Original insights into market moving news

[PODCAST] EU Open Rundown 17th April 2019

  • Asian equity markets traded indecisively as the region failed to fully benefit from a slew of better than expected Chinese data
  • Local UK Conservative party chairmen are circulating a petition which seeks an Extraordinary General Meeting to pass a no-confidence vote in PM May
  • In FX markets, the DXY was marginally softer and fell back below the 97.00 level as most major counterparts gained overnight
  • Looking ahead, highlights include UK, EZ, Canadian & Italian CPI, Fed Beige Book, BoE’s Carney, ECB’s Lautenschlaeger & de Galhau, Fed’s Harker & Bullard, supply from Germany
  • Earnings: Morgan Stanley, Abbott Laboratories, PepsiCo, US Bancorp, Bank of NY Mellon, ASML, Ericsson


Asian equity markets traded indecisively following the cautious gains on Wall St due to mixed earnings and as the region failed to fully benefit from a slew of better than expected Chinese data. ASX 200 (-0.2%) was negative with the index led lower by underperformance in the mining sector after BHP reported weaker quarterly production numbers and amid declines in Chinese iron ore prices after Vale received approval to resume Brucutu mine operations, while Nikkei 225 (+0.2%) was positive although initial price action had mirrored a choppy currency. Hang Seng (-0.3%) and Shanghai Comp. (Unch.) were indecisive with only brief support seen despite the better than expected Chinese GDP, Industrial Production and Retail Sales, as some suggested the data dampens prospects of PBoC action and after the central bank also recently suggested a preference for restraint in its quarterly monetary policy document. Furthermore, the PBoC conducted a liquidity injection of CNY 160bln through 7-day reverse repos but only announced CNY 200bln in MLF loans vs. the expiring CNY 366.5bln. Finally, 10yr JGBs were marginally lower as Japanese stocks remained afloat and on spillover selling from T-notes, while the US 30yr yield eyed the 3.0% level for the first time in nearly a month.

NEC Director Kudlow said they are continuing to make good progress on China talks and that discussions are set to continue this week with everything still on the table, while there were separate reports that China reportedly eyes removing US poultry and pork imports ban in trade talks. (Fox Business News/Newswires)

Japan and the US have agreed to accelerate trade talks after an initial meeting in Washington suggested the two nations will stick to a narrow range of subjects. (FT)

PBoC injected CNY 160bln via 7-day reverse repos and CNY 200bln of 1yr MLF loans vs. expiring CNY 366.5bln. (Newswires) PBoC set CNY mid-point at 6.7110 (Prev. 6.7097)

Chinese GDP (Q1) Q/Q 1.4% vs. Exp. 1.4% (Prev. 1.5%). (Newswires) Chinese GDP (Q1) Y/Y 6.4% vs. Exp. 6.3% (Prev. 6.4%)

Chinese Industrial Production (Mar) Y/Y 8.5% vs. Exp. 5.9% (Prev. 5.3%); fastest growth since July 2014. Chinese Retail Sales YY Mar 8.7% vs. Exp. 8.4% (Prev. 8.2%)


Japanese Trade Balance (JPY)(Mar) 528.5B vs. Exp. 372.2B (Prev. 339.0B, Rev. 334.9B).(Newswires) Japanese Exports (Mar) Y/Y -2.4% vs. Exp. -2.7% (Prev. -1.2%) Japanese Imports (Mar) Y/Y 1.1% vs. Exp. 2.6% (Prev. -6.6%) 


Local UK Conservative party chairmen are circulating a petition which seeks an Extraordinary General Meeting to pass a no-confidence vote in PM May. The report states that the party will be obliged to hold a meeting if more than 65 association chairmen sign the motion; so far between 40-50 have signed it, with expectations that the threshold could be passed next week. (Telegraph)


In FX markets, the DXY was marginally softer and fell back below the 97.00 level as most major counterparts gained overnight in which EUR/USD just about reclaimed the 1.1300 handle and GBP/USD nursed the prior day’s weakness from reports that cross-party talks to solve the deadlock had broken down which was later denied by the opposition Labour party. Elsewhere, USD/JPY initially printed fresh YTD highs but failed to sustain the momentum with the currency then choppy around the 112.00 level amid the indecisive risk tone, and antipodeans were mixed as the better than expected Chinese data helped AUD/USDextend on the rebound seen after RBA-watcher McCrann recently dismissed prospects of an imminent RBA rate cut. Meanwhile, NZD/USDslumped to a 3-month low after softer than expected CPI figures, although the pair has since recovered about half of its losses after the strong Chinese data and with the RBNZ sectoral factor model more encouraging on inflation.

New Zealand CPI (Q1) Q/Q 0.1% vs. Exp. 0.3% (Prev. 0.1%). (Newswires) New Zealand CPI (Q1) Y/Y 1.5% vs. Exp. 1.7% (Prev. 1.9%) New Zealand RBNZ Sectoral Factor Model Inflation 1.7% (Prev. 1.7%)


Commodities were mixed in which WTI crude futures reclaimed the USD 64.00/bbl level following a surprise drawdown in API headline crude inventories and as better than expected Chinese data provided some encouragement for the complex, which also notably benefitted copper overnight. Conversely, gold remained subdued following its recent declines and amid the indecisive risk sentiment, while Dalian ironore futures underperformed with prices down around 5% on returning supply after Vale was granted approval to resume operations at its Brucutu mine.

US API weekly crude stocks (8 Apr, w/e) -3.1M vs. Exp. 1.7M (Prev. +4.09M). (Newswires)


Satellite images showed movement at North Korea's main nuclear site last week which may be associated with reprocessing of radioactive material into bomb fuel, according to Centre for Strategic and International Studies think tank. (Newswires)

US National Security Advisor Bolton is to announce new sanctions on Cuba, Venezuela and Nicaragua. (Newswires)

US President Trump vetoed the Congressional Resolution that seeks to end US involvement in Saudi-led war on Yemen. (Newswires)

Reports noted several rockets striking Tripoli, Libya. (AFR/Twitter)


Yields rose to 4-week highs on better risk appetite, and ahead of key China data. The complex saw some upside, sympathising with Bunds, after a sources story suggested that some ECB policymakers believed ECB economic projections were too optimistic; a mixed ZEW report didn’t help. Some analysts reported that CTA’s were sellers at the North American cash open, while some programme selling was reported in the 5-year space. And there were also reports that some HFs were squaring their books at the front-end of the curve. Additionally, there was some decent corporate supply, particularly from the banking names, which saw rate locks adding to the downside. At settlement, yields were higher across the curve by between 2bps to 4bps, while major curve spreads were slightly wider, but not by more than 2bps. US T-note futures (M9) settled 10+ lower at 122-26+.

Fed Discount Rate Minutes stated all 12 Federal Reserve Banks supported keeping discount rate steady before March policy meeting and that there was no sentiment expressed for changing rate, while Fed directors had mixed reports on global economic conditions and saw less trade concerns amid global uncertainties. (Newswires)

NEC Director Kudlow said Fed nominee Herman Cain still has the confidence of Trump for a Fed seat and that it will be up to Cain if he wants to remain in the Fed process. Furthermore, Kudlow stated the White House still supports Moore and will let vetting play out, while he added the White House is speaking to a number of candidates for Fed seats beside Cain and Moore. (Newswires)

*HQ saying toodle pip for the week* Much love guys, as always, see you on the other side! (don't worry about him…