US Session Highlights
(US) Fed’s Dudley (dove, FOMC voter): Fed’s taken very measured and careful approach to shrinking bond portfolio
(US) MAY PRELIMINARY DURABLE GOODS ORDERS: -1.1% V -0.6E (the largest drop in six months); DURABLES EX TRANSPORTATION: 0.1% V +0.4%E
(US) May Chicago Fed National Activity Index: -0.26 v +0.49 prior
(US) JUNE DALLAS FED MANUFACTURING ACTIVITY: 15.0 V 16.0E
Stocks opened the week on a positive note, spurred by a rally in Europe, as two Italian banks were saved from bankruptcy with public money and Nestle hit a new all-time high, gaining 4% on the day. Technology stocks fell out of favor, down 0.3%. Best performing sectors in the S&P were Utilities and Financials, gaining 0.8% and 0.5% respectively.
US markets on close: Dow +0.1%, S&P500 flat, Nasdaq -0.3%
Best Sector in S&P500: Utilities
Worst Sector in S&P500: Technology
Biggest gainers: FE +4.1%; EQT +3.8%; CVS +3.5%
Biggest losers: FTR -6.6%; ARNC -6.0%; QRVO -5.1%
At the close: VIX 9.9 (-0.1pts); Treasuries: 2-yr 1.36% (+1bps), 10-yr 2.14% (-1bps), 30-yr 2.70% (-2bps)
Politics
(US) Sen Collins (R-ME) to vote NO on motion to proceed on healthcare legislation – tweet
(US) CBO scores Senate Republican healthcare bill: 22 million more people uninsured by 2026
(BR) Brazil Prosecutor General Janot confirms to proceed with corruption charges against President Temer – Brazil press
Key economic data
(CN) CHINA MAY INDUSTRIAL PROFITS Y/Y: 16.7% V 14.0% PRIOR; YTD 22.7% V 24.4% PRIOR
(NZ) NEW ZEALAND MAY TRADE BALANCE (NZD): 103M (3rd straight surplus) V 419ME; 12-MONTH YTD: -3.75B V -3.39BE
(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 111.8 v 112.4 prior
Asia Session Notable Observations
China Premier Li spoke at World Economic Forum, pleding to maintain policy settings amid steady growth expectations in Q2; Unemployment seen at 4.9%.
China profit growth accelerates to 16.7% from 14.0%, while Liabilities growth slows to 6.5% from 6.7% in May.
New Zealand posts 3rd straight trade surplus; Exports in line with estimates and Imports higher than expected; Shipments of Dairy spike over 40% y/y to NZ$1.2
Brazil Prosecutor confirms proceeding with corruption charges against Pres Temer.
White House notes signs of Syria preparing another chemical attack, warns Assad will pay heavy price if he proceeds.
Speakers and Press
China
(CN) China Premier Li: Economy maintaining steady growth and improving in Q2; To keep proactive fiscal policy and prudent monetary policy – World Economic Forum comments
(CN) PBOC said to be in talks with MoF on asset management tax plan
(CN) China May Lottery Sales CNY37.7B, +8.9% y/y
Japan
(JP) Japan Fin Min Aso: Takata bankruptcy may impact jobless rate; Will work with METI to gauge impact – press
(JP) Japan ruling Liberal Democratic Party lawmaker Shigeru Ishiba: Japan must keep its 2020 primary balance target; faith in currency is extremely important
(JP) Japan Q1 Household Assets ¥1,809T, +2.7% y/y
Korea
(KR) South Korea Pres Moon: Extra budget will help economy get back to 3% GDP growth – press
Asian Equity Indices/Futures (00:30ET)
Nikkei +0.3%, Hang Seng +0.1%, Shanghai Composite -0.1%, ASX200 -0.1%, Kospi +0.3%
Equity Futures: S&P500 flat; Nasdaq +0.1%, Dax flat, FTSE100 flat
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1180-1.1195; JPY 111.80-112.10; AUD 0.7575-0.7605; NZD 0.7275-0.7300
Aug Gold flat at 1,246/oz; Aug Crude Oil +0.3% at $43.50/brl; July Copper -0.2% at $2.63/lb
SPDR Gold Trust ETF daily holdings rise 2.7 tonnes to 853.7 tonnes
Morgan Stanley lowers Q3 Iron Ore price forecast by 23% to $50/ton – press
(CN) PBOC SETS YUAN MID POINT AT 6.8292 V 6.8220 PRIOR; Weakest Yuan fix since May 31st
(CN) PBoC: To skip today’s open market operation (OMO); 3rd straight skip
(JP) Japan MoF sells ¥1.77T v ¥2.2T indicated in 2-yr 0.1% JGBs; Avg yield: -0.103% v -0.162% prior; bid to cover: 6.79x v 5.06x prior
(AU) Australia (AOFM) sells A$150M in 2.5% 2030 indexed bonds; avg yield 0.6562%
Asia equities notable movers
Australia
QBE Insurance (QBE) +1.3%; Exec: Seeing higher claims in emerging markets – press
Blackmores Limited (BKL) -3.9%; CEO Christine Holgate to resign
Metcash (MTS) -4.1%; Cut at Credit Suisse
Japan
Nissan (7201) +0.7%; Targets 8% global market share as part of its next mid-term plan – press
Mitsubishi Motor (7211) +1.4%; Guides FY19 global vehicle production at least 1.5M units, +40% from last FY
Nikon (7731) +0.7%; Said to increase display device output for camera and TV products – Nikkei
Hong Kong
China Southern (1055) -3.5%; To raise up to $1.9B in share sale
Pioneer Global Group (224) +13.4%; Reports FY17 (HK$) Net loss 67.6M v loss 67.7M y/y; Rev 295.0M v 258.7M y/y
Bosideng International Holdings limited (3998) +5.1%; Reports FY (CNY) net 391.8M v 280.9M y/y, Rev 6.82B v 5.79B y/y
