Aussie Bonds Steady Ahead Of Upcoming Labor Data

Jul 17 19, 05:50 GMT

General Trend:

BHP rises after Q4 iron ore production beat ests, guided FY20 ore production higher y/y
Kospi index underperforms, chipmakers decline amid lingering dispute between South Korea and Japan; Bank of Korea (BOK) due to meet on Thursday
Chinese equities trade flat during morning session, gains in property and IT shares offset by banks
Chinese iron ore prices decline from record high, shipments from Australia’s Port Hedland to China rose m/m in June
Japanese equities weighed down by declines in Nikkei-weighted Softbank
US and Japan said to consider ‘small’ trade agreement (financial press)
Singapore’s export decline worsens in June; Electronics exports -31.9% y/y, shipments to Europe -22.1% y/y
Australia June labor market data due on Thursday, Aussie bonds trade generally flat ahead of the data
US companies expected to report earnings during the NY morning include Bank of America, Bank of NY and PNC.

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened flat
BHP.AU Reports Q4 Waio Iron Ore Production: 71.0Mt v 72.0Mt y/y; Attributable iron ore production: 62.6Mt v 62.0Me v 63.6Mt y/y
AXP.AU To reduce employees from 35 to 8; Plan to Cease Operations
(AU) Australia Port Hedland Jun Iron Ore exports 48.9Mt v 47.2Mt y/y; Exports to China 42Mt v 37.8M m/m
(AU) Australia sells A$1.6B v A$1.6B indicated in 1.50% June 2031 bonds, avg yield 1.4845%, bid to cover 1.93x

Japan

Nikkei 225 opened -0.3%
(KR) South Korea has rejected Japan’s arbitration process offer, South Korea Finance Min urges Japan to join negotiations – Korean press
(JP) US and Japan said to consider possible ‘small’ trade agreement by Sept – financial press
2264.JP Denies report that a merger with Morinaga UK is being considering
(JP) Fitch affirms Japan sovereign rating at A; Outlook stable
(JP) Japan Deputy Chief Cabinet Sec Nishimura: Strongly urges South Korea to take appropriate steps over wartime labor issue; Japan will firmly respond, considering various options
2678.JP Said to have asked Yahoo Japan to end tie-up agreement, in talks with other companies/funds on partnerships – Japanese Press (later confirms this report)
(JP) Japan MoF sells ¥900B v ¥900B indicated in 0.3% (prior 0.40%) 20-year bonds; avg yield 0.2490% v 0.2080% prior; bid to cover 4.89x v 4.08x prior

Korea

Kospi opened -0.6%
005930.KR Samsung is reportedly testing supplies of hydrogen fluoride etching gas from companies outside of Japan including China and Taiwan – Nikkei
(KR) South Korea raises extra budget sought to deal with Japan curbs to KRW760B (prior KRW300B) – Korean press
(KR) South Korea Fin Min Hong: Will announce plans soon to reduce dependence on Japan’s industries
(KR) South Korea PM has hinted there may be an envoy sent to Japan over dispute – Korean press
(KR) South Korea and US preparing for joint military exercises despite warnings from North Korea – Yonhap

China/Hong Kong

Hang Seng opened -0.5%; Shanghai Composite opened -0.2%
(CN) China sovereign wealth fund (CIC) and Hana Financial Group to establish a KRW1.0T industrial cooperation fund – South Korean Press
(CN) China PBOC sets yuan reference rate: 6.8827 v 6.8710 prior
(CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 7-day reverse repos v injects CNY160B prior; Net CNY100B injected v CNY160B injected prior (2nd consecutive injection)
(CN) China Agriculture Ministry: Pork prices may continue to rise
(CN) Growth in Shandong, China’s third largest provincial economy, saw growth slow in Q1 due to cuts in inefficient industrial capacity – SCMP
(CN) China newly appointed to the US trade negotiations team, Zhong Shan, is seen as very hawkish and an indication that China is in no hurry to wrap up trade talks and may be waiting to see outcome of 2020 election results – SCMP
1929.HK Reports Q1 SSS -14%, impacted by tough base comparison year, cautious consumer sentiment and uncertain macro environment

Other Asia

(SG) SINGAPORE JUN NON-OIL DOMESTIC EXPORTS M/M: -7.6% V -3.5%E; Y/Y: -17.3% V -9.6%E; Electronic Exports Y/Y: -31.9% v -22.0%e; Exports to US +1.5% y/y; Europe -22.1% y/y; China -15.8% y/y
(TH) Thailand Central Bank: Real interest rates low, cutting policy rate may not have much impact

North America

(US) Fed’s Daly (dove, non-voter): Not leaning one way or the other on July rate decision, too early to tell if the economy needs additional stimulus to get to above trend growth
(US) US House Leader Pelosi: To speak with US Treasury Sec Mnuchin again on Wed regarding debt ceiling; debt ceiling-related announcement will come ‘soon’
(US) MAY NET LONG-TERM TIC FLOWS: $3.5B V $46.9B PRIOR; TOTAL NET TIC FLOWS: $32.9B V -$9.0B PRIOR; China Total holding of US Treasuries: $1.110T v $1.113T prior (falls for third month in a row)
(US) Pres Trump: could impose tariffs on another $325B of China goods if we want – Cabinet meeting
(US) Fed Evans (dove, voter): given the nervousness I think that a little more accommodation would be appropriate; we should only do what is necessary, but at the moment it seems like a little more is necessary – CNBC interview
(US) Fed’s Kaplan (dove, non-voter): rate cut could be warranted based on bond market signals; cut should be limited and restrained – press interview

Europe

(EU) Germany’s Ursula Von Der Leyen confirmed as EU Commission President with 383 votes (needed 374 votes to be confirmed)
(UK) BOE’s Cunliffe: UK is not heading into a recession
(UK) UK prospective PM Johnson could send MPs home in October if he wins PM role to stop them hindering a possible No deal Brexit – sky

Levels as of 1:20 ET

Nikkei 225, -0.3%, ASX 200 +0.4%, Hang Seng -0.4%; Shanghai Composite flat; Kospi -1.1%
Equity Futures: S&P500 +0.1%; Nasdaq100 flat, Dax flat; FTSE100 -0.2%
EUR 1.1216-1.1206 ; JPY 108.32-108.11 ; AUD 0.7021-0.7001 ;NZD 0.6716-0.6697
Gold -0.4% at $1,406/oz; Crude Oil flat at $57.62/brl; Copper +0.3 % at $2.702/lb