MNI US OPEN - Surge in China Exports Fuels Surprising Surplus

NEWS

MNI WEBINAR: Webinar with BOE's Huw Pill

You are invited to listen to introductory remarks by Huw Pill, Chief Economist of the Bank of England & Member of the Monetary Policy Committee, followed by Q&A. This event is on the record and will run as a Zoom Webinar

• Topic of discussion: UK Economic & Monetary Policy Developments
• Date: Thursday 13th April
• Time: 9am-10:30am New York time, 2pm-3:30pm London time

FRANCE (MNI): 12th Day of Nationwide Strikes Underway Against Pension Reforms

The twelfth day of nationwide strikes and protests aimed at forcing the gov't to U-turn on controversial pension reforms are underway. Earlier this morning protesters blocked the Rue de Montpensier in Paris, the access route to the Constitutional Council. Tomorrow (14 April) the Council is set to deliver a ruling on whether President Emmanuel Macron's pension reforms - forced through parliament without a vote in the National Assembly - should be accepted, modified, or rejected. The acceptance of the reforms could spark further protests, while their rejection would come as a severe blow to the gov't.

FRANCE (BBG): France’s Macron Defends Stance on US, China After Backlash

Emmanuel Macron defended his approach to the US and China on Wednesday after his call for Europe to avoid being dragged into a conflict between Beijing and Washington sparked a backlash. The French president said his view on Taiwan hasn’t shifted and pointed to a shared vision of an open Indo-Pacific region with US counterpart Joe Biden. “France supports the status quo in Taiwan,” Macron told a news conference in Amsterdam alongside Dutch Prime Minister Mark Rutte during a state visit to the Netherlands.

RUSSIA/UKRAINE (NYT): Leaked Document Says Russia’s Ally Serbia Is Sending Arms to Ukraine

A leaked U.S. intelligence document lists Serbia as a country that has sent or is ready to send lethal aid to Ukraine, a revelation likely to create tensions between Russia and the Balkan nation, a close partner for centuries. The document, dated March 2 and part of a trove of secret intelligence material leaked online, included a chart that put Serbia in a group of European nations that has refused to provide training to Ukraine’s military but has “provided or committed to provide lethal aid.”

ITALY (BBG): Meloni Topples Titans of Italy Economy in Leadership Revamp

Prime Minister Giorgia Meloni extended her revamp of Italy’s economic and business elite as her government replaced leaders at some of its biggest state-controlled enterprises. The appointments mark the biggest step yet to reshape Italy’s business leadership with like-minded players at a consequential juncture with so many selections happening at once.

NORTH KOREA (MNI): Launch of Solid-Fuel ICBM Raises Risks, Sparks Evac Alert in Japan

The test launch of what observers believe to be North Korea's first solid-fuel long-range missile raises security risks in northeast Asia. The test launch saw Japan's public early-warning system, J-Alert, called for the evacuation of millions on the northern island of Hokkaido due to the risk of the missile landing nearby. Chief Cabinet secretary Hirokazu Matsuno stated subsequently that “We did not correct the information issued by J-Alert.”

DATA

EUROZONE DATA (MNI): Industrial Production Records a Second Month of Growth in Feb

• EUROZONE FEB INDUST PROD +1.5% M/M (FCST +1.0%); JAN +1.0%r M/M
• EUROZONE FEB INDUST PROD +2.0% Y/Y (FCST +1.9%); JAN +0.9% Y/Y

Eurozone industrial production was slightly stronger than anticipated in February, expanding by +1.5% m/m and +2.0% y/y in a second consecutive month of growth. Today's data follows surprisingly robust German, French and Spanish February IP prints, whilst Italy recorded a contraction. Volatile Irish data (which is exposed to shifts in multinationals' pricing) represented a largely negligible distortion on the m/m aggregate print in February as opposed to previous months. IP growth was positive on the month across goods categories, strongest in capital goods (+2.2%) whilst lagging in consumer durables (+0.2%).

UK DATA (MNI): UK GDP Flat in February Despite Construction Bounce

• UK FEB GDP +0% M/M, +0.1% 3MM, +0.4% 3M Y/Y
• UK FEB SERVICES INDEX -0.1% M/M, +0.1% 3MM
• UK FEB IND PROD -0.2% M/M, -3.1% Y/Y
• UK FEB MANUF OUTPUT +0% M/M, -2.3% Y/Y
• UK FEB CONSTRUCTION OUTPUT +2.4% MM, +0.9% 3M3M, +5.7% YY
• UK FEB TRADE BALANCE GBP -4.8BN

UK GDP flatlined in February, data released Thursday by the Office for National Statistics said, with data for January revised modestly higher to +0.4% m/m. For the latest rolling three months, growth was +0.1%. Overall the data was largely in line with Bank of England expectations for an economy bouncing along around zero, so there is little new information for policymakers ahead of the May 11 policy decision.

GERMAN DATA (MNI): Core CPI Edges up to a Fresh High

• GERMANY FINAL MAR CPI +0.8%; +7.4% Y/Y (=FLASH)
• GERMANY FINAL MAR HICP +1.1% M/M; +7.8% Y/Y (=FLASH)

German inflation cooled to +7.8% y/y (HICP), whilst rising +1.1% m/m in March, confirming results of the flash release. National CPI data showed energy prices slowed considerably on the year in February, driven lower by lower international prices and government energy price breaks. Food prices continued to accelerate, ticking up +1.2% m/m. Core inflation rose +5.8% y/y (non-harmonised), edging up by 0.1pp from February.

ITALY FEB IP -0.2% M/M, -2.3% Y/Y (MNI)

AUSTRALIA DATA (MNI): Labour Market Remains Tight, Keeping Rate Hikes on Agenda

• AUSTRALIA MAR EMPLOYED PERSONS CHANGE 53K
• AUSTRALIA MAR F-T EMPLOYED PERSONS CHANGE 72.2K
• AUSTRALIA MAR LABOR PARTICIPATION RATE +66.7%
• AUSTRALIA MAR UNEMPLOYMENT RATE +3.5%

The March employment report didn't show any signs of labour market easing. New jobs in Australia in March rose 53k, which was not only above consensus at 20k but above the highest forecast of 45k. The unemployment rate stayed at 3.5% and the participation rate at 66.7%. Full-time employment posted another very strong month with part-time contracting again, demonstrating that labour shortages persist. This data shows that the labour market remains very tight and continues to pose a risk to wages, and as a result makes another RBA hike a distinct possibility.

AUSTRALIA DATA (MNI): Inflation Expectations Ease to Lowest in 14 Months

Melbourne Institute consumer inflation expectations for April eased to 4.6%from 5%, their lowest since February 2022. This was the third consecutive monthly decline and is consistent with the RBA's view that inflation has peaked and that inflation expectations remain anchored. They peaked at 6.7% in June 2022. Expectations also points to a further moderation in monthly CPI inflation in the months ahead. The important Q1 and March CPI data print on April 26.

CHINA MAR TRADE SURPLUS +$88.19 BLN; MEDIAN +$39.95 BLN (MNI)
CHINA MAR EXPORTS +14.8% Y/Y; MEDIAN -7.2% Y/Y: CUSTOMS (MNI)
CHINA MAR IMPORTS -1.4% Y/Y; MEDIAN -6.5% Y/Y: CUSTOMS (MNI)

FOREX: Fading Greenback Tilts GBP/USD Toward Bull Trigger

• The greenback remains soft against most others in G10, putting the USD Index to another monthly low and within range of the early February support at 100.82. Weakness through here would put the USD at the lowest level since late April last year, a move predicated by the waning expectations for the Fed peak rate as well as the softer details in the March US CPI release.
• USD weakness has helped tip most major pairs through a number of key levels - EUR/USD now sits comfortably north of 1.10, while GBP/USD is narrowing in on the April high and bull trigger at 1.2525 - a level that, if broken, would mark the resumption of the uptrend off the March low and end the 2023 consolidation phase on a positive note.
• CHF again trades well, with USD/CHF through to new YTD lows and targeting handle support at the 0.8900 level. The pair is yet to hit technically oversold levels, but a break below the handle could tip the 30-day RSI below 30 for the first time since November.
• JPY sits softer alongside the USD despite the more moderate equity performance Thursday, while AUD outperforms on a more flattering overnight jobs release. AUD/JPY has printed a fifth consecutive higher high, narrowing the gap with resistance at 90.08.
• Weekly jobless claims data and the March PPI release take focus going forward, while the central bank speaker slate circles an MNI event with BoE Chief Economist Pill at 1400BST/0900ET and ECB's Nagel after the London close.

BONDS: Slightly Bear Steeper Post-CPI/Pre-PPI

Global curves are leaning bear steeper in overnight trade Thursday, with Bunds and Gilts testing Wednesday's lows but Treasuries more rangebound.

• A Reuters sources piece pointing to a 25bp ECB hike in May provided a dovish contrast to Wednesday's Holzmann comments favouring a 50bp raise.
• That boosted Bunds to session highs before they reversed lower, as equities recovered from overnight lows.
• Periphery EGB spreads are a little wider, with one notable move being Spanish 10Y yields moving above Treasuries for the first time since 2020.
• The key release of the session is US PPI, which in conjunction with yesterday's CPI will inform estimates of the Fed's preferred price gauge (PCE). Jobless claims feature alongside.
• The central bank speaker highlight is an MNI event with BoE's Pill, with no FOMC participants on the schedule.
• Italy/UK/Spanish auctions saw solid-to-strong results; $18B 30Y Treasury Bond re-open is the US supply highlight;

Latest levels:

• Jun US 10Y futures (TY) down 1/32 at 115-21.5 (L: 115-20 / H: 115-30)
• Jun Bund futures (RX) down 26 ticks at 134.89 (L: 134.7 / H: 135.5)
• Jun Gilt futures (G) down 11 ticks at 102.89 (L: 102.54 / H: 103.3)
• Italy / German 10-Yr spread 1.5bps wider at 186bps

EQUITIES: Stocks Remain Firm, Retaining Bullish Trend Condition

Eurostoxx 50 futures remain firm. The contract traded to a fresh cycle high Wednesday of 4321.00, reinforcing bullish conditions. Price has recently breached 4268.00, the Mar 6 high and a key hurdle for bulls. The break strengthens bullish conditions and opens 4324.50, the Jan 13 2022 high (cont). Moving average studies are in a bull-mode set-up and this highlights a broader uptrend. Initial firm support lies at 4199.30, the 20-day EMA. S&P E-minis briefly traded above 4171.75 yesterday, the Apr 4 high. Current trend conditions are bullish - price has recently breached 4119.50, Mar 6 high, reinforcing a positive theme. The move higher has also resulted in a break of 4148.48, 76.4% of the Feb 2 - Mar 13 downleg. This signals scope for an extension to 4205.50, the Feb 16 high ahead of 4244.00, the Feb 2 high and a key M/T resistance. Firm support lies at 4056.44, the 50-day EMA.

• Japan's NIKKEI closed higher by 74.27 pts or +0.26% at 28156.97 and the TOPIX ended 1.01 pts higher or +0.05% at 2007.93.
• Elsewhere, in China the SHANGHAI closed lower by 8.818 pts or -0.27% at 3318.364 and the HANG SENG ended 24.32 pts lower or -0.12% at 20289.03.
• Across Europe, Germany's DAX trades higher by 29.3 pts or +0.19% at 15734.08, FTSE 100 higher by 3.18 pts or +0.04% at 7827.96, CAC 40 up 76.3 pts or +1.03% at 7472.76 and Euro Stoxx 50 up 21.31 pts or +0.49% at 4355.37.
• Dow Jones mini up 39 pts or +0.12% at 33848, S&P 500 mini up 8.5 pts or +0.21% at 4126.75, NASDAQ mini up 34.5 pts or +0.27% at 12984.75.

COMMODITIES: WTI Futures Extend Bull Cycle, Targeting $85.01 Nov 14 High Next

WTI futures remain in a bull cycle and the contract has traded higher Wednesday, clearing resistance at $81.81, the Apr 4 high. The break confirms a resumption of the current uptrend note that an important resistance at $83.04, the Jan 23 high, has also been breached. This opens $85.01, the Nov 14 high. On the downside, key short-term support is seen at $79.00, the Apr 3 low and the gap high on the daily chart. Trend conditions in Gold remain bullish and last week’s resumption of the uptrend reinforced current conditions - the yellow metal cleared former resistance at 2009.7, the Mar 20 high, to post fresh YTD highs. This signals scope for a climb towards $2034.0 next, a Fibonacci projection. On the downside, key support has been defined at $1934.3, the Mar 22 low - a break would highlight a potential reversal.

• WTI Crude down $0.06 or -0.07% at $83.2
• Natural Gas down $0.02 or -0.72% at $2.076
• Gold spot up $11.27 or +0.56% at $2025.89
• Copper up $0.55 or +0.13% at $408.55
• Silver up $0.1 or +0.39% at $25.6068
• Platinum up $3.38 or +0.33% at $1023.69