- Mixed trade in Asia with very little in the way of tangible catalysts to dictate price action.
- US equity futures took a slight dip on reports that National Security Adviser McMaster had been removed from position, however was later denied by the White House.
- Looking ahead, highlights include Eurozone Inflation, US building permits, housing starts and U. of Michigan sentiment data.
Asia stocks traded mixed following a similar indecisive lead from Wall St. and as overnight trade lacked any tangible catalysts to dictate price action. ASX 200 (+0.5%) and Nikkei 225 (-0.4%) were mixed with Australia led by Consumer Staples as Wesfarmers shares surged on plans to spin off its Coles supermarket chain, while Nikkei 225 was kept subdued by a firmer JPY and as cover up allegations were fuelled by reports PM Abe knew of the document alterations days before the public admission. Elsewhere, Hang Seng (Unch.) and Shanghai Comp. (Unch.) were choppy after the PBoC skipped open market operations and instead announced to lend CNY 327bln via its MLF, while US equity futures were briefly pressured on administration instability concerns after initial reports that National Security Adviser McMaster was said to be removed from position, although this was later denied by the White House. Finally, 10yr JGBs were marginally higher with support seen amid losses in Japanese stocks and with the BoJ also present in the market with its Rinban amounts left unchanged, while Aussie yields declined across the curve following a 10yr auction in which the average yield was down nearly 20bps from prior.
Japan’s upper and lower houses of parliament approved BoJ Governor Kuroda for a 2nd term, while they also approved Amamiya and Wakatabe as Deputy Governors. (Newswires)
PBoC refrained from open market operations, but then announced to lend CNY 327bln via 1-year Medium-term Lending Facility with the rate unchanged at 3.25%. (Newswires)
PBoC set CNY mid-point at 6.3340 (Prev. 6.3141)
Irish border dispute is said to be complicating Brexit transition talks, while it was also reported that UK and EU officials have agreed to take part in “intensive” talks to resolve the issue of the Irish border. (Newswires)
FX markets were mostly quiet overnight amid a lack of drivers and sparse data releases. As such, the greenback held on to most of the prior day’s gains with the DXY maintaining above the 90.00 level, although the quiet tone somewhat provided much-needed respite for major currencies after the recent selling against USD. JPY remained firm as the cronyism scandal threatens to cloud over Abenomics, and with flows into the safe-haven also spurred amid the false McMasters firing report. Elsewhere, a subdued commodity-complex has in turn kept related currencies pressured, with NZD the worst performer in an extension of the post-GDP slide and amid a rebound in AUD/NZD from prior support around 1.0705-1.0710.
Trade in commodities left much to be desired with WTI crude little changed to cling on to the recently reclaimed USD 61/bbl level. Prices across the metals complex were also flat with gold near US sessions lows as the greenback retained most of its recent gains, while copper was lacklustre alongside the lacklustre risk tone seen in the region.
South Korea and US reportedly plan to announce their military exercise plans next week. (Newswires)
Bear flattening was observed with the short-end underperforming in the curve. A bid was later observed after the Mueller subpoena news hit the wires, but overall volumes were relatively light and liquidity thin which IFR noted could be the trend leading up to the Fed rate decision on Wednesday. 10yr T-note futures (June 2018) settled down 1.5 ticks at 120.60.
US Special Counsel Mueller has subpoenaed the Trump Organization demanding documents on Russia. Furthermore, there were also source reports that the Trump Organization has been producing documents to Mueller and Congressional investigations for months, while the White House also said it will continue to cooperate with Special Counsel Mueller but would not comment on Trump Organisation subpoenas. (Newswires)
There were initial reports on Twitter citing Washington Post that National Security Adviser McMaster is said to be removed from position, although this was later denied by the White House. (Newswires)