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RANsquawk EU Open Rundown 03.04.17

  • Asian equities traded mostly higher as the region digested a slew of mixed data
  • FX markets saw a quiet start to the week with the USD-index rangebound ahead of this week’s key risk events
  • Looking ahead, highlights include Eurozone, UK and US Mfg. PMI data, US Construction Spending, ECB’s Coeure, Fed’s Dudley, Lacker and Harker

ASIA

Asia equity markets began the quarter on a mostly positive note, although gains were relatively reserved as the region digested a slew of mixed data releases. Nikkei 225 (+0.3%) gained following the BoJ’s Tankan survey which despite missing expectations for Large Manufacturers Index and Outlook, still showed an improvement from prior while Large All-Industry Capex unexpectedly xpanded and the Small Manufacturing Index rose to its highest in nearly a decade. ASX 200 (-0.2%) traded subdued as commodity related sectors underperformed with an unexpected contraction in Retail Sales also dampening sentiment, while Hang Seng (+0.3%) also edged gains despite Chinese Caixin Manufacturing PMI falling short of estimates, as the data still showed the 9th consecutive monthly expansion and is solely focused on the mainland which was closed for Tomb Sweeping Day. 10yr JGBs traded lower amid gains seen in Japanese stocks and after today’s BoJ Rinban announcement was for a relatively paltry JPY 370bln. Furthermore, the curve flattened amid underperformance in the short-end.

Chinese Caixin Manufacturing PMI (Mar) M/M 51.2 vs. Exp. 51.6 (Prev. 51.7). (Newswires)

Japanese Tankan Large Manufacturers Index (Q1) Q/Q 12 vs. Exp. 14 (Prev. 10). (Newswires)

Tankan Large Manufacturing Outlook (Q1) Q/Q 11 vs. Exp. 13 (Prev. 8)

Tankan Large All Industry CAPEX (Q1) Q/Q 0.60% vs. Exp. -0.30% (Prev. 5.50%)

Tankan Small Manufacturers Index (Q1) Q/Q 5 vs. Exp. 3 (Prev. 1); Highest since June 2007

EUROPE

S&P revised the sovereign rating outlook for Spain to positive from stable, rating affirmed at BBB+. Fitch affirmed Switzerland at AAA; outlook stable, affirmed Norway at AAA; outlook stable and affirmed Russia at BBB-; outlook stable. DBRS affirmed France at AAA; stable trend. (Newswires)

UK

EU are planning to bill every UK citizen EUR 500 if PM May fails to pay the Brexit divorce settlement which is estimated to be around EUR 60bln, according to sources. (Newswires)

FX

FX markets saw a quiet start to the week with the USD-index rangebound ahead of this week’s key risk events culminating with US Non-Farm Payrolls on Friday. However, AUD/USD underperformed and briefly broke below the 0.7600 level to the downside following a contraction in Retail Sales coupled with AUD/NZD’s failure to reclaim the 1.0900 handle, while USD/JPY and JPY-crosses were lacklustre and languished near Friday’s lows.

Australian Retail Sales (Feb) M/M -0.1% vs. Exp. 0.3% (Prev. 0.4%)

South Africa's parliament speaker is to consider President Zuma no confidence vote. (Newswires)

COMMODITIES

Price moves across the commodities complex was virtually non-existent, with gold and copper prices sideways tspanoughout the session as the greenback remained range-bound and with the world’s largest consumer China away for holiday. Elsewhere, WTI crude futures were also uneventful with a slight pull back seen from Friday’s gains after the latest comments from OPEC provided no surprises or hints regarding an extension of the output deal.

US Baker Hughes Rig Count (31-Mar) M/M 824 (Prev. 809). (Newswires)

OPEC Sec Gen Barkindo said he remains cautiously optimistic that the market is rebalancing and that inventory levels have begun to decline. Barkindo also said that Iraq has assured OPEC it will fully comply with the oil output agreement in order to bolster crude prices. (Newswires)

US

Treasury prices closed near session highs with Informa noting the move was driven by last minute month-end duration needs. The curve ended steeper with 5/30s steeper by almost 2bps. Finally, Jun’17 10y T-note futures settled at 124.18, up 7 ticks.

US President Trump stated that they are working on healthcare with congress currently conducting negotiations and added that he won't be discussing tariffs with China President Xi, according to Twitter sources. (Twitter)

US President Trump has warned that the US will take unilateral action to remove the nuclear tspaneat from North Korea unless China increases pressure on Pyongyang. (FT)

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MOC: * SPX 850mln to sell (vs at 650mln to sell at 1549 EDT) * Dow 50mln to sell (vs 100mln to buy at 1549 EDT)