Quiet price action as markets closed for Easter holiday

– Quiet markets with bulk of global centers closed for holiday.

– French and Italian final March CPI readings reinforced concern over the region's inflation outlook.

Asia

– China PBoC Monthly MLF Setting left the 1-year Medium-Term Lending Facility unchanged at 2.85% (not expected).

– More speculation that China could cut RRR to support the real economy, cites official [in line].

– China military said to conduct drills around Taiwan aimed to target the wrong signal sent by US regarding Taiwan (Note: Several US officials are visiting Taiwan including Senator Menendez (D-NJ) and Senator Graham (R-SC).

Russia/Ukraine

– Russia Defense Min confirmed its flagship of Black Sea fleet, Moskva had sunk while being towed to port in stormy weather (Note: 1st Russian loss of a flagship since the Russian-Japanese war of 1904-1905).

Europe

– ECB policymakers saw a July rate hike as still possible after its April meeting. Consensus seemed to be growing for 25 basis point hike in Q3 as several ECB officials sought an earlier end to bond buying program.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

– Europe closed for Easter Holiday.

Speakers

– ECB Survey of Professional Forecasters raised its inflation outlook while cutting the growth forecast for the 2022 and 2023 period. Raised 2022 HICP (EU Harmonized CPI) from 3.0% to 6.0% and raised the 2023 HICP from 1.8% to 2.4% (**Note: ECB Mar Staff forecast is 2.1%). Survey cut 2022 GDP growth from 4.2% to 2.9% and also cut the 2023 GDP growth forecast from 2.7% to 2.3%.

– ECB's Simkus (Lithuania) stated that saw no reason not to consider rate increase.

– German Fin Min Lindner said to have approved €2.47B package for LNG terminal.

– Poland PM Morawiecki said to back Glapinski: for a 2nd term as central bank governor.

– Russia Deputy Chairman of the Federation Council Klimov said to have noted that special military operation in Ukraine would end pretty soon and would not stretch the conflict out.

– BOJ said to likely lower economic growth and raise inflation forecast for FY22 at its next Quarterly Outlook (due Apr 28th). BOJ to stress its resolve to keep monetary policy ultra-loose to underpin a fragile economic recovery.

– China Industry Ministry said to be sending teams to Shanghai to ensure resumption of production and work of key industrial companies.

– President Biden said to nominate Michael Barr as Fed Vice Chairman for Supervision.

Currencies/Fixed Income

– EUR/USD hovering around 1.08 area after Thursday’s surprisingly dovish ECB decision in regards to its future policy. Dealers zeroed in on Lagarde’s comment that ECB planned to raise interest rates “some time” after the asset purchase program was expected to end in the third quarter. Pair slowly drifted higher as French and Italian final CPI data reinforced reports that ECB policymakers saw a July rate hike as still possible after its April meeting. Consensus seemed to be growing for 25 basis point hike in Q3 as several ECB officials sought an earlier end to bond buying program.

– JPY currency (yen) dropped to a new two-decade low against the USD at 126.68 as robust US data and hawkish Fed comments reaffirmed the divergence in policy between Fed and BOJ.

Economic data

– (FR) France Mar Final CPI M/M: 1.4% v 1.4% prelim; Y/Y: 4.5% v 4.5% prelim; CPI (ex-tobacco) Index: 109.70 v 109.69e.

– (FR) France Mar Final CPI EU Harmonized M/M: 1.6% v 1.6% prelim; Y/Y: 5.1% v 5.1% prelim.

– (CN) Weekly Shanghai copper inventories (SHFE): 88.7K v 96.6K tons prior.

– (IT) Italy Mar Final CPI M/M: 1.0% v 1.2% prelim; Y/Y: 6.5% v 6.7% prelim; CPI (ex-tobacco) Index: 109.9 v 108.8 prior.

– (IT) Italy Mar Final CPI EU Harmonized M/M: 2.4% v 2.6% prelim; Y/Y: 6.8% v 7.0% prelim.

– (PL) Poland Mar Final CPI M/M: 3.3% v 3.2% prelim; Y/Y: 11.0% v 10.9% prelim.

– (RU) Russia Narrow Money Supply w/e Apr 8th (RUB): 14.72T v 14,89T prior.

– (TR) Turkey Mar Central Gov't Budget Balance (TRY): -69.0B v +69.7B prior.

– (IT) Italy Feb General Government Debt: €2.737T v €2.714T prior (record high).

– (IS) Iceland Mar International Reserves (ISK): 880 v 891B prior.

Fixed income issuance

– None seen.

Looking ahead

– (PE) Peru Feb Economic Activity Index (Monthly GDP) Y/Y: No est v 2.9% prior.

– (PE) Peru Mar Unemployment Rate: No est v 8.9% prior.

– 07:00 (IL) Israel Mar CPI M/M: 0.8%e v 0.7% prior; Y/Y: 3.7%e v 3.5% prior.

– 07:30 (IN) India Weekly Forex Reserve w/e Apr 8th: No est v $606.5B prior.

– 08:00 (RO) Romania Central Bank (NBR) Mar Minutes.

– 08:30 (US) Apr Empire Manufacturing: +1.0e v -11.8 prior.

– 09:15 (US) Mar Industrial Production M/M: 0.4%e v 0.5% prior; Capacity Utilization: 77.8%e v 77.6% prior; Manufacturing Production: 0.6%e v 1.2% prior.

– 16:00 (US) Feb Net Long-term TIC Flows: No est v $58.8B prior; Total Net TIC Flows: No est v $294.2B prior.