13 April 2021
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Eurozone retail sales grew in February

Eurozone retail sales surprised to the upside in February

By Daniel Richards

  • Eurozone retail sales grew 3.0% m/m in February, compared to a contraction of -5.2% in January. While they were still down -2.9% y/y, the monthly growth substantially exceeded consensus projections of 1.7% m/m. However, the outlook for March remains unpromising given many restrictions on activity in major economies such as France and Germany have been strengthened once again since February, as the single currency members try to get a grip on renewed outbreaks of the Covid-19 pandemic.
  • In Turkey, the current account deficit grew in February, widening from USD -1.87bn, to USD -2.61bn, missing projections of USD -2.50bn. The 12-month rolling shortfall is now at USD -37.8bn, which continues to exert pressure on the lira. Meanwhile, unemployment in Turkey has risen to 13.4% in February, up from 12.2% the previous month. This is the highest level since August last year and comes amidst a surge in Covid-19 case numbers which is reportedly likely to lead to renewed restrictions this week. The central bank is due to meet on Thursday, with the expectation that Governor Sahap Kavcioglu will keep the benchmark one-week repo rate on hold at 19.0% at his first meeting in charge. Any loosening of policy under the current circumstances would likely see further substantial pressure on the lira.
  • Indian CPI inflation came in at 5.5% y/y in March, moderately outpacing expectations of 5.4%, and up from 5.0% in February. Meanwhile, industrial production underperformed, contracting by -3.6% m/m in February, from a -0.9% contraction the previous months and compared to consensus projections of -3.0%. Higher food and transport costs drove the acceleration in prices, while the ongoing Covid-19 pandemic continues to disrupt. With the prospect of a renewed lockdown in Maharashtra state, the outlook in the near-term remains challenging. Inflation will likely remain fairly sticky around these levels, making a rate cut by the RBI increasingly unlikely despite a dovish bias.
  • Dubai attracted AED 24.7bn in FDI last year, despite the global challenges and the fact that worldwide FDI declined by -42%. The inflows are estimated to have created over 18,000 jobs. Accommodation and food services was the biggest recipient of FDI, followed by information services.

Today’s Economic Data and Events

13:00 Germany ZEW survey expectations, April: forecast 79.0

16:30 US CPI inflation m/m March: forecast 0.5%

10:00 UK industrial production m/m February: forecast 0.5%

Fixed income

  • US Treasury markets were moderately weaker to start the week although the rise in yields was relatively modest. At the front end of the curve, 2yr UST yields added a bit more than 1bp to close at 0.1668% while the 10yr yield rose less than 1bp to 1.6657%. Auctions on 3yr and 10yr Treasuries were relatively well received while US CPI data out later today will set the tone for near-term price moves.
  • The tone was generally the same across European markets with yields holding to less than 2bps gains across UK, French and Germany bonds. Emerging market bonds were mixed, however. Yields on South African 10yr bonds added 4bps to 9.306% while the 10yr Turkish government bond yield fell 8bps to 17.37%. Indian 10yrs held at a little more than 6%.
  • Fitch affirmed its rating on Bahrain at ‘B+’ with a stable outlook with the rating abetted by expectations of financial support from across the GCC.
  • Dubai Islamic Bank is in the market for a USD Tier 1 perpetual sukuk.
  • Egypt has adjusted its rules for private bond placements, and will divide placements into two tranches. 90% will be allocated for retail and international investors, with the remaining 10% now subject to 'no minimum limit'. The move is aimed at stimulating the local bond market.


  • The dollar was generally weaker against peers overnight and is likely waiting for a clearer signal from CPI data before making its next move. The dollar index was essentially flat with a downward bias. EURUSD was up 0.1% at 1.1911 while GBPUSD saw a stronger move upward of 0.25%, seemingly as markets rejoiced in a wider reopening of the UK economy at the start of the week.


  • Global equity markets were mixed at the start of the week, but the prevailing trend was for modest declines. In Europe, even the move into lockdown-light in the UK was not enough to boost the FTSE 100 on Monday, which lost -0.4% on the day. More muted losses were seen on the CAC and the DAX (-0.1% each) while the composite STOXX 600 lost -0.5%.
  • In Asia the Shanghai Composite closed -1.1% lower yesterday, and the Nikkei lost -0.8%, while the Nifty closed -3.5% lower. In early trading so far the Shanghai Composite is broadly flat while the Nikkei has climbed 1.1%
  • It was a slow start to the week in the US, with the S&P 500 closing flat while the Dow Jones and the NASDAQ lost -0.2% and -0.4% respectively. All eyes will be on the inflation print due later today.


  • Oil prices opened the week on a stronger footing with Brent futures adding 0.5% to settle at USD 63.28/b, WTI up 0.6% at USD 59.70/b and Murban gaining 0.3% at USD 61.94/b.
  • OPEC will release its monthly oil market report later today which will digest the impact of the lifting of some production cuts over the next few months. The producers’ bloc generally does not forecast its own production but their assessment of demand will be highly in focus. Given that the producers felt confident enough to increase production, an upward revision to demand could be expected even though that would grind against the assessment from the OPEC+ market monitoring body.

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Written By

Daniel Richards Senior Economist

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