NZD Falls On RBNZ Decision

General Trend:

• Jilin City (northeast China) announced partial lockdown after recent cluster of coronavirus cases
• South Korean press: South Korea ‘on alert’ over new wave of coronavirus cases
• Hong Kong woman with no travel history said to have coronavirus [would end HK’s 23-day streak of not having a ‘local’ coronavirus case] – Local press
• Early decliners in Shanghai include Telecom Services and IT firms
• Tencent is expected to report quarterly earnings after the close in Hong Kong
• Insurance, Iron & Steel and Real Estate are among the declining sectors in Japan; Toyota Motor declines after recently reported earnings
• Declining sectors in Australia include Energy, Consumer Staples and Financials.
• RBNZ: Negative cash rate will become option in future, raised QE program to NZ$60B from NZ$33B prior; NZD declined after the rate decision
• New Zealand is due to release budget on Thursday (May 14th)
• RBA skips offering to buy bonds at daily QE operation for 3rd straight session, 3-year yield is currently below the target of 0.25%
• Australia Consumer Confidence rebounds in May, survey period covered the lead up to and actual announcement of the plan to ease restrictions
• Australia April jobs data due on Thursday, unemployment rate expected to rise to 8.2% from 5.2%
• MSCI announced results of May 2020 Semi-Annual Index Review

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.2%
• (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; AS EXPECTED; RAISES LARGE SCALE ASSET PURCHASE (LSAP) PROGRAM TO NZ$60B FROM NZ$33B
• (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Policy committee prepared to do whatever it takes, hope we dont have to use all policy options, but will assess use of negative rates along with other tools if needed – post rate decision press conference
• (NZ) Reserve Bank of New Zealand (RBNZ) Deputy Gov Bascand: Have asked banks to be ready by the end of the year for negative rates
• CBA.AU Reports Q3 (A$) Cash profit 1.30B v 1.70B y/y; confirms to sell 55% stake in Colonial First State for A$1.7B to KKR
• (AU) Reserve Bank of Australia (RBA) skips offering to buy bonds for 3rd consecutive session
• (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$67.6B v A$66.2B prior
• (AU) Reserve Bank of Australia (RBA) adds A$369M to banking system through repos v A$405M prior
• (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$450M v NZ$450M prior in government bonds as part of QE
• (AU) Australia May Westpac Consumer Confidence: 88.1 v 75.6 prior; M/M: +16.4% v -17.7% prior (largest m/m increase on record)
• (NZ) New Zealand PM Ardern: Our number one priority is jobs, economic shock could be sharp but short, when times are hard you don’t cut, you invest – pre-budget address
• (AU) Australia Fin Min Cormann: Do not think Australia breached rules on barely dumping in China
• (AU) AUSTRALIA Q1 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 2.1% V 2.1%E
• (AU) Australia sells A$19B in new 1.00% Dec 2030 bonds through syndication, avg yield 1.025%, bid to cover 2.82x

Japan

• Nikkei 225 opened -1.1%
• (JP) Japan Mar Current Account Balance (BoP): ¥1.97T v +¥2.03Te; Adj Current Account: ¥0.94T v +¥1.125Te
• (JP) Japan Apr Bank Lending Ex-Trusts Y/Y: 3.1% v 2.2% prior; Incl Trusts Y/Y: 3.0% v 2.0% prior
• (JP) Japan Ministry of Finance offers to buy ¥50B in govt bonds
• 7201.JP Medium term plan to seek ¥300B cost cuts in 2020; sees Rev reaching ¥11.5T within 3-years; will include restructuring charge; to be announced on May 28th – press
• (JP) JAPAN APR ECO WATCHERS CURRENT SURVEY: 7.9 V 10.0E (lowest since 2002) OUTLOOK SURVEY: 16.6 V 17.0E
• (JP) Japan Econ Min Nishimura: Want to deal swiftly with 2nd extra budget; Govt and Bank of Japan (BOJ) are determined to not allow deflation

Korea

• Kospi opened -1.3%
• (KR) Bank of Korea (BOK) to provide additional KRW5.0T in special low interest rate loans to domestic businesses impacted by coronavirus – Yonhap
• (KR) South Korea renews calls for Japan to lift trade restrictions on 3 key industrial materials critical for South Korea’s chip and display industries (photoresist, etching gas, and fluorinated polyimide) – Yonhap

China/Hong Kong

• Hang Seng opened -0.6%; Shanghai Composite opened -0.3%
• (CN) China Jilin City announces partial lockdown after coronavirus cases surge, Rail Station to halt train services starting today as part of coronavirus containment measures – local press
• (CN) China PBOC sets Yuan reference rate: 7.0875 v 7.0919 prior
• (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 27th consecutive session; Net CNY0B v CNY0B prior
• (CN) China Foreign Ministry spokesperson Zhao Lijian: reiterates US and China should implement trade deal with equality and mutual respect
• (CN) China National Health Commission Coronavirus Update for May 12th: 7 additional cases (1 imported v 1 prior) v 1 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases: 8 v 15 prior
• (CN) S&P: China not likely to meet Phase 1 trade targets, China’s imports to the US are at levels that are tracking well below target
• (HK) Hong Kong woman with no travel history said to have coronavirus [would end HK’s 23-day streak of not having a ‘local’ coronavirus case] – Local press

Other

• 2474.TW Apple said to be urging Luxshare-ICT to invest into Catcher in order to have an alternative to Foxconn – Nikkei
• (SA) Saudi Arabia Cabinet affirms commitment to OPEC+ deal

North America

• (US) House Democrats’ Progressive Caucus asks Speaker Pelosi to delay the Friday planned vote on new stimulus to next week – press
• (CN) Sen Graham (R-SC) and some other GOP senators introduce China sanctions legislation – press
• (US) CDC Director Redfield: CDC spoke with Chinese counterparts as early as Jan 3rd regarding the coronavirus outbreak – Senate testimony
• (US) Fed’s Mester (hawk, voter): more pessimistic scenarios are almost as likely as the baseline; further direct fiscal support will be needed; Open to yield curve control debate to support guidance
• (US) Treasury has approved $25B in assistance to aviation industry, approved support for all major passenger carriers

Europe

• (NO) Norges Bank: To exclude 7 companies from government pension fund (including Canadian Natural Resources, Cenovus, Suncor, Imperial Oil, Elsewedy Electric, Electrobras and Vale)
• (UK) APR BRC SALES LFL Y/Y: +5.7% (ex-temporarily closed stores and includes online sales) V -15.0%E; Total Retail sales -19.1% y/y (record decline since data started in 1995)

Levels as of 1:15ET

• Hang Seng +0.3%; Shanghai Composite -0.1%; Kospi +0.4%; Nikkei225 -0.6%; ASX 200 -0.4%
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.3%, Dax +0.7%; FTSE100 -1.1%
• EUR 1.0858-1.0843; JPY 107.28-107.09; AUD 0.6480-0.6451; NZD 0.6096-0.6000
• Commodity Futures: Gold -0.0% at $1,706/oz; Crude Oil -0.6% at $25.61/brl; Copper +0.6% at $2.35/lb