LIVE MARKETS-Return to office gets delayed- again!
April 13 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
RETURN TO OFFICE GETS DELAYED- AGAIN! (1105 GMT)
With the euro zone facing a third wave of COVID-19 infections and more European governments signalling that they might extend restriction measures, it comes as no surprise that people are starting to push back their expectations for when they will return to the office.
According to a Morgan Stanley's survey, those expectations for the five richest European countries have now shifted from June to July.
The one exception though is the UK, where July estimates remained unchanged, as infection rates fell, while the vaccination programme is progressing.
As a result of the above uncertainties, office stocks are seen as rangebound and interest rate sensitive, the bank says.
"We have very few office stocks on an Overweight rating as a result," they add, as working from home is "a medium-term headwind to sentiment and rental growth in offices."
Here's a list of headlines on the state of COVID restrictions:
Dutch face prospect of extended lockdown amidst rising infections nL8N2M627T
Britain offers all over-50s first COVID-19 shots, beats target nL1N2M60G8
Top German health official says lockdown of two to four weeks is needed nL8N2M21ST
(Joice Alves)
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FED TO DISCUSS TAPERING BY SEPTEMBER? (1000 GMT)
All eyes are on the U.S. inflation data, which is expected to signal where the Fed stands in terms of the interest rate cycle, but most economists already have an idea about timing.
Unicredit recalls that James Bullard was the first Fed official to link the timing of tapering to the vaccination campaign, saying yesterday that the central bank will consider reducing its bond purchase program when 75% of Americans are vaccinated.
At the current seven-day average rate of vaccinations, the date when 75% of the U.S. population will have received two vaccine doses "is around late July," Unicredit economists say.
These numbers are consistent with the "assumption that the Fed will start discussing tapering in August/September this year" they add.
"With the timing of when the Fed initiates its rate hike cycle more likely to fall into the years 2022 to 2023 in our view," according to ING economists.
They see "housing-related inflation components adding to the push higher in inflation towards 4% over the summer and crucially keeping it closer to 3% for longer."
This data should make "the Fed's current forward guidance of not raising rates before 2024 increasingly stretched," they say.
(Stefano Rebaudo)
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BANKS: TOP OVERWEIGHT FOR FIRST TIME SINCE MAY 2018 (0931 GMT)
With bond tantrum and inflation fears mounting to become the biggest tail risks in BofA's latest fund manager survey, it may be of little surprise that banks are gaining in popularity.
According to the survey, long banks is at a three year high with the sector becoming the most overweight for the first time in nearly three years at the expense of sectors like utilities which tend to prosper in times of economic uncertainty.
"Allocation to banks increased 6ppt this month to a net 30% overweight, #1 FMS sector overweight for first time since May’18," BofA notes.
That doesn't mean however that from now on it's necessarily going to be plain sailing for the sector, as contrarians could look at taking some profit out of its recent gains.
"Bearish contrarians playing 'peak EPS' should sell commodities, banks & tech," BofA says.
(Danilo Masoni)
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STOXX STAYS BELOW RECORD PEAK (0741 GMT)
European shares started on a cautions footing ahead of the U.S. CPI data later on and the start tomorrow of the earning season in the world's largest economy.
The pan-regional STOXX 600 benchmark was last 0.3% higher but it remained below its recent record peak, while the picture elsewhere was mixed, as most investors stayed on the sidelines.
Moves in sectors weren't particularly meaningful too with price changes below 1% in either direction.
Givaudan GIVN.S stood out with a gain of more than 3% after the Swiss fragrance and flavour maker reported strong Q1 sales and confirmed its mid-term targets.
Among top movers were Swedish financial services firm Avanza AVANZ.ST and UK-based recruitment company Hays HAYS.L, up 5.6% and 3.5% respectively after solid updates.
Here's you opening snapshot:
(Danilo Masoni)
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CALM BEFORE THE CPI (0703 GMT)
Today's focus is squarely on U.S. March inflation data which is expected to show a rise to 2.5%. Obviously the jump is down to base effects, especially from last year's oil price collapse which markets are fully aware of. The question is how bond markets react to a figure significantly above-forecast.
Before the data, a degree of calm has settled in. The greenback is up from three-week lows and 10-year Treasury yields are up around two basis points, albeit almost 10 bps off recent 14-month highs. European and U.S. equity futures have eased, while volatility gauges languish at pre-pandemic lows.
Earlier, buoyant Chinese trade data highlighted the global recovery continues to gather steam, although gains in Chinese shares were capped by worries of tighter policy.
There's some anxiety too what sort of results U.S. banks will report, starting Wednesday; U.S. earnings are seen rising 25% (and 47.4% in Europe) so potential for disappointment is high.
In corporate news, dealmaking continues apace. Asian food delivery firm Grab is eyeing a $40 billion valuation by merging with a U.S.-based SPAC, while Microsoft is buying artificial intelligence firm Nuance for about $16 billion.
Several Fed speakers be on the wires again on Tuesday, presumably helping sooth market nerves on inflation and the prospect of tapering.
Finally, another U.S. Treasury auction -- of 30-year debt -- after a sales of 10- and three-year paper went off smoothly on Monday, albeit with slightly higher yields.
Key developments that should provide more direction to markets on Tuesday:
China's exports grew at a robust pace in March in yet another boost to its economic recovery, while import growth surged to the highest in four years
Britain's economy grew by 0.4% on the month in February
Russian foreign minister Lavrov in Teheran
Fed speakers: Philadelphia President Patrick Harker 1600 GMT. At Minneapolis event, speakers include San Francisco Fed President Mary Daly, Atlanta Fed President Raphael Bostic, Bank of Kansas City President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren 1600 GMT
Auctions: U.S. 30-year bond; Italian medium-long bonds; UK 50-year gilts
UK retail sales BRC/Feb GDP/trade balance/industrial output
German ZEW
U.S. CPI March
(Danilo Masoni)
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EUROPEAN SHARES SEEN FLAT BEFORE U.S. DATA (0632 GMT)
European shares are seen opening little changed today ahead of the release of critical U.S. CPI data for March, although shares in Asia found support earlier by strong China trade data.
Futures on the EuroSTOXX50, FTSE and DAX indices were last trading between a rise of 0.05% and a fall of 0.1%, while U.S. futures eased slightly.
(Danilo Masoni)
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