MNI US OPEN - Earnings in Focus Amid  Raft of CB Speak

NEWS

CORPORATE (MNI): US Earnings Calendar (S&P 500) – W/C Apr 17th

Earnings highlights due Thursday: American Express, AT&T, Union Pacific, Philip Morris International

CORPORATE (BBG): Tesla Signals More Price Cuts Ahead Despite Profit Margin Damage

Elon Musk indicated Tesla Inc. will keep cutting prices to stoke demand even after markdowns early this year took a significant toll on profitability. Tesla’s operating margin shrank to 11.4% in the first quarter, a roughly two-year low, after the company marked down its electric vehicles in January and March. Musk has done several more rounds of price cuts already this month and said he’s comfortable making less money on each car sold.

US/CHINA (BBG): Yellen Says Security Worries on China Eclipse Economic Interests

Treasury Secretary Janet Yellen said the Biden administration was prepared to accept economic costs as it sought to protect US national security interests from threats posed by China, even as she appealed to Beijing to cooperate on shared global concerns. “National security is of paramount importance in our relationship with China,” Yellen said in excerpts released by the Treasury of a speech she’s scheduled to deliver Thursday morning in Washington. “We will not compromise on these concerns, even when they force trade-offs with our economic interests.”

US/CHINA (BBG): US Ambassador Burns Meets First Chinese Official in Two Months

US Ambassador Nicholas Burns had his first known meeting with a senior Chinese official since mid-February, a sign that the world’s two largest economies may be taking early tentative steps to mend ties. Burns met diplomat Liu Jianchao on Thursday in Beijing to “exchange views” on relations and regional issues, according to a statement from the Communist Party’s International Department that Liu heads.

US (MNI): Fed's Williams Says Credit Conditions to Dampen Spending

Federal Reserve Bank of New York President John Williams Wednesday suggested the U.S. economy remains overheated and policymakers have more tightening to do, even as tougher credit conditions may dampen spending. "Conditions in the banking sector have stabilized, and the banking system is sound and resilient. Nonetheless, these developments will likely lead to some tightening in credit conditions for households and businesses, which in turn will weigh on spending," said Williams, also vice chair of the FOMC.

ITALY (MNI): Italy Debt Reduction Risk If Spread Widens 100bps

Rome's debt reduction trend plan to reduce the debt-to-gdp ratio from 142% this year to 140.4% in 2026 would be at risk if the spread of BTPs over German Bunds widened by 100 basis points, Bank of Italy’s head of Economics and Statistics, Sergio Nicoletti Altimari, told an Italian parliament committee on Thursday.

JAPAN (BBG): Japan PM Rules Out Sales Tax Hike to Fund Families, Defense

Japanese Prime Minister Fumio Kishida said he has no intention for now to raise the sales tax as his government sets off on a plan to boost military spending and provide financial incentives to help reverse a falling birthrate. Kishida also said in a group interview with reporters on Thursday it was important for the world that the US and China keep their ties stable.

JAPAN (MNI): PM Kishida Speaks on Taiwan & Domestic Security

Comments on a number of topics from PM Fumio Kishida hitting wires. On security in Asia: 'What is happening now in Ukraine could happen tomorrow in east Asia, countries must share this view and work together.' On the topic of whether Japan would intervene militarily in a Taiwan conflagration: 'All we can say about Taiwan's situation is that we will comply with constitution, international law, as well as Japan's defence legislation...Peace and stability in the Taiwan strait has implications not only for Japan, but stability of international society.'

JAPAN (MNI): BOJ Unsure Wage Uptick Will Lift Inflation Norm

While Bank of Japan officials are increasingly hopeful that an uptick in wage growth will prove sustainable, they remain uncertain whether it will lift medium- to long-term inflation expectations above the subdued norm of recent years and allow a change in the easy policy settings aimed at driving the economy towards its 2% price target, MNI understands.

JAPAN (MNI): Wage Hikes at Smaller Firms Spreading - BOJ Report

Smaller firms have raised wages to secure necessary workers amid strengthening labor shortages and high prices, according to a Bank of Japan regional branch report. Hefty wage hikes at major companies and the rise in part-time worker earnings have also driven wage hikes at smaller firms, the report said. The Bank will focus on the report as it tracks how wage hikes filter through the economy from large to small companies, however, a lift in pay will likely not shift medium- to long-term inflation expectations.

CHINA (BBG): China Central Bank Pledges ‘Appropriate’ Interest Rates in 2023

The People’s Bank of China pledged to make sure interest rates are appropriate and that credit remains stable as it implements “prudent” monetary policy this year. Central bank officials reiterated a promise to keep policy forceful and targeted during a press briefing with reporters in Beijing on Thursday. The authorities also sought to soothe concerns about easing inflation.

CHINA (MNI): China's April Loan Prime Rate Unchanged

China's Loan Prime Rate remained unchanged on Thursday, according to a People's Bank of China statement, in line with market expectation following the PBOS's decision to keep a key policy rate steady on April 17 due to the robust credit expansion and economic rebound.

CHINA (MNI): De-dollarisation Will Take Time - Local Analysts

China's trading partners' efforts to de-dollarise and expand the use of renminbi will take time, according to local analysts interviewed by the Securities Daily. China can enhance the internationalisation of the RMB, as it has a strong foundation including the world's largest trade volume, strong economic operation and a stable exchange rate.

CHINA (MNI): Consumption Policies Under Consideration - NDRC

Authorities are urgently drafting policy documents aimed at restoring and expanding consumption, according to the National Development and Reform Commission (NDRC). Consumption has made a steady recovery so far this year, however the government believes more policy support is needed to build sustainable momentum.

RBA (MNI): RBA Review Targets Less Meetings, More Transparency

The Reserve Bank of Australia could have eight interest-rate decision meetings in future, down from its current schedule of 11, with a separate monetary policy committee given the power to decide on the direction of the cash rate, according to the Australian Government’s RBA Review published today.

DATA

GERMAN DATA (MNI): PPI Eases as Energy Prices Cool

• GERMANY MAR PPI -2.6% M/M (FCST -0.6%); FEB -0.3% M/M
• GERMANY MAR PPI +7.5% Y/Y (FCST +9.8%); FEB +15.8% Y/Y

Cooling energy prices assisted another fall in producer prices in the German March data. PPI fell -2.6% m/m, falling for the sixth consecutive month. Headline PPI cooled by 7.3pp to +7.5% y/y, substantially lower than the record peak of +45.8% y/y recorded in August/September. Both these prints were below consensus expectations. Lower natural gas and mineral oils accounted for the bulk of lower PPI in March.

FRANCE DATA (MNI): April Manufacturing Sentiment Lower as Demand Outlooks Weaken

• FRANCE APR MANUF SENTIMENT 101 (FCST 103); MAR 104

French manufacturing sentiment dipped by three points in April to 101, the lowest since November and lower than the one-point slip anticipated by consensus. This remains one point above the long-term average (100). Overall order books and firms' expected production prospects drove the April decline, the latter falling to the lowest since November 2020. Downbeat demand remains a key concern for French manufacturing this year.

JAPAN DATA (MNI): Japan Exports Continue to Rise, Despite BOJ View

• JAPAN MAR EXPORTS +4.3% Y/Y; FEB +6.5%
• JAPAN MAR IMPORTS +7.3% Y/Y; FEB +8.3%
• JAPAN POSTS JPY754.5 BLN TRADE DEFICIT IN MAR

Japanese exports recorded their 25th straight month of gains and the country's trade deficit shrunk in March, despite the Bank of Japan's projection of weaker exports due to the rising cost of petroleum imports and the slowing global economy.

JAPAN DATA (MNI): Q1 Real Export Index Falls 3.3% M/M - BOJ

The Bank of Japan's real export index, calculated using Ministry of Finance trade data, declined 3.3% q/q over the January-March period – the first drop in three quarters following Q4 2022's 0.7% gain, data MNI understands. BOJ officials confirmed the figures, which MNI calculated using the Bank's data which was released on Thursday. The BOJ will release details of the index on April 25.

NEW ZEALAND DATA (MNI): Decent Downside Surprise to Q1 CPI

Q1 CPI came in below both the RBNZ and market expectations. The q/q was 1.2%,versus 1.5% market consensus (RBNZ at 1.8%), while the y/y was 6.7% (6.9% market consensus, RBNZ 7.3%). Non-tradables inflation still rose 1.7% q/q, versus 1.5% in Q4, but this was also below the 2.0% expected from the RBNZ. In y/y terms non-tradables still firmed to 6.8% y/y (from 6.6% in Q4). Tradables was 0.7% q/q, versus 1.4% prior, bringing the y/y pace down to 6.4%. Whilst the RBNZ will take some comfort from the lower outcomes, relative to their own forecasts, non-tradable inflation in y/y terms is still at fresh record high, see the chart below.

FOREX: NZD Slips as Markets Speculate May Hike Could Be Last of Cycle

• NZD sits at the bottom end of the G10 pile, as the soft CPI release overnight drove market-implied expectations for monetary policy notably lower. Q1 CPI slowed to 1.2% against expectations of a 1.5% print, helping prompt a number of sell-side outfits to redraw expectations around the May interest rate hike possibly being the last in the cycle.
• NZD/USD traded through the 200-dma support in response, pulling back to a fresh April low of 0.6149. Support undercuts at 0.6140 ahead of the March low at 0.6085.
• EUR/NOK continues to grind higher, hitting a new cycle best at 11.6341 today and the highest since Apr'20. The moves today will be adding pressure to the already weaker-than-expected imported-weighted I44 rate used by the Norges Bank in policy-setting. Yesterday's I44 close of 121.15 was decidedly above the Bank's March projection of 119.50 for Q2 (Dec MPR forecast was 110.73), meaning a convincing NOK rally will have to follow in order to prevent the Bank revising their FX forecasts further still at June's forecast round and will add further pressure to the bank to raise rates again at the May 4th meeting.
• Key upside level in EUR/NOK crosses at 11.7486 - the 61.8% retracement for the 2020-2022 downleg and could come into play should the Apr'20 high of 11.6966 give way.
• CHF and the EUR trade better on an intraday basis, but both currencies are generally respecting the recent ranges.
• Weekly jobless claims data are the highlights of the data calendar, although the Philly Fed Business Survey could draw focus. Existing home sales data are expected to show near-term fragility in the housing market, although Eurozone consumer confidence is seen improving on the margin.
• Central bank speak is thick and fast Thursday, with no fewer than 6 ECB speakers, 5 Fed speakers, 2 from the Bank of Canada and a BoE MPC member on the docket. Of the lot, most focus will likely be paid to Fed's Logan, a voter and neutral member of the FOMC, and ECB's Holzmann, who will likely retain the recent hawkish tilt.

BONDS: FI Round Trip

• Core fixed income has been on a roundtrip today, moving higher on the European cash / gilt opens but pretty much reversing course more recently to only be a little higher on the day.
• There have not really been any substantial headline drivers behind the moves - the most notable data releases this morning have been German PPI and French confidence data - both of which were on the soft side - particularly German PPI.
• Looking ahead we will receive the Account of the ECB's March monpol meeting as well as US weekly claims data, the Philadelphia Fed index and US existing home sales.
• In terms of speakers we have BOE's Tenreyro, ECB's Visco, Holzmann and Schnabel and the Fed's Waller, Mester, Bowman, Logan and Bostic all due.
• TY1 futures are up 0-7 today at 114-13 with 10y UST yields down -1.7bp at 3.576% and 2y yields down -2.6bp at 4.220%.
• Bund futures are up 0.07 today at 133.50 with 10y Bund yields down -1.8bp at 2.495% and Schatz yields down -1.0bp at 2.947%.
• Gilt futures are up 0.04 today at 100.00 with 10y yields down -0.9bp at 3.844% and 2y yields down -0.5bp at 3.807%.

EQUITIES: Eurostoxx Futures Trade Close to Recent Highs

Earnings highlights due Thursday: American Express, AT&T, Union Pacific, Philip Morris International
See full earnings calendar here: https://roar-assets-auto.rbl.ms/files/52491/MNIUSE...

Eurostoxx 50 futures are consolidating at recent highs and the uptrend remains intact. Recent gains have reinforced the bullish significance of the break of 4268.00, the Mar 6 high and a former key resistance. The breach confirmed a resumption of the trend and maintains the bullish price sequence of higher highs and higher lows. Sights are on 4381.50, the Jan 5 2022 high. Initial firm support lies at 4250.00, the 20-day EMA. The trend outlook in S&P E-minis remains bullish and the contract continues to trade closer to its recent highs. Attention is on the 4200.00 handle where a break would open 4205.50, the Feb 16 high ahead of 4244.00, the Feb 2 high and a key medium-term resistance. Firm support lies at 4077,86 the 50-day EMA. Initial support to watch lies at 4119.30, the 20-day EMA. Pullbacks would be considered corrective.

• Japan's NIKKEI closed higher by 50.81 pts or +0.18% at 28657.57 and the TOPIX ended 0.65 pts lower or -0.03% at 2039.73.
• Elsewhere, in China the SHANGHAI closed lower by 3.097 pts or -0.09% at 3367.031 and the HANG SENG ended 29.21 pts higher or +0.14% at 20429.93.
• Across Europe, Germany's DAX trades lower by 119.57 pts or -0.75% at 15833.2, FTSE 100 lower by 10.57 pts or -0.13% at 7892.28, CAC 40 down 27.29 pts or -0.36% at 7538.14 and Euro Stoxx 50 down 15.21 pts or -0.35% at 4389.85.
• Dow Jones mini down 162 pts or -0.48% at 33913, S&P 500 mini down 30.25 pts or -0.72% at 4156.25, NASDAQ mini down 127.25 pts or -0.97% at 13087.75.

COMMODITIES: WTI Futures Record Fresh April Low; 50-Day EMA at $77.42 Marks Immediate Support

WTI futures are trading lower this week. This has resulted in a breach of support at $79.00, the Apr 3 low and the gap high on the daily chart. A continuation lower would signal scope for a deeper retracement, towards the 50-day EMA at $77.42. On the upside, key short-term resistance has been defined at $83.53, the Apr 12 high. A break of this level is required to resume the recent uptrend. Trend conditions in Gold remain bullish, however, the yellow metal has entered a short-term corrective cycle and traded lower Wednesday. Price has breached initial firm support at $1985.5, the 20-day EMA, highlighting potential for a deeper retracement. This has opened $1949.7, Apr 3 low. Key short-term resistance has been defined at $2048.7, the Apr 5 high. A break of this level would confirm a resumption of the uptrend.

• WTI Crude down $1.13 or -1.43% at $77.85
• Natural Gas up $0 or +0.14% at $2.223
• Gold spot up $3.44 or +0.17% at $1995.7
• Copper down $5.6 or -1.37% at $404.65
• Silver down $0.07 or -0.26% at $25.1464
• Platinum down $6.56 or -0.6% at $1083.34