PBOC may start trading govt bonds

Asia market update: Geopolitics dominates wk/end & the week to come? PBOC may start trading govt bonds; US Retail Sales tonight and focus on US earnings.

General trend

Weekend geopolitics related

- Iran’s ‘calibrated’ and well-telegraphed strikes on Israel late Saturday did not appear to cause much actual damage and Iran said that the attacks were “complete” but warned Israel against retaliation. Markets now nervously await any potential response from Israel and if it may lead to further escalation.

- Bitcoin plunged to be briefly <$60k following the news of the Iranian strikes, its lowest price point since late Feb / early Mar.

- Currencies and Oil futures opened the week near to their Friday close levels, likely due to the advanced telegraphing of the Iran strikes and their apparent limited damage caused.

- Currencies proceeded to claw back a little of their steep losses against USD last week, with the exception of some Asian currencies incl. KRW, MYR, PHP and JPY which continued to plumb fresh 34-year lows as it approached 154 against the greenback.

Regular news

- Asian equities lower with Korea’s Kospi -1.2%, now having erased all the earlier gains in 2024. However, the Shanghai Composite bucked the trend, up over 1.0% on higher property stocks (Shanghai Prop Index +2.2% on no particular news, however SSE Banks +1.9%, SSE Consumer Staples +2.2% (QE talk?).

- Weak China data over the weekend, with generally worse Loans, Aggregate Financing and Trade data than expected.

- China PBOC weakest fix since Mar 25th and for the second month made no net injection in its monthly MLF operation.

- Apparent confirmation late Friday that China’s PBOC may follow through on starting to trade govt bonds to manage liquidity. (This been previously reported as an instruction to the PBOC from Pres Xi). US Tier-1 analysts note the development in their weekend updates.

- Nickel and Aluminum +6-7% after new US Treasury restrictions on Russian aluminum, nickel and copper.

- Japan Core Machine orders much higher than expected, but some analysts doubt it will yet impact BOJ’s outlook.

- US equity FUTs clawed back some Friday losses, +0.3% during Asian trading.

- Note China ‘data dump’ tomorrow.

Looking ahead (Asian time zone)

- Mon Apr 15th (Mon night US Mar Retail Sales).

- Tue Apr 16th China “Data Dump”; Q1 GDP, Mar Industrial Prod, Retail Sales, FAI;

- Wed Apr 17th New Zealand Q1 CPI, Japan Balance of Trade, China YTD FDI (Wed eve UK CPI).

- Thu Apr 18th Australia employment, RBA Bulletin,

- Friday Apr 19th Japan National CPI, (Fri eve UK Retail Sales).

Holidays in Asia this week

- Mon Apr 15th Indonesia, Thailand.

- Tue Apr 16th Thailand.

- Wed Apr 17th India.

- Thu Apr 18th Vietnam.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,776.

- New Zealand Mar Performance of Services Index: 47.5 v 53.0 prior (first contraction since Dec 2023).

- New Zealand Feb Net Migration: 7.6K v 2.9K prior.

- RBNZ says neutral cash rate currently ~3.9% (current OCR 5.50%).

- Singapore PM Lee: Singapore to partner with New Zealand on supply chains.

China/Hong Kong

- Hang Seng opens -1.4% at 16,487; Shanghai Composite opens -0.2% at 3,013.

- US reportedly faces pushback from Japan and Dutch officials regarding China chip actions as US election nears – press [weekend update].

- China PBOC: Reiterates to maintain reasonable and appropriate money conditions; May start trading govt bonds to manage liquidity - (post trade data comments) [weekend update].

- China Mar New Yuan Loans (CNY): 3.09T v 3.600Te [weekend update].

- China Mar YTD new Yuan loans (CNY): 9.46T V 6.37T prior [weekend update].

- China Mar YTD aggregate financing (CNY): 12.93T v 8.06T prior [weekend update].

- China Mar M2 money supply Y/Y: 8.3% V 8.7%E [weekend update].

- China Mar trade balance: $58.6B V $69.1BE; Exports Y/Y: -7.5% v -1.8%e [weekend update].

- China Mar trade balance (CNY-denominated): 415.9B V 540.9B PRIOR [weekend update].

- China Q1 Trade Balance (CNY) 1.31T [weekend update].

- China MIIT tells largest telecom carriers like China Mobile to phase out foreign processors, including one made by AMD and Intel, in networks by 2027 - WSJ [**Note: as of 2023, China provided 27% of Intel's Rev and 15% of AMD's Rev] [weekend update].

- Chip suppliers Intel and AMD drop -4 to -5% last Friday (US time) after China tells telecom carriers to remove foreign processors by 2027 [weekend update].

- China Cabinet (State Council): Will raise bar for IPOs and further improve IPO system [weekend update].

- (RU) Reportedly since end-Mar, Chinese banks began blocking payments from Russian companies for components to assemble electronic devices - Russian press [weekend update].

- US Senior Admin Official: China is supporting Russia's war effort in Ukraine by helping it ramp up its defense production [weekend update].

- China PBOC sets Yuan reference rate: 7.0979 v 7.0967 prior (weakest fix since Mar 25th).

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

- CHhina PBOC Conducts CNY100.0B in 1-year medium term lending facility (MLF) AT 2.50% VS. 2.50% PRIOR (second month of no net injection).

Japan

- Nikkei 225 opens -1.2% at 30,056.

- Japan Feb Core Machine Orders M/M: +7.7% v +0.8%e; Y/Y: -1.8% v -6.0%e.

- Japan planning to increase fines on app store monopolies to 20% of sales - Japanese press.

- US Steel X Shareholders formally approve Nippon Steel's takeover offer – press [weekend update].

South Korea

- Kospi opens -0.8% at 2,661.

- Bank of Korea to take measures in case of concerns over FX volatility - Korean press.

- South Korea Fin Min Choi: Uncertainty rising in economy and markets; current fuel tax cut to be extended for 2 additional months through the end of Jun.

- South Korea FSC: to strengthen monitoring of financial markets, to prepare additional market measures if needed – press.

- BOK Dir General said BOK Gov Rhee used verbal intervention rhetoric on Won [refers to comments made on Apr 12th] – US financial press [update].

Other Asia

- Malaysia Central Bank (BNM): Will ensure Malaysian markets remain orderly, including FX.

North America

- WIRE To be acquired by Italy's Prysmian for $290.00/shr in cash with implied EV €3.9B.

- (US) House to vote on bills including Iran as well as aid to Israel on Mon at ~6:30 PM ET.

- Tesla employees rumored to be preparing for round of layoffs; Texas Gigafactory to shorten Cybertruck production shift - Electrek.

- Apple Q1 (Jan-Mar) global iPhone shipments -9.6% while global smartphone market rebounded – IDC.

- US CENTCOM: On Apr 13-14th destroyed >80 UAV intended to strike Israel; also destroyed at least 6 missiles.

- (US) Apr preliminary university of Michigan confidence: 77.9 V 79.0E; Inflation expectations rise more than expected [weekend update].

- JPM CEO: CEO: It's quite clear the American economy is strong; Credit card charge offs are normalizing; There are some cracks in subprime auto loans - media call comments [weekend update].

Europe

- (IE) Ireland Mar Construction PMI: 51.6 v 47.4 prior (4th straight contraction) - update.

- (IR) Iran Envoy to the UN Amir Saeid Iravani reiterated that Iran does NOT plan to attack the US, would retaliate against Washington if it were attacked – Press.

- (IL) Israel Defense Min: We have repelled the first major wave of Iranian aerial attacks; The confrontation is not over; Over 300 projectiles were fired by Iran at Israel overnight and 99% were intercepted [weekend update].

- (US) Pres Biden: Have just spoken to PM Netanyahu to affirm America's ironclad commitment to the security of Israel; Told Netanyahu that US will oppose any Israeli counterattack against Iran [weekend update].

- (IR) Iran is reportedly closely watching Jordan for any pro-Israeli move - Iran FARS news agency [weekend update].

Levels as of 01:20 ET

- Nikkei 225 -0.9%, ASX 200 -0.4% , Hang Seng -0.8%; Shanghai Composite +1.2%; Kospi -0.6%.

- Equity S&P500 Futures: +0.4%; Nasdaq100 +0.4%, Dax +0.5% ; FTSE100 +0.3%.

- EUR 1.0633-1.0655; JPY 152.98-153.86 ; AUD 0.6460-0.6489 ; NZD 0.5927-0.5954.

- Gold -0.1% at $2,371/oz; Crude Oil -0.5% at $85.25/brl; Copper -0.6% at $4.2912/lb.