General Trend:

  • Overall markets are trading lower, tracking late US session, absorbing Fed rate hike and increased expectations for future policy moves
  • USD lower in the session, after several days of strength; bond yields also tracking slightly lower
  • Trade tensions remain front and center as talk circulates that Trump will meet with advisers tomorrow in order to decided on China tariffs
  • Australia employment changed registered lower than expected; though unemployment rate fell 0.1%; A$ weakened 0.2% on the data
  • China data came in softer than expected, though NBS affirmed 2018 GDP of 6.5%. Also noted Cannot rule out possibility that China’s firms rush to export in anticipation of trade war with US
  • KRW opened for trade much lower against the dollar
  • BOJ reduced purchases of 3-5 year JGBs

Headlines/Economic Data


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  • Nikkei 225 opened -0.5%
  • Subaru, 7270.JP May delay release report on improper testing – Nikkei
  • (JP) Japan Investors Net Buying of Foreign Bonds: -¥488.5B v -¥1.66T prior week; Foreign Net Buying of Japan Stocks: -¥108.5B v -¥527.8B prior week
  • (JP) Japan PM Abe considering summit with N. Korea Kim Aug/Sept – Japan press
  • (JP) BoJ announcement related to daily bond buying operation: cuts 3-5-yr buying by ¥30B


  • Kospi opened -0.7%
  • (KR) South Korea analysts trade between the Koreas could be profitable but will require large amounts of investment – Korean press
  • (KR) President Trump: Would love to have troops out of South Korea but its not an option right now; will talk to South Korea about them paying the US for troop presence
  • (KR) North Korea Kim said to have promised to destroy Tongchang-Ri ICBM site – Korean press
  • (KR) South Korea Vice Fin Min Ko: Do not expect large capital outflows due to rate gap with Fed; expects limited short term market impact from Fed
  • (KR) Bank of Korea (BOK) Gov Lee: Today’s Fed move will have limited impact on markets
  • (KR) Sec of State Pompeo: suspending war games with South Korea requires productive talks with the North; wants to see major disarmament from North Korea in two years
  • (KR) US Sec State Pompeo: South Korea President Moon said that South Korea will cooperate to implement agreement; Moon helped set foundation for Trump/Kim meeting

China/Hong Kong

  • Hang Seng opened -0.1%, Shanghai Composite -0.4%
  • (CN) Reportedly Pres Trump to meet with trade advisors tomorrow to decide whether to go ahead with China tariffs – press
  • (CN) China PBOC Adviser: Cut to RRR is still necessary; Expect 2018 M2 growth to be higher y/y – China press
  • (HK) Hong Kong Monetary Authority (HKMA) raises base rate 25bps to 2.25% (in line with Fed)
  • (HK) HKMA Chief Chan: HK$ rates will follow US rate normalization; HK banks will eventually raise prime rates
  • (CN) China PBoC Open Market Operation (OMO): Injects combined CNY150B in 7-day, 14-day and 28-day reverse repos v CNY130B prior: Net injects CNY70B v injects CNY70B prior;Leaves rates unchanged
  • (CN) China PBoC sets yuan reference rate at 6.3962 v 6.4156 prior
  • (CN) China PBOC Gov Yi Gang: China’s economy is shifting to high quality development era; to use RRR and relending tools to support SMEs – speaking at forum
  • (CN) China May Foreign Direct Investment (FDI) YTD y/y: 1.3% v 0.1% prior
  • (CN) CHINA MAY RETAIL SALES Y/Y: 8.5% V 9.6%E; YTD Y/Y: 9.5% V 9.7%E
  • (CN) China NBS Spokesperson: Confident of reaching 6.5% GDP in 2018. economy has continued with steady growth in H2
  • (CN) China Banking and Insurance Regulatory Commission (CBIRC) Chairman Shuqing: Overall default ratio is very low compared to other countries; to appropriately deal with bond defaults
  • (CN) China MOFCOM: China will push for a change in its exports pursuing size and speed to quality and efficiency
  • (CN) China Securities Regulatory Commission (CSRC): Overseas investors have an obvious tendency to hold yuan assets, explains yuan strength against backdrop of weakness in some other currencies
  • ZTE, 763.HK White House said to be working to prevent Congress from re-imposing penalties – US press

Australia/New Zealand

  • ASX 200 opened 0.0%
  • FCG.NZ NZ Commerce Commission believes method for calculating estimate of risk in the cost of financing milk processing operations is too low; creating a higher calculated milk price than competitors – NZ press
  • Atlas Iron, [-19%], AGO.AU Gives update on North West Infrastructure: Got notice from WA Govt saying NWI does not have priority right to develop Stanley Point berths 3 &4 in Port Hedland
  • (AU) Australia Jun Consumer Inflation Expectation: 4.2% v 3.7% prior
  • (NZ) New Zealand sells NZ$200M v NZ$200M indicated in 2025 bonds; avg yield 2.6042%; bid to cover 2.13x

North America

  • (US) FOMC UPDATED ECONOMIC FORECAST FOR JUNE MEETING (V. MAR): now forecasts 4 rate hikes in 2018; Raises Median forecast for end-2018 rate 2.375% (prior 2.125%)
  • FOXA Comcast makes all-cash $35/shr proposal to acquire Twenty-First Century Fox after spinoff of “New Fox”, values 21CF at $65B
  • (US) FCC Chairman Pai said to be planning to vote on limits of TV station ownership at July 12th meeting; not clear on how he will propose changing it


  • (UK) May RICS House Price Balance: -3% v -5%e

Levels as of 01:30ET

  • Hang Seng -0.9%; Shanghai Composite -0.3%; Kospi -1.3%; Nikkei225 -0.7%; ASX 200 -0.2%
  • Equity Futures: S&P500 +0.0%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.2%
  • EUR 1.1788-1.1810; JPY 110.09-110.38; AUD 0.7553-0.7582;NZD 0.7016-0.7036
  • Aug Gold +0.2% at $1,303/oz; Jul Crude Oil -0.0% at $66.62/brl; Jul Copper -0.5% at $3.24/lb
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