Original insights into market moving news

[PODCAST] EU Open Rundown 28th September 2018

  • Asian stocks traded mostly higher following a spur in risk-appetite and an upbeat lead on Wall St
  • The Italian government has reached agreement on 2.4% deficit to GDP target for 2019
  • Looking ahead, highlights include German jobs, UK GDP, EZ CPI, US personal income, core PCE price index, Canadian GDP, Chicago PMI, Uni. of Michigan and a slew of central bank speakers


Asian stocks traded mostly higher following a spur in risk-appetite and an upbeat lead on Wall St where bourses ended the day in the green, and Nasdaq outperformed its peers amid the strength in the IT sector, after Apple rallied on the news that JP Morgan sees a 23% upside in their shares. ASX 200 (+0.4%) was lifted by resources and IT names, while Nikkei 225 (+1.5%) outperformed its peers and breached YTD highs to print levels last seen in 1991 amid currency effects and optimistic retail sales. Elsewhere, Hang Seng (+0.6%) and Shanghai Comp. (+0.9%) also gained as trade concerns faded and the positive sentiment dominated the region ahead of next week’s National Day Golden Week holiday. Finally, 10yr JGBs were lower amid the heightened risk appetite although found support ahead of 150.00 while the 2yr JGB auction was uninspiring.

PBoC skipped open market operations for a net daily drain of CNY 40bln. (Newswires)

PBoC set the CNY mid-point 6.8792 (Prev. 6.8642)

FTSE Russell are said to see USD 2.5tln inflow to the Chinese securities market. (Newswires)

Chinese Commerce Ministry spokesperson said China is open to US negotiations to resolve trade issues, while he added extreme US pressure won't cripple the Chinese economy, while there were also reports that China is said to plan additional policies to support private companies. (Newswires)

BoJ Summary of Opinions stated there is room to mull steps to make policy more flexible and that it is necessary to persistently maintain highly accommodative financial conditions while examining positive effects & side effects, while it added that it is necessary to persistently continue with the current powerful monetary easing as the momentum toward 2 percent inflation is maintained. (Newswires)

Japan Tokyo CPI (Sep) Y/Y 1.3% vs. Exp 1.1% (Prev. 1.2%) (Newswires)

Japan Retail Sales (Aug) Y/Y 2.7% vs. Exp. 2.1% (Prev. 1.5%)


The Italian government has reached agreement on 2.4% deficit to GDP target for 2019, while a 5-Star source stated the 2.4% deficit to GDP target is for each year from 2019 through 2021, which was confirmed by Italy’s Justice Minister. Furthermore, Italy Interior Minister Salvini said tax cuts and pension reforms have been agreed and will not raise sales tax in the budget plan, while adding budget will allow for some early retirements (Newswires) Recent reports have suggested that President Mattarella has asked Economy Minister to not resign; Tria then followed up these reports by stating that he will stay in the position to avoid ‘chaos’. (Newswires)

German Chancellor Merkel said she has not ruled out candidacy of ECB's Weidmann to succeed President Draghi. In regards to Brexit, she said Britain must make its own decision on Brexit, while she added that parts of May's proposal do work well. (Newswires)

ECB's Praet (Dovish) said rates should note be raised just to be cut again, he also said at this stage of the cycle, careful monitoring of the risk-taking channel of monetary policy is important, while he added incoming data continues to support our confidence that the sustained convergence of inflation to our aim will proceed. (Newswires)

Former UK Foreign Minister Johnson called on PM May to scrap her Brexit proposals in which he stated it would leave UK "half in and half out" of the EU and proposed a six-part alternative plan for Brexit. (Telegraph)

Reports in the Times suggests that Conservative policymakers are struggling to figure out how to counter Jeremy Corbyn’s populist message at their upcoming party conference. (Times)

A poll by Natcen showed Britons would vote 52-48 to remain in the EU in a new Brexit referendum. (Newswires)

UK GfK Consumer Confidence (Sep) -9 vs. Exp. -8.0 (Prev. -7.0) (Newswires)

UK Lloyds Business Barometer (Sep) 29 (Prev. 23)


In FX markets, the greenback was firmer and tested the 95.00 level, while EUR/USD and GBP/USD rested near weekly lows. Elsewhere, USD/JPY was higher on safe haven outflow and printed fresh 2018 highs near 113.64, while USD/CAD initially showed mild weakness after BoC’s Governor Poloz stated the central bank will remain dependant on incoming data, before strengthening as Poloz also commented that the BoC will continue to raise rates to the neutral level. 

BoC’s Governor Poloz said economic uncertainties were the reason to keep gradual pace of rate hikes at the September meeting while he added rates will continue to raise rates to the neutral level and that the BoC will remain dependent on incoming data. Additionally, he said that higher has prices is having less of an effect on headline inflation and oil prices and the USD remain factors that drive the CAD. Furthermore, Poloz stated that in face of uncertainty, BoC cannot operated monetary policy mechanically and that policy becomes a matter of risk management. In regards to NAFTA, the central bank governor said he is optimistic on a deal.


European Council President Tusk said EU remains committed to the Iran nuclear deal, as long as Iran is. (Newswires)


Commodities were mixed overnight with oil prices little changed as Brent and WTI remained below USD 82.00/bbl and USD 72.50/bbl respectively. Elsewhere, the metals complex was mixed with gold uneventful and copper marginally higher on risk appetite. Meanwhile, Shanghai rebar was down over 3.5% and Dalian iron ore also took a hit of more than 2% at the open of the Shanghai Futures Exchange.

Hurricane Rosa became the seventh Category 4 hurricane of the season. (Newswires) Note: Rosa is located in the Eastern North Pacific with no oil refineries are in the Hurricane’s probable path.


The T-Note traded within a range, but action was being dictated by the European fixed income complex for much of the day, with sellers emerging after Bunds yields rose in European trade, with some profit-taking and dealer positioning ahead of the 7-year auction cited. Curve flattening was once again the theme, with a large block flattener in 5s30s reported which helped the long-end of the curve rise off lows. The 7s auction was lacklustre, tailing 0.9bps, and saw the highest stop-out rate since April 2010. Cover was below recent averages, and primary dealer takedown was above recent averages; in wake of the auction, the long-end continued to hold its bid. US T-note futures (Z8) settle half-a-tick higher at 118-24.

Fed Chair Powell (Neutral) reiterated the US economy is strong, unemployment low and inflation stable, while he repeated gradual rate path is helping sustain the US economy. Furthermore, he said models suggest probability of recession in the next year or two are not elevated (Newswires)