- Asian equity markets traded with a somewhat indecisive tone amid mixed data releases from China
- In FX, DXY below 89.50 with EUR/USD and GBP/USD holding onto recent gains, AUD hampered by RBA minutes
- Looking ahead, highlights include UK jobs, German ZEW, US Building Permits, Housing Starts, Industrial Production, APIs, Fed’s Williams, Quarles, Harker and Evans
Asian equity markets traded with a somewhat indecisive tone after the positive momentum from Wall St waned as the region digested mixed tier-1 data releases from China including GDP. ASX 200 (+0.3%) saw mild gains amid a slew of corporate updates, while Nikkei 225 (Unch) was flat with price action contained by a firm JPY. Hang Seng (Unch) and Shanghai Comp. (-0.4%) were choppy in reaction to the mixed data figures in which GDP Y/Y printed inline with estimates at 6.8% which surpasses the official target for 2018, while Q/Q printed slightly below estimates at 1.4% vs. Exp. 1.5%. Furthermore, Industrial Production also disappointed but was counterbalanced by solid growth in Retail Sales. Finally, 10yr JGBs were relatively flat amid a similar picture seen in riskier assets in Japan, while a 5yr JGB auction also failed to spur price action despite slightly firmer demand and higher prices, as this was in tandem with a lower amount sold.
Chinese GDP QQ SA (Q1) 1.4% vs. Exp. 1.5% (Prev. 1.6%). (Newswires)
Chinese GDP YY (Q1) 6.8% vs. Exp. 6.8% (Prev. 6.8%)
Chinese Industrial Output YY (Mar) 6.0% vs. Exp. 6.3% (Prev. 6.2%)
Chinese Industrial Output YTD YY (Mar) 6.8% vs. Exp. 6.9% (Prev. 7.2%)
Chinese Retail Sales YY (Mar) 10.1% vs. Exp. 9.7% (Prev. 9.4%)
Chinese Retail Sales YTD YY (Mar) 9.8% vs. Exp. 9.7% (Prev. 9.7%)
US Trade Representative is said to be putting together new trade complaint against China regarding high-tech services including cloud computing and is said to be considering tech-related actions under Section 301, while other reports noted that US is said to be considering ways to retaliate against Chinese restrictions on US tech firms. (Newswires/WSJ)
China urged US to treat Chinese companies lawfully after the US banned Chinese telecoms firm ZTE from buying parts from US for 7 years due to illegally exporting US goods by the firm to Iran and North Korea. (Xinhua/Newswires)
PBoC skipped repo operations but instead offered CNY 367.5bln in 1yr Medium-term Lending Facility with the rate increased by 5bps to 3.30%. (Newswires)
ECB’s Praet said ample degree of monetary policy remains necessary and that policy must be patient, persistent and prudent. Furthermore, Praet commented that the growth outlook confirms ECB’s confidence. (Newswires)
European Union seeks talks with the US at the WTO over compensation for US steel and aluminium tariffs according to WTO filing. (Newswires)
Italian Treasury said to offer BTP maturing in November 2021 in exchange for up to five other bonds on Wednesday. (Newswires)
USD languished after yesterday’s lost ground against its counterparts across the board with the DXY below 89.50. The subdued greenback ensured EUR/USD and GBP/USD held on to recent gains in which the latter posted its best levels since the 2016 Brexit referendum, while USD/JPY tested 107.00 to the downside. Elsewhere, AUD/USD was initially choppy after the RBA minutes mostly provided reiterations but then gradually declined as some suggested uncertainty regarding the outlook and after the Chinese data left much to be desired, while HKD remained near the weak point of the band despite further intervention by the HKMA which bought HKD 5.77bln in local currency during US hours to defend the peg.
RBA minutes from April 3rd meeting stated that the board agreed there was not a strong case for near term move in policy and that a strengthening AUD would slow expected pace of economy. The minutes also stated that given current conditions, the board agreed next move in rates is likely to be upwards but added that progress on inflation and unemployment is likely to be gradual. (Newswires)
Mexico Economy Minister Guajardo said 10 NAFTA chapters are already concluded or close to conclusion, while he also commented that he is exploring a possible meeting with USTR Lighthizer on Thursday but is not expecting a major announcement regarding NAFTA then. (Newswires)
Commodity prices were mixed overnight in which WTI crude futures nursed the losses seen from the unwinding of geopolitical concerns, while the EIA also stated that US total shale oil production for May is seen higher by 125,000BPD at 6.996mln BPD (Prev. 118,000 BPD rise in April). Elsewhere, gold was rangebound amid a lacklustre greenback and indecisive risk tone, while copper was higher but with gains capped following mixed Chinese data.
US President Trump is said to halt plan for further Russian sanctions. (Washington Post)
Syrian TV reported that air defences responded to missile strike attempt on an airbase in Syria’s Homs, which was later identified as a strike by Israel. (Newswires)
North Korea and South Korea are reported to discuss announcing a permanent end to military conflict, according to press reports. (Munhwa)
Treasuries were sold as European traders got to their desks on Monday morning, as some of the geopolitical risk eased. However, Treasuries did find buyers over the course of the session, particularly after a mixed retail sales report, as well as the latest business inventories and NAHB data, but the buying wasn’t enough to prevent the complex from settling slightly lower. The shape of the curve saw some modest flattening on Monday. US 10yr T-Notes futures settle half-a-tick lower at 120-15.
Fed’s Kaplan (Non-Voter, Neutral) said he sees cyclical wage pressure building this year but added that he does not see inflation moving higher even though confident wage pressure will build up. Furthermore, Kaplan also stated he is very concerned that fiscal stimulus will turn into headwinds in 3-5 years. (Newswires)
US President Trump is to nominate PIMCO’s economist Richard Clarida as Fed Vice Chair. (Newswires)
UBS cut US Q1 GDP tracker to 1.7% (Prev. 1.8%) and Goldman Sachs cut US Q1 GDP tracker to 1.90% (Prev. 2.0%) after the retail sales data. (Newswires)