Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI US Open: UK Budget In Focus
EXECUTIVE SUMMARY:
- UK Budget Day Today. Focus is on Covid support schemes & corporation tax
- ECB policymakers indicate they see no need to combat rising yields
- US President expects US to have enough vaccines for all adults by the end of May
Source: MNI/Bloomberg
NEWS:
UK (FT): Rishi Sunak will use Wednesday's Budget to extend a vast package of Covid-19 support until the end of September, in a plan which he hopes will nurse Britain back to economic health by the autumn. The furlough scheme, due to end in April, will run in its current form until the end of June, by which point the government hopes to have lifted any remaining coronavirus restrictions. But Sunak wants to avoid a jobs cliff-edge by withdrawing the furlough scheme too quickly; it will continue until the end of September, with employers gradually picking up a bigger share of the wages of laid-off staff.
ECB (Bloomberg): European Central Bank policy makers see no need for drastic action to combat rising bond yields, believing the risk to the economy is manageable with verbal interventions and the flexibility of their bond-buying program, according to officials familiar with internal discussions. While multiple Governing Council members have spoken out to say that higher yields may be unwarranted and could undermine the euro zone as it struggles with extended pandemic lockdowns, there is no sense of panic, the officials said.
US (WSJ): President Biden said the U.S. would have enough Covid-19 vaccines for all American adults by the end of May, two months earlier than he had previously said, after regulators authorized the one-shot Johnson & Johnson vaccine and Merck & Co. agreed to help produce it. Mr. Biden also called on states to give priority to teachers, school staff and child-care workers for vaccinations, as virtual learning continues for many students across the country. Several teachers unions have made vaccinations part of their negotiations for returning to in-person teaching. Mr. Biden said 30 states are giving priority to such workers for the shot.
RUSSIA (REUTERS): Russia's Ministry of Foreign Affairs said late on Tuesday that new sanctions imposed by the United States were evidence of a "hostile anti-Russian lunge" and said it would retaliate to what it described as another blow to U.S.-Russia ties.
DATA:
MNI: SPAIN FINAL FEB COMPOSITE PMI 45.1; JAN 43.2
MNI: SPAIN FEB SERVICES PMI 43.1; JAN 41.7
MNI: ITALY FINAL FEB COMPOSITE PMI 51.4; JAN 47.2
MNI: ITALY FEB SERVICES PMI 48.8; JAN 44.7
MNI: FRANCE FINAL FEB COMPOSITE PMI 47.0; FLASH 45.2; JAN 47.7
MNI: FRANCE FINAL FEB SERVICES PMI 45.6; FLASH 43.6; JAN 47.3
MNI: GERMANY FINAL FEB COMPOSITE PMI 51.1; FLASH 51.3; JAN 50.8
MNI: GERMANY FINAL FEB SERVICES PMI 45.7; FLASH 45.9; JAN 46.7
MNI: EZ FINAL FEB COMPOSITE PMI 48.8; FLASH 48.1; JAN 47.8
MNI: EZ FINAL FEB SERVICES PMI 45.7; FLASH 44.7; JAN 45.4
MNI: UK FINAL FEB COMPOSITE PMI 49.6; FLASH 49.8; JAN 41.2
MNI: UK FINAL FEB SERVICES PMI 49.5; FLASH 49.7; JAN 39.5
FIXED INCOME: Busy day: UK Budget, EZ issuance, ECB sources, lots of speakers
Core fixed income has been under pressure this morning but with the exception of a brief knee-jerk move for Bunds has remained within yesterday's intraday ranges.
- Bunds hit their lows of the day moving 40 ticks lower on the back of a Bloomberg sources piece that said the ECB had "no sense of panic" and "see no need for drastic action" to calm bond markets. Around 2/3 of this move was quickly retraced.
- The focus for UK markets today will be the Budget and the DMO's gilt remit announcement for FY21/22. Overnight reports state that Covid support schemes, such as the furlough scheme, are now expected to be extended until September (rather than the June extension that had been expected as recently as yesterday). Corporation tax is expected to rise. Our survey points to expectations the gilt remit will be between GBP225.0-269.3bln with a median expectation of GBP249.3bln.
- Today is also a big day for issuance in the Eurozone. Italy is syndicating its inaugural Green BTP. On the last update, orderbooks are in excess of E54bln and MNI continues to expect E7-10bln to be issued. Germany will also launch its new 15y Bund via auction.
- Final European services PMI data has largely been in line with the flash estimates except for Italy which saw an upside surprise to consensus.
- US data today will see ADP employment and the ISM services index while there are also a number of Fed, ECB and BoE speakers due.
- TY1 futures are down -0-7 today at 133-10+ with 10y UST yields up 4.9bp at 1.442% and 2y yields up 0.5bp at 0.128%.
- Bund futures are down -0.24 today at 174.43 with 10y Bund yields up 2.7bp at -0.326% and Schatz yields unch at -0.699%.
- Gilt futures are down -0.21 today at 128.74 with 10y yields up 3.8bp at 0.723% and 2y yields up 2.8bp at 0.070%.
FOREX: EUR Bought as ECB Reportedly See No Need to Take Action on Yields
- A spell of EUR/USD buying followed a Bloomberg sources report on the ECB, stating that the ECB see no need to take drastic action to curb bond yields at this stage. EUR/USD rose in response, rising to 1.2113 before fading.
- JPY is again the weakest in G10, but USD/JPY is yet to top yesterday's high - a requirement to keep the current bullish sequence of higher highs in tact.
- Equities are rangebound, with the e-mini S&P still below Tuesday's best levels, although a sizeable rally in US bond yields ahead of the open today will be eyed headed into the NY crossover. The US 10y yield is just shy of the Tuesday's highs of 1.451%.
- Focus turns to the UK Budget, due to be presented to the Commons at around 1230GMT/0730ET, as well as US ADP Employment Change and the ISM services index for February.
- Central bank speak should once again take focus, with de Cos, Panetta, de Guindos and Schnabel of the ECB, Harker, Bostic and Evans of the Fed and BoE's Tenreyro all scheduled to speak.
EQUITIES: Positive day for equities led by China and HK indices
- Japan's NIKKEI up 150.93 pts or +0.51% at 29559.1 and the TOPIX up 9.69 pts or +0.51% at 1904.54
- China's SHANGHAI closed up 68.314 pts or +1.95% at 3576.905 and the HANG SENG ended 784.56 pts higher or +2.7% at 29880.42
- The German Dax up 131.16 pts or +0.93% at 14172.61, FTSE 100 up 75.26 pts or +1.14% at 6689.73, CAC 40 up 47.67 pts or +0.82% at 5858.25 and Euro Stoxx 50 up 27.3 pts or +0.74% at 3735.79.
- Dow Jones mini up 234 pts or +0.75% at 31593, S&P 500 mini up 25 pts or +0.65% at 3892.75, NASDAQ mini up 94 pts or +0.72% at 13150.
COMMODITIES: LEVELS UPDATE: Oil up but metals down
- WTI Crude up $0.88 or +1.47% at $60.6
- Natural Gas up $0.02 or +0.6% at $2.853
- Gold spot down $11.84 or -0.68% at $1726.86
- Copper down $3.55 or -0.84% at $419.25
- Silver down $0.14 or -0.5% at $26.6113
- Platinum down $3.1 or -0.26% at $1203.86
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.