General Trend:
- Equities markets trade significantly higher taking their cues from a happy Wall St as the US Fed rolls out its Main Street Lending Facility program
- Fed also announced that it would start buying corporate bonds on June 16th [under previously announced program]
- Leading gainers in Japan include Steel, Transportation, Real Estate and Auto firms
- Japanese steelmakers outperform; Tokyo Steel to raise prices for the first time since early 2018, US speculated to consider infrastructure spending
- Currencies also generally higher against the USD as risk off sentiment takes hold
- North Korea threatens to re-enter the disarmed boarder area with South Korea and executive vague plans announced over the weekend
- China continues to lock down parts of Beijing to help contain most recent coronavirus outbreak
- US extends weekly flights to China, matching China’s moves (as expected)
- BOJ left policy and rate unchanged as expected, but did raise its Special lending program to~¥110T (prior ¥75T), as speculated in the press at the end of last week
- BoJ also said it would provide an ample provision of yen and foreign currency funds without setting upper limits
- RBA Minutes commented on the rise in 1-2 yr yields vs 3 yr yields; Should these developments continue, the Bank would consider purchasing bonds in the secondary market to ensure that these short-term yields are consistent with the target for three-year yields.
- Hong Kong to further ease restrictions on public gatherings, speculated to permit restaurants to operate at full capacity
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.7%
- (NZ) New Zealand Q2 Westpac Consumer Confidence: 97.2 v 104.2 prior (lowest since 2009)
- (AU) Australia Govt to provide A$92M in funding to support medicine wholesaler networks beginning July 1st
- (NZ) New Zealand Treasury Increases 2019/20 bond program to NZ$29.0B (prior NZ$25.0B)
- (AU) AUSTRALIA Q1 HOUSE PRICE INDEX Q/Q: 1.6% V 2.5%E; Y/Y: 7.4% V 8.1%E
- (AU) RESERVE BANK OF AUSTRALIA (RBA) JUNE MEETING MINUTES: Reiterates accomodative approach will be maintained as long as required to meet full employment and inflation target; Govt bonds only purchased one time since prior meeting; Prepared to scale up bond buying if needed
- (AU) Australia mid-March to early-May Total Payroll Jobs: -7.3%
Japan
- Nikkei 225 opened +1.8%
- BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED; Raises Special lending program to~¥110T (prior ¥75T), as speculated
- (JP) Japan Fin Min Aso: BOJ Policy decisions in April and May are yielding results as money supply data has shown gains y/y
- 9984.JP Exploring transactions related to T-Mobile shares, may do one or more private placements or public offerings, part of plans to monetize assets, no assurances talks will lead to any transactions
- (JP) Japan to have 3 IPOs on June 24th after no IPOs for for longest period since 2009; Locoguide, Ficha and Copa will list June 24 on Mothers – press
- (JP) Japan reports 0.1% of people surveyed in Tokyo had coronavirus antibodies
- 8306.JP Main banking unit obtains a license from the China PBOC to be a transaction agent in the country’s interbank bond market (1st Japan bank to get license) – Nikkei
Korea
- Kospi opened +3.1%
- (KR) North Korea considering plan to enter demilitarized zones (DMZ); Army is preparing to implement govt orders – North Korea state media
- 005930.KR Civilian committee planning to issue a decision next week on whether Lee Jae-yong, Group, should be indicted over his alleged involvement in a merger and accounting fraud – Yonhap
- (KR) South Korea Vice Fin Min Kim: Financial market volatility may return with increasing retail investors; Will employ market stabilizing measures if needed
- (KR) South Korea seeking to impose capital gains tax on all shareholders; Finance ministry to announce the tax revision next month – Press
- (KR) Bank of Korea (BOK) provides KRW620B in liquidity via weekly repo operations v KRW500B prior
China/Hong Kong
- Hang Seng opened +2.3%; Shanghai Composite opened +0.8%
- HUAWEI.CN (CN) US Commerce Dept, Bureau of Industry and Security announces rule allowing US companies to participate in technology standards-setting bodies with companies, despite it being blacklisted
- 9997.HK Offering 225.4M shares in IPO to price HK$12.36-13.88/shr; trading to start on June 29th
- (CN) China National Health Commission Coronavirus Update for June 14th: 40 additional cases v 57 prior; Additional deaths: 0 v 0 prior; Asymptomatic cases 6 v 18 prior; Cases in Beijing 27 v 36 prior
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repos for 2nd consecutive session v skips prior; Net drain CNY60B v drain CNY0B prior
- (CN) China PBOC sets Yuan reference rate: 7.0755 v 7.0902 prior
- (CN) China National Development and Reform Commission (NDRC): consumer inflation expected to continue to ease this year; China approved 7 fixed asset investment projects worth CNY129.8B in May
North America
- (US) Fed to begin purchasing corporate bonds through the existing SMCCF facility starting June 16th; only investment grade bonds as of March 22nd are eligible
- Major US wireless carriers, including T-Mobile, received reports of widespread outages affecting thousands of customers, according to a service tracking site; Facebook, Instagram, WhatsApp also all impacted; seems to be global issue – press
- (US) US Department of Transportation (DOT): Will allow 4 flights from China per week (matching what China is allowing to US)
- TSLA Reported to cut Model S long range plus price by $5K to $69.5K – Press
Europe
- (UK) Analysts speculate that Bank of England (BOE) could use bond purchase policy similar to Bank of Japan (BOJ); Reported to be focused on yield curve control – press
Levels as of 1:00ET
- Hang Seng +3.0%; Shanghai Composite +0.9%; Kospi +4.3%; Nikkei225 +4.4%; ASX 200 +4.1%
- Equity Futures: S&P500 +1.4%; Nasdaq100 +1.2%, Dax +1.4%; FTSE100 +1.9%
- EUR 1.1349-1.1320; JPY 107.64-107.23; AUD 0.6875-0.6910; NZD 0.6506-0.6462
- Commodity Futures: Gold +0.5% at $1,735/oz; Crude Oil -0.3% at $37.00/brl; Copper +0.7% at $2.61/lb
