- Quiet start to week, digesting German PPI, awaiting Eurozone Fin Min
meeting, Fed and BoE speak
- UK tops statistical schedule for week with CPI, PPI Retail Sales;
US Durables, Home Sales, Japan Trade and flash PMIs also due
- RBNZ rates seen on hold, 'surprise' Russia rate cut increasingly likely,
Colombia central bank set to resume rate cuts
..........................................................................
********************
** EVENTS PREVIEW **
********************
A very quiet start to the week, with the closure of Japan's markets for the Vernal Equinox holiday serving to thin market volumes, and a very meagre schedule of data that amounts to no more than the just published German PPI and an expected contraction in Chile's Q4 GDP, which would offer a post hoc justification for last week's 25 bps rate cut. A slightly busier day in terms of policy events features a Eurozone Finance Ministers' meeting, a meeting between Merkel and Abe on trade, speeches from BoE's Haldane and Chicago Fed's Evans, while this evening brings the first French Presidential TV debate.
Updated: The Week Ahead - Bullet point highlights: 20 to 24 March 2017
After last week's busy run of major statistics, central bank meetings and political events, the week ahead has an overall much lighter feel, thus leaving markets a degree of free rein to start focussing on quarter end portfolio considerations, as well as Japan's corporate financial year end.
- Statistically the UK takes pride of place with the full run of inflation statistics, including CPI-H, along with Retail Sales and PSNB budget data, and both CBI business surveys. A lighter week in the US features Durable Goods Orders, Home Sales and FHFA House Prices, and as with Japan and the Eurozone 'flash' PMI readings. Japan has its latest Trade data, France looks to Unemployment, while Brazil and South Africa see the latest consumer inflation data.
- In central bank terms, there is a very busy schedule of Fed speak, but having raised last week and with the FOMC consensus rate trajectory seeing two further rate hikes this year, it is debatable whether there will be anything that amounts to fresh insights into the near-term policy outlook. It will still be interesting to observe whether the 'unity of purpose' in guiding market rate expectations higher ahead of last week's meeting continues to be maintained, or whether the divergence of opinions which was all too evident in 2015/16 reasserts itself. Elsewhere there will be a smattering of BoE, ECB and BoJ speak, while New Zealand's RBNZ is expected to hold rates at 1.75%, having recently signalled it could hold rates for a number of years; the lack of any fresh forecast update or a press conference implies limited scope for any market reaction. The ECB will also conduct the last of its TLTRO2 repos, with a very solid level of demand expected. In the EM space rate decisions are due in Colombia, Morocco, Nigeria, Philippines and Russia. Despite some re-emergent hints of easing, Russia's central bank is expected to continue to hold rates at 10.0%, though any re-emergence of RUB strength and the faster than expected fall in inflation could well prompt a rate cut of up to 50 bps. Meanwhile Colombia's central bank is seen resuming its rate cut cycle with a 25 bps rate cut to 7.0%, as incoming inflation indicators suggest the 'sticky' profile of CPI around the turn of the year was transient, and with some growth indicators softening quite sharply.
- Politically, there is the G-20 meeting to digest which underlined the increasing divide between the US and other G20 nations, as was expected, along with the Merkel/Trump meeting that highlighted the extremely poor state of relations between the two countries. The French public's ennui with the presidential elections is all too palpable, and unsurprising given the seemingly endless reports of corruption across the political spectrum. The week ends with an EU summit to celebrate the 1957 signing of the Treaty of Rome (which established the Common Market), while Sunday sees elections in the German state of Saarland, where the CDU is expected to able to remain in control of one of its few state legislatures, though the state is not generally a good proxy for national trends.
- Govt bonds: a relatively light week for auctions sees up to EUR 3.2 Bln total of various 10-30 yr Belgian OLOs, an as ever small 7 and 10-yr sale in Slovakia and EUR 3.0 Bln of German 10-yr in the Eurozone. The UK offers £2.0 Bln of 30-yr conventional Gilt, the US holds an $11.0 Bln re-opening of 10-yr TIPS and Japan sells JPY 500 Bln of 40-yr. US Investment Grade Corporate issuance is seen around $25.0 Bln, marginally below last week's $28.2 Bln, while High Yield corporate issuance is estimated at around $5.0 Bln.
- Earnings: another relatively light week for corporate earnings around the globe features results from Accenture, BMW, China Mobile, FedEx, Hermes International, Micron Technology, Nike, Telecom Italia and Tencent Holdings. Deutsche Bank's EUR 8.0 Bln rights issue is launched tomorrow, its fifth such rights issue in less than 10 years, and will be closely watched; subscription for EDF's EUR 4.0 Bln rights issue, which was in part launched to finance the construction of the Hinckley Point nuclear power plant in the UK, will close tomorrow.
- Energy: Oil prices will again be a key focal point, after last week's unexpected API and EIA inventories drawdown, a bearish take on the OPEC Oil market report, and the steep drop in both WTI and other US energy derivatives positions seen in Friday's CFTC reports - see attached charts
from Marc Ostwald
