Recent Decline In Gov’t Bond Yields And Possible Implications Continue To Garner Attention

Aug 16 19, 06:50 GMT

General Trend:

Consumer Discretionary companies are among the gainers in Shanghai, NDRC plans to launch measures to boost disposable incomes in China
Shanghai Property index extends gain on hopes slowdown in property prices limits overheating concerns
Hang Seng rises amid recent dearth of significant news flow related to protests in Hong Kong; Ping An Insurance rises post earnings
Tencent remains weaker after recent quarterly revenue miss
Nikkei 225 pares opening losses as Yen weakens vs Aussie; Securities brokers gain after losses in prior session
Australia’s largest gold miner Newcrest declines after reporting FY earnings, guided midpoint of FY20 production lower y/y
South Korean markets weighed down by catchup selling after recent holiday
LG Display declines over 1%, Samsung Display may cut LCD production on supply concerns (local press)
BoJ reduced 5-10 yr JGB purchases after recent move lower in bond yields (as speculated)
Japan is now the largest foreign holder of US Treasuries (June US TIC flows data)
China said it will have to take countermeasures on the moves by the US [without being specific]
Hong Kong final Q2 GDP data due later today, government cut growth forecast and announced stimulus measures ahead of the data [advance q/q GDP was -0.3% v +0.9%e, released on July 31st]
New Zealand manufacturing PMI contracts in July (first time since 2012)

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened flat
(NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: continue to engage with an open mind on capital plan; the RBNZ is forward looking and transparent
(NZ) New Zealand July Business Manufacturing PMI: 48.2 v 51.3 prior (first contraction or reading below 50 since 2012)

China/Hong Kong

Shanghai Composite opened +0.1% , Hang Seng flat
(CN) Pres Trump: Have a call scheduled “soon” with China’s Xi
(CN) China Finance Ministry State Council Tariff Committee: Will have to take countermeasures on US moves; US actions violates consensus reached in Osaka at G-20 meeting in Jun
(CN) China NDRC: To roll out plan to boost population’s disposable income for 2019-2020
(HK) Hong Kong Govt cuts 2019 GDP growth forecast from 2.0-3.0% to 0.0-1.0% citing ongoing political unrest; confirms stimulus measures of HK$19.1B
(CN) China PBoC sets yuan reference rate: 7.0312 v 7.0268 prior (1st weaker CNY fixing in 3 sessions)
(CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v Injects CNY30B prior

Japan

Nikkei 225 opened -0.4%
(JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Cuts offer to buy 5-10 yr JGBs for the first time since Dec 2018 (as speculated)

Korea

Other

(ID) Indonesia Pres Jokowi: Need to develop more downstream industries; calls for local processing of Bauxite, Nickel Ore and coal; local processing of nickle to add value by 4 times
(MY) Malaysia Q2 GDP Q/Q: 1.0% v 0.9%e; Y/Y: 4.9% v 4.7%e (strongest annual growth in 5 quarters)
(MY) Malaysia Central Bank (BNM): Will manage excessive volatility thru targeted currency intervention
(SG) SINGAPORE JULY NON-OIL DOMESTIC EXPORTS M/M: 3.7% V 2.0%E; Y/Y: -11.2% V -15.4%E

North America

(US) Fed’s Bullard (dove, voter): Would like to take action to make sure we hit our inflation target; doesn’t want to prejudge what action Fed might take at next meeting, but wants to take action – Fox Business interview
(US) White House Trade Adviser Navarro: thinks Fed’s Bullard virtually guaranteed rate cut at next meeting – Fox Business interview

Europe

(EU) ECB’s Rehn (Finland): ECB needs to have significant and impactful easing package in Sept; weakening economy justifies a monetary policy response – press interview

Levels as of 1:20 ET

Nikkei 225, -0.1%, ASX 200 flat, Hang Seng +0.6%; Shanghai Composite +0.7%; Kospi -0.8%
Equity Futures: S&P500 +0.6%; Nasdaq100 +0.7%, Dax +0.5%; FTSE100 +0.7%
EUR 1.1114-1.1095; JPY 106.27-106.02 ; AUD 0.6796-0.6770 ;NZD 0.6451-0.6428
Gold +0.1% at $1,532/oz; Crude Oil +1.3% at $55.17/brl; Copper +0.3% at $2.599/lb