Recent decline in gov’t bond yields and possible implications continue to garner attention

Asia Market Update: Asian markets trade mixed, in line with Thursday’s US session; Uncertainty remains regarding growth, trade and HK; Recent decline in gov’t bond yields and possible implications continue to garner attention

General Trend:

- Consumer Discretionary companies are among the gainers in Shanghai, NDRC plans to launch measures to boost disposable incomes in China

- Shanghai Property index extends gain on hopes slowdown in property prices limits overheating concerns

- Hang Seng rises amid recent dearth of significant news flow related to protests in Hong Kong; Ping An Insurance rises post earnings

- Tencent remains weaker after recent quarterly revenue miss

- Nikkei 225 pares opening losses as Yen weakens vs Aussie; Securities brokers gain after losses in prior session

- Australia’s largest gold miner Newcrest declines after reporting FY earnings, guided midpoint of FY20 production lower y/y

- South Korean markets weighed down by catchup selling after recent holiday

- LG Display declines over 1%, Samsung Display may cut LCD production on supply concerns (local press)

- BoJ reduced 5-10 yr JGB purchases after recent move lower in bond yields (as speculated)

- Japan is now the largest foreign holder of US Treasuries (June US TIC flows data)

- China said it will have to take countermeasures on the moves by the US [without being specific]

- Hong Kong final Q2 GDP data due later today, government cut growth forecast and announced stimulus measures ahead of the data [advance q/q GDP was -0.3% v +0.9%e, released on July 31st]

- New Zealand manufacturing PMI contracts in July (first time since 2012)

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened flat

- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: continue to engage with an open mind on capital plan; the RBNZ is forward looking and transparent

- (NZ) New Zealand July Business Manufacturing PMI: 48.2 v 51.3 prior (first contraction or reading below 50 since 2012)

China/Hong Kong

- Shanghai Composite opened +0.1% , Hang Seng flat

- (CN) Pres Trump: Have a call scheduled "soon" with China's Xi

- (CN) China Finance Ministry State Council Tariff Committee: Will have to take countermeasures on US moves; US actions violates consensus reached in Osaka at G-20 meeting in Jun

- (CN) China NDRC: To roll out plan to boost population's disposable income for 2019-2020

- (HK) Hong Kong Govt cuts 2019 GDP growth forecast from 2.0-3.0% to 0.0-1.0% citing ongoing political unrest; confirms stimulus measures of HK$19.1B

- (CN) China PBoC sets yuan reference rate: 7.0312 v 7.0268 prior (1st weaker CNY fixing in 3 sessions)

- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v Injects CNY30B prior

Japan

- Nikkei 225 opened -0.4%

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Cuts offer to buy 5-10 yr JGBs for the first time since Dec 2018 (as speculated)

Korea

- Kospi opened -0.9% (returned from holiday)

- (KR) North Korea fires two projectiles towards East Sea - South Korea Press

Other

- (ID) Indonesia Pres Jokowi: Need to develop more downstream industries; calls for local processing of Bauxite, Nickel Ore and coal; local processing of nickle to add value by 4 times

- (MY) Malaysia Q2 GDP Q/Q: 1.0% v 0.9%e; Y/Y: 4.9% v 4.7%e (strongest annual growth in 5 quarters)

- (MY) Malaysia Central Bank (BNM): Will manage excessive volatility thru targeted currency intervention

- (SG) SINGAPORE JULY NON-OIL DOMESTIC EXPORTS M/M: 3.7% V 2.0%E; Y/Y: -11.2% V -15.4%E

North America

- (US) Fed's Bullard (dove, voter): Would like to take action to make sure we hit our inflation target; doesn't want to prejudge what action Fed might take at next meeting, but wants to take action - Fox Business interview

- (US) White House Trade Adviser Navarro: thinks Fed's Bullard virtually guaranteed rate cut at next meeting - Fox Business interview

Europe

- (EU) ECB's Rehn (Finland): ECB needs to have significant and impactful easing package in Sept; weakening economy justifies a monetary policy response - press interview

Levels as of 1:20 ET

- Nikkei 225, -0.1%, ASX 200 flat, Hang Seng +0.6%; Shanghai Composite +0.7%; Kospi -0.8%

- Equity Futures: S&P500 +0.6%; Nasdaq100 +0.7%, Dax +0.5%; FTSE100 +0.7%

- EUR 1.1114-1.1095; JPY 106.27-106.02 ; AUD 0.6796-0.6770 ;NZD 0.6451-0.6428

- Gold +0.1% at $1,532/oz; Crude Oil +1.3% at $55.17/brl; Copper +0.3% at $2.599/lb