JPY intervention amid volatility?

Asia market update: Tech down, Main Street up; JPY Intervention amid volatility?; CN budget surplus soars; Pres Biden drama continues; Focus on US Jun PPI.

General trend

- The schizophrenic stock action in the US post-soft CPI figures which saw Nasdaq and S&P500 down heavily but the small cap Russell index +3.6% (Dow also retained 2/3 of its earlier gains pre-market), continued in Asia, with the Nikkei and Kospi down heavily, but the ASX and Hang Seng (+1.8%) well up while the Shanghai Composite was static.

- Tech heavy indices performed the worst across all equity markets, with some normalization of non-tech business valuations, which have been relatively shunned with the focus on tech during the past 12-18 months. Nvidia was down -5.6% in regular trade and another -1.0% after hours.

- ASX 200 traded at a fresh record high; REIT index outperforms, while Australia government bond yields declined overnight.

- Following speculated Yen intervention overnight and today upon severe JPY volatility, Japan’s top diplomat Kanda dropped a clue on Yen FX limits by commenting that the “5% move in the past month is significant”.

- China budget surpluses continued to soar, which will fan fears outside China of the country exporting its over-capacity. Yuan denominated exports rose +8.6% y/y, the fastest growth since Apr 2023.

- New Zealand manufacturing PMI recorded its lowest figures for nearly three years and has now remained mired in contraction for 16 months.

- Aussie mining and resources companies report impact to their businesses due to supply chain disruptions after BHP announced overnight that nickel ops in Western Australia to be suspended due to oversupply.

- Singapore advance GDP was inline with estimates.

- The drama surrounding US Pres Biden continued as he held a much-anticipated live press conference. Most emphasis from the press centered around his mistaken reference to VP Harris as Trump.

- US equity FUTs -0.1% during Asian trading.

Looking ahead (Asian time zone)

- Fri July 12th (Fri night US Jun PPI, US July Michigan Consumer Conf).

Holidays in Asia this week

- Mon July 8th Malaysia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 7,890.

- Australia sells A$800M vs. A$800M indicated in 2.75% Nov 2029 bonds; Avg Yield: 4.0938% v 4.1079% prior; bid-to-cover: 3.10x v 3.23x prior.

- New Zealand Jun Total Card Spending M/M: -0.5% v -1.1% prior.

- New Zealand Jun Manufacturing PMI: 41.1 v 46.6 prior (16th straight contraction, lowest since Aug 2021).

China/Hong Kong

- Hang Seng opens +1.1% at 18,020.

- China Jun trade balance (CNY-denominated): 703.7B V 586.4B prior.

- China Jun trade balance: $99.1B V $85.3BE.

- China sells 5-Year Sovereign Bonds at Avg Yield: 1.9100% v 1.9943% prior (Jun 11th).

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.

- China PBOC sets Yuan reference rate: 7.1315 v 7.1339 prior [overnight update].

Japan

- Nikkei 225 opens -1.3% at 41,668.

- Japan May Final Industrial Production M/M: 3.6% v 2.8% prelim; Y/Y: 1.1% v 0.3% prelim.

- BOJ Quarterly Opinion Survey: Japanese households expect inflation to rise by average 11.5% one year from now, with median +10.0%.

- Japan Fin Min Suzuki: Declines comment on FX intervention, refrain from evaluating recent FX levels; declines comment on rate check report.

- @20:10 Bank of Japan (BOJ) said to have conducted a rate check related to EUR/JPY on Jul 12th, prepping for currency intervention - Nikkei.

- Japan Outgoing Top FX Diplomat Kanda: Continues to decline comment on FX intervention - financial press.

- Follow Up: Japan Economy Min Saito: To discuss measures to deal with jet fuel shortage on Tues (Jul 16th); domestic power supply-demand situation requires vigilance.

- Japan sells ¥5.2T in 3-Month Bills; Avg Yield: 0.0132% v 0.0032% prior; bid-to-cover: 3.51x v 3.47x prior.

- USD/JPY extends losses over 1.5% to test 158 level (lowest since mid-June); EUR/JPY drops over 1% as well [overnight update].

South Korea

- Kospi opens -0.8% at 2,867.

- South Korea’s 2025 hourly minimum wage set at KRW10,030, +1.7% y/y - financial press.

Other Asia

- Singapore Q2advance GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.9% V 2.7%E.

- (IN) Reserve Bank of India (RBI) Gov Das: India June CPI will be close to 5%; Too early to talk about interest rate cuts [overnight update].

- Malaysia central bank (BNM) leaves overnight policy rate unchanged at 3.00% [overnight update].

North America

- (US) Follow up: Former US Pres Trump meets with Hungary PM Orban at Mar-a-Lago, Florida, post-NATO Summit (Washington DC).

- (US) US Pres Biden mistakenly refers to VP Harris as "Vice President Trump" at key Press Conference.

- (US) BOFA institute: June total card spending -0.5% Y/Y (first drop since JAN 2024) V +0.7% AVERAGE IN MAY; The weakness was broad based; While softening, there is still some momentum behind consumer spending.

- (US) Reportedly Dem donors would be watching Biden’s NATO news conference tonight closely as they figure out what to do next - NYT's Dealbook.

- (US) JUN CPI M/M: -0.1% V +0.1%E; Y/Y: 3.0% V 3.1%E (1st negative M/M print since May 2020; lowest annual pace since Apr 2021); Core M/M: 0.1% v 0.2%e; Y/Y: 3.3% v 3.4%e (lowest since Apr 2021).

- (US) Initial jobless claims: 222K V 235KE; continuing claims: 1.852M V 1.860ME (1st drop in Continuing Claims in 10 weeks).

- TTN Research Alert: US June CPI Supercore Y/Y (Core Services less Shelter) 4.651% v 4.804% prior; CPI Supercore (M/M): -0.054% v -0.045% prior.

- (US) Jun Real Avg Hourly Earning Y/Y: 0.8% v 0.7% prior; Avg Weekly Earnings Y/Y: % v 0.5% prior.

- (US) Weekly EIA Natural Gas inventories: +65 BCF VS. +49 TO +65BCF indicated range.

- (US) Atlanta June Sticky-CPI annualized 2.6% v 2.4% m/m, Core 2.4% v 2.2% m/m.

- (US) Reportedly Biden campaign has tested Kamala Harris v Trump voter surveys - NYT.

- (US) Fed's Daly (voter): Big signal from Fed that so many of us are talking about the labor market; Every meeting is live.

- (US) Treasury $22B 30-year bond reopening draws 4.405% V 4.403% prior; bid to cover 2.30 V 2.49 prior and 2.41 over last 8 reopenings.

- (US) Fed's Musalem (non-voter): Supported Fed's rate decision at June meeting; CPI data points encourages further progress.

- (US) Jun monthly budget statement: -$66B V -$76.0BE.

Europe

- Rheinmetall [RHM.DE] (DE) German Chancellor Scholz: Will not comment on report about Russian plot to kill Co CEO - financial press.

- (IE) Ireland Jun CPI M/M: 0.4% v 0.5% prior; Y/Y: 2.2% v 2.6% prior.

- (FR) France Fin Min Le Maire: France faces strong market reaction if fails on cuts; We must find €15B annually to meet EU fiscal demands; France must rigorously stick to budget plans.

- (TR) Turkey Central Bank (CBRT) Gov Karahan: We're on verge of sustained disinflation; We're actively sterilizing excess liquidity - presentation- (IL) Netanyahu's Office: Israeli negotiation team to leave Cairo this evening for Gaza ceasefire talks.

Levels as of 01:20 ET

- Nikkei 225 -2.4%; ASX 200 +0.9%; Hang Seng +2.2%; Shanghai Composite -0.1% ; Kospi -2.0%.

- Equity S&P500 FUTs -0.1%; Nasdaq100 FUTs -0.2%, Dax flat; FTSE100 +0.2%.

- EUR 1.0863-1.0875: JPY 157.75-159.45; AUD 0.6754-0.6773 NZD 0.6076-0.6108.

- Gold -0.4% at $2,413/oz; Crude Oil +0.3% at $82.88/brl; Copper -0.7% at $4.4962/lb.