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Hot Reuters Morning Benchmark \ Dow Jones Morning Briefing

Discussion in 'World Economy' started by Tadhg Gaelach, Oct 17, 2016.

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    Tadhg Gaelach

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    WEDNESDAY, SEPTEMBER 27, 2017

    TOP NEWS

    Fed's Yellen says gradual hikes should continue, despite weak inflation
    The Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank's struggles to forecast one of its key policy objectives. It is possible, Yellen said, that the Fed may have "misspecified" its models for inflation, and "misjudged" key facts like the underlying strength of the labor market and whether inflation expectations are as stable as they seem.

    China's Aug industrial profit growth accelerates as commodity prices surge
    Annual profits at China's industrial companies rose 24 percent in August, accelerating from the previous month in an indication economic growth remains in good heart even as signs emerge of fading momentum following a robust first half. Profits in August jumped 24 percent to 672 billion yuan, the biggest percentage jump since the January-Feb period, the National Bureau of Statistics said. Annual profit growth was 16.5 percent in July.

    U.S. consumer confidence slips; new home sales hit 8-month low
    U.S. consumer confidence fell in September and home sales dropped to an eight-month low in August due to the impact of Hurricanes Harvey and Irma, supporting the view that the storms would hurt economic growth in the third quarter. The Conference Board said on Tuesday its consumer confidence index declined to a reading of 119.8 this month from 120.4 in August, which was the highest reading in five months. It said confidence in Texas and Florida "decreased considerably."

    China's Q3 growth slips but still solid, commodity reversal a big risk-Beige Book survey
    China's economic growth likely slipped in the third quarter but was still in far better shape than last year, a private survey showed, while adding that major risks are looming for 2018. Profits at Chinese firms are much healthier and hiring remains robust, but a five-quarter boom in commodities which has stoked growth has begun to reverse, according to the quarterly survey of thousands of Chinese firms by China Beige Book International.

    French 2018 growth forecast "reasonable" - fiscal watchdog
    The French government's 2018 budget is built on a reasonable growth estimate but there is little margin for error on spending targets, the independent fiscal watchdog said. The first budget of President Emmanuel Macron's administration, to be presented on Wednesday though the broad outlines are already public, forecasts economic growth of 1.7 percent both this and next year, the strongest since 2011.



    U.S. CONSUMER CONFIDENCE
    [​IMG]


    MORNING MEETING

    JGBS HEAVY, MARKETS AWAIT US TAX PLAN

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.240%, JGB 10s 0.036%, Bund 10s 0.411%
    • US-Japan-Germany respective 2s indicated 1.453%, -0.138%, -0.719%
    • JGBs weaken despite BoJ ops scheduled for this week
    • 30yr yields up to 0.84% before easing to 0.835%
    • Dealers' positions may still be heavy after yesterday's 40yr sale
    • At 150.70, futures off 10 ticks on day, range 150.84/150.67
    • Nikkei gap down open, 20,213-269 range since, at 20,259 -71 points, 0.35%
    • AXJ mostly up - HSI 0.4%, STI 0.7%, TWI 0.9%, NZX50 0.3%
    • Shanghai and KOSPI around par on day, ASX outlier, -0.3%
    • Crude off touch from recent highs at NYMEX close, Dalian iron ore +0.5%

    Currency Summaries

    JPY

    • Risk-on, higher US yields post-Yellen push USD/JPY, JPY crosses up
    • Little new in NoKorea-Trump war of words, US Treasury 10s @2.240%
    • USD/JPY from 111.50 to 112.49 yesterday, Asia today 112.23-54, buoyant
    • Good demand at Tokyo fix, spot date both month and Japan fiscal half-ends
    • Some exporter offers from @112.50, trail up but stops 112.75+, 113.00+
    • Downside well supported on option expiries, total USD3 bln 111.00-112.00
    • Tech support from @112.35 daily Ichi tankan, 112.08 200-DMA, 110.84 50-WMA
    • EUR/JPY holding up despite soggy EUR/USD, Asia 132.35-56
    • GBP/JPY testing up marginally, Asia 150.94-151.25
    • AUD/JPY and NZD/JPY heavy, 88.45-64 and 80.85-81.08, respectively
    • CAD/JPY bid after FinMin Morneau talk o/n, Asia 90.83-91.02, Poloz tonight

    EUR

    • EUR/USD opened 0.44% lower at 1.1795 as USD broadly firmed on higher US yields
    • USD retained a broadly bid tine in Asia and EUR/USD slipped to 1.1777
    • Support came from hope Trump's tax plan out later today will be well received
    • Asia went back to sleep late in the morning and EUR/USD drifted back to 1.1790
    • Sentiment towards EUR/USD turning bearish in the short-term at least
    • USD-favourable US/DEM yield spread and German political uncertainty weighing
    • EUR/USD will be vulnerable if US tax reform fever is revved up later today
    • Tax plan likely to include holiday for repatriating USD earnings abroad
    • EUR/USD support between 1.1700/20 while resistance at former 1.1820/35 support

    GBP

    • Cable on soggy side in Asia on broad USD strength, 1.3435-61 range
    • Holding above 1.3410 low o/n, support to 1.3400, likely stops below
    • 1.3400 possibly key support, little support below save 1.3382 9/15 low
    • Descending 100-WMA 1.3366, 1.3257 top of weekly Ichi cloud
    • Heavy EUR/GBP and possible GBP/JPY Japan buy interest supports though
    • EUR/GBP heavy, off to 0.8755 o/n, Asia today 0.8760-72, quiet
    • Next key support ascending 200-DMA below at 0.8720, 55-WMA 87.12

    CHF

    • USD/CHF steady in Asia after push up from 0.9645 Monday, 0.9654 yesterday
    • Range 0.9688-0.9705, steady, market awaiting European open
    • CHF like JPY may become favored short but caution pre-month, quarter-ends
    • EUR/CHF still heavy after push down to 1.1408 o/n, Asia 1.1424-43
    • Stops eyed sub-1.1400, 55-DMA 1.1361, 1.1360-65 multiple lows Aug-Sept

    Market Briefs

    • Trump: military option for N.Korea not preferred, but would be 'devastating'
    • Fed's Yellen says gradual hikes should continue, despite weak inflation
    • Republicans fail again to kill off Obamacare in U.S. Senate
    • Trump shows interest in bipartisan tax reform as Obamacare repeal collapses
    • China's Aug industrial profit growth accelerates as commodity prices surge
    • China's Q3 growth slips but still solid, commodity reversal a big risk-Beige Book survey
    • Putting May on notice, Corbyn says Britain's Labour ready for government
    • After German election, France's Macron paints sweeping vision for Europe
    • New Zealand's First Party says will not decide coalition partner before Oct. 7
    • Tokyo Gov Koike announces manifesto for new Hope Party, to rival Abe's LDP

    Looking Ahead - Economic Data (GMT)

    • 06:45 FR Sep Consumer Confidence, 103 eyed; last 103
    • 08:00 IT Sep Consumer Confidence, 110.8 eyed; last 110.8
    • 08:00 IT Sep Mfg Business Confidence, 108.1 eyed; last 108
    • 08:00 EU Aug Money-M3 Annual Growth, 4.6% eyed; last 4.5%

    Looking Ahead - Events, Auctions, Other Releases (GMT)

    • 07:10 ECB's Nouy speaks in Madrid
    • 08:00 ECB releases monthly data on lending and money supply
    • 09:15 Norges Bank Governor Olsen speaks in Kristiansand
    • 09:00 Norges Bank Deputy Governor Nicolaisen speaks in Bodoe
    • 10:30 UK 0.950 bln for 19 year auction
    See North American Open for a detailed listing of US/NorAm releases, events.

    AUD/USD vulnerable if EM starts to correct lower

    One of the factors behind AUD/USD strength in 2017 has been the huge gains in EM assets since the start of the year. While the day-to-day correlation isn't perfect, the peaks and troughs in EM assets and the AUD/USD have lined up pretty well over the past 10 to 15 years. Investors have flocked to EM assets and BofAML's September fund manager survey shows investors have not been this underweight US equities relative to EM since December 2007. There is a danger that the trade is getting overcrowded and due for at least a correction. The iShares MSCI EM ETF gained over 30% between the start of 2017 and Sept 18. It has since corrected over 3%, but has continued to close above the 55-day MA, as it has done since Jan 5 this year. A daily close below the 55-day MA (44.23 Tues vs a close at 44.49) could signal a deeper correction is underway. This would likely put added pressure on the AUD/USD and confirm a top is in place at 0.8125.

    Look for signature sign-offs from the RBNZ

    The phrase "Numerous uncertainties remain" has been included in the final paragraph of every post-RBNZ meeting statement since Nov 10, 2016, when the central bank last lowered the OCR by 25bps to 1.75%. We can now add the uncertainty that comes with a caretaker NZ government and a caretaker RBNZ governor. The reality however, is that even with political certainty and a full-time governor in place, there would be little reason for current RBNZ messaging to change. In his Aug 30 farewell speech, then-Gov Wheeler nominated inflated global asset prices and the continuing build-up in global debt as the greatest risks facing New Zealand. There's nothing the RBNZ can do about those. "Monetary policy will remain accommodative for a considerable period" is the other post-meeting mantra from the RBNZ since Feb 9, 2017. Expect to see a re-run of both signature sign-offs tomorrow.


     
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    Tadhg Gaelach

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    Dow Jones Symphony - Home
    Dow Jones Newswires, 28 Sep 2017 04:35 EDT
    Global Forex and Fixed Income Roundup: Market Talk

    0835 GMT - German inflation data, due at 1200 GMT on Thursday, should give the European Central Bank "further comfort" in crafting its plan to exit quantitative easing, says Rainer Guntermann, rates strategist at Commerzbank. Consumer price index harmonized according to European Union standards, or HICP, is expected to show inflation rising to 1.9% in September from 1.8% in August, based on The Wall Street Journal's survey. The expected slight uptick in German headline inflation would "probably [be] the intro to another solid euro area core HICP release" on Friday, Mr. Guntermann says.(emese.bartha@wsj.com; @EmeseBartha)

    0811 GMT - There is a risk of EUR/USD falling as low as 1.15 if investors continue to worry about German politics and optimism about the U.S. increases, says Societe Generale. "For EUR/USD, a return to 1.15 could be a matter of when, not if." EUR/USD trades at 1.1752, having dropped to its lowest in nearly 6 weeks after U.S. tax reform plans were announced Wednesday. After Sunday's German elections, worries have resurfaced about the rising populism in the eurozone, and about whether German Chancellor Angela Merkel and French President Emmanuel Macron will be able to strike a deal on deeper eurozone financial integration. This is negative for the euro, while the dollar also benefits from expectations that the U.S. Federal Reserve will raise interest rates in December. (olga.cotaga@wsj.com; @OlgaCotaga)

    0804 GMT - U.S. breakeven rates are more likely to widen than those in the U.K., RBC Capital Markets says in a note. Breakevens are the gap between yields of inflation-linked and conventional bonds and act as a market-based gauge of inflation expectations. Higher inflation expectations tend to push yields of conventional bonds higher. When yields rise, bond prices drop. RBC recently said that the U.S. economy is the "best place to generate inflation." In the U.K, annual CPI is running almost 1% above the Bank of England target of 2%, boosting expectations of that the central bank will raise interest rates soon. (tasos.vossos@wsj.com, @tasosvos)

    0800 GMT German engineering orders surged in August due to strong foreign demand, especially from the eurozone, says engineering association the VDMA, in a sign of strengthening corporate investment in the 19 countries that use the euro. Total plant and machinery orders jumped 10% in real terms from August 2016, led by a 23% rise in orders from the rest of the eurozone. Domestic demand, however, was subdued, with orders up just 1%. (nina.adam@wsj.com)

    0759 GMT - Hapag-Lloyd will generate significant free cash flow in the coming years but will spend most of it servicing debt, says Goldman Sachs, which maintains its neutral rating on the stock. Hapag's rigorous cost control and calibrated M&A have made it a key player in a consolidating industry but Goldman is concerned about high leverage and exposure to cyclical risks. The bank keeps its revenue estimates below consensus, based on likely volume losses and declining freight rates, though it expects synergies from the UASC merger to have a positive effect on Ebitda margins. Hapag trades down 1% at 36.10. (nathan.allen@dowjones.com)

    0748 GMT - The rupee's sharp decline over the past month or so can be traced to the Reserve Bank of India's dollar liabilities exceeding local banks' dollar assets held with it, says Bank of America Merrill Lynch economist Indranil Sen Gupta. The RBI's forward liabilities, at $26.5 billion, exceed banks' foreign currency assets, at $24 billion in August. That happened as the RBI entered into forward contracts with banks to soften the rise of the rupee before the greenback's rebound. Before losing 3.7% in the past 40 days on dollar strength, the rupee had gained 6.4% this year. The RBI may have to sell as much as $10 billion to replenish the forex market to avoid repeating a similar scenario in November 2011, when the rupee fell from 50 levels to 55 levels in a month. (kenan.machado@wsj.com)

    0743 GMT - Germany's harmonized index of consumer prices, or HICP, is expected to rise by 0.1% on the month in September, with the year-on-year reading edging up to 1.9% from 1.8% in August. KBC Bank analysts say they have "no reason to distance" themselves from the consensus but they note that any deviation, especially on the upside, might impact core eurozone government bonds. Six German states publish their consumer price inflation in the morning hours before the federal statistics office Destatis releases pan-German data at 1200 GMT. (emese.bartha@wsj.com)

    0738 GMT [Dow Jones] Currently trading at 154.54, the French December OAT contract has broken below a rising trend line in place since Sept. 21 and remains capped by the 50-period moving average at 155.43 on a 30-min chart, which is turning down. Furthermore, the 30-min RSI stands within its selling area between 50 and 30 and confirms the bearish bias. As a consequence, further weakness is expected with a first target set at the horizontal support at 154.25. The downside breakout of this threshold will open the way to further down move towards the horizontal supports at 153.75 and at 153.25 in extension. Only a rebound above the strong horizontal resistance and overlap at 155.49 would invalidate this bearish scenario. In this case, a bullish acceleration towards the horizontal resistance and Sept. 25 top at 156.04 and towards 156.40 in extension would be in the cards. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

    0737 GMT [Dow Jones] Currently trading at GBP 0.8776, the euro stands below a strong horizontal resistance at GBP 0.8790. Furthermore, the intraday RSI remains within its selling area between 50 and 30 and confirms the bearish bias. Thus, as long as GBP 0.8790 holds as a resistance, a new down move is likely towards the strong horizontal support and Sept. 27 bottom at GBP 0.8745. A break below this threshold would open the way to further weakness towards the horizontal supports at GBP 0.8730 and at GBP 0.8715. Only a rebound above the horizontal resistance at GBP 0.8790 would turn the outlook to bullish with a first alternative target set at the horizontal resistance and overlap at GBP 0.8810 and a second one set at the horizontal resistance at GBP 0.8830. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

    0733 GMT - Italy's 0.90% August 2022 BTP and its 2.05% August 2027 BTP, both to be auctioned on Thursday, look to offer attractive relative value, says Mizuho. The bank's rates strategists "particularly" like an extension to the August 2022 BTP from the September 2021 BTP, expecting further outperformance in the five-year sector after Thursday's tap. Mizuho adds that the pick-up of rates volatility is also likely to boost demand for on-the-run, low coupon issues such as those on auction. The Italian treasury offers EUR2 billion to EUR2.5 billion in the August 2022 BTP, and EUR1.5 billion to EUR2 billion in the August 2027 BTP. (emese.bartha@wsj.com; @EmeseBartha)

    0723 GMT - The EUR800.5 million antitrust fine that the European Commission slapped on Scania for colluding with peers between 1997 and 2011 should only have a small impact on the credit of the Swedish truckmaker's parent, Volkswagen, according to UniCredit. The bank expects adjusted net leverage should remain broadly stable at 0.8 time versus 0.77 time. The fine has had a limited impact on VW bond spreads. (tasos.vossos@wsj.com, @tasosvos)

    0722 GMT - The dollar gains broadly after U.S. President Donald Trump outlined plans for tax reform on Wednesday, with EUR/USD down 0.15% at 1.1733, having earlier dropped to its lowest in nearly 6 weeks at 1.1721, according to Factset. But Danske Bank sees limited scope for further falls. EUR/USD's vulnerability to USD-positive news "could fade somewhat" as a number of previous EUR/USD long positions have by now "likely been wiped out," it says. Further impetus would be needed to send EUR/USD below 1.17, such as below-forecast German inflation data. (jessica.fleetham@wsj.com)

    (END) Dow Jones Newswires
     
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    Tadhg Gaelach

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    THURSDAY, SEPTEMBER 28, 2017

    TOP NEWS

    German consumer morale clouds unexpectedly heading into Oct - GfK
    The cheerful mood among German shoppers clouded unexpectedly heading into October, a survey showed, suggesting that a consumer-led upswing in Europe's biggest economy could lose some steam in coming months. The Nuremberg-based GfK institute said its consumer sentiment indicator, which is based on a survey of around 2,000 Germans, edged down to 10.8 points going into October from 10.9 in the previous month, the highest reading in nearly 16 years. This compared with a Reuters consensus forecast of the 11.0. GfK's sub-index measuring income expectations fell to 52.7 points from 61.4 in the previous month. Consumers' willingness to buy decreased 1.1 points to 57.0, indicating that German consumers are still in a good buying mood.

    Trump proposes U.S. tax overhaul, stirs concerns on deficit
    President Donald Trump proposed on Wednesday the biggest U.S. tax overhaul in three decades, calling for tax cuts for most Americans, but prompting criticism that the plan favors business and the rich and could add trillions of dollars to the deficit. At an event in Indianapolis, Trump called the plan the largest tax cut in U.S. history. "We want tax reform that is pro-growth, pro-jobs, pro-worker, pro-family and, yes, tax reform that is pro-American," he said.

    BoE's Haldane: pay signs encouraging, rate hike would be good news
    Bank of England Chief Economist Andy Haldane said he saw encouraging signs of pay growth and any increase in interest rates should be seen as a "good news story" for Britain's economy, Sky News quoted him as saying on Wednesday. Haldane also said he was among of the majority of BoE rate-setters who, at their meeting this month, felt that Britain's first interest rate hike in a decade might be needed in the coming months.

    U.S. still on slow growth, low inflation track -Fed's Bullard
    The Federal Reserve has no need to raise interest rates anytime soon because U.S. economic growth will not rise appreciably over 2 percent this year and inflation will likely remain low, St. Louis Fed President James Bullard said on Wednesday. "Hopes for faster growth in the second half of 2017 have been tempered by weaker macroeconomic data and by hurricane damage," Bullard said.

    U.S. core capital goods data underscores economy's strength
    New orders for U.S. made capital goods increased more than expected in August and shipments maintained their upward trend, pointing to underlying strength in the economy despite an anticipated drag on growth from Hurricanes Harvey and Irma. The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.9 percent last month after an upwardly revised 1.1 percent gain in July.



    U.S. DURABLE GOODS

    [​IMG]


    MORNING MEETING

    JGB SELLOFF CONTINUES, BILLS SOLID

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.340%, JGB 10S 0.070%, Bund 10s 0.486%
    • US-Japan-Germany respective 2s indicated 1.484%, -0.120%, -0.697%
    • JGB selloff continues, 10yr yields hit highest since Aug 1
    • Selloff starts yesterday afternoon, Japanese bank selling suspected
    • 2yr auction ok, stop at -0.114%; BTC 4.11, tail 0.6bp., last 4.97/0.3bp
    • 3mo auction strong, stop -0.155%; BTC 4.46, tail 1bp, last 4.47/0.7bp
    • JGB yields up 1.5-4.0bp in bear-steepening fashion
    • Bills solid, 3mo yields down 3bp
    • At 150.27, futures off 31 ticks on day, range 150.44/150.23
    • Nikkei bid with USD/JPY, gap up open 20,299-398 range, +0.5% at 20,377
    • AXJ mostly in red albeit small, HSI -0.3%, ASX +0.1%, most around par
    • Dalian iron ore -3.2%, Shanghai rubber -7%, Tokyo rubber -5.4%

    Currency Summaries

    JPY

    • Higher US yields keeping USD/JPY buoyant, Asia today 112.71-113.10
    • USD/JPY to 113.26 o/n after 112.75-80+, 113.00 option stops tripped
    • Japanese exporter sales still on rallies back above 113.00, esp 113.25+
    • Japanese importer, other bids from @112.70, trail down
    • Option expires today – 112.00 USD2.1 bln, 112.24-64 809 mln, 113.00 340
    • JPY crosses not as buoyant on USD rallies against field
    • EUR/JPY 132.33-65, low o/n 132.10, support pre-132.00, 100-HMA 132.93
    • GBP/JPY 150.92-151.38, more buoyant of crosses, daily Ichi tankan 151.28
    • AUD/JPY 88.66 to 88.27, soggy, NZD/JPY early Tokyo high of 81.65 to 81.21
    • CAD/JPY 90.28-54 in Asia with USD/CAD especially up hard o/n
    • Japan buyout fund sees money flowing in from abroad - Nikkei
    • MoF flow data week-ended Sept 23 – Japanese buy net Y233.6 bln for-bonds
    • Small for-stocks buys/bill sales, foreigners sell Y923.9 bln Japan stocks
    • Net Y1.3899 trln JGBs, Y1.0996 trln short-term bills sold

    EUR

    • EUR/USD opened 0.42% lower at 1.1745 as higher US yields underpinned USD
    • EUR/USD consolidated between 1.1733 and 1.1756 in quiet Asian trading
    • It moved to the lows when the 10-year US yield edged 2 BPs higher to 2.32%
    • Support at 38.2 of 1.1119/1.2092 move at 1.1720 and yesterday’s 1.1717 low
    • Sentiment towards EUR/USD bearish as spread between US/DE yields widen
    • EZ Consumer Confidence and sentiment data out later today

    GBP

    • Cable heavy with other major currencies vs USD on higher US rates
    • Initially steady between 1.3383-1.3408, push down later to 1.3371
    • Low o/n 1.3364, break below 1.3360-50 bearish short-term, 100-WMA 1.3365
    • EUR/GBP managing to hold above 0.8747 low yesterday, Asia 0.8761-71
    • Support below at 0.8722 200-DMA, 55-WMA 0.8712, bias still down
    • XpertHR - UK pay settlements stick at 2%, no pick-up eyed

    CHF

    • USDCHF bids in Asia on higher US yields, 0.9718 to 0.9743, high o/n 0.9770
    • Stops eyed above 0.9770-75, 0.9800, test of 0.9851 200-DMA soon?
    • Multiple highs in 0.9770-75 area from mid-June, break above bullish
    • EUR/CHF heavy but quiet in Asia, 1.1417-25, low Tuesday 1.1407
    • Support still pre-1.1400 but stops likely below, heavy pre-1.15 on options

    Market Briefs

    • Trump proposes U.S. tax overhaul, stirs concerns on deficit
    • Hawkish Rosengren acknowledges low inflation gives Fed flexibility
    • Japan parliament dissolved, snap Oct. 22 election expected
    • Tokyo Gov Koike's party gains traction ahead of general election
    • Moody's - Japan banking system stable despite pressure on profitability
    • Japan set for largest party realignment in 15 years - Nikkei
    • Japan machine tools orders seen hitting record levels in 2017 - Nikkei
    • RBNZ flags softer NZ growth as construction boom deflates
    • Australia job vacancies surge to record high in August quarter
    • Schaeuble to head German parliament, unblocking coalition talks
    • Britain's May defends free markets and debt reduction
    • BoE's Haldane: pay signs encouraging, rate hike would be good news

    Looking Ahead - Economic Data (GMT)

    • 06:00 DE Oct GfK Consumer Sentiment, 11.0 eyed; last 10.9
    • 09:00 EU Sep Services Sentiment, 14.9 eyed; last 14.9
    • 09:00 EU Sep Business Climate, 1.11 eyed, last 1.09
    • 09:00 EU Sep Industrial Sentiment, 5.1 eyed, last 5.1
    • 09:00 EU Sep Economic Sentiment, 112.0 eyed, last 111.9
    • 09:00 EU Sep Consumer Confid. Final -1.2 eyed, last -1.2
    • 12:00 DE Sep HICP Prelim, 0.1% m/m, 1.9% y/y eyed; last 0.2%, 1.8%
    • 12:00 DE Sep CPI Prelim, 0.1% m/m, 1.8% y/y eyed; last 0.1%, 1.8%

    Looking Ahead - Events, Auctions, Other Releases (GMT)

    • N/A BoE holds '20 Years On' conference in London (to September 29)
    • N/A Riksbank Gov Ingves and Deputy Gov Floden speaks in Stockholm
    • 06:35 BOJ's Kuroda speaks in Tokyo
    • 07:20 Norges Bank Deputy Gov Matsen speaks in Copenhagen
    • 08:00 ECB's Praet speaks in Berlin
    • 10:00 IT E1.500/E2.500/E2.000 bln for 7/5/10 year auction
    • 10:00 RBA Deputy Governor Debelle speaks in London
    • 11:00 Riksbank executive board meeting
    • 11:10 ECB's Lautenschlager speaks in Vienna
    • 14:00 Fed's Fischer speaks in London
    • 23:50 BOJ to release summary of policy meeting
    See North American Open for a detailed listing of US/NorAm releases, events
     
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    Tadhg Gaelach

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    Dow Jones Symphony - Home
    Dow Jones Newswires, 29 Sep 2017 03:32 EDT
    Global Forex and Fixed Income Roundup: Market Talk
    0732 GMT - Finnish government bonds may receive a boost in the next couple of months after the State Treasury has reduced the country's borrowing needs for 2017 due to increased tax revenue estimate. The lower-than-previously-seen borrowing forecast enables the treasury to reduce its long-term funding for 2017, to EUR14 billion to EUR15 billion, down from EUR16 billion to EUR17 billion it forecast before. At the end of September, the treasury has completed around 80% of this year's long-term funding target. The 10-year Finnish government bond trades at a yield of 0.63%, down from 0.65%, according to Tradeweb. (emese.bartha@wsj.com; @EmeseBartha)


    0723 GMT - Taiwan's economy is on a firm footing, driven by private consumption and exports, HSBC says, expecting the broad strength in economic activity to likely remain supported by improving global trade and easing trade tensions. Still, the strength of the Taiwan currency remains a risk, even though it hasn't dented export recovery so far, the bank adds. It cites the Taiwan dollar being up nearly 7% against the greenback this year through August, making it the 3rd-best performing Asian currency. The bank raises the island's GDP growth forecast for both 2017 and 2018 to 2.2% from 2.0% previously, expecting monetary policy to remain on hold in the near term. (chester.yung@wsj.com;@chester_yung)

    0719 GMT - Indonesian inflation likely eased further this month as prices of some food commodities fell from August. The median forecast of 10 economists surveyed by WSJ is for CPI to rise 3.7% in September, versus last month's 3.8%. But the metric is seen to have risen 0.1% after dropping that much in August, according to the median forecast of 7 economists. After rate cuts this month and last, Bank Indonesia is likely on hold for now, in part on the rupiah's selloff the past week-plus. The CPI data come Monday. (i-made.sentana@wsj.com)

    0658 GMT - The gap between the 4.95% 2020 bond of Catalonia and comparable debt from the Spanish government widens as the Catalan independence referendum approaches and retraces the top of the post-July range. It stands at 257.3 bps early Friday, according to Tradeweb. Barclays economists see two scenarios: either the referendum takes place in some voting stations but not all, or local police follows the judiciary's orders strictly and prevents the referendum from taking place altogether. (tasos.vossos@wsj.com, @tasosvos)

    0655 GMT - Comments from Banque de France governor Francois Villeroy and European Central Bank chief economist Peter Praet suggest the ECB may avoid a quick tapering of its QE program, ABN Amro economist Nick Kounis says in a note. And Mr. Villeroy's mention of the December 2016 decision to cut the monthly pace of asset purchases to EUR60 billion from EUR80 million, makes Mr. Kounis remember President Draghi's explanation of what the word "tapering" means. Back then, Mr. Draghi said "the natural way to look at a word like that is to have a policy whereby purchases would gradually go to zero." (tasos.vossos@wsj.com, @tasosvos)

    0652 GMT - The Australian dollar fell slightly across other major currencies in Asian trading Friday as volumes thinned ahead of a holiday weekend. Many in the local market have already shifted focus to the upcoming finals of the Australian Football League and the Nation Rugby League, which occur on Saturday and Sunday, respectively. Meanwhile, Sydney markets are closed Monday. While not watching football, forex traders will have one eye on iron ore after this month's noted pullback. The metal weighed on the currency this week, trading now around US$0.7850 versus US$0.7970 at the start of the week. (james.glynn@wsj.com; @JamesGlynnWSJ)

    0651 GMT - The rise in the ratio of debt to internal funds to 507% in 2Q 2017 from 493% the year before implies a jump in U.S. speculative-grade companies' default rate, but the market appears unfazed for now, according to Moody's analytics. The last time this ratio reached 506% in 2Q 2008, defaults jumped from 2.4% to 6.9% by 1Q 2009. But current junk bond spreads imply that speculative-grade firm's default rate may even drop from 4.1% in 2Q 2017 to 2.8% by 2Q 2018. (tasos.vossos@wsj.com, @tasosvos)

    0639 GMT - Hong Kong's housing market remains an overarching risk to the city's economic-growth outlook, says HSBC in the wake of prices continuing to hit record highs despite cooling efforts. Prices rose for a 17th-straight month in August, climbing just this year. HSBC thinks mortgage burdens will go up as US interest rates continue to rise (the Hong Kong dollar is loosely pegged to the greenback), posing risks to what the bank calls a fragile recovery in consumption and economic sentiment. It expects the city's GDP to grow 3.3% this year and 2.7% in 2018. (chester.yung@wsj.com; @chester_yung)

    0633 GMT - India's central bank has raised the cap on foreign investments allowed in domestic bonds by 5% to INR2.893 trillion ($44 billion)--an INR80 billion increase for government bonds and an INR62 billion for state issues. The prior limit was nearly reached amid strong foreign-investor interest this year because of the bonds' higher yields versus other sovereign debt. Investors have been pressing the government to allow overseas funds buy more local bonds to help deepen India's markets and generate funding needed to drive economic growth. The government has been easing restrictions in recent years; last week the central bank removed masala bonds, or rupee bonds issued overseas, from the corporate-bond limit. (anant.kala@wsj.com)

    0631 GMT - The uptrend in eurozone government bond yields could lose steam, as the market reassesses the degree U.S. President Trump's tax plans could be watered down in the legislative process and potentially more cautious comments from European Central Bank officials, according to ING strategists. And geopolitical concerns "still simmer in the background," they add. Yields on 10-year German government bonds, or bunds, trade at 0.478% early Friday, having briefly crossed the 0.5% mark Thursday. (tasos.vossos@wsj.com, @tasosvos)

    0608 GMT - Japanese stocks ended a strong month on a quiet note, no surprise given the yen's overnight rebound. The Nikkei fell 6.83 points to 20356.28, not enough to prevent a 3rd-straight weekly gain for the index--which it hadn't done since early May. Stocks finished off session lows as the dollar climbed to Y112.65 from Y112.30 in early Tokyo trading. Meanwhile, JGB yields broadly eased, with the 10 down a half-basis point to 0.06%. The Nikkei logged its best month of the year, rising 3.6%. (suryatapa.bhattacharya@wsj.com; @SuryatapaB)

    0604 GMT - Chinese policy makers may allow the yuan to trade from CNY6.4-7.0/dollar, outside of which could trigger PBoC intervention, says Macquarie economist Larry Hu. As yuan-depreciation expectations have eased, central bank may tolerate--or even encourage--higher yuan volatility ahead, he adds. The dollar is around CNY6.68 today. (liyan.qi@wsj.com)

    (END) Dow Jones Newswires
     
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    FRIDAY, SEPTEMBER 29, 2017

    TOP NEWS

    Japan's inflation, labour demand and factory output signal solid economic recovery
    Japan's core inflation accelerated in August, industrial output rose more than expected and demand for labour remained at its strongest in over 40 years in a further sign of solid momentum in the world's third-largest economy. Nationwide core consumer price index rose 0.7 percent, matching a median market forecast. Industrial output also rose a larger-than-expected 2.1 percent in August from the previous month as manufacturers of construction equipment, autos, and electronic parts produced more goods.

    U.S. economy accelerates in Q2; hurricanes expected to slow growth
    The U.S. economy expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years, but the momentum likely slowed in the third quarter due to the impact of Hurricanes Harvey and Irma. GDP increased at a 3.1 percent annual rate in the April-June period, the Commerce Department said on Thursday. In a separate report, the Commerce Department said wholesale inventories jumped 1.0 percent in August after rising 0.6 percent in July.

    Greek recovery to strengthen, quick bailout review a must -Bank of Greece chief
    Greece's economy is recovering after a deep recession and growth is set to pick up in the next two years, the head of its central bank Yannis Stournaras said on Thursday, urging a speedy conclusion to its next bailout review to avoid a new cycle of uncertainty. In 2017 as a whole, gross domestic product was projected to grow by about 1.7 percent, while in 2018 and 2019, growth will quicken to 2.4 and 2.7 percent, respectively, driven by rising investment, consumption and exports, Yannis added. He cited the euro's appreciation as a potential external risk.

    BOJ member called for ramping up stimulus in Sept - summary of views
    A Bank of Japan policymaker called for expanding monetary stimulus at a rate review in September, a summary of opinions of the bank's board members at the meeting showed, an indication divisions may be growing over the direction of policy. Board newcomer Goushi Kataoka dissented to the BOJ's decision to maintain monetary policy on the view the current policy was insufficient to boost inflation to the BOJ's 2 percent target.

    Gold and cash reign as U.S. fund investors pare stocks -Lipper
    U.S. fund investors gorged on gold and traded stocks for cash during the latest week, showing caution even as markets trend higher, Lipper data showed on Thursday. More than $16 billion took shelter in low-risk, U.S.-based money-market funds during the seven days through Sept. 27, the research service's data showed. Precious metals commodities funds, which invest in gold and similar assets, took in $977 million, the most since July 2016.



    U.S. GDP

    [​IMG]


    MORNING MEETING


    JGBS BOUNCE, EYES ON US RATES

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.315%, JGB 10s 0.061%, Bund 10s 0.473%
    • US-Japan-Germany respective 2s indicated 1.457%, -0.117%, -0.704%
    • Dip-buying help futures to recover about half of yesterday's s losses
    • BoJ regular bond buying ops also support
    • At 150.39, futures up 13 ticks on day, range 150.42/150.32
    • Nikkei holding near recent highs at Japan fiscal half end
    • At 20,356 off 6 points on day after range of 20,285-356
    • AXJ mostly up - SSEC 0.25%, HSI 0.3%, KOSPI 0.7%, TWI 0.3%, ASX 0.3%
    • NZX50 up 0.2% too but STI outlier, -0.5%
    • Dalian iron ore -2%, Shanghai rubber -4.85%, Tokyo rubber -1.55%

    Currency Summaries

    JPY

    • Higher US yields, importer buys keeping USD/JPY, crosses bid in Asia
    • USD/JPY 112.26 to 112.70, remain bid, offers large from @113.0
    • Stops above 113.00 and 113.30 – 113.26 high Wednesday, 113.21 yesterday
    • Good bids still from Japanese importers sub-112.50, trails down
    • Option expiries today more supportive – 111.50 USD1.1 bln, 112.00 1.1 bln
    • Also USD710 mln 111.75-98, 520 mln at 112.50-75 tether for now
    • EUR/JPY better bid, 132.29 to 132.79, not straying far from 132.61 100-HMA
    • Bias more neutral now, underlying tech support at 130.61 ascending 55-DMA
    • GBP/JPY 150.87-151.28, CAD/JPY 90.30-61, AUD/JPY 88.17-44, NZD/JPY 81.15-36

    EUR

    • EUR/USD doing little in Asia at month and quarter-ends, 1.1776-90 range
    • Flows few, interest lacking, some eyed on Catalonia referendum over weekend
    • Pair on hold below ascending 55-DMA at 1.1816, option expiries help cap
    • Underlying support from flat-ish 55-HMA at 1.1763
    • Total E1.1 bln expiries 1.1790-1.1805 strikes, more above on 1.18-handle
    • Expiries below spotty at best – 1.1750 E588 mln, 1.1700 372 mln
    • EUR/JPY better bid, 132.29 to 132.79, not straying far from 132.61 100-HMA
    • Bias more neutral now, underlying tech support at 130.61 ascending 55-DMA
    • EUR/GBP steady, quiet in Asia, 0.8769-83, 200-DMA 0.8723, 100-HMA 0.8786
    • EUR/CHF still soggy, Asia 1.1430-46, low Tuesday 1.1407, stops sub-1.1400
    • ECB ChiefEcon Praet – Macron reforms are encouraging – Les Echos

    GBP

    • Cable on back foot in Asia, USD broadly bid, 1.3442 to 1.3408
    • Support from around descending 55-HMA at 1.3411, 100-HMA 1.3442 above
    • GBP/USD essentially on hold ahead of fresh catalysts, low yesterday 1.3344
    • Option expiries supportive? 1.3425 GBP348 mln, 1.3385 535 mln
    • Also above between 1.3500-20 - total GBP751 mln

    CHF

    • USD/CHF bid alongside USD/JPY, 0.9677 spike low early to 0.9719
    • Still high US yields cited, USD demand into month, quarter-ends
    • Bounce again from area of ascending 200-HMA, today 0.9687
    • USD/CHF also holding mostly above 0.9679 daily Ichi tankan

    Market Briefs

    • JP Inflation still low, acceleration risk low, Kataoka confirmed dove
    • JP Aug output +2.1% m/m, +1.9% eyed, -1.9/+3.5% eyed Sep/Oct, Sep prev -3.1%
    • JP Aug core CPI +0.5% m/m, +0.7% y/y, Tokyo Sep core +0.5% y/y, all as eyed
    • JP Aug jobless 2.8%, jobs-applicants ratio 1.52, unch m/m, jobs mkt tight
    • JP Aug household spending +0.2% m/m, +0.6% y/y, -0.2% and +1.0% eyed
    • BOJ PB Sept minutes - Best say to achieve CPI goal to stick to script
    • BOJ ready for more ease on geopolitical risks, deflation, sales tax hike
    • White House battles critics over tax plan as lawmakers prepare to act
    • Macron's EU vision will bolster Franco-German axis - Merkel
    • Greek recovery to strengthen, quick bailout review a must -Bank of Greece chief
    • Gold and cash reign as U.S. fund investors pare stocks -Lipper
    • Foreign CB US debt holdings -$4.490 bln to $3.371 trln Sept 27 week
    • Treasuries -$5.566 bln to $3.046 trln, agencies +$660 mln to $262.2 bln

    Looking Ahead - Economic Data (GMT)

    • 06:00 DE Aug Retail Sales Real, 0.5% m/m, 3.2% y/y eyed; last -1.2%, 2.7%
    • 06:00 GB Sep Nationwide House Price, 0.1% m/m, 1.9 y/y eyed; last -0.1%, 2.1%
    • 06:45 FR Aug Consumer Spending MM, 0.3% eyed, last 0.7%
    • 06:45 FR Sep CPI (EU Norm) Prelim YY, 1.0% eyed, last 1%
    • 08:00 DE Sep Unemployment Rate SA, 5.7% eyed, last 5.7%
    • 08:30 GB Q2 GDP, 0.3% q/q, 1.7% y/y eyed; last 0.3%, 1.7%
    • 08:30 GB Q2 Current Account GBP, 16.00 bln eyed, last -16.89 bln
    • 08:30 GB Aug Mortgage Approvals, 68.000k eyed, last 68.689k
    • 08:30 GB Aug Mortgage Lending, 3.600 bln eyed, last 3.601 bln
    • 08:30 GB Aug BOE Consumer Credit, 1.350 bln eyed, last 1.179 bln
    • 09:00 IT Sep Consumer Price Prelim, -0.1% m/m, 1.3 y/y eyed; last 0.3%, 1.2%
    • 09:00 IT Sep CPI (EU Norm) Prelim, 1.8% m/m, 1.3 y/y eyed; last 0.1%, 1.4%

    Looking Ahead - Events, Auctions, Other Releases (GMT)

    • N/A BoE holds '20 Years On' conference in London.
    • 07:30 ECB's Nouy speaks in Brussels
    • 08:00 Riksbank general council meeting
    • 08:25 Norges Bank deputy governors Nicolaisen and Matsen speaks in Hamar
    • 10:30 IMF's Lagarde speaks in London
    • 12:00 BoE's Cunliffe speaks in Brussels
    See North American Open for a detailed listing of US/NorAm releases, events.

    China looks to the gyroscope for yuan trading

    China has made clear that the yuan won't fall by much, come hell or high water. The CNY and CNH have fallen for 4 straight days against the USD, each losing over 1%, despite central bank intervention; state banks were said to have sold a modest amount of dollars onshore Thurs. USD/CNY fixings, which became more basket-based in 2016, have been on the low side of forecasts this week. The PBOC seems to have turned up its "counter-cyclical adjustment factor" since Mon, helping the yuan to outperform its peers, as evidenced by the TR/HKEX CNY index. It is becoming clearer that China isn't going to liberalise the trading of its currency just yet. Rather than a free float, or even a managed float akin to the SGD, it seems to be creating a sort of gyroscopic float. To that extent, China has allowed the yuan to depreciate, an acknowledgment of broad USD strength stemming from a surge in US Treasury yields. But you can bet the authorities won't let the market take the reins anytime soon. Expect a Great Wall of sellers near 6.8500-6.8600, the levels USD/CNH was at before the introduction of the counter-cyclical factor in late May.
     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 02 Oct 2017 04:24 EDT
    Global Forex and Fixed Income Roundup: Market Talk

    0823 GMT - Brent crude oil prices have gone from strength to strength as surplus oil stocks are being depleted, says Bank of America Merrill Lynch, showing that production cuts by Middle Eastern oil cartel OPEC are finally paying off. "Strong petroleum product markets are leading the charge," the bank says. "Hurricane Harvey has only exacerbated a tightness in product markets already visible in prior months," it adds. "Looking forward, we believe firm product margins should continue to support crude prices." (benoit.faucon@wsj.com)


    0820 GMT - The PMI for the eurozone's manufacturing sector was revised lower by IHS Markit, coming in at 58.1 in September compared with the preliminary estimate of 58.2. That was an increase from 57.4 in August, and still the highest reading in six-and-a-half years. The average for the third quarter was the highest since the first three months of 2011, and points to economic growth roughly in line with the strong second quarter. The survey also pointed to a strong final quarter, with export orders growing at a robust pace despite the stronger euro. (paul.hannon@wsj.com , Twitter: @PaulHannon29)

    0812 GMT [Dow Jones] Currently trading at 134.45, the Italian December BTP contract remains under pressure and stands below the 50-period moving average at 134.80 on a 30-min chart. Moreover, the intraday RSI stands within its selling area between 50 and 30 and confirms the bearish bias. A first target to the downside is set at the horizontal support at 134.34. A break below this threshold would open the way towards Sept. 28 bottom at 134.02 and towards 133.65 in extension. Only a rebound above the horizontal resistance at 135.29 would turn the intraday outlook to bullish with a first alternative target set at the horizontal resistance at 135.50 and a second one set at Sept. 20 top at 135.88 in extension. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

    0810 GMT - The postponed reconnection of the Beznau I nuclear power reactor to grids until February 2018 should be a one-off item for Swiss utility Axpo without an impact on its BBB shadow rating from Vontobel. But the bank treats the disconnection as temporary. If the situation proves to be more serious, leading to a final disconnection, Vontobel could cut its shadow rating. Axpo and subsidiary Kraftwerke Linth Limmern have a series of bonds outstanding, all denominated in Swiss francs. (tasos.vossos@wsj.com, @tasosvos)

    0802 GMT - Yields on the government of Catalonia's 4.75% euro-denominated bond that matures next June jump on the secondary market Monday after the independence referendum, which was marred by violence. Bid yields are up almost 40 bps to 2.83%, according to Tradeweb. They have been rising since early July, when they traded at just under 1.2%. Catalans overwhelmingly supported recession in a vote boycotted by opponents. Longer Generalitat de Catalunya yields also rise but not to the same extent. (tasos.vossos@wsj.com, @tasosvos)

    0757 GMT - The bond market is unlikely to cheer on credit rating agency S&P's upgrade Friday of oil & gas group Shell to A+ from A, as it has already factored in an upgrade thanks to good progress in asset sales, UniCredit analyst Mehmet Dere says in a note. S&P cited Shell's "meaningful progress" on the $30 billion disposal program and said the improvement in the group's credit metrics will take "less time than we previously projected." UniCredit has a market-weight recommendation on Shell bonds. (tasos.vossos@wsj.com, @tasosvos)

    0757 GMT [Dow Jones] Currently trading at $1.3330, the British pound remains under pressure, capped by the declining 50-period moving average at $1.3389 on a 30-min chart. Moreover, the intraday RSI stands within its selling area between 50 and 30, which confirms the bearish bias. Therefore, a first target is set at the strong horizontal support at $1.3320. A break below this threshold would open the way to further weakness towards the horizontal supports set at $1.3290 and at the previous overlap at $1.3230 in extension. Only a rebound above the horizontal resistance and overlap at $1.3420 would turn the intraday outlook to bullish with a first alternative target set at the horizontal resistance at $1.3450 and a second one set at $1.3465. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

    0752 GMT - Contingent convertible bonds from two Catalan banks, Banco de Sabadell and Caixabank, fall on the secondary market after the independence referendum, but losses are contained. Bid prices on Sabadell's 6.5% call-2022 euro CoCo drop to 101.34% from 101.53% Friday, while Caixabank's 6.75% call-2024 is down to 105.95% from 106.21%, based on Tradeweb data. Barclays economists say it's likely Catalonia will declare independence unilaterally, which shouldn't be recognized by the constitutional court and by international organizations or the EU. The regional government could also call for elections in Catalonia, the economists add. So-called CoCo bonds are a risky type of bank debt that can be written off or converted into equity if core capital drops below a predetermined level. (tasos.vossos@wsj.com, @tasosvos)

    0736 GMT - DBS thinks there is more than meets the eye in the easing of growth in bank lending in Singapore. Central bank data for August show a 5.1% expansion on year in August, the second consecutive month of slowing growth after loans rose 5.9% in July and 7.6% in June. The drag mainly comes from business loans. "While this could signal the peak of the business cycle, one also must realise that this doesn't imply that economic activities are falling off the cliff," DBS says. Instead, it could indicate the economy is shifting from a recovery to a normalization phase, DBS adds. (gaurav.raghuvanshi@wsj.com)

    0717 GMT - The euro is down Monday after the Catalan independence referendum, in which an overwhelming majority voted to separate from Spain. But the ballots represent only about 40% of eligible voters. EUR/USD is down 0.53% at 1.1751. Against sterling, the euro is down only 0.1% at 0.8807. Meanwhile, the U.K. Conservative Party's annual conference is taking place this week. Societe Generale says the conference "will be awash with stories of potential challenges to Theresa May's leadership and with fierce arguments about the shape that Brexit should take." Societe Generale adds that "politics is likely to dominate the week ahead." (olga.cotaga@wsj.com; @OlgaCotaga)

    0712 GMT - Private home prices in Singapore rose 0.5% on year in 3Q, the first increase in 4 years, government data show. The Urban Redevelopment Authority data may be a confirmation that property prices have seen their worst after falling for 15 consecutive quarters since 2013. Singapore had announced a series of steps to cool the property market earlier this decade. Analysts predict prices to recover amid robust demand, which has helped local builders' stocks rise this year. The uptick in property prices adds to a string of positive data in recent months that show the island nation's economy is on a firmer footing this year. (gaurav.raghuvanshi@wsj.com)

    0653 GMT - The merger of the rail businesses of Siemens AG and Alstom SA is unlikely to hurt the German industrial group's rating at Moody's, as the deal will be cash-neutral and won't increase its debt, Moody's analysts Martin Kohlhase and Oleksandr Yermolayev say in a note. Siemens can't take on too much debt, as its 2.3-time leverage ratio is already at the upper end of what Moody's expects from a A1-rated name. Siemens also carries ratings of A+ and A from S&P and Fitch, respectively. These two rating companies have also said the merger won't impact Siemens's rating. (tasos.vossos@wsj.com, @tasosvos)

    (END) Dow Jones Newswires
     
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    MONDAY, OCTOBER 2, 2017

    TOP NEWS

    Japan's business mood hits decade-high, labour shortage bites - BOJ tankan
    Big manufacturers have more confidence in Japan's business conditions than they have had for a decade as a weak yen and robust global demand add momentum to the economic recovery, a closely watched central bank survey showed. The headline index for big manufacturers' sentiment stood at plus 22 in September, handily exceeding a median market forecast of plus 18 to mark the highest level since September 2007. The big non-manufacturers' sentiment index stood at plus 23, unchanged from June and matching a median market forecast.

    GLOBAL ECONOMY- Asian factories rev up in Sept ahead of year-end spending spree
    Factories in Asia's largest economies cranked up activity in September as a synchronized upswing in growth globally pointed to solid consumption of manufactured goods heading into the lucrative end-of-year shopping season. The Nikkei/Markit PMI on South Korea's manufacturing sector edged up to 50.6 in September from 49.9 a month earlier, hitting the highest since December 2015. Meanwhile, China's manufacturing PMI rose to 52.4 in September, from 51.7 in August and well above the 50-point mark that separates growth from contraction on a monthly basis.

    China makes targeted reserve requirement rate cut to boost lending to small firms
    China's central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lacklustre private sector. The People's Bank of China said on its website that it would cut the reserve requirement ratio for some banks that meet certain requirements for lending to small business and the agricultural sector.

    "Our economy is not broken," says UK finance minister, defending capitalism
    British finance minister Philip Hammond will defend his Conservative Party's management of the economy on Monday, seeking to stave off rising support for the opposition Labour Party's vision of a more centrally-controlled state. "The market economy frees people and businesses, encourages them to create, take risks, give ideas a go because they can see the results and benefit from their success," he added.



    ASIA PMI's
    [​IMG]


    MORNING MEETING


    JGBS SOFTEN AHEAD OF 10YR AUCTION

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.356%, JGB 10s 0.073%, Bund 10s 0.479%
    • US-Japan-Germany respective 2s indicated 1.497%, -0.112%, -0.673%
    • JGBs give back Friday's gains and further soften ahead of 10yr auction
    • Weaker US Treasuries also weigh on JGBs
    • Weakness most noticeable in 10s, where yields up 1.5bp on day
    • At 150.16, futures off 19 ticks on day, range 150.28/150.11
    • MoF to sell ¥2.3trn of 10-year notes tomorrow
    • Nikkei in tight 20,363-411 range at fiscal half start, +0.1% at 20,375
    • AXJ mostly closed on slew of regional holidays, China out whole week
    • Hong Kong and Australia closed too, STI +0.7%, TWI +0.75%, NZX50 -0.1%

    Currency Summaries

    JPY

    • Higher US yields, importer buys keeping USD/JPY, crosses bid in Asia
    • Asia so far 112.37 to 112.91, offers still from pre-113.00, trail up
    • Japanese exporters likely good sellers all the way up, stops 113.30+
    • 113.26 high Sept 27, break up bullish, projects 114.49 July 11 test
    • Option expiries - 113.00-05 USD700 mln, 112.45-50 925, 112.24-30 801
    • EUR/JPY clawing up but lacking momentum, Asia 132.75-133.06, 200-HMA 133.11
    • GBP/JPY 150.43-97, hawkish BoE Gov Carney talk supportive
    • AUD/JPY 88.10-46, NZD/JPY 81.07-40, CAD/JPY 90.08-41

    EUR

    • EUR/USD gapped lower to 1.1776 at the open after ugly scenes from Catalan
    • The impact proved to be short-lived and the EUR/USD traded to 1.1815
    • Broad USD strength then became the main theme and the EUR/USD reversed lower
    • USD buying was prompted by the 10-year Treasury yield edging up 2 BPs to 2.36%
    • EUR/USD eased to 1.1771 and was around 1.1775 into the afternoon
    • Asia wasn’t sure how to react to the Catalan referendum crisis on Sunday
    • EUR unlikely to react unless constitutional crises emerged in Spain
    • EUR/USD support around 1.1720 where the 38.2 of the 1.119/1.2092 move is found
    • EZ MFG will be released today while the market eyes developments in Spain

    GBP

    • Cable soggy in Asia despite hawkish BoE Gov Carney talk over weekend
    • Asia 1.3358-1.3402, on back foot and just above session low
    • 55-HMA 1.3401, 100-HMA 1.3413, both above, descending and look to cap
    • Descending 100-WMA just below at 1.3349
    • EUR/GBP 0.8805-22 in Asia, quiet, trend low September 27 0.8747

    CHF

    • USD/CHF 0.9682-0.9709 in Asia, firm US yields supportive
    • On hold however just below descending 55-HMA above at 0.9708
    • EUR/CHF steady, Asia 1.1414-39, ascending 55-DMA 1.1382 below
    • Some stops eyed sub-1.1400 and 1.1380

    Market Briefs

    • JP Sept mfg PMI - final 52.9, flash 52.6, Aug final 52.2, sectoral growth up
    • BoJ seen trimming inflation outlook in October meeting - Nikkei
    • BoJ September Tankan - Big mfg DI +22, big non-mfg +23, +18/+23 eyed
    • DIs eyed at +19, +19 in December, previous +16, +20, USD eyed at 109.29
    • Though sentiment among smaller firms lagging, general mood at decade high
    • CN Sep NBS Manufacturing PMI, 52.4 vs 51.7, f'cast 51.5
    • CN Sep NBS Non-Mfg PMI, 55.40 vs 53.40
    • CN Sep Caixin Mfg PMI Final 51.0 vs 51.6, f'cast 51.5
    • China makes targeted reserve requirement rate cut to boost lending to small firms
    • Under pressure, PM May says she can steer Britain through Brexit
    • Catalan leader opens door to secession from Spain after vote
    • Chastened Merkel faces pressure to embrace Macron on Europe
    • Trump to top U.S. diplomat: Don't bother talking to North Korea
    • Australia home prices slow as Sydney suffers rare fall
    • New Zealand's "kingmaker" to start talks with both major parties this week
    • Speculators up U.S. dollar net short bets to highest in five years-CFTC

    Looking Ahead - Economic Data (GMT)

    • 07:15 ES Sep Manufacturing PMI, 53.00 eyed, last 52.40
    • 07:30 CZ Sep Markit PMI, 55.40 eyed, last 54.90
    • 07:45 IT Sep Markit/ADACI Mfg PMI, 56.80 eyed,last 56.30
    • 07:50 FR Sep Markit Mfg PMI, 56.00 eyed, last 56.00
    • 07:55 DE Sep Markit/BME Mfg PMI, 60.60 eyed, last 60.60
    • 08:00 IT Aug Unemployment Rate, 11.20% eyed, last 11.30%
    • 08:00 EU Sep Markit Mfg Final PMI, 58.20 eyed, last 58.20
    • 08:30 GB Sep Markit/CIPS Mfg PMI, 56.40 eyed, last 56.90
    • 09:00 EU Aug Unemployment Rate, 9.00% eyed, last 9.10%

    Looking Ahead - Events, Auctions, Other Releases (GMT)

    • N/A Norway Central Bank holds conference in Oslo
    • 09:30 Bank of Spain Gov Linde speaks in Madrid
    • 13:00 ECB's Praet speaks in London
    See North American Open for a detailed listing of US/NorAm releases, events.

    PBOC delays gratification with targeted RRR cut

    China's divergent Sept manufacturing PMIs endorse the PBOC's targeted reserve requirement rate cut to boost lending to small firms. While the official factory PMI for larger state-owned firms unexpectedly bounced to an over 5-yr high, the private Caixin gauge for small & mid-sized firms fell more than expected. By delaying the implementation of the RRR cut to 2018 and making its size contingent on the scale of lending to targeted sectors at end-2017, the central bank is moving to ensure that banks extend credit to under-funded areas of the economy while continuing to curb excess leverage in the bloated state sector. The PBOC was careful to emphasise that the cut does not mean a change to its neutral monetary policy stance. Analysts at SocGen estimate that the targeted cuts will release at least CNY800 bln of liquidity - a "counter-tightening" that will serve to soften the hit to the economy from financial deleveraging and the anti-pollution campaign. While that may be little consolation to those seeking looser funding conditions after the week-long National Day holidays, expect the PBOC to continue closely managing interbank liquidity via its daily open market operations and targeted lending facilities.

    Week Ahead-Catalonia, DC politics, RBA meet, ECB mins

    It promises to be a busy week as the mix of geopolitics and key data will continue to create volatility. Events in Spain could dominate early on after Catalonia's leader opened the door to secession following violent clashes in Sunday's banned referendum. The UK Conservative Party conference will also be watched with PM May under growing pressure. The constant political storms emanating from Washington DC could hurt efforts by the White house to implement policy, and markets will be especially sensitive to any developments on tax reform after responding positively to Trump's tax plan last week. While the North Korea crisis has faded from the market's focus, the situation remains fluid. Speculation on who will be the next Fed Chair continues to swirl after Trump and his key economic advisors met with several potential candidates last week. Central bank expectations remain critical, with the RBA meeting on Tues and the minutes of the ECB's Sept meeting due Thurs. The RBA is widely expected to stay on hold, but the market will be looking for any change in language that may reflect a subtle hawkish shift in bias. The ECB signaled there will be an announcement on policy tightening at the Oct meeting, but doves on the ECB board have indicated they may not be ready to act for some time yet.

    Week Ahead-US payrolls; US, EZ, UK PMIs

    The week's main event - Friday's US payrolls report - may not get the usual reaction due to the possibility of weather-related distortions to the data. The market is expecting +100k jobs, the unemployment rate to remain at 4.4% and ave hourly earnings to improve to 0.2% from 0.10% in Aug. Before that, the US releases key manufacturing ISM data Mon, ADP jobs and ISM non-manufacturing Weds, and trade data, factory orders & weekly jobless claims Thurs. The euro zone has a busy week with the mfg PMI and unemployment rate Mon, PPI Tues, retail sales and services PMI Weds, and German industrial orders Fri. UK manufacturing PMI is out Mon, followed by construction PMI Tues and services PMI Weds. China will be closed for the entire week. Australia has a busy week, with the RBA decision and building approvals Tues, and retail sales and trade data Thurs.
     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 03 Oct 2017 02:26 EDT
    Global Forex and Fixed Income Roundup: Market Talk

    0626 GMT - Chinese banks expand their gains in late session Tuesday, with the big-2 -- China Construction Bank and ICBC -- surging nearly 6% each. China Merchants Bank shoots up 8.4%, flirting with an all-time high. PBOC's RRR cut will free up CNY750 billion ($114 billion) of liquidity and will benefit most lenders, says Goldman Sachs. The move will help maintain slight growth in the country's M2, says Nomura, and will offset the impact of an economic slowdown due to cooling of property market. CCB is having its best intraday gains since April 2015, while ICBC surges to a 27-month high. (john.wu@wsj.com)

    0602 GMT - Fitch Ratings says India's economy will gain momentum in Oct-March, or the second half of the fiscal year, as the disruptive effects of the November note-ban and the goods and services tax rollout fade. Much of the acceleration is expected to be driven by consumption, with motorcycle sales -- an indicator of rural demand -- already showing a strong bounceback in recent months. Higher government spending on infrastructure projects would also help drive investment. For now, though, the rating firm joins many other institutions and economists in lowering India's growth forecast. The rating firm predicts a 6.9% expansion in India's economy this fiscal year, down from 7.4% earlier, following the April-June GDP data that showed growth slowing to a 3-year low. Fitch says the deceleration may have been due to firms running down inventory ahead of the GST rollout from July. (anant.kala@wsj.com)

    0602 GMT - Japan's election is the key domestic political point to watch this month, and market moves in the yen before and after voting, says Takahiro Sekido, Japan strategist with Bank of Tokyo-Mitsubishi UFJ. Meanwhile, Oct. 10 could see the yen fluctuate if North Korea marks its Party Foundation Day with an event that raises geopolitical tension. The political factors will make the yen direction hard to predict in October. The dollar is at Y113.10 compared with Y112.90 at Tokyo equity close Monday. (suryatapa.bhattacharya@wsj.com; @SuryatapaB)

    0550 GMT - The Aussie dollar fell to below 0.7800 to the greenback in Asian trade, after the RBA left its cash rate on hold at 1.5%, and issued a statement replete with caution over record household debt, low wages growth, and the elevated Australian dollar. The commentary lacked any sense of urgency from the RBA, despite unambiguous improvement in the job market over the last 6 months. The AUD/USD pair slumped to a low of 0.7792, it's lowest level since July 18, extending a retreat that began last week. (james.glynn@wsj.com; @JamesGlynnWSJ)

    0536 GMT - Growth in India's manufacturing activity held steady in September as the South Asian economy showed fresh signs of a recovery from the initial disruptive effects of the goods and services tax. The Nikkei/IHS Markit India Manufacturing Purchasing Managers' Index was unchanged from August at 51.2. Aashna Dodhia, economist at IHS Markit, says the data "painted an encouraging picture" and the sustained improvement was reflected in the expansion in new orders and output. Prospects are looking even brighter with business confidence rising that recent government policies would result in long-term benefits for the economy. (anant.kala@wsj.com)

    0502 GMT - Moody's says Japan, Vietnam and Mongolia are all at risk from a credit perspective if there is a drawn-out conflict in Korea. It adds that such a conflict would lower Japan's GDP growth, hampering the government's efforts to stabilize its debt burden. Vietnam's exposure to Korea through trade would be a big drag on its growth as the country has the highest proportion of non-commodity exports to Korea and also imports 20% of intermediate goods. Lastly, investors are likely to flock to safe havens and dump emerging markets and frontier assets in an escalated Korean crisis, making it hard for Mongolia to repay foreign-currency debt. (saumya.vaishampayan@wsj.com ;@saumvaish)

    (END) Dow Jones Newswires
     
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    TUESDAY, OCTOBER 3, 2017

    TOP NEWS

    BOJ tankan corporate inflation expectations flagging
    Japanese companies' inflation expectations eased slightly in September from three months ago in a worrying sign the economy continues to struggle with a deflationary mindset. Companies surveyed by the Bank of Japan expect consumer prices to rise 0.7 percent a year from now, lower than their projection for a 0.8 percent increase three months ago. Firms also expect consumer prices to rise an annual 1.1 percent three years from now, unchanged from the previous survey. The tankan survey also showed companies expect the economy to lose a little momentum in the next three months. The central bank next meets on Oct. 30-31, where it will update its forecasts for consumer prices.

    Hurricanes Harvey, Irma lift U.S. factory activity index to 13-year high
    A measure of U.S. manufacturing activity surged to a near 13-1/2-year high in September as disruptions to the supply chains caused by Hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices. ISM said its index of national factory activity surged to a reading of 60.8 last month, the highest reading since May 2004, from 58.8 in August. In separate report on Monday, the Commerce Department said construction spending rose 0.5 percent as outlays for both private and public projects increased, ending two straight monthly declines. Separately, Dallas Fed President Robert Kaplan said the Federal Reserve will need to "look hard" at whether it should raise rates in December, but there is no need to wait for inflation to actually get to, or even begin to rise back to, the Fed's 2-percent target before doing so.

    BoE tells banks to find 4 bln pounds of 'bail-in' debt by 2022
    Banks operating in Britain must find a net 4 billion pounds by 2022 to comply with rules aimed at shielding taxpayers if lenders go bust, the Bank of England said on Monday. Ten years after the financial crisis that cost British taxpayers billions of pounds torescue banks like Royal Bank of Scotland and Lloyds, the BoE said its was putting the finishing touches to a system for dealing with failing banks. This would ensure that even large banks can be wound down and would be no longer "too big to fail" and hold taxpayers to ransom. BoE Deputy Governor Jon Cunliffe said the BoE does not run a "zero failure regime". The BoE was setting out detailed proposals on so-called mandatory "bail-in" debt that can be written down to replenish a bank's burnt-out capital in a crisis.

    Calmer markets may call for smaller, longer ECB bond buys: Praet
    Relatively calm market conditions could encourage the European Central Bank to extend its asset purchase scheme for a relatively longer period but with reduced monthly spending, ECB chief economist Peter Praet said on Monday. "In more normal market conditions ... investors may become 'more patient', or, in other words, better able to evaluate the stimulus that can be expected to come from a purchase plan that is to be executed over a more extended time interval," he said. "In conditions in which uncertainty is high, frontloading the accumulation of a given stock of purchases more forcefully signals the central bank’s commitment to inject the degree of accommodation necessary to support the recovery."

    Greece targets faster growth, bigger primary surplus in 2018 draft budget
    Greece expects economic recovery to gain pace next year when it aims to exit its bailout, the government's draft budget showed on Monday, projecting that stronger growth will help it attain a bigger primary surplus and reduce unemployment. "This is the last budget under bailouts," said Deputy Finance Minister George Chouliarakis as he handed the draft budget to the speaker of the parliament. The country's leftist-led government sees the economy growing by 2.4 percent next year, picking up from a projected 1.8 percent expansion in 2017, according to the draft budget. Unemployment is seen easing to 19 percent from 21.1 percent in the second quarter, but still double the euro zone's current average of 9.1 percent. Based on the budget, the government expects to outperform this year's 1.75-percent-of-GDP primary surplus target, projecting that it will close the year with a 2.2 percent surplus.



    ANALYSIS


    Japanese companies struggle to hire, retain staff as labour shortage worsens
    Companies in Japan's service industries are struggling to hire and retain staff as the labour market becomes the tightest in decades, and are increasingly taking unorthodox steps to alleviate the shortage.


    U.S. ISM PMI
    [​IMG]


    MORNING MEETING


    10YR JGB AUCTION WEAK, USD/JPY HIGHER

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.348%, JGB 10s 0.079%
    • JGBs down after weak 10yr auction
    • Rally in USD/JPY, Nikkei also puts pressure
    • 10yr auction stops at 0.082%, vs morning trading point of 0.075%
    • BTC ratio 4.08, tail 0.5bp, last 3.95, 0.5bp
    • Curve steepens ahead of next week's 30yr sale; 10s +1bp, 30s +1.5bp
    • At 150.13, futures off 5 ticks on day, range 150.23/150.08
    • Nikkei +0.95% at 20,594
    • AXJ mostly higher, China out whole week
    • HSI +1.6%, TWI +0.2%, Kospi closed, NZX50 -0.1%, ASX200 -0.3%
    • E-mini S&P +0.1%
    • LME copper -0.5%, gold -0.1%

    Currency Summaries

    JPY
    • USD/JPY opened 0.22% higher at 112.72 after EUR/JPY selling limited upside
    • After quiet start the USD/JPY suddenly popped higher around Tokyo Fix
    • Talk that a large fund joined in and bought USD across the board
    • USD/JPY traded as high as 113.17 before sellers ahead of 113.25 capped
    • Heading into the afternoon it was trading around 113.0510
    • Market hesitant to commit to USD/JPY buying after multiple fails above 113.00
    • A break above 113.30 would reignite trend higher and target 114.49 trend high
    • A break back below 112.80 would warn of another fail and could see correction
    • Key will US Treasury yields and equity markets maintaining buoyancy

    EUR
    • EUR/USD opened Asia 0.69% lower at 1.1731 after selling on Spain uncertainty
    • After quiet start the USD went bid across the board
    • USD/JPY buying for fix and talk of a large fund buying USD sent EUR/USD lower
    • EUR/USD broke below 1.1715/25 support to trade as low as 1.1701
    • Talk of bids at 1.1700 underpinned and it was around 1.1715 into the afternoon
    • Sentiment toward EUR/USD bearish as US/DE yield spread continues to widen
    • Next support for EUR/USD at Aug 17 low at 1.1662 if 1.1700 gives way
    • Break below 1.1660 targets 50% of 1.1119/1.2092 move around 1.1605
    • Key resistance at 1.1815/25 where 10 and 21-day moving averages converge

    GBP
    • Cable staying soggy in Asia after Mon's soft lead in
    • Traded 1.3230/1.3280 range thus far, to be last quoted 1.3248/50
    • Broad based USD gains added note of urgency as weak GDP longs exited
    • Construction PMI eyed after soft mfg PMI spooked o/n, 51.00 f/c
    • EUR/GBP comparatively narrow 0.8837-47 in Asia as USD dominates

    CHF
    • USD/CHF higher within 0.9740/0.9785 range in Asia, last 0.9775
    • USD in ascendancy driving DXY to fresh 6-week top
    • Saw USD/CHF at multi-mth peak & probing highest level since end-May
    • 0.9808 30 May cycle top as next res then 0.9843 200-DMA
    • EUR/CHF traded 1.1431-56 thus far in Asia, last at 1.1445

    Market Briefs
    • Catalan leader calls for international mediation in Madrid stand-off
    • Australia's central bank holds rates at record lows, signals patience on policy
    • AU Aug Building approval, 0.4% vs -1.7%, rvsd -1.2% f'cast -0.5%
    • AU Aug Private House Approvals, -0.6% vs 0.0%, rvsd 1.0%
    • NZ business confidence sinks to 18-month low as election uncertainty weighs
    • Boris and Brexit sour British PM Theresa May's party in Manchester
    • Merkel's Bavarian allies insist on conservative unity before coalition talks
    • Tokyo governor Koike says will not run in Japan election - Yomiuri
    • BOJ tankan corporate inflation expectations flagging
    • White House again rejects talks with North Korea on nuclear issue

    Looking Ahead - Economic Data (GMT)
    • 07:00 NO Sep Manufacturing PMI SA, 56.0 eyed, last 55.7
    • 08:30 GB Sep Markit/CIPS Cons PMI, 51.0 eyed, last 51.1
    • 09:00 EU Aug Medium Producer Prices, 0.1% m/m, 2.3% y/y eyed; last 0.0%, 2.0%

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A Norway Central Bank holds conference in Oslo
    • 09:30 Swedish National Bank Gov Ingves speaks in Gothenburg
     
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    Dow Jones Newswires, 04 Oct 2017 04:19 EDT
    Global Forex and Fixed Income Roundup: Market Talk



    0818 GMT - Germany's services PMI rose to 55.6 in September from 53.5 in August, says IHS Markit, confirming a preliminary estimate. "Services order books were filled at the fastest rate for six months and firms' confidence towards future growth prospects also perked up, suggesting that the economy carries good momentum into the final few months of the year," says Phil Smith, an economist at IHS Markit. (nina.adam@wsj.com)


    0803 GMT [Dow Jones] Currently trading at 155.30, the French December OAT contract is posting a rebound but stands below the strong horizontal resistance and previous overlap set at 155.49. Furthermore, the 30-min RSI stands within its selling area between 50 and 30 and confirms the bearish bias. As a consequence, a new down is expected with a first target set at the horizontal support at 154.77. The downside breakout of this threshold will open the way to further weakness towards Sept. 28 bottom at 154.31 and towards 153.75 in extension. Only a rebound above the strong horizontal resistance at 155.49 would invalidate this bearish scenario. In this case, a bullish acceleration towards the horizontal resistance and Sept. 25 top at 156.04 and towards 156.40 in extension would be in the cards. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

    0755 GMT [Dow Jones] Currently trading at GBP 0.8873, the euro remains within a bullish channel in place since Sept. 29 and stands above the rising 50-period moving average at GBP 0.8864 on a 30-min chart. Furthermore, the intraday RSI remains within its buying area between 50 and 70 and confirms the bullish bias. Thus, as long as GBP 0.8850 holds as a support, further advance is likely towards the strong horizontal resistance at GBP 0.8890. A break above this threshold would open the way to further rise towards the horizontal resistances at GBP 0.8915 and at GBP 0.8945 in extension. Only a break below the horizontal support at GBP 0.8850 would turn the outlook to bearish with a first alternative target set at the horizontal support at GBP 0.8830 and a second one set at the horizontal support and overlap at GBP 0.8800. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

    0751 GMT - The list of senior non-preferred bond issuers is about to get longer as France's La Banque Postale offers its first such issue Wednesday. The seven-year bond won't grow above EUR500 million and comes at initial price talk of low 60s basis points above mid-swaps, according to dealers involved. Issuance of bail-in-able senior non-preferred debt is France's chosen method for its banks to meet MREL/TLAC capital requirements. As the market keeps growing, IHS Markit could add SNP debt to its iTraxx credit default indexes at the March 2018 roll. (tasos.vossos@wsj.com; @tasosvos)

    0748 GMT - DZ Bank expects a strong take-up at Germany's EUR3 billion tap of the August 2027 Bund at an auction on Wednesday, says analyst Hendrik Lodde. The last tap of this bund on Sept. 13, when EUR3 billion was again offered, was well received, with a bid-to-cover ratio of 1.6, while the average accepted yield was 0.39%. The August 2027 Bund is currently trading at a yield of 0.43%, according to Tradeweb. The somewhat higher yield in the secondary market than at the previous auction might attract buyers again. (emese.bartha@wsj.com; @EmeseBartha)

    0743 GMT - Stronger-than-expected resilience in China's economy, improved global growth and firmer local consumption prompt the World Bank to nudge up its 2017 forecasts for East Asia. It now sees China growing at 6.7% compared with an earlier projection of 6.5%, and by 6.4% next year as it continues to rebalance its economy. Malaysia is again the biggest outperformer in the region, with the World Bank raising its forecast 0.9 percentage point to 5.2%, while Thailand gets a 0.3 percentage point nudge to 3.5%, and the Philippines is seen growing 6.6%, down 0.3 points. "The challenge will be for countries to strike a balance between prioritizing short-term growth and reducing medium-term vulnerabilities," says Victoria Kwakwa, the bank's vice president for East Asia and Pacific. (paul.jackson@wsj.com)

    0739 GMT - Tesco's euro and sterling-denominated bonds jump on the secondary market early Wednesday after the U.K. retailer announced a 71.8% jump in operating profit and an almost 700% surge in pre-tax profit. Bid asset swap spreads on the sterling 6.125% 2022 issue drop to 177.4 basis points from around 185 bps, according to Tradeweb. Spreads on the 2.5% 2024 euro issue also tighten to 127.85 bps from 131.8 bps.(tasos.vossos@wsj.com; @tasosvos)

    0738 GMT - Sterling trades marginally higher Wednesday ahead of the September services purchasing managers' index release at 0830 GMT. GBP/USD is up 0.2% at 1.3262 and EUR/GBP is down 0.1% at 0.8864. The services PMI comes after the release of the manufacturing and construction PMIs earlier this week. Both previous sets of data came in below market expectations and lower than in the previous month. Societe Generale says that due to a weakening trend in the services output, the services PMI will likely come in at 52.7, down from last month's 53.2. A WSJ poll points to a slight rise to 53.4. ING says "a low services PMI today would question whether the market is right to price in a second" interest rate increase by September next year. The Bank of England is expected to raise its policy rate as early as November. (olga.cotaga@wsj.com; @OlgaCotaga)

    0707 GMT - UniCredit keeps its buy recommendation on Syngenta bonds, despite increased uncertainty about whether the Swiss chemical firm has the Chinese government's backing after a takeover by ChemChina. Recent comments from China's state-owned State Assets Supervision and Administration Commission, or SASAC, that it won't support Syngenta in relation to litigation on corn insecticides, prompted S&P to put its BBB- rating on negative watch. But UniCredit analyst Christian Aust says: "We still don't doubt there'll be support for a 100%-government-owned entity like ChemChina in what is a key industry for China." (tasos.vossos@wsj.com; @tasosvos)

    0701 GMT - Tensions between the Spanish government and regional authorities in Catalonia look poised to rise further before improving, as the Catalan parliament is increasingly likely to declare independence in coming days, Societe Generale strategists say. Uncertainty regarding the issue of Catalan independence has already taken its toll on Spanish government bonds; the gap versus higher-yielding 10-year Italian government debt has tightened to 48.2 basis points from 60.3 bps two weeks ago, according to Tradeweb. The last time Spanish 10-year bonds yielded more than Italian counterparts was when Spain couldn't form a government in 2016. (tasos.vossos@wsj.com; @tasosvos)

    0700 GMT - Ireland is expected to go ahead on Wednesday with the planned syndication of a new October 2022-dated government bond, say rates strategists in several banks. Ireland hired banks on Monday for this syndicated transaction. Mizuho rates strategists see the fair value of the planned bond at around 26 basis points below mid-swaps, equivalent to a yield spread of around 14.5 bps above the March 2022 bond, they say. The March 2022-dated Irish bond is trading at a yield of minus 0.16%, according to Tradeweb. The five-year mid-swap is 0.24%, according to VWD Manager. Mizuho adds that the Irish bond is set to come in an expensive maturity sector on the Irish curve and it also looks expensive compared with France. (emese.bartha@wsj.com; @EmeseBartha)

    0658 GMT - September was a record month in terms of emerging market bond issuance, according to CreditSights, but momentum is unlikely to stall now. After all, the Emirate of Abu Dhabi raised $10 billion in three tranches Tuesday, while Nigeria, Hungary and Argentina also look poised to tap the U.S. dollar, euro and Swiss franc markets. EM dollar issuance -- both sovereign and corporate - stood at $72.7 billion last month, says the research firm. (tasos.vossos@wsj.com; @tasosvos)

    (END) Dow Jones Newswires
     
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    WEDNESDAY, OCTOBER 4, 2017

    TOP NEWS

    Japan Sept services PMI shows growth slowest in 11 months
    Japan's services sector expanded in September at the slowest rate in 11 months as the pace of new orders eased, though a raft of other data suggest the economic recovery remains intact even as momentum may have ebbed slightly in the third quarter. The Markit/Nikkei survey showed its Japan Services PMI fell to a seasonally adjusted 51.0 from 51.6 in August. The new business index also showed expansion at a reduced pace, down at 52.0 in September from 52.4 in August. In one positive sign, the index for business sentiment rose to 53.3 from 52.4 in the previous month, suggesting companies believe the lull in activity is temporary. The composite PMI fell to 51.7 in September from 51.9 in the previous month.

    Bank of England sees Brexit risks to EU bank lending in UK and clearing
    Brexit poses risks to the ability of British companies to borrow from European banks and to some clearing activity which might have to relocate from London once Britain leaves the EU, the Bank of England said on Tuesday. Banks from the bloc and other associated countries accounted for around 10 percent of lending to British companies, the BoE's Financial Policy Committee (FPC) said in a summary of its most recent meeting held on Sept. 20. "The risk of disruption to wholesale UK banking services appeared to be slightly higher than previously thought, given that a number of EEA (European Economic Area) firms branching into the UK were not sufficiently focused on addressing this issue," the FPC said in a statement.

    BOJ's Nakaso says revenues could slip when it ends easy policy - paper
    Bank of Japan Deputy Governor Hiroshi Nakaso said the central bank may incur revenue losses when it exits ultra-easy monetary policy but that won't affect policy-making, the Asahi newspaper reported. The BOJ could smoothly withdraw its massive stimulus and learn from the experience of the U.S. Federal Reserve, which is already tapering its asset purchases, Nakaso was quoted as saying in an interview. Nakaso defended the BOJ's 2 percent inflation target, saying that setting its price goal at levels equivalent to other major central banks would stabilise currency moves in the long run. He also called on the government to take a "balanced" approach on fiscal policy, when asked about criticism by some analysts that the BOJ's ultra-easy policy was allowing lawmakers to drag their feet in fixing Japan's tattered finances by keeping borrowing costs essentially at zero.

    Brexit uncertainty prompts shock British construction contraction
    Britain's construction companies in September reported the sharpest fall in activity since just after June 2016's Brexit vote, as clients put projects on hold due to uncertainty over the economy. The IHS Markit/CIPS construction PMI sank to 48.1 in September from August's reading of 51.1, its lowest since July 2016 and far below all forecasts in a Reuters poll of economists. IHS Markit said the prospect that the BoE will raise rates next month for the first time in a decade was also a factor behind slower house building. Expectations for the future were at their second-lowest level since 2013, Tuesday's survey also showed. The PMI data showed the cost of building supplies rose at its fastest rate in seven months in September.

    Hurricane recovery helps boost U.S. September new auto sales
    Major automakers on Tuesday posted higher U.S. new vehicle sales in September as consumers in hurricane-hit parts of the country replaced flood-damaged cars, extending a rally in their shares that began when Hurricane Harvey hit southeast Texas in late August. The seasonally adjusted annualized rate of U.S. car and light truck sales in September rose to 18.57 million units from 17.72 million units a year earlier, according to Autodata Corp, which tracks industry sales. While U.S. sales rose beyond the storm zones, according to automakers and dealers, much of the September gains came after Hurricane Harvey hit Texas. Replacing cars during the recovery in southeast Texas and Florida will boost U.S. new and used auto sales through at least November, according to industry consultants.



    EURO ZONE PERIPHERY GOVERNMENT BOND YIELDS
    [​IMG]


    MORNING MEETING


    JGBS EXTEND RALLY

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.32%, JGB 10s 0.06%
    • JGBs extend rally as sentiment improves after yesterday's post-auction dip bought
    • Big domestic bank rumoured to be yesterday's dip-buyer
    • Yields down 1.5-2.5bp in 2s thru 20s
    • At 150.47, futures up 24 ticks on day, range 150.49/150.27
    • Nikkei +0.4% to 20,689 for fresh 2+yr high
    • STI -0.2%, HSI +0.7%, TWI flat, Kospi/SSEC closed, JKSE +0.3%, NZX50 -0.1%, ASX200 -0.7%
    • E-mini S&P flat
    • LME copper +0.1%, gold +0.3%, light crude -0.8%

    Currency Summaries

    JPY
    • USD/JPY opened Asia 112.84 after a relatively quiet US session
    • After trading at 112.90 the USD/JPY and USD more broadly – tracked lower
    • The move was sparked by easing US Treasury yields amid Fed Chair speculation
    • Reports Mnuchin favours Fed moderate Powell over hawk Warsh behind the moves
    • Warsh still favored and markets see USD & US yields rising if he gets nod
    • USD/JPY traded down to 112.51 before Tokyo buying underpinned
    • Heading into the afternoon the USD/JPY was trading around 112.65
    • The repeated fails above 113.00 may discourage bulls unless 113.30 gives way
    • USD/JPY to follow US yields and US yields to swing with Fed chair speculation

    EUR
    • EUR/USD opened Asia around 0.1% higher as US/DE yields narrowed slightly
    • After trading at 1.1735 the EUR/USD tracked higher as USD broadly eased
    • USD weakness due to 10-year US Treasury yield easing 1 BP to 2.31%
    • EUR/USD traded to 1.1780 before sellers returned to cap the rally
    • The EUR/USD was trading around 1.1770 heading into the afternoon
    • The 61.8 of the recent 1.1833/1.1695 move comes in at 1.1780 and it held
    • A break above 1.1780 targets the 10-day MA at 1.1812
    • Speculation on who will be the next Fed Chair likely to move EUR/USD
    • Front runner and hawk Warsh seen as the most hawkish and USD-favourable
    • Moderate Powell is firming and if he gets the nod it could weigh on USD
    • EZ services PMI and Draghi speech the main risks to EUR

    GBP
    • Cable traded higher within 1.3235/1.3273 range, last at 1.3263
    • Change of fortune after weak construction PMI & ongoing Brexit uncertainty undermined o/n
    • Potential for soft services PMI tonight put to one side for now as USD dumped
    • Remains wildcard with any downside miss aligning with earlier mfg and construction PMI's
    • 50% retracement of 1.2774/1.3659 rally validated with 1.3217 Tues low, breach opens to 1.3148 14/9 base
    • EUR/GBP comparatively narrow 0.8867-79 in Asia as USD once again dominates

    CHF
    • USD/CHF lower within 0.9710/0.9740 range in Asia, last 0.9720
    • EUR/CHF tight 1.1430-39 thus far in Asia, last at 1.1438

    Market Briefs
    • Japan Sept Services PMI, 51.0 vs 51.6, lowest in 11 months
    • Japan Sept Composite PMI, 51.7 vs 51.9
    • BOJ's Nakaso says revenues could slip when it ends easy policy - paper
    • Puigdemont says Catalonia to declare independence in 'matter of days' -BBC
    • Vowing not to give up, Britain's May tries to stamp authority on party
    • Boris Johnson gives PM May advice on Brexit while parading loyalty
    • Germany's Schaueble confident three-way coalition will come off
    • EU to reform sales tax, prepares changes to rates
    • World Bank raises 2017, 2018 East Asia growth forecasts, sees geopolitical risks

    Looking Ahead - Economic Data (GMT)
    • 07:15 ES Sep Services PMI, 55.50 eyed, last 56.00
    • 07:45 IT Sep Markit/ADACI Svcs PMI, 54.90 eyed, last 55.10
    • 07:50 FR Sep Markit Comp PMI, 57.20 eyed, last 57.20
    • 07:50 FR Sep Markit Serv PMI, 57.10 eyed, last 57.10
    • 07:55 DE Sep Markit Services PMI, 55.60 eyed, last 55.60
    • 07:55 DE Sep Markit Comp Final PMI, 57.80 eyed, last 57.80
    • 08:00 EU Sep Markit Comp Final PMI, 56.70 eyed, last 56.70
    • 08:00 EU Sep Markit Serv Final PMI, 55.60 eyed, last 55.60
    • 08:30 GB Sep Markit/CIPS Serv PMI, 53.20 eyed, last 53.20
    • 09:00 EU Aug Retail Sales, 0.3% m/m, 2.6% y/y eyed; last -0.3%, 2.6%

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A ECB Governing Council meeting
    • 10:00 IT E2.0 bln for 9 year auction
    • 10:30 DE E3.0 bln for 10 year auction
    • 16:15 ECB's Draghi speaks in Frankfurt
    • 18:30 BoE Deputy Gov Woods speaks in London
    • 19:15 Fed's Yellen speaks in St. Louis
     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 05 Oct 2017 04:29 EDT
    Global Forex and Fixed Income Roundup: Market Talk



    0829 GMT [Dow Jones] Currently trading at $1.1761, the Euro stands above the horizontal support at 1.1745 and remains supported by its rising 30-min moving average at $1.1750 on a 30-min. The intraday RSI which stands within its buying area between 50 and 70, confirms the bullish bias. Further advance is therefore expected towards the horizontal resistance at $1.1780. A break above this threshold would open the way to further up move towards the previous overlap at $1.1800 and towards the strong horizontal resistance and Sept. 29 top at $1.1825 in extension. Only a break below the horizontal support at $1.1745 would turn the intraday outlook to bearish with a first alternative target set at the horizontal support at $1.1725 and a second one set at Oct. 3 bottom at $1.1695 in extension. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)


    0759 GMT - More clarity on how German wages will behave should be a key determinant of the European Central Bank's QE exit strategy, according to Societe Generale economist Anatoli Annenkov. Any wage rises that result from annual wage negotiations between employers and trade unions should impact the projected path of inflation. If higher wages in Germany point to a rise in eurozone inflation toward the ECB's target of "below, but close to, 2%," the central bank should be more comfortable ending its QE program in 2018. (tasos.vossos@wsj.com, @tasosvos)

    0756 GMT - Given the rising risk of generic drugs, reducing debt leverage will become a more difficult topic for Teva, which needs more disposals to remain an investment-grade name, UniCredit analyst Silke Stegemann says. The Israeli pharmaceutical bonds slumped Wednesday as the U.S. Food and Drug Administration approved of a generic version of Teva's drug Copaxone, which was "another shock and credit negative," the analyst says. UniCredit cuts its recommendation on Teva bonds to underweight from marketweight. (tasos.vossos@wsj.com; @tasosvos)

    0755 GMT - Spanish government bonds have been under significant pressure since the referendum last Sunday on Catalan independence and Thursday's supply may intensify that, says UniCredit. The auction "should put further pressure on Spanish government bonds, with some possible spillover to BTPs [Italian government bonds] and Portuguese government bonds," UniCredit analysts say. They also expect Spanish bonds to continue to underperform versus both core issuers, such as Germany and the Netherlands, and periphery issuers, such as Italy and Portugal. At Thursday's auction, the Spanish treasury launches a new five-year bond with maturity in October 2022 and reopens the January 2029 bond with a combined offer volume of EUR3.5 billion to EUR4.5 billion. In addition, it taps the November 2024 linker with EUR250 million to EUR750 million. (emese.bartha@wsj.com; @EmeseBartha)

    0749 GMT - Sterling is down on Thursday before new car registrations in the U.K, due at 0800 GMT. Usually, this figure isn't given high priority, but some, including Jane Foley from Rabobank, will be paying close attention to the numbers, because they could give a good indication of how strong or weak domestic consumer confidence is. Other macroeconomic data may be distorted by the number of tourists taking advantage of a weaker pound. GBP/USD is down 0.42% at 1.3188. (olga.cotaga@wsj.com; @OlgaCotaga)

    0727 GMT - The European Central Bank's expected balance-sheet tapering could particularly hit top peripheral corporate bond issuers that trade at lower yields than their own sovereign, according to CreditSights. Take Snam, for instance: an Italian utility which was among the first to be bought by the ECB, even before the so-called corporate sector purchase scheme began. Its mid-dated euro bonds yield less than the Italian government. CreditSights recommends going for sovereign bonds, which offer more compelling yields, if buyers want exposure to peripheral eurozone debt. (tasos.vossos@wsj.com; @tasosvos)

    0720 GMT - The merger of the insurance businesses of Groupe Credit Mutuel-CM11 and Credit Mutuel Nord Europe is credit-positive, as it should help offset some revenue pressure in CM-CM11's retail banking and investment, Moody's says in a note. Both entities are part of France's Groupe Credit Mutuel. The merger should reduce regulatory costs in insurance, which contributes around 30% of CM11's net profit. Credit officer Yasuko Nakamura cites low interest rates for the pressure in banking and investment. (tasos.vossos@wsj.com; @tasosvos)

    0717 GMT - The volatility of Spanish government bonds is to become stronger, Societe Generale expects, with yields potentially rising further versus Italian BTP yields if the standoff between Catalonia's regional government and the central government escalates. However, an improvement in the political impasse could give Spanish bonds a boost relative to their Italian peers, it adds. "If the situation improves, Spanish government bonds have room to outperform [Italian government bonds] BTPs, correcting the post-referendum underperformance," Societe Generale analysts say. (emese.bartha@wsj.com; @EmeseBartha)

    0714 GMT - German 10-year government bonds are supported by concerns surrounding the Spanish-Catalan stand-off but Commerzbank still recommends selling bunds. The German bank has repeatedly pointed out how vulnerable bunds look so long as yields trade below 0.5%. Yields move inversely to bond prices. And macro-economic data from the eurozone and the U.S. are strong; typically a negative factor for haven assets, like bunds. Ten-year German yields trade at 0.458% early Thursday, based on Tradeweb data. (tasos.vossos@wsj.com; @tasosvos)

    0704 GMT - Take-up at Spain's government bond auction today could "be very subdued" given the unresolved conflict between the central Spanish government and Catalonia's regional authorities, says DZ Bank analyst Birgit Henseler. Spanish government bonds remain under pressure, with the 10-year bond yield up 2 basis points at 1.79% and the spread over 10-year bunds widening by 1 bp to 133 bps, according to Tradeweb. The Spanish treasury is set to launch a new five-year bond maturign in October 2022 and reopen the January 2029 bond, offering a combined EUR3.5 billion to EUR4.5 billion in the two securities. It will also offer a further EUR250 million to EUR750 million in its November 2024-dated inflation-linked bond. (emese.bartha@wjs.com; @EmeseBartha)

    0703 GMT - The euro is marginally up Thursday before minutes from the latest European Central Bank meeting are released at 1130 GMT. The minutes may give some clues on the central bank's plans regarding its quantitative easing program. Societe Generale says the ECB is likely to extend the program by six months to June, but should reduce it to EUR40 billion from the EUR60 billion a month it spends right now. Societe Generale also says the ECB will have to see the results of the Italian elections before outlining an end to its bond-buying program. EUR/USD is flat at 1.1760 and EUR/GBP is up 0.16% at 0.8893. (olga.cotaga@wsj.com; @OlgaCotaga)

    0658 GMT - Focus is on which direction the European Central Bank's asset-purchase program will take ahead of today's release of the minutes of the Governing Council's Sept. 6-7 monetary policy meeting. Nordea analyst Piet Christiansen says that while a decision on the tapering of the asset purchases is expected at the October meeting, "any signals regarding the possible path will be interesting." KBC Bank analysts say the minutes "sometimes bring additional, interesting information." (emese.bartha@wsj.com; @EmeseBartha)

    (END) Dow Jones Newswires
     
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    Message body


    [​IMG]
    [​IMG]



    [​IMG]



    THURSDAY, OCTOBER 5, 2017

    TOP NEWS

    Hurricanes hit U.S. hiring in September, services sector resilient
    U.S. companies scaled back their hiring to an 11-month low in September after two powerful hurricanes disrupted some business activities, while the vast domestic services sector overcame those snags to expand at its fastest pace in 12 years. U.S. companies added 135,000 jobs in September, the smallest monthly increase since October 2016, as Harvey and Irma "significantly impacted smaller retailers," the ADP National Employment Report showed earlier on Wednesday. Still, those gains managed to top economist expectations for an addition of 125,000 jobs. The Institute for Supply Management's index of non-manufacturing activity rose to 59.8, the highest since August 2005. The September figure topped expectations of 55.5 from a Reuters poll of economists and was up from 55.3 the month before.

    ECB's Nowotny urges gradual approach as QE decision nears
    Austrian central bank chief Ewald Nowotny has said the European Central Bank should tighten monetary policy gently, avoiding abrupt changes, three weeks before the policymakers decide whether to slow asset buys from next year. With the ECB's current 2.3 trillion euro bond purchase programme due to end in December, ECB policymakers are likely to use their meeting on Oct. 26 to debate themerits of either extending the scheme for a relatively long period but with smaller monthly purchases, or retaining bigger monthly purchases, but for a shorter period. "We are aiming for the prospect of a cautious normalisation," Nowotny, who sits on the ECB's Governing Council, said in a speech on Wednesday. "Caution means not hitting the brakes abruptly, but slowly taking your foot off the pedal."

    U.S. budget deficit could obstruct Trump's tax cut plan
    The U.S. budget deficit is proving to be a major obstacle to the tax reform plan being offered by President Donald Trump and top congressional Republicans, with one leading Senate hawk saying a week after the plan was introduced that any enlarging of the fiscal gap could kill his support. From proposed infrastructure enhancements to a military build-up, the deficit long ago put the brakes on major new federal spending programs; now Trump's tax-cut proposal is threatened. “It looks to me like the administration’s already running for the hills. It looks to me like some of the tax-writing chairmen are already running for the hills ... I’m disheartened by the lack of intestinal fortitude I’m seeing," Sen. Bob Corker said.

    S&P says Bank of England is talking up sterling to fight inflation
    Ratings agency Standard & Poor's says it is "a bit sceptical" about Britain's need for an interest rate hike soon, and that recent Bank of England comments that one may be in the offing seem designed to push up sterling and cool inflation. "Overall, we believe the Bank and Mark Carney's recent statements are primarily aimed at propping up sterling to reduce imported inflation pressures," S&P analysts said in a report released on Wednesday. "This strategy may include an actual 25 basis point hike in November, thus bringing the policy rate back to where it was before the Brexit referendum. Additional moves in 2018 do not appear warranted on the back of a slowing economy," it said.

    Euro ministers likely to mull developing bailout fund into Europe's Monetary Fund
    Euro zone finance ministers will discuss on Monday ideas for a European Monetary Fund that would eliminate the need to involve the International Monetary Fund or the European Central Bank in future euro zone crises. The discussion will revolve around expanding the role of the euro zone bailout fund, the European Stability Mechanism, an idea clearly backed by Germany, France and the European Commission. The talks in Luxembourg will be part of a broader discussion among finance ministers from the 19 countries sharing the euro on how to better organise the single currency area and integrate it more deeply after Britain leaves the European Union in 2019. Other ideas include setting up a euro zone budget, appointing a euro zone finance minister and creating a euro zone subgroup in the European Parliament.



    ADP VS. THE U.S. LABOR DEPARTMENT
    [​IMG]


    MORNING MEETING


    JGB YIELD CURVE STEEPENS

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.327%, JGB 10s 0.051%
    • JGB yield curve steepens as long-end swaps better paid
    • LCH/JSCC clearninghouse basis further widens, foreign paying suspected
    • Cash bonds in fronts to 20s steady, 30s top-heavy before auction
    • MoF to sell 30-year bonds next Wednesday
    • At 150.54, futures up 6 ticks on day, range 150.55/150.40
    • Nikkei near enough flat at 20,633
    • HSI, SSEC, Kospi closed, STI 0.6%, TWI 0.5%, JKSE -0.3%, KLSE -0.1%
    • NZX50 +0.5% at best to record high 7898.8, last +0.4%, ASX200 +0.2%
    • LME copper +0.1%, gold flat

    Currency Summaries
    JPY
    • USD/JPY opened little changed at 112.76 after tracking US 10-year yield
    • It ran up to 112.92 when Tokyo arrived and initially bought USD
    • Sellers ahead of 113.00 capped and USD/JPY drifted back to 112.70
    • Heading into the afternoon the USD/JPY was unchanged around 112.75
    • Repeated fails above 113.00 might start discouraging USD/JPY longs
    • USD/JPY needs to clear 113.30 to inspire accelerated move towards 114.50
    • A break below 200-day MA at 111.95 would likely see longs hit the exits
    • The USD/JPY will likely continue tracking the 10-year US yield

    EUR
    • EUR/USD opened at 1.1759 after showing resiliency despite Catalan concerns
    • FX market treating crisis as regional and expect eventual resolution
    • Asia was dead quiet and the EUR/USD could only manage a 1.1751/63 range
    • Heading into the afternoon it was unchanged around 1.1760
    • EUR/USD resistance at 1.1785/95 where 10-day MA and yesterday's high converge
    • Support at yesterday’s 1.1735 low and this week’s low at 1.1695

    GBP
    • Cable steady within 1.3230/1.3249 range thus far in Asia, last at 1.3238
    • Modest extension of 1.3235 overnight low as services PMI fillip faded
    • 1.3222 Tues low as next tech sup, breach opens to 1.3148 14 Sep base
    • EUR/GBP gone nowhere within 0.8877/0.8885 band

    CHF
    • USD/CHF steady in Asia
    • Ranged 0.9746-0.9757, last trades 0.9747
    • EUR/CHF nondescript 1.1462/1.1469

    Market Briefs
    • Prankster, coughing fits mar Theresa May's speech to activists
    • Eastern Europe's nationalists feel vindicated by German vote
    • AUS Aug Retail Sales, -0.6% vs 0.0%, f'cast 0.3%, rvsd -0.2%
    • AUS Aug Trade Balance(A$), 989 mln vs 808 mln, f'cast 875 mln
    • New Zealand 'kingmaker' starts coalition talks with National, Labour
    • New Zealand's operating surplus higher than expected for this fiscal year
    • Poll- Japan stocks to hit 21-year high in 2017 on weak yen, election

    Looking Ahead - Economic Data (GMT)
    • 07:15 CH Sep CPI, 0.20% m/m, 0.60% y/y eyed; last 0.00%, 0.50%
    • 07:30 SE Aug Ind Production, 0.10% eyed, last -0.90%

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 07:00 BoE's Cleland speaks in Vienna
    • 08:15 ECB's Praet speaks in Frankfurt
    • 09:30 ES E0.750/E3.500/E1.000 bln for 7/5/12 year auctions
    • 09:50 FR E1.500/ E5.000/E2.000 bln for 8/10/31 years auctions
    • 10:30 UK 2.750 bln for 6 year auction
    • 12:15 ECB's Coeure speaks in Frankfurt
    • 16:00 BoE's McCafferty speaks in London
    • 17:30 BoE's Haldane speaksin London

    See North American Open for a detailed listing of US/NorAm releases, events.

    Fed chair pick could mark inflection point for EM
    Emerging market assets have been a favourite for global investors in 2017, but a shake-up at the US Fed could at least temporarily derail the EM train. The iShares MS EM Equity ETF has risen 30% since the start of 2017 and the IIF said this week that emerging markets will attract USD1.1 tln of capital inflows in 2017, crossing the USD1 tln mark for the first time since 2014. US President Trump is expected to name his choice for a new Fed Chair within the next couple of weeks. Bookmakers tip ex-Fed Governor Kevin Warsh - a harsh critic of Fed policy and especially QE - as the most favoured. He would likely be far more hawkish than current Chair Yellen and a lot less 'market-friendly' after his recent comment that the Fed has become a slave to the stock market. The 2013 taper tantrum saw the EM ETF drop 18% in six weeks, but that is less likely this time as the EM bull run is on a sounder footing. Nevertheless a Warsh appointment would likely result in much higher US yields and a sustained USD rally. EM assets would likely correct lower in the short term and drag risk/commodity currencies such as the AUD and CAD down with them.


     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 06 Oct 2017 04:03 EDT
    Global Forex and Fixed Income Roundup: Market Talk



    0803 GMT [Dow Jones] Currently trading at $1.3075, the British pound remains under pressure, capped by the declining 50-period moving average at $1.3141 on a 30-min chart. Moreover, the intraday RSI stands within its selling area between 50 and 30, which confirms the bearish bias. Therefore, a first target is set at the horizontal support at $1.3050. A break below this threshold would open the way to further weakness towards the horizontal support and previous overlap set at $1.3000 and towards the horizontal support at $1.2940 in extension. Only a rebound above the horizontal resistance at $1.3170 would turn the intraday outlook to bullish with a first alternative target set at the strong horizontal resistance at $1.3225 and a second one set at $1.3285. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)


    0751 GMT - Societe Generale sees value in the Netherlands' upcoming new January 2024-dated government bond, known as DSL. The 2022-2024 DSL slope is 5 basis points steeper than the equivalent bund spread, when measured in asset swap terms. "The German asset curve is flat, the Dutch curve is steep," says Societe Generale, adding that this suggests value in the January 2024 DSL, a government bond that the Dutch State Treasury Agency is set to launch next week. The DSTA is set to raise EUR5 billion to EUR7 billion from the launch. Dutch bond supply will be very light thereafter, with only one auction scheduled through year-end, "helping robustness in Dutch rates," says rates strategist Marc-Henri Thoumin, adding that "remarkable" economic growth is also supportive. (emese.bartha@wsj.com; @EmeseBartha)

    0741 GMT - The U.S. dollar is in focus Friday with the U.S. non-farm payrolls due at 1230 GMT. Societe Generale expects the September payrolls to dip by 25,000 due to hurricanes' impact on the U.S. economy. This would be the first negative reading in seven years, the bank says. However, the market is looking for an increase of 75,000, it adds. A WSJ poll suggests a rise of 80,000, compared with a rise of 156,000 in August. EUR/USD is down 0.1% at 1.1697, after dipping below the 1.17 psychological level to a seven-week low of 1.1686. GBP/USD is down 0.3% at 1.3074. But political risk weighs on both the euro and sterling. (olga.cotaga@wsj.com; @OlgaCotaga)

    0741 GMT - Irish building materials firm CRH PLC is unlikely to engage in a bidding war after its U.S. target, Ash Grove Cement, received a larger counter-bid from an unidentified third party than CRH's offer of $3.5 billion, UniCredit analyst Christian Aust says in a note. CRH has been "disciplined" in its M&A transactions so far and may be able to find other acquisition targets in the U.S, he adds. UniCredit keeps its market-weight recommendation on CRH bonds.(tasos.vossos@wsj.com; @tasosvos)

    0736 GMT - The likelihood of strong 3Q GDP has Singapore on pace to top the government's 2-3% growth target, says Maybank. It expects the forecast to increase next month, when a fuller read on last quarter comes. An advance reading for 3Q will come next Friday, and performance has been helped by export strength. Maybank also expects the central bank to tighten its monetary-policy bias from neutral as inflation has also climbed off its lows. (saurabh.chaturvedi@wsj.com; @journosaurabh)

    0713 GMT - Ten-year Spanish government bonds are broadly unchanged in early Friday trade as they continue benefiting from Thursday's well-received debt auction. Analysts say the auction may have signaled a turning point in the mood toward Spanish debt after its losing streak following Sunday's Catalan independence vote. The 10-year Spanish bond yield trades at 1.70%, about 9 basis points up from the Sept. 29 close--the last trading session before the referendum-- but down from peaks of around 1.78% earlier this week, according to Tradeweb. The 10-year Spanish-German yield spread trades at 124 bps, wider than the 115 bps it closed at last Friday but down from highs of around 133 bps earlier in the week. (emese.bartha@wsj.com; @EmeseBartha)

    0713 GMT - The Swiss National Bank's currency reserves jumped by CHF7.5 billion to CHF724.4 billion ($740 billion) in September. This likely doesn't reflect currency intervention, since sight deposits were largely stable in September, but rather the weakening of the Swiss franc, which boosts the value of the SNB's foreign assets in franc terms. The euro is trading at 1.1454 francs, flat versus Thursday. (brian.blackstone@wsj.com)

    0706 GMT - Nomura believes the slowdown in Malaysian export growth seen in August was calendar-affected. Taking into the account of the moving Eid al-Fitr holiday, the investment bank says the month's 21.5% increase from a year earlier topped the combined 20% gain for June and July. Data released today showed Malaysian exports rose less than expected and below July's 31% pop, partly due to a decline in exports of palm oil and palm-oil-based agriculture products. Nomura still sees 2017 GDP rising 5.5%. (yantoultra.ngui@wsj.com; @yantoultra)

    0702 GMT - Even though Austrian building materials firm Wienerberger AG is a solid name from a credit perspective, its bonds appear too expensive to enthuse analysts at CreditSights. The research firm says its sub-benchmark senior bonds return less than the euro high-yield index. Meanwhile, the spread premium on its 6.5% perpetual euro issue is not sufficiently large to justify taking the extra risk embedded in such bonds. (tasos.vossos@wsj.com; @tasosvos)

    0654 GMT - Spanish bonds jumped Thursday and safe-haven German bunds declined after reports that Catalan leaders are divided, stalling the independence push. But unless there is further confirmation that secession plans are on hold, investors could start reversing this latest move ahead of the weekend, according to Commerzbank. Yields on 10-year German government bonds trade at 0.457% early Friday, based on Tradeweb data. The spread versus Spanish 10-year debt stands at around 125 basis points, having decreased since Thursday afternoon, when news of the divisions emerged. (tasos.vossos@wsj.com; @tasosvos)

    0648 GMT - Collective sales by owners of residential complexes in Singapore have quadrupled this year, suggesting to JPMorgan the start of a cycle that may last 3 years. Local developers' unsold inventories and land banks are at record lows, the investment bank notes, adding this year's deal spike will "result in immediate displacement demand, improved vacancy and higher selling prices." The collective sales have reached nearly US$4 billion this year, and JPMorgan predicts that sellers will put some of the deal proceeds into new homes for their children. Developers have been among the top stock performers in Singapore this year as the local property market has shown sign of recovery after 4 years of price declines mainly caused by government steps to cool previous gains. (gaurav.raghuvanshi@wsj.com)

    0646 GMT - Government-bond issuance in the eurozone in the week starting on Oct. 9 is set to concentrate on short and intermediate maturities. Finland and Germany will sell 2022-dated bonds with EUR1 bill lion and EUR3 billion volume, respectively. The Netherlands aims to raise EUR5 billion to EUR7 billion via the launch of a new 2024-dated bond. Italy is set to launch a new 2020-dated BTP and tap a 2024-dated BTP along with one or two ultra-long bonds on Thursday--its treasury announces auction details on Monday. Germany will also tap its April 2026 linker with EUR1 billion. Portugal, which also has its auction window open next week, is expected to make an announcement later Friday.(emese.bartha@wsj.com; @EmeseBartha)

    (END) Dow Jones Newswires