Tech outperforms while AUD & JPY lag in FX, BoE and ECB speak ahead

European markets are up as concerns about the banking sector dissipate and tech stocks outperform.


Wednesday, Mar 29, 2023 - 10:15 AM

European bourses/US Futures are firmer, as concerns about banking continue to subside. Meanwhile, tech continues to outperform.

Infineon, Micron and other tech names have all updated their products. MU is up 2.5% in pre-market.

DXY has a tendency to err lower, and is below 102.50 despite significant AUD & JPY whereas EUR & GBP are resilient.

Lane, ECB's Lane, says that to achieve the ECB scenario of a 2% inflation rate, additional interest rate increases are needed.

Bunds have pared over half the Tuesday's decline.

Commodities remain relatively stable, with crude edging higher and metals remaining slightly soft.

Highlights include the US House Financial Services Committee's re. SIVB: Speeches by Fed's Barr and BoE's Mann. ECB's Schnabel.

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The US Federal Reserve Office of Inspector General has initiated an independent investigation into the failure of Silicon Valley Bank (SIVB).

Reuters cites a spokesperson.

The testimony of Fed Vice Chair for Supervision Barr for the House hearing is identical to that given at the Senate hearing.

Reuters reported that US President Biden stated the White House response is 'not yet over' to the banking crisis.



European Stock Exchanges

We are more firm across the board.

Euro Stoxx 50

As banking concerns continue dissipate, the focus is now on the speakers.

Sectors that have outperformed in


Names after updates to


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Pre-market MU is +2.5%


Futures are green.


+0.9%, reducing the negative performance of Tuesday, which was due to the underperformance of large-cap stocks; the US-specific docket for the week ahead is relatively light.


The company has raised its Q2 revenue and segment guidance along with raising its FY revenue guidance. This is mainly due to the resilient business dynamics of its core automotive and industry segments.


Q2 adj. Its EPS was -1.91 (exp. The industry's current profitability levels are not sustainable and the company expects the profitability to be extremely challenging in the near future.

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Despite the marked AUD & JPY pressurization, the currency has erred lower and is now below 102.50 within 102.41 - 102.75 range.

The pressure is due to a cooler than expected inflation rate and other factors that have caused a drop from recent highs.


The USD//EUR exchange rate is at a low of 0.6662 and /USD/EUR/USD/EUR/


Above 132.00

The DXY is softer due to the resilience of the


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Cable has yet to break 1.2350, but Lane's data and BoE's data may help EUR/USD rise above 1.0850.


The 1.36 handle is under pressure because it cannot rely on oil benchmarks to sustain its support.


The positive sentiment indicators are undermined by the softer retail data.

The Swedish NIER is expecting the Riksbank will continue its current path. The cycle of rate increases is expected to end in July, when the rate will reach 3.75%.

The PBoC has set the mid-point for USD/CNY at 6.8771 vs. 6.8780 (prev. 6.8749)

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Fixed Income


Futures have a relatively strong rebound to defy the month-end rebalancing flows that favor stocks over bonds.


Recover more than half the Tuesday losses in a range between 135,47 and 136,28.


The top of the 104.18-103.56 parameter range is a good place to start.


Nearer 114-28 rather than 114-14+ before US housing data. House hearings on bank failures. USD 35bln seven-year auction.

According to Reuters, Greece has begun the sale of a 5yr bond. The price guidance is 95bps above mid-swaps.

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The price of oil is firmer, but still within a relatively narrow range (sub-USD 1 bbl), which can be seen in the weekly inventory data from yesterday and those to come. Iraqi flow through Turkey.

WTI is currently trading at USD 74/bbl in a range of 73.51 to 74.00/bbl, while Brent trades either side USD 79/bbl. (in the 78.73 to 79.32/bbl parameters).



The base is still softer than Tuesday's parameters.


Iron ore is the only commodity that has been boosted by steel consumption expectations.

US Private Energy Inventory: Crude -6,1mln (exp. +0.1mln),

Cushing -2,4mln; Distillate -0.5mln. Distillate +0.5mln, (exp. -1.6mln).

US Energy Secretary Granholm stated that the Strategic Petroleum Reserve (SPR) buybacks may begin this year. Work on two of the four oil reserves sites is to be completed 'into fall', which has caused the buybacks to be delayed.

According to Reuters.

Sky News Arabia reports that Russian Gazprom has said "we are nearing the limit of our gas supply to China".

According to the Russian Ministry of Agriculture, Cargill has informed them that they will cease exporting Russian grain after the next exporting period (July). This will not impact the volume of grain exported from Russia abroad.

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EU's Dombrovskis stated that the banking sector in the EU is stable, and banks are ready to withstand any shocks.

Lane, ECB's Lane, says that to achieve the ECB's target of 2% inflation, additional interest rate increases are needed.

According to Die Zeit, rates will increase if the banking tensions are "limited" or have little impact.

The tensions in the banking sector are expected to settle down, and there's no reason for major problems.


Kazimir, the ECB's Kazimir

Kazimir believes that inflation has been too high for too many years. ECB should keep increasing rates at a slower rate.

BoE Minutes of the FPC:

All UK banks are resilient against rising interest rates and bond positions. The countercyclical buffer rate is maintained at 2%. UK firms are resilient when it comes to higher debt costs.


German GfK Sentiment (Apr.) -29.5 vs. -29.2 (Prev. -30.5, Rev. -30.6)

UK M4 Money supply (Feb.) -0.4% 1.3%, Rev. 1.2%)

Prior. 2.541B GB, Rev. 2.003B GB)


US President Biden said that he is looking forward to speaking with House Speaker McCarthy about the economy and debt.

While he would like to see all of the Republican proposals

Hopes that the House GOP will be able to release a budget before the Easter recess.

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Early Morning Note for US


Officials from the Ukrainian military said that Russian forces continue to make efforts in an attempt to seize Bakhmut and Avdiivka, but are not making any progress.

According to Reuters.

According to AP, Ukrainian President Zelensky invited Chinese President Xi for a visit to Ukraine. The Kremlin said it was not up to Russia when China's leader visited Ukraine and that Russia's war against hostile states would last a long while

When asked if the US President was worried about Russia sending nuclear weapons to Belarus he replied that he hadn't seen it but that he is concerned.

According to Reuters.

According to the Russian Defence Ministry, Russia has begun drills using Yars Intercontinental Ballistic Missiles.


FDIC has told Signature Bank that crypto client accounts must be closed by April 5, 2019.



APAC stocks

The markets were generally positive, despite the fact that most major indices were rangebound due to a lack fresh macro-drivers and as we approached quarter-end. Hong Kong's markets performed better than other Asian markets thanks to the surge in tech stocks following Alibaba's announcement of a six-way splitting.

ASX 200

The RBA's decision to pause next week was backed by softer than expected CPI data. However, the gains in the financial sector were limited.

Nikkei 225

Traded higher after Japan's parliament approved a record JPY114tln budget. Policymakers are said to be considering lowering mortgage rates to families with children. BoJ officials have also stuck with the dovish script.

Hang Seng

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Shanghai Comp.

The results were mixed. Alibaba led the way in Hong Kong, as its plan to split the company is believed to unlock value to shareholders. This has led to speculation that other large tech companies may follow suit. Meanwhile, the mainland lags behind despite the PBoC injecting liquidity.

The global demand for oil and natural gas is expected to continue increasing.

PetroChina (857 HK): FY 2022 (CNY): IFRS net 149bln ($147.14bln, p. Total capex is 243.5bn, 2.614tln. Crude prices could increase in 2023.

Notable Asia-Pacific Headlines

China NDRC Deputy director general said that China's growth potential is comparable to the global growth potential and they are optimistic about the growth situation this year.

According to Reuters.

The US administration of President Biden added five Chinese companies to its list as it alleged that they were aiding China in its repression against Uyghurs.

Taiwan's President Tsai made a comment before boarding an international flight to New York, in which she stated that Democratic Taiwan defends democratic value and external pressure doesn't affect their determination to travel out into the world.

According to Reuters.

China's Taiwan Affairs Office has urged the US to not arrange a transit for Taiwan's leader via the US, and stated that any meeting between Taiwanese President Tsai with US House Speaker McCarthy will be a serious provocation.

China has firmly opposed this, it said.

Will definitely take steps to fight back

According to Reuters.

US senior administration official stated that Taiwan President Tsai’s planned transit is in line with long-standing US practices. The US does not see any reason for Beijing overreacting to the transit, which is in line with the unofficial relations and the One China policy.

Officials added that

Every Taiwan president has transited the US, and President Tsai met with members Congress during all six of her previous transits.

As stated,

China's efforts to change Taiwan's status-quo will not force the US to change its practice of facilitating the transits of Taiwan's presidents.

According to Reuters.

Uchida, the BoJ's Deputy Governor, said that they would make a judgment on inflation trends by looking at different indicators.

He noted that

If the yield on 10yr bonds rises to 2% then BoJ will face a loss of JPY50tln.

According to Reuters.


Australian CPI (Feb.) 6.8% vs. 7.1% (Prev. 7.4%)