Market movers for the week ahead – Rabobank

Given the market’s current pre-occupation with the outlook for US treasury yields, today auctions of USD28 bln of 3 year notes and USD21 bln of re-opened 10 years are set to pick up more interest than usual, according to analysts at Rabobank.

Key Quotes

“A combination of the relatively large size of the offerings and the approach of US February CPI inflation data tomorrow could keep some buyers side-lined.  10 year yields have edging higher since the middle of last week, though they remain below their late February highs.”

“Japanese Finance Minister Aso is refusing to resign on the back of an admission made to lawmakers that his ministry did alter documents relating to a discounted state land sale. The matter is at the centre of allegations regarding cronyism which reference both PM Abe and his wife.  The scandal could potentially lead to renewed support for the safe haven yen, though the currency is still being influenced by speculation regarding the outlook for the BoJ’s QQE program as well as risks concerning international trade wars and geopolitics.”

“South Korean press are reporting that N. Korean leader Kim Jong Un wants to sign a peace treaty after his meeting with US President Trump this spring. The Dong-A Ilbo newspaper suggested that Kim is likely to raise the issue of a peace treaty along with the establishment of diplomatic relations and nuclear disarmament, citing an unnamed senior official in S. Korea’s presidential office.”

“The UK promises to remain in the headlines this week, though tomorrow’s spring statement from UK Chancellor of the Exchequer Hammond will draw some attention away from Brexit. Despite the smallest UK budget deficit in around a decade, Hammond is expected to largely disappoint calls for the end of austerity. Yesterday the Chancellor told the BBC that “there is light at the end of the tunnel” but the UK is “still in the tunnel at the moment”.  Having outlined his main budget last November, this week’s statement is expected to amount to modest tweaking, potentially lasting no more than 20 minutes.  The Office of Budget Responsibility indicated last month that it will make a “significant” downward revision to its estimate of public borrowing for 2017-18, supported by better than expected growth.” 

“The economic data calendar is very limited today. Highlights in the week ahead are the US February CPI inflation data, retail sales, production and the University of Michigan sentiment and inflation expectations survey.  Fed speakers this week will be thin on the ground but there are plenty of speeches scheduled for ECB representatives, including President Draghi who could shine more light on the outlook for policy in the Eurozone. Final Eurozone February CPI inflation data are due this week.”