Thu, Dec 01, 2022 @ 13:23 GMT
HomeContributorsFundamental AnalysisGeopolitical Worries Over the Korean Peninsula also Contributed to a Firmer Yen

Geopolitical Worries Over the Korean Peninsula also Contributed to a Firmer Yen


Notes/Observations

  • China economic data offered some positive surprises as Annual Q1 GDP pace, Mar Retail Sales and Industrial Production all beat expectations
  • Situation on the Korean peninsula remained tense even though there was no activity at the nuclear test site over the weekend; North Korea said to have failed in a ballistic missile launch early on Sunday
  • Softer US CPI and Retail Sales data has market participants rethink the probability of another Fed rate hike in June

Overnight:

Asia:

  • China Q1 GDP YoY: 6.9% v 6.8%e (fastest growth since the third quarter of 2015)
  • China Mar Industrial ProductionYoY: 7.6% v 6.3%e (highest since Dec 2014)
  • China Mar Retail Sales YoY: 10.9% v 9.7%e (3-month high)
  • (JP) Japan PM Abe: Need to pressure North Korea for a sincere dialogue; Working for China to play a larger role in North Korea
  • US carrier USS Vinson to reach South Korea east coast on Apr 25th
  • (JP) Japan to seeking to revive Trans-Pacific Partnership (TPP) without the US

Europe:

  • Turkey passed its referendum on changing the constitution to replace its parliamentary system with the executive presidency with 51.5% v 48.7%; opposition to challenge result
  • EU’s Piri: Will suspend EU accession talks with Turkey if referendum package not changed
  • France presidential candidate Mélenchon (far left, communist) is rapidly rising in the polls

Americas:

  • US Mar CPI (released Friday) saw its 1st MoM negative reading since Feb 2016 and by its largest amount since Jan 2010
  • US Mar Advance Retail Sales (released Friday) registered its 2nd straight decline (M/M: -0.2% v -0.2%e

Energy:

  • (US) Weekly Baker Hughes US Rig Count: 847 v 839 w/w (+1%)(13th straight weekly rise)

Economic Data

  • (IN) India Mar Wholesale Prices (WPI) Y/Y: 5.7% v 6.0%e
  • (TR) Turkey Jan Unemployment Rate: 13.0% v 13.0%e (highest level since Feb 2010)
  • (TR) Turkey Mar Central Gov’t Budget Balance (TRY): -19.5B v -6.8B prior

**Fixed Income Issuance:

  • None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

  • European markets closed for Easter Monday holiday

Speakers

  • Turkey Dep PM Simsek reiterated view that double digit inflation is unacceptable and that it will fall to single digits
  • Various global leaders react to Turkey’s “Yes’ outcome for its Constitutional Referendum
  • German Chancellor Merkel called for respectful dialogue with Turkey
  • BOJ Gov Kuroda reiterated that ist needed to continue with its easy monetary policy because consumer prices were still distant from its 2 percent inflation target. Domestic economy had continued its moderate recovery trend; exports and production are recovering
  • BOJ Dep Gov Nakaso: BOJ should explain exit strategy as they near 2% inflation target. Bank was naturally holding internal discussions on its exit strategy from monetary easing, including the methods and impact on the bank’s profitability.
  • South Korea acting President Hwang stated that it had agreed with US to tighten global network of pressure on North Korea – comments alongside US VP Pence
  • US VP Pence stated US was 100% commitment to South Korea and would meet any attack
  • Saudi Oil Min Al-Falih noted that it aimed to double gas output by 2030 and planned to produce energy from nuclear sources

Currencies

  • The USD was on soft footing after Friday’s release of Mar CPI and retail sales data underwhelmed and had participants rethink the probability of another Fed rate hike in June.
  • EUR/USD was higher by 0.2% at 1.0630 area in quiet trading with European markets closed for Easter Monday holiday.
  • USD/JPY was softer by 0.3% and hovered near 5-month lows. Geopolitical worries over the Korean Peninsula also contributed to a firmer yen on safe-haven flows.

Looking Ahead

  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 07:00 (BR) Brazil Apr FGV Inflation IGP-10 M/M: -0.6%e v 0.1% prior
  • 07:00 (BR) Brazil Central Bank (BCB) Apr COPOM Minutes
  • 07:25 (BR) Brazil Central Bank Weekly Economists Survey
  • 07:30 (BR) Brazil Feb Economic Activity Index (Monthly GDP) M/M: +0.5%e v -0.3% prior; Y/Y: -2.4%e v -0.8% prior
  • 07:30 (TR) Turkey TCMB Turkey Survey of Expectations
  • 08:30 (US) Apr Empire Manufacturing: 15.0e v 16.4 prior
  • 10:00 (US) Apr NAHB Housing Market Index: 70e v 71 prior
  • 11:30 (US) Treasury to sell 3-Month and 6-month Bills
  • 15:00 (CO) Colombia Feb Industrial Production Y/Y: -1.3%e v -0.2% prior
  • 15:00 (CO) Colombia Feb Retail Sales Y/Y: -1.6%e v -2.2% prior
  • 16:00 (US) Feb Total Net TIC Flows: No est v $110.4B prior; Net Long-term TIC Flows: No est v $6.3B prior
  • 16:00 (US) Weekly Crop Progress Report
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