Focus remains on bond yields

By on March 22, 2022 0


– Bond yields continue to rise as inflation concerns simmer.


– BOJ Governor Kuroda reiterated that domestic inflation is cost inflation, which is negative for profits and revenue and weighs on the economy longer term.

– Japan Chief Cab Sec Matsuno: Don’t think about an economic recovery plan now.

– RBA Gov Lowe noted that he was watching the labor market for signals of the cost of labor and how pervasive the change in the psychology of inflation was.


– Ukraine Pres Zelenskiy called for meaningful peace and security talks with Moscow. Ready to discuss a commitment by Ukraine not to seek NATO membership in return for a ceasefire. Ukraine will hold a referendum on any deal with Russia, adding that the country will not comply with any ultimatum from Moscow.


– President Biden noted that there was “evolving intelligence” that Russia was exploring options for potential cyberattacks against the United States. Believed that Putin was also evaluating the use of chemical weapons in Ukraine.

– Fed Chairman Powell said the FOMC could rise more than 25 basis points in a meeting or meetings if needed; The Fed was ready to raise rates above neutral if warranted.

– Goldman Sachs analyst has now seen the Fed hike rates by 50 basis points in May and June, then clips of 25 basis points over the course of the year [2022]; expects the Fed to announce a reduction in its balance sheet starting in May 2022.


– ECB’s Rehn (Finland) noted that he should normalize policy without hurting growth; ECB rate hikes depend on economic developments, but could start in late 2022 or early 2023.

– Europe would be divided on the Russian oil sanctions. France has hinted that it is open to targeting Russian energy. Germany and Hungary have said they reject the idea (Note: each imports around 30% of its oil from Russia).

Speakers/Fixed Income/FX/Commodities/Erratum


clues [Stoxx600 +0.52% at 457.18, FTSE +0.58% at 7,485.90, DAX +1.00% at 14,469.96, CAC-40 % at #, IBEX-35 +0.44% at 8,425.77, FTSE MIB +0.93% at 24,520.00, SMI -0.04% at 12,165.93, S&P 500 Futures +0.38%].

Market Focal Points/Key Themes: European indices generally open higher (notable exception of the SMI starting the day in the red) and remained bullish throughout the first part of the session; top performing sectors include materials and financials; while lagging sectors include industrials and consumer discretionary; the travel and leisure sector underperforming following the plane crash in China yesterday; Just Eat and McDonald’s Reach Distribution Agreement; Leonardo agrees to sell its Enterprise Solutions unit to SES; Fortum gives up his Varme unit; Recticel acquires Trimo; earnings expected in the upcoming US session include Adobe, ARR and Nvidia Investor Day.


Discretionary consumption: Just Eat [TKWY.NL] +2% (partnership with McDonald’s), Kingfisher [KGF.UK] -2% (earnings).

Energy: Fortum [FUM1V.FI] +1% (divestment).

Finances: Partners Group [PGHN.CH] +2% (gains).

Technology: CD Project [CDR.PL] +4.5% (announcement of a new game).


De Guindos of the ECB (Spain) reiterated the Board’s view that inflation should be higher for longer; saw little risk of stagflation but needed to watch for possible side effects of inflation.

SNB Annual Report noted that it had made foreign exchange interventions for 21.1 billion Swiss francs during the year.

France European Affairs Min Beaune reiterated the EU to discuss tougher sanctions against Russia.

A draft statement has been released, noting EU leaders agreed to work together to jointly purchase gas, LNG and hydrogen. Could approve taxation of windfall profits of energy companies.

Germany Fin Min Lindner said stagflation posed a danger to the economy and noted that fiscal policy sought to counter such a risk. Cannot count on the ECB to stimulate growth as it focuses on the fight against inflation.

Italian government is expected to reduce projected GDP growth for 2022 to 3.0%.

Greece Late Min Staikouras said the Ukraine crisis should not derail the recovery.

British Chancellor of the Exchequer (Fin Min) Sunak stressed that the government could not allow the debt to soar with inflation and interest rates still rising.

Ministry of Finance of Russia declared that it had fully honored its commitments on the service of the obligation in euros 2029.

Japan Dep Cabinet Sec Kihara said the government does not foresee continued blackouts at this time.

Parliament of Japan says approve FY21/22 budget of ¥107.6T (record high).

Japanese Prime Minister Kishida said it was important to respond quickly to further price increases if necessary.

Japan Late MIn Suzuki reiterated the government’s position that no additional stimulus is being considered at this time.

China says to maintain annual crude production at 200 million tonnes and aims to bring non-fossil fuels to around 20% of total energy consumption by 2025.

Currency/Fixed Income

– The USD was mixed following Monday’s gains after Fed Chairman Powell opened the door to more aggressive monetary policy to fight inflation. Dealers took note of the Fed’s rewrite of this playbook.

– EUR/USD is back above the 1.10 level but well contained in recent ranges.

– USD/JPY was at a fresh 6-year high with the pair probing the 120.50 area helped by policy divergence from the Fed and the BOJ.

Economic data

– (FI) Finland Unemployment rate in February: 6.7% against 7.5% previously.

– (UK) Feb Public Finances (PSNCR): +£2.5bn vs. -£22.0bn previously; Public sector net borrowing: £12.3bn vs £8.4bn vs -£3.7bn previously; Central Government RCN: +£1.6bn vs -£23.2bn previously; PSNB (ex-banking groups): 13.1 B£ against 8.1 B£.

– (ZA) South Africa January leading indicator: 127.3 vs. 126.0 before.

– (MY) Malaysia Foreign reserves in mid-March: 115.2 billion dollars against 115.8 billion dollars previously.

– January euro zone (EU) current account (seasonal adjustment): 23.0 billion euros against 22.6 billion euros previously.

– (IS) Icelandic wage index M/M: 0.3% vs. 3.7% before; Y/Y: 7.3% vs. 7.3% before.

Issuance of fixed income securities

– (EU) European Union opened a book to sell 10- and 15-year EUR-denominated NextGeneration (NGEU) bonds through a syndicate. Sell ​​€8.0 billion in July 2032 NextGeneration Bonds (NGEU); guidance view -13bps at mid-swaps; Sell ​​2.17 billion euros in July 2039 NextGeneration Bonds (NGEU); guidance view -6bps at mid-swaps.

– (NL) Dutch Debt Agency (DSTA) sold €2.5bn vs. €1.5-2.5bn in the range shown in the July 2028 0.75% DSL bonds; Average return: +0.420% versus -0.479% before.

– (IDENTIFIER) Indonesia sold a total of IDR 2.8 T against a target of IDR 9.0 T in Islamic bills and bonds (sukuk).

– (ZA) South Africa total sold ZAR 3.9 billion vs. ZAR 3.9 billion shown in bonds 2030, 2032 and 2044.

Look forward

– (MX) Citibanamex survey of economists.

– 06:00 (EU) Construction production in January in the euro zone M/M: no est v -4.0% before; Y/Y: No est v -3.9% before.

– 06:00 (BE) Belgium March Consumer Confidence Index: No est v 1 prior.

– 06:00 (EU) Daily fixing of the Euribor.

– 06:00 (AT) Austria Dect Agency (AFFA) to sell 3-month and 6-month bills.

– 06:15 (CH) Switzerland will sell 3-month bills.

– 06:25 (EU) Daily ECB liquidity statistics.

– 06:30 (HU) The Hungarian Debt Agency (AKK) will sell 3-month bonds.

06:30 (DE) Germany to sell 4.0 billion euros in 0% April 2027 BOBL.

– 06:30 (EU) ECB allocation under the 7-day Main Refinancing Tender (MRO).

07:00 (UK) Tue CBI Industrial Trends Total Orders: 16th vs 20 before; Sale price: 79th v 77 before.

– 07:00 (IE) Ireland Feb PPI M/M: No east v 0.1% ahead; Y/Y: no east v 3.5% before.

– 07:00 (IL) Israel Jan Manufacturing Production M/M: No east vs. 5.9% prior.

– 07:00 (BR) March Minutes of the Central Bank of Brazil (BCB).

– 07:45 (US) Libor daily fixing.

– 08:00 (TR) Turkey will sell bonds.

– 08:00 (MX) Mexico’s overall supply and demand in the fourth quarter: 3.6% ev 8.1% before.

– 08:25 (SE) Swedish Central Bank (Riksbank) Gov Ingves on digital currencies.

– 08:30 (CA) Canada Feb Industrial Product Price M/M: 2.5%ev 3.0% before; Commodity price index M/M: 5.5%ev 6.5% before.

– 08:55 (US) Weekly Redbook LFL sales data.

– 09:00 (PL) Poland Feb M3 Money supply M/M: +1.1%ev -1.2% before; Y/Y: 7.9%ev 7.7% before.

09:00 (HU) Central Bank of Hungary (MNB) decision on interest rates: Should raise the base rate by 100 basis points to 4.40%.

– 09:00 (UK) Daily Baltic Dry Bulk Index.

– 09:00 (HU) Hungary Central Bank decision on interest rates.

– 09:15 (EU) ECB Lagarde – BRI.

– 09:00 (IT) ECB Panetti (Italy).

– 09:00 (US) Fed Wuerffel.

– 09:00 (RU) Russia’s announcement on the upcoming OFZ bond issue (held on Wednesday).

10:00 a.m. (US) March Richmond Fed Manufacturing Index: 2nd vs 1 forward.

– 10:00 a.m. (EU) ECB Weekly Forex Reserves.

– 10:00 am (EU) Weekly update on ECB QE bond purchases.

– 10:35 a.m. (US) Fed Williams.

– 10:35 a.m. (SE) Central Bank of Sweden (Riksbank) Skingsley.

– 11.15 a.m. (UK) BOE’s Cunliffe.

– 11:15 a.m. (CH) President of the SNB Jordan – BRI.

– 13:00 (IE) ECB’s Lane (Ireland, Chief Economist).

– 1:00 p.m. (US) The Treasury will sell 52-week notes.

– 2:00 p.m. (US) February Daly.

– 3:00 PM (AR) Argentina’s current account balance in the fourth quarter: 0.4 billion dollars against 3.3 billion dollars previously.

– 4:30 p.m. (US) Weekly API oil inventories.

– 17:00 (KR) South Korea Feb PPI Y/Y: No east vs. 8.7% prior.

– 5:00 p.m. (US) Fed Master.

– 21:10 (JP) Outright purchase of BOJ bonds with maturities of 1-3 years, 3-5 years and 5-10 years.

– 23:00 (CN) China will sell 3- and 7-year bonds denominated in CNY.

– 11:30 PM (TH) Thailand’s customs trade balance in February: -$1.4 billion vs. -$2.5 billion previously; Exports Y/Y: 10.4%ev 8.0% before; Y/Y imports: 19.0% vs. 20.5% before.