RBA extends rate pause, CN PMI in contraction again amid Asia PMI day

General trend

- Australia RBA paused again at 4.1%, slightly against consensus; AU 3-yr yields -9bps, AUD fell 0.7% post decision.

- Positive momentum from yesterday continued at the open across Asian equities at the open today.

- However, China equities lost some gains as Caixin manufacturing PMI moved back into contraction, along with further question marks over China developers with Country Garden cancelling a planned ~$300M placement.

- Copper and commodity currencies, NZD and AUD all fell 0.2-0.3% after the miss.

- Despite further positive commitments to encouraging economic growth from China authorities (though still non-concrete), the Hang Seng Property Markets Index lost up to -1.72% afterwards, with China Properties Index -3%.

- CNH lost 0.4% against USD post-Caixin PMI, amid general dollar strength at the start of the new month.

- On Asia PMI day a majority of economies continued their contraction trends (see below).

- In Japan TOPIX Banks -1% (megabank EPS in focus; JGB yields flat).

- US equity FUTs slightly up during Asia trading.

Looking ahead (Asian time zone)

- Wed night US ISM manufacturing and JOLTS job openings.

- Thu AU Balance of Trade, CN Caixin Services PMI.

- Thu evening UK BOE rate decision.

- Thu night US ISM Services PMI.

- Fri night US non-farm payrolls and unemployment.

Holidays in Asia this week

- Tue Aug 1 – Thailand holiday.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,419.

- Australia July Final PMI Manufacturing: 49.6 v 49.6 prelim (confirms 5th month of contraction).

- Australia Jun Building Approvals M/M: -7.7% v -8.0%e.

- Australia ANZ/Roy Morgan Weekly Consumer Confidence: 78.4 v 75.2 prior.

- Australia July CoreLogic House Prices M/M: 0.8% v 1.2% prior.

- New Zealand Jun Building Permits M/M: +3.5% v -2.2% prior.

China/Hong Kong

- Shanghai Composite opens -0.1% at 3,288.

- Hang Seng opens +0.7% at 20,211.

- Country Garden (2007.HK) Cancels HK$2.34B primary placement.

- Hong Kong Jun Budget Balance (HKD): -30.0B v -37.1B prior (overnight update).

- Hong Kong Q2 Advance GDP Q/Q: -1.3% v +0.8%e; Y/Y: 1.5% v 3.5%e (overnight update).

- CHINA JULY CAIXIN PMI MANUFACTURING: 49.2 V 50.1E (1st contraction in 3 months).

- China NDRC issues notice to promote private economy development in China.

- China State Council said to adjust and improve property policies; step up counter-cyclical adjustments (overnight update).

- China State Planner (NDRC) Vice Chair Li: Recovery in some consumption categories is not solid; Some categories of consumer goods have unstable growth momentum, and some residents lack strong consumer confidence (overnight update).

- China PBOC sets Yuan reference rate: 7.1283 v 7.1305 prior.

- China PBOC Open Market Operation (OMO): Sells CNY8B in 7-day reverse repo; Net drains CNY36B v net injects CNY17B prior (first net drain in 6 days).

Japan

- Nikkei 225 opens +0.4% at 33,292.

- JAPAN JUN JOBLESS RATE: 2.5% V 2.6%E.

- Japan July Final Manufacturing PMI: 49.6 v 49.4 prelim (confirms the 2nd month of contraction).

- Japan Finance Minister Suzuki: Will watch FX trend as environment is changing.

- Japan Trade Min Nishimura: Japan will act appropriately on China chips move (China export controls on germanium and gallium take effect today).

- Japan’s Labor Ministry reportedly proposing a record increase in the minimum hourly pay to over ¥1,000 (update) (overnight update).

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00%.

South Korea

- Kospi opens +0.5% at 2,644.

- South Korea July PMI Manufacturing: 49.4 v 47.8 prior (13th month of contraction).

- South Korea July Trade Balance: $1.6B v $2.6Be.

Other Asia

- Taiwan July PMI Manufacturing: 44.1 v 44.8 prior (14th month of contraction).

- Vietnam July PMI Manufacturing: 48.7 v 46.2 prior (5th month of contraction).

- Philippines July PMI Manufacturing: 51.9 v 50.9 prior (22nd month of expansion).

- Indonesia July PMI Manufacturing: 53.3 v 52.5 prior (23rd month of expansion).

- Malaysia July PMI Manufacturing: 47.8 v 47.7 prior (11th month of contraction).

- Singapore Jun M2 Money Supply Y/Y: 3.2% v 3.1% prior.

- Thailand’s Pheu Thai expected to name Srettha as candidate for PM.

North America

- (US) Fed's Goolsbee (Voter): Monthly inflation readings coming in quite good; Restrictiveness of policy rate will need to played by ear.

- (US) JULY CHICAGO PURCHASE MANAGER’S INDEX (PMI): 42.8 V 43.5E.

- (US) Fed July Senior Loan Officer Survey (SLOOS) on Bank Lending Practices: Seen tightening lending standards across all categories.

- (US) Treasury quarterly financing estimates: To borrow $1.0TB in Jul-Sep quarter v $885Be.

- TTN Research Alert: More companies start to hint negative effects of broad disinflationary process on their profits this earnings season; Falling prices usually start to hamper corporate margins with a six-month lag.

Europe

- UK’s financial regulator Financial Conduct Authority vows to “take action” against banks after lenders were not passing enough of Bank of England (BOE) rate increases to depositors with instant access savings accounts – FT.

- UK July Lloyds Business Barometer: 31 v 37 prior (update).

- UK July BRC Shop Price Index Y/Y: 7.6% v 8.4% prior.

- EURO ZONE Q2 ADVANCE GDP Q/Q: 0.3% V 0.2%E; Y/Y: 0.6% V 0.5%E.

- EURO ZONE JULY ADVANCE CPI ESTIMATE Y/Y: 5.3% V 5.3%E; CPI CORE Y/Y: 5.5% V 5.4%E.

Levels as of 01:20 ET

- Nikkei 225, +0.8%, ASX 200 +0.5% , Hang Seng -0.3%; Shanghai Composite -0.2% ; Kospi +1.4%.

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

- EUR 1.0980-1.0003 ; JPY 142.21-142.84 ; AUD 0.6627-0.6724 ; NZD 0.6180-0.6218.

- Gold -0.6% at $1,996/oz; Crude Oil -0.3% at $81.56/brl; Copper -0.4% at $3.9995/lb.