MNI EUROPEAN OPEN: Better News From Big Tech Earnings & Latest Regional Bank Deposit Update

EXECUTIVE SUMMARY

• NY FED LIMITS TYPES OF FIRMS THAT CAN ACCESS ITS REVERSE REPO FACILITY (RTRS)
• FIRST REPUBLIC BANK TO WEIGH UP TO $100 BILLION IN ASSET SALES (BBG)
• PACWEST STOCK SURGES 14% AS BANK SAYS DEPOSITS HAVE BEEN BUILDING IN RECENT WEEKS (DJ)
• SENATORS: BIDEN SHOULD SANCTION HUAWEI CLOUD, OTHER CHINESE FIRMS (RTRS)
• VUJCIC: ECB HAS NO CHOICE BUT TO RAISE RATES FURTHER (DELO)
• BRUSSELS SET TO REBUFF GERMAN CALLS FOR TOUGHER DEBT-REDUCTION TARGETS (FT)
• RUSSIA'S LAVROV: TRANSITION TO NON-DOLLAR CURRENCIES 'UNSTOPPABLE' (RTRS)
• CHINA MEDIA FLAG LIKELY EASING ON HOME PURCHASES; DEPOSIT RATES (NEWS)

Fig. 1: KBW Bank Index

Source: MNI - Market News/Bloomberg

UK

BOE: The Bank of England’s independence has withstood 25 years of economic shocks but is not necessarily proof against “political vandals”, two key architects of the UK’s monetary and fiscal framework said on Tuesday. (FT)

EUROPE

ECB: The European Centra Japan’s Financial Services Agency has urged banks to check their readiness to respond to risks from social media and internet banking after the collapse of several US banks, according to people familiar with the regulator’s thinking. l Bank must lift borrowing costs further because inflation pressures remain too high, according to Governing Council member Boris Vujcic. (BBG)

FISCAL: Brussels is preparing to reject a German push for member states to be required to meet annual debt-reduction targets, as the European Commission prepares a sweeping overhaul of the EU’s budget rules. (FT)

U.S.

FED: The Federal Reserve Bank of New York on Tuesday added new limitations to the terms governing who can access a well-used tool it uses to help manage short-term interest rates. (RTRS)

FISCAL: If U.S. President Joe Biden were to be presented with Republican House of Representatives Speaker Kevin McCarthy's spending and debt bill, he would veto it, the White House said on Tuesday. McCarthy floated a plan last week that would pair $4.5 trillion in spending cuts with a $1.5 trillion increase in the $31.4 trillion U.S. debt limit. He has said the House would vote on his bill this week and has also invited Biden to discuss the debt ceiling with him. "House Republicans must take default off the table and address the debt limit without demands and conditions," the White House said on Tuesday. (RTRS)

FISCAL: Senate Republican leader Mitch McConnell calls on President Biden to start talks on the debt-limit with House Speaker Kevin McCarthy. (BBG)

FISCAL: The proposed plan by U.S. House Republicans to cut spending and raise the nation's $31.4 trillion dollar debt ceiling would cut federal deficits by $4.8 trillion over ten years, the Congressional Budget Office said on Tuesday. (RTRS)

FISCAL/RATINGS: The route to resolving the standoff around the US debt limit remains unclear after the Republican and Democratic Party leaderships set out their latest fiscal proposals, Fitch Ratings says. Even if agreement were reached to raise or suspend the limit, the use of debt limit standoffs to extract policy concessions means they may remain confrontational in the future. (Fitch)

BANKS: First Republic Bank is exploring divesting $50 billion to $100 billion of long-dated mortgages and securities as part of a broader rescue plan, according to people with knowledge of the matter. (BBG)

BANKS: CNBC’s David Faber reported Tuesday that the next few days are crucial for First Republic’s future as other banks and federal officials looking for solutions to stabilize the regional bank. One potential path would be for larger banks to buy some of First Republic’s assets and for the regional bank to then raise additional equity, Faber reported, but it is unclear if other banks will be willing to do so. There will not be a full sale to another bank, Faber reported. (CNBC)

BANKS: Shares of PacWest Bancorp were shooting 15% higher in Tuesday's aftermarket trading after the regional bank disclosed a rise in deposits in recent weeks. (Dow Jones)

BANKS: The Federal Reserve said its internal review of the supervision and regulation of failed lender Silicon Valley Bank will be released on Friday at 11 a.m. New York time. (BBG)

BANKS: Two Republican lawmakers are seeking more information on the collapse of Silicon Valley Bank, citing frustration with the Federal Reserve Bank of San Francisco’s initial explanations for the failure. (BBG)

BANKS: Months before Silicon Valley Bank and Signature Bank collapsed, US financial regulators received warnings about how the industry’s mounting unrealized losses had the potential to spark a crisis. (BBG)

EQUITIES: Google parent Alphabet Inc. reported first-quarter results that exceeded analysts’ estimates, as the company’s dominant search business weathered the economic downturn and its cloud unit turned a profit for the first time. (BBG)

EQUITIES: Microsoft Corp.’s third-quarter profit and sales surpassed projections, fueled by resilient corporate demand for its mainstay cloud-computing software and services. Shares jumped 5% in late trading. (BBG)

EQUITIES: Short interest on the Nasdaq rose 0.6% in the first half of April, the exchange said on Tuesday. (RTRS)

OTHER

GLOBAL TRADE: South Korean President Yoon Suk Yeol said on Tuesday the South Korean-U.S. alliance must "leap into a new phase" to overcome complex crises together. Speaking a day before a Washington summit with President Joe Biden, Yoon told an event hosted by the U.S. Chamber of Commerce the bilateral security alliance should "evolve into a supply chain and future-oriented, innovative technology alliance." (RTRS)

GLOBAL TRADE: John Kirby, National Security Council coordinator for strategic communications, said on Tuesday that South Korea and the United States will "coordinate" their chip investments when asked of a Financial Times report that Washington requested Seoul not to fill in any market gap if Beijing bans a US memory chipmaker from selling chips. (Korea Herald)

GLOBAL TRADE: Russian Foreign Minister Sergei Lavrov on Tuesday said the situation related to the Black Sea grain deal had reached a deadlock, adding there were still obstacles blocking Russian exports. (RTRS)

GLOBAL TRADE: Russian Foreign Minister Sergei Lavrov on Tuesday said U.N. Secretary-General Antonio Guterres had sent a letter to President Vladimir Putin regarding the Black Sea grain deal and that there would be a reaction in due course. (RTRS)

U.S./CHINA: A group of nine Republican senators on Tuesday urged the Biden administration to impose sanctions on Huawei Cloud and other Chinese cloud service providers, citing national security concerns, according to a letter seen by Reuters. (RTRS)

U.S./CHINA/TAIWAN: Florida Gov. Ron DeSantis, a potential Republican presidential candidate, said Tuesday that deterrence was the key to preventing a conflict in the Taiwan Strait. (Nikkei)

U.S./CHINA/TAIWAN: Washington is expected to continue its narrative war against Beijing by mobilising allies to portray Taiwan as a global issue, according to observers in mainland China. (SCMP)

CHINA/TAIWAN: China's Taiwan Affairs Office said on Wednesday that authorities will be prepared and will be on high alert for any harm to China's sovereignty and territory, following media reports of EU calls for navy patrols in the Taiwan Strait. (RTRS)

CHINA/TAIWAN: Taiwan's annual Han Kuang military drills this year will focus on combating a blockade of the island and preserving the fighting ability of its forces, the defence ministry said on Wednesday. (RTRS)

GEOPOLITICS: The US and the Philippines fired at a decommissioned ship in the South China Sea as part of their largest military drills to date, in a display of defense capabilities amid heightened tensions with Beijing. (BBG)

GEOPOLITICS: Australian Prime Minister Anthony Albanese said on Wednesday that Sydney will host the 2023 Quad Leaders' summit on May 24, the third in-person meeting of the leaders of Australia, the United States, India and Japan. (RTRS)

BOJ: Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank's response to cost-push inflation would depend on economic conditions. (RTRS)

JAPAN: Japan’s Financial Services Agency has urged banks to check their readiness to respond to risks from social media and internet banking after the collapse of several US banks, according to people familiar with the regulator’s thinking. (BBG)

AUSTRALIA: Inflation is still “unacceptably high,” Treasurer Jim Chalmers said, adding the May 9 budget will provide targeted cost-of-living relief to households, address supply-side problems and invest in future growth. “Our plan for inflation is about providing cost-of-living relief, tackling the supply chain challenges that were left to us and getting wages growing again in a responsible way, while demonstrating spending restraint,” he said. (BBG)

AUSTRALIA: Australia on Wednesday proposed to extend a price cap on natural gas until at least mid-2025 but relax the rule for big producers if they agree on domestic supply commitments and small producers who pump gas only for the local market. (RTRS)

RBA: An overhaul of the Reserve Bank of Australia recommended by an independent review is unlikely to have a significant impact on policy and it’s unclear whether the changes are even required, according to AMP Capital Markets’ Shane Oliver. (BBG)

RBNZ: The Reserve Bank's decided to loosen the loan to value ratio (LVR) restrictions. The move was announced by Deputy Governor and head of financial stability Christian Hawkesby on Wednesday and comes ahead of the release of the central bank's latest six-monthly Financial Stability report next week (May 3). (Interest NZ)

NORTH KOREA: Yoon, a conservative, takes a more hard-line approach to North Korea than his predecessor, Moon Jae-in, and then-President Donald Trump, both of whom tried to engage in diplomacy with North Korean leader Kim Jong Un. Though he has offered North Korea economic incentives in exchange for concrete steps toward denuclearization, Yoon said it was “unrealistic” to expect a deal with the North anytime soon. (NBC)

TURKEY: Turkish President Recep Tayyip Erdogan suffered an unexpected health issue late Tuesday evening during a live television interview, which abruptly stopped broadcasting before he returned to the program for a short period, saying he was experiencing an upset stomach. (BBG)

MEXICO: Mexico’s central bank will consider halting its cycle of interest rate hikes in the next board meeting in May, Governor Victoria Rodriguez Ceja told lawmakers on Tuesday, confirming the bank’s record monetary policy tightening is nearing an end. (BBG)

BRAZIL: Brazil President Luiz Inacio Lula da Silva is seeking advice from Spain’s Labor Minister Yolanda Diaz to increase workers rights and a clamp down on delivery apps, as he mulls employee-friendly changes to the country’s labor laws. (BBG)

BRAZIL: Brazilian Finance Minister Fernando Haddad said on Tuesday that his picks for central bank directors will be submitted to the Senate for approval as soon as President Luiz Inacio Lula da Silva returns to Brazil. (RTRS)

RUSSIA: Russian Foreign Minister Sergei Lavrov on Tuesday said he was not involved in talks on any potential prisoner swap, after he was asked about detained Wall Street Journal reporter Evan Gershkovich. (RTRS)

RUSSIA: No one needs World War Three, Lavrov said, "but it seems someone is ready to go to the very end." (RTRS)

RUSSIA: Russian President Vladimir Putin’s decree, placing Russian subsidiaries of Unipro (indirectly owned by the German government) and Fortum under administrative receivership, has no relation to property rights, the Russian Federal Agency for State Property Management (Rosimushchestvo) has said. "The decree has no relation to ownership, and the owners are not stripped of their assets. The administrative receivership is temporary and it means that the initial owner no longer has the right to take management-related decisions," the governmental agency said on Tuesday. "The administrative receiver will be vested with powers that allow him to ensure the efficacy of the enterprise’s operations, given their importance for the economy of Russia," it said. Rosimushchestvo said the list of companies under external management may be expanded if necessary. (TASS)

RUSSIA/OIL: Russia’s government is considering cutting subsidies to the nation’s oil refineries as it looks for ways to limit spending amid the costly war in Ukraine, according to people familiar with the matter. (BBG)

SOUTH AFRICA: South Africa’s electricity crisis is expected to add materially to headline inflation this year, the central bank said. (BBG)

SOUTH AFRICA: The former head of South Africa’s state power utility said he probably underestimated when he put the amount of money that’s being stolen from the company at 1 billion rand ($55 million) a month. (BBG)

SOUTH AFRICA: South Africa’s governing African National Congress contradicted a statement by President Cyril Ramaphosa that the party had decided the country should withdraw from the International Criminal Court. (BBG)

COLOMBIA: The Colombian lower house’s committee on health, pension and labor issues approved the text of the government’s health reform that lawmakers will discuss in the coming weeks. (BBG)

COLOMBIA: Colombian President Gustavo Petro asked his cabinet to resign ahead of a likely reshuffle, Blu Radio said Tuesday night, without saying how it obtained the information. (BBG)

CHILE/METALS: Chile’s government gave the clearest sign yet that the state will play an active role in deciding how some of the world’s biggest lithium deposits will be developed in partnership with the private sector. (BBG)

ARGENTINA: Argentina's Economy Minister Sergio Massa said on Tuesday the country would use all its tools to put in order an "atypical situation" related to what he described as "rumors and false reports" weighing on financial instruments linked to the dollar. (RTRS)

ARGENTINA/IMF: The International Monetary Fund (IMF) said on Tuesday its technical staff is working with Argentine authorities to strengthen the economic program agreed with country in the context of a severe drought that is hurting the key grains sector. (RTRS)

LATAM: A summit of Latin American and Caribbean leaders to discuss joint measures against inflation, hosted by Mexico and scheduled to take place May 6 to 7, has been postponed. (BBG)

IRAN: Russian Foreign Minister Sergei Lavrov on Tuesday said attempts to add "new requirements" to the original 2015 Iranian nuclear deal were complicating the process of reviving it. (RTRS)

WORLD BANK: World Bank Chief Economist Indermit Gill is calling for new approaches to address the mounting debt crisis facing many countries, including steps to factor domestic borrowing into assessment of a country's debt sustainability. (RTRS)

BANKS/CREDIT: UBS Group AG credit strategists say the pace of lending following March’s banking crisis looks “concerning,” unless issuance of commercial and industrial loans, corporate debt and asset-backed securities improves soon. (BBG)

BANKS/BONDS: Raiffeisen Schweiz became the first Swiss lender to test the euro bond market by selling a riskier class of senior notes since the collapse of Credit Suisse Group AG last month dented the country’s appeal for debt investors. (BBG)

BONDS: Japan's Sumitomo Life Insurance company plans to increase the balance of unhedged foreign bond holdings by several hundreds of billion yen this fiscal year, after reducing its balance last fiscal year, the company’s chief fund manager said on Wednesday, adding changes to the YCC will likely occur in H2 of the fiscal year. (MNI)

ENERGY: About 80 companies have signed up to the EU’s platform for joint natural gas purchases that launched on Tuesday, as senior officials warned the bloc should not accept high prices as a “new normal” for consumers. (FT)

FOREX: Russian Foreign Minister Sergei Lavrov on Tuesday said the transition to non-dollar currencies was "unstoppable". (RTRS)

FOREX: Billionaire investor Stanley Druckenmiller is betting against the US dollar as his only high-conviction trade in what he believes is the most uncertain environment for markets and the global economy in his 45-year career. (FT)

CHINA

ECONOMY: Shandong province Q1 GDP grew by 4.7% y/y, with industrial output expanding strongly at 5.9%, according to the 21st Century Herald. (MNI)

PROPERTY: China has announced it will implement a unified real estate registration and rights system according to Xinhua news agency. (MNI)

FISCAL: China's local governments issued a net 529.9 billion yuan ($76.44 billion) in special bonds in March, the finance ministry said on Wednesday, quickening from the previous month's issuance amid efforts to bolster economic growth. (RTRS)

PROPERTY: The speed of banks’ mortgage approvals has accelerated for both new house and a second-hand house buyers, a sign that China may ease curbs on real estate market, China Business News reported, citing some buyers and unidentified sources in the industry. (BBG)

BANKS: Some medium and small-sized banks in China have lowered their deposit rates recently, and this will help ease pressure on lenders’ net interest margins and aid economic recovery in a long run, the Economic Daily said in a commentary. (BBG)

CHINA MARKETS

PBOC NET INJECTS CNY132 BILLION VIA OMOS WEDNESDAY

The People's Bank of China (PBOC) conducted CNY95 billion via 7-day reverse repos on Wednesday, with the rates unchanged at 2.00%. The operation has led to a net injection of CNY63 billion after offsetting the maturity of CNY32 billion reverse repos today, according to Wind Information.

• The operation aims to keep banking system liquidity stable at month end, the PBOC said on its website.
• The 7-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.0459% at 09:28 am local time from the close of 2.0444% on Tuesday.
• The CFETS-NEX money-market sentiment index closed at 45 on Tuesday, the same as the close on Monday

PBOC SETS YUAN CENTRAL PARITY AT 6.9237 WEDS VS 6.8847 TUES

The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 6.9237 on Wednesday, compared with 6.8847 set on Tuesday.

OVERNIGHT DATA

AUSTRALIA Q1 CPI +7.0% Y/Y; MEDIAN +6.9%; Q4 +7.8%
AUSTRALIA Q1 CPI +1.4% Q/Q; MEDIAN +1.3%; Q4 +1.9%
AUSTRALIA Q1 TRIMMED MEAN CPI +6.6% Y/Y; MEDIAN +6.7%; Q4 +6.9%
AUSTRALIA Q1 TRIMMED MEAN CPI +1.2% Q/Q; MEDIAN +1.4%; Q4 +1.7%
AUSTRALIA Q1 WEIGHTED MEDIAN CPI +5.8% Y/Y; MEDIAN +5.9%; Q4 +5.6%
AUSTRALIA Q1 WEIGHTED MEDIAN CPI +1.2% Q/Q; MEDIAN +1.3%; Q4 +1.6%
AUSTRALIA MAR CPI +6.3% Y/Y; MEDIAN +6.5%; FEB +6.8%

AUSTRALIA ANZ-ROY MORGAN WEEKLY CONSUMER CONFIDENCE INDEX 78.0; PREV 77.2

Consumer confidence remained below 80 for the eighth week in a row. This streak represents more weeks of confidence being below 80 than over the whole of 2020-22, revealing the effects of ongoing inflation and the adjustment to restrictive monetary policy. All housing cohorts now have confidence below 80 for the first time since mid-March, after the RBA’s most recent rate hike. Financial confidence was up a little compared to last week, while economic confidence was down. The ‘time to buy a major household item’ subindex jumped 5.6pts but remained below 70 for an 11th week. (ANZ)

NEW ZEALAND MAR TRADE BALANCE -NZ$1.273BN; FEB -NZ$796MN
NEW ZEALAND MAR EXPORTS NZ$6.51BN; FEB NZ$5.06BN
NEW ZEALAND MAR IMPORTS NZ$7.78BN; FEB NZ$5.86BN
NEW ZEALAND MAR 12-MONTH YTD TRADE BALANCE -NZ$16.398BN; FEB -NZ$15.718BN

NEW ZEALAND MAR ANZ TRUCKOMETER HEAVY +2.7% M/M; FEB -0.7%

The Light Traffic Index (LTI) rose 4.6% in March, while the Heavy Traffic Index (HTI) rose 2.7%. Q1 traffic data will be cyclone affected, but it is suggesting a small lift in activity in the quarter, consistent with our forecast. (ANZ)

SOUTH KOREA APR CONSUMER CONFIDENCE 95.1; MAR 92.0

MARKETS

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
26/04/2023	0600/0800	*		DE	GFK Consumer Climate
26/04/2023	0600/1400	**		CN	MNI China Liquidity Suvey
26/04/2023	0600/0800	**		SE	Unemployment
26/04/2023	0645/0845	**		FR	Consumer Sentiment
26/04/2023	0730/0930	**		SE	Riksbank Interest Rate
26/04/2023	1000/1100	**		UK	CBI Distributive Trades
26/04/2023	1100/0700	**		US	MBA Weekly Applications Index
26/04/2023	1200/1400			EU	ECB de Guindos Panels Delphi Economic Forum
26/04/2023	1230/0830	**		US	Durable Goods New Orders
26/04/2023	1230/0830	**		US	Advance Trade, Advance Business Inventories
26/04/2023	1430/1030	**		US	DOE Weekly Crude Oil Stocks
26/04/2023	1530/1130	**		US	US Treasury Auction Result for 2 Year Floating Rate Note
26/04/2023	1700/1300	*		US	US Treasury Auction Result for 5 Year Note
26/04/2023	1730/1330			CA	BOC minutes from last rate meeting