- Asian stocks higher across the board as Asia-Pac markets react to Friday’s NFP
- USD quiet overnight with Japanese Finance Minister Aso under pressure to resign over a controversial land sale
- Looking ahead, highlights include the Eurogroup meeting, 3- and 10-year note auctions from the US
Asia stocks were higher across the board as the region took its first opportunity to react to Friday’s rally on Wall St and jobs data from US where NFP smashed expectations, but wage growth slowed which in turn provided a goldilocks backdrop for stocks. ASX 200 (+0.6%) was led by commodity names after crude rallied over 3% on Friday and PM Turnbull confirmed Australia is to be exempted from US tariffs. Nikkei 225 (+1.6%) outperformed but closed off its best levels as the cronyism scandal continued to haunt PM Abe after Japan’s Finance Ministry confirmed documents had been doctored in a land-sale to a school operator which allegedly used ties to PM Abe’s wife to get a cheap deal on state-owned land. Elsewhere, Hang Seng (+1.5%) and Shanghai Comp. (+0.7%) also gained although the mainland got off to a slow start as US-China trade war concerns somewhat lingered and as participants also mulled over Xi’s power consolidation after China’s legislature voted to formally scrap presidential term limits from its constitution. Finally, 10yr JGBs are flat with demand constrained amid the heightened appetite for risk, while the BoJ were also in the market but kept its Rinban amounts unchanged from the prior.
PBoC injected CNY 50bln via 7-day reverse repos and CNY 40bln via 28-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.3333 (Prev. 6.3451)
Japanese Finance Minister Aso is under pressure to resign over a report regarding alleged favours to a school with connections to the Japanese PM Abe. The prime minister told parliament in February last year that he’d resign if any link emerges between himself or his wife Akie and the land deal. (Newswires)
Australian PM Turnbull confirmed that Australia is to be exempt from US Steel and aluminium tariffs. (Newswires)
UK and EU companies reportedly could face an additional GBP 58bln in annual costs in the event of a no-deal Brexit. (Newswires)
UK consumer spending suffered its weakest start to the year since 2012, according to data compiled by Visa. (Newswires)
Fitch affirmed Hungary at BBB-; Outlook Positive. (Newswires)
In FX markets, the USD was subdued in which the DXY just about held above the 90.00 level following last Friday’s jobs data as the weaker wage growth eased concerns of rising inflation. Elsewhere, USD/JPY and JPY-crosses were choppy with initial support seen amid the heightened risk-appetite, although upside was later pared as the land-sale scandal led to calls for Finance Minister Aso to resign and threatened PM Abe’s approval ratings which could also dampen his prospects to head the LDP for a third term. Elsewhere, antipodeans were underpinned with AUD lifted by recent gains in crude and Australia’s exemption from Trump tariffs, while NZD/USD led the advances after it reclaimed the 0.7300 handle.
Commodities were quiet overnight with WTI crude futures taking a breather after last Friday’s 3% rally to above the USD 62/bbl as risk appetite was spurred post-NFP jobs data. Elsewhere, gold traded flat amid similar price action for the greenback, while copper was also range-bound and failed to benefit from the risk tone amid fatigue from Friday’s advances and as Chinese metal prices were remain pressured from Trump tariffs.
US Baker Hughes Total Rig Count (9 Mar) 984 (Prev. 981). (Newswires)
US Baker Hughes Oil Rig Count (9 Mar) 796 (Prev. 800)
US Baker Hughes Gas Rig Count (9 Mar) 188 (Prev. 181)
OPEC is reported to be divided regarding views on the right price of oil with Iran said to prefer USD 60/bbl, while Saudi Arabia would prefer prices to be at USD 70/bbl. (WSJ) There were also reports that Iran Oil Minister Zanganeh stated that OPEC could agree in June to begin relaxing oil output cuts for 2019. (Newswires)
US President Trump claimed on Friday that a deal with North Korea is in the making, while he added that time and place for leaders meeting is yet to be determined. (Newswires)
White House Press Secretary Sanders said President Trump will not meet with Kim Jong Un until concrete steps have been taken. (Newswires)
North Korea reportedly wants a peace treaty and to build ties with US, while its leader Kim also wants a US embassy in Pyongyang. (Dong A)
UK PM May is on the verge of publicly blaming Russia for the attempted murder of Sergei Skripal and could order expulsions and sanctions against Putin’s regime. (Times)
Bear-steepening was the theme for Treasuries on Friday, but the yields were only 1-3bps higher across the curve. Perhaps the most interesting thing about the treasury complex was that, despite equity traders seeing the dovish side of the employment report, the bond traders didn’t entirely agree, and the March T-Note futured settled around 4 ticks lower than pre-NFP levels.
Fed’s Bullard (Voter, Dove) reiterated that 4 hikes this year could slow the economy. (FT)
Fed’s Rosengren (Non-voter, Hawk) said 4 rate hikes are likely needed this year, while he added that he expects inflation to firm and upward pressure on wages in 2018. (Newswires)
Fed’s Evans (Non-voter, Dove) said that periods of inflation above 2% would likely generate in most new frameworks under discussion. (Newswires)
US President Trump is firmly considering White House Strategic Initiatives Director Liddell as Gary Cohn’s replacement. Liddell is a former Microsoft and GM executive. (NYT)
US President Trump lawyers were reported to be in early stage discussions with Special Counsel Mueller for a deal to quicken an end to the Russia probe. (Newswires)
Mexico’s NAFTA negotiator Guajardo believes there is a 60% chance of a successful NAFTA agreement and states NAFTA talks could be wrapped up before Mexico’s election in July. (Newswires)