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Hot Brendan Keenan's "Bleak Omens" for Europe!

Discussion in 'Europe' started by Dublin 4, Nov 20, 2017 at 5:00 AM.

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Are you glad that this Economics Thread is the Biggest Thread of all on P.irish?

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  1. OP
    Dublin 4

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    [​IMG] Nitey nitey Britloanphobeez [​IMG]
     
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  3. TheWexfordInn

    TheWexfordInn Member Political Irish

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    That worked out as planned ie Lenihan and Cowan borrowed the money as an easy fix for a problem on their watch knowing that they wouldnt be around to worry about paying it back, that would be someone elses problem.

    Now repayment is due I presume that this loan will be repaid by borrowing more money to go on to the National debt ie to be forgotten about by the current generation and passed on to the next generation to sort out.
     
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    Dow Jones Newswires, 08 Nov 2017 02:37 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0737 GMT - Italy's economic outlook and the eurozone's monetary policy are supportive of spread tightening in Italian government bonds, say Mizuho rates strategists. They point to the country's positive economic outlook which makes its debt dynamics more sustainable as it contributes to higher tax receipts and to a reduction in the country's debt-to-gross domestic product ratio through growth. The European Central Bank's commitment to keep base rates low also keeps financing costs low. While upcoming parliamentary elections are most likely to result in a hung parliament, the Sicily elections were taken as evidence that support for the anti-establishment 5 Star Movement has lost momentum, Mizuho adds. (emese.bartha@wsj.com; @EmeseBartha)

    0725 GMT - There is little that can reverse the ongoing rally in 10-year German government bonds Wednesday, according to Commerzbank. The macroeconomic calendar features no data of interest to bond investors and no major central bank speeches are scheduled for Wednesday. Commerzbank recommends buying into dips. Bund yields, which move inversely to prices, trade at 0.328% early Wednesday, according to Tradeweb. They stood at 0.48% before the European Central Bank's meeting in late October, which delivered what some analysts call a dovish tapering. (tasos.vossos@wsj.com; @tasosvos)

    0647 GMT - RHB Research expects gradual strengthening for the Malaysian ringgit, helped by anticipation of the country's economy doing the same. The currency is up more than 6% this year versus the dollar, reversing some of late 2016's post-election jump in the greenback. The ringgit has extended yesterday's gains to sit at MYR4.2270/dollar versus MYR4.2285 on Tuesday. (yantoultra.ngui@wsj.com; @yantoultra)

    0634 GMT - A cut in factory-gate taxes likely cooled fuel prices and brought down transport costs, helping push broader inflation down for October, predicts Morgan Stanley. But an increase in rent allowances for state employees will keep price pressures simmering, it adds while predicting 3.2% CPI growth from a year earlier, versus September's 3.3% increase. But the central bank is unlikely to draw much comfort from that and cut rates once more in December. "Moreover, the recent rise in oil prices, coupled with signs that the economic recovery is gathering momentum, will be additional reasons against further monetary easing," Morgan Stanley says. Capital Economics has the same sentiment on both rates and an inflation pickup looming. October's data are due Monday. (anant.kala@wsj.com)

    0626 GMT - Down all day amid muted overnight stock trading and a pickup for the yen, the Nikkei finished with a slight drop and near its best session of the day. It fell 0.1% to 22913.82, just the 3rd down day for the index in the past 26. Financials led the drop amid fresh overnight declines in government-bond yields; the Topix insurance subindex shed 0.9%. The dollar, meanwhile, is around Y113.90 versus Y114 at yesterday's equity close and a risk-off mood was also seen in bonds. The newest 40-year JGB's yield fell 2 basis points to 0.985%. (suryatapa.bhattacharya@wsj.com; @SuryatapaB)

    0619 GMT - Industrial-production growth similar to August's reading of 4.3% for September would signal India is recovering from disruptions caused by the GST's midyear start. That's important for Modi as he tries to counter criticism that faulty implementation, on top of demonetization that failed to achieve its initial objectives, have badly hurt economic growth and taken away millions of jobs. Recent indicators such as manufacturing PMI and infrastructure output have been pointing to economic improvement. A strong factory-production number on Friday could confirm that trend. (anant.kala@wsj.com)

    0615 GMT - The Bank of Korea will likely tighten policy gradually when it takes any action, says 1 of its 7 voting members. Hahm Joon-ho noted in a press briefing that as the central bank is increasingly under pressure to start a rate-hike cycle as the economy continues to improve, the expected tapering of monetary easing will be measured given the country's aging population and slowing productivity. The pace of gains in private consumption and core inflation will be key in the timing of policy tightening, Hahm adds. (kwanwoo.jun@wsj.com; @kwanwoo)

    0559 GMT - China's trade surplus with the US will approach $370 billion this year and add to trade tensions, predicts Oxford Economics' Louis Kuijs. That after October's figure was $26.62 billion, China said Wednesday, down from September's record $28.08 billion. According to US data, 2016's trade deficit with China was $347 billion. While trade-war risks have receded, the Trump administration remains deeply unhappy with trade and investment between the countries, Kuijs notes, and may roll out more protectionist measures against Chinese exports after the President returns from his current Asian trip. (grace.zhu@wsj.com)

    0541 GMT - CBA is expecting very little out of tomorrow's New Zealand central-bank meeting, saying there's too many uncertainties for it to plan or forecast much. While the global outlook is strengthening, domestic growth has moderated somewhat. That as 3Q CPI was higher than the RBNZ expected and the country's currency is 6% below what the central bank assumed, the investment bank notes. There's also been a change in government, and it's too soon to determine how new policy might impact prior policy-maker predictions. (james.glynn@wsj.com; @JamesGlynnWSJ)
    0500 GMT - Australia's economy isn't reflating like others globally because after 26 years of uninterrupted GDP growth, household balance sheets are under stress, says JPMorgan economist Sally Auld. In that light, the country's central bank has effectively called "enough" on endless debt increases, she adds. "That game is over." While firmer commodity prices have lifted mining-sector profits of late, it's done little for hiring and investment too, Auld says, resulting in a subdued growth story. (james.glynn@wsj.com; @JamesGlynnWSJ)


    (END) Dow Jones Newswires
     
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    WEDNESDAY, NOVEMBER 8, 2017


    TOP NEWS

    China Oct exports growth slow as economy cools, imports still robust
    China's exports rose at a slower pace in October as expected, but import growth beat forecasts in a sign domestic demand remained robust despite Beijing's crackdown on pollution that analysts say will reduce factory output and crimp overall economic growth. October exports rose 6.9 percent from a year earlier, slightly lagging analysts' forecast of a 7.2 percent increase, compared to 8.1 percent growth in September, official data showed. Imports grew 17.2 percent year-on-year in October, beating forecast of 16.0 percent growth but slightly slower than the 18.7 percent rise in September.

    EU eyes tough Brexit transition terms
    EU diplomats will start sketching out a Brexit transition offer that would probably let Britain stay in the single market for about two years after it leaves the bloc in March 2019, EU officials said. A paper prepared for the discussion, seen by Reuters, showed the envoys would discuss the "scope" and "duration" of a transition, including how far Britain could remain in the single market - with all its obligations - and in other EU programmes such as agriculture and fisheries schemes, the nuclear pact Euratom and security and defence arrangements. They would also debate how the transition would affect EU agreements with other states, such as trade, fisheries and aviation treaties.

    U.S. Republican tax plans gain speed; Fitch warns on deficit
    Republicans in the U.S. House of Representatives forged ahead on Tuesday with legislation to reshape the federal tax code, while a top credit-ratings agency said the bill would balloon the budget deficit and give only a temporary boost to the economy. Senate Republicans are expected to unveil their own tax bill at the end of the week, and early indications suggest it could differ significantly from the House legislation. Trump made another pitch for Democratic support on Capitol Hill, where his top aides met with about a dozen Senate Democrats and Trump himself phoned in from his Asia trip.


    Stung by criticism, ECB seeks to defuse conflict on bad loans
    The European Central Bank sought on Tuesday to defuse a conflict with European and Italian authorities over its plans for ridding euro zone banks of bad loans, opening the door to working with other institutions and tailoring its approach to each bank. The ECB has come under fire for setting blanket rules for how much money banks should set aside for new unpaid loans. It is due to draft guidelines by March for existing soured credit, a much bigger issue at nearly 900 billion euros. Critics, including Italian Economic Minister Pier Carlo Padoan and the Italian head of the European Parliament, Antonio Tajani, fear the new rules will force banks to curtail lending or even need new capital.

    German "wise men" sound alarm over "overheating" economy
    The German economy is at risk of overheating, according to a leaked advisory council report that follows pressure from the Bundesbank for a swifter end to the European Central Bank's expansive monetary policy. In their annual report, seen by Handelsblatt newspaper, the five "wise men" who advise the German government on economic policy said the economy, which they expected to expand strongly this year and next, was moving gradually into a "boom phase". The wise men expected Germany's economy to expand by 2 percent this year and by 2.2 percent in 2018, Handelsblatt said.


    BREAKINGVIEWS

    Hadas: Even China will struggle to control finance
    There are many good reasons why China should not be in danger of falling into a foreign debt crisis. They're not good enough, though. The country's anti-crisis armoury is impressive. Foreign currency reserves of $3.1 trillion, as of September, amount to a healthy-sounding quarter of annual GDP. Combine that with fairly tight capital controls, and the government should have no fear of a run on the yuan.


    GRAPHIC

    A year in: U.S. stock market under Trump's shadow
    One year ago, when it became clear that Republican Donald Trump had pulled a historic upset to defeat Democrat Hillary Clinton to the U.S. presidency, futures in the Dow Jones Industrial Average tumbled nearly 900 points.


    CHINA'S TRADE WITH THE U.S.
    [​IMG]



    MORNING MEETING


    JGBS FIRM, LED BY WINGS OF THE CURVE

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.308%, JGB 10s 0.021%, Bund 10s 0.327%
    • US-Japan-Germany respective 2s indicated 1.631%, -0.205%, -0.771%
    • JGBs firm, led by short-end paper and ultra long-end bonds
    • 3mo bill yield -2.4bp, 2yr yield -1bp, 30yr yield -1bp, 40yr yield -2bp
    • 6mo bill auction very strong, stop -0.2276%, lowest since March
    • Undisclosed players take 86.6% at 6mo auction
    • Post-auction squeeze rather mild, easing from -0.245% to -0.24%
    • Secondary market demand possibly very small
    • Bills may turn weak after tomorrow's 3mo auction
    • JGB futures end at 150.99, up 8 ticks on day, range 151.04/150.96
    • Nikkei off from yesterday's 22,953 high but buoyant, 22,759-915
    • At 22,913, index off 23 points or 0.1% on day
    • AXJ mostly up - SSEC 0.6%, HSI 0.4%, KOSPI 0.2%, STI 0.1% ASX above par
    • HSI highest in decade, TWI and NZX50 outliers, off 0.15% and 0.1%
    • Crude off some more post-NYMEX settle as API inventories down less than eyed

    Currency Summaries
    JPY
    • USD/JPY does little in Asia, range 113.64-114.01
    • Low hit early on soggy US yields, Washington Post story on tax cut delay
    • Japanese, other bids again from low but heavy 114.00+
    • Nearby option expiries today - 113.50 USD692 mln, 113.75 880 mln
    • Total USD975 mln 113.95-114.00, 114.10 280 mln, 114.50 1.3 bln, 114.75 605
    • Nikkei down small but eyes on 23k test soon, USD/JPY supportive?
    • EUR/JPY mirrors USD/JPY, sold early but some bounce, range 131.80-132.01
    • Bias more neutral with EUR bulls coming out of woodwork, 55-DMA 132.15
    • GBP/JPY more buoyant of JPY crosses still, Asia 149.64 to 150.14
    • Range similar to Asia yesterday, daily Ichi kijun 149.42, tenkan 150.29
    • AUD/JPY 86.98-87.17 after o/n fall, NZD/JPY 78.50-73 after o/n fall too
    • Oct foreign reserves $1.260.9 trln, Sept $1.266.3 trln, -$5.385 bln
    • Goldman Sachs to invest @Y100 bln in Japan in next two years – Nikkei

    EUR
    • EUR/USD does little in Asia, still soggy but up from 1.1553 overnight low
    • Asia 1.1581-1.1606, heavy 1.1600+, some bears also coming out of woodwork
    • Option expiries again bracket, tether market down
    • Today 1.1545-70 E1.6 bln, 1.1600 E976 mln, 1.1640 E842 mln, 1.1700 E503 mln
    • More expiries in area tomorrow too - 1.1575-85, 1.1600, 1.1640-80, 1.1700
    • EUR/USD pivoting around 55-HMA at 1.1596, below 100 and 200 HMAs
    • Also tracking away from ascending 100-DMA up at 1.1713 today
    • EUR/JPY early Asia sales EUR weight, bounce later though, 131.81-132.01 range
    • EUR/GBP heavy after push down yesterday, Monday, Asia 0.8799-0.8806
    • Ascending 200-DMA below at 0.8765 - key support area
    • EUR/CHF 1.1580-94 in Asia, similar range to yesterday, on back foot

    GBP
    • Cable dipped to 1.3109 overnight but has since bounced, Asia 1.3163-76
    • Bias still up, break above 1.3181/82 daily Ichi tenkan/kijun bullish
    • Ascending 55-DMA above at 1.3206, daily Ichi cloud 1.3217-1.3332
    • Underlining support from ascending 100-DMA at 1.3098
    • Oct Markit/REC permanent placements index 55.3/salaries 61.2, Sept 55.4/60.7

    CHF
    • USD/CHF in stasis, Asia 0.9981-98, touch soggy but uptrend intact?
    • Just below flatter 200-HMA at 0.9990, near 0.9989 daily Ichi tenkan
    • Bias more neutral awaiting developments, tech moves

    Market Briefs
    • Trump warns 'rogue regime' N.Korea of grave danger
    • Fog stops Trump facing-off N.Korea across DMZ
    • Democrats win bitter Virginia governor's race in setback for Trump
    • U.S. Republican tax plans gain speed; Fitch warns on deficit
    • CN Oct Exports y/y, 6.9% vs 8.1%, f'cast 7.2%
    • CN Oct Imports y/y, 17.2% vs 18.7%, f'cast 16.0%, rvsd 18.6%
    • CN Oct Trade Balance USD +38.17 bln vs rvsd +28,61 bln, f'cast +39.50 bln
    • China's Oct FX reserves rise slightly in ninth month of gains
    • Quick signoff on TPP trade deal far from sure at Asia-Pacific meeting
    • BOJ's Funo says important to maintain 'powerful' easing
    • EU eyes tough Brexit transition terms
    • Greens, FDP make concessions in German coalition talks
    • Saudi mass arrests jolt markets but many see overdue swoop on corruption
    • Macri says Argentina's economy to grow more than 3 pct this year - Rtrs Exclusive
    • Bitcoin a new asset class, not a crypto-currency - CME's Melamed

    Looking Ahead - Economic Data (GMT)
    • 07:45 FR Sept Trade Balance, EUR, SA, f'cast -4.80 bln, -4.50 bln last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A IMF's Lagarde, Japan's Kuroda and Aso speak at a seminar - Tokyo
    • N/A ECB Governing council meeting – Frankfurt
    • 08:00 Riksbank’s executive board meeting
    • 08:10 Norges Bank's Nicolaisen speaks at a conference - Stavanger
    • 11:50 BoE's Kohn speaks at a conference - London
    • 18:35 BoE's Carney speaks at King's College - London
    See North American Open for a detailed listing of US/NorAm releases, events

    Lower NZD means things are looking up for the RBNZ
    A lot has changed since the RBNZ's last Monetary Policy Statement on Aug 10. New Zealand has a new central bank governor, PM and finance minister, a pending expanded Reserve Bank Act and in time, a new Policy Targets Agreement with the new coalition government. Plenty for markets to digest and it's resulted in a much lower exchange rate; from 0.7340 vs the USD on the eve of the election and 76.4 trade-weighted, the NZD is now closer to 0.6900 cents and 74.00 TWI. In his final speech as RBNZ governor, Wheeler cited 4-1/2 years of negative tradables inflation (brought about by the appreciating NZD) as the main reason headline inflation has been so low, and by definition why he had struggled to fulfill the PTA. The agreement requires the RBNZ to keep CPI inflation between 1% & 3% on average over the medium term, with a focus on keeping it near the 2% target midpoint. Inflation averaged 1% during Wheeler's 5-year stewardship, while tradables inflation averaged -1.2%. As the RBNZ heads into Thursday's rates decision and MPS, Wheeler's wish for a lower NZD that would help lift tradables inflation and deliver more balanced growth has come to fruition. Chances are that this new reality will be reflected in higher, albeit cautiously optimistic, RBNZ projections.


     
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    TUESDAY, NOVEMBER 7, 2017



    TOP NEWS



    The ECB sought to defuse a conflict with European and Italian authorities over its plans for ridding euro zone banks of bad loans, opening the door to working with other institutions and tailoring its approach to each bank. Critics, including Italian Economic Minister Pier Carlo Padoan and the Italian head of the European Parliament, Antonio Tajani, fear the new rules will force banks to curtail lending or even need new capital. But ECB President Mario Draghi appeared to extend an olive branch, calling for a "joint effort" between regulators, supervisors and national authorities. His comments raised the chances the ECB's guidelines on legacy loans will be influenced by a legislative proposal that the European Commission is preparing in parallel on the matter, as reported by Reuters last month.


    German industrial production fell in September after surging a month earlier, but output still grew by 0.8 percent in the third quarter as a whole and should increase further in the months ahead, the Economy Ministry said. Industrial output fell by 1.6 percent in September after rising by 2.6 in August, the biggest gain in more than six years, data from the Economy Ministry showed. A Reuters poll of analysts had forecast a drop of 0.8 percent. Separately, the German 'wise men' sound alarm over 'overheating' economy


    German economy is at risk of overheating, according to a leaked advisory council report that follows pressure from the Bundesbank for a swifter end to the European Central Bank's expansive monetary policy.

    New top U.S. banking regulator urges 'fresh look' at rules
    America's top financial regulator said "everything is up for a fresh look" as the Federal Reserve considers dialing back some crisis-era banking rules put in place over the last decade, offering hope to Wall Street and Republicans looking to cut red tape. Randal Quarles, making his first public comments since becoming the Fed's vice chair for financial supervision this month, said there are some areas such as better tailoring rules to firms' size that can be adjusted immediately. "As I have come into the job I have perceived quite an openness in the deep-state Fed to taking a fresh look, which I found very encouraging," he told a banking conference in New York, adding any regulatory changes ultimately "won't be to everyone's satisfaction."

    Inflation risks to rise with full output-Bank of Canada's Poloz

    The closer Canada gets to full output and employment the greater the risk that inflation pressures will appear, Bank of Canada Governor Stephen Poloz said, reiterating that policymakers will be cautious about future rate moves. Saying the central bank has a good understanding of what is driving inflation, Poloz said there is still a link between labor market slack and wages, just as there is still a link between inflation and the balance of total supply and demand. "What this means it that the closer we get to full output and employment, the greater the risk that inflation pressures will appear," Poloz said in prepared notes for his speech.

    UK house prices pick up speed, BoE rate hike won't hurt - Halifax
    British house prices rose in the three months to October at their fastest pace since February and the Bank of England's interest rate hike is unlikely to offset the impact on prices from a lack of homes for sale, mortgage lender Halifax said. House prices increased by an annual 4.5 percent in the August-October period, picking up speed from a 4.0 percent increase in the three months to September, Halifax said. In October alone, prices rose by 0.3 percent, Halifax said. That represented a slowdown from growth of 0.8 percent in September but was slightly stronger than the forecast in the Reuters poll. Separately, the British Retail Consortium said retail sales declined by an annual 1.0 percent on a like-for-like basis. Sales rose 1.9 percent in September.

    GRAPHIC

    How the ECB's "lower for longer" QE could play out

    To wean the euro zone off a heavy dose of cheap cash, the European Central Bank will in January cut its monthly asset purchases by half while extending the scheme deep into 2018.

    From breakup bet to #Euroboom: the surprise of 2017
    Euro zone investments have turned in one of their best years since the single currency was born in 1999, confounding many who had bet on the bloc to be the disaster play of 2017.


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    ECB's PURCHASE OF CORPORATE BONDS
    [​IMG]


    MARKETS TODAY

    TREASURIES: Treasury yields fell, flattening the yield curve to a level not seen in a decade, as $24 billion worth of three-year government debt, the first leg of this week's $64 billion quarterly refunding, fetched average demand. The Treasury sold 3-year notes at a high yield of 1.750 pct. The bid-to-cover ratio was 2.76. Benchmark 10-year notes were up 2/32 to yield 2.31 pct. 2-year notes edged down 1/32 with a yield of 1.63 pct. The yield spread between 2-year and 10-year Treasuries narrowed to 67.80 bps, the tightest since November 2007, Reuters data showed. 30-year bonds rose 14/32, yielding 2.77 pct. The drop in longer-dated yields with 30-year yields touching a six-week low, pinned short-term gauges of Treasury market volatility near all-time lows. "It was a quiet, firm day for the market. We have a pretty strong flattening trend that will probably continue into 2018," said John Canavan, market strategist at Stone & McCarthy Research Associates in New York.

    FOREX: The dollar edged higher against a basket of currencies, as investors renewed their focus on diverging monetary policy between the United States and the euro zone. The dollar index was up 0.15 pct at 94.896. The euro was 0.16 pct lower to $1.1590. Its session low was $1.1555, its lowest since July 20. Against the yen, the dollar gained 0.22 pct to 113.93 yen. Sterling edged down 0.02 pct to $1.3167.

    CORPORATES: Corporate bond spreads widened as uncertainty about the passage of a Republican-sponsored bill to overhaul the federal tax code dampened investors’ riskier appetite. The CDX-IG.29 index widened by 1 bps to 54 bps.

    STOCKS: The S&P 500 dipped after a disappointing profit forecast from Priceline and a drop in financials, as investors also fretted that a Republican plan to cut corporate taxes could be watered down. Priceline slumped 13.5 pct while TripAdvisor dropped 23.22 pct, after both companies gave soft quarterly profit forecasts. Goldman Sachs lost 1.51 pct, JPMorgan fell 2.01 pct and Bank of America was down 2.05 pct. The Dow rose 8.81 points, or 0.04 pct, to 23,557.23, the S&P 500 lost 0.56 points, or 0.02 pct, to 2,590.57 and the Nasdaq dropped 18.65 points, or 0.27 pct, to 6,767.78.

    C&E: Oil ended lower after rising to the highest since July 2015 the previous day, while tension flared between Saudi Arabia and Iran, and the Saudi crown prince tightened his grip on power. Brent was down 0.79 pct at $63.76 a barrel. U.S. crude fell 0.19 pct to $57.24 a barrel. Gold lost 0.39 pct to $1276.45 an ounce. Reuters-Jefferies index was down 0.37 pct at 194.54.


    ICAP DATA
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    LATAM NEWS

    Argentina central bank raises policy rate to 28.75 pct
    Argentina's central bank raised its policy rate to 28.75 percent, up from 27.25 percent previously, as inflation expectations rise, the monetary authority said in a statement. It was the bank's second consecutive hike after a long period of holding the rate steady. Inflation expectations for 2017 rose to 23 percent, up from 22 percent the prior month, according to the bank's monthly poll of economists published last Thursday. September data put Argentina's inflation at 1.9 percent, higher than previous months. The country's cumulative inflation rate is 17.6 percent for the first nine months of the year, above the 12 percent to 17 percent target range for 2017.

    Chile cenbank 'prepared to deepen' expansionary policy -governor
    Chile's central bank's decision to leave its benchmark interest rate unchanged at 2.5 percent in October was unanimous, but the committee considered a 25-basis-point cut, minutes of the most recent monetary policy meeting published showed. "There had not been a substantial change from what was expected in September, but the risks to inflation's convergence had accentuated," the central bank said in its October minutes. The discussion came as inflation is taking longer than expected to rise toward the central bank's target. Central bank Governor Mario Marcel said the risk of lower inflation in the short term remained, but that the committee "is prepared to deepen its expansionary monetary policy stance."


    LATAM MARKETS
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    EYE ON ASIA

    Australia's central bank upbeat on growth, cautious on low inflation
    Australia's central bank held rates at record lows for a 14th straight policy meeting and signs were they would stay sidelined for months to come in the face of stubbornly low inflation and caution among debt-laden consumers. Wrapping up its monthly board meeting, the Reserve Bank of Australia (RBA) stuck with a prediction that economic growth would pick up to around 3 percent over the next few years, nudging unemployment down from the current 5.5 percent. However, it struck a more cautious note on consumption and inflation. "In underlying terms, inflation is likely to remain low for some time, reflecting the slow growth in labour costs and increased competitive pressures, especially in retailing," RBA Governor Philip Lowe wrote in a brief statement. "Household incomes are growing slowly and debt levels are high."

    Malaysia's Sept industrial output growth seen slowing to 6.1 pct y/y
    Malaysia's factory output growth will likely moderate slightly in September, even as the manufacturing sector continues to perform well, a Reuters poll showed. Industrial production in September is expected to rise 6.1 percent from a year earlier, the median forecast of 10 economists showed, slowing slightly from the previous month.
     
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    Dow Jones Newswires, 09 Nov 2017 04:10 EST
    Global Forex and Fixed Income Roundup: Market Talk


    0910 GMT - The ECB's bank supervisory chair Daniele Nouy Thursday seemed open to delaying controversial new rules on non-performing loans that are due to go into effect at the beginning of next year. She said after considering input from stakeholders during a consultation period ending Dec. 8, it could be that the start of next year "is not the best day to be starting." She said she could propose that there be more time "to take seriously into accounts the comments that we are receiving." She's speaking at a European Parliament hearing in Brussels. (todd.buell@wsj.com ; @ToddBuell)

    0900 GMT - Who said bank supervision is boring? Ahead of European Central Bank supervisory board head Daniele Nouy's testimony Thursday, the head of the monetary affairs committee Roberto Gualtieri expressed displeasure at the ECB's new addendum on non-performing loans. He said it went beyond the mandate of the supervisor and that banks don't have enough time to implement them. "The time is too short," he said. Ms. Nouy said in her prepared remarks that the ECB's move "falls within the supervisory mandate and powers of the ECB." (todd.buell@wsj.com ; @ToddBuell)

    0858 GMT - Expectations of a rate increase by the Philippine central bank are overplayed, says Gareth Leather, senior Asia economist at Capital Economics, following the bank's latest stand-pat decision. "Looking ahead, we think fears that the economy is overheating are exaggerated," he says, predicting the Bangko Sentral Ng Pilipinas will keep policy on hold through the end of next year. Many economists expect the bank to raise rates in 2018. Fears have centered on rapid credit growth and the disappearance of the current account surplus, but both stem largely from an investment boom, not an unsustainable consumer boom, he adds. (paul.jackson@wsj.com)

    0858 GMT - The bonds of Danish facility manager ISS trade at wider z-spreads compared to those of similarly rated industrial firms. So why doesn't Danske Bank move to an overweight recommendation from marketweight? One reason is pressure on operating margins: ISS now guides for unchanged margins year-on-year in 2017 compared to its previous guidance of an increase versus 2016. And the other is debt leverage, which stands at 2.7 times, slightly above the target of 2.5 times. (tasos.vossos@wsj.com; @tasosvos)

    0857 GMT - America Movil, the Mexican owner of Telekom Austria and an issuer of bonds in European currencies, looks poised to benefit from the domestic regulator's decision to allow it to charge competitors for access to its mobile network, according to Moody's. Interconnection fees should marginally boost America Movil's Ebitda while raising operating costs for its competitors. Nevertheless, voice-related interconnection rates should eventually become less important to America Movil's earnings, given the Mexican telecom industry's increasing focus to data services. (tasos.vossos@wsj.com; @tasosvos)

    0836 GMT - Sterling rises slightly, helped partly by broad dollar weakness due to uncertainty about the U.S. tax bill, but increasing U.K. political and economic uncertainty leaves it vulnerable as Brexit negotiations are set to resume Thursday. U.K. Prime Minister Theresa May suffered the second resignation in a week from her cabinet Wednesday as Priti Patel resigned as international development secretary. "GBP is holding up quite well despite the self-destruction of the U.K. cabinet," says ING. GBP/USD up 0.17% at 1.3137, while EUR/GBP falls 0.17% to 0.8827. Commerzbank points to an "obvious lack of control May has over her ministers...not making the negotiations with the EU any easier." There are economic concerns too, with a Royal Institution of Chartered Surveyors survey showing weak U.K. house prices.(olga.cotaga@wsj.com; @OlgaCotaga)

    0826 GMT - Although Malaysia's industrial production grew at a slower-than-expected rate of 4.7% in September, 3Q turned in a formidable 5.9% increase, the most in 2 1/2 years. That's good for 3Q GDP. MIDF Research expects growth of more than 5.5%, and industrial production's strength should continue for months given that robust external trade continues and modest increases in commodity prices will boost industrial activity in Malaysia. (yantoultra.ngui@wsj.com; @yantoultra)

    0818 GMT - Malaysia's central bank is hinting at a possible 2018 rate hike, says Nomura. Following today's meeting, the policy statement said that "given the strength of the global and domestic macroeconomic conditions, the monetary-policy committee may consider reviewing the current degree of monetary accommodation." Nomura, whose base case has been for no hike through at least next year, says if financial-imbalance risks continue to build the probability of rate hikes could rise. (yantoultra.ngui@wsj.com; @yantoultra)

    0801 GMT - The U.S. dollar falls on Thursday, retracing some gains made in the previous day, due to uncertainty regarding the fate of the U.S. tax bill. "The fact that the tax reform in the U.S. is unlikely to happen before the spring is putting slight pressure on the dollar," says Commerzbank. EUR/USD is up 0.2% at 1.1613, while USD/JPY is down 0.29% at 113.54. GBP/USD also rises, last up 0.23% at 1.3145.(olga.cotaga@wsj.com; @OlgaCotaga)

    0751 GMT - The German government bond market should be "keen" to test the 0.3% yield mark, Commerzbank rates strategist Michael Leister says in a note. Bunds have been rallying since the European Central Bank's policy decision in late October, when it delivered what some analysts call a dovish tapering. The German bank keeps its "long bias" in bunds, even though yields rebounded Wednesday afternoon after dropping below 0.31%. They trade at 0.33% early Thursday, according to Tradeweb. Yields move inversely to bond prices. (tasos.vossos@wsj.com; @tasosvos)

    0744 GMT - Ireland is set to wrap up its government bond-issuance program for 2017 with Thursday's auction. The National Treasury Management Agency will offer a total of EUR1 billion to EUR1.25 billion in May 2026- and February 2045-dated bonds. Danske's chief analyst Allan von Mehren says the strong performance of Irish government bonds over the past month was probably related to increased assets purchases by the European Central Bank. The ECB bought EUR62.4 billion assets in October, slightly more than its monthly pace of EUR60 billion, thus building some buffer for the last two months of the year when it might buy somewhat below EUR60 billion per month. (emese.bartha@wsj.com; @EmeseBartha)

    0701 GMT - Chinese banks are projected to have extended CNY700 billion ($105.6 billion) of loans last month, according to a poll of 13 economists by WSJ. That would be down sharply from September's CNY1.27 trillion. Meanwhile, growth in M2--the broadest measurement of money supply--is seen having held steady at 9.2%. The data from the PBoC is due the next few days. (grace.zhu@wsj.com)

    (END) Dow Jones Newswires
     
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    THURSDAY, NOVEMBER 9, 2017


    TOP NEWS

    Japan Sept core machinery orders tumble in dent to capex outlook
    Japan's core machinery orders tumbled at their fastest pace in more than two years in September, a decline that companies expect to persist into October-December in a sign that business investment is losing momentum. The 8.1 percent fall in machinery orders was more than the median estimate for a 1.8 percent decline and follows a 3.4 percent increase in the previous month. Orders from manufacturers fell 5.1 percent month-on-month in September, driven by lower orders for cranes and other heavy machinery used in construction. Economists say the weakness is likely temporary because rising corporate earnings and domestic labour shortages should push up capital expenditure next year, but there are some doubts about the pace of gains.

    China's strong factory gate inflation shows economic momentum still robust
    China's producer prices were surprisingly strong in October, while consumer inflation picked up pace in a sign the economy remains robust, with analysts expecting further price pressure as the government's crackdown on smog hurts factory output. The PPI rose 6.9 percent in October from a year earlier, despite muted activity during a week-long golden week holiday, data released by the National Bureau of Statistics showed. China's consumer inflation, which has stayed well within Beijing's 2017 target of 3 percent this year, also accelerated more than expected to 1.9 percent from 1.6 percent in September, as food prices fell at a slower pace and due to low base effect.

    Tax-cut debate in U.S. Congress swings to Senate bill
    A U.S. Senate tax-cut bill, differing from one in the House of Representatives, was expected to be unveiled, complicating a Republican tax overhaul push and increasing skepticism on Wall Street about the effort. House and Senate Republicans are working on separate plans for the biggest overhaul of the U.S. tax code since the 1980s. President Donald Trump and his House allies have proposed slashing the corporate tax rate to 20 percent from 35 percent, one of the costliest features of the wide-ranging House plan. Republicans have yet to score a major legislative win since he took office in January, although they control Congress as well as the White House.


    BOJ board debated newcomer's calls for easing - Oct meeting summary
    The Bank of Japan's nine-member board debated calls from one of its policymakers to target the longer end of the yield curve at a rate review in October, a summary of their opinions showed, with several stressing that the current stimulus was sufficient. One board member said the BOJ should pledge to guide the 15-year government bond yield lower than 0.2 percent, instead of aiming to guide the 10-year yield around zero percent. Another board member countered such calls for further easing, saying that taking "extreme steps" to quicken the achievement of the BOJ's 2 percent inflation target could destabilise financial markets, the summary showed on Thursday.

    UK house price growth peters out, London weakest since 2009 –RICS
    House prices in Britain are no longer rising and are falling in London at their fastest pace since 2009, the Royal Institution of Chartered Surveyors said, citing political worries and last week's Bank of England interest rate hike. RICS's benchmark house price index for Britain as a whole fell more sharply than expected to +1 in October, a level consistent with flat price growth, down from +6 in September. RICS' gauge of price expectations for the next three months fell in October to -11 from -8. The fall in sales mirrored a recent slide in demand from buyers and suggested sales would fall over the next 12 months.


    ANALYSIS & COLUMN

    Investors size up U.S. tax reform after Democrats gain in elections
    If the election of Donald Trump as U.S. president was a big catalyst behind a 23 percent rally in the S&P 500 over the past year, Tuesday’s first wide-scale retesting of his agenda with voters could signal the clock is ticking for Republicans to deliver on a range of so-far unkept promises before a much larger ballot showdown next year.

    Will tax reform end the American dream of owning a home?
    People who buy homes soon could be setting themselves up to lose money. If a U.S. tax reform measure targeting the popular mortgage interest deduction is adopted, values of homes could drop 10 percent on average nationally, Lawrence Yun told 20,000 real estate agents gathered for the National Association of Realtors conference last week.



    CHINA'S CONSUMER PRICE INFLATION
    [​IMG]



    MORNING MEETING


    TDB RALLY STALLS, NIKKEI VOLATILE

    EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.327%, JGB 10s 0.022%, Bund 10s 0.336%
    • US-Japan-Germany respective 2s indicated 1.652%, -0.206%, -0.760%
    • JGB futures off 4 ticks on day, range 151.04/150.89
    • 30yr auction weaker than expected
    • Stop rate 0.80%, BTC 3.43, last 3.98; tail 1.1bp, last 0.3bp
    • 30yr bonds hold steady around 0.795-0.80% post-auction
    • 3mo auction also weak, stop -0.2549%, vs -0.295% pre-auction level
    • New 3mo paper weakens to -0.255% post-auction
    • Nikkei rallies 2% in morning session, hits new 25-year high
    • Falls in afternoon session to be down 1.7% at one point
    • AXJ mixed - HSI +0.9%, SSEC-STI-KOSPI around par, ASX +0.5%
    • TWI -0.9% and NZX50 -0.2%
    • Dalian iron ore -1.4%, Tokyo rubber -1.0%

    Currency Summaries
    JPY
    • USD/JPY bid in Asia again after fall to 113.40 overnight
    • 113.80 to 114.07 on higher US yields, another bid leg up in Nikkei
    • Offshore players still buying Japan stocks - JPY funding, currency hedges
    • US Treasury yields also up, 10s from @2.30%, currently 2.328%
    • Option expiries also supportive - total USD1.74 bln 112.90-113.10
    • Also 113.50-60 USD812 mln, 114.00 540 mln, 114.15-50 @1.4 bln, 85-90 469
    • Upside option expiries to help limit moves higher
    • GBP/JPY up from 148.50 o/n, Asia 149.21 to 69 despite UK political to-do
    • AUD/JPY 87.35 to 66, NZD/JPY 79.16 to 46, fresh toshin demand in both?
    • MoF October flow data – Japanese buy net Y1.0 trln foreign stocks
    • Y1.43 trln bonds sold, foreigners buy net Y3.43 trln Japanese stocks
    • MoF flow data 10/29-Oct 4 week– Japanese buy net Y169.7 bln foreign stocks
    • Y729.7/Y29.7 bln for-bonds/bills sold, foreigners sell Y12.4 bln J-stocks
    • Source - MUFG seeking 40% of Indonesia's Bank Danamon for $1.8 bln

    EUR
    • EUR/USD, EUR complex in stasis in Asia again, options bracket
    • Case especially for EUR/USD – 1.1575-85 E649 mln, 1.1600 1.7 bln
    • Also above 1.1640-80 total E1.67 bln and E1.1 bln up at 1.1700
    • Support from 1.1550-60, 1.1553 low yesterday, some stops eyed sub-1.1550
    • Better bids-support eyed ahead of presumed option barriers at 1.1500
    • EUR/JPY mirrors USD/JPY moves up, Asia 132.04-25 range though, low o/n 131.40
    • EUR/GBP soggy in Asia, flows few-interest low though, range 0.8830-45
    • EUR/CHF quiet but soggy too, Asia 1.1590-97

    GBP
    • Cable better bid in Asia, 1.3105 to 32, up from 1.3087 low yesterday
    • UK political to-do, Brexit concerns not having that much impact
    • Support from area of ascending 100-DMA at 1.3102, 55-DMA above at 1.3211
    • GBP/USD endeavoring to make tracks away from 1.3040 low last Friday

    CHF
    • USD/CHF in stasis near recent highs, Asia 0.9994-1.0000, very quiet
    • Support from area of flat daily Ichi tenkan at 0.9988
    • Resistance strong from @1.0030, 1.0029 high Tuesday, Oct 27 high 1.0039
    • CHF still funding currency of choice for whatever carries?

    Market Briefs
    • CN Oct PPI y/y, 6.9% vs 6.9%, f'cast 6.6%
    • CN Oct CPI y/y, m/m, 1.9%, 0.1% vs 1.6%, 0.5%, f' cast 1.8%, 0.2%
    • Trump tells Xi he believes N.Korea solution can be found
    • Tax-cut debate in U.S. Congress swings to Senate bill
    • U.S. Democrats ride grassroots wave to major statehouse gains
    • NZ central bank looks ahead to faster inflation, earlier hike
    • AU Sept Housing Finance, -2.3% vs 1.0%, f' cast 3.0%
    • GB Oct RICS house price balance +1, +4 eyed, Sept +6, London weakest since '09
    • EU states see Britain failing to meet Brexit divorce terms
    • In new test for British PM, British aid minister resigns
    • Catalan strike severs road links as secessionist leader regroups
    • JP Sept core mach orders -8.1% m/m, -1.8% eyed, Q3 +4.7% q/q, Q4 -3.5% eyed
    • JP Sept c/a surplus Y2.2712 trln, Y2.3754 trln eyed, Aug Y2.3804 trln
    • JP Oct bank loans +2.8% y/y to Y518.091 trln, Sept +2.9%, Aug +3.2%
    • BoJ Oct MPM summary of opinions - Even-keel most appropriate policy stance
    • BoJ - More demerits to further ease now, ETF purchase policy debate

    Looking Ahead - Economic Data (GMT)
    • 07:00 DE Sept Trade Balance, EUR, SA, f' cast 21.1 bln, last 21.6 bln
    • 07:00 DE Sept Exports m/m SA, f' cast -1.10%, last 3.10%
    • 07:00 DE Sept Imports m/m SA, f' cast 0.3%, last 1.2%

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 08:00 ECB's Nouy speaks in European Parliament - Brussels
    • 08:30 Swedish cen bank minutes from monetary policy - Stockholm
    • 08:30 Riksbank's Skingsley speaks at a conference - Paris
    • 13:00 French cen bank's Galhau speaks in a conference - Brussels
    • 13:00 ECB's Coeure participates in a discussion - Lyon
    • 13:15 ECB's Mersch speaks at a forum - Vienna
    • 13:45 ECB's Constancio speaks in a conference - Rome
    • 16:30 SNB's Jordan speaks at Frankfurt
    • 18:20 ECB's Lautenschlager speaks in a conference - Washington
    See North American Open for a detailed listing of US/NorAm releases, events

    USD looks to Treasury yields for next big move
    The EUR/USD ended a three-day sequence of lower lows Tuesday, with yesterday's 33-pip range producing an inside day that suggests the market is unsure of the next move. FX Land seems to be in a constant state of waiting at the moment - first it was US tax reform, the Fed chair decision, the BOE, US NFP; now it's just the tax bill and geopolitics. Yet it seems like FX will have to wait for a lead from other markets, particularly US Treasuries. Since the US 10-year yield topped out on Oct 27, the DXY has been confined to just a 74-pip range in the subsequent nine sessions. Something has to give soon and it will probably be led by Treasuries or stocks. On the UST side of the equation, a break below the Oct 13 low at 2.273% would tip the DXY back through the neckline of the head-and-shoulders formation at 97.26 and send it back to the 92.75 level seen before yields rose, while a move back towards 2.50% would see the dollar rally accelerate towards the 200 DMA at 96.63.
     
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    Italy to become Putin's ally?

    Rome urged to LEAVE EU and Nato as 'European dream is DEAD'

    ITALY should ditch the euro, leave the European Union, walk away from NATO and join forces with Russia, a shocking new book has claimed


    Mr Valloreja said he and many of his peers were persuaded in the 1970s and 1980s that a united Europe would prosper but are now disillusioned.

    [​IMG]

    Italy to become Putin's ally? Rome urged to LEAVE EU and Nato as 'European dream is DEAD'
     
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    Dow Jones Newswires, 10 Nov 2017 03:18 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0818 GMT - Sterling falls on the second and last day of another round of Brexit negotiations, with no sign of progress being made. Again. GBP/USD is down 0.1% at 1.3133, but EUR/GBP trades flat at 0.8855. "Following the October summit, I had the impression that the declaration of 'sufficient progress' at the next summit in December was a fait accompli," a Commerzbank analyst says in a note. "That was wrong." Investors "should consider carefully before entering GBP longs," as the summit in December approaches," says the analyst. U.K. industrial production and trade data due at 0930 GMT.(olga.cotaga@wsj.com; @OlgaCotaga)

    0814 GMT - Recent strong buying of government rupiah bonds by Indonesian investors during while foreigners sell shows that high overseas ownership is less of a worry than before. "The increase in bond yield during the latest outflow was less than in the past," notes Mandiri Sekuritas debt-market analyst Handy Yunianto. High foreign ownership of the government's rupiah bonds has been long seen as posing risk to both local bonds and the rupiah. (i-made.sentana@wsj.com)

    0808 GMT - Astaldi exhibits a classic trait of a stressed corporate: its credit default swaps curve is inverted. One-year CDS on the Italian construction firm has surged to 2583.57 basis points from 732.12 bps this week, far outpacing the rise in five-year CDS, which jumped from 869.02 bps to 1,564.77 bps, according to Factset. An inverted CDS curve means the market fears near-term default, but believes the borrower could eventually repay its obligations if it survives a rough patch. The company recently postponed the release of 9M results and confirmed Thursday it is considering a circa EUR200 million capital increase. The reasons are as yet unclear, with some investors even speculating about big impairments in Venezuela.(tasos.vossos@wsj.com; @tasosvos)

    0807 GMT - China Development Bank sold its first dollar-denominated green bonds, taking advantage of growing investor interest in instruments whose proceeds are used for energy efficient projects. The $500 million 5-year bonds have a 2.75% coupon and were priced 0.78 percentage point above comparable Treasurys; the initial spread was a full point. The deal drew $1.3 billion in orders, with investors from EMEA picking up 41% of the deal; Asian buyers got the rest. (manju.dalal@wsj.com)

    0754 GMT - German government bonds may have corrected Thursday but yields -- which move inversely to bond prices -- look set to avoid an "accelerating and self-reinforcing" upward spiral, says Commerzbank rates strategist Michael Leister. This is based on the more balanced positioning now and sizeable holdings in "sticky hands"--long-term investors and not traders--should offer comfort to longs, he adds. Nevertheless, he expects 10-year German bonds to remain vulnerable so long as yields remain below 0.4%. Bund yields trade at 0.396% early Friday, up from recent lows of 0.309%, based on Tradeweb data. (tasos.vossos@wsj.com; @tasosvos)

    0743 GMT - When it comes to amending a US-South Korean free-trade pact, any further lifting of tariffs may be pointless because the deal has already removed or lowered duties significantly, says a feasibility study by Seoul's state-funded research institute. The Korea Institute for International Economic Policy tells a public hearing that the estimated impact of such tariff adjustments will be 0.0004-0.0007% of Korean GDP. The public hearing--a part of legal procedures necessary for amendment talks--was partially interrupted by angry, egg-pelting local farmers who want to kill, rather than revise, the 5-year-old deal. Unfazed by the protesters, Seoul's trade ministry vows to go ahead with outlining and reporting a negotiation plan for parliament. (kwanwoo.jun@wsj.com; @kwanwoo)

    0737 GMT - Government bond issuance volume in the eurozone is set to be elevated next week, with Italy, the Netherlands, Germany, Spain and France lining up auctions. ING rates strategists expect an issuance volume of up to EUR30 billion. Italy kicks off the week Monday with up to EUR6 billion on offer in 2020-, 2024- and 2033-dated BTPs. The Netherlands will offer EUR2 billion to EUR3 billion in July 2027 DSL, while Germany on Tuesday launches new December 2019-dated schatz valued at EUR5 billion. Germany returns on Wednesday to sell EUR3 billion August 2027 bund. Spain and France have auctions on Thursday and their debt agencies will announce auction details later Friday. (emese.bartha@wsj.com; @EmeseBartha)

    0700 GMT - The Philippine central bank has changed its tone on its reserve-requirement ratio, hinting more strongly that a cut is in the works, says HSBC economist Noelan Arbis. While Bangko Sentral Ng Pilipinas kept its main policy rate on hold yesterday--as widely expected--Arbis flags Gov. Nestor Espenilla's comment that the bank is crafting a strategy for a ratio cut. That follows reported remarks in October of his desire for a single-digit figure; it's currently 20%. Arbis says a cut "in the near future would be timely given the recent increase in Treasury-bonds and T-bills issuance plans." (paul.jackson@wsj.com)

    0655 GMT - Consumer-goods companies and homebuilders are likely to be the beneficiaries of a possible rate cut at today's GST Council meeting, says Motilal Oswal Securities. India is attempting to address the concerns facing small businesses implementing the new tax system. More than 200 items fall in the highest 28% tax bracket, and the broker believes lower rates will be a significant step toward tax simplification. The firm sees products like paint, detergent, watches and plywood seeing rate cuts. (debiprasad.nayak@wsj.com)

    0642 GMT - A panel of Indian lawmakers headed by Finance Minister Arun Jaitley is meeting today to consider slashing tax rates on nearly 200 goods and services as well as easing compliance rules for small businesses under GST. There's been growing criticism that poor implementation of new regime since July 1's start is hurting business there. "It will be a comprehensive overhaul of the tax rates on daily-use items," a ministry official says. The panel has been meeting regularly, easing regulations and tax rates while showcasing the government's resolve to accommodate changes sought by industries and consumers. (rajesh.roy@wsj.com)

    0630 GMT - The Nikkei logs the biggest one-day percentage loss in 2 months as the recent surge invited profit-taking. The Japanese index fell 0.8% to 22681.42, but it still rose 0.6% for the week, the 9th-straight gain, the longest since 2013. Corporate results have proved strong so far, providing market support, but as earnings season winds down a lack of additional fresh buying catalysts could mean more stock selling in coming weeks. Meanwhile, dollar-yen remains little-changed with late-Thursday New York levels and The 10-year JGB yields rose a basis point to 0.035%. (kosaku.narioka@wsj.com)

    (END) Dow Jones Newswires
     
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    FRIDAY, NOVEMBER 10, 2017


    TOP NEWS

    Japan manufacturers' mood slips but hovers near decade high - Reuters Tankan
    Confidence among Japanese manufacturers slipped in November from a decade high seen the previous month, a Reuters poll showed, but it remained strong - underscoring the economy's continuing expansion. The sentiment index for manufacturers fell to 27 from a decade-high of 31 in October. Sentiment deteriorated sharply among producers of industrial materials such as refined oils and chemicals, likely reflecting worsening terms of trade due to a weakening yen and rising oil prices. Service-sector sentiment rose one point to 31, led by real estate/construction firms that benefit from the BOJ's easy money.

    Dueling Republican tax plans advance in U.S. Congress
    U.S. Senate Republicans unveiled a tax plan on Thursday that differed from the House of Representatives' version on several key fronts, including how they treat the corporate tax rate, the tax deduction for state and local taxes, and the estate tax. Complicating a Republican push for the biggest overhaul of U.S. tax law since the 1980s, senators said that, like the House, they wanted to slash the corporate tax rate to 20 percent from 35 percent, but in 2019, not right away. The Senate's timetable was less clear, with a formal bill yet to be drafted in that chamber, where Republicans have a much smaller majority and a narrower path to winning approval for any legislation, let alone one as contentious as a tax package.

    China to expand corporate tax cuts for hi-tech services firms nationwide
    China will expand corporate tax rate cuts for high-tech services firms nationwide, in an effort to attract more foreign capital into its high tech, high value-added services industry. The tax rate for high-tech services firms would be reduced to 15 percent, effective Jan. 1, 2017, the Ministry of Finance said in a statement on its website. China's leaders are counting on growth in services and consumption to rebalance their growth model from its heavy reliance on investment and exports. Firms eligible for the tax cuts range from information technology outsourcing, business process outsourcing to knowledge process outsourcing, the ministry added.


    ECB can take more decisive steps once inflation moves higher
    The European Central Bank can tighten monetary policy more decisively once inflation is on a clear path towards the target, leaving behind its gradualist approach, Governing Council member Philip Lane told German business newspaper Boersen-Zeitung. The ECB agreed last month to halve asset purchases from next year but extended the buys until September, arguing that inflation still needed central bank support to rise towards its target of almost 2 percent. Arguing that 2018 will be an "interesting" year for monetary policy, Lane said that the bar for another increase in the ECB's 2.55 trillion euro asset purchase scheme was higher than before.

    PREVIEW-Japan's economy set to show 7 straight growth quarters
    Japan's economy was expected have grown for a seventh straight quarter in July-September, a period of unbroken expansion last seen between 1999 and 2001, a Reuters poll found. GDP is expected to have grown at an annualised rate of 1.3 percent in the third quarter, the poll of 20 analysts showed. Quarter-on-quarter growth of 0.3 percent is expected after a revised 0.6 percent rise in the second quarter. The poll found that private consumption probably slipped 0.4 percent in the third quarter, the first fall in seven quarters. External demand was seen contributing 0.4 percentage point to growth, the poll found, after it subtracted 0.3 percentage point from GDP growth in April-June.


    BREAKINGVIEWS

    U.S. tax reform heading for desperate compromise
    U.S. tax reform is heading toward a desperate compromise. Senate Republicans on Thursday were set to unveil a proposal that would delay a corporate rate cut, preserve the estate tax and fully repeal state and local deductions. It sets them at odds with House colleagues and could derail the effort. A GOP frantic for a policy win, though, means major concessions are likely.



    JAPAN BIG MANUFACTURER'S SENTIMENT
    [​IMG]



    MORNING MEETING


    SHORT-END JGBS EXTEND LOSSES

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.343%, JGB 10s 0.032%, Bund 10s 0.376%
    • US-Japan-Germany respective 2s indicated 1.640%, -0.183%, -0.755%
    • Short-end JGBs extend losses on weaker T-bills
    • BoJ buys only ¥100bn of bills in regular op, in apparent attempt to cool demand
    • 2yr JGB yield up 2bp to -0.18%, 5yr yield up 1.5bp
    • 40s still solid, adding to flattening pressure
    • At 150.87, futures off 8 ticks on day, range 150.96/150.86
    • TSE SG sees Nikkei fall back again towards lows yesterday
    • PM low yesterday after collapse 22,522, close 22,868
    • Today 22,709 early high to 22,511 and, at 22,655, index -219 pts, 1% on day
    • AXJ mostly in red - KOSPI 0.3%, TWI 0.25%, ASX 0.4%, NZX50 0.6%
    • Shanghai just below par, HSI just above, STI +0.1%
    • Dalian iron ore -1.5%, Tokyo rubber -2.0%

    Currency Summaries
    JPY
    • USD/JPY, JPY crosses in stasis above overnight lows, quiet
    • Nikkei back to lows seen yesterday but FX little affected, TSE SQ flows
    • USD/JPY in 113.27-53 range, option expiries more supportive than not
    • 112.50 USD719 mln, 112.80 235 mln, 113.00 1.87 bln, 113.50 377 mln
    • Also some above - 114.00 USD435 mln, roughly 1 yard again Monday @113.00
    • Gotobi/pres-weekend demand into Tokyo fix, US yields higher, 10s @2.341%
    • EUR/JPY Asia range 131.96-132.18, holding around 132.08 descending 100-HMA
    • Also just below Ichi daily cloud top 132.15, ascending 55-DMA 132.24 above
    • Large, E540 mln in option expiries at 132.00 help tether market down
    • GBP/JPY 148.82-149.23 in Asia, mostly sideways
    • AUD/JPY touch better bid, 86.90-87.22, NZD/JPY heavy, 78.44-89

    EUR
    • EUR/USD, EUR complex in stasis, consolidation mostly, market quiet
    • EUR/USD Asia range 1.1639-54, consolidates gains overnight
    • Pair still essentially in recent 1.1550-1.1700 range since October 27
    • Option expiries - 1.1500-50 total E2.4 bln, 1.1600 400 mln, 1.1650 477 mln
    • Also 1.1670-80 E439 mln, more 1.1600-30 Monday, total E758 mln
    • Also just below Ichi daily cloud top 132.15, ascending 55-DMA 132.24 above
    • Large, E540 mln in option expiries at 132.00 help tether market down
    • EUR/GBP unmoving, Asia 0.8858-64, few flows, little interest
    • E485 mln option expiries tipped down at 0.8800 today
    • EUR/CHF up small from late NY 1.1558 low, Asia 1.1573-85

    GBP
    • Cable unmoving in Asia, 1.3141-50, trade between 1.3107/1.3217 100/55 DMAs
    • Both moving averages ascending, GBP/USD itself seen neutral currently
    • Slowly descending 200-HMA above too at 1.3159
    • Quiet eyed with little clarity on Brexit, increasing calls for no Brexit

    CHF
    • USD/CHF on hold in Asia after fall overnight, range3 0.9935-49
    • Techs suggest break down with piercing of 0.9939 low Oct 30, base of pennant
    • That said, little to argue for fresh CHF buys given easy SNB stance
    • Option expiries today include USD405 mln down at 0.9900 strike

    Market Briefs
    • Australia's central bank cuts inflation forecasts, to be lower for longer
    • NZ finmin says new RBNZ governor must take on dual mandate
    • JP Nov Reuters Tankan DI 27 vs 31
    • China will relax controls on foreign ownership in Chinese banks and insurance companies
    • China to expand corporate tax cuts for hi-tech services firms nationwide
    • Dueling Republican tax plans advance in U.S. Congress
    • China media praises tone, outcome of Trump-Xi summit
    • Republican U.S. Senate candidate Moore hit by sexual misconduct allegations
    • Britain's future EU trade ties hinge on choice of "European model" -Barnier
    • UK's May picks Brexiteer to replace scandal-hit aid minister
    • Saudi says it has questioned 208 in graft inquiry, $100 bln stolen
    • Venezuela creditors skeptical despite pledges on Caracas meeting
    • U.S. fund investors snap up international stocks -Lipper
    • Foreign CB US debt holdings +$7.589 bln to $3.373 trln Nov 8 week
    • Treasuries +$7.057 bln to $3.046 trln, agencies +$151 mln to +$262.6 bln

    Looking Ahead - Economic Data (GMT)
    • 06:15 FR Sept Industrial Output m/m, f'cast 0.6%, -0.3% last
    • 08:00 GB Sept Industrial Output m/m, y/y, f'cast 0.3%, 1.9%, 0.2%, 1.6% last
    • 08:00 GB Sept Manufacturing Output m/m, y/y, f'cast 0.3%, 2.4%, 0.4%, 2.8% last
    • 08:00 GB Sept Goods Trade Balance GBP f'cast -12.80 bln, -14.25 bln last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 07:30 Greece's Stournaras speaks at EU-Arab summit - Athens
    • 12:00 Riksbank general council meeting – Stockholm
    • 12:30 ECB's Mersch speaks at European Policy Forum - Windsor
    See North American Open for a detailed listing of US/NorAm releases, events

    CHART FOCUS - DXY- Soft close would be a major negative
    Trades +0.1% in a low key Asia so far - market focus is on Nikkei downside correction, currently off 1.4%, but little response in FX. DXY fell 0.5% Thursday on US tax uncertainty, which is likely to extend into NY. Close below strong support at 94.25 - 20 DMA & prior Oct high - would be a major negative, which is also below last week's 94.40 base, leaving a bearish outside week. This would open the door to a test of 93.56, 38.2% Fibo of September/October rise. A bounce would target the daily double top @ 95.15, with a break opening the door to 95.90, 38.2% of 2017 fall - so tonight's close is pivotal for next week.
    Chart: http://reut.rs/2zK1FnR
     
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