President Barack Obama has warned Russia of further sanctions if it doesn't act to ease tensions in eastern Ukraine, as agreed upon in a peace deal signed last week in Geneva.
Obama's comments come after Russian Foreign Minister Sergei Lavrov yesterday declared that an attack on his country's citizens in Ukraine "is an attack against the Russian Federation." He added that "if we are attacked, we would certainly respond."
In what may or may not end up being a bell-ringer of a deal, French cable company Numericable finalizes its record €7.9B junk bond offering, reportedly pricing the yield even lower than the initial whisper numbers. The size blows past the previous record - Sprint's $6.5B issuance last year.
This deal is spread over €2.25B of euro-denominated paper, $7.75B of dollar-denominated, and across three tranches of varying maturities.
RBS's Albert Gallo: “The new deal highlights strong growth in the European high-yield bond market, which has grown fivefold over the past five years to nearly €300B . . . Despite the strong supply, we expect European high-yield spreads to continue to tighten over the year, on recovering growth, easy ECB policy, stable fundamentals and low default rates.”
The proceeds are to be used to fund Altice's (Numericable's parent) purchase of Vivendi's telecoms business.
Asian stocks trade mixed and European shares are mainly lower, with a strong showing on Wall Street yesterday helping to boost sentiment, but with disappointing PMI data out of China and France dampening the mood.
Japan +1.1%, Hong Kong -1%, China -0.3%, India +0.5%.
Euro Stoxx 50 -0.3%, London flat, Paris -0.4%, Frankfurt -0.3%, Milan -0.2%, Madrid +0.2%.
The Bank of England's Monetary Policy Committee voted unanimously, as expected, to keep interest rates at 0.5% and against more quantitative easing at a meeting earlier this month, the minutes of the meeting show.
Meanwhile, the U.K.'s Public Sector Net Borrowing dropped to £4.86B in March from £7B in February and was well below consensus of £9.1B. (PR)
Eurozone flash manufacturing PMI has increased to 53.3 in April from 53 in March and topped consensus that was also 53.
Services has risen to a 34-month high of 53.1 from 52.2 and vs 52.4.
Composite output has climbed to a 35-month high of 54 from 53.1 and vs 53.1.
Manufacturing output has increased to 56.5 from 55.6.
The growth was led by Germany, while France stabilized.
The data indicates that eurozone GDP is on course to rise 0.5% in Q2 following 0.4% growth in Q1.
The bloc experienced a return to job creation, says Markit, suggesting that companies believe "that the recovery has legs and is looking increasingly sustainable." However, Markit warns of "growing fears that deflationary pressures are intensifying."
The euro rises further, having gained a boost from German PMI, and is +0.25% at $1.3839. (PR)
German flash manufacturing PMI has increased to 54.2 in April from 53.7 in March and topped consensus of 54.
Services has risen to 55 from 53 and vs 53.4.
Manufacturing output has climbed to 58.8 from 57.
Composite output has grown to to 56.3 from 54.3.
"A combination of increased activity, rising new orders and further employment growth across both the manufacturing and service sectors suggest companies will remain in expansion mode during the coming months," says Markit. The data indicates that "the economy is set to build on the foundation of last quarter's solid growth."
However, Markit warns that price data points to an "increasing risk of deflationary pressures."
The DAX is flat after being lower earlier, while the euro has recovered from prior losses, particularly after French PMI data, and is +0.05% at $1.3814. (PR)
French flash manufacturing PMI has dropped to 50.9 in April from 52.1 in March and missed consensus of 51.9.
Services has fallen to 50.3 from 51.5 and vs 51.4.
Manufacturing output has declined to 51.6 from 53.3.
Composite output has slipped to 50.5 from 51.8.
The weaker rise in activity "reflected stalling new business, while staffing levels were cut at a sharper rate," says Markit, adding that companies reported hesitancy among clients. "The business climate looks set to remain frail."
The CAC 40 (EWQ) is -0.3%, while the euro dives a bit and is now flat at $1.3808. (PR)
Australian CPI eased to +0.6% on quarter in Q1 from +0.8% in Q4 and came in below consensus that was also +0.8%.
On year, inflation rose to 2.9% from 2.7% but was below forecasts of 3.2%. The latest figure compares with the Reserve Bank of Australia's target of 2-3%.
Core CPI +0.5% on quarter vs +0.9% and +0.7%. On year, core inflation +2.6% vs +2.6% and +2.9%.
The low inflation could cool speculation that the Reserve Bank of Australia may raise interest rates from a record low of 2.5%, especially with house prices surging and amid the prospect of a looming building boom.
"The Reserve Bank can comfortably keep interest rates at exceptionally low levels over the near term," says economist Savanth Sebastian. "Whichever way you cut it, inflation is well and truly in check."
The S&P/ASX 200 is +0.7% and the AUD-USD is -0.9% at $0.9285. (PR)
The odds of unsterilized large-scale asset purchases - i.e., LSAPs, i.e., QE - from the ECB have pushed past 50:50 says Citi;s Guillaume Menuet, and the program could begin as early as September.
How? Citi's team expects the ECB to buy both public and private-asset classes, with a majority likely to be things like sovereign bonds. As for size, Citi sees a bare minimum being €1T. This compares to the BoE's £375B program and the Fed's current pace (amid the taper) of $55B per month.
Don't look for action before September, though, says Menuet, as the ECB will likely wait and see if easing at the June meeting begins to do the trick of bringing inflation back up towards its 2% target. Will it work? "While it will likely be on a scale large enough to excite financial markets, we are doubtful it will be on a scale large enough to transform the economic outlook from an extended period of low inflation and low interest rates.”