MNI EUROPEAN OPEN: Fed Remains Laser Focused On CPI

EXECUTIVE SUMMARY

• FED’S HARKER IS PREPARED TO DO MORE IF NEEDED TO CURB INFLATION (BBG)
• FED'S KASHKARI: RECESSION POSSIBLE, BUT HIGH INFLATION WOULD BE WORSE (RTRS)
• FED’S GOOLSBEE CAUTIOUS ON RATE HIKES, REJECTS PRE-EMPTIVE CUT (MNI)
• BIG BANKS THAT SHORED UP FIRST REPUBLIC PUSHED TO BOOST RESERVES (BBG)
• ECB’S VILLEROY: EURO ZONE INFLATION AT RISK OF GETTING ENTRENCHED (RTRS)
• MELONI UNVEILS ITALY 2023 BUDGET WITH TOUCH OF EXTRA STIMULUS (BBG)

Fig. 1: U.S. 2-/10- & 5-/30-Year Tsy Yield Curves

Source: MNI - Market News/Bloomberg

UK

ECONOMY: The overall supply of candidates for jobs has increased for the first time in more than two years, a survey of recruiters suggests. While the rise in the availability of workers in March was "modest", it marks the first such upturn in the UK since February 2021, a report from the Recruitment and Employment Confederation (REC) and KPMG said. (Sky)

HOUSING: British homes sales recovered to within a whisker of pre-pandemic levels in March, representing a recovery from September when the failed economic plan of former prime minister Liz Truss sparked turmoil across markets, a survey showed on Wednesday. (RTRS)

EUROPE

ECB: Euro zone inflation is at risk of getting entrenched above 2% so the European Central Bank will keep fighting excessive price growth, even as its policy response is shifting gears, French central bank chief Francois Villeroy de Galhau said. (RTRS)

FRANCE: The Bank of France raised its estimate for first-quarter economic expansion as stronger-than-expected activity early in the year more than offset the drag in March from strikes and pension protests. (BBG)

ITALY: Italian premier Giorgia Meloni unveiled a slightly more expansive fiscal outlook for this year, aiming for an extra sliver of economic growth through tax cuts. (BBG)

ITALY: Italy's ruling coalition on Tuesday failed to clinch a deal on key appointments at state-controlled companies, two people familiar with the matter told Reuters, as negotiations continue within the government. (RTRS)

SWITZERLAND/BANKS: The lower house of Switzerland's parliament voted late on Tuesday to retrospectively reject the 109 billion Swiss francs of financial guarantees the government gave to Credit Suisse as part of a hastily cobbled-together rescue package. (RTRS)

U.S.

FED: Federal Reserve Bank of Philadelphia President Patrick Harker said he’s been disappointed that US inflation hasn’t slowed by more and was ready to take further steps to bring it down if necessary. (BBG)

FED: Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday said the Fed's interest-rate hikes and a possible pullback in lending after two bank failures last month could trigger a recession, but allowing inflation to stay high would be even worse for the labor market. (RTRS)

FED: Chicago Fed President Austan Goolsbee said Tuesday he's inclined to keep raising interest rates cautiously to restrain inflation, and rejected the idea of pre-emptively cutting to appease investors worried about tensions in the banking system. (MNI)

ECONOMY: US Treasury Secretary Janet Yellen said she believes the American economy remains strong and its banking system is resilient despite some recent turmoil among regional financial institutions. (CNN)

BANKS: The biggest US banks are planning to bolster reserves in a move tied to their unusual effort to shore up ailing lender First Republic Bank last month. (BBG)

OTHER

GLOBAL TRADE: No ships were inspected on Tuesday under the Ukraine Black Sea grain deal "as the parties needed more time to reach an agreement on operational priorities," the United Nations said, adding that routine inspections were due to resume on Wednesday. (RTRS)

GLOBAL TRADE: TSMC has told some suppliers and building contractors to delay their works by 6 months to a year as the company is slowing down its expansion plans in Taiwan, Taipei-based DigiTimes reports, citing unidentified people in the supply chain. (BBG)

U.S./CHINA: The House of Representatives is set to vote next week on a bill to crack down on Chinese telecommunications companies Huawei and ZTE Corp that have been deemed security threats by the U.S. government. (RTRS)

EU/CHINA: Chinese and Dutch officials held consultations on international and regional security, arms control and non-proliferation in Beijing on Tuesday, China's foreign ministry said in a statement. (RTRS)

GEOPOLITICS: Russia risks becoming an "economic colony" of China as its isolation from the West deepens following the invasion of Ukraine, U.S. CIA Director William Burns said on Tuesday. (RTRS)

GEOPOLITICS: President Luiz Inacio Lula da Silva’s trip to China will include a tour of Huawei’s innovation center in Shanghai, a stop that may irk the US which alleges the technology company poses a threat to its national security. (BBG)

GEOPOLITICS: China is negotiating a compromise plan with other major creditors that could help break a logjam in multibillion-dollar debt-relief talks for struggling developing nations, people familiar with the talks said. (WSJ)

GEOPOLITICS: World Bank President David Malpass on Tuesday called for urgent moves to finalize a debt restructuring plan for Zambia, and said the size of its debt was so small it could not pose a financial burden to China, now the world's largest sovereign creditor. (RTRS)

CHINA/TAIWAN: Taiwan President Tsai Ing-wen said on Wednesday that her recent overseas trip, which included the United States, showed the world Taiwan's determination to defend freedom and democracy, even as the prompted China to stage war games around the island. (RTRS)

BOJ: The Bank of Japan may revise or even abandon its targeting of long-term interest rates by the end of September if conditions are right, an executive at leading Japanese banking group MUFG tells Nikkei. (Nikkei)

BOJ: The Bank of Japan could help prevent abrupt policy changes later by allowing more flexibility in its bond yield curve control, the International Monetary Fund said in its global financial stability report released on Tuesday. (RTRS)

ASIA/IMF: Asia faces the biggest potential fallout from rising geopolitical tensions, according to a senior regional official at the International Monetary Fund, after China held military drills around Taiwan. (BBG)

BRAZIL: Brazil's Finance Minister Fernando Haddad said on Tuesday that there will be space for interest rate cuts with "increased confidence in the country's fiscal framework and a fiscal consolidation path consistently affecting inflation expectations". (RTRS)

BRAZIL: Americanas and certain financial creditors have agreed to temporarily suspend their ongoing legal disputes in order to allow the parties involved to focus their efforts on negotiating a judicial recovery plan that is acceptable to most of the company’s creditors and that makes the operational future of Americanas possible, company said in a filing. (BBG)

RUSSIA: The Strategic Missile Forces have carried out a test-launch of the intercontinental ballistic missile from the Kapustin Yar training ground in Russia’s Astrakhan Region, the Defense Ministry reported on Wednesday. (TASS)

RUSSIA: More than a year since the start of the Ukraine war, hundreds of millions of dollars' worth of U.S.-made semiconductors are flowing into Russia despite Washington's sanctions on the country, a Nikkei investigation has found. (Nikkei)

RUSSIA: U.S. Secretary of State Antony Blinken said on Tuesday Russia's detention of Evan Gershkovich and denial of consular access to the Wall Street Journal reporter sends a message that people around the world should "beware of even setting foot" in Russia. (RTRS)

RUSSIA: Russia's central bank said on Tuesday that it was maintaining its forecast of structural liquidity surplus at the end of 2023 of 2.8 trillion roubles to 3.4 trillion roubles ($34.17 billion-41.50 billion). (RTRS)

CHILE/METALS: Chile’s government delivered further concessions to its copper royalty bill on Tuesday, while stopping short of meeting industry demands to keep the effective tax rate in line with rival nations. (BBG)

SOUTH AFRICA: South Africa's electricity minister told Reuters that this month the cabinet would choose between his proposals to end rolling power blackouts but that he believed the government should not shy away from spending to address the crisis. (RTRS)

CHILE: Chile’s Congress on Tuesday overwhelmingly approved a bill to reduce the work week from 45 to 40 hours over five years, a decision hailed by the left-wing government as a breakthrough for workers’ rights. (AP)

CHILE/METALS: Chile’s government delivered further concessions to its copper royalty bill on Tuesday, while stopping short of meeting industry demands to keep the effective tax rate in line with rival nations. (BBG)

IMF: The International Monetary Fund reached record high lending of close to $300 billion about 10 days ago, but still has ample space to lend, Managing Director Kristalina Georgieva said on Tuesday. Georgieva said the fund was still seeing strong demand, primarily from mid-sized and smaller countries. (RTRS)

IMF: International Monetary Fund Managing Director Kristalina Georgieva and UN and COP28 climate leaders on Tuesday pledged to work to accelerate public-private finance to help raise the trillions of dollars needed to meet emissions reduction goals, a statement issued by the IMF said. (RTRS)

WORLD BANK: The World Bank is ready to play its role in rebuilding Ukraine after the devastation of Russia's invasion, but the numbers are too large for international financial institutions alone and Western European countries will have to chip in, World Bank President David Malpass said on Tuesday. (RTRS)

OIL: Non-OPEC countries will account for a higher percentage of oil production gains this year and next, a reversal of the last two years, the U.S. Energy Information Administration predicted on Tuesday. (RTRS)

CHINA

PBOC: Authorities will likely not cut China's LPR due to satisfactory Q1 GDP and credit growth, and subdued CPI, according to Yicai. Experts said the central bank has room to support the economy if needed, but will be more inclined to cut the reserve rate requirement (RRR) or increase its targeted lending, rather than launching a policy cut when rates are at historic lows due to concerns about financial risk. (MNI)

INFLATION: Low food prices were responsible for the weaker than expected CPI rate in March, according to the Securities Daily. (MNI)

CREDIT: China’s strong credit growth may last into 2Q, leading to ample liquidity for the full year, Shanghai Securities News reported, citing analysts it didn’t name. (MNI)

PROPERTY: Multiple children families in the Fangshan district of Beijing could have property purchase restrictions relaxed, as the local government looks to implement a “one district, one policy” approach, according to proposals submitted by the Beijing Municipal Commission of Housing and Urban-Rural Development. (MNI)

EQUITIES: Technology platform companies are entering a new stage of development and facing new opportunities following the end of a regulatory crackdown on monopolistic behaviors and other malpractices, Economic Daily says in a front-page commentary Wednesday. (BBG)

EQUITIES: The Chinese government should step up continuous and joint efforts to tighten supervision of algorithms used by tech companies, according to a commentary in the Communist Party mouthpiece People’s Daily. (BBG)

CHINA MARKETS

PBOC NET INJECTS CNY7 BILLION VIA OMOS WEDNESDAY

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
12/04/2023	0600/0800	**		NO	Norway GDP
12/04/2023	0900/1000	*		UK	Index Linked Gilt Outright Auction Result
12/04/2023	1100/0700	**		US	MBA Weekly Applications Index
12/04/2023	-			EU	ECB Lagarde and Panetta in IMF/World Bank, G20 Finance Ministers' Meetings
12/04/2023	1230/0830	***		US	CPI
12/04/2023	1230/1430			EU	ECB de Guindos at Asociacion para el Progreso de Direccion Event
12/04/2023	1300/1400			UK	BOE Bailey Remarks at Institute of International Finance
12/04/2023	1300/0900			US	Richmond Fed's Tom Barkin
12/04/2023	1400/1000	***		CA	Bank of Canada Policy Decision
12/04/2023	1400/1000			CA	Bank of Canada Monetary Policy Report
12/04/2023	1430/1030	**		US	DOE Weekly Crude Oil Stocks
12/04/2023	1500/1100			CA	Bank of Canada Governor press conference
12/04/2023	1600/1200			US	San Francisco Fed's Mary Daly
12/04/2023	1700/1300	**		US	US Note 10 Year Treasury Auction Result
12/04/2023	1800/1400	**		US	Treasury Budget
12/04/2023	1800/1400	*		US	FOMC Statement
12/04/2023	1915/2015			UK	BOE Bailey Speaks at IMF Governor Talks