Original insights into market moving news

[PODCAST] EU Open Rundown 10th September 2019

  • Asian equity markets traded mixed, following suit from the indecisive tone seen on Wall St
  • Chinese inflation metrics were largely influenced by a 10% increase in food prices amid the swine fever epidemic, PPI saw its sharpest contraction in 3 years
  • US President Trump reiterated that China wants to talk whilst it was also reported that China is hopeful US can create the conditions for trade talks
  • MPs scuppered PM Johnson’s attempt for a snap election just before Parliament began its 5-week suspension
  • Looking ahead, highlights include UK Employment Data, EIA STEO, APIs, BoE’s Carney & Riksbank’s Ingves, US 3yr supply


Asian equity markets traded mixed as they followed suit to the indecisive tone seen on Wall St amid a sell-off in treasuries and as the region also digested ambiguous inflation figures from China. ASX 200 (-0.7%) was negative with gold miners frontrunning the declines in Australia after the precious metal slipped below the psychological key USD 1500/oz level but with further losses in the index stemmed by strength in the energy sector following the recent rally in oil prices, while Nikkei 225 (+0.3%) was kept afloat by favourable currency moves. Elsewhere, Hang Seng (Unch.) and Shanghai Comp. (-0.4%) gave back initial gains despite the liquidity efforts by the PBoC and firmer than expected Chinese inflation data, as the figures were largely influenced by a 10% increase in food prices amid the swine fever epidemic and also showed PPI at its sharpest contraction in 3 years. Finally, 10yr JGBs were lower following the bear-steepening seen in US and broad declines across global bonds, while the absence of the BoJ from the market today also added to the lacklustre demand.

PBoC injected CNY 80bln via 7-day reverse repos. (Newswires)

PBoC set CNY mid-point at 7.0846 vs. Exp. 7.0958 (Prev. 7.0851) 

Chinese CPI (Aug) Y/Y 2.8% vs. Exp. 2.6% (Prev. 2.8%), food prices rose 10% Y/Y, pork prices rose 47% Y/Y. (Newswires) Chinese PPI (Aug) Y/Y -0.8% vs. Exp. -0.9% (Prev. -0.3%); steepest decline since August 2016.

US President Trump reiterated that China wants to talk, and it was also reported that China is hopeful US can create conditions for trade talks. (Newswires/China Daily)

Huawei abandoned its lawsuit against the US government regarding seizure of its telecoms equipment, while there were separate report the Co. expects to be able to release first Google-free smartphone by Spring next year, and that the US filed criminal charges against a Chinese professor in Texas who is linked to Huawei. (Newswires/WSJ)

US Secretary of State Pompeo said he is looking forward to completing a deal with Japan at the UN General Assembly and stated they have reached a consensus on agricultural, digital and industrial issues. (Twitter)


UK parliament voted (311-302) in favour of forcing the government to show all documents regarding its no-deal planning as well as private messages related to the decision to suspend parliament as expected. Parliament also rejected holding an early election as 293 voted for it vs. 46 against, which is short of the 434 votes or two-thirds majority needed for a snap election. (Newswires)

UK PM Johnson said the government will press on with negotiating a Brexit deal and that he will go to the EU Summit on October 17th to strive to get an agreement, while he also reiterated the government will not delay Brexit. Elsewhere, Tory MPs confirmed they were told PM Johnson is opening the door for a return of rebels but will require a show of loyalty. (Newswires/Twitter)

UK opposition Labour Party leader Corbyn said they will not vote for an election until no-deal is off the table. In other news, Labour is reportedly considering tabling a confidence vote on PM Johnson on October 22nd after instructing its MPs to vote down the Queen's Speech a day beforehand. (Newswires/Telegraph) 

Germany could reportedly face a shortfall in tax revenue in 2020/21. (Handelsblatt)


DXY was slightly firmer amid a rebound from yesterday’s lows and as EUR/USD continued to retrace the advances that were spurred by news of Germany considering the creation of a 'shadow budget', with expectations of a looming ECB stimulus package this week the main restraint on the single currency. GBP/USD traded relatively steady at the 1.2300 handle after the latest slew of events in which the no-deal Brexit extension bill was given Royal Assent, while lawmakers also approved the motion to force the government to show all documents regarding its no-deal planning and scuppered PM Johnson’s attempt for a snap election just before Parliament began its 5-week suspension. Elsewhere, USD/JPY and JPY-crosses held on to recent gains and antipodeans were mixed in which AUD/USD reversed the initial support from a stronger PBoC reference rate, due to weaker NAB Business Confidence figures and somewhat misleading Chinese inflation numbers.

Australian NAB Business Confidence (Aug) 1 (Prev. 4). (Newswires)

Australian NAB Business Conditions (Aug) 1 (Prev. 2)


Commodities were mixed in which WTI crude futures marginally extended on the prior day’s rally to above the USD 58.00/bbl with the recent upside attributed to the change of guard at OPEC’s top producer. Furthermore, Saudi has vowed it would continue to support output cuts under new energy minister Prince Abdulaziz and some have suggested the change has raised anticipation  heading into the JMMC in Abu Dhabi this week for any changes to the kingdom’s policy or its signals regarding the oil market and compliance by other producers. Elsewhere, gold languished after its slip below USD 1500/bbl and amid mild strength in the greenback, while copper was resilient as it rebounded overnight with prices unfazed by the indecisive risk tone.


US President Trump said he could meet with Iran's Rouhani and has no problem with the idea, while he stated 'we'll see what happens' regarding a meeting with North Korea in September. (Newswires)

North Korea launched 2 projectiles, although a Japanese Defence Ministry official later commented that the latest North Korea missiles pose no immediate threat to Japan's national security. (Newswires/Yonhap)


The Treasury curve bear-steepened, taking its cues from the Bund in afternoon trade. Some desks had cited a more constructive risk tone in early trade for the rise in yields, with fewer concerns on the US/China trade front, while the notion of central bank easing was also being attributed (which is difficult to buy, given one usually expects yields to fall on the latter). The US Treasury will this week auction a new 3-year note (USD 38bln, Tuesday), a 10-year re-opening (USD 24bln, Wednesday), and a 30-year bond (USD 16bln, Thursday); UBS notes that that there will be around USD 26bln of cashflows (ex-SOMA) this week, including USD 24bln of redemptions and USD 2bln of coupons. Analysts at BMO say that this week's supply could offer a further concessionary impulse as September's 3s/10s/30s auctions are the final primary market coupon opportunity before the Fed once again (very likely) lowers policy. US T-note (U9) settled 16+ ticks lower at 130-27+.

US Senate Republican leader McConnell says he is expecting a stop-gap government funding bill this month. (Newswires)

Suspected coronavirus in Scotland, UK, according to BBC reporter. NOTE: SUSPECTED