FOMC policy meeting minutes were widely perceived as dovish

Asian Market Update: Strong Aussie jobs overshadowed by another disappointing round of China trade data

Economic Data

- (CN) CHINA MAR TRADE BALANCE: +$7.7B V +$1.8BE; Exports Y/Y: -6.6% v +4.8%e; Imports Y/Y: -11.3% v +3.9%e

- (AU) AUSTRALIA MAR EMPLOYMENT CHANGE: 18.1K V 2.5KE; UNEMPLOYMENT RATE: 5.8% (3-month low) V 6.1%E; Participation Rate: 64.7% v 64.8%e; Full-Time Employment Change: -22.1K v +80.0K prior; Part-Time Employment Change: +40.2K v -31.8K prior

- (AU) AUSTRALIA APR CONSUMER INFLATION EXPECTATION: 2.4% V 2.1% PRIOR (9-month high)

- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 2.50% (AS EXPECTED; 11TH STRAIGHT PAUSE)

- (KR) SOUTH KOREA MAR EXPORT PRICE INDEX M/M: -0.4% V +0.7% PRIOR; Y/Y: -4.2% V -3.6% PRIOR; IMPORT PRICE INDEX M/M: -0.5% V +0.9% PRIOR; Y/Y: -4.5% V -4.8% PRIOR

- (JP) JAPAN FEB MACHINE ORDERS M/M: -8.8% V -2.6%E PRIOR; Y/Y: 10.8% V 17.5%E PRIOR

- (JP) JAPAN MAR BANK LENDING INCL TRUSTS: 2.1% (5-month low) V 2.2% PRIOR; BANK LENDING EXCL TRUSTS: 2.3% V 2.4% PRIOR

- (JP) JAPAN MAR TOKYO AVERAGE OFFICE VACANCIES: 6.7% V 7.0% PRIOR

- (JP) Japan investors sold net ¥380.5B (net sales for 3rd week) in foreign bonds last week vs sold net ¥763.6B in prior week; Foreign Investors bought net ¥223.6B (net buyers for the 1st time in 4 weeks) in Japan stocks v sold net ¥515.5B in prior week

- (NZ) NEW ZEALAND MAR BUSINESS MANUFACTURING PMI: 58.4 V 56.5 PRIOR (8 months high)

- (NZ) NEW ZEALAND ANZ TRUCKOMETER HEAVY M/M: -1.1% V +2.4% PRIOR

- (PH) Philippines Feb Exports: $4.65B v $4.38B; Y/Y: 24.4% v 16.6%e prior

- (UK) UK MAR RICS HOUSE PRICE BALANCE: 57% V 43%E (4-month high)

Market Snapshot (as of 03:30 GMT):

- Nikkei225 +0.7%, S&P/ASX +0.4%, Kospi %, Shanghai Composite -0.2%, Hang Seng +0.1%, Jun S&P500 -0.1% at 1,863, Jun gold +0.8% at $1,315, May crude oil -0.4% at $103.22/brl

Highlights/Observations/Insights

- FOMC policy meeting minutes were widely perceived as dovish, sending USD/short-term treasury yields lower and gold/stocks higher. Fed officials reinforced expectations they will maintain Fed Funds at low levels even after employment and inflation are near mandate-consistent levels. Some also expressed concern that the shift in Summary of Economic Projections (SEP) "could be misconstrued as indicating a move by the Committee to a less accommodative reaction function," confirming that market interpretation of a more hawkish Fed after the March statement was premature.

- Bed Bath Beyond was the most notable US mover afterhours following earnings. Shares are down 5.7% at the end of extended session after the company missed on the top line and guided Q1 EPS below estimates. Following its initial selloff, BBBY took a further tumble after the conference call when it guided both Q1 and FY14 revenue well short of consensus.

- A rather busy economic calendar in Asia kicked off with disappointing data from Japan, where Feb machine orders fell much further than expected, prompting the govt to cut its assessment on orders to state that rising trend in the segment is stalling. Later in the day, Japan also downgraded its assessment of broader CAPEX - the first time this crucial GDP component was downgraded in 16 months.

- Australia employment offered some brief with a second consecutive month of gains well above consensus. Analysts expected jobless rate to rise to fresh 10-year high of 6.1%, but instead it fell to a 3-month low of 5.8%. Traders were also mindful of outsized gains last month as well as contraction in employment in all sectors of AiG surveys for last month in expectation of a soft print. Note that much of the job gains were in part-time rather than full-time sector, and labor participation rate dropped off by a decimal from prior month's 5-month high.

- On the surface, China's March trade surplus came in higher than expected, but both imports and exports showed a y/y decline against expectations for a rebound from the terrible February report. Customs office attempted to gloss over the disappointing results, expressing optimism that Q2 exports will recover and that 2014 target of 7.5% can still be met. Traders did not take the data nearly as in stride, sending US equity futures and China indices into the red, JPY higher, and AUD off its post-jobs figures highs. Separately, premier Li spoke, reiterating China can accept 2014 GDP below 7.5% target and further negating speculation over a large-scale stimulus to relieve the downward pressure on economy.

- Bank of Korea left rates on hold as widely expected at 2.50% - unchanged for the 11th consecutive month. The new BOK Gov Lee cited an update to the calculation method in lifting 2014 GDP target to 4.0% from 3.8% and also expressing optimism over exports and domestic demand. Regarding the Korean Won, which hit a fresh 5 1/2 year highs going into the decision, Lee said he would support stabilizing FX if one-sided movements continue.

Fixed Income/Commodities/Currencies

- (CN) PBoC to drain CNY70B in 14-day repos and CNY44B in 28-day repos (16th consecutive drain); Injects net CNY55B this week v drained CNY62B prior (1st injection in 9 weeks)

- (JP) BOJ offers to buy ¥250B in 1-3 yr JGB, ¥250B in 3-5yr JGB, and ¥400B in 5-10 yr JGB

- PIMCO Total Returns Fund reduces US govt debt holdings to 41% from 43% prior

- USD/KRW: Onshore open at KRW1,035 vs KRW1,041 prior close (strongest KRW since Aug 2008)

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1510 v 6.1490 prior setting (first weaker CNY setting in 3 sessions)

- AUD/USD rose about 60pips above $0.9430 - 4-month highs - after better than expected Aussie jobs data before retreating toward $0.94 handle after China trade numbers. NZD/USD hit multi-year highs as well, approachign $0.8750. JPY pairs are under added pressure from risk-off flows after China trade, with USD/JPY falling below 101.70, down 40pips from the highs.

Equities

US markets:

- RT: Reports Q3 -$0.07 (adj) v -$0.07e, R$295.6M v $283Me; +12.3% afterhours

- CVX: Issues interim Q1 update: Earnings for the quarter are expected to be lower than Q4 as a result of adverse foreign exchange effects and selected asset impairments and related charge; -0.5% afterhours

- IMPV: Reports Q1 prelim -$0.44 to -$0.40 v -$0.35e, R$31-31.5M v $36.6Me (previously guided -$0.37 to -$0.33, R$36-37M); -0.8% afterhours

- APOG: Reports Q4 $0.27 v $0.31e, R$214.4M v $217Me; -5.6% afterhours

- BBBY: Reports Q4 $1.60 v $1.60e, R$3.20B v $3.22Be; -5.7% afterhours

- ALLY: Prices 95M share IPO at $25, the low end of $25-28/shr expected range

Notable movers by sector:

- Consumer Discretionary: Kintetsu Department Store 8244.JP +3.2% (management changes)

- Materials: Dongwu Cement International 695.HK +1.5% (FY13 results)

- Technology: Elan Microelectonics 2458.TW -0.7% (Q1 results)

- Healthcare: Shijiazhuang Yiling Pharmaceutical 002603.CN +2.8% (FY13 results); Tianjin Chase Sun Pharmaceutical 300026.CN +3.4% (FY13 results); Sinopharm Group 1099.HK +1.0% (FY13 results)

- Telecom: Ten Network TEN.AU +2.7% (H1 results)

- Utilities: Transurban TCL.AU +1.0% (Q3 results)