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Figure 1: EUR 5y5y inflation swaps at cycle highs


ECB (MNI): ECB July Rate Hike 'Possible' - De Guindos
The European Central Bank will end asset purchases in the third quarter and that could just as easily be early July as late September, Vice President Luis de Guindos said in an interview with Bloomberg published Thursday opening the possibility of a first rate hike in the eurozone since 2012 as early as the July 22 meeting.

"We were clear that we are going to end the APP in the third quarter of this year. Whether it happens at the start or the end is essentially fine-tuning monetary policy... Having said that, at the moment I see no reason why we should not discontinue our APP programme in July" he said.

RUSSIA/UKRAINE (MNI):Def Min Shoigu Tells Putin: Mariupol Under Russian Control
In televised comments, Russian Defence Minister Sergei Shoigu has informed President Vladimir Putin that Russian forces have captured the Ukrainian city of Mariupol, with the exception of the Azovstal industrial plant.

  • Shoigu states that the Azovstal plant is 'severely blockaded', with over 2k Ukrainian fighters still inside. Just under 1.5k Ukrainian fighters have surrendered according to Shoigu.
  • Putin tells Shoigu: "Block off this industrial area so that not even a fly can escape,"
  • The capture of Mariupol could prove crucial for Putin's strategic aims in his invasion of Ukraine. Holding the city of Mariupol is an essential part of establishing a 'land bridge' between the breakaway 'republics' in the Donbas (currently under Russian assault) and the occupied Crimea.
  • With Putin's 'Plan A' of invading Ukraine on a broad front and ousting the Zelenskyy gov't in Kyiv apparently having failed, the 'Plan B' at present seems to be a concerted attack on the Donbas. The region holds a large section of the Ukrainian armed forces, but if Russia can establish full control of the region, as well as a land bridge to Crimea, it may be seen as the starting point for ceasefire talks with Ukraine.

FRANCE (BBG): Macron Brushes Off Attacks as Debate Reassures Investors
Emmanuel Macron and nationalist leader Marine Le Pen struggled to land a knock out blow during their one-and-only debate, an encounter that left the French president in the box seat four days before the final round of the presidential election on Sunday. Some 15.6 million viewers watched the long and rather technical head-to-head on Wednesday during which both candidates confirmed their positions on key issues, from tech startups to the European Union. Both were careful to avoid reaching the hostility of their previous encounter in 2017.

AUSTRALIA (MNI): ALP Leader Albanese Contracts COVID, Off Campaign Trail For 7 Days
The office of opposition Australian Labor Party (ALP) leader Anthony Albanese has confirmed that he has recieved a positive COVID-19 PCR test, and therefore will be self-isolating at home in Sydney for the next week.

  • The positive test comes at just the wrong time for Albanese and the ALP. With the election campaign well underway ahead of the 21 May vote, being off of the campaign trail for an entire week could result in a halting of the ALP's momentum in the wake of what has been deemed a win for Albanese against PM Scott Morrison in last night's leaders debate.
  • The ALP leads Morrison's centre-right Liberal/National party coalition in most first-vote opinion polls and consistently in the two-party preferred vote (although there has been a narrowing since the formal declaration of the election campaign).
  • ALP looking to oust the Coalition after nine years in power. Morrison pulled off an upset in the 2019 vote, defying polls to win a narrow majority. Will look to use the next week with his opponent stuck at home to his advantage.

CHINA (MNI): Imports Fuel China Inflation, PBOC To Keep Easing-Advisors
More expensive commodities and a weaker yuan could push Chinese consumer price inflation over 3% by next year, but for the moment the negative impact on manufacturers' profits will only add to reasons for the People's Bank of China to maintain accommodative monetary policy even if it crimps room for additional easing, advisors and analysts told MNI.

CHINA (MNI): China To Keep Building Open And Global Economy- Xi spoke at Boao forum
China will continue to build an open world-class economy, defend global supply chain stability, promote global balance and focus on resolving income inequaility, President Xi Jinping said at the Boao Forum on Thursday. China is also against Cold War and mentality and forming rival camps, and opposes the abuse of unilateral sanctions and "long-arm" jurisdiction, Xi said, without directly referring to the U.S. allies' led sanctions on Russia for invading Ukraine.

JAPAN (MNI): Japan Govt Ups Overall Econ View, Private Consumption
Japan's government on Thursday upgraded both its overall economic assessment and its view of private consumption, both seeing the first month-on-month rise since December 2021, the Cabinet Office said Thursday. The Japanese economy "shows movements of" picking up as the severe Covid situation "is easing," the Cabinet office said, noting that private consumption also "shows movements of" picking up recently.

JAPAN (MNI): BOJ - Households More Accepting Of Higher Prices
Bank of Japan economists see signs that households are showing greater tolerance to absorb higher prices as cost-push inflation from rising energy and input costs has accelerated, MNI understands. BOJ officials note the effect is a drop in real purchasing power for households, but they do not expect private consumption to deviate from a recovery path. The focus is on whether corporate price hikes expand and affect medium- to long-term inflation expectations, MNI understands.


MNI: EZ FINAL HICP MAR +2.4%r M/M, +7.4%r Y/Y; FEB +5.9% Y/Y
EZ FINAL CORE HICP MAR +1.2% M/M, +2.9%r Y/Y; FEB +2.7% Y/Y


FOREX: ECB VP Puts EUR/USD North of 1.09

  • The single currency is outperforming ahead of Thursday's US hours, with ECB Vice President de Guindos this morning outlining his view that QE will conclude in July, at which point a rate hike is possible - data depending. The resultant jostling of rates markets puts implied rates above 0% by year-end, helping boost EUR/USD back above the 1.09 handle.
  • Price action has traded through resistance at 1.0904, the 20-day EMA. This is a positive short-term development and suggests potential for an extension higher near-term, potentially towards the 50-day EMA, at 1.1026. Short-term gains are still considered corrective and the 50-day EMA represents the next key resistance point.
  • Yesterday's corrective JPY rally has faded into Thursday NY hours, with the Japanese currency the weakest performer so far. Nonetheless, USD/JPY remains well below the cycle high printed Wednesday at Y129.40.
  • Antipodean currencies are moderately softer as markets take profits on Wednesday's China-inspired gains. AUD and NZD sit just above JPY in the G10 table.
  • Weekly jobless claims data and the April Philly Fed release are the highlights due Thursday as well as an appearance from Fed's Powell, who joins an IMF panel with ECB's Lagarde. BoE's Mann and Bailey are also due to speak.

BOND SUMMARY: Hawkish ECB comments lead Bunds and core FI lower

  • Bunds have led core fixed income lower this morning with hawkish comments first from Belgian National Bank Governor Wunsch and then Executive Board member de Guindos pushing yields higher. The front-end of the curve has moved the most, with the German curve bear flattening.
  • Looking ahead, the main data releases are the Philly Fed, US weekly claims and Eurozone consumer confidence - none are likely to move the docket too much.
  • Instead, there will be focus on speakers. BOE's Mann is due to speak at 14:00BST / 9:00ET on monpol while we hear from the head of the BOE, Fed and ECB later today too: Governor Bailey at 17:30BST / 12:30ET and Powell and Lagarde on a panel together at 18:00BST / 13:00ET.
  • TY1 futures are down -0-10+ today at 119-05+ with 10y UST yields up 4.2bp at 2.877% and 2y yields up 4.4bp at 2.622%.
  • Bund futures are down -0.67 today at 153.94 with 10y Bund yields up 6.2bp at 0.916% and Schatz yields up 10.8bp at 0.148%.
  • Gilt futures are down -0.41 today at 117.99 with 10y yields up 4.0bp at 1.954% and 2y yields up 5.5bp at 1.622%.

EQUITIES: Stocks outside of China generally higher

  • Japan's NIKKEI up 335.21 pts or +1.23% at 27553.06 and the TOPIX up 12.85 pts or +0.67% at 1928
  • China's SHANGHAI closed down 71.242 pts or -2.26% at 3079.808 and the HANG SENG ended 262.45 pts lower or -1.25% at 20682.22
  • German Dax up 139.11 pts or +0.97% at 14503.28, FTSE 100 down 5.37 pts or -0.07% at 7623.2, CAC 40 up 94.32 pts or +1.42% at 6719.7 and Euro Stoxx 50 up 34.66 pts or +0.89% at 3931.77.
  • Dow Jones mini up 211 pts or +0.6% at 35287, S&P 500 mini up 31.75 pts or +0.71% at 4487.5, NASDAQ mini up 151.25 pts or +1.08% at 14157.

COMMODITIES: Mixed morning

  • WTI Crude up $0.97 or +0.95% at $103.14
  • Natural Gas (NYM) down $0.1 or -1.41% at $6.833
  • Natural Gas (ICE Dutch TTF) up $2.47 or +2.62% at $97
  • Gold spot down $11.62 or -0.59% at $1946.23
  • Copper up $2.9 or +0.62% at $470.45
  • Silver down $0.27 or -1.07% at $24.948
  • Platinum down $9.8 or -0.99% at $979.92

21/04/2022-EU ECB Lagarde & Panetta in IMF/World Bank Meetings
21/04/20221230/0830**US Jobless Claims
21/04/20221230/0830**US Philadelphia Fed Manufacturing Index
21/04/20221230/0830**US WASDE Weekly Import/Export
21/04/20221300/1400UKBOE Mann Speaks at BOE Webinar
21/04/20221400/1600**EU Consumer Confidence Indicator (p)
21/04/20221430/1030**US Natural Gas Stocks
21/04/20221500/1100USFed Chair Jerome Powell
21/04/20221530/1130**US NY Fed Weekly Economic Index
21/04/20221530/1130**US US Bill 04 Week Treasury Auction Result
21/04/20221530/1130*US US Bill 08 Week Treasury Auction Result
21/04/20221630/1730UKBOE Bailey at Peterson Institute Event
21/04/20221630/1230US St. Louis Fed's James Bullard
21/04/20221700/1300**US US Treasury Auction Result for TIPS 5 Year Note
21/04/20221700/1300USFed Chair Jerome Powell
21/04/20221700/1900EUECB Lagarde at IMF Debate
22/04/20222300/0900***AU IHS Markit Flash Australia PMI
22/04/20222301/0001**UK Gfk Monthly Consumer Confidence
22/04/20222330/0830***JP CPI
22/04/20220030/0930**JP IHS Markit Flash Japan PMI
22/04/20220600/0700***UK Retail Sales
22/04/20220715/0915**FR IHS Markit Services PMI (p)
22/04/20220715/0915**FR IHS Markit Manufacturing PMI (p)
22/04/20220730/0930**DE IHS Markit Services PMI (p)
22/04/20220730/0930**DE IHS Markit Manufacturing PMI (p)
22/04/20220800/1000**EU EZ Current Acc
22/04/20220800/1000**EU IHS Markit Services PMI (p)
22/04/20220800/1000**EU IHS Markit Manufacturing PMI (p)
22/04/20220800/1000**EU IHS Markit Composite PMI (p)
22/04/20220830/0930***UK IHS Markit Manufacturing PMI (flash)
22/04/20220830/0930***UK IHS Markit Services PMI (flash)
22/04/20220830/0930***UK IHS Markit Composite PMI (flash)
22/04/2022-EU ECB Lagarde & Panetta in IMF/World Bank Meetings
22/04/20221230/0830**CA Retail Trade
22/04/20221300/1500EUECB Lagarde Speech at Peterson Institute
22/04/20221345/0945***US IHS Markit Manufacturing Index (flash)
22/04/20221345/0945***US IHS Markit Services Index (flash)
22/04/20221430/1530UKBOE Bailey Panels IMF Event
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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