General Trend:
- Questions have been raised about certain coronavirus treatments, Fujifilm [4901.JP] and Moderna [MRNA] both decline
- Early decliners in Shanghai include property and financial companies
- Large Japanese banks comment on CLO exposures
- BoJ to hold unscheduled meeting on May 22nd (Friday) to discuss new measure to provide funds to financial institutions [Reminder from May 12th: BoJ Gov Kuroda said he wanted to decide the details of the lending program ‘soon’]
- Japan March Core Machine orders supported by big ticket items (government)
- South Korea to create SPV which will be able to purchase risky corporate debt
- South Korean think tank calls for near zero interest rates [vs 0.75% currently]
- New South Wales (largest state in Australia) to partially ease domestic travel restrictions on June 1st
- RBA Gov Lowe is due to appear on an Australian financial services institute panel on Thursday (May 21st at 2:30 GMT)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.3%
- (AU) AUSTRALIA APR PRELIMINARY RETAIL SALES M/M: -17.9% V +8.5% PRIOR (largest decline on record)
- (AU) China said to be considering stricter quality checks, delayed Customs clearances, anti-dumping probes or state media encouraged consumer boycotts on Australia made wine, seafood, oats, fruit and dairy products as backlash for coronavirus investigation – Aussie press
- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Reiterates goal is to keep yield curve low or flat; Prepared to go negative, but “a lot later”; Expects retail interest rates to continue falling
- (AU) Reserve Bank of Australia (RBA) adds A$891M to banking system through repos vs A$400M prior- (AU) Australia sells A$2.0B v A$2.0B indicated in 1.25% May 2032 bonds, avg yield 1.0672%, bid to cover 3.71x
- (AU) China Coal Transport and Distribution Association (CCTD): China may tighten Australia Coal imports over tensions between Australia and China
Japan
- Nikkei 225 opened +0.1%
- (JP) JAPAN MAR CORE MACHINE ORDERS M/M: -0.4% V -6.7%E; Y/Y: -0.7% V -8.6%E
- 4901.JP (JP) Japan Chief Cabinet Suga: Avigan approval will be processed in May if Avigan is safe and effective
- 4901.JP Avigan is reportedly not showing apparent efficacy as coronavirus treatment – Japanese press
- 8729.JP Sony to purchase remaining 34.96% stake it doesn’t already own for ¥2,600/shr in ¥400B deal (yesterday after the close)
- (JP) BOJ to hold an unscheduled meeting on Friday, May 22nd (announced yesterday after the close)
- (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.40% 20-yr bonds; avg yield 0.332% v 0.366% prior; bid to cover 4.25x v 5.10x prior
Korea
- Kospi opened -0.4%
- (KR) South Korea to create KRW10T fund to buy corporate bonds; Bank of Korea (BOK) to lend KRW8.0T to special purpose vehicle (SPV) to buy corporate bonds and commercial paper; will expand program to KRW20T if needed
- (KR) South Korea Fin Min Hong: South Korea needs to aggressively create jobs, measures to create jobs will be central to bi-annual economic policy plan due early June
- (KR) Bank of Korea (BOK) sells 2-year monetary stabilization bonds (MSB), avg yield 0.82% v 1.725% prior
- (KR) South Korea think Tank, KDI cuts 2020 GDP at 0.2% (prior 2.3%) due to pandemic (forecast would be lowest GDP since 1998); think BOK needs to cut interest rates to near 0% (currently 0.75%)
China/Hong Kong
- Hang Seng opened +0.3%; Shanghai Composite opened -0.1%
- (CN) CHINA LEAVES 1-YEAR LOAN PRIME RATE (LPR) AT 3.85% V 3.85% PRIOR (3.85%E); SETS 5-YEAR LPR AT 4.65% V 4.65% PRIOR (4.65%E)
- (CN) US Senate expected to vote on Holding Foreign Companies Accountable act; which could delist China companies from the US stock exchanges, law would require Chinese companies to establish they are not owned or controlled by a foreign govt, submit to audit by US oversight board in order to raise money in the US markets – US press
- 992.HK Reports Q4 Net $43M v $118M y/y, Rev $10.6B v $11.7B y/y
- (CN) China National Health Commission Coronavirus Update for May 19th: 5 additional cases (1 imported v 3 prior) v 6 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases: 16 v 17 prior
- (CN) China PBOC sets Yuan reference rate: 7.0956 v 7.0912 prior
- (CN) China Banking and Insurance Regulator (CBIRC) tightens rules related to credit insurance and guarantee insurance contracts; raised the requirements related to insurers solvency margin ratios and risk control practices – Chinese press
- (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 32nd consecutive session; Net CNY0B v CNY0B prior
- (CN) China Minister of Industry and Information Technology (MIIT) Min Miao Wei: China industrial recovery in H2 will be stronger than in H1; 40% of surveyed foreign companies plan to increase investment in China
- (CN) China Communist Party and State Council renew their 2013 pledge to undertake market-oriented reforms of its economy and to better regulate local government finances, only changes seem to be focus on employment and traditional monetary and fiscal policies – SCMP
- (CN) China National People’s Congress spokesperson: Will hold a video briefing Thursday May 21st at 21:40 local time (09:40ET, 13:40GMT) on the agenda for NPC
Other
- (SG) Singapore Trade Min Teo: Govt is in talks with Australia, New Zealand, China, and South Korea on reopening borders, can weather financial impacts of virus
North America
- (US) US Fed’s Rosengren (hawk, non-voter): sees US unemployment peaking around 20%; likely to end year in double digits
- (US) White House econ adviser Kudlow: Pres Trump is not saying he will tear up China deal; Pres Trump in a ‘bad place’ over China’s virus mistakes
- CLX Raises dividend 4.7% to $1.11 from $1.06 (indicated yield 2.2%)
Europe
- (CH) Swiss FINMA extends the leverage calculations for all Swiss banks until Jan 1st 2021
Levels as of 1:15ET
- Hang Seng -0.1%; Shanghai Composite -0.4%; Kospi +0.4%; Nikkei225 +1.0%; ASX 200 +0.4%
- Equity Futures: S&P500 +0.7%; Nasdaq100 +0.6%, Dax +0.9%; FTSE100 -0.3%
- EUR 1.0949-1.0918; JPY 107.98-107.66; AUD 0.6563-0.6525; NZD 0.6118-0.6063
- Commodity Futures: Gold +0.4% at $1,752/oz; Crude Oil +0.6% at $32.14/brl; Copper +0.4% at $2.42/lb
