It has been a largely event-free weekend except, of course, for the previously reported re-escalation in Ukraine following what was a lethal shooting in the east Ukraine city of Slavyansk blamed on Ukraine's Right Front, which has made a mockery, as expected, of the Geneva Ukraine de-escalation announcement from last Thursday. Overnight in Asia, Japan reported its largest ever trade deficit, providing yet more evidence that Abenomics has been an abysmal failure: all we are waiting for now is confirmation that basic Japanese wages have fallen yet again, which would make nearly 2 years in a row of declines. Still, the USDJPY, gamed as usual by HFT algos for which FX is now the last respite as the equity market crackdown gets louder, is doing its best to ramp from the overnight lows and ahead of the traditional US market open surge, as a result equity futures are modestly higher.
Key overnight news highlights from Bloomberg:
- Treasuries steady overnight, led by long end; trading quiet with Easter Monday holiday in Europe and the U.K.
- Japan’s weakest export growth in a year spurred a wider-than- forecast trade deficit in March; exports rose 1.8% vs 6.5% median estimate while imports jumped 18.1%, widening the deficit to the biggest ever for the month
- Deadly shootouts in eastern Ukraine during the weekend led to renewed calls in the U.S. for economic sanctions against Russia as a diplomatic accord showed little sign of defusing the crisis
- Ukraine is boosting natural-gas imports from Russia to the highest in 10 weeks after Putin gave the country one month to resume payments or have to start prepaying for the fuel
- South Korean President Park Geun Hye said the actions of the crew on a ferry that sank last week were “like murder” and called for a thorough investigation of the incident that left more than 300 dead or missing
- Sovereign yields unchanged amid Easter Monday holidays in Asia, Europe and the U.K. Nikkei little changed; Shanghai falls 1.5%. European equity markets closed, U.S. stock futures flat. WTI crude and gold lower, gold higher
US Event Calendar:
- 8:30am: Chicago Fed National Activity Index, March (prior 0.14)
- 10:00am: Leading Index, March, est. 0.7% (prior 0.5%) Supply
- 11:00am: Fed to purchase $3.25b-$4b in 2019 sector
- 11:00am: U.S. to announce plans for auction of 4W bills
- 11:30am: U.S. to sell $25b 3M, $23b 6M bills
The Nikkei 225 closed flat in a subdued day of trade as Chinese and European markets stay closed for the Easter holidays. Japanese bond markets closed slightly lower, with 10yr JGBs down 2 ticks at 145.02 after shrugging off poorer-than-expected Japanese trade balance -1446.3bln vs. Exp. -1080.9bln (Prev. -800.3bln, Rev. -802.5bln). (RANsquawk)
Japan's PM Abe's government plans to shake up the GPIF by replacing several key advisors in a sign that the leader wants public funds to invest more aggressively, according to sources familiar with the matter. (RTRS)
Ukraine's foreign minister has said that operations against pro-Russian militants in the east of the country have been suspended over Easter, but added that security services would resume military action if the separatists continued to occupy government offices. Despite this, there were more recent reports that five people have been reportedly killed in a shooting in Slavyansk, a city in eastern Ukraine held by anti-government protesters. (Il Sole 24 Ore/BBC/Tages Anzeiger)
In related news, Poland and the United States will announce next week the deployment of US ground forces to Poland as part of an expansion of NATO presence in Central and Eastern Europe in response to events in Ukraine, according to Poland’s defense minister Tomasz Siemoniak. (Washington Post)
A Kremlin spokesman says that additional Russian troops near the border with Ukraine are there in response to events in Ukraine and are a precaution against a spillover of instability from the Ukraine and are not interfering in the country. (RTRS)
Weekend EU & UK Headlines
The ECB have ran various QE models including an unlimited program in case a limited program does not yield the desired results, according to unsourced reports from Spiegel. (BBG) This follows reports some weeks ago that the ECB has gauged the effect on inflation from EUR 1trl of QE.
The ECB have made rule changes which will now see the central bank accept collateral government bonds that Canadian rating agency DBRS ranks as BBB (low), a move that would now allow the use of Portuguese bonds as collateral. (BBG)
This is because of an adjustment in harmonised ratings comparisons and not an adjustment to policy.
The US are said to have met with mutual funds and hedge funds last week, warning money managers about further Russian sanctions. (BBG)
US stock futures currently trade in minor positive territory amid particularly light newsflow and a mixed close on Wall Street on Friday. (RANsquawk)
AstraZeneca (AZN LN) - Pfizer (PFE) is weighing a GBP 60bln bid for the Co. with informal conversations about a possible tie-up have taken place in recent weeks, according to sources. (Sunday Times)
WTI and Brent crude futures currently reside in negative territory amid particularly light news flow given the multiple market closures. However, the NYMEX pit will be open for trade for today's session while focus remains on the fragile state of Ukraine after reports of fatalities in Slavyansk in eastern Ukraine. (RANsquawk)
The US State Department announced on Friday it is extending the government comment period on the Keystone XL pipeline, a move that likely postpones a final decision on the controversial project until after the Nov. 4 mid-term elections. (CNBC)