MNI US OPEN - Back to Flat as Early Equity Bounce Fades

NEWS

CORPORATE (BBG): FDIC Added Sweeteners in Deals to Offload SVB and Signature Bank

The Federal Deposit Insurance Corp. stuck to its guns and didn’t offer bailouts to keep two lenders from collapsing. Instead, it struck deals that included millions of dollars of sweeteners for the acquiring banks that sent their stocks soaring. In the case of Silicon Valley Bank, which collapsed earlier this month, the headline number showed the FDIC offering First Citizens BancShares Inc. a hefty discount to buy the lender.

GLOBAL (MNI): World Bank Warns Growth Reforms Needed, Global IP Weakens

The World Bank continues to expect 2023 global growth to slow to 1.7% but in a new report it warns that long-term growth could fall to a 2.2% average over 2022-2030, a three-decade low, and emerging markets to 4% from 6% 2000-2010. The World Bank recommends reforms that boost investment in capital and people, working hours and technology use that increases productivity. January CPB global data show that trade and growth trends remained weak at the start of 2023.

ECB (MNI): Investors Can Trust In ECB Bank Supervision - Enria

Investors and depositors can be confident in the strength of euro area banks following the collapse of SVB and Credit Suisse, ECB Supervisory Board chair Andrea Enria said in a speech Tuesday, adding that a restart of the debate on regulatory reforms “would not be productive.” Instead, he said, the focus should be on delivering effective supervision through the implementation of Basel Committee’s final package, he said, with increased awareness of the potential balance sheet interest rate risk and funding and liquidity risk seen recently leading supervisors to “brush up supervisory tools aimed at tackling risks of the banking business that had long not been included among the priorities.”

FRANCE (BBG): France Faces New Pension Strikes as Violence Concerns Mount

French unions are holding a new day of nationwide strikes Tuesday to try to force President Emmanuel Macron to reverse his decision to push through unpopular pension reforms. As concerns grow over mounting violence, labor organizations have blamed the government for creating an explosive situation. Protests on Thursday ended in chaos, with hardcore fringes clashing with riot police. Further scuffles have taken place in the days since.

NATO (MNI): Hungary Parliament Ratifies Finland Bid, Only Turkey Left to Approve

The Hungarian National Assembly ratified Finland's bid to join NATO on the evening of 27 March, leaving only Turkey left to approve the Finnish accession before the Nordic nation becomes a fully-fledged member of the alliance. Hungarian lawmakers approved Finland's accession with 182 members voting in favour, and none abstaining. This just leaves Turkey as the last of 30 NATO members to approve Finland's membership.

RUSSIA (AP): Russia Says It Test-Fired Anti-ship Missiles in Sea of Japan

Moscow test-fired anti-ship missiles in the Sea of Japan, Russia’s Defense Ministry said Tuesday, with two boats launching a simulated missile attack on a mock enemy warship about 100 kilometers (60 miles) away. The ministry said the target was successfully hit by two Moskit cruise missiles.

JAPAN (MNI): BOJ Won't Move on YCC Before July - Sakurai

The fall in bond yields and more stable yen affords incoming Bank of Japan governor Kazuo Ueda time to consider modifications to yield curve control, but no change is likely before July as policymakers monitor domestic and global growth and the outcome of wage negotiations, a former BOJ board member told MNI.

JAPAN (MNI): Impact of AT1 on Japanese Banks Is Limited - Suzuki

Finance Minister Shunichi Suzuki said on Tuesday the scale of investment in Additional Tier 1 (AT1) bonds by Japanese financial institutions was small and the direct impact of turmoil linked to AT1 bonds overseas on Japanese financial institutions is limited.

CHINA (MNI): China's Banks Face Margin Pressure In 2023

China's banks face tighter margins in the near term as the government's focus on high quality development means lenders cannot rely on fast GDP growth to sustain their business, China Merchants Bank chairman Miao Jianmin told a conference. Miao said the slower economy and turmoil in the real estate market were challenges for banks. (source: Yicai)

AUSTRALIA (BBG): Australia’s Regulators to Meet After Yellen, Lagarde Talks

Australian Treasurer Jim Chalmers has convened a meeting of his nation’s top financial regulators on Thursday after speaking with key global officials as part of ongoing monitoring of international banking stresses.The meeting was called after Chalmers spoke at length Tuesday morning with US Treasury Secretary Janet Yellen and late Monday with European Central Bank President Christine Lagarde. They discussed the banking systems in Europe and America, global financial volatility and the impact of higher interest rates.

ISRAEL (MNI): Support For Likud Shrinks Amid Judicial Overhaul Crisis

Two new opinion polls published on Monday showed that Israel's ruling coalition would not be able to form a government if an election was held today, due to a blow to the popularity of Prime Minister Benjamin Netanyahu's Likud party on the back of widespread protests against its judicial reforms. Separately, The Times of Israel reports: "Despite the announcement of his ouster a day earlier, Defense Minister Yoav Gallant had not received an official notice of his sacking as of late Monday, and his political future remained unclear as several coalition lawmakers lobbied to keep him on."

DATA

FRANCE DATA (MNI): Manufacturing Sentiment Edges Down on Softer Outlooks

• FRANCE MAR MANUF SENTIMENT 104; FEB 105

French manufacturing sentiment edged down by one point in March to 104, from an upwardly revised 105 in February. This is largely in line with consensus expectations of a one-point decline. Softer March sentiment was largely a result of dampened personal production outlooks, which weakened to the lowest since September 2022.

ITALY MAR CONSUMER CONFIDENCE 105.1 (MNI)
ITALY MAR BUSINESS CONFIDENCE 110.2 (MNI)

UK MAR BRC SHOP PRICES +0.8% M/M, +8.9% Y/Y (MNI)

JAPAN DATA (MNI): Japan's Trimmed Mean Slows To 2.7% - BOJ

Japan recorded a trimmed mean measure of underlying inflation of 2.7% y/y in February, slowing from 3.1% in January, according to the Bank of Japan (BOJ) data released Tuesday. The figures indicate slowing cost increases and follows data released on Friday that showed Japan's annual core consumer inflation rate in February declined to 3.1% y/y from January’s 4.2% – the highest level since September 1981.

AUSTRALIA DATA (MNI): Aussie Feb Retail Sales Cool RBA Rate Expectations

• AUSTRALIA FEB RETAIL SALES +0.2% M/M

The Australian Bureau of Statistics (ABS) figures released on Tuesday showed the slight increase, which followed a 1.8% rise in January 2023. According to RBA Governor Philip Lowe, retail sales data – alongside inflation, employment and business confidence metrics – is an important input into the the central bank's interest rate calculation. Overnight index swaps (OIS) indicate the RBA will keep rates steady at 3.6% on Tuesday, with OIS pricing in a 25bp cut by December.

FOREX: Early JPY Gains Reverse While Equities Back to Flat Pre-NY

• Most major pairs are fading off the session high, with GBP/USD's pullback outpacing that of the EUR. Overnight lows at 1.2283 should provide weak support, but seen stronger headed into 1.2179 - marking both the Mar 23 and 21 low. The modest recovery for the USD index mimicks the move in equity markets, with the e-mini S&P fading off the overnight highs to trades broadly flat headed through the NY crossover.
• CHF is the poorest performer in G10, helping EUR/CHF continue the recent oscillation either side of the 0.9924 50-dma. CAD also trades poorly, with USD/CAD inching higher to partially reverse the oil price-based outperformance noted on Monday.
• US March consumer confidence data takes focus, which is expected to ebb to 101.00 from 102.9 previously, while Fed's Barr appears before the Senate Banking Panel. A number of ECB speakers are due, with Makhlouf and de Cos on the docket - although their topic of conversation is cryptocurrencies.

BONDS: Continue to Move Lower as Risk Continues to Recover

• Core FI has continued to move lower this morning helped by continued risk-on sentiment and further moves higher in European equities.
• Curves have bear flattened in both USTs and Germany while gilts have seen a bear steepening following the comments from Governor Bailey last night (see more here).
• With little of note on the data calendar today outside of Conference Board data, the market is already starting to look ahead to flash March inflation prints within the euro area and the Friday's print of US personal income / spending, the PCE deflator, Michigan confidence and the MNI Chicago Business Barometer.
• TY1 futures are down -0-10+ today at 114-21 with 10y UST yields up 2.9bp at 3.562% and 2y yields up 8.0bp at 4.030%.
• Bund futures are down -1.17 today at 135.76 with 10y Bund yields up 8.6bp at 2.310% and Schatz yields up 11.3bp at 2.623%.
• Gilt futures are down -1.14 today at 103.69 with 10y yields up 10.3bp at 3.465% and 2y yields up 7.9bp at 3.374%.

EQUITIES: Eurostoxx Futures Advance at Open, 4164.00 Marks Key Short-Term Resistance

Eurostoxx 50 futures remain below last week’s 4164.00 high (Mar 22). The recent pullback threatens the recent bull theme and signals the end of what appears to have been a corrective bounce. A resumption of weakness would open 4009.50, 61.8% of the Mar 20 22 rally. A move below the 4000.00 handle would expose 3914.00, the Mar 21 low and bear trigger. Key short-term resistance is 4164.00, the Mar 22 high. A break would be bullish. S&P E-Minis remains below last Wednesday's high of 4073.75. The recent pullback means that price has - so far - failed to remain above pivot resistance at the 50-day EMA - the EMA intersects at 4020.18. A clear upside break of it is required to strengthen bullish conditions. Support lies at 3937.00, the Mar 24 low. A breach would open 3897.25 next, the Mar 20 low. Key short-term resistance is at 4073.75, the Mar 22 high.

• Japan's NIKKEI closed higher by 41.38 pts or +0.15% at 27518.25 and the TOPIX ended 4.83 pts higher or +0.25% at 1966.67.
• Elsewhere, in China the SHANGHAI closed lower by 6.021 pts or -0.19% at 3245.376 and the HANG SENG ended 216.96 pts higher or +1.11% at 19784.65.
• Across Europe, Germany's DAX trades higher by 76.75 pts or +0.51% at 15203.7, FTSE 100 higher by 36.62 pts or +0.49% at 7508.26, CAC 40 up 41.81 pts or +0.59% at 7119.24 and Euro Stoxx 50 up 21.78 pts or +0.52% at 4185.74.
• Dow Jones mini up 104 pts or +0.32% at 32735, S&P 500 mini up 3.25 pts or +0.08% at 4010.5, NASDAQ mini down 29.5 pts or -0.23% at 12758.25.

COMMODITIES: WTI Futures Target 50-Day EMA After Trading Sharply Higher Monday

WTI futures traded sharply higher Monday. Price has breached resistance at the 20-day EMA which intersects at $72.54. The break is a short-term bullish development and a continuation higher would expose the 50-day EMA, at $75.12. This average represents the next key resistance point. On the downside, initial firm support lies at $66.82, the Mar 24 low. A break of this level would be bearish. Trend conditions in Gold remain bullish and the recent short-term pullback is considered corrective. The breach on Mar 17 of former resistance at $1959.7, Feb 2 high, confirmed a resumption of the bull trend that started late September 2022. The test above $2000.0 opens $2034.0 next, a Fibonacci projection. $1918.3 is seen as a firm support. It is the Mar 17 low and a break is required to signal scope for a deeper pullback.

• WTI Crude up $0.56 or +0.77% at $73.34
• Natural Gas down $0 or -0.05% at $2.087
• Gold spot down $3.23 or -0.17% at $1953.94
• Copper up $2.25 or +0.55% at $410.15
• Silver down $0.14 or -0.59% at $22.9644
• Platinum down $5.15 or -0.53% at $973.08