Asia Summary
Hong Kong banks led the market higher with the PBoC resuming open market operations after 12 consecutive skips, this was speculated in the press ahead of the announcement given that the government and policy banks needed to sell at least CNY483B in bonds this week and a high chance companies would start to hoard cash ahead of tax payments later this month. According to Chinese press going forward OMO’s are expected to remain more modest than prior to this latest hiatus.
NZD/USD fell to a two-week low of 0.7237, attributed to a technical move that then triggered stop losses. The A$ gained slightly on stronger business confidence and conditions for the month of June. However, Australian miners remained under pressure and next week will kick off with results from Rio Tinto, July 11th and then BHP on July 19th.
Key economic data
(AU) AUSTRALIA MAY HOME LOANS M/M: 1.0% V 1.5%E
(NZ) NEW ZEALAND JUN CARD SPENDING RETAIL M/M: 0.0% V 0.8%E; TOTAL M/M: 0.1% V -0.2% PRIOR
(UK) JUN BRC LFL SALES Y/Y: 1.2% V 0.8%E
(UK) UK June Barclays Card Consumer Spending Y/Y: 2.5% v 2.8% prior (15-month low)
(AU) AUSTRALIA JUN NAB BUSINESS CONFIDENCE: 9 V 8 PRIOR; CONDITIONS: 15 V 11 PRIOR
(CN) China Passenger Car Association (PCA): Jun vehicle sales +4.6% y/y; YTD sales -0.2% y/y
Speakers and Press
China
(CN) China may start to inject cash again through OMO due to Govt and policy banks need to sell at least CNY483B in bonds this week and companies may keep cash through July for tax payments – financial press
(CN) China Investment Corporation (CIC) reports 2016 net return on overseas investment 6.22% v -2.96% y/y
Japan
(JP) According to SMBC Nikko Securities analyst: BoJ is unlikely to be prompted into action by the rise in five-year yield unless it causes a spike in volatility or pushes 10-year yields higher
(JP) According to latest Asahi poll 61% feel that Japan PM Abe cannot be trusted
Australia/New Zealand
(NZ) New Zealand PM English: Government allocates NZ$1.0B to a housing infrastructure fund that will focus on 9 projects
US
(US) US President Trump may name Randal Quarles as the Fed’s supervision vice chair later today – US press
(US) Fed’s Williams (moderate, non-voter): US fiscal policy is on an unsustainable path; reasonable view to expect one more rate hike this year
Asian Equity Indices/Futures (00:30ET)
Nikkei +0.5%, Hang Seng 1.1%, Shanghai Composite -0.2%, ASX200 -0.1%, Kospi +0.3%
Equity Futures: S&P500 +0.1%; Nasdaq flat, Dax +0.2%, FTSE100 +0.1%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1398-1.1391; JPY 114.26-114.03; AUD 0.7620-0.7603; NZD 0.7272-0.7230
Aug Gold -0.2% at 1,211/oz; Aug Crude Oil +0.4% at $44.58/brl; Sept Copper -0.2% at $2.65/lb
GLD SPDR Gold Trust ETF daily holdings fall 2.96 tonnes to 832.4 tonnes
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.7983 V 6.7964 PRIOR
(CN) PBoC injects combined CNY40B in 7-day and 14-day reverse repos (1st injection in 12 sessions)
(TH) Thailand sells combined THB105B in 3-month, 6-month and 329-day bonds
(JP) Japan MoF sells ¥21.80T v ¥2.2T indicated in 0.10% 5-year JGB bonds; avg yield -0.0350% v -0.065% prior; bid-to-cover: 4.85x v 4.71x prior
Asia equities notable movers
Australia
Slater &Gordon, SGH.AU Reaches in-principle conditional agreement to settle Hall Proceeding; +12.2%
Japan
Suzuki Motor , 7269.JP Netherlands Vehicle Authority said to investigate possible misuse of vehicle emissions software – press; -3%
Hong Kong/China
Geely Automobile, 175.HK Positive profit alert: Guides H1 Net +100% v CNY1.91B y/y; Rev to substantially increase; +3.8%
Korea
005380.KR Hyundai and Kia said to discuss cutting China sales target – South Korean Press
US Session Highlights
(UK) PM May met with Australian PM Turnbull, as she vows to create closer ties, especially on trade. Over the weekend, May had met with Pres Trump, who promised a fast track to a free trade agreement. PM May, weakened after the unneeded early election, has been active in garnering support from third parties in terms of trade to strengthen her position with the EU. But after last week’s reports that the EU and Japan were to agree to free trade terms, Japan has said that may not be the case, and in fact the UK may take their front seat on trade talks.
(US) US regulatory agency CFPB announced completion of a rule that would allow class action suits against banks. The rule would prevent banks and credit card companies from including class action bans in customer contracts. The new rules become effective in ~240 days, but under the Congressional Review Act, the GOP has 60 legislative days to block it.
US Treasuries managed to hold some ground today, as investors continued to sell fixed income but at a slower pace. 10-year yield dropped 1.3bps to 2.37%, and the 10s/30s yield curve widen, rising to 55.5bps, with 30-year bond yield only slightly lower at 2.93%.
US markets on close: Dow flat, S&P500 +0.1%, Nasdaq +0.4%
Best Sector in S&P500: IT
Worst Sector in S&P500: Real Estate
Biggest gainers: CF +6.6%; MOS +5.3%; FCX +5.2%
Biggest losers: M -7.1%; GPS -6.3%; BBY -6.3%
At the close: VIX 11.1 (-0.08pts); Treasuries: 2-yr 1.39% (-1.4%), 10-yr 2.37% (-0.8%), 30-yr 2.93% (-0.3%)
