- Asian equities saw an indecisive session ahead of key risk events with notable data releases including Japanese GDP and Chinese Trade
- USD held onto the gains seen after Former FBI Director Comey’s prepared statement was deemed less detrimental than some had feared
- Looking ahead, highlights include ECB rate decision, UK election and Former FBI Director Comey’s testimony
Asia equity markets were choppy amid a cautious tone ahead of today’s trifecta of key risk events including the UK election, ECB policy meeting and to a lesser extent, former FBI Director Comey’s testimony after the pre-released statement didn’t appear to be too damaging for President Trump. Indecisive trade was seen in ASX 200 (+0.1%) and Nikkei 225 (-0.1%), with Australia stocks initially led lower by weakness in energy after a surprise DoE build. However, a mild improvement in tone was observed amid encouraging Chinese Exports and Imports figures, while Japanese stocks were driven by a temperamental JPY. Elsewhere, Shanghai Comp. (+0.1%) and Hang Seng (+0.2%) were underpinned by the Chinese trade data and after the PBoC conducted another respectable liquidity injection. 10yr JGBs saw volatile trade with prices pressured throughout the session despite a downward revision to Q1 GDP figures and a better than prior 5yr auction. Selling was later exacerbated heading into the European open with some analysts attributing the pressure to an article that the BoJ is tweaking its communications to suggest it is contemplating how to handle a future QE exit.
Chinese Trade Balance (CNY)(May) M/M 281.6bln vs. Exp. 324.1bln (Prev. 262.3bln). (Newswires)
Chinese Exports (CNY)(May) Y/Y 15.5% vs. Exp. 13.5% (Prev. 14.3%)
Chinese Imports (CNY)(May) Y/Y 22.1% vs. Exp. 8.3% (Prev. 18.6%)
Chinese Trade Balance (USD)(May) 40.8bln vs. Exp. 47.8bln (Prev. 38.1bln). (Newswires)
Chinese Exports (USD)(May) Y/Y 8.7% vs. Exp. 7.2% (Prev. 8.0%)
Chinese Imports (USD)(May) Y/Y 14.8% vs. Exp. 8.3% (Prev. 11.9%)
PBoC injected CNY 30bln in 7-day reverse repos, CNY 50bln in 14-day reverse repos and CNY 70bln in 28-day reverse repos.
PBoC set CNY mid-point at 6.7930 (Prev. 6.7858)
Japanese GDP Growth Rate Final (Q1) Q/Q 0.3% vs. Exp. 0.6% (Prev. 0.5%). (Newswires)
Japanese GDP Growth Annualized Final (Q1) Y/Y 1.0% vs. Exp. 2.4% (Prev. 2.2%)
UK RICS House Price Balance (May) M/M 17% vs. Exp. 20% (Prev. 22%). (Newswires)
YouGov UK Election Poll showed Conservatives 42% (Prev. 42%) vs. Labour 35% (Prev. 38%). (Newswires)
Survation UK Election Poll showed Conservatives 41% (Prev. 40%) vs. Labour 40% (Prev. 39%)
Kantar UK Election Poll showed Conservatives 43% (Prev. 43%) vs. Labour 38% (Prev. 33%)
Comres UK Election Poll showed Conservatives 44% (Prev. 47%) vs. Labour 34% (Prev. 35%)
ICM UK Election Poll showed Conservatives 46% (Prev. 45%) vs. Labour 34% (Prev. 34%)
PanelBase UK Election Poll showed Conservatives 44% (Prev. 44%) vs. Labour 36% (Prev. 36%)
BMG UK Election Poll showed Conservatives at 46% vs. Labour at 33%.
FX markets were relatively quiet during Asia hours with the USD holding onto the gains seen after Former FBI Director Comey’s prepared statement was deemed less detrimental than some had feared. The mild relief rally in the greenback buoyed USD/JPY to test 110.00 to the upside, although USD/JPY then retreated heading into the European morning as the 10yr yield surged. AUD was choppy with weak Australian trade data counterbalanced by their Chinese counterparts, while GBP/USD was flat but remained near yesterday’s best levels, as the pair exhibited calmness before a possible thunderstorm from today’s general election in which polls suggest the Conservative party winning in a tighter contested race.
Australian Trade Balance (AUD)(Apr) M/M 555mln vs. Exp. 1.95bln (Prev. 3.11bln, Rev. 3.17bln). (Newswires)
Australian Exports (Apr) M/M -8% (Prev. 2%)
Australian Imports (Apr) M/M -1% (Prev. 5%)
WTI held near yesterday’s lows and failed to make any significant recovery from the DoE-triggered losses, in which an unexpected build pushed prices lower by around 5% to beneath USD 46/bbl. Elsewhere, gold prices slipped slightly alongside the mildly firmer greenback, whilst copper gained amid the better than expected Chinese Exports and Imports data.
China May YTD Iron Ore Imports rose 11.3% Y/Y to 91.5mln tons. (Newswires)
North Korea is confirmed to have fired several ground-to-ship missiles. (Newswires)
Qatar’s military was placed on a high state of alert and issued warnings on maritime borders. (Twitter)
Tsy yields were up between 1-3 bps across the curve on Wednesday, ahead of today’s key risk events, with yields generally consolidating around recent levels. With a week to go before the FOMC’s June decision, money markets are pricing in a 98% implied probability that rates will be lifted by 25bps, up around 10ppts over the week, with around a 90% chance that rates will be raised to 125-150bps by the end of the year. US 10-Year T-Note future settled at 126.25, down 7+ ticks.
Former-FBI Director Comey’s prepared remarks were released ahead of his testimony tomorrow, which didn’t appear to contain any smoking guns that suggest Trump asked Comey to ‘drop’ his investigations into Russian links/Flynn, while it confirmed that Comey informed Trump he wasn’t under FBI investigation. (Newswires)
- Our clients receive this daily podcast direct to their inbox every morning. To get the same, sign up for our 7 day free trial.