General Trend
– All markets trod water during Asian trading today, waiting for the Non-Farm Payrolls in the US tonight as a hint to what the Fed’s next moves will likely be.
– JP yields started out continuing their softening tone of this week, with JGB 10-yr yields down to as low as 0.965%, but then reversed course during the session +2.3bps to 0.988% and some renewed JPY strength.
– In a piece of brighter economic news out of New Zealand, first quarter Manufacturing Activity moved back into expansion.
– China Balance of Trade showed the usual surpluses, slightly higher than expected.
– Former US Former Pres Trump again opined on using tariffs against nations, including China, this time threatened against those countries that do not curb flow of immigrants to the US.
– Some inconsequential Central Bank / FX speak from RBA’s new Dep Gov Hauser (ex-BOE) and Japan Fin Min Suzuki.
– US equity FUTs up slightly during Asian trading.
Looking ahead (Asian time zone)
– Fri Jun 7th (Fri night DE May Balance of Trade, US NFP jobs, ECB Lagarde speech).
Holidays in Asia this week
– Monday June 3rd, Malaysia, New Zealand, Thailand.
– Thursday June 6th South Korea.
Headlines/economic data
Australia/New Zealand
– ASX 200 opens +0.1% at 7,833.
– New Zealand Q1 Manufacturing Activity Q/Q: +0.7% v -0.7% prior.
– ANZ Bank now expects RBNZ’s first rate cut to come in Feb 2025 (revised from May 2025) – press.
China/Hong Kong
– Hang Seng opens +0.5% at 18,562; Shanghai Composite opens +0.2% at 3,053.
– CHINA MAY TRADE BALANCE: $82.6B V $73.0BE.
– CHINA MAY TRADE BALANCE (CNY-DENOMINATED): 586.4B V 513.5B PRIOR.
– (CN) Follow up: US Former Pres Trump suggests will use tariffs against nations, incl China, that do not curb flow of immigrants to US – US press.
– China Commerce Ministry (MOFCOM): Risks to China-EU trade are rising due to EU anti-subsidy probes [overnight update].
– (US) GOP Lawmakers: Leading Chinese battery companies, including CATL, with ties to Ford Motor and Volkswagen should be banned from shipping goods to the US as their supply chains use forced labor – WSJ [overnight update].
– China said to speed up innovative drug and rate disease drug approvals – press [overnight update].
– China PBOC sets Yuan reference rate: 7.1106 v 7.1108 prior.
– China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net drains CNY98B v net drains CN258B prior.
Japan
– Nikkei 225 opens -0.3% at 38,597.
– Japan Apr Household Spending Y/Y: 0.5% v 0.5%e (1st rise in 14 months).
– Japan Apr Preliminary Leading Index CI: 111.6 v 111.6e; Coincident Index: 115.2 v 114.5e.
– Japan Fin Min Suzuki: FX intervention should be used on a limited basis and in a ‘restrained manner’; Decline in Japan’s FX reserves partly reflects Apr-May intervention.
– Japan May Total Reserve Assets: $1.23T v $1.28T prior (follows record interventions Apr-May of ~$62B).
– Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years, 5-10 Years, 10-25 Years; (lnline with prior purchases).
– Follow up: Japan Transport Ministry said to now be verifying safety of 6 vehicle models – Japanese press.
– Natixis analysts see next Bank of Japan (BOJ) hike may come as early as next week [overnight update].
South Korea
– Kospi opens +1.1% at 2,718 (post-holiday yesterday).
– Taiwan Semi to strengthen cooperation in AI chips with SK Group (Korea) [Conglomerate incl SK Hynix, SK Telecom, SK Innovation, Chey Tae-won] – financial press.
Other Asia
– INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.50%.
– Thailand May CPI M/M: 0.6% v 0.3%e; Y/Y: 1.5% v 1.2%e.
– Taiwan May CPI Y/Y: 2.2% v 2.1%e [overnight update].
North America
– Moody’s warned it may cut ratings on six US Banks due to Commercial Real Estate Exposure; First Merchants Corp., F.N.B. Corp., Fulton Financial Corp., Old National Bancorp, Peapack-Gladstone Financial Corp. and WaFd were placed on review for downgrade.
– (IL) Netanyahu’s address to US Congress pushed to July 24th (prior: June 13th) – press.
– US) May Challenger Job Cuts: 68.8K v 64.8K prior; Y/Y: -20.3% v -3.3% prior; Hiring announcements at decade low.
– (MX) Mexico May Vehicle Production: 365.6K v 358.6K prior.
– (US) Q1 FINAL NONFARM PRODUCTIVITY: 0.2% V 0.0%E; UNIT LABOR COSTS: 4.0% V 4.9%E.
– (US) INITIAL JOBLESS CLAIMS: 229K V 220KE (4-week high); CONTINUING CLAIMS: 1.792M V 1.790ME.
– (US) APR TRADE BALANCE: -$74.6B V -$76.5BE.
– GME Meme stocks move higher after ‘Roaring Kitty’ schedules a YouTube stream tomorrow at Noon ET.
Europe
– (UR) Reportedly the European Commission says that Ukraine is ready for EU membership talks – FT.
– (EU) ECB CUTS KEY RATES BY 25BPS; AS EXPECTED; To stay data-dependent, follow meeting-by-meeting approach.
– (EU) ECB UPDATES STAFF PROJECTIONS: Now sees 2025 Inflation above 2% target.
– (EU) ECB Chief Lagarde: ECB is not close to neutral rate; Not going to tell you until much later in summer if we do something now or at another point in time; Speed and timing is uncertain – Q&A.
– (EU) ECB’s Holzmann (Austria, hawk) was reportedly the only dissenter at today’s ECB meeting – press.
– (EU) Reportedly a few ECB hawks would have supported holding rates if there had not been a commitment – press.
Levels as of 01:20 ET
– Nikkei 225 -0.3%; ASX 200 +0.5%; Hang Seng -0.8%; Shanghai Composite -0.4%; Kospi +1.2%.
– Equity S&P500 Futures +0.1%; Nasdaq100 +0.1%; Dax% flat; FTSE100 +0.1%.
– EUR 1.0886-1.0898; JPY 155.50-155.94; AUD 0.6662-0.6678; NZD 0.6188-0.6204.
– Gold +0.5% at $2,402/oz; Crude Oil +0.3% at $75.77; Copper -0.4% at $4.6437/lb.