Asian stocks traded negative across the board as the region followed suit from the broad weakness on Wall St amid rising US yields
EU is said to be ready to offer UK a better trade deal if it chooses to remain in the customs union, according to an EU official
Looking ahead, highlights include the Turkish rate decision, DoEs and a slew of speakers
ASIA
Asian stocks traded negative across the board as the region followed suit from the broad weakness on Wall St amid rising US yields, in which the Nasdaq 100 underperformed with losses of over 2% and industrials led the DJIA lower after Caterpillar suggested that Q1 could be the apex for the year. Nikkei 225 (-0.4%) and KOSPI (-0.9%) were lower with participants also digesting earnings releases, while Takeda was among the worst performers in Japan after the Co. further sweetened its offer in pursuit of Shire. ASX and NZX were shut for ANZAC Day, while Shanghai Comp. (-0.3%) and Hang Seng (-0.9%) conformed to the downbeat tone after the PBoC skipped open market operations which resulted to a net daily drain of CNY 150bln, However, the losses in the mainland were contained amid continued chatter regarding further RRR cuts and as the previously announced cut took effect from today. Finally, 10yr JGBs were uneventful and have failed to benefit from the broad risk averse tone as well as the BoJ’s presence in the market for JPY 710bln in the belly to super-long end, while USTs were choppy overnight with early pressure seen after the US 10yr yield continued to test the 3.000% level which it had earlier reclaimed for the 1st time since January 2014.
China researcher noted that deflation in China is possible as soon as Q4 this year and added that further reductions in RRR are expected, while there were also reports that a Chinese official sees large room for RRR reductions and sees it lowered by between 600-800bps in 3 years. (Newswires)
PBoC skipped open market operations for a daily net drain of CNY 150bln. (Newswires)
PBoC set CNY mid-point at 6.3066 (Prev. 6.3229)
UK/EU
EU is said to be ready to offer UK a better trade deal if it chooses to remain in the customs union, according to an EU official. (Newswires)
Italy’s M5S leader Di Maio leader sees potential for negotiations with PD while he also noted the idea of a centre-right coalition has passed. (Newswires)
FX
Price action was kept rangebound amid a lack of data releases and market closures in the region. Nonetheless, the greenback attempted to nurse some of the prior session’s losses which saw a mild pullback in EUR/USD and GBP/USD, while USD/JPY reclaimed the 109.00 level. Elsewhere, AUD and NZD are subdued as participants were away for ANZAC Day, with AUD/USD pressured after it slipped below the 0.7600 handle while NZD/USD broke 0.7100 to the downside.
COMMODITIES
Commodities were little changed overnight with WTI crude futures below USD 68/bbl following yesterday’s pullback and as the latest API inventory report provided no support given that headline crude stockpiles showed a surprise build. In addition, President Trump remained vague regarding the Iran nuclear deal and suggested that he was still undecided on whether to extend the agreement. Elsewhere, gold was kept subdued by a mild recovery in the greenback, while copperlacked demand amid a broad risk averse tone.
US API Weekly Crude Stocks (20 Apr) 1.099M vs. Exp. -2.000M (Prev. -1.047M). (Newswires)
GEOPOLITICAL
US President Trump stated that nobody knows what he is going to do regarding Iran deal on May 12th, while Trump and French President Macron both believe Iran should not hold a Nuclear Weapon. Furthermore, Macron stated he wants to work on a new deal with Iran and the deal can be added to but should not be torn apart, while he also noted that President Trump’s concerns can be taken aboard. (Newswires)
US
There was an extraordinary amount of attention on 10-year yields temporarily breaching the 3.00% handle for the first time in four years, as the curve steepened, which also saw yields on 2s above 2.50% at one point. Traders were attributing the rise in yields to the notion that the Fed hikes will take an ‘autopilot’ approach (as was hinted by the Fed’s Williams over the weekend) as well as the increased size of issuance out of the US Treasury, which will auction a total of $113bln this week ($32bln 2-year notes on Tuesday; $35bln 5-year notes on Wednesday; $17bln 2-year FRN on Wednesday; $29bln 7-year notes on Thursday. Net supply is implied at $3.6bln given that $109.4bln maturing at the mid-month settlement. Analysts also note that over the next month, gross supply (including next week’s auction of $73bln in 3s, 10s, 30s) is around $169bln, with large cashflows due, estimated around $208bln. Traders are also cognizant of the Q2 refunding announcement on 2/May, where the US Treasury may raise the size of auction issuance, according to some analysts. Today’s auction of 2s saw a tail of 0.5bps, while the yield at auction was the highest since 2008. The internals weren’t particularly bright, with cover beneath recent averages and direct takedown slightly higher than recent averages. US 10yr T-Notes futures settle unchanged at 119-10+.
Canada’s Foreign Minister Freeland said they are in intensive NAFTA talks and noted good progress is being made on autos but the issue is complex. Freeland also commented after meeting with US Trade Representative Lighthizer that creative ideas by the US in regards to autos has helped progress discussions, while she added discussions will continue on Wednesday and that they are ready to respond to fresh proposals. (Newswires)
Comentarios