Emmanuel Macron is expected to secure a narrow win over Marine Le Pen in the second round of presidential elections on Sunday, but Wednesday's TV debate will be key, and it could also impact French government bonds on Thursday, Citi's strategists said.

"The incumbent has consolidated his lead in recent polls...but today's debate could help undecided voters make up their mind towards either candidate or abstention."

This could drive early reaction in OATs on Thursday morning, the strategists said, adding that OATs seem largely priced for a Macron win.

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Lacking more pressing data releases today, credit investors will wait for key eurozone data slated for release on Thursday, including inflation, said UniCredit's research team.

"The economic calendar does not contain pivotal data releases, with the focus being on tomorrow's final eurozone Consumer Price Index and consumer confidence data," analysts at the Italian bank said.

Economists polled by the Wall Street Journal expect annual inflation in the 19-member single currency zone to have jumped to 7.5% in March from 5.9% in February.

Meanwhile, war in Ukraine is expected weigh further on consumer confidence, with the WSJ poll predicting the Flash Consumer Confidence Indicator to fall to minus 20 in April from minus 18.7 the month before.

Commodities:

Oil prices rose as U.S. oil statistics showed a larger-than-expected drop in crude inventories.

The American Petroleum Institute said that crude stockpiles fell by 4.5 million barrels last week. Analysts had been expecting a drop of 3.1 million barrels.

Distillate inventory also dropped by more than expected while gasoline inventories rose by a larger-than-expected amount. Analysts are looking to similar stockpile data from the U.S.'s Department of Energy later Wednesday.

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Prices for both precious and base metals fell in early European trade as weak economic sentiment from the IMF's forecast cut in global growth pushed investors into Treasuries and the dollar


EMEA HEADLINES

Eurozone Industrial Production Increased on Month in February

Industrial production in the eurozone rose on month in February despite global supply-chain strains and rising input prices.

Output from factories, mines and utilities across the region increased 0.7% compared with January, the European Union statistics agency Eurostat said Wednesday. Economists polled by The Wall Street Journal had forecast a 0.8% increase.


Eurozone Posts Trade Deficit in February

The eurozone's trade balance swung to a deficit in February from a surplus a year earlier as the cost of imported energy increased sharply, according to data from the European Union's statistics agency, Eurostat, released Wednesday.

The eurozone's trade deficit in goods--the difference between exports and imports--was 7.6 billion euros ($8.23 billion) in February, compared with a EUR23.6 billion surplus the same month a year earlier.


Credit Suisse Warns of Loss From Russia and Legal Woes

Credit Suisse Group AG warned it will make a loss in the first quarter from rising litigation costs and loan losses related to Russia.

The Swiss bank said litigation provisions will be around $740 million in the quarter because of developments in legal cases, which include a former client winning a roughly $555 million court award in Bermuda. It said results will be hit by around $212 million in negative revenues and loan-loss provisions stemming from Russia's invasion of Ukraine, and that business activity in general was lower.


Siemens Energy Warns on Outlook Over Gamesa, Ukraine Concerns

Siemens Energy AG said Wednesday that it is reassessing its full-year guidance after posting a second-quarter loss alongside a profit warning at its wind-energy subsidiary Siemens Gamesa Renewable Energy SA.

The war in Ukraine has also hit revenue and profitability and aggravated existing supply-chain constraints, it said.


Danone 1Q Sales Rose; Backs 2022 Guidance

Danone SA on Wednesday said sales rose in the first quarter despite a highly volatile operating environment and backed guidance for the full year.

The French food company reported sales of 6.24 billion euros ($6.73 billion) in the period compared with EUR5.66 billion a year ago. Sales rose 10.2% on a reported basis and 7.1% on a like-for-like basis.


Heineken 1Q Net Profit, Revenue Rose on Strong Channel Mix, Pricing

Heineken NV said Wednesday that first-quarter net profit and revenue increased as it benefited from a strong channel mix and assertive pricing, but warned that it will take action on prices as it expects significant inflationary headwinds.

The Dutch brewer posted a net profit of 417 million euros ($449.8 million) for the first three months of 2022 compared with EUR168 million a year earlier, driven by top-line growth, with the partial recovery of on-trade--bars, clubs, hotels and restaurants--in Europe after Covid-19-related restrictions last year.


Rio Tinto's First-Quarter Australian Iron-Ore Shipments Fell 8%

Rio Tinto PLC said it shipped less iron ore from its Australian mines in the first quarter of 2022 as it faced challenges progressing new developments, but stuck to its full-year output target, saying it expects increased production later this year.

The world's second-biggest mining company by market value on Wednesday said 71.5 million metric tons of iron ore was shipped from its operations in Australia's remote Pilbara region during the three months through March. That was down 8.0% year over year, and 15% weaker than the quarter immediately prior.


ASML 1Q Profit Fell on Lower Sales, Margin

ASML Holding NV on Wednesday reported that its net income more than halved in the first quarter compared with the previous quarter, although sales were at the higher end of guidance.

The Dutch manufacturer of lithography systems for the semiconductor industry generated net income of 695 million euros ($749.7 million) in the first quarter compared with EUR1.77 billion in the fourth quarter of 2021.


DSM to Sell Protective-Materials Business to Avient for EUR1.44B

Royal DSM NV said Wednesday that it is selling its protective-materials business to Avient Corp. for 1.44 billion euros ($1.55 billion).

The Dutch nutrition, health and bioscience company said the sale follows a strategic review that began in September.


EU New Car Sales Fell in March as Ukraine War Adds to Supply-Chain Woes

Passenger car registration in the European Union declined in March compared with the previous year as Russia's invasion of Ukraine exacerbated continued supply-chain disruptions, the European Automobile Manufacturers' Association, or ACEA, said Wednesday.

In March, new car registrations fell by 20.5% to 844,187 units sold, according to the association. The region's four key markets of Spain, Italy, France and Germany all recorded double-digit drops in sales, ACEA said.


France's Presidential Election Hinges on Far-Left Voters

PARIS-The duel between President Emmanuel Macron and far-right leader Marine Le Pen in France's presidential election this Sunday hinges on voters whose first choice to lead the nation was a far-left, pro-immigration anticapitalist.

Supporters of Jean-Luc Mélenchon hold the key in the runoff because the candidate's third-place finish, with 22% of the vote, nearly qualified him for the final showdown. Ms. Le Pen got 23.2% and Mr. Macron received 27.9%.


Ukraine Rushes to Evacuate Civilians in East as Russia's Offensive Pushes Forward

SLOVYANSK, Ukraine-Ukrainian authorities are scrambling to evacuate the remaining civilians from the eastern Donetsk and Luhansk regions as Russia begins its new military offensive here and pitched battles get closer to the area's main population centers.

The biggest cities in the Ukrainian-controlled parts of Donetsk and Luhansk, such as Kramatorsk, Slovyansk and Severodonetsk, have already turned into ghost towns, with almost all stores and businesses closed, streets emptied and only a handful of apartments in each housing block still inhabited.


GLOBAL NEWS

Rising Rates Threaten Companies Acquired in LBO Boom

Low-rated U.S. companies borrowed record amounts in the loan market last year, highlighting the surge in floating-rate debt as interest rates are expected to rise significantly.

An economywide crunch is hitting everything from mortgages to commodities prices as the Federal Reserve tightens monetary policy in an attempt to tame inflation. Interest expenses on floating-rate loans rise with interest rates, making them attractive to debt investors as an alternative to bonds, which pay a fixed coupon regardless of how high benchmarks climb.


China Benchmark Lending Rates Remain Unchanged

BEIJING-China's central bank on Wednesday held its benchmark loan rates unchanged as expected, after it kept its key policy rates stable last week.

The People's Bank of China said the one-year Loan Prime Rate stayed at 3.7%, while the five-year rate remained at 4.6%.


Japan's Exports Grew for 13th Consecutive Month in March

Japan's exports increased in March for the 13th consecutive month, driven by robust demand for steel and semiconductor manufacturing equipment, Ministry of Finance data showed Wednesday.

Exports rose 14.7% from a year earlier in March. That compared with February's 19.1% increase and was weaker than the 18% increase expected by economists surveyed by data provider FactSet.


Two Fed Officials Doubt Need for Super Aggressive Front Loading for Rate Increases

Two Federal Reserve officials made the case on Tuesday for ongoing interest rate increases to combat inflation, but said uncertainty over the economic outlook makes it hard to say how aggressive the central bank will need to be.

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04-20-22 0628ET