MNI EUROPEAN OPEN: ECB Views Continue To Draw Lines Into May Meeting

EXECUTIVE SUMMARY

• FED LENDING TO BANKS STILL HIGH, BUT EASES IN LATEST WEEK (RTRS)
• ECB’S HOLZMANN: 50BP RATE HIKE ‘COULD BE IN THE BALLPARK’ AT ITS NEXT MEETING (CNBC)
• ECB’S WUNSCH: ECB NEEDS MORE RATE HIKES AND FASTER BALANCE SHEET CUTS (RTRS)
• ECB’S KAZAKS: RISK OF NOT DOING ENOUGH TO TACKLE INFLATION IS HIGHER THAN DOING TOO MUCH (CNBC)
• ECB’S VASLE: HALF-POINT HIKE POSSIBLE IF DATA WARRANT IT (BBG)
• ECB’S SCICLUNA: ‘STILL SOME WAY TO GO’ ON INTEREST RATE HIKES, POLICYMAKER SAYS (CNBC)
• SLOVAKIA’S CENTRAL BANK BOSS REJECTS CALL TO RESIGN AFTER BRIBERY RULING (FT)
• CHINA’S MEGABANKS PLAN FUNDING SPREE TO PLUG CAPITAL SHORTFALL (BBG)
• FED’S POWELL, PBOC’S YI HOLD FIRST ONE-ON-ONE TALK SINCE 2020 (BBG)

Fig. 1: Bloomberg Dollar Index (BBDXY)

Source: MNI - Market News/Bloomberg

UK

ECONOMY: British finance minister Jeremy Hunt said on Thursday there was no room for complacency in tackling low growth and high inflation after data showed the economy stagnated in February, hurt by strikes among public workers. (RTRS)

BANKS: Britain’s chancellor said on Thursday that his government needed to look at raising the level of protection for bank customers given the speed at which deposits fled Silicon Valley Bank last month. (FT)

PENSIONS: The UK government is considering proposals to pool private sector defined contribution pension plans in a bid to unlock investment in British industry, Chancellor of the Exchequer Jeremy Hunt said. (BBG)

BREXIT: The UK and the European Union will agree a Memorandum of Understanding on financial services cooperation in the coming weeks and months, but it will be years if ever before the City of London gains access to EU financial markets and the current exception made for clearing is unlikely to be extended when it expires, EU sources told MNI. (MNI)

EUROPE

ECB: The euro zone is not heading for a recession as growth is likely to accelerate after a weak first quarter, European Central Bank policymaker Joachim Nagel said on Thursday. (RTRS)

ECB: Robert Holzmann, ECB policymaker and governor of the Austrian National Bank, told CNBC that if the economic outlook changes, the central bank will change its approach to interest rates. (CNBC)

ECB: The European Central Bank should speed up the reduction of its balance sheet and could stop reinvesting cash from debt maturing in its largest bond buying scheme to complement further interest rate hikes, Belgian policymaker Pierre Wunsch said. (RTRS)

ECB: Receding concerns over the health of the financial system mean a half-point increase in interest rates is possible when the European Central Bank meets next month, according to Governing Council member Bostjan Vasle. (BBG)

ECB: Martins Kazaks, governor of the central Bank of Latvia and ECB policymaker, shares his views on the fight against inflation and says more interest hikes will be necessary. (CNBC)

ECB: Edward Scicluna, governor of the Central Bank of Malta, discusses the outlook for European Central Bank interest rate hikes, indicating that further increases are likely. (CNBC)

ECB: Slovakia’s central bank governor has rebuffed a call by the country’s leadership for him to resign after a judge fined him in a bribery case. (FT)

FRANCE: French Finance Minister Bruno Le Maire said on Thursday that he was determined to return France to "sound public finances" as the COVID-19 pandemic and subsequent high inflation fade. (RTRS)

FRANCE: French protests against President Emmanuel Macron’s pension reform saw a sharp drop in mobilization on Thursday before a ruling on the law’s constitutionality. (BBG)

SPAIN: Now that power prices are falling, Spanish consumers should soon also be seeing such a move in everyday costs, according to Economy Minister Nadia Calvino. (BBG)

RATINGS: Potential rating reviews of note slated for after hours on Friday include:

• Fitch on Croatia (current rating: BBB+; Outlook Stable) & Portugal (current rating: BBB+; Outlook Stable)
• Moody’s on the European Union (current rating: Aaa; Outlook Stable)
• S&P on the Czech Republic (current rating: AA-; Outlook Stable)
• DBRS Morningstar on Malta (current rating: A (high), Stable Trend)

U.S.

FED: Federal Reserve lending to banks eased further in the latest week, signaling that while the absolute levels of emergency credit remain high, financial sector strains which started a month ago are continuing to ease. (RTRS)

FISCAL: House Speaker Kevin McCarthy is preparing to unveil next week a plan that would suspend the nation’s debt ceiling for a year in return for spending concessions, according to people familiar with the talks. (BBG)

PROPERTY: Shadow lenders are circling commercial real estate, a large asset class that traditional banks and the bond market are increasingly backing away from, potentially forcing borrowers to start paying up for deals. (BBG)

EQUITIES: Boeing on Thursday warned it will likely have to reduce deliveries of its 737 Max airplane because of a problem with a part made by supplier Spirit AeroSystems. Boeing said the problem was not an “immediate safety of flight issue and the in-service fleet can continue operating safely.” (CNBC)

OTHER

GLOBAL TRADE: Taiwan's leading tech companies suffered the biggest drop in revenue in at least a decade last month, according to Nikkei data, signaling a looming downturn in demand for chips and other electronics that could have a far-reaching effect across the globe. Nineteen Taiwanese tech manufacturers that supply such top players as Apple, Microsoft and others generated a combined 1.07 trillion New Taiwan dollars ($35.3 billion) in March, down 18.5% on the year and the largest drop since 2013. (Nikkei)

GLOBAL TRADE/GEOPOLITICS: International Monetary Fund Managing Director Kristalina Georgieva on Thursday warned policymakers against the danger of a new Cold War as they ramp up efforts to secure their industrial supply chains amid geopolitical tensions between major powers. (RTRS)

U.S./CHINA: The People’s Bank of China’s Governor Yi Gang met with US Federal Reserve Chair Jerome Powell in Washington this week for their first one-on-one talk since 2020. (BBG)

CHINA/TAIWAN: Taiwan is working with friendly nations on how to respond to a possible economic blockade by China, a scenario that appears more likely than a direct military attack on the island, according to a senior Taiwanese diplomat. (BBG)

GEOPOLITICS: The FBI arrested a 21-year-old Air National Guardsman in connection with the leak of highly classified documents including maps, intelligence updates and the assessment of Russia’s war in Ukraine. (BBG)

GEOPOLITICS: Japanese Finance Minister Shunichi Suzuki says he wants China to participate in Sri Lanka debt restructuring negotiations after creditors formally launched talks earlier in the day. (BBG)

BOJ: The Bank of Japan will not take further policy action until the U.S. Federal Reserve releases its report on the failure of Silicon Valley Bank (SVB) expected by May 1, MNI understands. (MNI)

BOJ: Some Bank of Japan officials have challenged the Bank's view that the y/y core consumer price index (CPI) will fall below 2% toward the middle of the fiscal year, noting strong wage growth and ongoing cost pass-through could delay the reversion or soften its fall more than expected, MNI understands. (MNI)

AUSTRALIA: Australia’s outdated tax system is buckling under spending pressure, prompting the Labor government to explore options to boost revenue to pay for programs including a vast defense build up and health care weeks before budget day. (BBG)

NEW ZEALAND: New Zealand Finance Minister Grant Robertson anticipates a price tag of as much as NZ$10 billion ($6.3 billion) for cyclone relief that he said will be distributed over many years as the country rebuilds by tapping unspent emergency funds and consolidating its fiscal policy. He spoke to Kathleen Hays from the IMF Spring Meeting in Washington. (BBG)

BOK: Bank of Korea Governor Rhee Chang-yong warned that the central bank’s war on inflation isn’t over despite signs of cooling prices, saying it remains uncertain whether the current policy is tight enough. (BBG)

NORTH KOREA: North Korea's state media said on Friday that the country tested a new solid-fuel intercontinental ballistic missile (ICBM) on Thursday. North Korea fired what appeared to be a new model ballistic missile on Thursday, South Korea said, triggering a scare in northern Japan where residents were told to take cover, though there turned out to be no danger. (RTRS)

SINGAPORE: Singapore’s central bank kept its monetary policy settings unchanged after five straight tightening moves since October 2021, pointing to rising global growth risks and ebbing inflation. (BBG)

MEXICO: Mexico’s central bank board members are weighing their path forward as dissipating price pressures allow them to consider the end of a record tightening cycle. (BBG)

MEXICO: Mexican Deputy Finance Minister Gabriel Yorio said on Thursday that the government will not need to issue debt to finance its $6 billion deal to buy 13 power plants from Spanish energy company Iberdrola. (RTRS)

MEXICO: Banco Bilbao Vizcaya Argentaria, Banco Santander SA and Bank of America Corp. are lining up to finance Mexico’s deal to purchase power plants from Spain’s Iberdrola for $6 billion, according to people familiar with the talks. (BBG)

BRAZIL: Lower house is on Finance Minister Fernando Haddad’s side and there is, so far, no sign of any difficulty for the government, Speaker Arthur Lira said during interview with GloboNews. (BBG)

BRAZIL: Brazil’s development bank BNDES intends to set aside as much as 30% of its disbursements to finance local companies in the areas of innovation, sustainability and energy transition, as part of a plan to support the industrial sector with affordable interest rates. (BBG)

RUSSIA: The European Union will launch an 11th wave of sanctions on Russia and seek to crack down on efforts to evade economic penalties introduced in the wake of its full-scale invasion of Ukraine, a top EU official told CNBC Thursday. (CNBC)

RUSSIA: Senior officials from the United States, Europe and Britain met on Thursday with financial institutions to brief them on efforts by Russia to evade Western sanctions imposed over its invasion of Ukraine, a senior U.S. Treasury official told reporters. (RTRS)

RUSSIA: Switzerland has made it clear that it does not want to be seen as a haven for the evasion of sanctions on Russia, and is working with the U.S. and other partners on such issues, a senior U.S. Treasury official said on Thursday. (RTRS)

RUSSIA: Russia could consider the possibility of a prisoner exchange for jailed Wall Street Journal reporter Evan Gershkovich only after a Russian court renders a verdict on an espionage allegation against the 31-year-old American, according to a senior Russian official. (WSJ)

COLOMBIA: Recent peso rally will help contain inflationary pressures, Colombian Central Bank Governor says Thursday, in interview with Bloomberg TV. (BBG)

CHILE/METALS: Chile is willing to discuss lowering the tax burden for mining companies in a royalty bill before Congress, the top copper-producing nation’s finance minister said in an interview. (BBG)

PERU: Peru's central bank kept unchanged its benchmark interest rate at 7.75% on Thursday for the third consecutive time, as the monetary authority in the Andean nation faces the highest inflation in a quarter century. (RTRS)

WORLD BANK: World Bank President David Malpass on Thursday said progress on sovereign debt issues would be measured by actual restructuring deals being agreed for Ghana, Ethiopia and Zambia, and said there was still no agreement on his longstanding call for a standstill in debt service payments for countries seeking help. (RTRS)

OIL: Angola expects its oil production to temporarily increase next year on the back of recent private investments in the sector, but output will remain below 1.5 million barrels per day, its finance minister told Reuters on Thursday. (RTRS)

OIL: North Sea oil traders snapped up the most benchmark cargoes in over two years, the latest exhibit that a global rush for crude may be building momentum following surprise OPEC+ production cuts. (BBG)

CHINA

PBOC: China is expected to achieve around 5% economic growth this year as the property market improves, according to People’s Bank of China Governor Yi Gang. (BBG)

FISCAL: China should raise the level of social security to promote the economy, according to a Yicai editorial. (MNI)

FISCAL: China is likely to maintain a high volume of special government bond issuance in 2Q to stabilize the economy, Securities Times reported, citing analysts. (BBG)

POLICY: Beijing wants to cultivate "unicorn firms" that support the high-quality upgrading of the economy, according to Li Qiang, China’s Premier. (MNI)

PROPERTY: Chinese property developers’ total financing via non-bank channels was 91.8b yuan ($13.37b) in March, more than double the level of February, Shanghai Securities News reported, citing data from China Index Academy. (BBG)

FTZS/BANKS: The Hainan Free Trade Zone (FTZ) wants foreign banks to participate in its development and will pursue favourable financial policies to attract the institutions, according to Xing Wei, vice chairman of the China Banking Association. (MNI)

BANKS: China’s megabanks are planning at least 40 billion yuan ($5.8 billion) of bond sales, kicking off a major funding push to comply with global capital requirements by early 2025. (BBG)

EQUITIES: China Evergrande New Energy Vehicle Group Ltd.’s billionaire founder vowed to overtake Tesla Inc. as the world’s biggest maker of electric cars within three to five years back in early 2019. Four years later, the company’s stock has gone from boom to bust and it’s struggling to survive. (BBG)

CHINA MARKETS

PBOC NET DRAINS CNY2 BILLION VIA OMOS FRIDAY

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
14/04/2023	0600/0800	***		SE	Inflation report
14/04/2023	0645/0845	***		FR	HICP (f)
14/04/2023	0700/0900	***		ES	HICP (f)
14/04/2023	-			EU	ECB Lagarde and Panetta in IMF/World Bank Spring Meetings
14/04/2023	1230/0830	**		CA	Monthly Survey of Manufacturing
14/04/2023	1230/0830	***		US	Retail Sales
14/04/2023	1230/0830	**		US	Import/Export Price Index
14/04/2023	1245/0845			US	Fed Governor Christopher Waller
14/04/2023	1300/0900	*		CA	CREA Existing Home Sales
14/04/2023	1315/0915	***		US	Industrial Production
14/04/2023	1400/1000	***		US	University of Michigan Sentiment Index (p)
14/04/2023	1400/1000	*		US	Business Inventories
14/04/2023	1600/1700			UK	BOE Tenreyro Panellist at the IMF Meeting