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.
EXECUTIVE SUMMARY:
- O.E.C.D. SEES GLOBAL GROWTH SURGE, MILD INFLATION
- CHINA PROPERTY RULES AIM AT SLOWER PRICE GROWTH (MNI EXCLUSIVE)
- B.O.J. POLICY STATEMENT TO ADD CLARITY ON ETF BUYS (MNI)
- NORGES BANK NETWORK SEES ACTIVITY PICKING UP IN NEXT 6 MONTHS
FIG.1: US Treasury Curve Flatter After Large 5s/10s Trade Via Futures Blocks
BBG, MNI
NEWS:
GLOBAL ECONOMY: U.S. fiscal stimulus will boost global GDP growth to 5.6% this year and the Federal Reserve should allow the economy to run faster without reacting to short-term price pressures, according to a new OECD forecast Tuesday. The estimated expansion is up 1.4 percentage points from the Paris-based group's December Economic Outlook report, and would bring global GDP back to pre-pandemic levels by mid-year. The expected pace of growth this year would be the fastest since a gain of 6.5% in 1973 according to World Bank figures. "The significant fiscal stimulus in the United States, along with faster vaccination, could boost U.S. GDP growth by over 3 percentage points this year, with welcome demand spillovers in key trading partners," the OECD report said. Euro area growth was revised to 3.9% from 3.6% and Japan's to 2.7% from 2.3%.
CHINA (MNI EXCLUSIVE): China will limit lending to house buyers and property developers in cities where the cost of buying a home is increasing too rapidly, but officials are wary of causing sudden drops in prices and long-term plans to implement a widespread property tax remain a distant prospect at current levels of urbanisation, policy advisors told MNI. For full article contact sales@marketnews.com
BOJ (MNI): The Bank of Japan will likely reword the section of its statement that covers prioritized purchase of ETFs, underlining the current policy but adding a greater degree of clarity, MNI understands. For full article contact sales@marketnews.com
NORWAY (BBG): Contacts "are more optimistic than in November, primarily owing to the roll-out of vaccines," Norges Banks says in its regional network report. Regional network survey aggregated output index for past three months was -0.16, lower than 0.13 in previous survey, while index for next six months was 0.92, compared with 0.1 earlier. Prospects have improved compared with expectations in November, primarily owing to the roll-out of vaccines.
DENMARK (BBG): Denmark's FSA lowers the maximum rate that pension funds can offer for new guaranteed products to below zero, citing need to ensure that companies can meet their obligations. Cuts rate to minus 0.5% from 1%, with effect from July 1. Applies to new contracts, increased contributions, bonus. Danish FSA says decision to lower the rate is due to the current "low and negative" interest rate environment.
DATA:
Italian Industrial Production Up in Jan
- Jan SA ind. output +1.0% m/m (Dec revised up +0.2% m/m), WDA -2.4% y/y, stronger than markets expected (median: 0.8% m/m)
- Jan SA m/m intermed., consumer, capital gds rose; energy fell—ISTAT SAYS
- Jan WDA y/y consumer, capital gds, energy fell--ISTAT SAYS
- Jan WDA y/y intermediate goods tick up +2.4%
- There were 19 working days in Jan 2021 vs. 21 in Jan 2020.
Final EZ Q/Q GDP print slightly below flash
EZ Q4 FINAL GDP -0.7% Q/Q SA, -4.9% Y/Y WDA
EZ Q4 FINAL GDP REVISED FROM FLASH -0.6% Q/Q SA, -5.0% Y/Y WDA
- The final estimate of quarterly GDP came in slightly below the flash estimate, but in line with the preliminary flash estimate, showing a contraction in the last quarter of 2020.
- Annual growth was marginally better than indicated by the flash estimate, showing 4.9% decline in Q4 after falling by 4.2% in Q3.
- Q4's decrease was mainly driven by a drop in household spending due to the renewed lockdown measures in several European countries.
- Household consumption fell by 3.0% in Q4, shaving off 1.3pp of GDP growth, while government expenditure ticked up 0.4%.
- Gross capital formation rose by 1.6% in Q4, following Q3's sharp 13.9% increase.
- While exports slowed to 3.5%, down from 16.7% in Q3, imports rose by 4.1% in Q4, resulting in a negative contribution from net trade.
- Among the member states, Ireland (-5.1%), Austria (-2.7%) and Italy (-1.9%) showed the largest declines, while Malta (+3.8%), Greece (+2.7%) and Estonia (+2.1%) posted the biggest gains.
- Employment edged up by 0.3% in Q4, after rising by 1.0% in the previous quarter, while annual employment fell by 1.9% in Q4, slightly up from Q3's 2.1% drop.
FIXED INCOME: Bull flattening in focus
Bull flattening has been the theme of the day with 5s30s curves in focus.
- UK 5s30s are close to yesterday's lows (which were the lowest levels since January). US 5s30s are at their lowest levels of the month, and have only been lower since the end of January on February 26. German 5s30s are 2.8bp lower on the day, but still around 6bp higher than the lows of March to date.
- This morning has seen some decent supply with the EU issuing under its SURE mandate and the Netherlands and UK also coming to the market.
- TY1 futures are up 0-12 today at 132-08 with 10y UST yields down -5.3bp at 1.539% and 2y yields down -0.7bp at 0.158%.
- Bund futures are up 0.54 today at 171.42 with 10y Bund yields down -3.8bp at -0.316% and Schatz yields down -0.4bp at -0.690%.
- Gilt futures are up 0.47 today at 128.94 with 10y yields down -4.9bp at 0.704% and 2y yields down -2.2bp at 0.069%.
FOREX: USD Edging Off 2021 Highs
- The greenback is edging lower after Monday's strong session put the USD at the best levels since late November.
- At the top end of the G10 table so far Tuesday is NOK, which is pressuring EUR/NOK to new cycle lows and narrowing the gap with the February 2020 support at 10.00. Strong oil prices continue to contribute to the currency's outperformance, but markets also keep an eye on the upcoming Norges Bank policy decision, at which the bank may steepen their rate path projections to indicate a sooner-than-expected first post-COVID rate hike.
- AUD and NZD are chewing through Monday's losses, with AUD?USD nearing the week's best levels at $0.7722. A break above opens 50-dma resistance at $0.7736.
- There are no major data releases due Tuesday, with few central bank speakers on the slate either. RBA governor Lowe speaks after the close from Sydney.
EQUITIES: Tech Bounce Leading Equity Gains
- Asian stocks closed mixed, with Japan's NIKKEI up 284.69 pts or +0.99% at 29027.94 and the TOPIX up 24.1 pts or +1.27% at 1917.68. China's SHANGHAI closed down 62.122 pts or -1.82% at 3359.292 and the HANG SENG ended 232.4 pts higher or +0.81% at 28773.23
- European equities are stronger, with the German Dax up 56.72 pts or +0.39% at 14349.69, FTSE 100 up 19.33 pts or +0.29% at 6712.62, CAC 40 up 6.19 pts or +0.1% at 5895.36 and Euro Stoxx 50 up 14.75 pts or +0.39% at 3763.32.
- U.S. futures are higher, led by a tech rebound, with the Dow Jones mini up 206 pts or +0.65% at 31982, S&P 500 mini up 40.75 pts or +1.07% at 3860, NASDAQ mini up 258.5 pts or +2.1% at 12556.25.
COMMODITIES: Precious Metals Bounce As Dollar Softens
- WTI Crude up $0.3 or +0.46% at $65.36
- Natural Gas down $0.01 or -0.19% at $2.659
- Gold spot up $20.78 or +1.23% at $1699.22
- Copper down $5.35 or -1.31% at $403.95
- Silver up $0.6 or +2.39% at $25.7294
- Platinum up $34.19 or +3% at $1174.45
LOOK AHEAD:
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.