China acts on Yuan (but no stimulus yet), equities mixed

- No CN stimulus yet, but we did see reported FX intervention by China SOE banks in the offshore FX markets to support the Yuan.

- A little before the reports of intervention Yuan was up after a stronger than expected PBOC reference rate fix by about ~100bps.

- AUD & NZD along with Copper picked up bids on the back of the Yuan activity, each up 0.5%-0.8% during the morning, despite AU 3-yr bond yields falling a further -6bps during morning trading.

- Shanghai Composite and Hang Seng also bid up, 1% and 1.5% respectively.

- Tomorrow is Aussie CPI, which could have some significant impact on AUD either way depending on the read.

- After losses over the past several days losses, today ASX 200 REITs +2.3%, leading the ASX 200 +0.5%.

- On the other hand, Nikkei and Kospi both down on the day (-0.6% and -0.1% respectively).

- US equity FUTs slightly higher.

- Staying with China, a story from Hangzhou Bank [600926.CN] which reduced its planned share sale by 33%, citing “the situation of the bank and the industry”.

- CN also asked its banks to lend more to manufacturers, amid officials complaining that global trade is growing slower than expected.

Looking ahead

- Tue ECB Pres Lagarde speech @Central Banking Forum in Portugal.

- Wed Australia CPI.

- Wed night US Fed Powell and BOJ Gov Ueda on policy panel @Central Banking Forum in Portugal.

- Thu Japan Consumer Confidence, AU Retail Sales.

- Fri CN Manufacturing PMI, EU inflation rate and unemployment rate.

- Fri night US PCE Core and Personal Spending.

- Holidays this week: Jun 29 Singapore, Indonesia, Malaysia and Philippines closed for Eid-al-Adha.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,084.

- Australia sells total A$150M v A$150hM indicated in 2027 and 2040 indexed bonds.

- Australia ANZ/Roy Morgan Weekly Consumer Confidence: 74.9 v 72.4 prior.

- New Zealand Fin Min: Reserve Bank of New Zealand (RBNZ) Monetary Policy Committee Remit & Charter renewed; only 'minor' changes to the policy framework.

- New Zealand Fin Min Robertson: Several NZ universities' balance sheets are under stress - news conference’.

China/Hong Kong

- Shanghai Composite opens +0.1% at 3,153.

- Hang Seng opens +0.3% at 18,851.

- HK Exchange & Clearing (388.HK) COO says IPO pipeline is healthy; Expects more flows from Middle East - TV interview.

- Hong Kong Monetary Authority (HKMA): To examine whether the three-tier banking system is still fit for purpose in light of market developments.

- China State Banks spotted selling USD in offshore markets to prop up Yuan.

- Hangzhou Bank [600926.CN] cuts size of share sale to CNY8.0B (prior CNY12.5B); cites the situation of the bank and the industry.

- China NDRC encouraged financial firms to expand loans to the manufacturing industry [update from Jun 26].

- SASAC Chairman Yuzhuo: Global Trade is growing slower than expected.

- China Premier Li Qiang: China likely to achieve annual [2023] GDP growth target of ~5.0%.

- China PBOC Open Market Operation (OMO): Sells CNY219B in 7-day reverse repo; Net injects CNY37B v Net injects CNY155B prior.

- China PBOC sets Yuan reference rate: 7.2098 v 7.2056 prior (weakest level since Nov 10, 2022).

Japan

- Nikkei 225 opens -0.2% at 32,629.

- Bank of Japan (BOJ): Japan Household Assets at ¥2,043T, +1.1% y/y – Q1 Quarterly Flow of Funds Report.

- Japan's LDP, Komeito [coalition partner] parties affirm cooperation on next election.

- Japan to draw up carbon pricing strategy next month.

- Japan to revamp inheritance tax rules for apartments.

- 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].

- Japan sells ¥1.2T IN 20-year JGB bonds; AVG yield: 0.9480% V 0.9920% prior; bid-to-cover: 3.03X V 3.69X prior.

- Japan Chief Cabinet Sec Matsuno: JSR deal is very important for strengthening Japan's industrial competitiveness (for chip supply and supply chains).

- JSR (4185.JP) JIC plans ¥4,350/shr tender offer - financial press.

- Japan MOF: Japan top currency diplomat Kanda to remain at his post in annual personnel reshuffle.

- Japan Fin Min Suzuki; Recent FX moves are sharp and one-sided.

South Korea

- Kospi opens flat at 2,581.

- South Korea to enforce FX law revisions that make it easier to trade the Won currency (KRW).

- Japan Econ Min Nishimura: Japan confirms to return South Korea to export white (most-favored) list on Jul 21st.

- South Korea flour millers said to consider cutting flour prices in July following drop in international flour costs.

- JBIC, Korea Export/Import Bank to tie up on infrastructure building in other countries.

Other Asia

- Taiwan May M1 Money Supply Daily Avg Y/Y: 3.3% v 2.7% prior; M2 Money Supply Daily Avg Y/Y: 6.6% v 6.7% prior.

- Philippines Central Bank (BSP): Very hard to cut rates if the US is raising rates.

- Philippines said to sign $1.14B loan deals with the World Bank.

- China Premier Li: China is ready to work with Vietnam to manage differences through dialogue and consultation.

- Thailand May Customs Trade Balance: -$1.8B v -$0.4Be.

North America

- Fed's Williams (voter): Restoring price stability is of paramount importance.

- June Dallas Fed manufacturing activity: -23.2 V -20.0E.

- Treasury sells $42B IN 2-year note auction; draws 4.670% V 4.300% prior; bid-to-cover ratio: 2.99 V 2.90 prior and 2.63 over the last 12.

- Treasury Sec Yellen reportedly planning a trip to China in early July – press.

Europe

- German Bundesbank Monthly Report: Economy has bottomed out; see slight growth in Q2.

- UK PM Sunak: Prepared for a range of scenarios in Russia.

- Russian Foreign Minister Lavrov: US envoy gave signals to Russia that the US had nothing to do with the Wagner mutiny and hoped for nuclear arms safety - Russian press.

- Russia Pres Putin: Most of Wagner troops are patriots; Suggests that the Wagner mercenaries sign contracts with the Ministry of Defense, either quit or leave for Belaru.

Levels as of 01:20 ET

- Nikkei 225 -0.5%, ASX 200 +0.5%, Hang Seng +1.5%; Shanghai Composite +1.0% ; Kospi -0.1%.

- Equity S&P500 Futures: +0.2%; Nasdaq100 +0.2%; Dax +0.2%; FTSE100 -0.1%.

- EUR 1.09.03-1.0936 ; JPY 143.28-143.57; AUD 0.6668-0.6721 ; NZD 0.6150-0.6194.

- Gold +0.2% at $1,938/oz; Crude Oil +0.8% at $69.92/brl; Copper +0.9% at $3.8327/lb.