General Trend:
- Small-caps and IT shares decline in Shanghai, PBOC continues to leave money market rates unchanged
- Chinese banks outperform amid report the gov’t will require banks with excess NPL coverage ratios to pay dividends
- Japanese steel makers rise after US/Japan partial trade deal was announced; Automakers also rise despite uncertainty regarding tariffs
- Japanese financials trade higher after recent rise in Treasury yields, BoJ cut daily purchases of 5-10 yr JGBs for the 4th time in 6 weeks
- At his Sept 19th post rate decision press conference BoJ Gov Kuroda said will make necessary adjustments in market operations to ensure yield curve is steep enough
- Softbank pares gain, said to be in talks to increase investment pledge related to Wework
- Declines in Telecom, Financial and Resources firms weigh on Australian equities
- US Treasury Futures rise after losses on Wednesday, Fed repo operations in focus
- NZD rises, RBNZ Gov does not signal near-term rate cut
- China Commerce Ministry (MOFCOM) sometimes holds its weekly press conference on Thursdays (generally comes during early European morning)
- Philippines Central Bank is expected to cut rates later today
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.1%
- FCG.NZ Reports FY19 (N$) Net -605M v -196M y/y, Rev 20.1B v 20.4B y/y; announces new strategy to focus on dairy ingredients and foodservice
- (AU) Australia Parliament Medium Term Projections: Sees underlying cash balance at a surplus of 1.6% of GDP by 2029/30
- (AU) Australia Aug Job Vacancies: -1.9% v -1.1% prior
- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: In a sound position to seize the opportunities and manage the challenges associated with global low interest rate environment; NZ neutral interest rate has declined to 3% as of today
Japan
- Nikkei 225 opened +0.6%
- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: cuts 5-10 year JGB purchases for the 4th time in 6-weeks
- (JP) Japan Foreign Min Motegi: Rice has been completely excluded from US Japan trade deal; US agreed to remove tariffs on Japanese cars
- (JP) Pres Trump: I am announcing the first stage of a new Japan trade deal; Japan to open market to $70B in US agricultural products
- (JP) Japan PM Abe: US Japan trade deal will contribute to the global economy, taking ample measures to deal with effects of tax hike
- 7181.JP Planning to restart sales in January – Japan press
- WE Softbank in talks to increase $1.5B investment – Financial Press
- 6902.JP Will expand semiconductor sensor production at Hokkaido factory, preparing for increased sensor demand as vehicle electrification and safety systems become more complex and proliferate
Korea
- Kospi opened +0.4%
- (KR) South Korea Sept Consumer Confidence: 96.9 v 92.5 prior (1st increase in 4 months)
- 009830.KR Cancels plans to offer ¥20B in bonds – Korean press
- (KR) Bank of Korea (BOK): As earnings decline corporate credit risks will grow; firms generally remain financially sound – statement on financial stability
China/Hong Kong
- Hang Seng opened +0.5%; Shanghai Composite opened +0.3%
- (US) Sec State Pompeo: US imposed new sanctions today on Chinese shipping companies for knowingly lifting oil cargoes from Iran
- (CN) China Ministry of Industry and Information Technology (MIIT): Illegal new capacity risks are increasing in steel sectors; to actively encourage merger and restructuring in steel sector
- (CN) China PBoC Open Market Operation (OMO): Injects CNY20B in 14-day reverse repos v CNY20B prior in 14-day; Net drains CNY100B v CNY10B drains prior
- (CN) China PBOC sets Yuan Reference Rate: 7.0729 v 7.0724 prior
- 678.HK Planning to sell $900M cruise ship
- (CN) China Ministry of Agriculture and Rural Affairs official: Weekly pork prices increases have been moderating – US financial press
- (CN) Senior White House official: Believe China is absolutely committed to cooperating on curbing illicit fentanyl
Other
- OPEC Sec Gen Barkindo: Over the past few months global oil market has been struck by uncertainty
North America
- (US) NY Fed to increase size of its Thursday term repo operation to $60B (from $30.0B) and overnight repo to $100B (from $75.0B) – press
- (US) Fed’s Kaplan (dove, non-voter): Odds of recession within the next 12 months are relatively low; could have solid growth regardless of China trade deal; Fed is monitoring slowing growth and weak manufacturing; US can ‘skate through’ a period of ‘fragile’ global growth; US and UK need a hard Brexit like ‘a hole in the head’
- (US) According to CNN, the Trump whistleblower report has been declassified and will be released Thursday
- (US) Pres Trump: “I fully support transparency on so-called whistleblower information but also insist on transparency from Joe Biden and his son Hunter”
- (US) House Intelligence Committee’s Conway (R): After reviewing whistleblower complaint do not see anything that bothers me or anything that would compromise Trump if declassified
- (US) Rep Quigley (D-IL, Intel Committee): whistleblower complaint ‘reinforces our concerns’ – CNN
- FB AG Barr seeking DoJ antitrust probe into Facebook, which would put it under 2 separate simultaneous federal investigations – US press
Europe
- (DE) ECB’s Lautenschlaeger (Germany) resigns from ECB board, confirms term will end Oct 31st
- (EU) Reportedly the EU is planning a $4B in retaliatory tariffs, potentially escalating trade war with the US – press
- (UK) PM Johnson: will not request a Brexit extension even if conditions of the Benn bill are met – press
- ERICB.SE Guides Q3 provision related to investigations in the US; see costs for resolving investigations by US authorities at SEK12B
- (UK) UK Aug Auto Manufacturing, +3.3% y/y (1st increase in 15 months) – SMMT
Levels as of 1:20 ET
- Nikkei 225, +0.2%, ASX 200 -0.5%, Hang Seng +0.1%; Shanghai Composite -0.5%; Kospi -0.3%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.4%, Dax -0.3%; FTSE100 -0.1%
- EUR 1.966-1.940 ; JPY 107.80-107.60 ; AUD 0.6761-0.6746 ;NZD 0.6309-0.6266
- Gold +0.2% at $1,515/oz; Crude Oil +0.1% at $56.56/brl; Copper flat at $2.612/lb
