- Asian stocks were higher across the board following the mostly positive lead from Wall St, where earnings remained in focus
- UK House of Lords voted 348 – 225 for Brexit amendment that would keep UK in the Customs Union with the EU as expected
- Looking ahead, highlights include UK retail sales, US weekly jobs, Philly Fed and a slew of central bank speakers
Asian stocks were higher across the board following the mostly positive lead from Wall St, where earnings remained in focus and the energy sector outperformed after crude rallied over 3% to its highest since 2014. ASX 200 (+0.4%) was lifted by commodity names as miners outperformed amid strength in metals prices, which also boosted BHP shares despite a disappointing quarterly iron ore production update. Nikkei 225 (+0.5%) was also led higher by metal stocks and in tandem with a weaker currency, while Hang Seng (+1.3%) and Shanghai Comp. (+1.0%) conformed to the commodity-led gains with the blue-chip energy stocks in Hong Kong cheering the higher oil prices and with sentiment also helped by another firm liquidity operation by the PBoC. Finally, 10yr JGBs were subdued as upside in riskier assets sapped safe-haven demand, and with price action also kept tame by mixed 20yr auction results which showed reduced demand but higher accepted prices.
PBoC injected CNY 190bln via 7-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.2832 (Prev. 6.2817)
China MOFCOM said it is to implement temporary anti-dumping measures on halogenated butyl rubber imports from US, EU and Singapore. Furthermore, MOFCOM stated it is reviewing Qualcomm and NXP deal and that it may have a negative impact on the market. (Newswires)
HKMA Deputy Chief Executive Lee said operation in banking system has been smooth and that no large-scale shorting of HKD is seen, while Lee further added that HKD 50bln outflow isn’t much. (Newswires)
US President Trump said will shrink the US trade deficit with Japan and hopefully a balance will be reached, while he later stated that they are negotiating a one-on-one trade deal with Japan. There were also comments from Japanese PM Abe that he agreed with US President Trump to begin discussions on fair, free and reciprocal trade, while he also commented that TPP is the best trade deal for both Japan and US. (Newswires)
UK House of Lords voted 348 – 225 for Brexit amendment that would keep UK in the Customs Union with the EU as expected, which was against PM May’s wishes and sends the amended EU withdrawal bill back to the House of Commons. (Newswires)
Canadian PM Trudeau told UK PM May their countries could move quickly towards trade deal post-Brexit. (Newswires)
Italy’s’ S5M leader Di Maio said they are not willing to govern with centre right coalition and that they are only ready to form with League. (Newswires)
The DXY was range-bound overnight which kept its major counterparts restrained with GBP/USD around the 1.4200 level following yesterday’s softer than expected CPI data, while CAD also found very little redemption from the post-BoC pressure after Governor Poloz said interest rates may need to remain below the neutral range. Elsewhere, USD/JPY was underpinned as the positive sentiment spurred JPY outflows, while antipodeans were choppy and initially data-determined with AUD pressured by abysmal Employment numbers and with NZD subdued after CPI data beat expectations Q/Q but also showed a substantial Y/Y slowdown from the prior quarter. However, both AUD and NZD later pared losses and took strength from the upside in commodities and stronger CNY.
Australian Employment Change (Mar) 4.9k vs. Exp. 20.0k (Prev. 17.5k, Rev. -6.3k). (Newswires)
Australian Full Time Employment (Mar) -19.9k (Prev. 64.9k, Rev. 20.1k)
Australian Unemployment Rate (Mar) 5.5% vs. Exp. 5.5% (Prev. 5.6%, Rev. 5.5%)
New Zealand CPI QQ (Q1) 0.5% vs. Exp. 0.4% (Prev. 0.1%). (Newswires)
New Zealand CPI YY (Q1) 1.1% vs. Exp. 1.1% (Prev. 1.6%)
Gains were seen across the commodities in which WTI crude futures remained firm after the prior day’s reports that Saudi Arabia is said to favour oil price of USD 80/bbl and even USD 100/bbl, while the upside also followed the DoE inventory report which mirrored the API release and showed drawdowns across all product components. Elsewhere, gold and copper prices were higher alongside broad strength in the complex in which Chinese metal prices gained around 3%-5% at the open and with LME aluminium up over 4% to its highest since July 2011.
US President Trump reportedly told Russian officials not to expect any new sanctions. (Newswires)
US President Trump stated that Secretary of State nominee Pompeo got along very well with North Korean leader Kim. However, President Trump later stated US will continue campaign of maximum pressure until North Korea denuclearizes and that he will not meet with North Korean leader Kim if he thinks it is unlikely to be fruitful, while he added that he would leave the meeting if it is not fruitful. (Newswires)
The yield curve bear-flattened during the session, with most of the action concentrated in the belly of the curve, where yields on 5s and 7s yield rose by c.5bps, pushing 5s30s under 30bps. There were fresh cyclical highs for the 2yr yield which sent the US/German 2yr spread above 300bps, the widest since 1989. The flattening of the curve has not gone unnoticed by policy makers, Fed’s Bullard again warned the risks of a yield curve inversion could be seen within 6 months and said the Fed should have discussions on the subject. US 10yr T-Notes futures settle 13+ lower at 120-04+.
Fed Beige Book said the economy continues to expand at modest-to-moderate pace, while it added that employment growth continues, labour markets were tight and that shortages of skills were reported. Furthermore, it stated that wage growth was modest and that prices increased across districts at a moderate pace, while it also mentioned that manufacturers, agriculture and transportation sectors expressed concerns about newly imposed tariffs. (Newswires)
US was reported to be targeting a NAFTA deal in 3 weeks, according to sources. (Newswires)
Fed’s Dudley (voter, neutral) said he supports only gradual hikes given that inflation sits below target. (Newswires)
Fed’s Quarles (voter, neutral) said he does not view current yield curve flattening as a signal for a recession. (Newswires)
Fed’s Rosengren (non-voter, hawkish) suggested the US lacks buffers for next downturn. (Newswires)
Fed’s Bullard (non-voter, dovish) said Fed policy rate should stay flat. (Newswires)