China Beige Book and CASS think tank see robust Q2 growth

US Session Highlights

- (US) APR S&P / CASE-SHILLER 20-CITY M/M: 0.28% V 0.50%E; Y/Y: 5.67% V 5.90%E; HOUSE PRICE INDEX (HPI): 197.19 V 195.38 PRIOR

- (US) JUN RICHMOND FED MANUFACTURING INDEX: 7 V 5E

- (US) JUNE DALLAS FED MANUFACTURING ACTIVITY: 15.0 V 16.0E; new orders 6 v 0 prior

- (US) JUN CONSUMER CONFIDENCE: 118.9 V 116.0E

- (US) FDA to take new steps to improve prescription drug competition; to expedite review of generic drug applications

- (CN) Trump administration reportedly mulling tougher stance on China trade which could include steel tariffs - press

- (US) Fed's Harker (hawk, voter) still supports one more rate hike this year; inflation weakness likely temporary

- (US) Sen Cornyn (R-TX): Senate will vote on healthcare bill this week; expects to have support to get it done

- Stocks fell across the board today, with technology showing the largest losses, as the Nasdaq dropped 1.6%. The S&P was not far behind; it had its lowest close in 6 weeks. Investors have begun to take note of the downward movement, as the VIX increased 10% to 11.06, its highest close in 2 weeks. Financials rose 0.5% on the day, the only sector posting gains.

 

US markets on close: Dow -0.5%, S&P500 -0.8%, Nasdaq -1.6%

- Best Sector in S&P500: Financials

- Worst Sector in S&P500: Technology

- Biggest gainers: SIG +4.6%; DRI +2.9%; CHK +2.8%

- Biggest losers: ARNC -9.0%; STX -6.8%; NFLX -4.1%
- At the close: VIX 11.1 (+1.2pts); Treasuries: 2-yr 1.37% (+1bps), 10-yr 2.20% (+6bps), 30-yr 2.74% (+4bps)

 

Politics

- (US) President Trump: I just finished a great meeting with the Republican Senators concerning HealthCare. They really want to get it right, unlike OCare! - tweet

- (VE) Venezuela President Maduro: Supreme Court building in Caracas suffered a "terror attack" by police helicopter - press

- (JP) Japan chief cabinet secretary Suga: Defense Min Inada will continue to perform his duties; Remarks were reported to PM Abe, have no impact on timing of cabinet reshuffle - press

 

Key economic data

none seen

 

Asia Session Observations

- Sentiment has turned more cautious as investors sold both Equities and Treasuries in US session, while the Vix jumped above 11. Euro spiked up over 1 big figure overnight on much less dovish comments from ECB President Draghi. USD/JPY is pulling back to 112 handle after rising above 112.40, while Nikkei225 has reversed its opening gains.

- Takata briefly resumed trading, plunging over 40%; Toshiba is also struggling to close its chip unit sale on resistance from WDC.

 

Speakers and Press

China

- (CN) PBoC adviser: Anticipates no further tightening of monetary policy in H2 - Chinese press

- (CN) Bank of China (BOC) economists see China 2017 GDP around 6.8% - press

- (CN) China Beige Book International (CBB) Q2 survey: Economy continues to improve

- (CN) China Academy of Social Sciences (CASS): Q2 GDP estimated at 6.8% v 6.9% in Q1; 2017 GDP seen around 6.7% v around 6.5% official target - Chinese press

Japan

- (JP) Japan PM Abe reportedly considering abandoning plans to balance the budget by FY20 in exchange for looser debt-to-GDP ratio target - press

- (JP) Japan top banks sold off their JGB holdings to lowest level on record - Nikkei

Australia / New Zealand

- (AU) Former RBA board member Edwards: RBA may raise interest rates as many as 8 times in 2018-19 - AFR

- (NZ) According to latest RBNZ data, property investors borrowing in May fell to NZ$1.5B from NZ$2.5B y/y

- (NZ) RBNZ Gov Wheeler: Outlook for growth remains positive - statement of intent outlining priorities

Korea

- (CN) China National Petroleum Corporation (CNPC) suspends fuel sales to North Korea over concerns that it won’t get paid

 

Asian Equity Indices/Futures (00:00ET)

- Nikkei -0.3%, Hang Seng -0.4%, Shanghai Composite +0.1%, ASX200 +0.3%, Kospi -0.2%

- Equity Futures: S&P500 -0.1%; Nasdaq -0.3%, Dax flat, FTSE100 +0.1%

 

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.1330-1.1355; JPY 112.05-112.35; AUD 0.7580-0.7615; NZD 0.7260-0.7285

- Aug Gold +0.5% at 1,253/oz; Aug Crude Oil -0.2% at $44.14/brl; Sept Copper +0.2% at $2.66/lb

- (US) Weekly API Oil Inventories: Crude: +0.9M v -2.7M prior

- (CN) PBOC SETS YUAN MID POINT AT 6.8053 V 6.8292 PRIOR; strongest Yuan fix since June 19th

- (CN) PBoC: To skip today's open market operation (OMO); 4th consecutive skip

- (CN) China MOF sells 3-yr bonds at 3.4349% v 3.42%e; bid-to-cover 2.73x

- (AU) Australia sells A$800M in 2027 bonds; avg yield 2.4791%; bid-to-cover 3.5x

 

Asia equities notable movers

Australia

- Sirtex Medical (SRX) +14.9%; To cut staff by 15%; to write off A$90M in R&D, performing within FY17 guidance

- Nine Entertainment (NEC) +6.1%; Raises FY17 Reported EBITDA to A$200-210M; Sees FY17 reduction in the licensing fees that it has to pay, equal to ~A$33M (guided A$158-187M on May 2nd)

- AusNet Services (AST) +2.5%; Raised at Credit Suisse

Japan

- FujiFilm (4901) -1.1%; Files to delay financial results to July 31st

- Toshiba (6502) -1.2%; CEO: Western Digital is unfairly obstructing the chip unit sale; Looking to resolve dispute at an early stage

Hong Kong

- Yanzhou Coal (1171) +2.6%; Raised at HSBC

- Kenford Group holdings (464) -7.1%; Reports FY17 (HK$) Net loss 22.2M v 22.5M y/y; Rev 495.4M v 522.9M y/y