Bond yields repriced upwards in the US

General trend

- On the back of strong jobs data overnight from the US indicating that US Fed may have more hiking to go than previously thought, bonds yields repriced upwards in the US, EU and on through to Asia today.

- Asian equities continued yesterday’s steep falls across the board, today led by ASX 200 and Kospi, both down -1.5%.

- AU equities were down as much as 2% to 7,023 - biggest intra-day loss since Mar 16; while AU 10-yr yields jumped to 4.26%, highest since 2014.

- NZ 10-year yields jumped +13bps to 4.8730, highest since 2011.

- After yesterday’s losses of >5% the HK Mainland Banks Index fell further, >-10% for the week -- set for biggest weekly loss in five years.

- South Korean equities saw 62 stocks hitting 52-week lows vs 2 hitting 52-week highs, with Korea 3Y Corp bond yields +7bps to 4.54%.

- US equity FUTs down slightly in the Asian session.

- Samsung electronics saw a 96% slump in profit, to the lowest in 14 years as memory chip prices continue to fall due to oversupply - despite production cuts.

- In currencies, CN PBOC again set the CNY fix >400 pips stronger than estimates. Will the gap between PBOC’s fixes versus estimates widen to 800-900 pips as per late 2022?

- China press reported that the Yuan “will be defended if necessary”.

- On the backdrop of CN rare earth restrictions and US Treas Sec Yellen starting her China trip today, tensions ratcheted up further with the US renewing audit inspection of New York-listed China firms.

- All economists surveyed saw the New Zealand’s RBNZ likely keeping interest rates unchanged at 5.50% when it meets next week on July 12.

- Japan crept closer to the BOJ’s 2% inflation target, with May labor cash earnings rising 2.5% y/y.

Looking ahead (Asian time zone)

- Tonight US non-farm payrolls & unemployment.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 7,140.

- Australia ASX 200 down as much as 2% to 7,023 - biggest intra-day loss since Mar 16.

- Australia 10-yr yield jumps to 4.26%, highest since 2014.

- New Zealand 10-year yields climb +13bps to 4.8730, highest since 2011.

- 25/25 economists polled expect New Zealand RBNZ to keep interest rates unchanged at 5.50% on July 12 - financial press poll.

- New Zealand PM Hipkins: There are ways in which China challenges our national interests - comments in speech.

China/Hong Kong

- Shanghai Composite opens -0.3% at 3,197.

- Hang Seng opens -0.5% at 18,435.

- Hong Kong Mainland Banks Index down >-10% for the week; On track for biggest weekly loss since 2018.

- US said to have warned Hong Kong on tech exports to Russia – Nikkei [overnight update].

- US renews audit inspection of New York-listed China firms as tensions mount - financial press.

- S&PGR: Skewed funding amplifies default risks for China LGFVs.

- China Yuan to be defended if necessary - China press.

- Tesla raises cash rewards to new buyers of Model 3 and Y vehicles in China upon recommendation of existing owners - financial press.

- China MIIT supports China, Hungary NEV makers cooperation - financial press.

- Treasury Sec Yellen will meet Vice Premier Liu He at 10am Beijing time; Today's schedule.

- China Finance Ministry (MOFCOM): We hope the US takes 'concrete' actions to create favourable environment for healthy development of economic, trade ties between China, US - statement responding to Yellen's visit.

- China Customs: Japan wastewater raised food safety concerns; The IAEA Report did not fully reflect the views of all the experts involved in the assessment process.

- China PBOC sets Yuan reference rate: 7.2054 v 7.2098 prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repo; Net drains CNY101B v drains CNY191B prior.

Japan

- Nikkei 225 opens -1.0% at 32,450.

- JAPAN MAY LABOR CASH EARNINGS Y/Y: 2.5% V 1.2%E.

- Japan May Household Spending Y/Y: -4.0% v -2.5%e.

- Japan Jun Foreign Reserves $1.25T v $1.25T prior.

- Japan BOJ Dep Gov Uchida: Urges balanced decision on yield curve control (YCC).

- Former top currency diplomat Sakakibara: Yen may weaken to 160 and beyond - financial press (update).

- Japan PM Kishida reportedly mulls Cabinet reshuffle in early Sep - Japan press.

- IAEA Head Grossi says takes criticism on Fukushima water release in good faith because nothing identical like this has happened before - financial press.

- Japan NRA approves Fukushima water release facilities.

- Japan Industry Min Nishimura: Decided to provide ~¥5.3B subsidy to Softbank for generative AI super computer development - financial press.

- Japan Fin Min Suzuki: Need to review impact of corporate tax cut.

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

South Korea

- Kospi opens -0.4% at 2,547.

- South Korea May Current Account: +$1.9B v -$0.8B prior.

- Central Bank of Korea (BoK); Current account surplus will be definitely bigger in June than May - financial press.

- South Korea sells KRW500B vs. KRW500B indicated in 50-year Bonds; Avg Yield: 3.700% v 3.675% prior; bid-to-cover: x v 1.82x prior.

- Samsung Electronics (005930.KR) Reports Q2 prelim (KRW) Op 600B v 555Be (-96% y/y), Rev 60.0T v 62.0Te (-22% y/y).

- South Korea says Japan's Fukushima wastewater discharge plan if carried out as planned meets international standards including IAEA assessment.

- Japan Foreign Ministry: South Korea's military exercises regarding Takeshima is 'extremely regrettable'.

Other Asia

- Taiwan Jun CPI Y/Y: 1.8% v 1.8%e (slowest pace in over 2 yrs) [overnight update].

- Vietnam PM reiterates call for more flexible monetary policy.

- Philippines May Unemployment Rate: 4.3% v 4.5% prior.

- Thailand's ERC proposes to cut power tariff to as low as THB4.45 for Sept-Dec - financial press.

- MALAYSIA CENTRAL BANK (BNM) LEAVES OVERNIGHT POLICY RATE (OPR) UNCHANGED AT 3.00%; AS EXPECTED [overnight update].

- Indonesia Jun Foreign Reserves: $137.5B v $139.3B prior.

- Indonesia Central Bank says ready to intervene in FX market to defend IDR (Rupiah) when needed - financial press.

North America

- JUN ADP EMPLOYMENT CHANGE: +497K V +225KE (largest increase since Feb 2022); Jobs market was 'fragmented', with manufacturing, information, and finance showing declines.

- MAY TRADE BALANCE: -$69.0B V -$69.0BE.

- INITIAL JOBLESS CLAIMS: 248K V 245KE; CONTINUING CLAIMS: 1.72M V 1.73ME.

- Fed's Logan (voter): More rate hikes are likely necessary; Challenging and uncertain environment enabled Jun pause.

- JUN ISM SERVICES INDEX: 53.9 V 51.2E; ISM Services Prices Index at lowest level since Mar 2020.

- MAY JOLTS JOB OPENINGS: 9.824M V 9.900ME.

Europe

- EURO ZONE MAY RETAIL SALES M/M: 0.0% V 0.2%E; Y/Y: -2.9% V -2.7%E.

- EU working on plan to pull out of Energy Charter Treaty – FT.

- EU Council, Parliament, agree on ammunition output boost - financial press.

Levels as of 01:20 ET

- Nikkei 225 -0.5%; ASX 200 -1.5%; Hang Seng -0.3%; Shanghai Composite +0.1% ; Kospi -1.4%.

- Equity S&P500 Futures flat; Nasdaq100 flat, Dax +0.3%; FTSE100 -2.1%.

- EUR 1.0882-1.0896 ; JPY 143.68-144.20 ; AUD 0.6618-0.6643 ; NZD 0.6153-0.6176.

- Gold +0.2% at $1,919/oz; Crude Oil +0.5% at $72.16/brl; Copper +0.2% at $3.7505/lb.