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All major European equity indices closed higher, APAC was mixed,
and the US was lower. US government bonds closed higher, while most
benchmark European bonds were lower. European iTraxx and CDX-NA
closed almost unchanged on the day across IG and high yield. The US
dollar, natural gas, and copper were lower, and oil, gold, and
silver were higher on the day.
Americas
US equity indices closed modestly lower; Nasdaq/S&P 500
-0.1% and Russell 2000/DJIA -0.3%.
10yr US govt bonds close -4bps/1.66% yield and 30yr bonds
-3bps/2.32% yield.
CDX-NAIG closed flat/52bps and CDX-NAHY -1bp/294bps.
The impact of changing the closing time for the major US dollar
denominated fixed income indices from 3:00pm to 4:00pm this year is
becoming apparent in the shift of the timing of trading activity of
US corporate bonds. The below chart shows the daily counts of
investment grade US corporate bond roundlot (≥$250K trade sizes)
trades from January 2020 to March 2021 at 3:00pm (3:00-3:59pm) and
4:00pm (4:00-4:59pm). The monthly surges in trading volumes
coincide with heightened activity on the last trading day of each
month, with 3:00pm activity being higher than 4:00pm for almost
every day in 2020 and up until 15 January this year, which is the
day after the Bloomberg Barclays USD bond indices changed to a
4:00pm close. IHS Markit iBoxx USD indices changed to a 4:00pm
close on 26 February, which appears to have further increased the
shift of trades to 4:00pm.
The below chart shows the difference in on-the-run benchmark US
government bond prices between 3:00pm and 4:00pm EST since January
2020. Price changes between those snaps never breached ±1.0% for
the shorter duration 5-, 7-, and 10-year bonds, but 30-years bond
prices changed by over 2.0% twice during the heightened volatility
of March 2020.
DXY US dollar index closed -0.3%/92.34.
Gold closed +0.8%/$1,743 per troy oz, silver +1.8%/$25.23 per
troy oz, and copper -0.5%/$4.12 per pound.
Crude oil closed +1.2%/$59.33 per barrel and natural gas closed
-2.2%/$2.46 per mmbtu.
More than 80% of all power generation capacity installed in
2020 was renewable, with solar and wind accounting for 91% of new
renewables, according to International Renewable Energy Agency
(IRENA) data released 5 April. A year earlier, renewables accounted
for 72% of generation additions. More than 260 GW of renewable
energy capacity came online in 2020, exceeding newbuild figures for
2019 by close to 50%, and the highest total on record, the trade
association said in its Renewable Capacity Statistics 2021 report.
Total fossil fuel additions fell to 60 GW in 2020 from 64 GW a year
earlier, highlighting a continued downward trend of fossil fuel
expansion, it added. (IHS Markit Climate and Sustainability News'
Keiron Greenhalgh)
The latest US JOLTS report points to a strong February for the
labor market as businesses benefitted from the loosening of
COVID-19 restrictions in February. (IHS Markit Economist Akshat
Goel)
Job openings rose to 7.4 million in February, the highest since
January 2019. The number of hires rose to 5.8 million.
Job separations rose to 5.5 million in February with layoffs
and discharges edging up to 1.8 million.
The quits rate, a valuable indicator of the general health of
the labor market, was unchanged at 2.3% and remains at its
pre-pandemic average.
Over the 12 months ending in February, there was a net
employment loss of 8.6 million.
There were 1.4 workers competing for every job opening in
February. In the two years prior to the pandemic, the number of job
openings exceeded the number of unemployed in every report.
In the fourth quarter of 2020, state personal income fell by a
quarter-on-quarter (q/q) annualized rate of 6.8%. (IHS Markit
Economist Alexander Minelli)
This is a marked improvement on the 11.3% q/q annualized
decline in the third quarter.
The increases in net earnings and dividends, interest, and rent
were unable to offset the decline in transfer payments during the
fourth quarter, as several Coronavirus Aid, Relief, and Economic
Security (CARES) Act programs expired, including the enhanced
$600-per-week state unemployment insurance compensation.
Transfer payments fell by $573.6 million, while net earnings
and dividends, interest, and rents grew by $178.2 million and $40.5
million, respectively.
Personal income fell in 37 states, most after disproportionate
decreases in transfer payments.
The largest declines were in Pennsylvania and Rhode Island,
which both saw incomes fall by 16.1% q/q. While South Dakota saw
income expand at the fastest rate, 16.7% q/q, growth was more
modest in many of the other states that expanded.
Tesla has announced initial global production and delivery
figures for the first quarter of 2021, with 184,800 vehicles
delivered and 180,338 vehicles produced. These figures are slightly
ahead of the fourth quarter of 2020, and bode well for a strong
2021. The first quarter of 2021 included having production of both
Model 3 and Model Y in China, with Tesla noting it is "quickly
progressing" to full production capacity in China. Production of
the Model S and Model X was non-existent in the first quarter,
however, as Tesla is in process of installing and testing equipment
for a model change; deliveries of those two products reached only
2,020 units as a result. Tesla delivered 182,780 Model 3 and Model
Y vehicles in the first quarter of 2021, and produced 180,338
units. (IHS Markit AutoIntelligence's Stephanie Brinley)
Ford and Volkswagen's (VW) autonomous operation partner, Argo
AI, is reported to be considering a bid to go public to boost
funding, according to a report from Bloomberg. The report cites an
internal Argo AI source as saying that Argo co-founder Bryan
Salesky told employees in an all-hands meeting on 1 April that the
move is under consideration, and possibly in 2021. The report says
that Salesky is looking to boost funding as Argo comes closer to
commercialization of its technology. Blooomberg cites sources who
say the timing could be right as it is in advanced stages of
technology development, including tests in six cities, a new LiDAR
guidance system, and a path to commercialization through the Ford
and VW partnerships. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Private investment fund 40 North Management has increased its
bid for W.R. Grace to $70/share, the firm said in a 1 April letter
to Grace management. The bid reflects "our belief that Grace's full
potential for all stakeholders can best be achieved outside of the
public markets with proactive, hands-on management," 40 North says.
"In this regard, we are prepared to submit our best and final offer
of $70 per share in cash." The latest bid implies a purchase price
of about $4.63 billion in cash. It represents a multiple of 11.9
times (x) the analyst consensus for W.R. Grace's EBITDA, according
to 40 North. (IHS Markit Chemical Advisory)
The Brazilian Institute of Geography and Statistics (Instituto
Brasileiro de Geografia e Estatística: IBGE) has reported that
industrial production contracted by 0.7% in February compared with
January based on seasonally adjusted data. The drop was driven by
sizeable declines in the production of capital goods and durable
goods. (IHS Markit Economist Rafael Amiel)
Global shortage of semiconductors have impaired production in
many sectors within the industry, particularly in automotive.
The second wave of the COVID-19-virus health crisis takes
center stage: social discontent is building up because of the
record daily death tolls, hospitals working at full capacity, and
shortages of medical supplies (particularly oxygen tanks).
Europe/Middle East/Africa
All major European equity indices closed higher; UK +1.3%,
Germany/Spain +0.7%, France +0.5%, and Italy +0.2%.
10yr European govt bonds closed mixed; Italy +7bps, Spain
+4bps, France +2bps, Germany +1bp, and UK flat.
iTraxx-Europe closed flat/51bps and iTraxx-Xover
flat/246bps.
UK passenger car registrations recorded some improvement during
March, which is typically one of the peak selling months due to the
number plate change. According to the Society of Motor
Manufacturers and Traders (SMMT), registrations grew by 11.5% year
on year (y/y) to 283,964 units last month as COVID-19 virus-related
lockdown measures that closed showrooms remained in force. Despite
the further changes made to the Plug-in Car Grant (PiCG) during the
month, demand for alternative powertrain types remains strong. (IHS
Markit AutoIntelligence's Ian Fletcher)
Registrations of battery electric vehicles (BEVs) expanded by
88.2% y/y to 22,003 units, while plug-in hybrid electric vehicle
(PHEV) sales leapt by 152.2% y/y to 17,330 units.
Sales of hybrid electric vehicles (HEVs) were up by 42% y/y to
21,599 units.
Of the traditional internal combustion engine (ICE) powertrain
types, diesel has struggled with most with a drop of 31.4% y/y to
30,730 units, although its performanmild-hybrid diesels which
recorded a surge of 127.5% y/y to 23,273 units.
Traditional ICE gasoline passenger cars slipped by 10% y/y to
137,557 units, while mild-hybrid gasoline passenger cars jumped by
140.9% y/y to 31,472 units.
The European Food Safety Authority (EFSA) has proposed a
framework for conducting the environmental risk assessment (ERA)
for naturally occurring metals, such as copper, when used as
agrochemicals. Its final statement follows a draft version issued
for public consultation last year. It aims to overcome shortcomings
in current guidance, which was developed for synthetic organic
chemicals and does not allow for the distinct chemical behavior of
metals in the environment. (IHS Markit Crop Science's Jackie
Bird)
Siemens Gamesa has received a firm order for 100 of its latest
and largest SG14-222 DD offshore wind turbines for the Sofia
Project. The contract, awarded by RWE, also includes a two year
service and maintenance agreement. Installation of the turbines is
slated for 2025 and will last until the end of 2026. The direct
drive turbines are capable of producing up to 15 MW with the
proprietary Power Boost function. (IHS Markit Upstream Costs and
Technology's Melvin Leong)
French infrastructure group Vinci has agreed to buy Cobra
Instalaciones y Servicios SA from Spain's Actividades de
Construccion y Servicios SA for a consideration of USD5.8 billion.
The deal, which has been in negotiations for the last six months,
marks Vinci's entry into the renewable energy market. Traditionally
a major construction firm for airports and highways, Vinci will now
acquire a pipeline of 15 GW of new renewable power assets
comprising mostly solar and onshore wind, and possibly considering
8 GW of offshore wind projects. The company will also add 45,000
employees and 6 billion euros in annual sales. (IHS Markit Upstream
Costs and Technology's Melvin Leong)
Ørsted has awarded MDE Consultants and Taylor Hopkinson each a
four-year framework agreement for the provision of personnel for
Ørsted's offshore wind farms in Germany. The wind farms include
Gode Wind 3 and Borkum Riffgrund 3, both located in the German
sector of the North Sea. Under the agreement, which started on 1
March and will run until 2025, MDE Consultants will be providing
qualified personnel for the entire lifecycle of the developer's
offshore wind projects. (IHS Markit Upstream Costs and Technology's
Jie Sheng Aw)
The Norwegian Pharmacy Association (Apotekforeningen) predicts
that pharmacy spending on seasonal allergic rhinitis medications
will increase steadily in 2021 amid general healthcare advice and
recent public behaviour trends suggesting that allergy sufferers
treat early to avoid confusion with sometimes similar COVID-19
symptoms. Pharmacy spending on seasonal allergic rhinitis
medications during 2020 was estimated to have increased by more
than 7% annually compared with pre-pandemic 2019 sales statistics.
A further increase is likely in 2021, with the generic
antihistamine Zyrtec (cetirizine hydrochloride) predicted to be
among the chief beneficiaries. (IHS Markit Life Sciences' Eóin
Ryan)
LiDAR supplier Innoviz Technologies announced it has closed its
business combination with special purpose acquisition company
(SPAC) Collective Growth Corporation, paving the way for going
public. The new company will be traded on the NASDAQ stock exchange
with ordinary shares traded under the ticker symbol INVZ and
warrants traded under INVZW. The transaction has provided Innoviz
with approximately USD371 million in gross proceeds, including
Collective Growth's USD141 million in cash held in trust following
public stockholder redemptions and USD230 million from an ordinary
share PIPE (private investment in public equity). (IHS Markit
AutoIntelligence's Stephanie Brinley)
Tanzanian President Samia Suluhu on 31 March announced a series
of changes to her cabinet, appointing two prominent figures under
former president Jakaya Kikwete (in office 2005-15), Mwigulu
Nchemba and Liberata Mulamula, to the posts of finance minister and
foreign minister respectively. (IHS Markit Country Risk's William
Farmer and Eva Renon)
Nchemba's appointment as finance minister increases the
likelihood of policies favoring private investors. Such measures
are likely to include making tax appeals easier to file.
Mpango's appointment also increases the likelihood that
short-term budgetary commitments to be announced in the June 2021
budget will be upheld, including funding of Magufuli's priority
projects. Before his nomination was approved by parliament, Mpango,
echoing Suluhu's earlier public statements at Magufuli's funeral,
told MPs that he would continue his efforts supporting the
completion of the construction of major infrastructure projects
championed by late president Magufuli. These include the Julius
Nyerere Hydropower Project and the standard gauge railway.
Asia-Pacific
APAC equity markets closed mixed; Australia +0.8%, South Korea
+0.2%, India +0.1%, Mainland China flat, and Japan -1.3%.
Dongfeng Motor Corporation Passenger Vehicle Company, a
passenger vehicle subsidiary of Dongfeng Motor Corporation, plans
to roll out its first battery-swappable model this year. Production
of the Dongfeng Fengshen E70, an electric model featuring a
swappable battery, is due to begin in June. The E70 is to be put
into operation first in Wuhan and Nanjing for ride-hailing services
and later to be launched in more cities, according to a gasgoo.com
report. Dongfeng has entered into a partnership with Chinese
battery-swapping technology provider Aulton on the launch of the
E70. Aulton is to build 10 to 15 battery-swapping station this year
in Wuhan to support the launch of the Fengshen E70. (IHS Markit
AutoIntelligence's Abby Chun Tu)
Japan's real household expenditure rose by 2.4% month on month
(m/m) in February following a 7.3% m/m drop in January. However,
the year-on-year (y/y) contraction widened to 6.6% in February from
a 6.1% decrease in January partially because of leap-year effects
(one fewer day than February 2020), but largely because of the
negative effects of the state of emergency on 11 prefectures. (IHS
Markit Economist Harumi Taguchi)
The m/m improvement largely reflected rebounds in spending for
education, clothing and footwear, and culture and recreation,
offsetting continued declines in spending in transportation and
communication; fuel, light, and water charges; and housing.
Monthly average nominal cash earnings continued to slip, but
the decline softened to 0.2% y/y in February 2021. Real cash
earnings turned positive for the first time since February 2020
with a 0.2% y/y increase.
Daiichi Sankyo (Japan) has announced a new five-year plan,
under which the company plans to invest JPY1.5 trillion (USD13.6
billion) in the development of new oncology treatments, the
company's president and CEO Sunao Manabe told an online news
conference. Under the plan, Daiichi Sankyo plans to increase its
revenue from cancer-related businesses to JPY600 billion by March
2026, and increase total company revenue by 63% to JPY1.6 trillion,
compared with year-end March 2020. In particular, Daiichi Sankyo
plans to use part of the planned investment amount to expand the
approved indications for its antibody drug conjugate (ADC) Enhertu
(trastuzumab deruxtecan), as part of its partnership agreement with
AstraZeneca (UK). (IHS Markit Life Sciences' Sophie Cairns)
The Japan Automobile Importers Association (JAIA) has reported
that imported vehicle sales in the country increased by 18.6% year
on year (y/y) to 45,040 units in March. This figure includes sales
of foreign brands' imported vehicles, which increased 2.7% y/y to
32,742 units last month, and domestic brands' imported vehicles,
which increased by 101.6% y/y to 12,298 units. (IHS Markit
AutoIntelligence's Nitin Budhiraja)
By brand, Nissan led the imported market with a 13.7% share
during March, with its sales coming in at 6,159 units compared with
858 units in March 2020.
Mercedes-Benz followed in the rankings with sales of 6,369
units, down 8.0% y/y, and a market share of 14.1%.
BMW ranked third with a market share of 10.6% and remained flat
with sales of 4,780 units, 13.6% y/y.
BMW was followed by Toyota and Volkswagen (VW) with sales of
3,394 units (up 14.6% y/y) and 3,578 units (down 32.6% y/y),
respectively, equating to market shares of 7.5% and 7.9%. In the
year to date (YTD), sales were up 21.6% y/y to 101,364 units in
March.
The significant growth in sales last month was due to a low
base of comparison.
US hydrogen equipment manufacturer Chart Industries and India's
Reliance Industries announced on 6 April they will team up to
create the India H2 Alliance to commercialize hydrogen technology
and develop a supply chain in collaboration with other
private-sector partners and the Indian government. The India H2
Alliance was Chart's second hydrogen announcement in the last week,
as it said it has become a "cornerstone investor" in the FiveT
Hydrogen Fund, along with hydrogen fuel cell maker Plug Power and
oilfield services firm Baker Hughes. "Dedicated to delivering clean
hydrogen projects at scale," the companies will invest €260 million
($307 million) in the fund, and they are seeking other investors to
raise a total of €1 billion ($1.18 billion). (IHS Markit Climate
and Sustainability News' Abdul Latheef)
Posted 06 April 2021 by Chris Fenske, Head of Fixed Income Research, Americas
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