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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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    Dow Jones Symphony - Home
    Dow Jones Newswires, 23 Oct 2017 03:54 EDT
    Global Forex and Fixed Income Roundup: Market Talk



    0754 GMT - Singapore central-bank comments that imported inflation is likely to rise mildly shouldn't be seen as hawkish or dovish, says United Overseas Bank. "Rather, it is quite a balanced and cautious view." The MAS' comments accompanied today's September CPI data. Though prices are expected to rise over time due to stronger external demand and improving local labor-market conditions, the investment bank says price gains aren't likely to run hot any time soon due to excess capacity and employment slack. (gaurav.raghuvanshi@wsj.com)


    0749 GMT [Dow Jones] The December Gilt future contract, currently trading at 124.36, stands below a strong horizontal resistance at 124.75 and remains under pressure, capped by its 50-period moving average at 124.64 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 therefore set at the strong horizontal support at 124.02. A break below this threshold would open the way to further weakness towards 123.75 and towards the strong horizontal support and Oct. 13 bottom at 123.46 in extension. Only a rebound above the horizontal resistance at 124.75 would turn the intraday outlook to bullish with a first alternative target set at Oct. 19 top at 125.00 and a second one set at the horizontal resistance and previous overlap at 125.21 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)

    0748 GMT [Dow Jones] Currently trading at $1.3196, the British pound remains on the upside, supported by the rising 50-period moving average at $1.3172 on a 30-min chart. Moreover, the intraday RSI stands within its buying area between 50 and 70, which confirms the bullish bias. Therefore, a first target is set at the strong horizontal resistance and overlap at $1.3220. A break above this threshold would open the way to further rise towards the horizontal resistance at $1.3260 and towards the horizontal resistance and Oct. 17 top at $1.3290 in extension. Only a break below the strong horizontal support at $1.3145 would turn the intraday outlook to bearish with a first alternative target set Oct. 20 bottom at $1.3100 and a second one set at the horizontal support at $1.3060 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)

    0747 GMT - A wider spread between U.S. and eurozone bond yields, as well as political uncertainty in Spain, weigh on the euro against the dollar, with EUR/USD last down 0.2% at 1.1762. U.S. yields have risen on expectations of U.S. tax cuts and the possibility of a new Federal Reserve chair who could be more inclined to raise interest rates. However, analysts say euro falls are limited, with Societe Generale describing EUR/USD as "resilient" above the 1.1750 level. Focus this week on a European Central Bank meeting on Thursday, where policymakers are expected to outline plans to reduce bond purchases.(olga.cotaga@wsj.com; @OlgaCotaga)

    0712 GMT - Long-dated gilts are unlikely to be driven by domestic factors this week, not least due to the lack of supply of new U.K. government bonds, according to Societe Generale. The U.K. Debt Management Office is only scheduled to print a 0.625% 2042 inflation-linked gilt this week. Therefore, direction for the longer end of the gilt curve will likely come from the U.S. and the eurozone, the French bank says. The European Central Bank's meeting is scheduled for Thursday, while the tax reform debate flares up in the U.S. (tasos.vossos@wsj.com; @tasosvos)

    0711 GMT - The negative momentum in Sixt Leasing's credit quality prompts UniCredit to cut its recommendation on the firm's bonds to sell from hold. Sixt Leasing recently guided for a lower profit year-on-year, but its credit metrics are already showing signs of weakness: net leverage increased in 1H, dividend payments increased and the funds from operations-to-net debt ratio dropped. The company will report 3Q figures on November 14. (tasos.vossos@wsj.com; @tasosvos)

    0700 GMT - Term premiums -- the extra yield investors ask to buy a longer-dated bond instead of a series of short issues -- have been falling in the euro corporate bond market, leaving investors vulnerable to the risk of a rise in inflation expectations and a steeper-than-expected pace of rate rises by the European Central Bank, according to CreditSights. Corporate bonds maturing in 10 years or longer now offer just 34 basis points over 1 to 3-year bonds, the research firm adds. Longer-dated bonds are typically more price-sensitive to changes in interest rates. (tasos.vossos@wsj.com; @tasosvos)

    0631 GMT - Even though Airbus's acquisition of a majority stake in the CSeries aircraft program from Bombardier carries advantages, it is unlikely to provide an immediate boost to Airbus's credit metrics, according to Moody's. The European aircraft manufacturer has high leverage and weak free cash flow generation for its A2 rating, analysts Jeanine Arnold and Oleksandr Yermolayev say in a note. But credit metrics should get more in line with this rating by 2019, they add.(tasos.vossos@wsj.com; @tasosvos)

    0630 GMT - Investor positioning in 10-year German government bonds looks more balanced going into the European Central Bank meeting Thursday, following large swings over the past couple of weeks, according to Commerzbank. Bund yields dropped all the way to around 0.35% on hopes of a cautious tapering by the ECB but jumped back to 0.45% when focus moved to reviving U.S. tax cut hopes. The German bank expects bund volatility to stay high given top-tier data in the U.S., the U.K. and the eurozone. Bund yields trade at 0.44% early Monday, according to Tradeweb. (tasos.vossos@wsj.com; @tasosvos)

    0624 GMT - May a rate hike be not that far away in India? The market and economists aren't anticipating that, with many calling for further rate cuts. But Michael Patra, an executive director at the RBI and member of its policy-making committee, says factors such as increases to pay allowances for state employees, a seasonal spike in vegetable prices and firming fuel prices have provided "an additional upside to the inflation outlook in a froth-suffused financial environment." Therefore, "it is time to be in readiness to raise the policy rate to quell the underlying drivers of inflation if they strengthen further." (anant.kala@wsj.com)

    0611 GMT - As the Nikkei notches a record 15th-straight gain, stoked today by Abe's election win, it shows Japanese investors are "looking ahead and seeing more-realistic policy makers who may support their efforts to expand their overseas' portfolio," says Takahiro Sekido, Japan strategist with Bank of Tokyo-Mitsubishi UFJ. Today's 1.1% advance for the Nikkei, steady with initial gains, held even as the yen rebounded some during Asian trading. The dollar has eased to Y113.65 from Y114 this morning. Sekido says while early stock gains were supported by a weaker yen, he sees the correlation between the yen and local stocks getting weaker in the medium term--something that's already been seen somewhat this year. (suryatapa.bhattacharya@wsj.com; @SuryatapaB)

    0505 GMT - Singapore CPI being the same in September as August at 0.4% gives the central bank policy flexibility after recently keeping its stance unchanged. That as core inflation ticked up to 1.5% last month from 1.4%, remaining in the central bank's target band. The MAS and government also note a slight improvement in local labor-market conditions, though they add that the "gradual absorption of previously accumulated slack will temper wage pressures." (gaurav.raghuvanshi@wsj.com)

    (END) Dow Jones Newswires
     
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    Tadhg Gaelach

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    MONDAY, OCTOBER 23, 2017


    TOP NEWS
    China's home price growth steadies in September as speculative curbs weigh
    China's new home prices registered a second straight month of weak growth in September, with prices in the biggest markets slipping and gains in smaller cities slowing as government measures to cool a long property boom took hold. Average new home prices rose 0.2 percent month-on-month in September, the same rate as in August when prices rose at the slowest rate in seven months, according to data from NBS. Separately, the ministry of human resources and social security said in a statement that 10.97 million new jobs had been created in China from January to September this year, a growth of 300,000 compared with the previous year.

    UK households' morale and rate hike expectations rise - IHS Markit
    British households' financial worries have eased to their lowest since June, despite the prospect of higher Bank of England interest rates and a reliance on borrowing to make up for falling employment income, a survey showed. The IHS Markit Household Finance Index rose to 43.8 in October from 42.8 in September, its highest since June, and marking a recovery from a third quarter which was the weakest since 2014. BoE data has shown unsecured household borrowing growing at an annual rate of nearly 10 percent in recent months, down only slightly from an 11-year high reached last year.

    Japan's Abe says won't delay tax hike unless big shock hits economy
    Japanese Prime Minister Shinzo Abe said on Sunday the government will proceed with a scheduled sales tax increase in 2019 unless the economy suffers a shock as big as the 2008 collapse of Lehman Brothers. He also defended the government's plan to divert some of the proceeds from the scheduled tax hike to 10 percent from 8 percent to child care and education, saying that investing in children will "undoubtedly lead to stronger economic growth". Abe twice delayed the sales tax hike to 10 percent after an earlier increase to 8 percent tipped Japan into recession.

    Top U.S. Senate Republican, White House, aim for tax bill by year-end
    The top U.S. Senate Republican and the White House budget director said on Sunday they hoped for action on a Republican tax reform package by the end of the year, while keeping their options open on how to pay for sweeping tax cuts. Republicans, who control both the Senate and House of Representatives, have yet to produce a bill as their self-imposed deadline to overhaul the U.S. tax code by the end of 2017 approaches. The party's lawmakers differ widely on what cuts to make and how to pay for them. Senate Majority Leader Mitch McConnell said estimated growth for the overall economy in the Republican plan would offset the tax cuts.

    China still on track to hit growth target despite winter smog war
    China's economy is on track to meet its official growth target for 2017, the head of the state planning agency said on Saturday, despite a punishing war on pollution which is expected to slash industrial output over the winter months. Most economists believe China's actual growth should easily beat the target. The economy grew 6.8 percent in the third quarter of the year, and 6.9 percent in the first half. Last year's growth rate of 6.7 percent was a 26-year low. Meanwhile, China’s housing minister said the country’s property sales will slow in the fourth quarter but prices will remain stable.



    CHINA GDP
    [​IMG]


    ANALYSIS


    Now talk nice: EU script to help May settle Brexit bill

    Diplomatic theatrics at last week's Brussels summit revealed how European Union leaders will coax Theresa May over the next two months into parting with tens of billions of euros in return for a post-Brexit trade deal. The British prime minister gave away nothing hardliners in her Conservative cabinet can beat her with. She stuck to earlier vague concessions about honouring commitments and insisting a "Brexit bill", which the EU reckons at around 60 billion euros, must be part of a package deal on what Britain's relationship with the EU will be once it leaves in March 2019. Sticking to their own script, the other 27 states gave May until the next regular summit in eight weeks to improve an offer officials estimate at about 20 billion euros if she wants them to start discussing future trade ties. Miss that deadline and, the EU says, time will be running out for any deal. Yet between the lines of well-rehearsed arguments that have hit "deadlock" in the view of the EU negotiator, the outlines of a political fix are emerging. It may create leeway to get round an impasse that is in neither side's interest and which has left businesses fearing the legal limbo of a messy divorce. In essence, the 27 need to trust May that Britain will pay much more than is on the table but understand her difficulties in naming a figure by December, which could spark revolt at home and derail the process. In return, they seem likely to let slip more hints of what kind of future relationship she might secure. The EU position is "solid", Italian Prime Minister Paolo Gentiloni told reporters after the talks, but also "flexible". It was unrealistic, he said, to expect May to sell a precise demand for money in December. Equally, she could not expect the EU to negotiate a future trade deal without knowing roughly what outstanding items Britain would pay for. But defining those items could, Gentiloni said, be done "in the most politically manageable way possible for our British friends". Even the roughest of definitions will let commentators work out numbers. But as a senior diplomat from another major EU power put it: "We don't want to go public with a bald figure. If it's on the front page of The Sun, the whole process is dead."

    "POSITIVE NARRATIVE"

    "Reports of the deadlock ... have been exaggerated," summit chair Donald Tusk concluded, adding that discussions with May had finally succeeded in "establishing trust and goodwill". Tusk, a former Polish premier, echoed the EU mantra of unity among the 27 and full backing for European Commission negotiator Michel Barnier, whose team of technical experts are handling the talks with London. But he also acknowledged a nuance in his role in steering the high-level political imperatives of the leaders. That, Tusk said, meant he would be a "positive motivator" in the coming weeks to create "a more positive narrative" than what some British politicians call EU "blackmail" demands. Anxious not to worsen May's troubles at home, fellow leaders made an effort to demonstrate goodwill. German Chancellor Angela Merkel and French President Emmanuel Macron take a hard line on "sequencing" divorce talks before trade, but they huddled with May in amicable conversation for television cameras. The EU communique acknowledged progress on key issues, which also comprise expatriate rights and the Irish border, and instructed Barnier to begin internal EU preparations for the talks May wants on a two-year transition period after Brexit. Tusk said EU preparations would "take account of proposals presented" by "our British friends" -- an indication that, even without direct talks, May might be able to show her domestic audience an outline of how the EU sees future ties. Over dinner on Thursday, she appealed for help and stressed two concessions made in a speech at Florence on Sept. 22 -- that the 27 would not lose out financially in the current EU budget ending in 2020 and that Britain would "honour its commitments". Some were disappointed that she repeated Britain's rejection of the legal basis of much of the EU's demands, notably that it pay for EU commitments lasting beyond 2020. Macron, for one, said they were "not even half way" toward an agreement on money. But others detected a more positive tone. Luxembourg Prime Minister Xavier Bettel said May had indicated that Britain was at least "analysing" what other parts of the bill it might pay. Merkel said she had "no doubt" a good agreement was possible. Yet there are few illusions that the Brexit plot will play out smoothly. "We've always predicted a drama for autumn," one EU diplomat said. "We haven't seen it yet. So maybe November."
     
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    Tadhg Gaelach

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    Dow Jones Symphony - Home
    Dow Jones Newswires, 24 Oct 2017 06:09 EDT
    Global Forex and Fixed Income Roundup: Market Talk


    0943 GMT - Asset swap spreads on Covestro bonds are slightly wider Tuesday after the German polymer firm announced it will use cash to buy back EUR1.5 billion of shares. Bid spreads on its 1% 2021 and 1.75% 2024 bonds are quoted at intraday wides of 7.1 basis points and 30.1 bps, respectively, according to Tradeweb. UniCredit analyst Christian Aust had expected only a marginally negative impact on bonds, as the company's credit metrics are strong enough to allow increased shareholder payments without jeopardizing its Baa2 rating at Moody's. Covestro shares last up 5.37%. (tasos.vossos@wsj.com; @tasosvos)

    0939 GMT - Order books are not closed yet and the European Stability Mechanism, the eurozone's bailout fund, has received more than $7 billion of orders for its $3 billion bond, according to dealers involved in the transaction. This is the ESM's first bond issue in U.S. dollars. Spreads on the three-year bond are set at 10 basis points above mid-swaps. (tasos.vossos@wsj.com; @tasosvos)

    0936 GMT - Galp's exploration and production business should benefit from stronger margins in 3Q, Deutsche Bank says, thanks to reduced maintenance boosting production and to lower depreciation costs from the Brazilian real weakening versus the euro. Refining and marketing gains could be limited, it adds, given the delay between rising crude prices and higher input costs. The bank says that new investment opportunities may be a key growth catalyst going forward, noting particular potential in Brazil's licensing rounds on Friday, where Galp will bid on a block containing the Carcara extension. Galp's 3Q results are due Oct. 30. (marc.bisbalarias@dowjones.com; @bamarc)

    0905 GMT - EUR/HUF is likely to fall to 302 on "solid HUF fundamentals, such as a strong current account and growth dynamics," but not below that, ING says. The Hungarian National Bank is expected to keep interest rates on hold on Tuesday following its meeting at 1200 GMT. But ING says it sees "the September NBH's negative impact on HUF as largely exhausted and expect HUF to re-start its strengthening trend." EUR/HUF last up 0.1% at 308.48. ING says it is short EUR/HUF via a two-month leveraged put spread. (olga.cotaga@wsj.com; @OlgaCotaga)

    0857 GMT - The strong supply of euro-denominated corporate bonds at the start of this week may not mark an issuance peak, as the pace of supply could accelerate further, according to Commerzbank. The reason is that more and more companies will have reported earnings, exiting their so-called blackout periods. This could be particularly the case for the U.S, where the earnings season gathers pace earlier than Europe. Therefore, more "reverse Yankee" bonds could come in the following days, after Verizon's and Procter & Gamble's issues Monday. (tasos.vossos@wsj.com; @tasosvos)

    0855 GMT - Next year could feature a less clear-cut macroeconomic theme and country-level dispersion should prove a much stronger theme in emerging markets, says BNP Paribas Asset Management portfolio manager Cristiana de Alessi. Emerging market funds have attracted strong inflows this year, which can be attributed to "rich" valuations in other asset classes, according to Ms. De Alessi. Investors recently cited these EM inflows as one reason why the impact of a U.S.-Turkey diplomatic row on Turkish bonds was short lived. (tasos.vossos@wsj.com; @tasosvos)

    0844 GMT - As central banks normalize their monetary policy, sovereign yield curves should get flatter, i.e. the gap between shorter and longer-dated yields should decrease, according to HSBC. But curve flattening should mainly be a U.S. Treasury story in the next 12 months, as two-year yields should move up due to a rising Fed funds rate, while longer Treasury yields should stay within a tight range, HSBC adds. But the German government bond yield could also flatten. The European Central Bank is expected to announce the tapering of its QE program Thursday, while the U.S. Federal Reserve is seen raising its target rate in December. (tasos.vossos@wsj.com; @tasosvos)

    0844 GMT - Donald Tusk, the president of the European Council which gathers the leaders of the European Union's 28 nations, on Tuesday suggested he is still hoping that the U.K. won't leave the bloc. Speaking in the European Parliament in Strasbourg, Mr. Tusk repeated that the EU stands united in Brexit talks and said: "It is up to London how this will end - with a good deal, no deal or no Brexit." Mr. Tusk in June said that he hoped Britain would change its mind and stay in the bloc. (valentina.pop@wsj.com)

    0841 GMT - Bond investors following a benchmark have good reason to buy Wind Tre's upcoming bonds: not doing so will leave them with a "sizeable underweight" position, CreditSights says. Wind Tre is looking to print several euro and U.S. dollar-denominated bond tranches, making it an important component of junk bond indexes. The old Wind Acquisition Finance vehicle is one of the largest issuers in the iShares exchange-traded fund that tracks the Markit iBoxx Euro Liquid High Yield Index. It has a weight of 1.92% as of Oct. 20. (tasos.vossos@wsj.com; @tasosvos)

    0839 GMT - The Swiss central bank likely earned a record-high profit of between 30 billion to 35 billion francs ($30 billion to $36 billion) during the third quarter, according to UBS. The gain was likely triggered by the weaker Swiss franc, which makes the SNB's massive portfolio of foreign stocks and bonds worth more in franc terms, as well as higher equity and gold prices. That estimate is in line with a WSJ report on Oct. 6 that said the profit would be over 30 billion francs, based on an analysis of SNB foreign-reserves data. The SNB releases the third-quarter profit data on Oct. 31. (brian.blackstone@wsj.com)

    0831 GMT - The 0.625% 2042 inflation-linked U.K. government bond that is auctioned Tuesday will have less than 25 years left to maturity in late November, potentially preventing investors who track the Over 25Y FTSE Gilt index from buying it. But the gilt's pre-auction weakness probably reflects that this is priced in, RBC Capital Markets says. The U.K. Debt Management Office will sell GBP650 million of the issue Tuesday.(tasos.vossos@wsj.com; @tasosvos)

    (END) Dow Jones Newswires
     
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    Tadhg Gaelach

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    TUESDAY, OCTOBER 24, 2017


    TOP NEWS
    Japan flash Oct manufacturing PMI shows slower growth
    Japanese manufacturing activity expanded in October at a slower pace than the previous month as output and new orders growth eased in a sign final demand is moderating, a preliminary gauge of activity showed. The Markit/Nikkei Japan Manufacturing flash PMI fell to a seasonally adjusted 52.5 in October from a final reading of 52.9 in September. The output component of the PMI index fell to preliminary a 52.6 from a final 53.2 in the previous month. The flash index for new orders also fell to 52.4 from 53.4 in September.

    China finance minister says fiscal deficit to be under 3 pct target – SCMP
    China's finance minister said the country's 2017 fiscal deficit will be less than the budget deficit target of 3 percent of GDP due to stronger-than-expected economic growth, South China Morning Post reported on Monday, citing a statement to the newspaper. The minister, Xiao Jie, reiterated that China's switch to a value-added tax system and other cuts in company fees would reduce corporate costs by at least 1 trillion yuan this year, the newspaper said. Xiao also said Beijing was considering ways to implement a ceiling on local government debt.

    November rate rise is "open question", BoE's Cunliffe says
    Bank of England Deputy Governor Jon Cunliffe again raised doubts about whether he will back an interest rate rise next week, describing it as an "open question" in an interview published by a Welsh newspaper on Monday. Cunliffe and his fellow deputy governor, Dave Ramsden, have made clear over the past week that they are some way from seeing the case to raise rates next week. Echoing language he used in an interview with BBC Radio Wales last week, Cunliffe said rates would need to rise if domestic inflation pressures picked up as the BoE predicted, but he had not decided when this process should start.


    Most EU states push reform of labour rules sought by France's Macron
    Most European Union states agreed on Monday on reforming the bloc's labour rules that poorer countries value for giving them a competitive edge but French President Emmanuel Macron criticises for undercutting his workers. After some 12 hours of negotiations among labour ministers in Luxembourg, most of the EU's 28 members backed a compromise that would cap posting workers abroad at 18 months and introduce a four-year transition between reaching a final agreement on the reform and its taking effect. Hungary, Lithuania, Latvia and Poland said they could not back the proposal, while Ireland, Britain and Croatia abstained over concerns that the new rules would hurt their transport industries.

    Luxembourg says punishing City of London after Brexit would harm EU
    The City of London must remain the top global financial centre after Brexit to avoid its financial services drifting to other parts of the world, Luxembourg Finance Minister Pierre Gramegna said on Monday. Financial centres such as Luxembourg, Paris and Frankfurt are battling each other to attract banks, insurers and asset managers in Britain who need an EU base after the UK departs the bloc in 2019. Companies from across the EU use London for currency trading, derivatives and managing investment funds. Some EU policymakers want parts of these activities shifted to the continent after Brexit to avoid relying on what will then be a foreign financial centre.


    REUTERS POLLS

    China's economy seen growing 6.8 pct in 2017 and 6.4 pct in 2018
    China's economy will likely grow 6.8 percent in 2017, topping the state target and accelerating for the first time in seven years, a Reuters poll showed, as Beijing walks a tightrope by containing debt and property risks without stunting economic growth. Still, growth in the world's second-largest economy is projected to slow to 6.4 percent in 2018 as the property curbs and efforts to deal with debt risks are expected to gain more traction. Chinese economic growth in the fourth quarter of 2017 is expected to cool to 6.7 percent from a year earlier, but the full-year growth is expected at 6.8 percent, according to the poll.

    Low inflation could slow Fed, but fiscal stimulus unnecessary
    The U.S. Federal Reserve will raise interest rates in December and twice next year, according to a Reuters poll of economists, who now worry that the central bank will slow its tightening because of expectations that inflation will remain low. Most respondents expected the nation's economy to determine future rate hikes, but a change in regime at the Fed could also affect monetary policy. A vast majority of the economists in the poll expect rate hikes to depend largely on how the U.S. economy performs. The need for such a large stimulus to boost the U.S. economy at this late stage of its cycle, when the jobless rate is at more than a 16-year low, remains questionable.



    ASIA MANUFACTURING GROWTH
    [​IMG]


    MORNING MEETING


    JGB 30S FIRM AFTER REOFFER AUCTION

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.370%, JGB 10s 0.066%, Bund 10s 0.433%.
    • US-Japan-Germany respective 2s indicated 1.562%, -0.138%, -0.732%.
    • Quiet day for JGBs, futures in tight 150.41/150.34 range
    • MoF reoffers 15.5yr-39yr off-the-run bonds
    • 30s firm after reoffer auction
    • Wall St down o/n, Nikkei attempts move down but bounces, 21,646 to 21,745.
    • At 21,727, index up modest 30 points or 0.1% on day.
    • AXJ seeing mostly modest gains too, Shanghai, KOSPI, TWI +0.1% on day.
    • Other bourses mostly above par.

    Currency Summaries
    JPY
    • USD/JPY, JPY crosses steady after push up then down yesterday, bid-ish
    • USD/JPY to 113.25 late NY before steadying, Asia range 113.25-49
    • Option expiries help cap, USD1.16 bln 113.50-55, 878 mln 113.95-114.00
    • Some below today too - 112.95-113.00 USD602 mln, 112.50 946 mln
    • Japanese exporter, option player offers 114.00+, barriers at 114.50, 115.00
    • Good tech resistance at 114.50, 114.49 spike high July 11
    • EUR/JPY 133.19-37, tracking 100-HMA up in Asia, HMA currently 133.34
    • GBP/JPY 149.53-85, tracking 55-HMA up, now 149.60, 150.50-60 resistance
    • AUD/JPY 88.50-67, buoyant, NZD/JPY not, 79.34 to 78.58, sales continue
    • Higher US yields, fresh Nikkei moves up needed for renewed JPY weakness
    • EconMin Motegi - Hope TPP concludes soon, next round Tokyo Oct 30-Nov 1

    EUR
    • EUR/USD opened 0.31% lower at 1.1750 as Catalonia uncertainty finally weighed
    • fter trading at 1.1747 the EUR/USD grinded higher the rest of the morning
    • It traded to 1.1770 and was just below heading into the afternoon
    • Buying was mostly due to broad uSD weakness as EUR/JPY traded in narrow range
    • EUR/USD still range trading, as market awaits key ECB meeting Thursday
    • Key support around 1.1665 where the 100-day MA and Oct 6 low converge
    • Nearby resistance at 21-day MA at 1.1780 and 10-day MA at 1.1802
    • EZ flash MFG and Services PMI the key events in Europe today

    GBP
    • Cable bid in Asia, 1.3193 early to 1.3227, tracking away from 1.3158 o/n low
    • Back above flat-ish 200-HMA at 1.3217, lastious move above very brief
    • 1.3227-28 double top from Thursday-yesterday, stops 1.3230+ eyed
    • Next resistance pre-1.3300, 1.3286 high October 17
    • Underlying support at 1.3154 55-DMA, 100-DMA below at 1.3054
    • EUR/GBP heavy after fall from 0.9022 yesterday, Asia 0.8887-0.8928

    CHF
    • USD/CHF down from 0.9881 high yesterday but bias still up, Asia 0.9841-53.
    • CHF still considered funding currency for carries.
    • More moves up eyed on higher US yields, more risk-on sentiment.
    • Support from ascending 55-HMA at 0.9838, 100-HMA 0.9816 below.
    • EUR/CHF quiet in Asia, 1.1572-82, above 1.1564 100-HMA, 200-HMA 1.1545.

    Market Briefs
    • Incoming New Zealand govt to review central bank objectives
    • Japan to host next round of TPP talks, New Zealand wants changes
    • New Zealand populist to become deputy prime minister, foreign minister -media
    • JP Oct Nikkei Mfg PMI Flash 52.5, 52.9 prev, output and new orders slow
    • Trump says popular retirement program will be unscathed in tax plan
    • Low inflation could slow Fed, but fiscal stimulus unnecessary - Rtrs poll
    • Warsh met with vice President Pence about top Fed job last week - WSJ
    • Trump to press China on North Korea, trade on Beijing visit
    • China Communist Party enshrines Xi in constitution
    • North Korea may be building biological weapons - New York Post
    • Catalonia warns of civil disobedience as Madrid readies direct rule

    Looking Ahead - Economic Data (GMT)
    • 06:45 FR Oct Business Climate 110.00 eyed, last 110.00
    • 07:00 FR Oct Markit Serv Flash PMI 56.90 eyed, last 57.00
    • 07:00 FR Oct Markit Comp Flash PMI 57.00 eyed, last 57.10
    • 07:00 FR Oct Markit Mfg Flash PMI 56.00 eyed, last 56.10
    • 07:30 EZ Oct Markit Mfg Flash PMI 57.8 eyed, last 58.1
    • 07:30 EZ Oct Markit Serv Flash PMI 55.6 eyed, last 55.8
    • 07:30 EZ Oct Markit Comp Flash PMI 56.5 eyed, last 56.7
    • 07:30 DE Oct Markit Service Flash PMI 55.60 eyed, last 55.60
    • 07:30 DE Oct Markit Mfg Flash PMI 60.20 eyed, last 60.60
    • 07:30 DE Oct Markit Comp Flash PMI 57.50 eyed, last 57.70

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A ESM @USD3 bln 5-yr inaugural syndication via Citi, Deutsche Bank and JP Morgan.
    • N/A ADB 10yr USD global, IPTs MS+24 area via Citi, Daiwa, HSBC and JP Morgan

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

    JPY bias down post-Abe win, options stall move
    Japanese PM Abe's LDP-Komeito coalition election landslide led to fresh JPY weakness, with USD/JPY up to a high of 114.10 Mon before falling back on profit-taking by longs, Japanese exporter sales and selling by option players long gamma. Although the USD/JPY bias remains higher given no changes in government policies and the likelihood the BOJ will maintain its ultra-easy stance, further moves up are stalling. Options are playing a big role, with barriers at 114.50 and 115.00 leading to defensive sales. Large topside vanilla expirations are playing a part too. Today sees USD1.16 bln at 113.50-55, 878 mln at 113.95-114.00 and another 620 mln at 114.50. Wednesday sees USD455 mln at 113.50-55 and 1.8 bln at 114.00. With Japanese exporters also likely to sell more above 114.00, some consolidation may be needed before the pair proceeds higher. Good technical resistance is seen from 114.50, with 114.49 the spike high on July 11.

    NZD/USD-PM-designate Ardern taken at her word
    The FX market has responded to the new New Zealand government's first update on policy plans by selling the NZD/USD. Initial favourable reaction which saw the pair bounce from the 0.6990 area to a 0.7005 session high proved short-lived, with the subsequent selloff to as low as 0.6935. The fiscal responsibility mantra while always well received, isn't usually followed up by a commitment to increase the minimum wage, which PM-designate Ardern described as their top priority. It's also not a good look for a small open economy like NZ to be talking about banning some overseas investment, specifically foreign investment in existing NZ housing. More scrutiny in general on overseas investment/ownership is also flagged. A commitment to review, expand and redraft the existing RBNZ Act adds to traders' angst. While there was nothing really new in the end, what is new is the market seems to believe that this government led by Jacinda Ardern may be true to its word in implementing the said changes.
     
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    Dow Jones Newswires, 25 Oct 2017 03:41 EDT
    Global Forex and Fixed Income Roundup: Market Talk


    0741 GMT - Sterling weakens slightly before the first estimate of U.K. 3Q gross domestic product is released at 0830 GMT. The consensus in a WSJ poll is for quarterly GDP growth of 0.3%, in line with Bank of England forecasts. Some analysts expect a smaller 0.2% rise, which would push the pound lower. GBP/USD last down slightly at 1.3129 and EUR/GBP up slightly at 0.8956. Societe Generale says it estimates 0.3% quarterly growth as higher industrial production offsets weak construction output. It expects slightly slower growth in services output, the largest GDP component. RBC forecasts 0.2% growth, adding "the implied probability of a BOE hike next week...may fall further on a soft GDP." (olga.cotaga@wsj.com; @OlgaCotaga)

    0732 GMT - Though hitting 3-month lows today versus the US dollar following soft 3Q CPI data, the Aussie dollar isn't liable to fall much more, says Societe Generale. It thinks that because the hurdle to cut interest rates any further "remains high" considering central-bank chief Lowe's "willingness to tolerate lower spot inflation." But Commerzbank believes the RBA's concerns "are likely to have intensified due to the disappointing inflation data." (olga.cotaga@wsj.com; @OlgaCotaga)

    0732 GMT - The European Central Bank's upcoming meeting is its most important one since last December, with the monthly run-rate of asset purchases for 2018 being only one part of a broader package the market will scrutinize, says Marchel Alexandrovich, managing director and senior European economist at Jefferies International. The language around the forward guidance, President Mario Draghi's tone in the Q&A and any clarity around the reinvestment flows from maturing bonds will be looked at too, he says. Jefferies expects internal debate on whether the ECB should use this meeting as an opportunity to signal that it is preparing to stop QE entirely, or whether this decision can wait until mid-2018, Mr. Alexandrovich says. (emese.bartha@wsj.com; @EmeseBartha)

    0720 GMT - UBS expects China's economy finish 2017 on a solid note, with full-year GDP growth to beat the government's target of 6.5%, despite the moderation in 3Q. It says Chinese demand still remains supportive of regional growth, as evidenced by a recent bump in import growth. UBS sees Chinese investment to bottom in 1Q of 2018, after which regional demand growth should show signs of a return to trend. "Any rise in core inflation should be modest as capacity remains abundant, so policy rates will probably remain on hold for much of next year," it says. (chester.yung@wsj.com; @chester_yung)

    0714 GMT - Germany's 10-year bund auction and the release of the Ifo business sentiment indicator could be catalysts for weakness in bunds in the morning, say Mizuho rates strategists, but they look for a rebound in the afternoon once these risk events are out of the way. The October Ifo index will be released at 0800 GMT. The consensus in a WSJ poll is for the Ifo business sentiment index to come in at 115.1 in October, versus 115.2 the previous month, and business expectations at 107.3, versus 107.4 previously. Germany will auction EUR3 billion in the 0.50% August 2027 bund which currently trades at a yield of 0.46%. (emese.bartha@wsj.com; @EmeseBartha)

    0714 GMT - UniCredit remains "quite cautious" on Italian fixed-rate bonds, known as BTPs, because of the potential for political risk. The chances of a hung parliament at the next election have not declined, "so the curve will likely re-steepen once markets start pricing in that risk again," UniCredit rates strategist Chiara Cremonesi says. The 10-year BTP trades at a yield of 2.04%, down less than 1 basis point, according to Tradeweb. (emese.bartha@wsj.com; @EmeseBartha)

    0709 GMT - The euro is little changed on caution before Thursday's European Central Bank meeting, where it is widely expected to outline plans to scale back bond purchases under its quantitative easing program. EUR/USD trades flat at 1.1764, and Unicredit expects it to "remain range-bound" ahead of the ECB announcement. German Ifo data is due at 0800 GMT and is expected to continue to suggest Europe's largest economy is performing well. Commerzbank notes positive sentiment toward the euro is likely to be offset by dollar-positive news as speculation grows that U.S. President Donald Trump will appoint a "known hawk" as the next Federal Reserve chair. (jessica.fleetham@wsj.com)

    0648 GMT - Investors will be eying the pace of financial reform in China with the Party Congress wrapped and new leadership unveiled, says Bank of America Merrill Lynch. Among other things, there's a race to be PBoC chief (the investment bank pegs the most-likely candidates as Jiang Chaoliang, party secretary in Hubei province, banking regulator Guo Shuqing and securities chief Liu Shiyu based on the central-committee members elected). Regarding reforms, Merrill expects so-called mixed-ownership reforms for SOEs to be atop the list, followed by possible deregulation in the service sector, some loosening of foreign-ownership caps and potential measures to boost housing supply. (joanne.chiu@wsj.com; @joannechiuhk)

    0648 GMT - Fidelity International's fixed income fund manager David Simner expects the European Central Bank to extend its quantitative easing program by nine months beyond 2017, with the monthly purchase volume to be reduced to EUR30 billion from EUR60 billion currently. This view reflects the fact that market expectations regarding the ECB's tapering have shifted towards a "lower for longer" approach. A "lower for longer" tapering would allow the ECB to remain on the market for a longer time and to shift market expectations regarding the first rate hike to 2019, Mr. Simner says. (emese.bartha@wsj.com; @EmeseBartha)

    0644 GMT - Saab's 3Q results don't give Danske Bank any reason to alter its bullish call on the Swedish defence group's bonds, as debt metrics improved and Ebitda grew 29%. The bank already had an overweight recommendation on Saab bonds, given the spread pick-up they offer versus BBB+ and BBB rated peers in the Swedish krona bond market. Asset swap spreads are especially wide at the 2.75% 2019 issue, which is trading at wider levels than the BBB- SEK curve. Saab is unrated. (tasos.vossos@wsj.com; @tasosvos)

    0624 GMT - There is limited upside left in German government bond yields after a further sell-off Tuesday boosted yields toward 0.48%, Commerzbank rates strategist Michael Leister says. Yields move inversely to bond prices. Just over a week ago, bund yields traded at around 0.35% as investors started pricing in a lower-for-longer QE tapering scenario at the European Central Bank. The sell-off suggests more "sober exit expectations," Mr. Leister adds. Bund yields drop 0.5 basis point to 0.471% early Wednesday, according to Tradeweb. (tasos.vossos@wsj.com; @tasosvos)

    0607 GMT - Two hours after New Zealand's stock benchmark saw its winning streak end at 15, Japan's Nikkei saw its run end at 16 thanks to a last-hour selloff in which selling prompted more selling. Market players say there was no specific news which set off the decline, but they note folks were ready to take profits in light of this month's strength and as earnings season is about to begin in earnest. The Nikkei falls 0.4% to 21707.62. Bank and insurance stocks maintained earlier gains through the close amid rising government bond yields globally. That market's overnight moves helped push up 10-year JGB yields a half-basis point to 0.07%, though they were higher earlier. Meanwhile, the dollar is around Y113.85, versus Y113.90 late Tuesday in New York. (kosaku.narioka@wsj.com)

    (END) Dow Jones Newswires
     
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    WEDNESDAY, OCTOBER 25, 2017


    TOP NEWS
    BOJ sees less to fret about low inflation, policy on hold
    Japan's central bank is set to roughly maintain its price forecasts at its policy meeting next week and blame stagnant inflation on factors like corporate efforts to boost productivity, signalling that it will hold off on expanding stimulus for the time being. At the two-day meeting ending on Tuesday, the BOJ is set to keep intact a pledge to guide short-term interest rates at minus 0.1 percent and the 10-year bond yield around zero percent. Meanwhile, government officials said Japan's government may be able to declare that the economy has made a sustained exit from deflation before it implements a scheduled sales tax hike in October 2019. The announcement could be made if consumer inflation accelerates to around 1 to 1.5 percent and the GDP deflator is stably above 1 percent.

    Trump consults U.S. Republican senators on Fed chief candidates
    U.S. President Donald Trump used a luncheon with Senate Republicans on Tuesday to get their views on who he should tap to be the next leader of the Federal Reserve, according to senators who attended. A source familiar with the matter said Trump polled the Republicans on whether they would prefer Stanford University economist John Taylor or current Fed Governor Jerome Powell for the job. Trump also said he was considering reappointing the current head of the U.S. central bank, Janet Yellen, the source said. White House officials have said Trump economic adviser Gary Cohn and former Fed Governor Kevin Warsh were also under consideration.

    UK's Hammond eyes "measured" approach to November budget
    Britain will continue with a "measured and balanced" approach to reducing public borrowing in next month's budget, finance minister Philip Hammond said on Tuesday, seeking to contain any expectations of big surprises. Hammond is under pressure from pro-Brexit lawmakers who dislike his relatively pro-European views. But Hammond told parliament on Tuesday, in his last major appearance there before the budget, that the economy was fundamentally strong and did not need extra stimulus. Hammond will set out his annual budget on Nov. 22, and official forecasts from March showed borrowing as a share of the economy was on course to rise this year for the first time since his Conservative Party entered office in 2010.


    Japan advisers propose delaying primary surplus target to after FY2020
    Influential private-sector members of Japan's top advisory panel will propose on Thursday that the government delay its time frame for achieving a primary budget surplus to some time after fiscal 2020/21, a draft obtained by Reuters showed. The private-sector members of the Council on Economic and Fiscal Policy will also ask the government to spend as little as possible on fiscal stimulus in any extra budget it compiles, the draft showed. The government should also make changes to the tax code to encourage capital expenditure and higher wages, the members will say at a meeting on Thursday, according to the draft.

    U.S. mortgage supply seen falling in 2018 – MBA
    U.S. lenders are expected to issue a smaller amount of mortgages in 2018 on a sharp drop in refinancing demand, but loan originations will pick up in 2019, the Mortgage Bankers Association said on Tuesday. Total mortgage originations are forecast to decline to $1.60 trillion next year, lower than an expected $1.69 trillion this year, the Washington-based industry group said. The amount of new loans to refinance a home was expected to drop to $430 billion, down 28.3 percent from 2017, while the amount of new mortgages to buy a home will likely increase by 7.3 percent to $1.2 trillion, MBA said.


    GRAPHIC
    Taper time: Five questions for the ECB
    The European Central Bank is likely to decide the fate of its 2.3 trillion euro stimulus scheme on Thursday in one of the ECB's most keenly anticipated policy meetings for months.



    THE ECB'S QE PROGRAMME
    [​IMG]


    REUTERS POLL


    Disorderly Brexit risk rises but BoE to raise rates anyway

    The likelihood of a disorderly Brexit has crept higher but that won't deter the Bank of England from raising rates next week for the first time in a decade, even though many economists believe that would be a mistake, a Reuters poll showed on Tuesday. There is now a 30 percent chance Britain will leave the EU without a trade deal when two-year divorce talks end in March 2019, up from 25 percent in a September poll, according to the median forecast in the latest Reuters survey of economists. "It is in everybody's interests that a transitional arrangement is put in place by 2019. Given the EU's habit of finding a last-minute solution, we believe that a deal will be found. But the risk of failure is non-negligible," said Peter Dixon at Commerzbank. British Prime Minister Theresa May won a modest reprieve on Friday when European Union leaders signalled they were ready to move negotiations forward in the coming months. But she now faces a political balancing act as she tries to meet EU demands for more concrete pledges on Britain's divorce bill without triggering a backlash from Brexit campaigners at home, some of whom would prefer she walk away from talks. The overwhelming majority of respondents in the poll, however, said the most likely ultimate outcome was still an EU-UK free trade agreement, possibly with a transitional arrangement. The second most probable outcome was Britain leaving without a deal and being forced to trade with the continent under basic World Trade Organization rules, the poll showed. Third was European Economic Area membership, under which Britain would pay to maintain full access to the EU Single Market - but without having any say over its policies. The least likely option was Britain reversing its decision to leave the European Union, the poll showed. While the sample of respondents was different and slightly larger than the Reuters poll published on Sept. 1, the overall conclusions about Britain's likely future trading relationship with the European Union were the same. There was no noticeable change among those who contributed to both polls although a majority increased their risk forecast. "Our base case remains that there will eventually be a deal and talks will move on to trade at the December meeting - based on our view that the alternative is so bad a deal must happen - but the next couple of months will be politically very tricky indeed for Theresa May," said Daniel Vernazza at UniCredit. European Council President Donald Tusk said on Tuesday it was up to Britain to determine if there would be a good deal or no deal and European Commission President Jean-Claude Juncker said they were not negotiating with London in a hostile way.

    WRONG MOVE

    Britain's economy has so far dodged the widely-predicted post-referendum recession but is now lagging, rather than leading, the other Group of Seven industrialised economies in the midst of a resurgence in the global economy. According to the poll, UK growth will be 0.3 percent per quarter through to the middle of next year, behind projections for 0.5 percent for the EU bloc. In the aftermath of last year's decision to leave the EU, the Bank of England cut borrowing costs to a record low of 0.25 percent but it has since turned more hawkish and given strong signals it intends to raise rates soon. As a result, a large majority of economists polled - 46 out of 64 - said the Bank would put those 25 basis points back on its Bank Rate on Nov. 2 - although about three-quarters of those surveyed also said now was not the right time to do so. "A rate rise or two won't crash the economy, but will be negative for household and business spending at the margins," said Elizabeth Martins at HSBC. "Given, we don't see an urgent need to tighten from an inflation perspective, any tightening may come to be seen as unnecessary at best." Consumers played a major role in driving economic growth last year but high inflation, largely driven by the fall in sterling since the referendum which has made imports more expensive, means they are more likely to rein in spending. Average consumer prices rose 3.0 percent in September compared with a year earlier, the fastest increase in more than five years and much steeper than the 2.0 percent the Bank of England would like. Inflation is not expected to fall back to target anytime soon, with the poll predicting it will average 2.6 percent next year and 2.2 percent in 2019. However, after an initial November rate rise no action is expected from the central bank next year. For now, it is forecast to add another 25 basis points in 2019. "They'll hike now (since they said so), but they'll be making a mistake, and they'll recognise that in the coming months, and it's therefore overwhelmingly likely that they won't hike again for a long while," UniCredit's Vernazza said.
     
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    Dow Jones Newswires, 26 Oct 2017 03:21 EDT
    Global Forex and Fixed Income Roundup: Market Talk



    0721 GMT - The euro edges up by 0.1% versus the U.S. dollar to 1.1827, after reaching a six-day high of 1.1838 earlier, as investors await the European Central Bank's announcement at 1145 GMT, followed by ECB President Mario Draghi's press conference at 1230 GMT. The ECB is expected to lay out plans to scale back monetary easing. "Preparations for today's announcement are six weeks in the making," says Societe Generale. Commerzbank expects the impact on the euro to be limited, and says there is no reason to buy euros unless the ECB hints at the expected timing of interest rates rising, which is not expected. On the other hand, "surprisingly cautious" comments by Mr. Draghi could see the euro "quickly retrace yesterday's gains." (olga.cotaga@wsj.com; @OlgaCotaga)


    0711 GMT - DBS Bank says the strong surge in industrial production in September will likely prompt an upward revision in 3Q GDP. Singapore's factory output rose 14.6% on year in September, faster than street estimates and more than double the pace implied in advance GDP data released earlier this month, DBS notes. The government's initial estimate was for 3Q GDP growth of 4.6% on year. But the September industrial production data itself will raise it above 5%, DBS says. DBS adds that electronics production will likely remain a bright spark, though growth will soften in coming months due to a high base of comparison from a year earlier. (gaurav.raghuvanshi@wsj.com)

    0709 GMT - With the German 10-year bund yield approaching a first resistance level of 0.50%, the chances of a break higher are high barring an ultra-dovish message from European Central Bank President Mario Draghi, say KBC Bank analysts. KBC therefore positions for higher rates. The 10-year bund yield currently trades at 0.47%, according to Tradeweb. (emese.bartha@wsj.com; @EmeseBartha)

    0707 GMT - BNP Paribas favors fading EUR gains on a more hawkish European Central Bank. The main point for BNP Paribas is that it sees the distribution of outcomes as skewed towards EUR downside, particularly because the bank's FX positioning analysis signals that FX investors hold "quite extended" EUR longs ahead of the ECB meeting. BNP Paribas' central scenario is a six-month extension of asset purchases at EUR30 billion per month pace, and if this assumption proves correct, it is likely to lead to some near-term EUR upside towards $1.1850-$1.1900. BNP Paribas would view such levels as attractive to initiate shorts to position for a move lower to $1.15 at end of first quarter 2018 as re-pricing of US tax reform will dominate. Euro last at 1.1824.(emese.bartha@wsj.com; @EmeseBartha)

    0705 GMT - The Swedish krona could fall if the Riksbank announces a 'wait and see' message when it announces a policy decision at 0730 GMT, Danske Bank says. It expects no change to rates, an unchanged inflation and rate path and no news on the QE programme. "This call very much reflects the subsequent ECB [European Central Bank] meeting as we suspect the Riksbank would like more clarity on the ECB policy outlook before sending any new signals to markets that could potentially trigger an unwarranted SEK appreciation trend," Danske says. It expects a similar reaction to the September meeting, "where EUR/SEK rose 3-5 figures on a 'wait and see' message." EUR/SEK is flat at 9.7055, NOK/SEK down 0.1% at 1.2041. Norges Bank's decision is due at 0800 GMT, the ECB's at 1145 GMT. (jessica.fleetham@wsj.com)

    0649 GMT - Swiss chemical company Sika's 3Q earnings feature the 23rd consecutive quarter of margin improvement and an overall "continued solid" operating performance, but the Saint-Gobain risk remains, according to Vontobel. The bank sees a potential unfriendly takeover by the lower-rated French group as a main mid-term driver of Sika's credit. Still, a final court decision on the potential takeover is still more than one year away, according to Vontobel. (tasos.vossos@wsj.com; @tasosvos)

    0637 GMT - The European Central Bank's meeting Thursday is unlikely to turn the current bearish sentiment in the wider fixed income market, Societe Generale strategists say. Even if the ECB manages to avoid a bond sell-off, U.K. gilts look vulnerable as the Bank of England looks poised to raise its policy rate at its Nov. 2 meeting, while technical indicators point to further selling in U.S. Treasurys. (tasos.vossos@wsj.com; @tasosvos)

    0632 GMT - The bar for a dovish surprise by the European Central Bank is high and therefore 10-year German government bonds are unlikely to rally after the Thursday meeting, according to Commerzbank. Even after the recent sell-off, which pushed yields up toward 0.5%, factors like solid macroeconomic data from the eurozone and good risk sentiment -- reflected in strong equities - should weigh on bunds. Bund yields are quoted at 0.472% early Thursday, according to Tradeweb. (tasos.vossos@wsj.com; @tasosvos)

    0510 GMT - German consumer sentiment will weaken in November, market researcher GfK says in its monthly survey, which gives a reading of 10.7 points for the coming month, compared with 10.8 points in October. Consumers expect that the domestic economy will "clearly" continue to grow, which in turn gives them safety in jobs and planning, GfK says. However, Germans remain wary of inflation as the most recent data from September showed the headline rate at 1.8%. (emese.bartha@wsj.com; @EmeseBartha)

    0536 GMT - With Xi placing greater emphasis on development quality and equality during the Party Congress, Credit Suisse expects China's currency-regime liberalization to not be aggressive near-term. Still, the investment bank sees a risk of a weaker yuan if policymakers indicate they're moving toward implementing structural reforms, which would certainly slow near-term growth. As such, the bank expects the dollar to remain around CNY6.65 through year-end before rising to CNY6.9 by next October. (chester.yung@wsj.com; @chester_yung)

    0501 GMT - Singapore's Industrial Production rose 14.6% on year in September, signaling continued strength and contrasting a surprise weakness in exports for the month. Electronics output remains strong, growing 33% on year. Pharmaceutical output, usually a wildcard, was up 6.8%. However, the offshore and marine segment stayed weak with a 27% contraction. The stronger data will likely lead to an upward revision in 3Q GDP when revised data are released next month. (gaurav.raghuvanshi@wsj.com)

    (END) Dow Jones Newswires
     
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    THURSDAY, OCTOBER 26, 2017


    TOP NEWS
    Beginning of the end for Europe's loose money? ECB to curb stimulus
    The European Central Bank (ECB) is all but certain to cut back on its bond-buying stimulus, taking its biggest step yet in unwinding years of loose monetary policy. The ECB is still bothered about low inflation. So it is expected to twin the cut with an extension of the programme -- essentially a less-but-for-longer move. Policymakers from the 19 euro zone countries are seen cutting monthly bond purchases by half in a nod to the rapid growth, a move towards dismantling the unprecedented measures that held the currency bloc together after back-to-back recessions. Yet because inflation, the ECB's single focus, remains far below target, any move is expected to come with a lengthy extension, a signal that support, even if diminished, could continue for years to come.

    China will not set target to double GDP from 2021 - party official
    China will not set a target to double gross domestic product from 2021, a senior Communist Party official said, as top leaders look to high-quality growth in the long term. Yang Weimin, vice minister of the Office of the Central Leading Group on Financial and Economic Affairs, told a news conference the government will not solely pursue economic growth and will emphasise the quality of its growth. Meanwhile, International investors are piling into a rare global bond offering from China, with orders topping over $10 billion in the first hour after books opened, more than five times the amount on offer.

    EU envoys start discussion on ties with London after Brexit
    European Union nations except Britain began preparing on Wednesday for a transition period in relations with London and for their future ties after Brexit, with meetings over the next month aimed at drawing up guidelines for EU leaders in December. Brussels envoys from the 27 EU states that will remain in the bloc after Britain exits on March 29, 2019, met for the first time since EU leaders last week decided not enough progress had been made in talks on the terms of the divorce with Britain to start discussions about future relations yet. To encourage stronger efforts, EU leaders said they would start preparing now for talks on a transition period so they are ready if enough progress is made by the next summit in December.


    Trump unlikely to pick Cohn for Fed as he is crucial to tax reform drive -official
    President Donald Trump is unlikely to pick economic adviser Gary Cohn as his nominee for Federal Reserve chairman because Cohn is playing a crucial role in the White House tax reform effort, a senior administration official said on Wednesday. The Republican president is looking to announce a Fed chair nominee before leaving on a trip to Asia on Nov. 3, in order to give his choice time to go through the Senate confirmation process. Current Fed Chair Janet Yellen's term ends in early February. But an announcement is unlikely this week, said another source familiar with the situation.

    UK retailers cut jobs at fastest rate since 2008 – BRC
    British retailers cut jobs over the past three months at the fastest rate since comparable records began in 2008, due to technological change and rising employment costs, the British Retail Consortium (BRC) said. The BRC said its members employed 3.0 percent fewer staff in the third quarter of this year than during the same time in 2016, and total hours worked fell by 4.2 percent year-on-year. Separately, British builders registered in the third quarter of 2017 that they planned to build 37,936 homes, 9 percent more than during the same period last year and the highest third-quarter total since 2007, Britain's National House-Building Council said. Also, British car production fell 4.1 percent in September from the same month a year earlier, a fifth decline in six months that adds to signs of faltering consumer and business confidence.


    POLL
    Global growth? Sure. But still not much inflation pressure
    The global economy is on its best roll in years and set to do better in 2018, but economists in Reuters polls around the world mostly said synchronous growth is not about to spawn significant price pressures.



    ECB RATES AND INFLATION
    [​IMG]


    MORNING MEETING


    JGBS STEADY, SHORT-END BETTER BID

    BONDS, EQUITIES, OTHER ASSET MARKETS

    • US Treasury 10s indicated 2.427%, JGB 10s 0.063%, Bund 10s 0.471%
    • US-Japan-Germany respective 2s indicated 1.593%, -0.150%, -0.712%
    • JGBs steady, supported by strength in short-end
    • 2yr auction strong, stop -0.141%, vs -0.134% pre-auction
    • BTC 5.93, last 4.11; tail 0.2bp, last 0.5bp
    • 3mo auction strong too, stop -0.1898%, BTC 4.05, last 4.22
    • Swappers suspected of being buyers in short-end
    • At 150.38, JGB futures up 3 ticks on day, range 150.42/150.31
    • Nikkei steady after down day yesterday, range 21,688-793, buoyant
    • At 21,764, index up modest 56 points or 0.3% on day
    • AXJ mostly in red - HSI 0.1%, NZX50 0.4%, TWI-KOSPI-STI sub-par on day
    • Shanghai outlier, up 0.5%

    Currency Summaries
    JPY
    • USD/JPY, EUR/JPY off highs but still buoyant, 113.37-74, 134.10-36
    • USD/JPY to 114.24, EUR/JPY to 134.51 yesterday before easing down
    • USD/JPY followed US yields up then down, Treasury 10s to 2.475% then off
    • Good selling noted 114.00+, Japanese exporters sated for now
    • Option-related headwinds still however, KOs at 114.50, 115.00, large
    • Vanilla option expiries tether again - USD2.5 bln 113.50-80
    • Above and below too - 113.95-114.00 USD937 mln, 113.00-05 USD1.86 bln
    • Asia sees bids @113.50 absorbed, more trail down to 113.00, stops below
    • EUR/JPY through 134.30-40 9/21-25 triple top but upside limited
    • Bias to stay up into ECB tonight, risk of more hawkish stance
    • Support sub-134.00, E420 mln option expiries at 133.00 today
    • GBP/JPY down from 151.38 post-GDP spike high o/n, Asia 150.44-89, buoyant
    • Dollar bloc crosses on back-foot - AUD, NZD and CAD all soggy
    • AUD/JPY 87.43-64, NZD/JPY 78.02-37 and CAD/JPY 88.65-91

    EUR
    • EUR/USD opened 0.46% higher at 1.1815 after shrugging off higher US yields
    • Short covering ahead of ECB meeting & uncertainty over US tax cuts underpinned
    • USD was generally offered in Asia and EUR/USD drifted up to 1.1833
    • Heading into the afternoon it was trading around 1.1825
    • Market expects "dovish tapering" from ECB but how much and how long unclear
    • EUR would be vulnerable if there aren't any hawkish surprises from ECB
    • Resistance at double-top formed at 1.1858 - support at 1.1750/60

    GBP
    • Cable buoyant in Asia on USD pull-back, post strong UK GDP data o/n
    • Asia range 1.3260-78, tight, 1.3271 high yesterday eclipsed
    • Underlying support from ascending 55-DMA at 1.3163, 100-DMA 1.3059
    • Market quiet ahead of ECB meeting tonight but bias up, BoE more hawkish?
    • EUR/GBP 0.8905-15, ascending 100-DMA at 0.8941 likely pivot
    • Resistance from 0.8923 55-HMA, 200-HMA 0.8925 above, 100-HMA 0.8940
    • Topside vanilla option expiries today - 0.8980 E516 mln, 0.9050 585 mln

    CHF
    • USD/CHF off from 0.9940 high overnight, Asia 0.9885-98. tight
    • Focus still on US yields, off from highs o/n but still at recent highs
    • Some support from @55-HMA at 0.9888, 100/200-HMAs below at 0.9867, 0.9822
    • EUR/CHF quiet in Asia after push to 1.1705 o/n, range 1.1687-97
    • Bias still up for cross, CHF weakest vs EUR currency cap removed Jan '15

    Market Briefs
    • Beginning of the end for Europe's loose money? ECB to curb stimulus
    • Republican tax fight complicates plan to pass budget in U.S. House
    • Amid Brexit timetable confusion, UK aims for transition outline by early 2018
    • EU envoys start discussion on ties with London after Brexit
    • Crisis over Catalan independence nears crucial few days
    • NZ Prime Minister heads to trade talks with foreign investment ban on her mind
    • NZ Sept Trade Balance, -1.143.0 mln vs -1.2350 M, rvsd -1.179.0 mln
    • AU Q3 Export, Import Prices, -3.0% imports, -1.6% exports vs -5.7%, -0.1%
    • Trump congratulates China's Xi on "extraordinary elevation”
    • China will not set target to double GDP from 2021 - party official
    • Global investors race for rare $2 billion China sovereign bond issue
    • N.Korea diplomat says take atmospheric nuclear test threat 'literally'
    • BOJ shouldn't be criticised for missing inflation goal -Japan PM's aide
    • MoF flow data week-ended Oct 21 - Japanese buy net Y10.9 bln foreign bonds
    • Y55.1 bln foreign stocks bought too, sell Y25.5 bln foreign bills
    • Foreigners buy Y686 bln Japan stocks, sell 410.3 bln JGBs, 583.6 bln bills
    • September corporate service price index +0.1% m/m, +0.9% y/y to 103.8
    • Fitch - Japanese mega banks' resilience to shocks has increased
    • UK retailers cut jobs at fastest rate since 2008 -BRC
    • UK housing starts on track for 10-year high - industry group
    • UK car output falls again in September
    • Global growth? Sure. But still not much inflation pressure -Rtrs poll

    Looking Ahead - Economic Data (GMT)
    • 08:00 EZ Sept Money-M3 Annual Growth, 5.0% eyed, last 5.0%
    • 08:00 DE Nov Gfk Consumer Sentiment 10.8 eyed, last 10.8
    • 10:00 GB Oct CBI Distributive Trade 15 eyed, last 42

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 07:30 Swedish Central Bank announces rate decision;

    Monetary Policy Report will be published - Stockholm
    • 08:00 Norway Central Bank announces interest rate decision - Oslo
    • 09:00 Swedish Central Bank’s press conference on its rate decision - Stockholm
    • 09:00 Norges Bank Gov Olsen speaks at Oslo
    • 11:45 ECB Governing Council meeting; interest rate announcement - Frankfurt
    • 12:30 ECB’s Draghi holds a press meet following the rate decision

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

    AUD/USD vulnerable as inflection point nears
    Australia's weak Q3 CPI data Wednesday has pushed the RBA towards the back of the queue of DM central banks preparing to enter a tightening cycle. The market is pricing little chance of an RBA hike before Nov next year and those analysts predicting no change in 2018 are growing in confidence. Meanwhile a Fed hike is almost fully priced in December and depending on how Trump reshapes the Fed board, there may be a need to price in at least two more in 2018. The correlation between the AUD/USD and EM assets faded over the past month when EM assets continued to soar while the AUD/USD consolidated. Unfortunately for AUD bulls, a bearish turn in EM sentiment over the past few days appears to have brought the correlation back into play. The AUD/USD has key support around 0.7630. The 61.8 Fibo of the 0.7329-0.8125 move comes in at 0.7633 while the 38.2 of the move from 2016's 8-year low of 0.6827 to 0.8125 comes in at 0.7629. The average price of the AUD/USD over the past 12 months and since its float also come in around 0.7630. A clear break below 0.7630 would likely signal the start of a significant downtrend.


     
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    Tadhg Gaelach

    Tadhg Gaelach Legend Donator Battle Royale Political Irish

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    Dow Jones Newswires, 13 Nov 2017 03:50 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0849 GMT [Dow Jones] The Bank of Japan needs to adjust its extraordinary easing policies before it hits its goal of 2% inflation, says the head of Mizuho Financial Group. Chief Executive Yasuhiro Sato says both U.S. and European central banks took steps to reduce bond buying before achieving 2% inflation. He says some developed economies may be experiencing chronic slow inflation despite near full employment. The BOJ's massive bond-buying program has been depressing lending margins for Japanese banks. Sato says, though, it would be still necessary for the BOJ to maintain a low interest rate policy.(kosaku.narioka@wsj.com)


    0828 GMT - India's consumer inflation data due out later Monday is likely to show the headline print holding steady for the second consecutive month at 3.3% from a year earlier in October, says DBS. Food costs were higher due to higher prices of vegetables while a fall in prices of pulses slowed. This, however, was offset by lower transportation costs on the back of a cut in factory-gate taxes. At the forecast rate, inflation would be modestly below the Reserve Bank of India's 4% long-term target, but a rate cut at the central bank's next policy review in December is still unlikely because of firmer core price pressures, higher oil prices and policy normalization by global central banks, DBS adds. (anant.kala@wsj.com)

    0831 GMT - [Dow Jones] Indian telecom Reliance Communications has put its bondholders in a quandary by missing an interest payment last week on its $300 million bonds that mature in 2020. The seven-day grace period on the $9.75 million interest payment expires today and it said last week it isn't paying for the "time being" given its ongoing debt restructuring plan. These bonds are mostly held by retail investors. The company, which has about $7 billion debt outstanding, also missed payments on two rupee-denominated bonds earlier this month. The 2020 bonds have fallen to 35.97 cents on the dollar, yielding 50%. (manju.dalal@wsj.com)

    0823 GMT - The Swedish FSA Board will announce its decision on enhanced mortgage amortisation rules at a press conference Monday, notes Danske Bank. "We think that decisions that potentially amplify downside risks to the housing market could weigh further on the [Swedish krona] while a decision not to go ahead with the amortisation rule could lend some support to the SEK." Key resistance area for EUR/SEK is still around 9.80, it adds. EUR/SEK trades at 9.7582. (dominic.chopping@wsj.com)

    0815 GMT - Italy's upcoming launch of new November 2023 BTP Italia, a retail-oriented bond indexed to domestic inflation, offers good opportunities to investors to diversify their portfolios, say UniCredit rates strategists. After the strong tightening in the Italian BTP-German bund spreads of late, "seeking some diversification appears to be reasonable," they say. The rates strategists add that the new bond looks attractive relative to Italy's nominal yield curve. Subscriptions for retail investors for the November 2023 BTP Italia run from Monday to Wednesday, while institutional investors can subscribe for it on Thursday. (emese.bartha@wsj.com; @EmeseBartha)

    0809 GMT - Swiss telecom Swisscom looks set to issue a further CHF1.5 billion of bonds in various tenors over the next 12 months to re-finance all its maturing liabilities, Vontobel analyst Marc Schulthess says in a note. This will add to the pre-financing of upcoming maturities that has already taken place. The liabilities include domestic bonds, Eurobonds, Swiss and foreign private placements, as well as bank loans. (tasos.vossos@wsj.com; @tasosvos)

    0804 GMT - Sterling falls after reports that 40 Conservative Party ministers agreed to sign a letter of no confidence in the Prime Minister Theresa May. GBP/USD is down 0.3% at 1.3094 and EUR/GBP is up 0.33% at 0.8891. "While this remains short of the 48 votes needed to force a new leadership, it still creates much frustration amongst investors seeking clarity on Brexit negotiations," says FXTM. The pound is likely to breach the support level of 1.3024, FXTM says. "With May's position being potentially at risk and no significant progress after six rounds of talks with EU, sterling may come under increased pressure in the next couple of days," the broker adds. (olga.cotaga@wsj.com; @OlgaCotaga)

    0800 GMT - Some investors may be cautious in Monday's government bond auction in Italy, wary of potential risks related to next year's Italian elections, says KBC Bank. Italy's treasury has a total of EUR4.5 billion to EUR6 billion on offer on Monday in fixed-rate bonds, known as BTPs, dated October 2020, November 2024 and September 2033. (emese.bartha@wsj.com; @EmeseBartha)

    0800 GMT - Even though ING strategists have a "bearish bias" on 10-year German government bonds, they are not too convinced yields will rise above 0.5% before January. Recent selling in bonds has boosted yields -- which rise when bond prices drop - to 0.4% from 0.3% within just three trading sessions. Bund yields have tested the 0.5% level several times in 2017 but, with the exception of July, they have failed to break through. (tasos.vossos@wsj.com; @tasosvos)

    0759 GMT - Government bond supply in the eurozone may be as high as EUR37 billion this week, an amount which would mark the highest weekly volume this year, says Alessandro Giongo, fixed income strategist at UniCredit. Issuance at auctions from Italy, Netherlands, Germany, Spain and France will total EUR28 billion to EUR29 billion, a number that itself is significantly above the year-to-date weekly average. Mr. Giongo expects an additional EUR5 billion to EUR8 billion issuance via Italy's launch of BTP Italia, a retail-oriented bond indexed to domestic inflation. Retail subscriptions for BTP Italia run from Monday to Wednesday, while institutional investors can subscribe in the early hours of Thursday. (emese.bartha@wsj.com; @EmeseBartha)

    0750 GMT - German government bonds look vulnerable to further losses and Commerzbank recommends tactical short positions so long as 10-year yields, which move inversely to bond prices, remain below 0.5%. Bund yields have jumped from just over 0.3% to 0.4% in the past three trading sessions. The bond market's focus this week should be on two major financial conferences, Euro Finance Week and the European Central Bank's "Communication Challenges for Policy Effectiveness, Accountability and Reputation" forum, where the heads of all major central banks will make an appearance. Bund yields are quoted at 0.405% early Monday, according to Tradeweb. (tasos.vossos@wsj.com; @tasosvos)

    0741 GMT - India will overtake Japan to become the world's third-largest economy in 10 years, as rising saving and investment rates help sustain 7%-plus annual economic growth, says Bank of America Merrill Lynch. A continued decline in lending rates and increasing income will also help stoke demand, making the South Asian economy stand out among the BRIC group of developing economies, it says. At the same time, structural factors will likely weigh on growth in the group's other economies (Brazil, Russia and China), the firm adds. (anant.kala@wsj.com)

    (END) Dow Jones Newswires
     
  10. OP
    Tadhg Gaelach

    Tadhg Gaelach Legend Donator Battle Royale Political Irish

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    Message body


    [​IMG]
    [​IMG]



    [​IMG]



    MONDAY, NOVEMBER 13, 2017


    TOP NEWS

    Fed's Harker stands by call for rate hike next month
    A Federal Reserve official said he expects to back an interest rate hike next month despite caution over low-inflation, as U.S. central bank policy needs to be positioned to deal with future economic shocks. Philadelphia Fed President Patrick Harker said he has "lightly penciled in" a December rate hike. Harker said he expects the Fed to raise rates three times next year as long as inflation remains on track, and the projected tightening could take policy to what he would describe as a neutral stance. Harker said the Fed must continue normalizing policy as the economy is "more or less at full strength" and there remains "very little slack" in the labour market.

    UK shoppers cut spending by most in more than 4 years – Visa
    British shoppers reined in their spending by the most in more than four years in October, according to a survey by payments company Visa which added to other signs that the squeeze on incomes is hitting the high street. Consumer spending fell by 2.0 percent in October compared with the same month last year, Visa said, based on its credit and debit card data. Meanwhile, the Chartered Institute for Personnel and Development said its gauge of pay intentions for the private and public sector in the UK rose 2 percent in the latest quarter from 1 percent previously.

    U.S. House will reject total elimination of state and local tax deductions –Brady
    The head of the House of Representatives' tax-writing committee said on Sunday he would not accept elimination of a federal deduction for state and local taxes, opposing a proposal from Senate Republicans that would hike taxes for some middle class Americans. House Ways and Means Committee Chairman Kevin Brady said he guaranteed the deduction would not be entirely scrapped in a final tax bill that emerges from dueling plans already unveiled by Republicans in the House and the Senate. The House bill would repeal state and local tax deduction only for state and local income and sales taxes, but preserve it for property tax up to $10,000 a year.


    Britain won't offer a new figure on Brexit bill to unlock talks – minister
    Britain will not offer a figure or a formula for how much it believes it owes the European Union, Brexit minister David Davis said on Sunday, after the EU demanded that London spell out its approach to the final bill to unblock talks. Britain may miss a December deadline to move the talks to a discussion of future trade ties, which businesses say is vital for them to make investment decisions. Both sides are frustrated by the lack of progress, and last week the EU negotiator, Michel Barnier, said Britain had two weeks to spell out how far it would "honour its obligations" to break the deadlock. Prime Minister Theresa May says she cannot offer a figure for the financial settlement until her government knows what the future relationship will be.

    Japan Oct wholesale prices rise 3.4 pct yr/yr
    Japanese wholesale prices rose 3.4 percent in the year to October, Bank of Japan data showed. The rise in the corporate goods price index compares with the median market forecast for a 3.1 percent annual increase and follows a 3.1 percent annual increase in September. Overall final goods prices rose 1.8 percent from a year earlier. Domestic final goods prices, which loosely track the consumer price index, rose 0.8 percent from a year earlier.



    U.S. PCE PRICE INDEX AND THE FED FUNDS TARGET RATE
    [​IMG]



    MORNING MEETING


    JGBS QUIET, CABLE HIT ON MAY LEADERSHIP WORRIES

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.389%, JGB 10s 0.047%, Bund 10s 0.405%
    • US-Japan-Germany respective 2s indicated 1.660%, -0.171%, -0.747%
    • Quiet start to week for JGBs, with no BoJ ops, MoF auctions
    • Weaker Bunds, US Treasuries weigh on JGBs
    • JGB futures in narrow 150.75/150.69 range
    • At 150.71, futures off 13 ticks on day
    • Nikkei lower but holding @22.5k, range 22,474-607
    • At 22,537, index off 144 points or 0.6% on day, some players still caught long
    • AXJ mixed but moves small, SSEC +0.3%, HSI +0.3%, STI and NZX50 above par
    • KOSPI -0.4%, ASX -0.2% and TWI below par
    • Dalian iron ore +1.3%, Tokyo rubber +1.9%, Shanghai rubber +2.2%

    Currency Summaries
    JPY
    • USD/JPY, JPY crosses in stasis, USD/JPY post-Tokyo fix range 10-ticks
    • Broader, USD/JPY range for session 113.49-71, post-fix 60-70 if that
    • Bids below from @113.25, trail down, large @113.00, also option expiries
    • 112.95-113.15 total USD1.3 yards today, tomorrow 114.00-05 USD1.4 yards
    • Solid standing offers at 113.90, 113.95, 114.00, some stops above latter
    • Given lack of JPY moves, some Tokyo players move into Bitcoin
    • EUR/JPY shadows USD/JPY, Asia 132.33-59, support from 200-HMA at 132.33
    • Back above 132.27 ascending 55-DMA, daily cloud top 132.17
    • Some option expiries today below at 133.00 strike, E323 mln
    • GBP/JPY steady on daily basis despite negative UK news, 148.95-149.80
    • AUD/JPY, NZD/JPY quiet, 86.85-87.07 and 78.59-73 ranges, respectively

    EUR
    • EUR/USD, EUR complex in stasis again in Asia, consolidation, quiet
    • EUR/USD Asia 1.1645-70, pivoting both sides of 1.1622 flat Ichi daily tenkan
    • Option expiries of less import, today 1.1600-05 E532 mln, 1.1625-75 E542 mln
    • Option expiries tomorrow 1.1600-30, 1.1650-75 too but of little consequence
    • 1.1550-1.1700 range in place since October 27 still
    • Back above 132.27 ascending 55-DMA, daily cloud top 132.17
    • Some option expiries today below at 133.00 strike, E323 mln
    • EUR/GBP better bid, Asia 0.8841 to 0.8890, UK PM May to-do to blame
    • Weekend reports suggest May support within Tory Party eroding fast
    • EUR/CHF holds bid after leg up Friday, Asia quiet, 1.1613-22

    GBP
    • Cable down from 1.3198 to 1.3108 early on negative weekend UK news
    • That said, GBP/USD still well within recent 1.3050-1.3300 core range
    • Support from 1.3111 ascending 100-DMA, resistance from 1.3221 ascending 55-DMA
    • EUR/GBP up a leg and GBP/JPY soggy but latter also still within recent range

    CHF
    • USD/CHF touch better bid in Asia on higher US yields, 0.9957-77
    • In slow ratchet up from 0.9926 low Friday, resistance from 0.9976 100-HMA
    • 200-HMA above at 0.9988, 1.0039 high October 27, heavy 1.0000+

    Market Briefs
    • Britain won't offer a new figure on Brexit bill to unlock talks - minister
    • Forty UK Tory lawmakers ready to oust May - Sunday Times
    • Outlook for UK pay growth improves, but only a little - CIPD
    • UK shoppers cut spending by most in more than 4 years - Visa
    • Harker eyes inflation, stands by Fed rate hike next month
    • Gala glitz masks Asia's tensions as Trump winds up tour
    • U.S. House will reject total elimination of state and local tax deductions -Brady
    • JP Oct Corp Goods Price m/m, y/y, 0.3%, 3.4% vs 0.2%, 3.0%, f'cast 0.1%, 3.1%
    • BoJ Nakata - Fed policies won't have direct linkage to BoJ steps.
    • Tokyo eyes tax cuts to emerge as Asia's top financial hub - Nikkei
    • Japan's cash-rich companies to spend more on M&A, not wages - Rtrs poll
    • RBA's Debelle: no shock on horizon that could force RBA to materially raise rates
    • Spanish PM, in Catalonia, calls for big turnout at December election
    • Merkel urges compromises as coalition talks enter final stretch

    Looking Ahead - Economic Data (GMT)
    • No significant data

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A - BoJ's Kuroda speaks in Switzerland
    • 08:00 EU Foreign Affairs Council meeting - Brussels
    • 09:00 ECB's Constancio speaks at Euro finance Week - Frankfurt
    • 16:30 France's Le Maire speaks at a conference - Paris
    See North American Open for a detailed listing of US/NorAm releases, events

    Week Ahead-US tax reform, central bank speakers
    Markets will continue to watch the debate over tax reform in Washington DC, with President Trump due to head back to the US from Asia early in the week. There are no major central bank decisions, but plenty of speakers, starting with Philly Fed President Harker (2017 voter) on 'Fed balance sheet normalisation' in Tokyo Mon; ECB Vice President Constancio gives the keynote speech at a conference in Frankfurt and BOJ Governor Kuroda speaks in Switzerland. On Tuesday, Fed Chair Yellen, ECB President Draghi, Kuroda and BOE Governor Carney all speak at an ECB conference on central bank communication, where Chicago Fed President Evans (2017 voter) also participates in a panel discussion, while Boston Fed President Bostic (2018 voter) is due to speak in Alabama. On Wednesday ECB Chief Economist Praet speaks at the ECB conference and the Fed's Evans in London. on Thursday, Carney, Haldane and Broadbent speak at the BOE Future Forum; Fed Governor Brainard and Cleveland Fed President Mester (2018 voter) are both due to give speeches, and Dallas Fed President Kaplan (2017 voter) participates in a moderated Q&A in Houston. To end the week, Draghi, Bundesbank President Weidmann and Deutsche Bank CEO Cryan speak at a banking conference in Frankfurt.

    Week Ahead-US, EZ IP & CPI; EZ, Japan GDP; China data
    This week's busy data calendar only kicks off on Tuesday, with the Oct NAB business survey in Australia, followed by China's Oct industrial production, retail sales and year-to-date fixed asset investment. In Europe, Germany has Q3 flash GDP a few hours ahead of the euro zone measure; the German Nov ZEW survey and EZ Sept IP are also due, while the US has Oct PPI. Wednesday begins with Japan's Q3 GDP, followed by Australia's Q3 wage price index. The UK releases employment data, the euro zone has Sept trade data and the US has the widely watched CPI and retail sales for Oct, as well as the Nov NY Fed manufacturing index. On Thursday, Australia's jobs data are due, followed by UK retail sales and EZ final inflation - all for Oct. The US has weekly jobless claims, Oct IP, and the Nov Philly Fed and NAHB housing index. Friday brings EZ Sept current account data, US Oct building permits and housing starts, and Canada's Oct CPI. China's Oct lending data are also expected over the course of the week and house prices are due on Sat.
     
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    Tadhg Gaelach

    Tadhg Gaelach Legend Donator Battle Royale Political Irish

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    TUESDAY, NOVEMBER 14, 2017


    TOP NEWS

    China's economy cools as gov't curbs hit factories, property and retailers
    China's economy cooled further last month, with industrial output, fixed asset investment and retail sales missing expectations as the government extended a crackdown on debt risks and factory pollution. Data pointed to moderating growth over the next few quarters as credit expansion slows, with year-on-year industrial output gain of 6.2 percent in October missing analysts' estimates of a 6.3 percent rise. Fixed-asset investment growth slowed to 7.3 percent in the January-October period, the National Bureau of Statistics said. Separately, China’s property sales by floor area fell by 6.0 percent in October from a year earlier, compared with a 1.5 percent decline in September, according to Reuters calculations.

    POLL-Japan wages seen rising 2-2.5 pct in spring, below Abe's target
    Japanese wages will rise by 2.0 percent to 2.5 percent at next spring's annual negotiations, falling short of Prime Minister Shinzo Abe's goal of 3 percent, economists polled by Reuters predicted. This year, major Japanese companies -- which negotiate with labour unions every spring to agree on a wage hike -- raised pay an average 1.98 percent, according to Rengo, Japan's biggest labour federation. Economists projected the economy would grow 1.6 percent for the fiscal year through March and 1.1 percent over the next year, unchanged from the last monthly survey. The poll showed the core consumer price index was expected to average 0.6 percent this fiscal year and 0.8 percent the next.

    Risks ahead for U.S. tax push as disputes linger, Trump returns
    Congressional Republicans pushed ahead on Monday on a U.S. tax code overhaul as a Senate panel considered the issue, but risks lay ahead with major intraparty disputes unsettled and President Donald Trump returning soon from Asia as the debate heats up. While overseas at a leaders conference, Trump tweeted some tax bill suggestions early on Monday that were starkly different from the two Republican plans being considered in the U.S. Senate and House of Representatives. He called on lawmakers to add a highly risky provision to their tax effort: repealing the individual mandate included in the 2010 Obamacare health insurance law that requires Americans to have health coverage or pay a tax to Washington.


    Greece to distribute 1.4 bln euros to citizens hit by austerity
    Greece will distribute 1.4 billion euros as a social dividend to pensioners and others hit hard by the country's austerity programmes, Prime Minister Alexis Tsipras said on Monday. The money is available because the country has beaten its 2017 bailout target for a primary surplus - which excludes debt servicing costs - of 1.75 percent of gross economic output, he said. Tsipras said about 720 million euros would be distributed by mid-December to 3.4 million Greeks as a one-off, tax-free benefit, based on income and wealth criteria and household size. Another 315 million euros would be directed to pensioners, he said, to compensate them for "unfair" health contribution payments in 2012-2016.

    U.S. inflation expectations edge up -NY Fed survey
    U.S. inflation expectations edged up again in October, touching their highest level in six months, according to a Federal Reserve Bank of New York survey that could spell some relief for central bankers looking for hints of price pressure. The survey of consumer expectations showed the one-year-ahead measure was 2.61 percent in October, its second monthly rise. The three-year-ahead expectation was 2.81 percent, slightly up from the previous month and also at the highest level since April.



    CHINA GDP AND FIXED ASSET INVESTMENT
    [​IMG]



    MORNING MEETING


    JGB FUTURES RANGEBOUND, CURVE STEEPER

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.406%, JGB 10s 0.051%
    • JGB curve steepens, 2 steady, long-end bonds still heavy
    • 5yr auction as expected, stop -0.105%, BTC 4.19, tail 0.2bp, last 4.24/zero
    • JGB futures move in narrow range without clear direction
    • At 150.71, futures unch on day, range 150.75/150.63
    • Nikkei at 22,501 +0.54%, SSEC -0.45%, HSI +0.1%, STI -0.54%, Kospi -0.26%
    • JKSE and KLSE both flat, NZX50 +0.4%, ASX200 as regions laggard -0.9%
    • Dalian iron ore +1.0%, LME copper-0.1%, gold -0.1%,light crude -0.25%

    Currency Summaries
    JPY
    • USD/JPY trades a narrow 113.52/74 range in Asia Tuesday
    • Nikkei opened down 0.2%, moved into positive territory during the morning
    • Nikkei last up 0.5%, but USD/JPY not paying attention
    • Support for USD/JPY at 113.19 Kijun line and resistance at 113.91 Tenkan
    • JPY crosses mostly flat, AUD/JPY a tad higher on NAB business conditions
    • EUR/JPY also slightly higher, trades a range of 132.49/71

    EUR
    • EUR/USD only manages a range of 1.1662/76 in Asia
    • Still struggling to close back above the SHS neckline at 1.1670
    • A break of the neckline targets a move to the 100 DMA at 1.1732
    • But downside limited by rising bund yields, strong data
    • Support at 1.1632 10 DMA and 1.1623 Monday low

    GBP
    • Fraction firmer in Asia - closed -0.6% on political/Brexit uncertainty
    • Tight 1.3114/1.3129 Asian range - GBP sidelined with little interest
    • Neutral momentum studies, 5, 10 & 20 DMAs crest, 2nd week of consolidation
    • Familiar levels - Nov 1.3040/1.3321 range holds - close outside directional
    • 1.3150 650M strike then 1.3198 Asian high first resistance
    • London 1.3063 low then 1.3040 Nov base initial support
    • UK inflation leads data - polls - CPI y/y +3.1%

    CHF
    • Tight 99.59/99.68 USD/CHF range in Asia, EUR/CHF 1.1622/1.1630
    • No CHF specific news - European currencies sidelined in Asia

    Market Briefs
    • Weaker than ever, May faces test in UK parliament over Brexit plans
    • British government introduces budget for Northern Ireland
    • CN Oct Industrial Output y/y, 6.2% vs 6.6%, f' cast 6.3%
    • CN Oct Retail Sales y/y, 10.0% vs 10.3%, f’ cast 10.4%
    • CN Oct Urban Investment (ytd) y/y, 7.3% vs 7.5%, f'cast 7.4%
    • China property investment growth cools in Oct, sales decline accelerates
    • Eighth Australian lawmaker falls in citizenship crisis
    • AU Oct NAB Business Conditions 21 vs 14
    • AU Oct NAB Business Confidence 8 vs 7
    • Japan wages seen rising 2-2.5 pct in spring, below Abe's target - Rtrs poll
    • Risks ahead for U.S. tax push as disputes linger, Trump returns
    • U.S. Senate Republicans ask Moore to withdraw as new accuser steps forward

    Looking Ahead - Economic Data (GMT)
    • 07:00 DE Q3 GDP Flash q/q, SA, y/y, NSA, f'cast 0.6%, 2.3% 0.6%, 0.8% last
    • 07:00 DE Oct HICP Final y/y, f'cast 1.5%, 1.5% last
    • 09:30 GB Oct CPI m/m, y/y, f'cast 0.2%, 3.1%, 0.3%, 3.0% last
    • 10:00 EZ Q3 GDP Flash Estimate q/q, y/y, f'cast 0.6%, 2.5%, 0.6%, 2.5% last
    • 10:00 EZ Industrial Production m/m, y/y, f'cast -0.6%, 3.2%, 1.4%, 3.8% last
    • 10:00 DE Nov ZEW Economic Sentiment f'cast 20.0, 17.6 last
    • 10:00 DE Nov ZEW Current Conditions f'cast 88.0, 87.0 last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A EU Foreign Affairs Council meeting
    • 08:05 Fed's Yellen and Evans, ECB's Draghi, BoJ's Kuroda,
    • BoE's Carney are set to speak at ECB Conference - Frankfurt
    • 13:15 Fed's Bullard presents on US economy - Louisville
    • 15:30 BoE's Cunliffe speaks at Oxford Economic Society - London
    • 15:30 ECB's Coeure speaks at ICMA meeting - Belgium
    • 18:05 Fed's Bostic speaks at University of Montgomery - Montgomery
    See North American Open for a detailed listing of US/NorAm releases, events

    Political catnip is catalyst for lower AUD
    The fractious nature of Australian politics is again on display with news of an eighth lawmaker failing the constitutional citizenship test. The crisis has necessitated replacement members in the Senate and by-elections in seats for candidates exiting the House of Representatives, where the ruling Conservative coalition government is struggling to hang on to its slim majority. Thus far the FX market has largely ignored these comings and goings, focusing instead on US political machinations. However, news that high-profile ex-state Labor leader Kristina Keneally intends to contest a recently vacated House seat could prove to be a tipping point. Political instability can be catnip for FX traders once they get a whiff, as evidenced by what happened in NZ. The AUD is already under pressure as traders recalibrate risk given what looks to be a watered-down US Republican tax plan, together with an imminent Fed funds rate hike and ongoing balance sheet unwind. The AUD's status as EM Asia proxy will eventually garner more attention as USD funding costs inexorably edge higher, exposing the excessive level of corporate debt that has long concerned central bankers.


     
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    Tadhg Gaelach

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    EUROPE FX MARKETS OPEN
    FX MARKETS OPEN
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    TUESDAY, NOVEMBER 14, 2017

    USD TREADS WATER AHEAD OF BUSY DAY

    Market Briefs
    Weaker than ever, May faces test in UK parliament over Brexit plans
    • British government introduces budget for Northern Ireland
    • CN Oct Industrial Output y/y, 6.2% vs 6.6%, f' cast 6.3%
    • CN Oct Retail Sales y/y, 10.0% vs 10.3%, f’ cast 10.4%
    • CN Oct Urban Investment (ytd) y/y, 7.3% vs 7.5%, f'cast 7.4%
    • China property investment growth cools in Oct, sales decline accelerates
    • Eighth Australian lawmaker falls in citizenship crisis
    • AU Oct NAB Business Conditions 21 vs 14
    • AU Oct NAB Business Confidence 8 vs 7
    • Japan wages seen rising 2-2.5 pct in spring, below Abe's target – Rtrs poll
    • Risks ahead for U.S. tax push as disputes linger, Trump returns
    • U.S. Senate Republicans ask Moore to withdraw as new accuser steps forward

    Looking Ahead - Economic Data (GMT)
    • 07:00 DE Q3 GDP Flash q/q, SA, y/y, NSA, f' cast 0.6%, 2.3% 0.6%, 0.8% last
    • 07:00 DE Oct HICP Final y/y, f' cast 1.5%, 1.5% last
    • 09:30 GB Oct CPI m/m, y/y, f'cast 0.2%, 3.1%, 0.3%, 3.0% last
    • 10:00 EZ Q3 GDP Flash Estimate q/q, y/y, f' cast 0.6%, 2.5%, 0.6%, 2.5% last
    • 10:00 EZ Industrial Production m/m, y/y, f' cast -0.6%, 3.2%, 1.4%, 3.8% last
    • 10:00 DE Nov ZEW Economic Sentiment f' cast 20.0, 17.6 last
    • 10:00 DE Nov ZEW Current Conditions f' cast 88.0, 87.0 last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A EU Foreign Affairs Council meeting
    • 08:05 Fed's Yellen and Evans, ECB's Draghi, BoJ's Kuroda,
    • BoE's Carney are set to speak at ECB Conference – Frankfurt
    • 13:15 Fed's Bullard presents on US economy – Louisville
    • 15:30 BoE's Cunliffe speaks at Oxford Economic Society – London
    • 15:30 ECB's Coeure speaks at ICMA meeting – Belgium
    • 18:05 Fed's Bostic speaks at University of Montgomery – Montgomery
    See North American Open for a detailed listing of US/NorAm releases, events

    Currency Summaries
    JPY
    • USD/JPY trades a narrow 113.52/74 range in Asia Tuesday
    • Nikkei opened down 0.2%, moved into positive territory during the morning
    • Nikkei last up 0.5%, but USD/JPY not paying attention
    • Support for USD/JPY at 113.19 Kijun line and resistance at 113.91 Tenkan
    • JPY crosses mostly flat, AUD/JPY a tad higher on NAB business conditions
    • EUR/JPY also slightly higher, trades a range of 132.49/71

    EUR
    • EUR/USD only manages a range of 1.1662/76 in Asia
    • Still struggling to close back above the SHS neckline at 1.1670
    • A break of the neckline targets a move to the 100 DMA at 1.1732
    • But downside limited by rising bund yields, strong data
    • Support at 1.1632 10 DMA and 1.1623 Monday low

    GBP
    • Fraction firmer in Asia - closed -0.6% on political/Brexit uncertainty
    • Tight 1.3114/1.3129 Asian range - GBP sidelined with little interest
    • Neutral momentum studies, 5, 10 & 20 DMAs crest, 2nd week of consolidation
    • Familiar levels - Nov 1.3040/1.3321 range holds - close outside directional
    • 1.3150 650M strike then 1.3198 Asian high first resistance
    • London 1.3063 low then 1.3040 Nov base initial support
    • UK inflation leads data – polls - CPI y/y +3.1%

    CHF
    • Tight 99.59/99.68 USD/CHF range in Asia, EUR/CHF 1.1622/1.1630
    • No CHF specific news – European currencies sidelined in Asia

    AUD
    • Opened Asia session 0.44% lower at 0.7624, thus far traded 0.7609/0.7639 range
    • Prevailing risk-off vibe saw early intraday base of 0.7609 for fresh 4-mth low
    • Bids ahead of the figure braced encouraging partial buy-back
    • Gains accelerated following stellar NAB Aust business conditions survey results
    • Index to all-time high in Oct with strength broad based across States/industries
    • Catalyst for eventual run to 0.7639 high before wad of China data disappointed
    • Gradual retrace back to 0.7625/30 area for little net changed overall
    • Helping hand from local data unlikely resonates as aligns with Debelle speech Mon
    • Move closer to 0.7570 5 July trend low remains in prospect, last at 0.7629

    NZD
    • Bear pressure still in situ for NZD tracking post 1 Nov lows within 0.6860/0.6901 range
    • 0.6900 open eventually gave way to AUD/NZD sourced kiwi component leg offers
    • Solid NAB oz business survey main point of difference bouncing cross off 1.1045 area
    • Lingering risk off sentiment weighed so too AUD/NZD reclaiming 1.11 foothold
    • China IP, retail sales and FAI data f/c shortfalls added deadweight
    • 0.6825 1 Nov low as sup just ahead of 0.6818 11 May and 27 Oct cycle low
    • Breach here opens up sub-0.6800 move closer to 0.6779 2 June 2016 base
    • On the defensive in line with risk, marginally extending Fri's low of 0.6921

    EQUITIES, OTHER ASSET MARKETS
    • Nikkei at 22,501 +0.54%, SSEC -0.45%, HSI +0.1%, STI -0.54%, Kospi -0.26%
    • JKSE and KLSE both flat, NZX50 +0.4%, ASX200 as regions laggard -0.9%
    • US Treasury 10s indicated 2.406%, JGB 10s 0.051%
    • Dalian iron ore +1.0%, LME copper-0.1%, gold -0.1%,light crude -0.25%

    Political catnip is catalyst for lower AUD
    The fractious nature of Australian politics is again on display with news of an eighth lawmaker failing the constitutional citizenship test. The crisis has necessitated replacement members in the Senate and by-elections in seats for candidates exiting the House of Representatives, where the ruling Conservative coalition government is struggling to hang on to its slim majority. Thus far the FX market has largely ignored these comings and goings, focusing instead on US political machinations. However, news that high-profile ex-state Labor leader Kristina Keneally intends to contest a recently vacated House seat could prove to be a tipping point. Political instability can be catnip for FX traders once they get a whiff, as evidenced by what happened in NZ. The AUD is already under pressure as traders recalibrate risk given what looks to be a watered-down US Republican tax plan, together with an imminent Fed funds rate hike and ongoing balance sheet unwind. The AUD's status as EM Asia proxy will eventually garner more attention as USD funding costs inexorably edge higher, exposing the excessive level of corporate debt that has long concerned central bankers.
     
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    Tadhg Gaelach

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    Dow Jones Newswires, 15 Nov 2017 04:17 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0917 GMT - Bid prices on Astaldi's 7.125% 2020 bond collapse further to 68.3% from 81.5% after the firm's results, which revealed a EUR230 million write-down on its exposures to Venezuela. The bond touched intraday lows of 63.15% earlier Wednesday -- it was quoted above par only last week. The Italian construction firm calculates a recovery rate of 47% using Venezuelan government bond yields, credit default swaps and discounted cash flows. Venezuela's foreign-currency debt was downgraded to restricted default at Fitch Tuesday and at selective default at S&P earlier in the week. (tasos.vossos@wsj.com; @tasosvos)


    0912 GMT - Positive U.K. jobs data at 0930 GMT would send GBP/USD above 1.32, says ING. Just ahead of the data, GBP/USD already trades close to that level, at 1.3189, and a break above 1.32 could see it rise above Friday's high of 1.3230. According to a WSJ poll, average three-month earnings growth, excluding bonuses, is expected at 2.1% in October, with the three-month unemployment rate expected unchanged at 4.3%. ING says: "The true test for the BOE's hawkish assumptions over the coming months will be the labour market data," it says. GBP/USD is lifted by a weak dollar, but sterling falls against astronger euro. EUR/GBP rises to its highest in nearly four weeks at 0.8982. (olga.cotaga@wsj.com; @OlgaCotaga)

    0900 GMT - Even though the deficit of defined-benefit pension schemes has shrunk during the course of 2017, liabilities of around GBP1.7 billion should ensure ongoing supply for long-dated gilts for years to come, RBC Capital Markets says. This demand should be "prevalent" as the year draws to a close, not least because December's coupon payments in conventional gilts -- which are likely to be reinvested in similar issues -- are mostly from longer-dated gilts, RBC adds. (tasos.vossos@wsj.com; @tasosvos)

    0853 GMT - European Central Bank Governing Council member Ardo Hansson says the eurozone economy is currently expanding at a rate about one percentage point above its growth potential, suggesting slack in the 19-nation currency union should be used up quickly. The Bank of Estonia governor said there are "incipient signs" of gathering wage growth, and that the risks in the short term are "probably somewhat towards the upside." The ECB in October agreed to pare back the pace of its bond purchases next year, while extending the program through to September. "I think the policy choice that was announced broadly makes sense," Mr. Hansson says.(Jason.Douglas@wsj.com)

    0853 GMT - A downgrade of French retailer Auchan at S&P seems unlikely, as this would require large M&A or a jump in shareholder payments pushing debt leverage toward three times from 2.3 times, UniCredit says. But the bank doesn't give Auchan's bonds the all-clear. On the contrary, it keeps its underweight recommendation, arguing that the already tight spread curve leaves limited tightening potential. And Auchan's shorter-dated bonds, maturing in 2018 and 2019, already trade at negative yields, UniCredit adds. (tasos.vossos@wsj.com; @tasosvos)

    0838 GMT - Commerzbank doesn't see the U.S. dollar falling or rising on the back of U.S. inflation data, due 1330 GMT. "Consumer prices...are unlikely to have risen much in October," but "the Fed will nonetheless stick to its rate hike in December," the bank says. Core CPI is likely to have risen 0.2% month-on-month in October, according to a WSJ poll. "As the market is unlikely to adjust its longer term rate expectations until the inflation rates rises, I do not see any upside potential for USD as a result of today's data," says a Commerzbank analyst in a note. (olga.cotaga@wsj.com; @OlgaCotaga)

    0837 GMT - German 10-year bund yields have come off recent lows around 0.30%, but they remain at historically expensive levels near 0.40%, ING rates strategists say ahead of Germany's EUR3 billion auction of the August 2027 bund on Wednesday. The 10-year bund yield trades at 0.38%, according to Tradeweb. ING strategists add that the 10-year maturity sector also remains expensive versus five- and 30-year maturities. Bond yields rise as prices fall. (emese.bartha@wsj.com; @EmeseBartha)

    0822 GMT - Yields on 10-year U.K. government bonds, or gilts, should reach 1.75% by the end of next year, TD Securities says in its 2018 outlook. This would represent a 43-basis-point increase from current levels. Yields rise as bond prices drop. Gilt prices should also under-perform versus German and U.S. counterparts, as those bonds already price in monetary tightening to a certain extent. By contrast, the gilt market has been less convinced regarding the future path of Bank of England policy, TD adds. (tasos.vossos@wsj.com; @tasosvos)

    0819 GMT - Singapore's "car-lite" future ambitions could be hampered if breakdowns and other snags continue to plague its mass rapid transit system, Jones Lang LaSalle says. That as a collision between two subway trains in Singapore injured 25 people Wednesday morning. The city state had been known for its well developed public transport infrastructure, but its train network has faced criticism in the last few years for frequent breakdowns. "Of greater concern is the underlying causes of these breakdowns and incidents as these could call to question Singaporeans' work ethics and corporate governance, amongst others," says JLL's Singapore research head Tay Huey Ying. (saurabh.chaturvedi@wsj.com; @journosaurabh)

    0809 GMT - ING says the U.S. consumer price index, due 1330 GMT, may lower the probability of an interest rate increase in December, something that strategists and market participants think is a done deal. "A miss could be more troubling for the U.S. dollar given that we could see the 90% probability of a December Fed hike currently priced into markets fall quite sharply," the bank says. According to a WSJ poll, market consensus points to a 0.2% month-on-month increase in October core CPI. EUR/USD is up at 1.1821, but USD/JPY is down 0.48% at 112.868. (olga.cotaga@wsj.com; @OlgaCotaga)

    0759 GMT - Iceland's central bank is likely to leave its key policy rate unchanged at 4.25% later on Wednesday, as a decline in the real policy rate, uncertainty about Iceland's fiscal stance and short-term developments in the labor market are likely to outweigh other factors, says Jon Bentsson, chief economist at Islandsbanki. Those factors include signs of weaker GDP growth in Iceland, a calmer housing market and a more stable krona, he says. But Mr. Bentsson wouldn't exclude the possibility of a 0.25% rate cut. "It is difficult to determine the MPC's priorities at present," he says, pointing to "a considerable dove-like tendency" among committee members. A decision is due at 0855 GMT. (nina.adam@wsj.com)

    0728 GMT - Market-maker quotes on Astaldi's 7.125% 2020 euro bond collapse early Wednesday after the Italian construction firm's results late Tuesday, which featured a EUR230 million write-down on its exposure to Venezuela. Bid quotes -- the price at which the market-maker is willing to buy - tumble to 67.63% from 81.5% Tuesday, according to Tradeweb. Bids stood above par only last week. "Investors might wish to find the door quickly and look for either a better re-entry point if and when stability does return, or count their blessings if Astaldi's foundations collapse," CreditSights says after the results. (tasos.vossos@wsj.com; @tasosvos)

    (END) Dow Jones Newswires
     
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    Tadhg Gaelach

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    WEDNESDAY, NOVEMBER 15, 2017


    TOP NEWS

    Japan's GDP grows for 7 straight quarters, outlook remains solid
    Japan's economy grew faster than expected in the third quarter due to strong exports, posting the longest period of uninterrupted growth in more than a decade. The economy expanded at a 1.4 percent annualised rate in July-September, slightly above the median estimate for annualised growth of 1.3 percent, Cabinet Office data showed. GDP grew 0.3 percent compared to the previous quarter, which matched the median estimate and followed a 0.6 percent quarter-on-quarter expansion in April-June. Private consumption, which accounts for about two-thirds of GDP, fell 0.5 percent from the previous quarter, more than the median estimate of a 0.3 percent contraction to mark the first decline since October-December 2015.

    Steady UK inflation leaves question mark over BoE rate action
    British inflation unexpectedly held steady in October, wrong-footing the Bank of England and raising fresh questions about how fast the central bank will follow up on this month's interest rate hike. The annual rate of consumer price inflation was unchanged from September's five-and-a-half-year high of 3.0 percent, official data showed. While inflation in many developed countries remains weak, in Britain it has surged from just 0.5 percent at the time of the June 2016 vote to leave the European Union as the fall in the pound pushed up the cost of imported goods.

    U.S. Senate Republicans tie tax plan to repeal of key Obamacare mandate
    U.S. Senate Republicans on Tuesday linked repealing a key component of Obamacare to their ambitious tax-cut plan, raising new political risks and uncertainties for the tax measure that financial markets have been monitoring closely for months. The finance panel, which had been in session for two days, abruptly adjourned on Tuesday as Democrats slammed the Republicans' handling of their tax proposals, for which formal legislative language has still not been unveiled. Tying Obamacare to the tax program introduces new risks for the Republicans and for President Donald Trump. Together, they have yet to score a major legislative win since Trump took power in January, even with control of Congress and the White House.


    Top central bankers vow to talk investors out of easy money
    Four of the world's top central bankers promised on Tuesday to keep openly guiding investors about future policy moves as they slowly withdraw the huge monetary stimulus rolled out during the financial crisis. After pumping some $10 trillion into financial markets since the 2008 crisis the Federal Reserve, European Central Bank, Bank of England and Bank of Japan are now trying to wean investors off easy money without causing an upset. To do this, words will be key, the heads of the four central banks told an ECB conference on communication. It is called forward guidance in banker-speak, essentially warning gently of what is coming.

    Services boost U.S. producer prices; underlying inflation firming
    U.S. producer prices rose more than expected in October, driven by a surge in the cost of services, leading to the biggest annual increase in wholesale inflation in more than 5-1/2 years. The producer price index for final demand increased 0.4 percent last month after a similar gain in September. That lifted the year-on-year increase in the PPI to 2.8 percent, the largest rise since February 2012, from 2.6 percent in September. Margins for fuels and lubricants retailing soared 24.9 percent, accounting for almost half of the increase in the cost of services last month. Services rose 0.4 percent in September. The rise in services helped to offset a 4.6 percent drop in the cost of gasoline.


    BREAKINGVIEWS

    Japan’s growth streak starts to look shakier

    Japan’s growth spell is showing signs of fatigue. GDP has now expanded for seven straight quarters, growing by 1.4 percent at an annualised rate in the third quarter. At first glance this marks another endorsement of Prime Minister Shinzo Abe’s programme of economic renewal. The last unbroken run of this length ended in 2001. But while it is risky to read too much into this choppy data, reality looks a bit gloomier.



    JAPAN'S ECONOMY
    [​IMG]



    MORNING MEETING


    JGBS SUPPORTED BY FIRMER USTS

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.36%, JGB 10s 0.044%
    • JGBs firmer, supported gains in USTs overnight
    • But gains very limited, 10yr yield -0.5bp, longer yields -1bp
    • 1yr auction strong, avg accepted rate -0.2145%, vs -0.19/-0.20% before auction
    • More than half taken by undisclosed players, 36% by single domestic house
    • JGB futures up 8 ticks after trading in tight 150.85/150.76 range
    • Nikkei at 22,035 off 1.5%, SSEC -0.70%, HSI +0.75%, STI -0.85%, Kospi -0.45%
    • JKSE +0.2%, KLSE -0.15%, NZX50 -0.1%, ASX200 -0.40%
    • Dalian iron ore -4.0%, LME copper-0.2%, gold unchanged, light crude -1.10%

    Currency Summaries
    JPY
    • USD/JPY trades a range of 113.03/49 in Asia
    • Trades quietly around 113.40 for first few hours of the session
    • Japan GDP and capex close to expectations, no impact
    • Nikkei off 0.9% in the morning, last at -1.4% in afternoon session
    • Stocks across Asia plus US futures marked lower take USD/JPY down
    • AUD/JPY hit hard after soft Australian wage data, last down 0.8%
    • EUR/JPY 0.3% lower as JPY outperforms in Asia
    • Support seen at Nov lows between 112.96-113.09
    • Close below the Kijun line at 113.19 targets 38.2 Fibo at 111.90

    EUR
    • EUR/USD quiet in Asia with focus on JPY, trades 1.1786/1.1802 range
    • Next resistance at 1.1822/37, 50% retracement and ECB day high
    • Support now at 1.1691, rebound high on Nov 3 after payrolls
    • Sell-off in Nikkei and US stock futures drives JPY cross selling
    • EUR/AUD gains 0.6% as Australian wage data softer than expected
    • Other EUR crosses mixed, EUR/JPY lower and EUR/GBP higher

    GBP
    • -0.2% in Asia with risk, as WTI falls 1.1% & E-mini S&P -0.3%
    • 1.3131/1.3163 range today with moderate interest once Asia fully opened
    • Neutral momentum studies, 5, 10 & 20 DMAs coil, as consolidation extends
    • Familiar levels - Nov 1.3040/1.3321 range holds - close outside directional
    • Earlier 1.3163 high then 1.3200 340M strikes are first resistance
    • 1.3075 London low then this weeks 1.3063 base is initial support

    CHF
    • -0.1% in Asia modest risk off session with stock & oil lower
    • Tight 0.9887/0.9899 Range & EUR/CHF 1.1662/1.1672
    • No specific CHF related news – sidelined in Asia

    Market Briefs
    • Japan's GDP grows for 7 straight quarters, outlook remains solid
    • Australia consumer sentiment eases back in Oct-survey
    • AU Q3 Wage Price Index q/q, y/y, 0.5%, 2.0%, last 0.5%, 1.9%, f'cast 0.7%, 2.2%
    • Auckland house prices see biggest annual fall since 2010
    • Britain's May sees off challenges to Brexit plan, so far
    • UK's Hammond has limited options to help May with budget
    • CN Oct FDI (YTD) 1.90% vs 1.60%
    • Senior Chinese diplomat to visit North Korea as envoy of Xi
    • Top central bankers vow to talk investors out of easy money
    • U.S. Senate Republicans tie tax plan to repeal of key Obamacare mandate
    • U.S. Commerce chief says 'some sort' of NAFTA deal will reach Trump
    • Sessions changes statement about Trump campaign and Russia

    Looking Ahead - Economic Data (GMT)
    • 07:45 FR Oct CPI (EU Norm) Final m/m, y/y, f'cast 0.1%, 1.2%, -0.2%, 1.2% last
    • 09:30 GB Oct Claimant Count Unem Chng f'cast 2.3k, last 1.7k
    • 09:30 GB Sept ILO Unemployment Rate f'cast 4.3%, 4.3% last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A - EU General Affairs Council meeting - Brussels
    • 07:00 Ireland cen bank's Lane will speak at a conference - Dublin
    • 08:00 Fed's Evans will speak at a UBS conference - London
    • 10:00 ECB's Praet and Denmark Nationalbank's Rohde speak at a ECB conference - Frankfurt
    • 12:00 BoE's Haldane participates at a ECB conference - Frankfurt
    • 13:00 BoE's Braodbent speaks at LSE - London
    • 15:05 Riksbank's Skingsley participates at a discussion - Stockholm
    • 21:10 Fed's Rosengren speaks at Northeastern University - Boston
    See North American Open for a detailed listing of US/NorAm releases, events
     
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    Tadhg Gaelach

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    TUESDAY, NOVEMBER 14, 2017


    TOP NEWS


    [font=arial]• [/font]Top central bankers vow to talk investors out of easy money

    Four of the world's top central bankers promised to keep openly guiding investors about future policy moves as they slowly withdraw the huge monetary stimulus rolled out during the financial crisis. "Forward guidance has become a full-fledged monetary policy instrument," ECB President Mario Draghi said. "Why discard a monetary policy instrument that has proved to be effective?" Fed Chair Janet Yellen agreed with Draghi that guidance has been beneficial "on balance" but stressed it should always be viewed as depending on how the economy actually develops. "All guidance should be conditional and related to the outlook for the economy," she said.

    [font=arial]• [/font]Fed should stand pat on interest rates for now-Bullard
    The Federal Reserve should keep its benchmark interest rate at current levels until there is an upswing in inflation, St. Louis Fed President James Bullard said. "Inflation data during 2017 have surprised to the downside and call into question the idea that U.S. inflation is reliably returning toward target," Bullard said in a speech during an appearance in Louisville, Kentucky. He added that even if the Fed does manage to return inflation to its 2 percent inflation target, it would not happen before 2018 or 2019. Meanwhile, Atlanta Fed President Raphael Bostic said the Federal Reserve should aim to raise interest rates gradually, despite weak inflation readings, in part because any spike in demand could push the U.S. economy beyond its sustainable levels.


    Services boost U.S. producer prices; underlying inflation firming
    U.S. producer prices rose more than expected in October, driven by a surge in the cost of services, leading to the biggest annual increase in wholesale inflation in more than 5-1/2 years. The Labor Department also showed steady gains in underlying producer prices, which supported expectations of a gradual increase in inflation and keep the Federal Reserve on track to raise interest rates in December. Report from the Labor Department showed the producer price index for final demand increased 0.4 percent last month after a similar gain in September. That lifted the year-on-year increase in the PPI to 2.8 percent, the largest rise since February 2012, from 2.6 percent in September.

    Euro zone growth, eclipsing U.S. economy, set to be best in decade
    The euro zone's annual economic growth rate outstripped that of the United States in the third quarter setting up 2017 as the best year for the currency area since financial markets crashed a decade ago. Eurostat, the European Union statistics office, confirmed a preliminary estimate that euro zone GDP grew 0.6 percent from July to September from the previous quarter and on a year on year basis was 2.5 percent higher. This was higher than the 2.3 percent year-on-year rate for the U.S. economy, which had been growing faster than the euro zone. Meanwhile, seasonally adjusted German GDP rose 0.8 percent on the quarter, beating a consensus forecast of 0.6 percent, which was also the second-quarter growth rate.

    China's economy cools as gov't curbs hit factories, property and retailers
    China's economy cooled further last month, with industrial output, fixed asset investment and retail sales missing expectations as the government extended a crackdown on debt risks and factory pollution. Industrial output rose 6.2 percent year-on-year in October, the National Bureau of Statistics said, missing analysts' estimates of a 6.3 percent gain and lagging a 6.6 percent increase in September. Fixed-asset investment growth also slowed to 7.3 percent in the January-October period, from 7.5 percent in the first nine months. Analysts had expected an increase of 7.4 percent. Property investment growth also cooled to 5.6 percent in October year-on-year, from 9.2 percent in September. Retail sales gained 10 percent in October on-year, versus an expected 10.4 percent rise and below the 10.3 percent growth in September.

    DEEP DIVE

    BREAKINGVIEWS-Euro zone boom stimulates reform complacency
    Italy’s failure to qualify for soccer’s World Cup may be a national humiliation, but the country has other reasons to celebrate. Europe’s fourth-largest economy is growing at a rate not seen since before the sovereign debt crisis. The data confirms the euro zone recovery is getting stronger and broader.

    REUTERS SUMMIT-Pimco's Fels sees U.S. stuck in 'new neutral' of low rates as fear vanishes
    A top economist at Pacific Investment Management Co on Tuesday said global markets are stuck in a low interest rate environment that has siphoned fear from investors who may be ill-prepared for when the market environment next heads south.



    IS QE WORKING?
    [​IMG]



    MARKETS TODAY


    TREASURIES: Treasury two-year note yields touched a nine-year high, while those on long-dated debt fell as the yield curve flattened for a second straight day and investors braced for the next tightening by the Federal Reserve in December. 2-year notes were flat with a yield of 1.69 pct. Benchmark 10-year notes were up 6/32 to yield 2.38 pct. The yield gap between 2-year notes 10-year notes contracted to 69.20 bps. 5-year notes gained 1/32 to yield 2.06 pct. 30-year bonds rose 22/32, yielding 2.84 pct. The yield spread between 5-year notes and 30-year bonds also flattened to 76.20 bps. That was the narrowest spread in nearly two weeks.

    FOREX: The euro rose against the dollar after data showed Germany's economy shifted into a higher gear in the third quarter. The euro was up 0.1.11 pct at $1.1794. Against the yen, the dollar fell 0.17 pct to 113.42 yen. Sterling was up 0.37 pct at $1.3162. The dollar index was down 0.70 pct at 93.829.

    CORPORATES: Corporate bond spreads widened amid uncertainty about U.S. tax policy and the economy's ability to deal with more interest rate hikes. The CDX-IG.29 index widened by 1 bps to 57 bps.

    STOCKS: Stock indexes fell as General Electric shares plunged for the second straight day and a drop in crude oil prices hit energy stocks. General Electric was down 5.89 pct. Exxon slipped 0.78 pct and ConocoPhillips fell 2.55 pct. The Dow fell 30.3 points, or 0.13 pct, to 23,409.4, the S&P 500 lost 5.93 points, or 0.23 pct, to 2,578.91 and the Nasdaq dropped 19.72 points, or 0.29 pct, to 6,737.87.

    C&E: Oil fell for a third day in a row on forecasts for rising U.S. crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency (IEA). In addition, analysts said oil prices were pressured by a global commodities selloff, led by base metals like nickel and copper, due to weaker-than-expected economic data from China. The Paris-based IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018. Brent fell 2.26 pct to $61.73 a barrel. U.S. crude lost 2.54 pct to $55.32 a barrel. Gold was up 0.21 pct at $1280.26 an ounce. Reuters-Jefferies index was down 1.25 pct at 191.75.


    ICAP DATA

    [​IMG]



    LATAM NEWS

    Venezuela says debt refinancing under way, S&P calls selective default
    Venezuela's cash-strapped government insisted it had successfully begun efforts to refinance some $60 billion in bonds, though creditors disagreed following fruitless talks and a ratings firm declared the nation in selective default. In its statement on Monday, S&P Global Ratings said it could raise Venezuela's ratings again if the government made payments on the overdue coupons and remained timely on other payments before the restructuring is completed. However, it said it saw a one-in-two chance that Venezuela could default again within the next three months and it listed a further four bonds with overdue coupon payments due in the coming weeks, with unpaid obligations totaling $420 million.

    Brazil retail sales rebound in September as spending rises
    Brazilian retail sales rebounded in September from an unexpected drop in the prior month as lower unemployment provided a welcome boost to consumer spending. Sales volumes, excluding cars and building materials rose 0.5 percent in September from August after seasonal adjustments, government statistics agency IBGE said. The reading exceeded economists' median forecast of a 0.40 percent increase in a Reuters poll, and bucked a two-month string of underwhelming figures that had stoked concerns over Brazil's recovery from its worst recession in a century. Retail sales increased 6.40 percent from the year before, compared to the median forecast of 5.20 percent.


    LATAM MARKETS
    [​IMG]


    EYE ON ASIA


    India's trade deficit widens to near 3-year high in October
    India's trade deficit widened to its highest in nearly three years in October, government data showed, as export growth contracted for the first time after more than a year. The trade deficit widened to $14.02 billion last month from $8.98 billion in September, data from the Ministry of Commerce and Industry showed. The trade deficit has widened by more $31 billion in the first seven months of the current financial year to $86.15 billion, which could put pressure on the current account deficit of Asia's third largest economy. Merchandise exports for October fell 1.12 percent from a year earlier to $23.1 billion, dropping for the first time since August 2016, dragged down by fall in gems, jewellery and textile exports. Goods imports were up 7.6 percent from a year earlier to $37.12 billion.

    POLL-Philippine economy likely to sustain strong momentum in Q3
    The Philippine economy likely sustained its strong growth momentum in the third quarter, buoyed by brisk consumer and government spending, while higher exports and agricultural output provided a further boost. Analysts forecast the country's GDP expanded a seasonally adjusted 1.6 percent in the July-September period from the second quarter, when it grew 1.7 percent. On an annual basis, the median forecast from 17 analysts was for growth of 6.5 percent in the third quarter, matching the pace of the second quarter and marking the ninth consecutive quarter of growth above 6 percent. Only five analysts gave quarter-on-quarter forecasts. Full-year growth should be around the centre of the 6.5-7.5 percent target, he said, more upbeat than analysts' median forecast of 6.5 percent.



    ASIA ECON WATCH
    (Nov 15)

    Japan GDP (qq) for Q3: Expected 0.3 pct ; Prior 0.6 pct
    Japan GDP (qq) annualized for Q3: Expected 1.3 pct ; Prior 2.5 pct
    Japan GDP capital expenditure for Q3: Expected 0.3 pct ; Prior 0.5 pct
    Australia Wage price index (qq) for Q3: Expected 0.7 pct ; Prior 0.5 pct
    Australia Wage price index (yy) for Q3: Expected 2.2 pct ; Prior 1.9 pct
     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 16 Nov 2017 03:54 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0854 GMT - Hong Kong's August-October unemployment rate falls to a near 20-year low of 3.0%, as the labor market tightens further especially in the import/export trade and financing sectors, official data show. The latest jobless rate was in line with market expectations and down from the 3.1% rate in the July-September period. (chester.yung@wsj.com; @chester_yung)


    0846 GMT - India will continue to cut GST tax rates over the next two years, says Finance Minister Arun Jaitley at a Morgan Stanley event in Singapore. Analysts said the recent tax rate cuts are boosting consumption demand. Jaitley also said the number of people registered for GST has increased about 40% over the old tax system, resulting in higher tax revenue for the government. Analysts say India should remove the multiple tax structures in GST and move towards a simpler format to make it easier for the small- and medium-sized businesses to comply with the new tax law. (debiprasad.nayak@wsj.com)

    0844 GMT - Investors could use moves in the 10-year German government bond futures contract toward 163.43, last week's peak value, to set short positions, KBC Bank strategists say in a note. They expect bund futures to remain within a "sideways" trading range of 160.24-163.43. The December-expiring bund futures contract trades marginally lower at 162.63 early Thursday, according to Factset. (tasos.vossos@wsj.com; @tasosvos)

    0835 GMT - The bonds of German container shipping company Hapag-Lloyd still trade at much lower yields compared to those of French peer CMA CGM, but CreditSights cites several reasons backing its recommendation upgrade to hold from sell. The outlook for the container shipping market looks favorable, with growth in demand expected to outweigh supply until 2019. Meanwhile, efficiency savings from its merger with United Arab Shipping Company earlier this year and a "hiatus" from new vessel purchases should help the German group deal with pressure on its balance sheet or cash flow generation, CreditSights adds. (tasos.vossos@wsj.com; @tasosvos)

    0828 GMT - Vodafone Group PLC's deal to use CityFibre's network to provide fiber broadband in the U.K. is positive for the telecom's credit, Moody's analyst Laura Perez says in a note. The reason is that CityFibre costs less than using BT Group PLC's network business Openreach. And even though CityFibre is small versus Openreach and Virgin Media, it benefits from Ofcom's aim to promote infrastructure competition, Ms. Perez adds. Ofcom is the U.K.'s communications regulator. Vodafone has a Baa1 rating at Moody's. (tasos.vossos@wsj.com; @tasosvos)

    0826 GMT - One of the bitcoin exchanges CME has said it plans to use in pricing proposed bitcoin-futures contracts experienced connection issues this week. That generated complaints on Twitter and has added to the uncertainty and complexity surrounding digital-currency futures. Kraken said on its website that clients were experiencing slow response times, connection timeouts and withdrawal delays. "The issues should be mostly resolved now, but we are continuing to monitor performance closely," it said in its latest update. Kraken is one of 4 exchanges CME plans to price its futures. Bitcoin recently traded above $7,300, recovering from a sharp selloff earlier this week and closing in on yet-another record high. (steven.russolillo@wsj.com; @srussolillo)

    0822 GMT - Singapore's exports likely rebounded last month following September's unexpected 1.1% contraction. The median estimate of 10 economists surveyed by WSJ is for 9.4% growth. Helping the comparison will be the 12% slide in nonoil exports logged in October 2016. On a seasonally adjusted basis, exports are projected to have risen 5.8% sequentially in October after skidding 11% in September. The data are due Friday. (gaurav.raghuvanshi@wsj.com)

    0815 GMT - EUR/USD has some catching up to do with good eurozone economic data, says Commerzbank. "Positive real economic data from the Eurozone is becoming relevant again - also those data that have been ignored in the past," the bank says. EUR/USD trades down 0.1% at 1.1773 Thursday after a jump backed by stronger-than-expected German GDP data. "At least some EUR/USD level above the ones we saw earlier this week seem to be justified in my view," says Commerzbank in a note. The U.S. dollar side "does not constitute too much of a threat for the EUR/USD," the bank adds. (olga.cotaga@wsj.com; @OlgaCotaga)

    0815 GMT - High money supplies in China heightens financial-market risks, says Huang Qifan, deputy chairman of the economic and finance committee under China's legislature. Speaking on a panel at a Beijing financial conference, he noted M2--a broad measure of money supply--has climbed to more than 200% of GDP. It's 70% in the US. Having the highest ratio in the world is "not a good thing," said Huang, noting too much cash in the system could lead to property bubbles. He also called for reforming how China invests its foreign reserves, saying higher returns are needed for the country to become a strong financial power. (chao.deng@wsj.com)

    0807 GMT - Spain's upcoming government bond auction on Thursday should proceed without any major fuss, say KBC Bank analysts. They say that the country's constitutional crisis has hardly had any negative impact on its bonds. The Spanish treasury is to auction EUR4 billion to EUR5 billion in January 2021-, October 2022-, October 2027- and July 2066-dated bonds Thursday. (emese.bartha@wsj.com; @EmeseBartha)

    0759 GMT - The Swedish krona and the Norwegian krone have both lost significant ground versus the euro this week. HSBC analysts attribute this weakening to uncertainties related to housing price developments in both countries. The EUR/SEK trades at 9.9201, down 0.18%, while the EUR/NOK trades at 9.6904, down 0.29% in early Thursday trade. (emese.bartha@wsj.com; @EmeseBartha)
    0749 GMT - French government bonds, or OATs, have been performing strongly recently, partly driven by Japanese investors' appetite, say ING rates strategists. The European Central Bank's recent decision to extend asset purchases by nine months in 2018 is supportive, but that's broad-based for the whole eurozone. One possible France-specific explanation for the recent strong performance of French OATs is that 10-year OATs on a JPY-hedged basis currently offer the widest pick-up to U.S. Treasurys for Japanese investors in years, ING rates strategists say. (emese.bartha@wsj.com; @EmeseBartha)


    (END) Dow Jones Newswires
     
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    [​IMG]



    [​IMG]



    THURSDAY, NOVEMBER 16, 2017


    TOP NEWS

    China Jan-Oct outbound investment falls 40.9 pct to $86.31 bln
    China's non-financial outbound direct investment from January to October fell 40.9 percent year-on-year to $86.31 billion, the Ministry of Commerce said as authorities bear down on what they say are speculative foreign ventures. Outbound investment in October fell 29.6 percent on-year to $8.28 billion, Reuters calculated from official data, narrowing from a 42.5 percent on-year decline in September. Separately, China’s deputy chairman of the economic and finance committee under the National People's Congress, Huang Qifan, said China's financial sector faces bubble risks and that a property tax may be on the cards in the near future as authorities extended their efforts to reduce a worrisome build-up of debt in the economy.

    Two U.S. Senate Republicans critical of party's tax plan
    A Senate Republican tax plan that would repeal the Obamacare mandate and give permanent tax cuts only to U.S. corporations drew fire from two Republican lawmakers on Wednesday in what could be a sign of trouble for the sweeping measure. Republican Senator Ron Johnson of Wisconsin said he would not support the current proposal, because he believes they unfairly benefit corporations over other kinds of enterprises, including small businesses. Senator Susan Collins warned that some middle-income taxpayers could see tax cuts wiped out by higher health insurance premiums if the repeal of the Affordable Care Act's mandate goes through.

    Caution prudent in uncertain times, but has limits -BoC's Wilkins
    A cautious approach to monetary policy may be prudent during times of uncertainty like today, but caution has its limits because the trade-off can be financial instability, Bank of Canada Senior Deputy Governor Carolyn Wilkins said on Wednesday. Explaining how uncertainty affects decision-making at the bank, Wilkins said policy may respond to negative shocks more aggressively when interest rates are low, but a cautious approach is prudent when it is not clear how rate moves will affect spending. Wilkins said the bank is particularly focused on data that indicate how wages and potential output are progressing, as well as the effects of the rate hikes and the renegotiation of the North American Free Trade Agreement.


    Britain's May weathers new challenges on Brexit plan, more to come
    British Prime Minister Theresa May withstood new attempts to force concessions on her blueprint for leaving the European Union on Wednesday, the second day of a parliamentary debate that is deepening divisions over Brexit. May has been weakened by losing the Conservative Party's majority in a June election and faces hostility from many lawmakers, including some Conservatives, to various parts of the EU withdrawal bill which requires parliamentary approval. May urged lawmakers to work together ahead of a debate on several amendments aimed at entrenching EU protections on a wide range of issues from the environment to workers' rights.

    Greece readies new benchmarks for 30 billion euro debt swap
    Greece on Wednesday invited holders of about 30 billion euros in its debt to swap 20 outstanding bonds for five new benchmark ones, a move designed to help wean it off reliance on rescue funds and regain full access to financial markets. The eligible papers are 20 bonds issued in 2012 in a voluntary scheme under which private bondholders took a 53.5 percent haircut - or value reduction - on the nominal value of their holdings. The new bonds will have durations of five, 10, 15, 17 and 25 years, with coupons ranging from 3.5 to 4.2 percent, according to an announcement from debt agency PDMA.


    NEWSMAKER

    Mark Cuban says tax rates have almost no impact on investment
    Billionaire entrepreneur and potential presidential candidate Mark Cuban said on Wednesday that a cut in the U.S. corporate tax rate would have little to no effect on his investment decisions.


    REUTERS SUMMIT

    Trade sterling like emerging market currency, say investors
    The pound should be traded like the currency of an emerging-market country, money managers at the 2018 Reuters Global Investment Summit said on Wednesday, because of uncertainty surrounding Brexit.



    BANK OF ENGLAND'S TRADE-WEIGHTED STERLING INDEX
    [​IMG]



    MORNING MEETING


    JGBS RANGE-BOUND, NIKKEI RALLIES

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.344%, JGB 10s 0.041%, Bund 10s 0.372%
    • US-Japan-Germany respective 2s indicated 1.698%, -0.192%, -0.754%
    • JGBs up, albeit slightly, on firmer USTs, lack of sellers
    • 20yr auction goes well, stop 0.574%, BTC 3.51, tail 0.1bp, last 3.45, 0.1bp
    • 3mo auction goes well too, stop 0.227%, BTC 3.70, tail 1.1bp, last 3.13, 2.3bp
    • JGB futures up 0.01 at 150.80, range 150.87/150.79
    • Nikkei sees good bounce after recent moves down, 21,972 early to 22,345
    • At 22,351, index up 322 points or 1.47% on day
    • AXJ mixed and moves more limited, SSEC -0.1%, STI -0.4%
    • HSI +0.5%, KOSPI +0.4%, TWI +0.2%, ASX +0.3% and NZX50 +0.4%
    • Tokyo and Shanghai rubber futures up but Dalian iron ore down

    Currency Summaries
    JPY
    • USD/JPY, most JPY crosses buoyant in Asia, fresh demand and buy-backs
    • Slightly higher US Treasury yields help, 10s +2 bp or so to @2.343%
    • USD/JPY from 112.76 to 113.05, heavy above 113.00 with market still long
    • Bids below from @113.25, trail down, large @113.00, also option expiries
    • Option expiries bracket, total USD3.7 bln 112.00-75, 3 bln 112.95-113.60
    • Another USD1.5 bln above between 113.90-114.00
    • Nikkei supportive today, on bounce, currently up 197 pts or 0.9% at 22,225
    • EUR/JPY Asia 132.88-133.16, tethered down by E780mln 133.00 option expiries
    • GBP/JPY buoyant, 148.47-90, resistance from 148.98 100-HMA, 200-HMA 149.21
    • AUD/JPY see small bump up on good jobs data, 85.56 to 85.93, low o/n 85.50
    • NZD/JPY on back-foot, edges down from 77.62 to 77.37, trend low 10/31 77.34
    • MoF flow data week-ended Nov 11 - Japanese buy net Y308.2bln for-stocks
    • Y75.6bln bills too, Y105bln bonds sold, foreigners buy Y182.4bln JPN stocks

    EUR
    • EUR/USD does little in Asia, large nearby EUR option expiries again
    • Range 1.1769-92, touch on back foot after rally to 1.1862 overnight
    • Total E1.95 bln option expiries today between 1.1770-1.1800 strikes
    • Another E5.1 bln above between 1.1815-35, effective cap, large below too
    • Possible rendezvous with ascending 55-HMA at 1.1766, 55-DMA 1.1793 above
    • EUR/JPY Asia 132.88-133.16, tethered down by E780mln 133.00 option expiries
    • EUR/GBP heavy, 0.8950 to 0.8930, down from 0.9014 high o/n, sub-0.8950 100-DMA
    • EUR/CHF heavy too, off tad from 1.1655 to 1.1642, high o/n 1.1688

    GBP
    • Cable treads water in Asia, 1.3162-88, option expiries above help cap
    • GBP562 mln between 1.3185-1.3200 strikes, 396 mln 1.3265-80
    • Little to trade off of, interest low, flows light at best
    • Recently holding mostly above ascending 100-DMA at 1.3119 today

    CHF
    • USD/CHF steady after fall with USD/JPY yesterday, Asia 0.9884-95
    • Market quiet with few flows, little interest, higher US yields supportive
    • Resistance from descending 55-HMA at 0.9908, 100-HMA 0.9929
    • Some nearby option expiries - 0.9800 USD400 mln, 0.9975 305 mln

    Market Briefs
    • AU Oct Unemployment Rate 5.4%, last 5.5%, f'cast 5.5%; lowest since 2013
    • AU Oct Employment 3.7k, last 19.8k, f'cast 17.5k, rvsd 26.6k
    • AU Oct Full Time Employment 24.3k, last 6.1k, rvsd 9.3k
    • New Zealand consumer confidence falls in November - ANZ survey
    • China gov't official warns of bubble risks in financial sector
    • China Jan-Oct outbound investment falls 40.9 pct to $86.31 bln
    • Two U.S. Senate Republicans critical of party's tax plan
    • Mark Cuban says tax rates have almost no impact on investment
    • Japan Sept US Treasury holdings $1.096 trln, Aug $1.102 trln
    • S.Korea says U.S. must not strike N.Korea without Seoul's consent
    • Caution prudent in uncertain times, but has limits - BoC's Wilkins
    • Britain's May weathers new challenges on Brexit plan, more to come
    • Trade sterling like emerging market currency, say investors - Rtrs summit

    Looking Ahead - Economic Data (GMT)
    • 09:30 GB Oct Retail Sales m/m, y/y, f'cast 0.1%, -0.6%, -0.8%, 1.2% last
    • 10:00 EZ Oct Inflation Final m/m, y/y, f'cast 0.1%, 1.4%, 0.4%, 1.4%, last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 08:00 ECB's Jazbec speaks at a conference - Ljubljana
    • 08:45 ECB's Mersch speaks at a conference - Frankfurt
    • 10:00 EU's Oettinger speaks at a conference - Berlin
    • 11:50 Riksbank's Ohlsson speaks at a conference - Gothenburg
    • 14:00 BoE's Carney and others participate in a discussion - Liverpool
    • 14:10 Fed's Loretta speaks at a conference - Washington
    • 17:00 SNB's Maechler speaks at a conference - Geneva
    • 18:10 Fed's Kaplan participates in a Q&A - Houston
    • 20:00 Fed's Williams speaks at FRBSF conference - San Francisco
    • 20:00 ECB's Constancio participates in a panel - Ottawa
    • 20:45 Fed's Brainard speaks at a conference - Michigan
    • 21:30 Fed's Potter speaks at NASP discussion - New York
    See North American Open for a detailed listing of US/NorAm releases, events


     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 17 Nov 2017 03:05 EST
    Global Forex and Fixed Income Roundup: Market Talk


    Swedbank remains confident that net bond purchases by the Swedish Riksbank will stop at year-end, even though it is still an open question. However, Swedbank analysts Knut Hallberg and Joergen Kennemar also expect the Riksbank to signal that reinvestments will continue for a while longer. At its October meeting, the Riksbank didn't issue new guidance on its current bond-buying program which runs until year-end, and therefore a decision is expected at the December meeting. (emese.bartha@wsj.com; @EmeseBartha)

    0755 GMT - The latest sell-off in U.S. speculative-grade, or junk, corporate bonds likely reflects the market's effort to correct the under-compensation for default risk, Moody's Capital Markets Research chief economist John Lonski says. However, the default outlook should improve over the next 12 months, limiting any widening in U.S. junk bond spreads over Treasury yields. After all, rating upgrades have outnumbered downgrades so far in 4Q 2017, both in investment-grade and junk issuers. And the number of improved U.S. corporate rating outlooks has exceeded that of worsened outlooks since the of June, Mr. Lonski adds. (tasos.vossos@wsj.com; @tasosvos)

    0732 GMT - Italy's upcoming bond-exchange operation Friday will allow holders of certain government bonds to add duration before facing possible pre-auction pressure later this month. "Italy will offer investors the last opportunity to add periphery duration before the month-end auctions," says Commerzbank rates strategist Christoph Rieger. Italy will issue a maximum of EUR2 billion in February 2033-dated BTPs in exchange for short-dated BTPs and an inflation-linked BTPei with maturities in 2018 and 2019. With a yield close to 2.4% for the February 2033 BTP, the offer "should fall on fertile ground," Mr. Rieger says. Bond-exchange operations are cash-neutral. (emese.bartha@wsj.com; @EmeseBartha)

    0727 GMT - Yields on 10-year German government bonds have established a new tight trading range at just under the 0.4% mark in recent days, and Friday should provide little impetus to break through it, Commerzbank rates strategist Christoph Rieger says. The bank recommends tactical short positions with tight profit targets and stop-loss orders to capture this range. Bund yields are quoted at 0.374% early Friday, according to Tradeweb. Yields move inversely to bond prices. (tasos.vossos@wsj.com; @tasosvos)

    0722 GMT - Commerzbank sees potential for Spanish government bond yield spreads over bunds to tighten as issuance is abating into the year-end, says rates strategist Christoph Rieger. In addition, the valuations of Spanish government bonds look good against the fundamentals, he says, implying room for tightening. The 10-year Spanish-German yield spread trades at 116 basis points early on Friday, unchanged from Thursday, according to Tradeweb. (emese.bartha@wsj.com; @EmeseBartha)

    0715 GMT - As ANZ also says a rate hike in Malaysia will come soon in the wake of today's stronger-than-expected 3Q report, Wednesday's CPI reading for October could prove key, says ANZ. It sees inflation easing to 4.1% from September's 4.3%. The central bank's next meeting is in January. (chester.yung@wsj.com; @chester_yung)

    0645 GMT - Moody's view on India's growth prospects should be music to Modi's ears. While this FY's increase is seen slowing to 6.7% from the prior year's 7.1%, GDP gains are seen jumping to 7.5% next FY, says the ratings firm. That call should help the government as it tries to counter criticism that its two big policy changes--demonetization and GST--have caused irreparable damage. Moody's says economic activity will strengthen as the initial negative effects from both fade while government steps to support small- and medium-sized businesses as well as exporters would further help the economy. "Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns." Baa grades are the lowest in investment-grade territory. (anant.kala@wsj.com)

    0634 GMT - Japanese stocks were about to reverse a brief foray into negative territory to end up slightly as a stronger yen sapped the market's early strength. After rising as much as 1.8% this morning, the Nikkei ended up 0.2% at 22396.80, trimming the week's pullback to 1.3%. That ends a 9-week winning streak, the longest in nearly 5 years. The dollar is around Y112.60, down from Y113.05 late Thursday, on both greenback weakness and broader yen gains as some closed out bearish bets which had been popular. That as US trading activity will notably slow next week with the Thanksgiving holiday. Ten-year JGB yields fell a half-basis point to 0.035%. (kosaku.narioka@wsj.com)

    0622 GMT - Moody's has moved its India ratings outlook to stable amid today's sovereign upgrade. Both S&P and Fitch have the same view, but their ratings are now a notch lower than Moody's. Stable implies an equal chance of an upgrade or downgrade. (anant.kala@wsj.com)

    0606 GMT - Nomura believes Malaysia's central bank will view 3Q's stronger-than-expected GDP growth as an opening to normalize its accommodative monetary-policy stance. The central bank in its policy statement after last week's meeting appeared to signal the possibility of a rate increase next year. The investment bank, which reiterates its call of a quarter-point hike at the next meeting in January, adds the pickup in 3Q growth poses upside risks to its 2017 forecast of 5.5%, which is also the midpoint of the central bank's prediction. (yantoultra.ngui@wsj.com; @yantoultra)

    0552 GMT - Moody's upgrade of India should be a shot in the arm for PM Modi amid growing criticism that faulty government policies have taken the sheen off of what was once the world's fastest-growing big economy. He is likely to highlight the decision to drive home the point that his government's major moves--including last November's high-denomination-currency withdrawal and July's GST start--would lead to significant economic gains despite some short-term pain. And Modi doesn't just have Moody's to make that point. Recently, the World Bank lifted India by a whopping 30 positions to 100 in the Ease of Doing Business global rankings. And earlier this week, the results of a survey by the US-based Pew Research Center showed Modi's domestic appeal was intact. (anant.kala@wsj.com)

    0549 GMT - Fresh 1-year highs for the Malaysian ringgit versus the dollar after the country's economic grew by the most in 3 years last quarter. The dollar fell as low as MYR4.158, adding the recent gained fueled by months of oil-price gains and the country's central bank hinting last week at a possible rate hike. Ahmad Raziq Ab Rahman, senior portfolio manager at Affin Hwang Asset Management, tells WSJ that some foreign flows in Malaysian bonds are expected to take advantage of expected further ringgit strengthening. (yantoultra.ngui@wsj.com; @yantoultra)

    (END) Dow Jones Newswires