AU and NZ 10-yr bond yields decline after drop in US yields

Asia Market Update: Subdued and mixed trading seen in Asia amid inflation data; FX markets quiet; AU and NZ 10-yr bond yields decline after dropping in US yields, NZ priced syndicate.

General Trend

- Cautious equity and FX trading scene ahead of Thursday’s US CPI data.

- Chip-related firms decline after weakness in the US.

- S&P ASX 200 declines after reaching a fresh record high [Woolworths weighs on Consumer Staples; Financials also decline amid lower bond yields].

- Nikkei opened lower and currently trades near the opening level [Topix Banks index drops amid a decline in UST yields; Eisai continues to support Pharma index; Air Transports rise after gains in the US].

- Little initial reaction seen to mixed Chinese inflation data.

- Shanghai Composite ended the morning session modestly higher (+0.4%) [Consumer Staples index has modest rise, the index declined 3% on Tues.].

- Hang Seng has essentially remained flat; China Evergrande Group has remained in the headlines; There was also some focus on Great Wall AMC and Language.

- Taiwan Semi may issue monthly sales this week.

- Companies due to report during the NY morning include Campbell Soup, Daktronics, Lovesac, United Natural Foods, Vera Bradley.

- US CPI data due on Thurs (Jun 10).

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened 0.0%.

- (AU) Reserve Bank of Australia (RBA) Assist Gov Kent: CPI unlikely to be sustainably in target range until 2024 at earliest.

- (AU) Australia Jun Westpac Consumer Confidence: 107.2 v 113.1 prior; M/M: -5.2% v -4.8% prior (back to levels seen in Jan when things were impacted by significant lockdowns).

- BKW.AU Guides FY21 (A$) EBIT 240-260M; Taking A$100M revaluation gain from Industrial JV.

- (AU) Australia sells A$1.0B v A$1.0B indicated in 1.00% Nov 2031 bonds, avg yield: 1.5713%, bid to cover 2.67x.

- (NZ) New Zealand Jun Preliminary ANZ Business Confidence: -0.4 v 1.8 prior; Activity Outlook: 29.1 v 27.1 prior.

- (AU) Australia total weekly payroll jobs change for May 8th to May 22nd: +0.3% v -0.5% prior; Wages +0.6% v -1.3% prior.

Japan

-Nikkei 225 opened -0.2%.

- (JP) Follow up on Japan draft fiscal blueprint: Japan will maintain its goal of achieving a primary balance surplus by FY25, but reassess the timeframe by the end of the year due to the economic impact of COVID.

- (JP) BOJ Dep Gov Amamiya reiterated will not hesitate to ease further if needed - financial press.

Korea

-Kospi opened -0.1%.

- (KR) SOUTH KOREA Q1 FINAL GDP Q/Q: 1.7% V 1.6%E; Y/Y: 1.9% V 1.8%E.

- (KR) South Korea May Unemployment Rate: 3.8% v 3.6%e.

China/Hong Kong

-Hang Seng opened -0.0%; Shanghai Composite opened -0.1%.

- (CN) CHINA MAY CPI M/M: -0.2% V -0.1%E; Y/Y: 1.3% V 1.6%E; PPI Y/Y: 9.0% v 8.5%e (Highest since 2008).

- (CN) China said to plan reforming deposit rate calculations for banks – financial press.

- (CN) China Commerce Ministry (MOFCOM): Cannot be blindly optimistic about China Foreign Trade this year.

- (CN) China PBOC sets Yuan reference rate: 6.3956 v 6.3909 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net CNY0B prior.

- (CN) China fined four banks a total of CNY5.3M related to property lending violations –Caixin.

- 1928.HK Asian American Entertainment Corporation files a lawsuit alleging that Sands breached a contract for a casino license in Macau; seeking 70% of Macau profits since 2004 (implies $12.0B) - press.

North America

- (US) Biden-Capital talks have officially broken down; Biden to move on to talks with groups of Democrats and Republicans - Punchbowl News.

- (US) Weekly API Crude Oil Inventories: -2.1M v -5.4M prior.

- ROBINHOOD.IPO Said to target IPO in July (prior end of June) – Press.

- (MX) Mexico Dep Fin Min Yorio: Tax increases not planned in upcoming fiscal reform; Fiscal reform will include measures to improve tax efficiency and closing loopholes.

- (US) Said that SEC Commissioner Peirce has warned against strict cryptocurrency rules - FT.

Europe

- (UK) Chancellor of the Exchequer Sunak (Fin Min) said to be pushing for financial companies to be exempt from the G7 global corporate tax rate agreement – FT.

- (UK) Said that a group of MPs has called to raise the minimum age to purchase tobacco to 21 from 18 - Press.

Levels as of 01:15ET

- Hang Seng -0.1%; Shanghai Composite +0.3%; Kospi -0.8%; Nikkei225 -0.3%; ASX 200 -0.1%.

- Equity Futures: S&P500 0.0%; Nasdaq100 +0.0%, Dax -0.0%; FTSE100 -0.2%.

- EUR 1.2186-1.2171; JPY 109.53-109.41 ;AUD 0.7744-0.7733; NZD 0.7204-0.7189.

- Commodity Futures: Gold +0.1% at $1,896/oz; Crude Oil +0.5% at $70.43/brl; Copper -0.4% at $4.52/lb.