HomeContributorsFundamental AnalysisAsian Market Update: BOJ Conducts Another Fixed-Rate JGB Operation

Asian Market Update: BOJ Conducts Another Fixed-Rate JGB Operation

BOJ conducts another fixed-rate JGB operation

Asia Mid-Session Market Update: China Caixin manufacturing PMI misses again; BOJ conducts another fixed-rate JGB operation

US Session Highlights

(US) Q4 PRELIMINARY NONFARM PRODUCTIVITY: 1.3% V 1.0%E; LABOR COSTS: 1.7% V 1.9%E; Q3 productivity revised higher


President Trump reiterates very serious concerns about NAFTA

(US) House Speaker Ryan (R-WI): Congress must fix health care first, then move to tax reform; Obamacare must be replaced

(US) Jan ISM New York: 57.7 v 63.8 prior

(US) House Energy and Commerce Committee plans next week to take up bill to boost generic drug development – press

US markets on close: Dow flat, S&P500 +0.1%, Nasdaq -0.1%

Best Sector in S&P500: Utilities

Worst Sector in S&P500: Healthcare

Biggest gainers: MJN +21.4%, CTXS +5.2%, M +5.2%, EQT +5.1%, SWN +5.0%

Biggest losers: RL -12.3%, ETFC -8.9%, EW -8.5%, R -7.8%, SNA -7.4%

At the close: VIX 11.9 (+0.1pts); Treasuries: 2-yr 1.22% (+1bps), 10-yr 2.47% (flat), 30-yr 3.08% (flat)

US movers afterhours

DATA: Reports Q4 $0.26 v $0.14e, R$250.7M v $230Me- Non-GAAP op margin 12.3% v 14.9% y/y; Customer account adds +4K; +16.7% afterhours

FTNT: Reports Q4 $0.30 v $0.21e, R$363M v $352Me; total billings $463.4M, +22% y/y; Non-GAAP Op margin 22% v 16% y/y; +11.1% afterhours

V: Reports Q1 $0.86 GAAP v $0.78e, R$4.46B v $4.28Be; +3.4% afterhours

AMGN: Reports Q4 $2.89 v $2.77e, R$5.97B v $5.74Be; +2.5% afterhours

CMG: Reports Q4 $0.55 v $0.55e, R$1.03B v $1.03Be; -0.5% afterhours

AMZN: Reports Q4 $1.54 v $1.40e, R$43.7B v $44.9Be; -4.2% afterhours

ATHN: Reports Q4 $0.62 v $0.51e, R$288M v $303Me; -7.6% afterhours

GPRO: Reports Q4 $0.29 v $0.21e, R$540.6M v $576Me; -12.5% afterhours

FEYE: Reports Q4 -$0.03 v -$0.16e, R$184.7M v $192Me; Guides Q1 -$0.28 to -$0.26 v -$0.23e, R$160-166M v $178Me, operating margin -26% to -24%; -17.7% afterhours

DECK: Reports Q3 $4.11 v $4.24e, R$760M v $787Me; Guides Q4 -$0.10 to $0.00 v $0.43e, Rev -6% to -5% y/y, implies $M v $381Me; Cuts FY17 $3.45-3.55 v $4.15e, Rev -5.0% (prior $4.05-4.25, Rev -3% to -1.5%); -23.0% afterhours

Asia Key economic data:

(CN) CHINA JAN CAIXIN MANUFACTURING PMI: 51.0 V 51.8E (7th consecutive expansion)

(HK) HONG KONG JAN COMPOSITE PMI: 49.9 v 50.3 PRIOR (in conctraction for 22nd out of 23 months)

(JP) JAPAN DEC SERVICES PMI: 51.9 (4th consecutive expansion) V 52.3 PRIOR; COMPOSITE PMI: 52.3 (4th consecutive expansion) V 52.8 PRIOR

(AU) AUSTRALIA JAN AIG PERF OF SERVICES INDEX: 54.5 V 57.7 PRIOR (4th month of expansion)



Asia Session Notable Observations, Speakers and Press

Asia indices are tracking lower after a neutral day on Wall St where investors await a critical non-farm payrolls report on Friday; Shanghai Composite has returned for trade after a week-long holiday with a slight decline. Of note in China, the PBoC reverse repo operations saw rates rise 10bps across the maturities.

USD majors also traded in narrow ranges with the exception of USD/JPY; Initially, the pair dropped abruptly some 40pips to the lows after BOJ’s QE operation in 5-10yr merely maintained bond purchase quantity in spite of rising yields; 2 hours later, USD/JPY spiked some 60pips back above 113.20 after BOJ took cue from the bond market and conducted its 2nd fixed-rate unlimited JGB operation since mid-Nov to bring the 10-yr back toward 0.1%. BOJ official confirmed the operation was meant to bring the yield to target. Japan Finance officials also continued to deflect currency criticism from US pres Trump

Fin Min Aso said FX policy is in line with G7 and G20 agreements, adding it is aimed at inflation objectives and not manipulating FX.

In economic data, China Caixin PMI and Hong Kong PMI were both slightly disappointing; Caixin PMI was in expansion for 7th month but missed consensus amid slower increase in output and new order activity as well as reduction in employment. After last month’s jump in Hong Kong PMI to expansion, the figure was back below the 50-threshold – also on contraction in output, new orders, and falling business confidence. Employment, however, saw some marginal improvement.

In Australia, Services PMI slowed to 54.4 from multi-year high of 57.7 last month, but remain in expansion for the 4th month; Goldman economist also claims that strong economy evidenced by yesterday’s record high trade surplus has put the probability of an RBA rate hike this year somewhere at 40% and rising.


(CN) PBoC said to have raised overnight lending rates on SLF to 3.1% by 35bps – financial press

(HK) Hong Kong China visitors +3.6% y/y during Lunar New Year holiday – Chinese press

(HK) Macau China visitors +9.5% y/y during Lunar New Year holiday


(JP) BOJ Gov Kuroda: BOJ still has distance to reach inflation target

(JP) Japan Econ Min Ishihara: No comment on Trump’s claims about currencies – press

(JP) BOJ official: JGB operation was conducted to implement yield target

Australia/New Zealand:

(AU) Goldman Sachs economist Toohey: Probability of an RBA rate hike by Nov is "somewhere in the 40s and rising" – AFR

(NZ) Capital Economics: Markets have priced in up to RBNZ 2 rate hikes in 2017, but CA expects it to remain on hold this year and likely next year – press

(NZ) New Zealand real estate agency Barfoot & Thompson: Auckland Jan avg house price m/m: flat v -2.0% prior; y/y: 13% v 5.1% prior

Asian Equity Indices/Futures (00:00ET)

Nikkei flat, Hang Seng -0.4%, Shanghai Composite -0.5%, ASX200 -0.4%, Kospi -0.1%

Equity Futures: S&P500 -0.2%; Nasdaq -0.2%; Dax -0.2%; FTSE100 -0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0745-1.0770; JPY 112.50-113.25; AUD 0.7635-0.7665; NZD 0.7265-0.7295

Apr Gold -0.4% at $1,215/oz; Mar Crude Oil +0.6% at $53.86/brl; Mar Copper -1.3% at $2.65/lb

GLD SPDR Gold Trust ETF daily holdings rise 1.5 tonnes to 811.2 tonnes; 2nd straight increase, highest since Jan 6th


(CN) PBOC to inject combined CNY50B in 7-day, 14-day and 28-day reverse repos v CNY30B on 1/25; raises reverse repos offer yield ; Raises offer yields by 10bps


(JP) BOJ announces amounts to buy in upcoming QE operation; Raises 5-10-yr maturity JGB purchase; To buy ¥450B (¥410B expected) in 5-10yr JGBs, unch from ¥450B purchased on Jan 27th

(AU) Australia MoF (AOFM) sells A$600M in 5.75% 2022 Bonds; avg yield: 2.2669%; bid-to-cover: 5.18x

Asia equities/Notables/movers by sector

Consumer discretionary: VAH.AU Virgin Australia -2.3%(Q2 result); 1237.HK Merry Garden Holdings +4.1% (guidance); 2432.JP DeNA Co. +3.7% (new smartphone game debuts strongly); MTR.AU Mantra Group +2.1% (Citi raises rating); SWM.AU Seven West Media -2.8% (no allegations of wrongdoing of CEO); 7733.JP Olympus Corp +0.7% (9-month result); 4452.JP Kao Corp +4.1% (FY16 result); 9831.JP Yamada Denki -4.9% (9-month result)

Financials: 001450.KR Hyundai Marine & Fire Insurance Co +5.1%

Industrials: 4183.JP Mitsui Chemical -4.1% (9-month result); JHX.AU James Hardie Industries -4.8% (Q3 result); 7261.JP Mazda Motor Corp -2.3% (9-month result)

Technology: BXB.AU Brambles +2.3% (Morgan Financail raises rating); 7974.JP Nintendo Co. +5.0% (new smartphone game debuts strongly); 5802.JP Sumitomo Electric Industries +7.0% (9-month result);

Materials: 4202.JP Daicel Corp +6.2% (9-month result); 5406.JP Kobe Steel -6.9% (9-month result)

Energy: 568.HK Shandong Molong Petroleum Machinery -13.5% (prelim FY16 result)

Healthcare: IPD.AU ImpediMed Ltd +2.1% (Allan Gray Australia raises rating)

Telecom: 017670.KR SK Telecom +0.9% (Q4 result); 9433.JP KDDI Corp -1.8% (9-month result)

Utilities: 5803.JP Fujikura +12.2% (9-month result)

Trade The News
Trade The Newshttp://www.tradethenews.com/
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

Featured Analysis

Learn Forex Trading