Original insights into market moving news

[PODCAST] EU Open Rundown 12th April 2019

  • Asian indices are mixed as markets await Chinese trade data and the start of US earnings season
  • France is reportedly against reopening EU-US trade talks, but will not block them given that a majority supports the talks
  • Looking ahead, highlights include EZ Industrial Production, US Import/Export Prices, University of Michigan (Preliminary), Chinese Trade Balance, ECB's Weidmann & Praet, BoE's Carney
  • Earnings: JP Morgan Chase, Wells Fargo & PNC Financial



Asian equity markets traded mixed following an indecisive lead from Wall St. with participants tentative ahead of the latest Chinese trade data and big bank earnings in US. ASX 200 (+0.7%) benefitted from early outperformance in its largest weighted financials sector as top lender CBA gained on the reports it plans to reduce 10k workers, while Nikkei 225 (+0.7%) exporters found solace from favourable currency flows. Elsewhere, Hang Seng (-0.3%) and Shanghai Comp. (-0.4%) lagged amid weakness in tech and gambling names, as well as cautiousness heading into the latest Chinese trade data. Finally, 10yr JGBs were lower as stocks in Japan remained afloat although downside for bonds was stemmed amid the BoJ’s presence in the market for nearly JPY 1tln of JGBs and with SoftBank pricing a record JPY 500bln offering.

PBoC skipped open market operations and are net neutral for a 2nd consecutive week. (Newswires) PBoC set CNY mid-point at 6.7220 (Prev. 6.7088)

Monetary Authority of Singapore kept policy unchanged as expected, while it lowered 2019 all-items inflation forecasts to 0.5%-1.5% from 1.0%-2.0% and sees GDP growth to be slightly below mid-point of 1.5%-3.5% projected range. (Newswires)

Singapore GDP (Q1) Q/Q 2.0% vs. Exp. 1.2% (Prev. 1.4%). (Newswires) Singapore GDP (Q1) Y/Y 1.3% vs. Exp. 1.5% (Prev. 1.9%) 


BoE Governor Carney said business investment has stalled since the 2016 referendum and that it is having an effect on productivity, while he added that the UK labour market is incredibly tight and business uncertainty is 'through the roof'. (Newswires)

ECB sources said policymakers are leaning towards offering a negative rate on TLTRO to banks that meet lending targets and that policymakers are sceptical on a tiered deposit rate. (Newswires)

France is said to object to re-opening trade talks with the US but will not block discussions since there is a majority of EU members who support the process. (Newswires)


In FX markets, the DXY trickled below the 97.00 level as it gave back some of the prior session’s data-inspired gains in which encouraging jobless claims and firmer than expected PPI numbers subsequently dampened hopes for a Fed rate cut this year. Nonetheless, the greenback’s major counterparts have benefitted from the overnight pullback with outperformance in EUR/USD after it broke through the 5- and 20-day moving averages on its quest towards the 1.1300 level, while gains were exacerbated by cross-related flows as EUR/JPY tripped through stops at 126.00 post-Tokyo fix and some also suggested flows from a previously announced USD 6.3bln European M&A foray by Japanese megabank MUFG. GBP/USD nursed recent losses as Brexit-related news quietened, although PM May continues to face challenges to her leadership with former Foreign Secretary Boris Johnson said to have held private talks with the DUP. Elsewhere, antipodeans were indecisive as participants awaited the Chinese trade data and as early momentum in AUD/USD faded after the RBA Financial Stability Review noted increased risks in the household sector and uncertainty regarding consumption outlook, while SGD was choppy in the aftermath of mixed GDP data and the Monetary Authority of Singapore’s semi-annual policy meeting where it maintained FX-based policy settings but lowered CPI forecasts.

RBA Financial Stability Review said risks in the household sector have increased and consumption outlook is uncertain but added the financial system is more resilient and banks have higher, more liquid capital. (Newswires)



Commodities were rangebound overnight amid a tentative risk tone as participants awaited the latest Chinese trade figures. WTI crude futures consolidated after its recent decline to below USD 64.00/bbl amid reports the June OPEC meeting is to debate raising oil output if crude hits USD 80-85/bbl and if supply from Venezuela and Iran falls further. Elsewhere, gold was lacklustre and failed to benefit from a softer greenback with the precious metal despondent after it recently gave up the USD 1300/oz level, while copper prices were more resilient and extended on the intraday rebound seen during US hours but with upside limited by the looming China data.

PDVSA reportedly shipped 1mln barrels of crude in two tankers to Cuba. (Newswires)

Libya NOC chief said oil and gas exports face biggest threat since 2011 given the recent fighting. (Newswires)


US President Trump said he would support easing on the sanctions on North Korea at the right time but sanctions on the country are at a fair level right now. US President Trump added that North Korea did not fulfil what he wanted them to in the talks and that he is discussing further meeting with North Korea, while he also noted that South Korea has agreed to purchase 'tremendous' amounts of military equipment. (Newswires) 


The implied probability for a Fed rate cut in 2019 fell to sub-50%, from around 55% on Wednesday, after decent jobless claims data and an upside surprise to PPI. However, ranges were low, and volumes were hardly exciting. Fed speakers added little new to the narrative, generally reiterating current positions and the central bank’s neutral stance (in line with yesterday’s minutes). This week’s auction series have been mixed, and after a solid 10-year sale on Wednesday, which stopped through by 1bps, Thursday’s sale of 30s was ok, tailing by 0.6bps, though direct participation fell slightly, picked-up by the indirects. At settlement, major curve spreads were a touch wider. US T-note futures (M9) settled 7+ lower at 123-18.

Fed Chair Powell (neutral) reiterated that rates are in the right place and that China's soft patch impacted US growth outlook, according to sources. (Newswires)

Fed's Kashkari (non-voter, dove) said if Fed keep rates low to spur wage growth that should also translate into lower mortgage costs which should help housing. Kashkari also commented that there is still slack in the labor market and therefore not yet at maximum employment, while he added that inflation is still below target so no need to tap the brakes. (Newswires/Twitter)

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