Big Aussie Banks Now All Expect RBA To Ease In Oct

Sep 20 19, 06:30 GMT

General Trend:

Aussie consumer stocks outperform amid near-term rate cut expectations
Japanese banks rise as BoJ cut longer-term bond purchases at daily operation, trade-sensitive Marine/Transportation index also rises
There has been renewed speculation about possible interim trade deal between the US and China, low-level trade talks due to conclude later today
Offshore yuan (CNH) rises, PBoC to sell bills in Hong Kong on Sept 26th
China sells 50-year bonds at higher than expected yield
Kiwi declines ahead of next week’s RBNZ official cash rate (OCR) decision (Wed Sept 25th)
Australia PM Morrison expected to meet with US President Trump in Washington D.C on Friday

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.5%
(AU) NAB: Now expects RBA to cut rates in Oct and Dec 2019 [vs rate cuts in Nov 2019 and Feb 2020 prior]; Big Aussie banks are now all calling for Oct 2019 rate cut
(AU) Citi sees RBA cutting rates in Oct (prior Nov)
(US) US senior administration official: Australia and US to announce a plan to boost supply of rare earth metals tomorrow – press

China/Hong Kong

Shanghai Composite opened +0.2%, Hang Seng +0.2%
(CN) Some analysts see risk that Q3 GDP growth in China could decline below 6% amid trade war [China’s official government GDP growth forecast for 2019 is 6.0-6.5%] – US financial press
(CN) China PBoC sets 1-year loan prime rate (LPR) at 4.20% v 4.25% prior (4.20%e); sets 5-year LPR at 4.85% v 4.85% prior (4.80%e)
(US) White House advisor Kudlow: See softening in the mood as US and China officials meet this week
(CN) China Centre for International Economic Exchanges’ Chief Economist Wenling: China, US could be close to agreeing interim trade war deal – SCMP
(CN) Chinese trade negotiators reportedly intend to visit US farm country after talks wrap up in Washington this week – CNBC
(CN) US Ag Sec Perdue: doesn’t know about China plans to buy crops next week – press
(CN) China Pres Xi urges nations to cooperate in the manufacturing sector
(CN) China PBOC sets Yuan Reference Rate: 7.0730 v 7.0732 prior
(CN) China PBoC Open Market Operation (OMO): Injects CNY120B in 7-day and 14-day reverse repos v CNY170B prior in 7-day and 14-day; Net injection CNY120B v drain CNY170B prior
(CN) China Environment Min: Cities that met last year’s targets will be exempt from this year’s targets; will set higher targets for cities that had higher air quality concentrations higher than PM2.5 last Fall and Winter

Japan

Nikkei 225 opened +0.4%
(JP) JAPAN AUG NATIONAL CPI Y/Y: 0.3% V 0.3%E; CPI EX-FRESH FOOD (CORE) Y/Y: 0.5% V 0.5%E (slowest rise since July 2017)
(JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Cuts 5-10, 10-25, >25 year JGB purchases
(JP) Bank of Japan (BOJ) to hold meeting regarding market operations on Oct 18

Korea

Kospi opened flat
(KR) South Korea Pres Moon approval rating at lowest since the start of his term – US Financial Press
(KR) South Korea Fin Min: To pursue FTA agreements with Indonesia, Malaysia, and Philippines by end of 2019
(KR) North Korea may be preparing a submarine capable of launching ballistic missiles – Japan Press

Other Asia

(IN) India Fin Min is said likely to announce new efforts to boost the economy on Friday; may also review import tariffs on some items – press
(IN) India Fin Min Sitharaman: proposes to cut corporate tax rates for domestic manufacturing companies
(IN) India Central Bank (RBI) Gov Das: negative rates posing threat to financial stability; inflation below target and price stability give us room to cut
(PH) Philippines Central Bank Chief Diokno: Sept CPI estimate at 1.4%; CPI to be within target even if oil is $90/barrel; Reiterates looking at 100bps RRR to come soon; very comfortable with PHP level; Central Bank has not intervened in FX market for a ‘long, long time’

North America

(US) New York Fed to conduct a fourth day of repo operations tomorrow morning (Friday)
(US) SEMI: Aug North America Manufacture Billings: $2B, -1.4% m/m, -10.5% y/y
SMTC Corp [SMTX]: Plans to exit China market on tariff and macroeconomic uncertainty; cuts FY19 guidance

Europe

(EU) Incoming ECB President Lagarde: Central Bankers must be ‘predictable’ and focus on stability; global growth fragile and under threat
(SA) Saudi-led coalition launches military operation north of Hodeidah in Yemen against ‘military targets’ – Local media
(DE) German Fin Min Monthly Report: Global slowdown is weighing on Germany; started Q3 on weaker footing; sees continued contraction in industrial production

Levels as of 1:20 ET

Nikkei 225, +0.2%, ASX 200 +0.4%, Hang Seng +0.1%; Shanghai Composite +0.2%; Kospi +0.4%
Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 -1.1%
EUR 1.1061-1.1039 ; JPY 108.08-107.89 ; AUD 0.6809-0.6778 ;NZD 0.6311-0.6284
Gold +0.3% at $1,511/oz; Crude Oil +0.9% at $58.70/brl; Copper +0.4% at $2.618/lb