v 12e
(SW) Sweden Mar PPI M/M: 0.0% v 0.4%e; Y/Y: 1.7% v 2.1%e
(SW) Sweden Mar Trade Balance (SEK): 9.6B v 9.0Be
(GE) Germany Apr Unemployment Change: -37K v -37Ke; Unemployment Rate: 7.1% v 7.0%e
(IT) Italy Apr Business Confidence: 103.0 v 103.5e
(HK) Hong Kong Mar Trade Balance (HKD): -40.1B v -36.6Be; Exports Y/Y: 21.5% v 20.4%e; Imports Y/Y: 18.8% v 18.4%e
(GR) ECB end-Feb funding to Greek banks at €90.4B v €94.4B m/m
(IC) Iceland Apr CPI M/M: 0.8% v 1.0% prior; Y/Y: 2.8% v 2.3% prior
(BE) Belgium Apr CPI M/M: 0.3% v 0.5% prior; Y/Y: 3.4% v 3.5% prior
(SA) South Afrca Mar PPI M/M: 0.9% v 0.6%e; Y/Y: 7.3% v 7.2%e
Fixed Income
(IT) Italy Debt Agency (Tesoro) sold approx €6.6B vs. €5.0-7.0B in 2014 and 2021 Bonds
Sold €3.21B vs. €2.5-3.5Be in 3.0% Apr 2014 BTP; Avg Yield 3.45% v 3.24% prior; Bid-to-cover: 1.58x v 1.3x prior
Sold €3.35B vs. 2.5-3.5Be in 4.75% Sept 2021 BTP; Avg Yield 4.84% v 4.80% prior; Bid-to-cover: 1.41x v 1.50x prior
Sold €3.5B vs. €2.5-3.5Be indicated in Floating 2018 CCT, Avg Yield 2.89%
HU) Hungary Debt Agency (AKK) sold HUF60B in 12-Month Bills; Avg Yield 5.93% v 5.98% prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Notes/Observations:
BOJ Interest left the Target Rate Range unchanged between 0.0% to 0.10%; As expoected
RBNZ unchanged with a dovish tint
Fed Chairman Bernanke signals no rush to normalize policy. USD softer across the board as dollar bears believe they have been given the green light
Equities:
FTSE 100 +0.10% at 6091, DAX +0.50% 7438, CAC 40 +0.70% at 4095, IBEX 35 +1% at 10845, FTSE MIB +0.60% at 22370, SMI +0.30% at 6494
European shares rose again today supported by Fed's speech and good corporate earnings. During its historic press conference Fed's Bernanke pledged that the central bank would maintain its monetary stimulus in contrast with ECB and other central banks. As expected Fed left the target rate unchanged but Bernanke also confirmed that it would keep balance sheet stable at end of QE 2 program and reinvest assets. Wall Street cheered the support as fears that Bernanke may signal the end of an expansionary monetary policy dissipated. Investors will eye US GDP today due during early morning. European corporate earnings were strong today adding further support to the rally.
Deutsche Bank [DB1.GE] topped estimates buoyed especially by divisions of Private Clients and Asset and Wealth Management supported significantly by Postbank. Investment banking had also raised on a yearly basis. Shares rallied as bank reiterated its outlook. Royal Dutch Shell [RDSA.UK] also gained on the FTSE100 after reporting strong results. The output was slightly lower but the decrease at 4% was alarming than its peer BP. Bayer [BAYN.GE] gained over 1.5% after surpassing estimates and raising outlook for FY11.
Among the decliners was SAP [SAP.GE], dropping over 5% after reporting lower than expected results and weaker margins on a sequential basis. The decrease was primarily attributed to costs related to the acquisition of SybaseHowever, the company reaffirmed its forecast and the CEO noted that the Q1 was generally a weak quarter. Unilever [UNA.NV] also dropped around 3.5% after missing estimates and announcing that movement in underlying operating margin to be down in H1 before improving in H2 2011
Speakers:
(JP) BOJ semi-annual Economic Outlook noted that Japan's economy to remain under strong downward pressure, mainly on output, for time being. The BOJ cut its FY11 GDP view to 0.6% from 1.6% prior but did raise FY12 GDP forecast to +2.9% from 2.0% prior Jan view. It raise both FY11 and FY12 core views to 0.7% versus 0.3% and 0.6% views previously
IMF commented in its regional report that China's inflation was close to peaking and would slow in H2 of the year towards the range of 4.0% to 4.5%. Thus it view as that inflation to increase further in 2011 before decelerating modestly in 2012 for the region. It noted that it was premature to say that China's economy was overheating but pockets of overheating had emerged across parts of the Asian region. It was important for China maintained a prudent monetary policy stance as the need to tighten macroeconomic policies has become more pressing. Interest rates were below levels consistent with stable growth and low inflation as high commodity prices have spilled over into core inflation and expectations
BOJ Gov Shirakawa commented at his post rate decision press conference that the BOJ expected exports and production to rebound in H2 of the year but cautioned it needed to watch the downside economic. He stressed that the BOJ to take appropriate steps if necessary but had no comment whether BOJ would directly purchase JGBs if approved by parliament. Lastly he noted that it was unlikely that prices would keep rising given the current gap between demand and supply
BoE Sentence reiterated his long-standing hawkish tone on UK interest rates. He again noted that the BOE should NOT for 'red signal' before increasing interest rates and stressed need for gradual rate hikes
ECB Mersch reiterated view that non-standard measures are temporary and to be withdrawn at an appropriate pace
China Premier Wen reiterated G20's view for its distaste in using all forms of protectionism and added that he sought a balance on global trade
EU Commissioner De Gucht commented that China's export credits were hurting European businesses
The German Institute for Economic Research (DIW) forecasted first and second quarter GDP at 0.9% and 0.6%, respectively. This compares with the German Minister of Finance's first quarter GDP estimate of 0.75%.
Currencies/Fixed income:
Following the FOMC rate decision and Bernanke press conference the soft tone of the USD has been the markets' obsession with further downside in focus for the greenback. The Dollar Index fell to the lowest since 2008 below 73.04 level. For the most part the risk appetite theme remained appropriate after the FOMC signaled that it would maintain its record monetary stimulus after ending large-scale bond purchases in June. The EUR/USD was higher by over 50 pips from its Asian open hovering around the mid-1.48 handle during the session.
Geo-Political/In the Papers:
The Bank of Japan semi-annual economic outlook reported that attention must be paid to the downside economic risks. There is high degree of uncertainty regarding how the recent disasters will affect the economy, including its possible affects on corporate and household growth expectations. The outlook broadly raised inflation estimates for the country including the current year core CPI to 0.7% from the January view of 0.3%. The report also cut the growth forecast for the year to 0.6% (1.6% prior) though raise next year forecast to 2.9% (2.0% prior). The economic recovery is seen to accelerate from October.
Looking Ahead
(BR) Brazil Mar Central Govt Budget (BRL): 8.4Be v 2.6B prior
(IS) Israel Feb Unemployment Rate: No est v 6.1% prior
(SP) Spain Feb Total Housing Permits M/M: No est v -15.3% prior; Y/Y: No est v 4.0% prior
6:00 (CZ) Czech Republic to sell CZK6.0B in 3-month Bills
6:00 (IR) Ireland Mar Retail Sales Volume M/M: No est v 3.2% prior; Y/Y: No est v -0.7% prior
7:00 (BR) Brazil Apr FGV Inflation IGP-M M/M: 0.6%e v 0.6% prior; Y/Y: 10.7%e v 11.0% prior
7:30 (BR) Brazil COPOM Monetary Policy Meeting Minutes
8:00 (CL) Chile Mar Industrial Production Y/Y: 23.0%e v 1.9% prior; Industrial Sales Y/Y: 12.9%e v 3.8% prior
8:00 (CL) Chile Mar Total Copper Production: No est v 368.2K tons
8:00 (CL) Chile Mar Retail Sales Y/Y: No est v 16.8% prior
8:30 (US) Fed's Williams speaks at Community Affairs Conference
8:30 (US) Mar Chicago Fed National Activity Index: +0.50e v -0.04 prior
8:30 (US) Q1 Advanced GDP QoQ (Annualized): 2.0%e v 3.1% prior; Personal Consumption: 2.0%e v 4.0% prior
8:30 (US) Q1 Advanced GDP Price Index: 2.3%e v 0.4% prior; Core PCE Q/Q: 1.3%e v 0.4% prior
8:30 (US) Initial Jobless Claims: No est v 403K prior; Continuing Claims: No est v 3.695M prior
10:00 (US) Mar Pending Home Sales M/M: 1.5%e v 2.1% prior; Y/Y: No est v -9.3% prior
10:30 (US) Weekly EIA Natural Gas Inventories
11:00 (US)Fed to purchase $5-7B in Notes/Bonds
13:00 (US) Treasury to sell $29B in 7-Year Notes