BOJ's Kuroda reiterates flexible stance on yield curve

Asia Mid-Session Market Update: China property price growth stays hot; BOJ's Kuroda reiterates flexible stance on yield curve; USD extending gains

 

US Session Highlights

- (US) INITIAL JOBLESS CLAIMS: 260K V 250KE; CONTINUING CLAIMS: 2.06M V 2.05ME (4-week average of continuing claims lowest since July 8, 2000)

- (US) OCT PHILADELPHIA FED BUSINESS OUTLOOK: 9.7 V 5.0E; new orders reach 23-month high

- (US) SEPT EXISTING HOME SALES: 5.47M V 5.35ME

- US Dollar Index hits fresh multi-month high post data

- Tesla shares trade off-course following self-driving technology announcement

- WFM: Detroit Health Dept investigating case of hepatitis A found in a food handler at a Whole Foods market; urges customers that ate at the prepared foods bar at that local store to contact their doctor - press

 

US markets on close: Dow -0.2%, S&P500 -0.1%, Nasdaq -0.1%

- Best Sector in S&P500: Healthcare

- Worst Sector in S&P500: Technology

- Biggest gainers: AXP +9.1%, SNA +6.6%, MAT +6.0%, WBA +5.0%, TWX +4.8%

- Biggest losers: EBAY -10.8%, UNP -6.7%, TRV -5.7%, ADS -4.9%, AN -4.1%

- At the close: VIX 13.75 (-0.4pts); Treasuries: 2-yr 0.82% (+2bp), 10-yr 1.75% (+1bp), 30-yr 2.50% (-1bp)

 

US movers afterhours

- ALKS: Announces positive topline results from FORWARD-5 pivotal Phase 3 study of ALKS 5461 for Major Depressive Disorder; +44.8% afterhours

- WLH: Meritage Homes said to target acquistion of William Lyon - Betaville; +12.2% afterhours

- PFPT: Reports Q3 $0.19 v $0.05e, R$99.8M v $94.4Me; +11.2% afterhours

- VRSN: Discloses amendment Dept of Commerce agreement; Verisign to remain sole registry for .com domains through Nov 30, 2024 - filing; +7.1% afterhours

- MSFT: Reports Q1 $0.76 adj v $0.68e, R$22.3B v $21.5Be; +5.9% afterhours

- PTCT: Spinal Muscular Atrophy Program Advances into Phase 2 Clinical Studies in SMA Patients with RG7916; trial triggers $20M milestone payment to PTCT; +5.3% afterhours

- PYPL: Reports Q3 $0.35 v $0.35e, R$2.67B v $2.65Be; Will allow Xoom accounts to link to PYPL; +4.5% afterhours

- SAM: Reports Q3 $2.48 v $2.54e, R$253.4M v $291Me; -1.9% afterhours

- AMD: Reports Q3 $0.03 v $0.00e, R$1.31B v $1.20Be; -5.8% afterhours

- RRGB: Reports prelim Q3 $0.38 v $0.46e, R$297M v $300Me; -6.9% afterhours

- SKX: Reports Q3 $0.42 v $0.46e, R$942.2M v $953Me; -15.4% afterhours

 

Asia Session Notable Observations, Speakers and Press

- China property prices in September continue to rise particularly in the top-tier cities; Annualized growth in Shanghai And Beijing was up 32.7% and 27.8% - up from 31.2% and 23.5% respectively in the prior month and also the biggest increase of the year. All-70 cities calculation saw y/y rise 11.2% v 9.2% prior and m/m at 2.1% v 1.5% prior - also 2016 highs. Also of note, State Administration of Foreign Exchange (SAFE) was not concerned about the impact of Fed tightening on emerging markets while also cheering the easing in capital outflow pressure.

- Ahead of Nov 1st BOJ meeting, Gov Kuroda reiterated he would consider what is appropriate for the yield curve target at every decision, but also added he sees no immediate need for change of view consider there have not been any big changes seen in the economy, price and financial developments; Kuroda further noted one option could be to reduce long-term bond buying to steepen the curve and that monetary base would still grow even if annual JGB pace slowed to ¥70T or ¥60T. Separately, BOJ's Masai also hinted the timing for achieving inflation target could be delayed, with the size of the anticipated BOJ GDP/CPI forecast revisions on Nov 1st driving that decision. Also in Japan, Fin Min Aso acknowledged Japan top union association (Rengo) demands of 2% wage inflation as reasonable, and that he was surprised they did not ask for more.

- Goldman Sachs forecast for RBA to transition to policy tightening mode in early 2018, even with the latest set of employment data overnight showing some turbulence; Focus turns on quarterly CPI next Wednesday that could potentially boost the case for further easing.

- US dollar extended its ascent across a number of major currencies as short-end US rates rise on improving US housing and Philly Fed data; EUR falls below 1.09 to a 7-month low, USD/CNY offshore hits multi-month highs above 6.775, USD/JPY returned above 100-day EMA above ¥104, and USD/CHF is at its near 5-month highs approaching parity.

 

Asia Key economic data:

- (CN) CHINA SEPT PROPERTY PRICES M/M: RISE IN 63 OUT OF 70 CITIES VS 64 PRIOR; Y/Y: RISE IN 64 OUT OF 70 CITIES V 62 PRIOR; China all-70 new home prices m/m: 1.4% v 1.5% prior; y/y: 11.2% v 9.2% prior

- (NZ) New Zealand Sept Net Migration: 6.3K v 5.6K prior

- (KR) South Korea Oct 1-20th exports +1.2% y/y; imports -4.6% y/y

- (US) NORTH AMERICA Sept SEMI BOOK/BILL RATIO: 1.05 V 1.03 prior (above parity for 10th straight month)

- (US) NPD: Sept Video Games Sales -23% y/y at $838M

 

Asian Equity Markets (23:30ET)

- Nikkei +0.3%, Hang Seng closed, Shanghai Composite -0.4%, ASX200 -0.2%, Kospi -0.4%

 

FX ranges/Commodities/Futures/Fixed Income (23:30ET):

- EUR 1.0895-1.0930; JPY 103.90-104.20; AUD 0.7615-0.7635; NZD 0.7160-0.7195

- Dec Gold -0.4% at 1,263/oz; Dec Crude Oil -0.5% at $50.36/brl; Copper +0.1% at $2.10/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 970.2 tonnes; highest since Aug 11th

- Equity Futures: S&P e-mini -0.2%, Dax -0.2%, FTSE100 -0.2%

- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7558 V 6.7311 PRIOR; lowest CNY setting since 2010

- (CN) PBOC to inject CNY70B in 7-day reverse repos, CNY40B in 14-day reverse repos and CNY50B in 28-day reverse repos; Injects net CNY95.5B for the week v drains CNY415B w/w

- (AU) Australia MoF (AOFM) sells A$900M in 5.75% 2021 Bonds; avg yield: 1.808%; bid-to-cover: 3.58x

- (US) Weekly Fed Balance Sheet Total Assets for week ending Oct 19th: $4.47T v $4.46T prior; Reserve Bank Credit: $4.43T v $4.42T prior; M1: -$4.7B v +$69.1B prior; M2: +$43.4B (11-week high) v -$8.0B prior

 

Asia movers

- BCI.AU BC Iron: Reports Q1 Iron Valley production 2.1M wmt; EBITDA A$4.7M; +6.3%

- JHC.AU Japara: Affirms FY17 EBITDA similar y/y (implies +11%); YTD performance has been in line with expectations - AGM; +1.5%

- 7201.JP Nissan: Co-CEO Ghosn: Mitsubishi and Nissan do not have capacity redundancies; +0.9%

- STO.AU Santos: Reports Q3 production 15.5 MMBOE v 14.5 MMBOE y/y; Sales 21.3 MMBOE v 16.2 MMBOE y/y; Rev A$650M v A$585M y/y; +0.3%

- OZL.AU Oz Minerals: Reports Q3 gold production 28.5K oz v 23.8K y/y; copper 28.8Kt v 33.5Kt y/y; Cuts FY16 gold production 115-120K (prior 125-135K oz); Affirms copper production 115-125Kt; -0.3%

- HSO.AU Healthscope: Warns Q1 saw slower than expected Rev growth in hospitals; -18.4%

- 3861.JP Oji Holdings: May report H1 op profit ¥33B, +16% y/y (v prior forecast ¥31B) - Nikkei; +1.7%

- 4185.JP JSR Corp: May report H1 op profit ¥13B, -32% y/y (v prior forecast ¥17B) - Nikkei; -2.8%