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Watch Those Minutes. ADP Ahoy! Le Pen Loses Her Sh*t. And More On A Fun Wednesday

“Let’s not forget where we’re coming from,” he shouted, struggling to be heard over his rival. “You have been repeating the same lies for 40 years -- those your father used to tell.”

Ok, let’s start in Europe on Wednesday.

We got some PMI data. How fun is that, right? Here are the numbers you should probably care a little something about:

Germany March Composite PMI 57.1 vs Flash Reading 57

Eurozone March Composite PMI 56.4 vs Flash Reading 56.7

  • Index rises to 56.4 from 56 in Feb.; Year ago 53.1
  • Highest reading since April 2011
  • New Orders rise to 56.2 vs 55.7 in Feb.
  • Highest reading since April 2011

U.K. March Composite PMI 54.9 vs 53.8 in Feb.; Est. 53.8

  • Forecast range from 53.3 to 54.9 from 10 economists
  • Index rises to 54.9 from 53.8 in Feb.; Year ago 53.7
  • Eighth consecutive month of expansion
  • New Orders rise to 56.4 vs 54.9 in Feb.
  • Eighth consecutive month of expansion

As far as the UK is concerned, do note that the services PMI printed at 55, handily beating estimates.


Turns out some folks care about that, as is abundantly clear from the following chart which shows the pound spiking on the headline:


“U.K. services PMI is probably more important for the U.K. than any other developed nation,” Neil Jones, head of hedge-fund sales at Mizuho Bank said a few hours ago. “This is clearly positive for the pound,” remarked Georgette Boele, a currency strategist at ABN Amro. “Still,” Boele continued, “the ranges in cable are getting smaller [and] investors are positioned for GBP weakness, so it’s difficult to push it lower, you really need a shocking event.” Of course that means that “if GBP weakness is not coming soon there will be investors losing confidence in the trade and close it.”

Ok whatever, right? Moving on, Marine Le Pen lost her sh*t in the second French presidential debate. Here’s Bloomberg, recounting the drama:

As Emmanuel Macron, a 39-year-old former economy minister, accused Le Pen of risking war in Europe with her attacks on the EU and hinted at her party’s record of antisemitism, Le Pen shook her head and rolled her eyes.

“Let’s not forget where we’re coming from,” he shouted, struggling to be heard over his rival. “You have been repeating the same lies for 40 years — those your father used to tell.”

Third-placed Fillon, hoping to repeat the comeback he pulled off in the Republican primaries last year, skewered Le Pen on her plan for a referendum on euro membership, saying it was the sum total of her plans for the economy.

“In reality Madame Le Pen has no economic policy,” Francois Fillon said. “The policy she does have will melt the moment the French vote” in that referendum.

Le Pen did not come out of the melee looking good. Here’s a quick rundown of some polls:

  • 25% of debate viewers said Jean-Luc Melenchon was the most convincing candidate, followed by Emmanuel Macron with 21% and Francois Fillon with 15%, an Elabe poll conducted for BFMTV showed
  • A separate poll conducted after the debate by Opinion Way for Le Point showed Melenchon, Fillon and Macron tied at 18% seen as most convincing by debate viewers
  • Marine Le Pen was seen as most convincing by 11% in Le Point poll, followed by Benoit Hamon with 8% and Nicolas Dupont- Aignan with 5%
  • Opinion Way surveyed 1,004 people
  • Elabe said on its website it surveyed 1,024 people

Sorry populism, that one didn’t go so well.

And that was a good thing for measures of European political risk, like the OAT-bund spread which narrowed by 2 basis points to 65 basis points at 11:26 a.m. in Paris Wednesday.


Speaking of rates, you’ve probably surmised that the upbeat PMI data out of the UK had a knock-on effect with Treasurys and bunds. “Gilts futures slipped to session lows after U.K. services PMI release, putting pressure on bunds, Treasuries,” Bloomberg wrote a few hours ago. Here’s your visual:


Finally, here’s SocGen’s overnight take:

As for EUR/USD, it remains stuck. The ‘winner’ of last night’s TV debate was apparently Jean-Luc Melenchon, who is chasing down Fancois Fillon for third place. The effective winner seems to be Emmanuel Macron. The big question is still whether a large percentage of undecided voters and a low turnout could give Marine Le Pen a chance that is not reflected in any of the opinion polls. The Euro may struggle to rally amid the uncertainty but the fundamental backdrop points more and more to a sharp post-election spike. 

Moving on, oil extended gains as WTI hit its highest level in almost a month, with investor focus shifting back to U.S. crude inventories after supply disruptions and optimism over OPEC’s output curbs drove a rally over the past week. As a reminder, U.S. crude inventories drew 1.83m bbl last week, according to API data out yesterday afternoon. Traders will be watching today’s EIA print for confirmation. “The likelihood that the OPEC-led production agreement will be extended for another six months is providing some support to oil,” Ric Spooner, chief market analyst at CMC Markets in Sydney said. “The extent of the recent rally makes the market vulnerable to bad news, especially poor inventory data.”

Asian markets were mostly higher despite saber rattling out of Pyongyang. European equities are mixed.

There’s a lot on the docket today (watch ADP and the Minutes), so buckle up although the price action may prove limited given the focus on the Trump/Xi pow wow.

  • 7am: MBA Mortgage Applications, prior -0.8%
  • 8:15am: ADP Employment Change, est. 185,000, prior 298,000
  • 9:45am: Markit US Services PMI, est. 53.1, prior 52.9
  • 9:45am: Markit US Composite PMI, prior 53.2
  • 10am: ISM Non-Manf. Composite, est. 57, prior 57.6
  • 2pm: FOMC Meeting Minutes


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