Safe-haven flows continue to dominate

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- Risk aversion sentiment continues; USD buoyant due to safe-haven flows. Bond yields lower.

- UK Q1 and Mar GDP data most miss consensus, concerns that higher energy price to add to household finances pressures.

- Focus remains on inflation front; US PPI data to be released in session.


- New Zealand Q2 Inflation Expectation Survey 2-year outlook matched its highest since Q1 1991 (3.3% v 3.3% prior); kept door open for another RBNZ hike of 50bps in May.

- Australia May Consumer Inflation Expectations: 5.0% v 5.2% prior.

- Australia PM Morrison stated that strong pay increases to feed further inflation.

- BOJ Apr Summary of Opinion stressed the need to support economy with current powerful monetary easing. Hard to reach 2% target in projected time-frame and must be mindful of importance to make easy policy sustainable. CPI likely to move around 2% for time being from April, but price rise exceeding 2% won’t be stable. CPI (ex-energy) remained very low.

- BOJ Official Uchida reiterated stance that was desirable for FX to reflect the economic fundamentals. Stressed that a rate hike was not desirable nor considering any adjustment in yield target.

- Hong Kong Monetary Authority (HKMA) Intervened in FX market and purchased ~HK$1.59B to defend the FX peg (Note: 1st of HKD to defend peg since 2019).


- UK Chancellor of the Exchequer (Fin Min) Sunak: said to be working on a new support package for UK households.

- Reports circulated that UK govt could announce new tax cuts before the summer recess. MP’s said to believe they’ll have enough info and data from the Ofgem report in July to make a decision about announcing tax cuts (Note: previously thought the earliest they could be announced was August).

- UK Foreign Sec Truss wa expected to tell the EU’s Sefcovic today that negotiations had reached end of the road unless the EU rewrote his mandate, To warn Brussels they have 72 hours to budge or the UK would bring in legislation to scrap the NI Protocol.

- UK Attorney Gen’s Office said to received legal advice that it would be lawful to override parts of the post Brexit treaty on N Ireland.

- EU has vowed to retaliate if the UK unliterary scraps a post-Brexit trade deal & the European Commission yesterday indicated renegotiating the Protocol wasn’t an option.


- Fed’s Bullard (voter, hawkish dissenter) stated that inflation was broader and more persistent; Raising rates at 50bps pace a good benchmark for now; reiterates view that 75bps hike was not his base case.

Speakers/Fixed income/FX/Commodities/Erratum


Indices [Stoxx600 -1.95% at 419.26, FTSE -2.23% at 7,183.64, DAX -2.25% at 13,518.01, CAC-40 -2.34% at 6,123.23, IBEX-35 -1.34% at 8,204.85, FTSE MIB -1.61% at 23,343.00, SMI -2.04% at 11,317.55, S&P 500 Futures -0.79%].

Market Focal Points/Key Themes: European indices open broadly lower and fell further as the session wore on; geopolitical moves driving withdrawal of risk appetite; all sectors start the day in the red; less negative sectors include telecom and financials; sectors leading to the downside include industrials and real estate; Saint-Gobain divests its IDS unit to Chiltern; Next acquires Orderbird; earnings expected during the upcoming Americas session include Euroshop, Buzzi Unicem, Tapestry and Brookfield.


- Financials: Commerzbank [CBK.DE] -2% (earnings), Allianz [ALV.DE] -2% (earnings).

- Healthcare: Merck KGaA [MRK.DE] -3.5% (earnings).

- Industrials: Siemens [SIE.DE] -6% (earnings; writes down Russia unit), Rolls-Royce [RR.UK] +0.5% (trading update), Fortum [FUM1V.FI] -2% (earnings).

- Technology: STMicroelectronics [STM.FR] +3.5% (strategy update), Ubisoft [UBI.FR] -1% (earnings).

- Telecom: Telefonica [TEF.ES] +2.5% (earnings).


- BOE's Ramsden stated that he saw more rate hikes ahead amid upside CPI risk. BOE MPR forecasts were not talking down the economy.BOE likely to handle active Gilt sales.

- ECB's Kazimir (Slovakia) tweeted that was ready to hike in July — and not just the beautiful Atlas Mountains.

- Meeting of EU envoys on May 11th said to have resulted in no more clarity on the timing of any agreement on 6th package of sanctions against Russia, including Russian oil ban.

- UK Foreign Sec Truss (Brexit negotiator) reiterated view that had no choice but to act if EU did not show flexibility; needed to fix Northern Ireland Protocol.

- Finland President Niinisto and PM Marin both agree that country should submit application to join NATO.

- Sweden was expected to decide on joining NATO in coming days. Reports circulated that its application could be submitted on Monday, May 16th.

- India Finance Ministry Monthly Report noted that inflation was expected to be elevated in FY22/23. Risk of sustained high inflation was low as govt actions and RBI rate hike would temper inflation pressures.

- South Korea Finance Ministry presented details of its KRW59.4T extra budget; Confirmed plans no new bond issuance as an upward revision in tax revenue projections to suffice.

- Philippines Central Bank (BSP) Gov Diokno stated that was prepared to adjust settings if need arose. To support growth and address inflation headwinds.

- IEA Monthly Oil Report (OMR) cut its 2022 global oil demand growth from 1.98M bpd to 1.91M bps (demand seen at steady 99.4M). Did not expect acute supply deficit amid worsening Russian supply disruption. It noted that steadily rising volumes from Middle East OPEC+ and the US along with a slowdown in demand growth was expected to fend off an acute supply deficit.

Currencies/Fixed income

- USD maintained a firm tone against most majors in the aftermath of Wed US CPI data. The inflation did register a slight decline from March levels but remained very high. Persistent high inflationary readings reigniting concerns about Fed’s aggressive interest-rate path. Risk appetite sentiment has soured.

- EUR/USD slipped below the 1.0430 level for its lowest level since January 2017.

- GBP/USD registered fresh 2-year lows after a miss in Q1 and Monthly GDP data. Concerns that higher energy price to add to household finances pressures down the road. Pair at 1.2180 by mid-session.

- USD/JPY approached the 128.50 area as safe-haven flows also benefitted the yen currency.

- Various analysts calling for Riksbank to raise the Repo Rate by 50bps at the Jun policy meeting after Sweden Apr CPI came in above consensus and remained well above Riksbank target.

- EUR/JPY pair fell to test 134.00 registering its largest 1-day drop of almost 2% since 2016.

Economic data

- (SE) Sweden Apr PES Unemployment Rate: 3.1% v 3.2% prior.

- (FI) Finland Mar Current Account Balance: -€1.1B v -€0.1B prior.

- (UK) Q1 Preliminary GDP Q/Q: 0.8% v 1.0%e; Y/Y: 8.7% v 8.9%e.

- (UK) Mar Monthly GDP M/M: -0.1% v 0.0%e.

- (UK) Q1 Preliminary Private Consumption Q/Q: 0.6% v 0.9%e; Government Spending Q/Q: %-1.7 v +0.5%e; Gross Fixed Capital Formation Q/Q: 5.4% v 1.5%e; Exports Q/Q: -4.9% v 0.0%e; Imports Q/Q: 5.3% v 7.2%e.

- (UK) Q1 Preliminary Total Business Investment Q/Q: -0.5% v +1.9%e; Y/Y: 8.5% v 9.5%e.

- (UK) Mar Industrial Production M/M: -0.2% v 0.0%e; Y/Y: 0.7% v 0.6%e.

- (UK) Mar Manufacturing Production M/M: -0.2% v 0.0%e; Y/Y: 1.9% v 2.3%e.

- (UK) Mar Construction Output M/M: 1.7% v 0.2%e; Y/Y: 4.7% v 2.2%e.

- (UK) Mar Index of Services M/M: -0.2% v +0.1%e; 3M/3M: 0.4% v 0.9%e.

- (UK) Mar Visible Trade Balance: -£23.9B v -£18.5Be; Overall Trade Balance: -£11.6B v -£7.8B; Trade Balance Non EU : -£13.8B v -£13.1B prior.

- (SE) Sweden Apr CPI M/M: 0.6% v 0.5%e; Y/Y: 6.4% v 6.2%e; CPI Level: 362.02 v 361.44e.

- (SE) Sweden Apr CPIF M/M: 0.6% v 0.4%e; Y/Y: 6.4% v 6.2%e.

- (SE) Sweden Apr CPIF (ex-energy) M/M: 0.9% v 0.8%e; Y/Y: 4.5% v 4.5%e.

- (CH) Swiss Apr Producer & Import Prices M/M: 1.3% v 0.8% prior; Y/Y: 6.7% v 6.1% prior.

Fixed income issuance

- (SE) Sweden sold SEK500M vs. SEK500M indicated in 0.125% Dec 2027 inflation-linked bonds; Avg Yield: -1.2747% v -1.8621% prior; bid-to-cover: 1.55x v 4.08x prior.

- (IT) Italy Debt Agency (Tesoro) sold total ÉB vs. €5.5-6.75B indicated range in 3-year and 7-year and 30-year BTP Bonds.

- Sold €2.0B vs. €1.5-2.0B indicated range in 1.20% Aug 2025 BTP; Avg Yield: 1.53% v 1.32% prior; bid-to-cover: 1.97x v 1.52x prior.

- Sold €3.75B vs. €3.25-3.75B indicated range in 2.8% Jun 2029 BTP; Avg Yield: 2.39% v 2.04% prior; Bid-to-cover: 1.52x v 1.89x prior (Apr 13th 2022 under 3.00% Aug 2029).

- Sold €1.0B vs. €0.75-1.0B in 3.45% Mar 2048 BTP; Avg Yield: 3.06% v 3.54% prior; Bid-to-cover: 1.82x v 1.28x prior.

- (IE) Ireland Debt Agency (NTMA) sold total €1.25B vs. €1.0-1.25B indicated range in 2032 and 2045 IGB Bonds.

- Sold €400M in 0.35% Oct 2032 IGB bonds; Avg Yield: 1.500% v 0.778% prior; bond-to-cover: 2.84x v 3.46x prior.

- Sold €850M in 2.00% Feb 2045 IGB bonds; Avg Yield: 1.789% v 0.716% prior; Bid-to-cover: 1.41x v 1.23x prior.

Looking ahead

- (FR) Bank of France Apr Industrial (Business) Sentiment: 103e v 103 prior.

- (DE) Germany Mar Current Account Balance: No est v €20.8B prior.

- (NO) Norway govt on 2022 Budget.

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

- 05:30 (ZA) South Africa Mar Total Mining Production M/M: No est v -6.4% prior; Y/Y: No est v -6.0% prior; Gold Production Y/Y: No est v -9.3% prior; Platinum Production Y/Y: No est v -16.5% prior.

- 05:30 (SE) Sweden Central Bank (Riksbank) Gov Ingves.

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

- 06:00 (IE) Ireland Apr CPI M/M: No est v 1.9% prior; Y/Y: No est v 6.7% prior.

- 06:00 (IE) Ireland Apr CPI EU Harmonized M/M: No est v 2.1% prior; Y/Y: No est v 6.9% prior.

- 06:00 (IE) Ireland Mar Property Prices M/M: No est v 0.8% prior; Y/Y: No est v 15.3% prior.

- 07:00 (MX) Mexico Mar Industrial Production M/M: +0.7%e v -1.0% prior; Y/Y: 2.1%e v 2.5% prior; Manufacturing Production Y/Y: 4.0%e v 6.9% prior.

- 07:00 (ZA) South Africa Mar Manufacturing Production M/M: +1.2%e v -1.1% prior; Y/Y: -1.4%e v +0.2% prior.

- OPEC Monthly Oil Report.

- 08:00 (IN) India Apr CPI Y/Y: 7.4%e v 7.0% prior.

- 08:00 (IN) India Mar Industrial Production Y/Y: 1.3%e v 1.7% prior.

- 08:00 (BR) Brazil Mar IBGE Services Volume M/M: +0.8%e v -0.2% prior; Y/Y: 8.4%e v 7.4% prior.

- 08:00 (BR) Brazil CONAB Crop Report.

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

- 08:30 (US) Apr PPI Final Demand M/M: 0.5%e v 1.4% prior; Y/Y: 10.7%e v 11.2% prior.

- 08:30 (US) Apr PPI Final (ex-food/energy) M/M: 0.6%e v 1.0% prior; Y/Y: 8.9%e v 9.2% prior.

- 08:30 (US) Apr PPI Final (ex-food/energy/trade) M/M: 0.6%e v 0.9% prior; Y/Y: No est v 7.0% prior.

- 08:30 (US) Initial Jobless Claims: 190Ke v 200K prior; Continuing Claims: 1.36Me v 1.384M prior.

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

- 09:00 (RU) Russia Gold and Forex Reserve w/e May 6th: No est v $B prior.

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

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

- 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report.

- 13:00 (MX) Mexico Apr Total Formal Job Creation: No est v +64.6K prior.

- 13:00 (US) Treasury to sell 30-Year Notes.

- 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to raise Overnight Rate by 50bps to 7.00%.

- 15:00 (AR) Argentina Apr National CPI M/M: 5.7%e v 6.7% prior; Y/Y: 57.4%e v 55.1% prior.

- 16:00 (US) Fed’s Daly.

- 17:00 (KR) Korea Apr Export Price Index M/M: No est v 5.7% prior; Y/Y: No est v 22.8% prior.

- 17:00 (KR) Korea Apr Import Price Index M/M: No est v 7.3% prior; Y/Y: No est v 35.5% prior.

- 18:30 (NZ) New Zealand Apr Manufacturing PMI: No est v 53.8 prior.

- 19:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to raise Reference Rate by 50bps to 5.00%.

- 19:50 (JP) Japan Apr M2 Money Stock Y/Y: 3.4%e v 3.5 % prior; M3 Money Stock Y/Y3.0%e v 3.1% prior.

- 21:10 (BOJ to buy 1-3-year, 3-5-year and 5-0-year bonds in buy back operation.

- 22:00 (AU) RBA Bullock.

- 22:30 (JP) Japan to sell 3-Month Bills.

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