EUROPEAN OPENING NEWS INCLUDING: ECB President Draghi (neutral …
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Geopolitical risk subsides as Russian troops return to their bases from the Ukrainian border after Kyiv stated they would not use further military force.
EUR trades firmer after sources state ECB’s Draghi sees QE still being ‘a way off’ and is relatively unlikely.
Attention turns to German CPIs, Advanced Q1 UK GDP and earnings from BP, Volkswagen, Deutsche Bank (beat on net income, missed on revenues), and Sanofi (missed on sales, but confirms outlook).
Asia
Chinese markets trade mixed as the Shanghai Comp (-0.1%) failed to rebound from its biggest loss in 7-weeks, as the Hang Seng (+0.4%) benefits from the backdrop of some positive earnings reports across China. Despite the PBoC draining CNY 50bln via 28-day repos in their 21st consecutive daily drain, the money market ops still equated to a net injection, which provided modest support. Iron ore remains in focus, as China’s import iron ore benchmark grade hitting monthly lows as regulators probe iron ore financing. Iron ore credit is used to offset a slowdown in growth in Chinese regions, as governments are attempting to adhere to nationwide rules on curbing pollution and controlling local debt, constricting base metals trade. Japanese markets were closed for Showa day. (RANsquawk)
Europe
ECB President Draghi (neutral) sees a continued problem of low inflation in the Eurozone, but no deflation scenario, sees quantitative easing as still being “a way off” and QE is relatively unlikely according to sources. (RTRS) EUR strengthened modestly on the back of the comments, with EUR/USD higher by a further 10pips heading into the Eurex open.
Barclays preliminary pan-Euro agg month-end extensions for April: +0.10y (March +0.07y)
Barclays preliminary Sterling month-end extensions for April: +0.02y (March -0.02y)
FX
In FX markets, antipodean currencies have been the main focus over the overnight session with AUD coming under selling pressure alongside weakness in base metals, after Australia’s largest export market, China, looks ahead to possible regulation against iron ore financing. Elsewhere, USD/KRW fell to the lowest level since 2008 after the South Korean March BoP Current Account Balance almost doubled from the previous reading. (RANsquawk)
Geopolitical
Russian troops have returned to their base from the Ukraine border after Ukraine said it would not use force. (IFX) In other positive reports Russian Defence Minister Shoigu has told US Defense Secretary Hagel that Russia is open to contacts with all sides to seek to defuse tensions over Ukraine. (RIA)
The South Korean military raised their readiness levels after the North Korean military ran firing drills near the disputed sea border. (Yonhap)
Commodities
Brent crude futures trade higher by USD 0.23 after falling the most in a month as Libya prepared to resume oil exports at its Zueitina oil port. WTI crude futures trade flat at USD 100.87. (RANsquawk)
US
Treasuries pared early losses yesterday to close broadly flat as uncertainty remained over Ukraine and Russia, and financials led US stocks lower. Late on in the session there was talk of a relatively large asset allocation trade out of stocks into the long end of the Treasury market, but despite this the long-end underperformed the curve (30y +1.7BPs). At the pit close, T-notes settled at 124.03, up 1 tick. Overnight, T-notes fell 5 ticks to trade at 123.30 as geopolitical risk subsides after Russia withdrew from the Ukrainian border. Last price taken at 0610BST. (RANsquawk)
There is a real risk that three Fed nominees will not be confirmed before June, according to senior Democratic aide. (BBG) The US Senate Banking Committee are to vote tomorrow on nominations of Fischer, Brainard and Powell to the Fed board
Barclays preliminary US Tsys month-end extensions for April:+0.08y (March +0.07y)
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