General Trend:
- US corporate earnings in focus: Fedex declines over 9% in afterhours trading on reduced outlook
- Airlines trade generally higher in Asia after oil prices declined on Tuesday
- China President Xi has called on China to upgrade manufacturing and real economy [the comments follow the recent release of China’s weaker than expected Aug industrial production]
- China NDRC: China pork price growth has stabilized ‘recently’, consumer prices to remain stable during Oct holiday
- Shanghai Property index outperforms after recently released home price data showed slowing
- Chinese sports companies rise in HK; China is considering plan to establish investment funds related to the fitness industry (US financial press)
- Apple supplier AAC Technologies rises over 10% in Hong Kong, strength attributed to reports of ‘strong’ pre-orders related to the iPhone [in line with report from Sept 16th]
- Swire Properties drops over 1% in HK; Brokerage firm CLSA has been asked by Chinese parent company to leave an office property that is owned by Swire [amid the ongoing protests in HK] – FT
- Esprit expected to report FY results later today
- Financials decline in Japan ahead of BoJ rate decision; Sumitomo Mitsui Trust Bank said to consider account fees if BoJ cuts rates further into negative territory (Japanese Press)
- Softbank’s shares remain weaker in the face of concerns regarding the Wework IPO
- Trade-sensitive Marine/Transportation index outperforms in Japan
- BoJ rate decision is due on Thursday (Sept 19th) [*Reminder: Ahead of the policy meeting, there has been financial press speculation that the central bank’s Sept policy decision might be a ‘close call’ – article from Sept 10th]
- BOJ said to see no backlash if a rate cut becomes necessary (financial press article from Sept 17th)
- Japan sells 20-yr JGBs at lowest bid to cover since early 2017 ahead of BoJ decision
- US July TIC flows show Japan top holder of US treasuries with $1.12T (higher m/m) and China with $1.11T (unchanged m/m)
- Japan has 9th straight export decline in Aug, exports to China -12.1% y/y
- US dollar trades generally firmer ahead of Wednesday’s Fed decision and economic forecasts
- Fed rate cut probability declines ahead of upcoming decision : Fed Funds Futures imply traders see ~54% chance of 25bps rate cut vs ~92% one week ago
- NY Fed to conduct another overnight repurchase agreement (repo) operation on Wed for up to $75.0B, move comes amid recent rise in US repo rates
- Oil futures declined by over 5.5% on Tuesday; Saudi Oil Minister said production capacity will be ‘fully back online’ by the end of Sept at 11M bpd
- Saudi Defense Minister expected to hold press conference later today [time not initially disclosed], may reveal evidence of Iran’s involvement in the recent Aramco attacks (Saudi media)
- US/China due to hold working-level trade talks in Washington D.C from Sept 19-20 (Thursday-Friday)
- New Zealand Q2 GDP data due on Thursday, Q2 current account data met expectations
- Aussie Aug jobs data due on Thursday
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened %
- (NZ) NEW ZEALAND Q2 CURRENT ACCOUNT: (NZ$): -1.1B V -1.1BE; Current Account to GDP Ratio: -3.4% v -3.4%e
- (NZ) New Zealand Fisheries Min Nash: Targeting NZ$3.0B in aquaculture sales by 2035 v NZ$600M in 2018
- (AU) Australia sells A$1.2B v A$1.2B indicated in 1.50% June 2031 bonds, avg yield 1.1779%, bid to cover 2.0x
Japan
- Nikkei 225 opened +0.1%
- (JP) Japan planning new economic security section under National Security Council (NSC) – Japan press
- (JP) North Korea’s ruling party hosted a Japan prefectural delegation in Pyongyang, no details provided on talks – North Korea media
- (JP) JAPAN AUG TRADE BALANCE: -¥136.3136.3B V -¥365.4BE; ADJ TRADE BALANCE: -¥130.8B130.8 V -¥160.7BE; Exports Y/Y: -8.2% v -10.0%e (9th straight decline)
- 6758.JP Letter from CEO to shareholders; to keep proactively evaluating business portfolio, turns down Third Point request to hive off image sensor business
- (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.30% 20-year bonds; avg yield 0.2050% v 0.1100% prior; bid to cover 3.48x v 3.81x prior (lowest btc since Jan 2017)
Korea
- Kospi opened +0.1%
- (KR) South Korea Aug Export Price Index M/M: 1.5% v -0.2% prior; Y/Y: -3.9% v -5.3% prior; Import Price Index M/M 0.9% v 0.6% prior; Y/Y: 0.0% v -1.3% prior
- 005380.KR Has asked many Japan part makers to raise shipments, worried about dispute with South Korea could extend to auto sector – Nikkei
- (KR) South Korea officially drops Japan from list of trusted trade partners; process to export goods to take longer and more paperwork
- (KR) Bank of Korea (BOK) Aug Minutes: Majority of Board said to be unclear if more rate cuts were needed
China/Hong Kong
- Hang Seng opened +0.2%; Shanghai Composite opened +0.2%
- (CN) China NDRC Spokesperson Meng Wei: Aug Power Consumption +3.6% y/y; China pork price growth has stabilized ‘recently’, consumer prices to remain stable during Oct holiday – weekly press conference
- (CN) China PBoC Open Market Operation (OMO): Injects CNY30B in 7-day reverse repos v skips prior; Net drain CNY0B v CNY0B prior
- (CN) China PBOC sets Yuan Reference Rate: 7.0728 v 7.0730 prior
- (CN) China and Russia reach agreement to expand agricultural trade
- (CN) China President Xi calling on China to upgrade manufacturing and real economy to move from low-end to the mid-to-high end in the industrial chain – Xinhua citing speech from Zhengzhou Coal Mining Machinery Group
- (CN) Follow Up: China investment into Iran petrochemical industries now said to reach $290B to offset US sanctions; China to receive 12% discount on all energy imports
Other
- (SA) Saudi Arabia Def Min to hold press conference later today; to show evidence of Iran involvement in Aramco attacks – Saudi State TV
- (PH) Philippines Central Bank Chief Diokno: Rise in oil prices is not yet a worry; CPI to stay on target as long at oil doesn’t top $85/bbl; rate cut before Nov still a possibility, could be 100bps
North America
- STLD Guides Q3 $0.66-0.70 v $0.72e; reduced earnings are primarily related to lower profitability from the company’s sheet steel operations, as shipments and average steel pricing declined in the quarter, more than offsetting lower scrap costs
- (US) Pres Trump: China trade deal could come soon, maybe before the 2020 election or one day after the election
- (US) New York Fed announces overnight repo will be for up to $75B (as expected); to conduct another overnight repurchase agreement (repo) operation from 8:15-8:30AM ET tomorrow up to $75B
- (US) White House advisor Kudlow: Probably going to enjoy a pretty good Q3, Q4 and Q1; economy has potential to grow by 3% of better; May be a US/Japan announcement at UN; optimistic over a US-Japan trade deal
Europe
- (SA) SAUDI ENERGY MIN: OIL EXPORT SUPPLY HAS RESUMED AS BEFORE; PRODUCTION CAPACITY WILL BE FULLY BACK ONLINE BY END OF SEPT AT 11M BPD – PRESS
- (SA) Saudi Arabian oil output will return to normal levels sooner than initially believed, according to sources with knowledge of Saudi oil operations – press
- (UK) Britain are waiting until the last minute to negotiate as recent Brexit drafts have all had the Irish Backstop removed
Levels as of 1:20 ET
- Nikkei 225, -0.1%, ASX 200 -0.2%, Hang Seng -0.1%; Shanghai Composite +0.3%; Kospi +0.4%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.2%; FTSE100 -0.7%
- EUR 1.1076-1.1064; JPY 108.27-108.07 ; AUD 0.6870-0.6845 ;NZD .6363-0.6332
- Gold -0.2% at $1,510/oz; Crude Oil -0.5% at $58.87/brl; Copper +0.1% at $2.630/lb
