US And China Bond Yields Drop Amid Caixin PMI Data

General trend

• WTI Crude FUTs drop after China PMI data.
• US equity FUTS have remained higher.
• Shanghai Composite continued to rebound during the morning session [Kweichow Moutai and Consumer Staples indices rebound]; Property and Financial indices also rise; IT index lags.
• Hang Seng also reversed declines; HSBC rose ahead of earnings report; EV stocks rose amid comments from China’s Politburo.
• China announced new appointment in Education Ministry.
• Nikkei has extended gains; Mizuho, Japan Tobacco and NEC rise following earnings; Nomura, Hitachi, Komatsu and Mazda decline; Companies expected to report earnings include Mitsubishi UFJ, Shionogi, AGC.
• S&P ASX 200 has continued to rise after hitting record high [gainers include Financial, Energy and Consumer indices]; Afterpay to be acquired by Square in all stock deal.
• Companies expected to report during the NY morning include Arcbest, CNA Financial, Global Payments, Jeld-Wen, Loews, ON Semiconductor, Ferrari, Timken, TowerJazz.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened +0.3%.
• APT.AU To be acquired by Square in all stock deal, implied value of A$39B.
• APT.AU Reports prelim FY21 (A$) Rev 925M v 920Me; Underlying sales 21.1B v 11.1B y/y.
• OSH.AU Santos makes raised proposal of 0.6275/new Santos shares (prior 0.589), implies A$4.29/Oil search shr (prior A$4.25).
• (AU) Queensland Coronavirus lockdown to be extended by additional 5 days.

Japan

Nikkei 225 opened +0.8%.

(JP) Japan Jul Final PMI Manufacturing: 53.0 v 52.2 prelim (6th consecutive month in expansion).

(JP) Japan govt officials said to escalate calls for a new relief package to deal with the prolonged pain from the pandemic – financial press (Friday after the close).

Korea

• Kospi opened +0.5%.
• (KR) South Korea Jul PMI Manufacturing: 53.0 v 53.9 prior (lowest since Dec 2020).
• (KR) South Korea sells 30-year bonds: Avg yield 1.950% v 2.225% prior.

China/Hong Kong

• Hang Seng opened +0.4%; Shanghai Composite opened -0.3%.
• (CN) CHINA JULY MANUFACTURING PMI (GOVT OFFICIAL): 50.4 V 50.8E (16th month of expansion, lowest since Feb 2020); Non-manufacturing PMI: 53.3 v 53.3e (15th straight month of expansion).
• (CN) CHINA JUL CAIXIN PMI MANUFACTURING: 50.3 V 51.0E (15th consecutive expansion, lowest since Apr 2020).
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY30B in 7-day reverse repos prior; Net CNY0B v Net inject CNY20B prior.
• 5.HK Reports Q2 Net $3.39B v $192M y/y, adj Pretax $5.56B v $2.6B y/y, Rev $12.52B v $13.2B y/y; to reduce office space this year.
• (CN) China, Beijing Haidain district Govt has set up a fund to buy SOE bonds, traded with a discount in secondary market – China PBOC backed news.
• (CN) China PBOC sets Yuan reference rate: 6.4660 v 6.4602 prior.
• (CN) China Education Ministry: Appointed Huai Jinpeng new party chief of ministry.
• (HK) Macau Jul Casino Rev (MOP): 8.4B v 6.5B prior; Y/Y: 528.1% v 540.5%e (35% of pre-COVID levels).
• (CN) China regulators fine 3 private tutoring companies: Xueda CNY1.2M; ABC CNY181K; 51talk CNY500K.
• (CN) China PBOC: to maintain a prudent, flexible and reasonable monetary policy in the second half of 2021; Will not take “flood like” measures (Friday after the close).

North America

• SQ Reports Q2 $0.66 adj v $0.32e, Rev $4.68B v $5.02Be.
• XPEV Reports Jul deliveries 8.04K units, +228% y/y.

Europe

• (UK) Aldi said to be raising wages for truck drivers as grocery labor shortages continue – UK press.
• (FR) France July passenger car sales 115.7K, -35% y/y – Plateforme Auto.
• DWNI.DE Entered into a new business combination to merge with Vonovia, Vonovia offers €53.00/shr cash.
• ALV.DE Issues reassessment of risk relating to Structured Alpha Funds, US DoJ investigation could materially impact future results, cannot determine financial amount, so no provision to be recognized at this time.

Levels as of 01:15ET

• Hang Seng +1.1%; Shanghai Composite +1.6%; Kospi +0.6%; Nikkei225 +1.9%; ASX 200 +1.4%.
• Equity Futures: S&P500 +0.5%; Nasdaq100 +0.5%, Dax +0.5%; FTSE100 +0.5%.
• EUR 1.1874-1.1859; JPY 109.78-109.61; AUD 0.7350-0.7329; NZD 0.6985-0.6953.
• Commodity Futures: Gold -0.2% at $1,813/oz; Crude Oil -0.9% at $73.27/brl; Copper +0.2% at $4.49/lb.