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Grab's SPAC Deal, U.S. CPI and Long Bond Sale, CDC Warning - What's up in Markets

Economy Apr 13, 2021 20:39
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By Geoffrey Smith -- Grab, the Southeast Asian ride-hailing company, bags the biggest SPAC deal ever. U.S. inflation data for March are due, with knock-on effects for a 30-year Treasury bond sale later and possible reactions from no fewer than four Federal Reserve speakers. A top U.S. health official calls on Governor Gretchen Whitmer to reintroduce lockdown measures in Michigan, and oil is back above $60 ahead of OPEC's monthly update and API inventory data. Here's what you need to know in financial markets on Tuesday, April 13th.

1. Grab breaks SPAC record

Grab, the southeast Asian ride-hailing-cum-food-delivery company that bested Uber (NYSE:UBER) in one of the world’s big growth markets, is set to go public via the biggest-ever deal involving a Special Purpose Acquisition Company, or SPAC.

Grab will merge with Altimeter Growth Corp at a valuation of $40 billion, receiving $4.5 billion through the so-called ‘PIPE’ mechanism (private investment in public equity). AGC rose 7.5% in premarket trading.

The news comes a day after the Securities and Exchanges Commission warned that SPACs may need to change the way they account for warrants.

It also comes a day after Dubai signed a deal with GM-backed Cruise for up to 4,000 self-driving taxis. Cruise is also backed by Honda, which recently unveiled the world’s first car to boast ‘level 3’ autonomy features

2. CPI data due; reactions possible from bond buyers, Fed officials 

The rate of inflation is set to breach the Federal Reserve’s medium-term target for the first time since the pandemic began when U.S. consumer price data for March are released at 8:30 AM ET (1230 GMT).

The headline CPI is expected to rise to 2.5% from 1.7% in February, as the collapse in oil prices a year ago starts to exert an influence on the year-on-year data. The core CPI, which excludes food and energy prices, is set to accelerate to 1.5% from 1.3%.

The Federal Reserve has warned repeatedly against reading too much into what will be an inevitable spike in annual rates due to basis effects. Interventions due from  12 PM ET onward from the Fed’s Mary Daly, Patrick Harker, Esther George and Raphael Bostic will likely repeat such messages.

Even so, the numbers will create an interesting backdrop for the Treasury’s 30-year bond auction at 1 PM ET. The 10-year sale on Monday was absorbed relatively smoothly, with yields rising only by 2 basis points to 1.69%  

3. Stocks edge higher, as 'fear gauge' hits 14-month low

U.S. stock markets continue to trade in subdued fashion as they await the start of the first-quarter earnings season.

By 6:30 AM ET (1030 GMT), Dow Jones futures were up 70 points, or 0.2%, while S&P 500 futures were up a little less and Nasdaq 100 futures were up by 0.1%. {{8884|S&P 500 VIX Futures}}, Wall Street’s ‘fear gauge’ fell to their lowest since February last year at 17.92.

Stocks likely to be in focus later include Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC), as the market continues to digest the news of Nvidia’s move into making its own datacenter processors and its new partnership with Amazon (NASDAQ:AMZN) Web Services. Fastenal (NASDAQ:FAST) reports earnings before the opening.

4. CDC head urges Michigan shutdown

Rochelle Walensky, the head of the Center for Disease Control and Prevention, urged Michigan Governor Gretchen Whitmer to reintroduce lockdown restrictions to bring the latest surge in Covid-19 cases under control.

Whitmer has pressured the federal government in recent days to accelerate the delivery of vaccines to her state, but Walensky argued on Monday that even that wouldn’t be enough to flatten an infection curve that is rising sharply as people enjoy their newly-regained freedom to mix. Michigan’s infection rate is now back at its high of last winter.

The U.S. infection rate, measured on a seven-day moving average, has risen some 27% from its low point a month ago, as states across the country have relaxed restrictions. That’s despite the fact that the U.S.’s vaccination program is also picking up speed, with a record 4.6 million people getting a shot on Saturday.

5. Oil higher ahead of OPEC report, API

Crude oil futures nudged back above $60 a barrel against a backdrop of geopolitical rumblings, ahead of two key updates on the state of the market later in the day.

The Organization of Petroleum Exporting Countries will release its monthly report on the oil market, while the American Petroleum Institute will publish its weekly assessment of U.S. crude and fuel inventories.

By 6:30 AM ET, U.S. crude futures were up 1.0% at $60.28 a barrel, while Brent crude was up 1.1% at $63.95 a barrel.

Grab's SPAC Deal, U.S. CPI and Long Bond Sale, CDC Warning - What's up in Markets

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