BoJ’s government debt holdings jumped to record high

    BoJ’s government debt holdings jumped to record high in the period of October to December 2017. By the end of December, holdings jumped 6.8% yoy to JPY 449T. That equaled to 41.1% of all Japanese government debt. Insurance and pensions holdings was a distant second, at JPY 21.6T only. Overseas holdings also rose to JPY 122T, a record high.

    Sterling rebounds as UK Supreme Court rules Johnson’s parliament suspension unlawful

      Sterling rebounds notably after UK’s Supreme Court ruled that Prime Minister Boris Johnson’s move to shut down the parliament was unlawful. And Supreme Court President Brenda Hale said both houses should return as soon as possible. The ruling gave MPs a boost to continue with their work to block no-deal Brexit on October 31.

      Hale said, “The decision to advise Her Majesty to prorogue parliament was unlawful because it had the effect of frustrating or preventing the ability of parliament to carry out its constitutional functions without reasonable justification.” “Parliament has not been prorogued. This is the unanimous judgment of all 11 justices,” she added. “It is for parliament, and in particular the speaker and the Lords speaker, to decide what to do next.”

      Speaker of the House of Commons John Bercow called for Parliament to reconvene. “As the embodiment of our Parliamentary democracy, the House of Commons must convene without delay,” Bercow said in a statement. ” To this end, I will now consult the party leaders as a matter of urgency.”

      Into US session: Sterling recovers, but upside capped by Brexit confusions

        Entering US session, New Zealand Dollar remains the strongest one for today. Sterling regains some ground yet it’s limited generally below yesterday’s high. Traders are looking at Brexit debate and amendment voting in the Commons, with increasing confusions. New alternatives emerge including the Brady Amendments as the Malthouse Compromise. But after all, one of the keys lies in whether there would be a united consensus within the UK. And another key is whether the EU would agree to re-open negotiations.

        As for today, Swiss Franc is the weakest one followed by Yen. European stocks rise broadly on return of risk appetite while DOW futures also point to higher open. Eyes will also be on US-China trade negotiations but so far there is little news.

        In Europe, currently:

        • FTSE is up 1.34%.
        • DAX is up 0.20%.
        • CAC is up 0.97%.
        • German 10-year yield is down -0.001 at 0.207.

        Earlier in Asia:

        • Nikkei rose 0.08%.
        • Hong Kong HSI dropped -0.16%.
        • China Shanghai SSE dropped -0.10%.
        • Singapore Strait Times dropped -0.37%.
        • Japan 10-year JGB yield rose 0.005 to 0.005.

        UK PM May seeks to complete the blueprint on future relationship with Juncker

          UK Prime Minister Theresa May will meet European Commission President Jean-Claude Juncker today, with focus on the future relationship. Specifically, May seeks to complete a 20-page political blueprint document on future relationship with Juncker And hopefully, the blueprint could help May win back the support in the parliament on the Brexit withdrawal agrement.

          May also told the parliament today that “we continue to negotiate on that future relationship to get the good deal that we believe is right for the United Kingdom.”

          While May could have survived the leadership challenge by the embarrassed Jacob Rees-Mogg, the chance of getting the Brexit deal through the parliament is still slim. Another breakthrough is deadly needed.

          Swiss GDP grew 7.2% qoq in Q3, still -2% below pre-crisis level

            Swiss GDP grew 7.2% qoq in Q3, above expectation of 5.8% qoq. Still, output was -2% below pre-crisis level, after contracting by a total of -8.6% in the first half of the year.

            Looking at some details, private consumption bounded significantly by 11.9% following gradual easing of coronavirus restrictions. Investment in equipment rose 8.8% and investment in construction rose 5.1%. Final domestic demand posted 8.9% growth.

            Full release here.

            Also from Swiss, SVME PMI rose to 55.2 in NOvember, up from 52.3, well above expectatio nof 51.5.

            NZ BNZ manufacturing dropped to 52.0, positive trend with ongoing volatility

              New Zealand BusinessNZ Performance of Manufacturing Index dropped back from 54.8 to 52.0 in September, comparing to July’s 53.5 and June’s 50.2. Looking at some details, production dropped from 54.5 to 52.0. Employment dropped from 53.6 to 51.9. New orders tumbled sharply from 59.7 to 48.4. Finished stocks rose from 52.0 to 55.0. Deliveries edged down from 55.0 to 54.5.

              BNZ Senior Economist, Doug Steel stated “the overall trend remains positive, but with ongoing volatility around it. On the positive side, the PMI’s 3-month moving average has continued to edge higher this month but, not so good, the 52.0 monthly reading is now back below the PMI’s longer-term norm”.

              Full release here.

              China foreign ministry: Trade friction is not a positive situation for US, China and the world

                China and the US are holding vice ministerial trade negotiation in Beijing today. Chinese Foreign Ministry spokesman Lu Kang said that “From the beginning we have believed that China-U.S. trade friction is not a positive situation for either country or the world economy. China has the good faith, on the basis of mutual respect and equality, to resolve the bilateral trade frictions.”

                Lu added, “As for whether the Chinese economy is good or not, I have already explained this. China’s development has ample tenacity and huge potential”. And, “We have firm confidence in the strong long-term fundamentals of the Chinese economy.”

                Trump said on Sunday that “I think China wants to get it resolved. Their economy’s not doing well… “I think that gives them a great incentive to negotiate.”

                Fed Daly: Talking about tapering later this year or early next year is where I’m at

                  San Francisco Fed President Mary Daly said in an FT interview that she remained “very optimistic and positive”. She added, ” it’s appropriate to start discussing dialling back the level of accommodation that we’re giving the economy on a regular basis

                  “The starting point for that is of course asset purchases,” she said. “Talking about potentially tapering those later this year or early next year is where I’m at.”

                  On the employment markets, she said “we’re really adding enough jobs to see that we’re making progress towards our full employment goal.” While “we’re not there yet… we’re chipping away at the hole that was dug by Covid.”

                  IMF Lagarde: China’s Belt and Road should only go where it’s needed and sustainable

                    IMF Managing Director Christine Lagarde called for greater balance in the next phase of China’s Belt and Road Initiative. She borrowed from a Chinese proverb “It is easy to start a venture — the more difficult challenge is what comes next.”

                    Lagarde warned that “history has taught us that, if not managed carefully, infrastructure investments can lead to a problematic increase in debt”. And, “to be fully successful, the Belt and Road should only go where it is needed. I would add today that it should only go where it is sustainable, in all aspects.”

                    Also she emphasized, BRI 2.0 can also benefit from “increased transparency, open procurement with competitive bidding, and better risk assessment in project selection.”

                    Full remarks here.

                    EU Dombrovskis: All member economies are set to growth this year and next

                      European Commission is scheduled to announce new economic forecasts tomorrow. Ahead of that Vice-President Valdis Dombrovskis said “all EU economies are set to grow this year and next,” citing the forecast results.

                      However, he also warned that “we see risks, especially external risks, on the rise”. And resilience of EU economies could be tested if the risks materialized.

                      He also emphasized “it’s high time to do reform while keeping public finances sound.”

                      Testimony of Fed Powell and Treasury Yellen live stream

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                        Nikkei down -900pts, but not out yet

                          The steep -909.75 pts, or -3.08% decline in Nikkei earlier today looks rather scary. Yet, overall outlook isn’t that bearish yet. The index is still holding in the triangle pattern from 30714.52 high. It’s kept inside medium term raising channel, holding well above 38.2% retracement of 22948.47 to 30714.52 at 27747.88. Hence, the long term up trend remains intact.

                          At this moment, deeper pull back cannot be ruled out based on global market development. We’d believe that 27747.88 fibonacci support is the key to level to defend. Medium term outlook will stay bullish as long as it holds. But a firm break there would argue that a medium term correction is already underway.

                          Australia goods exports rose to record 41.3B in Jun

                            Australia exports of goods rose 8% mom or AUD 2.9B to AUD 41.3B in June. Imports of goods rose 7% mom or AUD 2.1B to AUD 28.0B. Goods trade surplus widened to record AUD 13.3B, up slightly from AUD 12.5B. Exports to top five destinations rose, including China (8%), Japan (21%), South Korea (24%), Taiwan (9%), USA (7%).

                            Head of International Statistics at the ABS Andrew Tomadini said: “June 2021 recorded a monthly export value above $40 billion. Exports increased 8 per cent to $41.3 billion, with significant increases in metalliferous ores, coal, non-monetary gold, and gas”.

                            Full release here.

                            Eurozone industrial production dropped -0.2% mom in Sep, EU down -0.5% mom

                              Eurozone industrial production dropped -0.2% mom in September, better than expectation of -0.5% mom. Production of capital goods fell by -0.7%, intermediate goods by -0.2%, while production of energy remained stable, durable consumer goods rose by 0.5% and non-durable consumer goods by 1.0%.

                              EU industrial production dropped -0.5% mom. Among Member States for which data are available, the largest monthly decreases were registered in Denmark (-5.0%), Czechia (-3.2%) and Austria (-3.0%). The highest increases were observed in Estonia (+5.3%), Lithuania (+4.3%) and Belgium (+3.7%).

                              Full release here.

                              US Empires State Manufacturing index rose 12.9 pts to 4.3

                                US Empires State Manufacturing General Business Outlook improved to 4.3 in July, up 12.9 pts from -8.6. Looking at some details, new orders were little changed, and shipments increased. Unfilled orders and inventories continued to move lower, while delivery times were longer. The employment index remained negative, falling to its lowest level in nearly three years. Input price increases continued to moderate somewhat, while the pace of selling price increases remained modest. Indexes assessing the six-month outlook indicated that firms were fairly optimistic about future conditions.

                                Full release here.

                                WH Navarro urges patience on trade negotiations with China, 100% sure on USMCA passage

                                  White House economic adviser Peter Navarro urged investors to be patient regarding US-China trade negotiations. He emphasized that “if we’re going to get a great result, we really have to let the process take its course.” And, “in the meantime, we need to be patient with the China negotiations.”

                                  Navarro was also optimistic that he’s 100% sure on passing USMCA by the end of 2019, because “it’s so important for this country and I can’t imagine that Nancy Pelosi would not put this on the floor to at least have a vote.”

                                  UK PMI composite finalized at 59.2, re-acceleration of growth looks unlikely

                                    UK PMI Services was finalized at 59.6 in July, down from June’s 62.4. PMI Composite dropped to 59.2, down from 62.2. Markit said there was weakest rise in business activity since March, but strongest input cost inflation in 25 years of data collection. Staff shortages constrained business capacity and recruitment.

                                    Tim Moore, Economics Director at IHS Markit: “UK economy has slowed… More businesses are experiencing growth constraints from supply shortages of labour and materials, while on the demand side we’ve already seen the peak phase of pent up consumer spending… Any re-acceleration of growth in August looks unlikely.. as new orders increased at a much-reduced pace at the start of the third quarter… business expectations softened again.

                                    Full release here.

                                    German ZEW dropped sharply to 40.4, increasing risks for the economy

                                      Germany ZEW Economic Sentiment dropped sharply from 63.3 to 40.4 in August, well below expectation of 57.0. Germany Current Situation rose from 21.9 to 29.3, below expectation of 30.0. Eurozone ZEW Economic Sentiment dropped sharply from 61.2 to 42.7, well below expectation of 72.0. Eurozone Current Situation rose 8.6 pts to 14.6.

                                      “Expectations have declined for the third time in a row. This points to increasing risks for the German economy, such as from a possible fourth COVID-19 wave starting in autumn or a slowdown in growth in China. The clear improvement in the assessment of the economic situation, which has been ongoing for months, shows that expectations are also weakening due to the higher growth already achieved,” comments ZEW President Professor Achim Wambach on current expectations.

                                      Full release here.

                                      China’s industrial output Surges, retail sales and investment miss expectations

                                        China’s economic data for November 2023 presented a mixed picture, with industrial output exceeding expectations while retail sales and fixed asset investment fell short.

                                        Industrial output saw a significant increase of 6.6% yoy, surpassing the expected 5.6% yoy and marking the strongest expansion since February 2022.

                                        However, retail sales, rose by 10.1% yoy, which was below the anticipated 12.5%. It’s important to note that this increase was influenced by a low base effect from the previous year, when China’s stringent coronavirus pandemic control measures significantly impacted consumer activities.

                                        Fixed asset investment, a key driver of economic growth, increased by 2.9% ytd yoy, slightly missing the expected 3.0%.

                                        National Bureau of Statistics of China commented on the overall economic situation, stating: “There are still a lot of external instabilities and uncertainties, and the domestic demand appears insufficient.” The NBS emphasized the need to solidify the foundation of the economy’s recovery.

                                        NASDAQ lost 2% from new record, DOW lost momentum ahead of key near term projection

                                          NASDAQ suffered a steep pull back and ended down -1.94% at 12338.95 overnight, after hitting new record high at 12607.14. Stalled stimulus talks in the US was a factor putting investors on guard. The Congress has less than tw0 weeks to try and reach a comprise before budget deadline. Additionally, the US had the worst days of coronavirus pandemic so far, with daily deaths hitting 3000 for the first time.

                                          Technically, there is no immediate threat to the up trend of NASDAQ so far. As long as 12027.16 support holds, the record run is still in favor to continue. Next target is 38.2% projection of 6631.42 to 12074.06 from 10822.57 at 12901.65.

                                          Meanwhile, DOW is already just inch away from equivalent target, 61.8% projection of 18213.65 to 29199.35 from 26143.77 at 30340.30. Upside momentum in DOW has been clearly diminishing as seen in daily MACD. We’d continue to view this projection level as a major near term test for DOW and a more noticeable pull back could be around the corner. Nevertheless, near term trend won’t be under much threat as long as 29231.20 support holds.