MNI US Open: Safe Havens Up As Regulators Mull Vaccine Safety

EXECUTIVE SUMMARY:

• MARCH SERVICES PMIS: SPAIN BEATS EXPECTATIONS, ITALY MISSES, BOTH SUB-50
• E.C.B. COULD START WINDING DOWN PEPP FROM Q3: KNOT (RTRS INTERVIEW)
• EUROPEAN MEDICINES AGENCY TO BRIEF ON ASTRAZENECA BLOOT CLOT CONCLUSIONS AT 1600CET...
• ...AMID SPECULATION OVER WHETHER U.K. VACCINE REGULATOR WILL RECOMMEND ROLLOUT PAUSE (POLITICO)

Fig. 1: Italian And Spanish Services Sectors Continue To Contract

IHS Markit, BBG, MNI

NEWS:

SPAIN PMI DATA: The Spanish services sector contracted for the 8th consecutive month in March, but it was the smallest contraction in that sequence and beat expectations, coming in at 48.1 (vs 43.1 in Feb and the 45.8 BBG Survey).

• IHS Markit's report notes that "activity continued to be negatively impacted by COVID-19 restrictions during March, albeit perhaps not to the same degree as recent months with some firms reporting an improvement in underlying demand". That said, an overall decline in services sales was led by a drop in foreign orders, especially in tourism/hospitality.
• Services firms are being pressured on prices at both ends: "Margins also remained under pressure, with firms reporting another noticeable increase in operating expenses, but a slight drop in output charges."
• Jobs growth was negative, "extending the current period of job shedding to over a year – although the pace of contraction was comfortably the weakest in the current sequence. Job losses were again linked by firms to a reduction in new work, plus continued efforts to keep on top of operating expenses."
• As with services sectors elsewhere in Europe, Spanish firms reported strong confidence in the outlook on the back of the COVID vaccine rollout (though sentiment was little changed from Feb).

ITALY PMI DATA: Italian Services PMI missed expectations in March, remaining in contractionary territory at 48.6, vs 48.8 in Feb and and 49.0 expected by the Bloomberg consensus.

• This was the 8th consecutive monthly sub-50.0 reading. The IHS Markit report explains the worsening contraction came "amid a renewed dip in new work. As a result, firms continued to trim their workforce numbers during March, with the rate of job shedding quickening on the month."
• Demand relapsed from the previous month: "Following a slight upturn in February, new business declined marginally amid reports of weak demand conditions due to COVID-19 restrictions. New orders from abroad also decreased in March, extending the current sequence of contraction to 21 months, although the rate of decline was the slowest since August 2019."
• That said, there was some positive news on the confidence front, with service sector sentiment the strongest since September 2010 on COVID vaccine rollout and anticipated economic recovery.
• Also notable is input price pressures, which eased in the month but remained "solid". That said, "service providers continued to offer discounts as part of efforts to attract sales during March. Average charges fell for the twentieth month in a row and moderately overall."

ASTRAZENECA VACCINE / UK (POLITICO PLAYBOOK): All eyes are on the U.K.'s vaccines regulator today amid rising speculation that it may recommend the rollout of the Oxford/AstraZeneca jab to younger people should be paused. Last night a trial of the vaccine on children was halted by the team at Oxford University, who stressed there were "no safety concerns" but that they were waiting for the regulator to announce the results of its review on whether there is a link between the AZ jab and blood clots in adults. Playbook understands the Medicines and Healthcare products Regulatory Agency (MHRA) was locked in talks with the Joint Committee on Vaccination and Immunisation (JCVI) last night over what to do — with Downing Street anxiously awaiting their decision. Stay tuned: It is possible we may get the MHRA's decision today and that it could hold a briefing for journalists to explain its findings, Playbook is told, but this is still up in the air...a consultation on mandatory jabs for care workers was also meant to launch this week but seems to have been put on hold until the MHRA review concludes.

FRANCE/E.U. (BBG): French Finance Minister Bruno Le Maire said he's "deeply concerned" by the slow rollout of the European Union's joint recovery fund, saying governments are putting the rebound from the pandemic at risk.The 750 billion-euro ($890 billion) plan is "not on the right track," Le Maire said in a Bloomberg Television interview. "If we want a strong economy, we need to invest, and invest right now. The key point is to have a quick EU recovery and have the plan implemented as soon as possible."

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