TradeTheNews.com Staff
TradeTheNews.com
General trend
- “The Japan Show” of recent weeks gave way to fresh events in Australia and China.
- Investors in China are still waiting for an expected “basket of support measures” to appear from the Govt, particularly for mainland property. The Hang Seng Mainland Properties Index, rose slightly further (+0.75%).
- Shanghai SSE Banks index +1% (after deposit rate cut story – see China section below).
- Even broadsheet newspapers in China called for relaxation of home purchase curbs (see Economic Times in China below), and China Govt said to be asking its biggest banks to cut deposits rates – all on top of yesterday’s China Securities Journal suggesting a likely cut to the RRR.
- These measures may be needed, as within China’s disappointing China Trade Balance data today (see below) it was revealed that Soybean Imports for May were the highest ever for one month. Govt stockpiling?
- After yesterday’s spike in AUD on the back of the RBA’s unexpected 25bps hike, the Aussie was softer this morning heading into what turned out to be weak trade balance print out of China.
- Even still, RBA Gov Lowe remained hawkish in his earlier speech and Q&A session today.
- After Lowe’s speech, Goldman now sees up to three more rate hikes from the RBA, with a terminal rate of 4.85 (75bps higher than today’s rate).
- Aussie 3-yr yields rose to 3.71%, the highest since October 2022.
- Today RBA Gov Lowe reiterated some measures of medium term term inflation are up strongly. [A Reminder from the May RBA Statement: "Medium-term inflation expectations remain well anchored, and it is important that this remains the case" - this was omitted from the Jun statement].
- Nikkei was down as much as 1.5% in early trading, with Fast Retailing -1.6%, Advantest and Tokyo Electron down 2-3%.
- [Note for Nikkei 225 Traders] Jun 9th (Fri) is the setting of special quotation prices related to index options and futures. Some traders may wait until this date for before considering whether to push the market higher.
- US equity FUTs were flat.
Looking forward this week:
- Wed night BoC rate decision.
- Fri China CPI, PPI and aggregate funding.
- No US-Fed speak this week, having entered the black-out period ahead of June 14 rate decision
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.2% at 7,140.
- AUSTRALIA Q1 GDP Q/Q: 0.2% V 0.3%E; Y/Y: 2.3% V 2.4%E.
- Australia Treasurer Chalmers: Growth momentum is moderating as expected; rise in interest rates is clearly biting [follows Q1 GDP data].
- Australia RBA Gov Lowe: "A Narrow Path" - Speech and press conference Q&A.
- Australia RBA Dep Gov Bullock: Reiterates trying hard to bring inflation back to target - Conference panel discussion.
- Goldman now sees Australia RBA terminal rate at 4.85% (prior 4.35%).
- Australia Trade Min: Sets out pathway to resolve all trade disputes with China during recent meeting with counterpart - financial press [overnight update].
- Australia AOFM [debt agency]: Names advisors for green bond issuance; plans to issue green bonds from 2024.
- Australia sells A$700M v A$700M indicated in 3.75% May 2034 bonds; Avg Yield: 3.8475%; bid-to-cover: 4.27x.
- (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -0.9%.
China/Hong Kong
- Hang Seng opens +1.2% at 19,327.
- Shanghai Composite opens +0.1% at 3,197.
- CHINA MAY TRADE BALANCE: $65.8B V $95.5BE.
- CHINA MAY TRADE BALANCE: $65.8B V $95.5BE CHINA MAY TRADE BALANCE (CNY-DENOMINATED): 452.3B V 618.4B PRIOR.
- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repo; Net drains CNY11B v drains CNY35B prior.
- China PBOC sets Yuan reference rate: 7.1196 v 7.1075 prior (weakest level since Dec 1, 2022).
- China's yuan will find support in fundamentals - China press.
- China said to be asking its biggest banks to cut deposits rates to boost domestic economy [overnight update].
- China Economic Times posts commentary urging relaxation of home purchase curbs in big cities [overnight update].
- S&P: China property delistings reduce restructuring options.
- China sells 3-year and 10-year Upsized bonds.
- China sells 1-month and 2-month bills.
- Secretary of State Blinken said to be headed to China in coming weeks - press.
- Treasury Department issued new Iran-related sanctions targeting individuals and groups in Iran, China and Hong Kong related to Iran's weapons program.
- Hangzhou Hikvision Digital Technology (002415.CN) Says believes that possible action by the UK government is further step up of mounting geopolitical tensions [UK is expected to remove China surveillance cameras from sensitive gov't sites] - financial press.
Japan
- Nikkei 225 opens +0.3% at 32,618.
-Japan May FX Reserves: $1.25T v $1.27T prior.
- Japan Econ Min METI: Releases revised chip strategy; Aims for chip sales of ¥15T in 2030 [overnight update].
- Japan BOJ Gov Ueda: Reiterates stance to maintain QQE until price target is met (sustainable inflation of 2%) - Parliament testimony [overnight update].
- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].
- Follow Up: Japan PM Kishida expected to announce child measures on Jun 13th (Tues) – Japan media.
South Korea
- Kospi opens +0.3% at 2,623 (yesterday was a holiday).
- South Korea Joint Chiefs of Staff: 4 Russian and 4 Chinese jets breached South Korea air defense ID zone.
Other Asia
- Japan LDP Minister Aso to visit Taiwan in Aug - Taiwan press.
- Taiwan May CPI Y/Y: 2.0% v 2.3%e.
- (SG) Mapletree Industrial Trust (ME8U.SG) Third-largest tenant (a data center) has filed for bankruptcy, which may weigh on Co. earnings - financial press.
North America
- SEC Chair Gensler: Crypto trading platforms should be treated no different from other securities trading platforms - CNBC.
- Coinbase (COIN) SEC sues Coinbase in NY federal court; SEC claims Coinbase acting as unregistered broker, securities exchange, and clearing agency - filing.
- BINANCE.IPO SEC seeks temporary restraining order to freeze BinanceUS assets – filing.
Europe
- Lloyds Bank (LLOY.UK) To launch £600M Telegraph newspaper auction - UK press.
- Bank of England (BOE) reportedly may end active corporate bond sales program as soon as today – press.
- HUAWEI.CN; EU considers mandatory ban on using Huawei to build 5G – FT.
- NATO Sec Gen Stoltenberg: Dam explosion exposes 'brutality' of Russia.
- EURO ZONE APR RETAIL SALES M/M: 0.0% V 0.2%E; Y/Y: -2.6% V -3.0%E.
Levels as of 01:20 ET
- ASX200 flat; Hang Seng +1.2%; Shanghai Composite +0.2%; Nikkei 225 -1.1%; Kospi flat.
- Equity S&P500 Futures +0.1; Nasdaq100 flat, DAX +0.1; FTSE100 +0.4%.
- EUR 1.0686 – 1.0704; JPY 139.16 – 139.69 ; AUD 0.66.61 – 0.6690 ; NZD 0.6070 – 0.6090.
- Gold -0.1% at $1,977/oz; Crude Oil -0.6% at $71.27/brl; Copper -0.1% at $3.7622/lb.
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