- Asian equity markets were mostly higher as the region partially took cue from Wall St. after US President Trump dispelled fears over an imminent attack on Syria
- FX markets saw little in the way of sustained direction as the DXY somewhat maintained its gradual upward trajectory seen since FOMC minutes
- Looking ahead, highlights include German CPI (F), Uni. Of Michigan, Fed’s Rosengren, Bullard and Kaplan
Asian equity markets were mostly higher as the region partially took cue from Wall St, where sentiment was underpinned after US President Trump tweets further alleviated fears of an imminent strike on Syria. This resulted to firm gains across all US major indices, while the financial sector outperformed as yields rose in the wake of the recent hawkish FOMC minutes. As such ASX 200 (+0.3%) and Nikkei 225 (+0.6%) were positive with Australian financials mostly kept afloat following an upbeat Financial Stability Review, while Japan benefitted from the weaker currency-heightened risk dynamic. Elsewhere, Hang Seng (Unch.) and Shanghai Comp. (-0.4%) were underpinned at the open but then pared gains as the risk tone deteriorated following disappointing Chinese trade data and a CNY 100bln net weekly drain by the PBoC, while the White House was also reported to be planning to escalate trade pressure on China. Finally, 10yr JGBs were marginally softer with demand subdued by a positive tone seen in Japanese stocks, although downside was stemmed amid the BoJ’s presence in the market for JPY 840bln in maturities across the curve.
PBoC skipped open market operations for a net weekly drain of CNY 100bln vs. last week’s CNY 10bln net drain. (Newswires)
PBoC set CNY mid-point at 6.2898 (Prev. 6.2834)
Chinese Trade Balance (CNY)(Mar) -29.8B vs. Exp. 160.00B (Prev. 224.88B). (Newswires)
Chinese Exports (CNY)(Mar) Y/Y -9.8% vs. Exp. 8.0% (Prev. 36.2%)
Chinese Imports (CNY)(Mar) Y/Y 5.9% vs. Exp. 7.5% (Prev. -0.2%)
Monetary Authority of Singapore tightened policy through a slight appreciation of SGD NEER slope as expected. (Newswires)
MAS said domestic economy is likely to maintain steady expansion path this year and that upward pressures on core inflation is likely to persist past this year, although it also noted that an escalation of the US-China trade dispute remains possible which would have significant consequences for global trade.
Singapore GDP (Q1 A) Q/Q 1.4% vs. Exp. 1.2% (Prev. 2.1%). (Newswires)
Singapore GDP (Q1 A) Y/Y 4.3% vs. Exp. 4.3% (Prev. 3.6%)
Italy’s League leader Salvini said the centre-right wants to govern together with a PM chosen by the League. (Newswires)
The majors were relatively inconclusive overnight in which the DXY somewhat maintained the gradual upward trajectory seen since this week’s hawkish FOMC minutes, while EUR/USD consolidated following the selling pressure that was triggered by cautious ECB minutes. GBP/USD took a breather after real money buying interest helped a reclaim of the 1.4200 handle on Thursday, while USD/JPY and JPY-crosses were propped up amid the overall risk-tone. Elsewhere, the HKMA authority continued to intervene and bought HKD 3.26bln in defence of the peg, while SGD initially strengthened after the MAS tightened its FX-based policy, although this was later pared as the decision was as expected and the central bank also suggested a cautiousness regarding the ongoing trade spat between US and China.
Commodities were mixed in which WTI crude futures pulled back below the USD 67.00/bbl as the geopolitical concerns, which had fuelled oil to levels last seen in 2014, took a back seat. Elsewhere, gold prices found some reprieve from the pressure seen since Wednesday’s hawkish FOMC minutes, while copper is indecisive following disappointing Chinese trade data which showed an unexpected trade deficit, surprise contraction in exports and a miss on imports.
China March iron ore imports fell 10% Y/Y to 85.8mln tons, while copper and copper product imports rose 2.1% Y/Y to 438k tons. (Newswires)
There were initial source reports that the US was planning to strike 8 targets in Syria. However, White House Press Secretary Sanders later said no final decision was made regarding Syria after President Trump finished meeting with his national security team. Furthermore, Twitter sources reported US President Trump put off his final decision regarding strikes on Syria in meeting with security advisers amid internal conflict between Secretary of Defense Mattis and National Security Advisor Bolton. (Newswires/Twitter)
UK PM May and US President Trump spoke on Thursday and agreed it was vital to deter the further use by Syrian government of chemicals weapons, while the leaders agreed to keep working closely on international response to Syria chemical weapons use and stated that chemical weapons use must not go unchallenged. (Newswires)
UK cabinet backed military action against Syria in which it agreed on the need to take action to alleviate humanitarian distress and to deter the further use of chemical weapons by Assad. (Newswires)
US Secretary of State nominee Pompeo said more work needs to be done on Russian sanctions as Putin has not yet received the message sufficiently, while he added that there is no sign Iran is racing towards a nuclear weapon and that there is ‘long way to go’ on North Korea even after talks. (Newswires)
European diplomat believes progress is being made towards Trump concerns on Iran’s nuclear deal. (Newswires)
US Treasury yields were higher on Thursday with short-dated yields up by 4bps and long-end yields up around 5bps by settlement, although most of the selling was in the belly of the curve. Selling pressure was seen pre-market after Trump’s tweet hinted that military action might not be in the offing. Even later in the session, when it emerged the US was close to military action, the Treasury complex struggled to catch a bid. The US completed this week’s supply offering with an auction of 30-year bonds, which stopped through the screens by 0.1bps, the strongest auction this week. Traders were encouraged by the direct bidders after the weakness seen this week, while indirects took down 61%, in line with recent averages. US 10yr T-Notes settle 12 ticks lower at 120-15.
White House is planning to increase trade pressure on China and the US Trade Representative will detail a list of goods as early as next week that may be subject to 25% tariffs as part of possible USD 100bln of additional tariffs on China. (WSJ)
US Special Counsel Mueller is said to be preparing a minimum of 4 findings to make case of obstruction of justice against US President Trump, while there were also reports that excerpts from former FBI Director Comey’s new book stated it is possible President Trump sought to obstruct justice (NBC/Newswires)
US Republican Senator Roberts said President Trump indicated in a meeting that he assigned NEC Director Kudlow, US Trade Representative Lightizer and other advisers to have another look at the Trans-Pacific Partnership. However, President Trump later noted that the US would only join TPP if deal was substantially better than what was offered to prior administration. (Newswires/Twitter)
Twitter sources noted that Trump administration is to send spending cancellation proposal early next month in an effort to reduce some of the spending agreed to in the omnibus package, although senior GOP sources are said to be sceptical. (Twitter)
US President Trump said to issue order related to task force to probe US postal system pricing on packages. (Newswires)
Fed’s Kashkari (Non-Voter, Dove) repeated that he has not seen much wage growth nationally, while he added that the US must avert a trade war with China and that it is difficult to gauge where a trade dispute will end up. (Newswires)