Market 03/13: Successful 30Y T-bond auction. EV market weakens

Successful auction of 22 billion USD 30Y Treasury bonds

• High Yield: 4.331% (Market yield: 4.352% | Previous session's High Yield: 4.360%)

  • => stop-through 2.1bps (higher than average tails of -1.5bps in the past 2 years).

  • 66.54% of successful bidders bid at High Yield (down from record 82.55% in February auction).

• Bid-to-Cover ratio: 2.47 (previous session: 2.304)

• Foreign investors account for 69.29% winning bid value (previous: 70.7%)

• Dealers account for 13.93%.

• Immediately after auction: 30Y T-bond yield drops sharply

EV market weakens: manufacturers scale back

Market gradually shifting to hybrid vehicles instead of EVs

Automakers scaling back or delaying their EV production plans:

• Mercedes-Benz delays its 5-year electrification target

• Apple abandons EV production after 16 years of preparation

Nissan and Honda cut production in China as EV race heats up

• Nissan cuts capacity by up to 30%, equivalent to 500,000 vehicles per year

• Honda aims to cut capacity by 20% to ~1.2 million vehicles/year.

Japan: Rengo's chance of victory at Shunto grows closer

• Toyota Motor agrees to largest wage hike in 25 years for factory workers.

• Japanese economists expect across-the-board wage increases after Shunto meeting

China: Ultra-long bond issuance, Country Garden defaults

Country Garden misses RMB bond payment for first time

• China plans to issue ultra-long bonds, from 30 to 50 years

• China's bond yield curve nears inversion as spread narrows to 11 bps low - narrowest in 5 years.

Some of China's efforts last week to improve economic-financial situation

• China's 'National Team' continues buying ETFs, pushing China ETF value to 28 billion USD.

• China commits central government funding to encourage consumers and businesses to replace old equipment and goods

WTI oil price falls as crude oil inventories fall less than expected

Official data shows crude inventories fell less than API report. Gasoline inventories decline.

API report:

• Crude: -5.52 million barrels (expected +400,000 barrels increase)

• Cushing: -998,000 barrels decrease

DOE Report:

• Crude Oil: down -1.54 million barrels (expected +400,000 barrels)

• Cushing: down -220,000 barrels

Government continues to add 600-700,000 barrels to SPR inventory (13th consecutive week of increase)

US crude oil production continues to decline

Oil prices rise as Ukraine attacks more Russian oil facilities with drones

Earnings updates: Dollar Tree, Adidas, Volkswagen

1. Dollar Tree

• Revenue: 8.63 billion USD, +11.9% y/y

• EPS: 2.55 USD

• Same-store sales growth:

  • Dollar Tree +6.3%

  • Family Dollar -1.2%

• Portfolio optimization: Closing about 600 Family Dollar stores to improve profitability

Dollar Tree stock drops nearly 15% after announcing closure of 600 stores and earnings miss

2. Volkswagen

• Vehicle deliveries up +12% to 9.24 million vehicles

• Revenue: 322.3 billion EUR

• Operating profit: 22.6 billion EUR

• Operating margin: 7%

• Dividend: 9 EUR/ordinary share, 9.06 EUR/preferred share

3. Adidas

• Revenue: 750 million EUR

  • Decline in North America and Europe markets

• Profit: 300 million EUR

• EBITDA down -28% y/y and down -64% since 2019

• Operating margin falls to 1.3% from 3% in 2022

• Inventory: down to 1.5 billion euro in 2023, -24% Y/Y

• Dividend: 0.7 EUR/share

Other news

1. US House passes bill calling for ByteDance to divest TikTok, or this video app will be banned in the US.

2. Donald Trump and Joe Biden have officially secured enough delegates to become nominees for the 2024 presidential election.

3. ECB reduces spread between deposit rate and refinancing rate: narrows to 15 bps - from current 50 bps - from 09/18.

• Previously, Eurozone industrial production index hits lowest level since 2020.