Italian election 2018: Marine Le Pen TAUNTS EU and celebrates ‘TERRIBLE evening’ for bloc
MARINE Le Pen has taken to Twitter to taunt the EU ahead of the what she says will be a “terrible evening” for the crumbling Brussels bloc as eurosceptic parties surge in the 2018 Italian election polls.
Italian Election results PANIC – 'Germany must get out of the euro now'
ITALIAN ELECTION RESULTS has sparked panic in Germany with one of the country’s most senior MEPs urging Berlin to “get out of the euro now” after eurosceptic parties collected half of the votes in Italy.
Nigel Farage warns Italian election result will crush Brussels
Nigel Farage has claimed the Italian election result could crush the European Union after Luigi di Maio’s anti-establishment Five Star Movement secured 32.5 percent of the vote – becoming the first single party in Italy.
The former Ukip leader who played a leading role in Britain’s decision to leave the European Union has claimed “the end of the EU is nigh” after the Italian election vote.
The comments come after the anti-establishment Five Star Movement secured over 30 percent of the vote in the Italian election becoming the first single party in Italy ahead of the incumbent Democratic Party (DC).
Speaking on his LBC show, Ukip MEP Farage said: “This is a massive, massive anti-establishment vote it is a big shift towards euroscepticism.
•Japan central bank chief tempers talk of easy policy exit
Japan's central bank chief said a future exit from ultra-easy monetary policy would need to be "very gradual", in comments analysts described as a bid to temper expectations about a near-term end to crisis-mode stimulus. BOJ Governor Haruhiko Kuroda said it had the necessary tools to engineer a smooth exit from easy policy and was already brainstorming how a future stimulus exit could affect its balance sheet, but sounded caution about withdrawing too quickly. Kuroda stressed that an actual exit from easy policy was some time away with inflation, now at 0.9 percent, still distant from his 2 percent target. "When the BOJ exits, it will be a very gradual process ... so as not to trigger a spike in long-term interest rates or a disruption in financial markets," Kuroda said.
• PREVIEW-China seen posting strong Feb export growth, factory inflation to moderate
A raft of Chinese economic data in the next few weeks is expected to show growth was mostly stable at the start of the year as exports picked up and factory activity remained largely resilient despite tougher air pollution measures. One big change this year could be a reversal of strong growth in China's factory inflation, which helped boost industrial profits last year, according to a Reuters poll. Following on January's solid export data, growth likely picked up further to an 11-month high in February. Resurgent exports last year helped boost China's overall growth, though trade tensions are escalating rapidly this year as U.S. President Donald Trump prepares to roll out new tariffs on steel and aluminium imports and threatens other punitive measures.
• UK shoppers keep on spending more on food as inflation bites-BRC
Britain's shoppers spent more on food in the three months to February and once again cut back on non-essential purchases as the rise in inflation after the Brexit vote of 2016 squeezed their spending power, a survey showed. The amount of money spent with retailers in February rose by 1.6 percent compared with a year earlier, slightly above the pace of growth seen in the previous three months, the British Retail Consortium said. Non-food sales in the three months to February were 0.5 lower than a year earlier, while food sales grew 4.0 percent. Overall consumer spending rose by an annual 3.8 percent, slightly down from January's increase of 3.9 percent and driven by spending on activities such as going to the cinema or the theatre which bounced back after falling for five months.
•German job vacancies reach record high at the end of 2017
Job vacancies in Germany hit an all-time high in the last three months of 2017, data showed, underlining the strength of a labour market that is pushing up wages and fuelling a consumer-led upswing in Europe's biggest economy. Vacancies surged by 85,000 on the quarter and by 128,000 on the year to reach 1.18 million in the fourth quarter, a survey found. Manufacturing firms posted 161,000 vacancies, up 35 percent on the year, while construction companies reported 98,000 vacancies, a 24 percent rise, the survey showed. An index measuring the ratio between unemployment and job vacancies fell to 2.0 which was also the lowest on record.
• Euro zone bond yields rise as trade war fears ebb, ECB in focus
Most euro zone bond yields rose as fears of a global trade war ebbed, taking the shine off safe-haven debt as attention turned to this week's ECB meeting for clues as to how and when the bank will withdraw its hefty stimulus programme. The premium investors demand to hold 10-year Italian debt over its benchmark German equivalent fell back to levels last seen before Sunday's election at around 139 basis points. Most better-rated euro zone bond yields across bloc were up 1-2 basis points, with Germany's 10-year Bund yield up 2.5 bps at 0.66 percent - above five-week lows hit on Monday at around 0.60 percent. Italy's 10-year bond yield fell 5.5 bps to 2.03 percent, with peripheral peers Spain and Portugal also down 5-6 basis points.
ANALYSIS & INSIGHT
• Urgent rates decision likely to face next head of China's central bank
China's central bank will probably have to respond to an expected U.S. interest rate rise at a particularly sensitive time later this month. In 2017, the Fed raised borrowing costs three times and the PBOC followed it twice - in March and December - tapping open market operations' rates higher by 10 basis points (bps) and 5 bps, respectively. Economists say they expect a similar move by the PBOC this time around.
• Kuroda's tough task: navigating the long road toward stimulus exit
When Bank of Japan Governor Haruhiko Kuroda spooked markets last week with talk of winding down the bank's crisis-mode stimulus, he was describing a goal on the distant horizon - not warning of an imminent shift, say sources familiar with his thinking. But they say starting discussion of an exit from ultra-loose policy is seen as crucial given the rising cost of easing and the need to give Japanese policymakers some ammunition in case there is another crisis.
CHART OF THE DAY
U.S. YIELD CURVE - AN ECONOMIC OMEN?
• 08:55 Redbook Weekly Same-Store Sales Index (prev +3.3% y/y)
• 10:00 IBD / TIPP Economic Optimism Index (Mar)
• 10:00 Factory Orders (Jan) (mkt -1.3% m/m, prev +1.7% m/m)
• 10:00 Factory Orders ex-Trans (Jan) (prev +0.7% m/m)
• 07:30 FRB New York's Dudley (voter, dove) participates in roundtable with USVI non-profit leaders; St Thomas
• 11:45 FedTrade operation 30-year Fannie Mae / Freddie Mac (max $980 mn)
• 17:30 Fed Governor Brainard (voter, dove) speaks at Money Marketeers of NYU; New York, NY
• 20:30 FRB Dallas's Kaplan (non-voter, dovish) participates in moderated Q&A session before CERAWeek event; Houston, TX
• The tactical bias is defensive looking for strength selling opportunities
• Look for a 2.93% to 2.85% range in 10s
• The strategic bias is flat, though looks to sell a 50% position in the 30-year at 3.12% if hit
• The curve bias is in a 7s/10s steepener at 4.5 bps looking to exit at 8.0 bps. A 5s/30s steepener was added at 51.1 bps as a set-up trade for the expected duration heavy jumbo CVS corporate new issue deal
OVERNIGHT NEWS RECAP
• Market opens risk on due to improved earnings and deal making
• Italy's League, 5-Star vie for power after inconclusive vote - Rtrs
• Northern EU states urge caution in euro reforms - Rtrs
• Brent Crude moves above $65 on improving growth optimism
• Shanghai Composite gains 1.02% as Trump trade war concerns ease
• UK February BRC Retail Sales 0.60% y/y (exp 0.50%, prev 0.60%)
• COMMENT: ECB-Bigger debate looms beyond QE easing bias shift (Full Story)
• Bonds hit by risk on price action overnight, hammered by reports North Korea willing to discuss nukes
• Better selling from Japanese accounts in belly
• Good volume, 295k 10-year futures trade by 06:27 EST
• June 10s trade 120-05/119-29 overnight, last at 119-30
• 10s trade 2.864%/2.895% overnight, last at 2.895%
• 2s/10s 0.8bp steeper at 64.5bp last
• Bund extend sell off : 159.19 next then 159.03
• Sharp risk-on move in evidence
• Volume big at 530k but roll underway, June trades 435k
• EUROSTOXX 600 bounces after holding above late Aug lows at 365.99
• 2s/10s bear steepens around 3bp with long leg under pressure
• 10yr Italy/Germany 9bp tighter, Spain 9bp tighter, Portugal 10bp tighter
• 10yr US/Germany holding under 223bp recent high
• EUR/USD up again but capped by spike highs from Monday
• Commodities manage rebound after recent weakness
• IEA report got oil going yesterday with minor extension today
• Austria taps EUR0.6bn 2022s and EUR0.4bn 2028s
• Gilts open lower in line with core markets
• GBP2.25bn1.50% 2047 tap solid, sold at 0.937%, b/c 2.10, tail 0.2bp
• 10-yr Gilts trades 1.503% to 1.552% range, last at 1.551%
• Jun Gilts trade 121.21 to 120.68, prev settlement 121.31, last at 120.69
• Jun Gilt Volumes 99k as of 06:15 EST
• Gilts 2s/10s curve 2bp steeper at 70.5bp
• 10-yr Germany/UK 0.5bp wider at 86.5bp
10-yr Current Yield Spread to Trsy (bps)
JGB 0.050% -284
BUND 0.680% -221
GILTS 1.547% -134
Prices from Tradeweb
NIKKEI 21417.76, +376
• Nikkei gains 1.79% as global trade war fears subside
DAX 12239.46, +149 FTSE 100 7189.75 +74
• FTSE gains 1.03% as corporate earnings and deal making underpins
SPREAD PRODUCT OUTLOOK
• The FNMA 30-year current coupon closed on Monday at 3.568%, +80.8bp over the 5/10-year treasury blend and +68.3bp over the 10-year swap rate bid, 1.5bp and 1.4bp wider on the day
• The agencies begin releasing February prepayment data starting at around 4:30pm with FNMA.
Italian election results: Whatever happens next Brussels is in BIG TROUBLE - This is why
THE Italian election results did not provide a clear view of who will form Italy’s next government, but with a huge outpouring for anti-EU populist parties, Brussels is facing a big challenge from the bloc’s founder state, no matter who ends up in Palazzo Chigi.