General Trend:
- PBOC Gov: Central bank’s balance sheet is stable at around CNY36.0T (~$5.1T), sees 2020 new yuan loans of ~CNY20.0T; Did not comment specifically on interest rates
- China’s Banking Regulator rules out negative interest rates
- Financials trade generally lower in Asia after the earlier weakness in the US
- Chinese banks drop amid rate cut and call to cap profit growth; Banks later pare losses following comments out of China regarding loan growth and negative rates
- JD.com’s HK shares opened at ~6% above the IPO price
- Decliners in Japan include financial and Iron/Steel companies; Automakers decline amid the firmer Yen
- Financial and energy companies drop in Australia [in line with earlier US session]
- Qantas declines by over 4%, has canceled most of its international flights until late Oct.
- NZ on track for technical recession after Q1 GDP contraction
- China sold special coronavirus bonds at lower than expected yields
- China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thursday
- Indonesia is expected to cut rates by 25bps later today
- Australia is expected to sell A$2.0B in April 2025 bonds on Friday
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.1%
- (NZ) NEW ZEALAND Q1 GDP Q/Q: -1.6% V -1.0%E; Y/Y: -0.2% V +0.3%E
- (AU) AUSTRALIA MAY EMPLOYMENT CHANGE: -227.7K V -78.8KE; UNEMPLOYMENT RATE: 7.1% (19-year high) V 6.9%E; Unemployment rate would have been ~9.6% if people who has lost jobs were considered actively looking for work
- (AU) Australia PM Morrison: Impact of coronavirus on Australia jobs is devastating and great
Japan
- Nikkei 225 opened -0.4%
- (JP) Japan Govt said to be planning to raise economic assessment in June (1st upward revision since Jan 2018) – Nikkei
- (JP) Japan Econ Min Nishimura: Coronavirus contract tracing app to be released June 19th; No change to easing coroanvirus restrictions on travel
- (JP) Japan Govt expected to see a tax rev for FY19/20 below ¥60T (would be the first time in 2-yrs) due to coronavirus impact – Nikkei
- (JP) Japan MoF sells ¥1.9T v ¥1.9T prior in 0.1% coupon 5-year JGB: avg yield: -0.119% v -0.220% prior, bid to cover: 3.78x v 2.73x prior
Korea
- Kospi opened -0.3%
- (KR) North Korea newspaper, Rodong Sinmun: This week’s demolition of an inter-Korean liaison office was just the beginning; there could be additional retaliatory steps against South Korea that could go “far beyond imagination”
- (KR) South Korea Nuclear envoy arrives in US; Korean Govt will not disclose purpose of visit – Yonhap
- (KR) US extends existing sanctions on North Korea by 1-year, due to the continued “unusual and extraordinary” threat it poses – Yonhap
- (KR) According to air traffic, an aircraft used by North Korean leader Kim flew from Pyongyang to the eastern part of the country on Wednesday, sparking speculation he may oversee military action – Yonhap
- (KR) South Korea Fin Min Hong: Will tax cryptocurrency, more details to be announced in July – Yonhap
- (KR) South Korea confirms 59 additional coronavirus cases (3-week high), 1 additional death
China/Hong Kong
- Hang Seng opened -0.4%; Shanghai Composite opened -0.2%
- (CN) China PBOC Govt Yi Gang: Sees 2020 new yuan loans of ~CNY20T; aggregate financing >CNY30T; Economic fundamentals are sound, monetary policy still within normal range
- (CN) China Vice Premier Liu He: Economic situation has gradually improved, various indicators have shown marginal improvements; China is maintaining appropriate levels of overall liquidity; China will enforce phase 1 trade deal despite interruptions
- (CN) China PBoC Open Market Operation (OMO): Injects combined CNY120B in 7-day and 14-day reverse repos v 3 consecutive skips; Net inject CNY40B v drain CNY60B prior; cuts 14-day rate by 20bps to 2.35%
- (CN) China National Health Commission Coronavirus Update for June 17th: 28 additional cases v 44 prior (4 imported v 11 prior); Additional deaths: 0 v 0 prior; Asymptomatic cases 8 v 11 prior; Cases in Beijing 21 v 31 prior
- 9618.HK Hong Kong IPO opens for trade at HK$239.00/shr v HK$226/shr pricing
- (CN) China said to have asked major banks to keep profit growth below 10% this year as measures to try and support the economy – press
- (CN) China May Swift Global Payments (CNY): 1.8% v 1.7% prior
- (CN) China PBOC sets Yuan reference rate: 7.0903 v 7.0873 prior
- (CN) China Securities Regulator (CSRC) Official Yi: China economy faces serious downward pressure; China to crack down harder on financial crimes
- (CN) China State Council: Need to better leverage policy tools like RRR cuts and re-lending to keep liquidity reasonably sufficient and intensify efforts to make financing more accessible for enterprises and help them tackle the financial difficulties in order to help meet goal for faster expansion of new loans and aggregate financing relative to the previous year – Xinhua
- (CN) China National Development and Reform Commission (NDRC): China seeks more reasonable prices for imported Iron ore; Will cap China coal mines at 5k total mines; China will have >96% coal output from major mines
Other
- (SG) Singapore Central Bank (MAS): 14 of 21 digital bank applications have met eligibility requirements to be considered
- (SG) Singapore Deputy PM Keat: China and Singapore can improve ties in cross boarder CNY initiative – speaking at Lujiazui Forum
North America
- (US) Fed’s Mester (hawk, voter): economy likely to see uncertain recovery over H2’20; sees US contracting by 6% this year
- (US) US Equal Employment Opportunity Commission (EEOC): Employers cannot require employees to take coronavirus antibody tests before returning to work – press
- HLT (CN) Tianjin (Northern China): 1 Hilton owned Conrad hotel employee has been infected with coronavirus
- (US) President Trump: Reiterates we are very close to a vaccine and therapeutics; will be visiting border wall very soon – Fox interview
- (US) US Sec of State Pompeo: US China meetings in Hawaii have ended; Both parties agree dialogue was ‘constructive’
Levels as of 1:15ET
- Hang Seng -0.1%; Shanghai Composite +0.1%; Kospi -0.1%; Nikkei225 -0.5%; ASX 200 -1.1%
- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -1.5%
- EUR 1.1261-1.1225; JPY 107.06-106.70; AUD 0.6896-0.6838; NZD 0.6480-0.6423
- Commodity Futures: Gold +0.0% at $1,736/oz; Crude Oil -1.0% at $37.61/brl; Copper +0.0% at $2.59/lb
