E Markets: It Is Not Enough

Market Recap:

Equities: The US S&P500 futures are up 0.45% after losing 0.53% yesterday. The Stoxx Europe 600 is up 0.2% tracking China growth pledges and Italian banks with ECB capital requirements for NPLs hurting. The MSCI Asia Pacific bounces up 1%.  

  • Japan Nikkei up 0.96% to 20,555.29
  • Korea Kospi up 1.58% to 2,097.18
  • Hong Kong Hang Seng up 2.02% to 26,830.29
  • China Shanghai Composite up 1.36% to 2,570.34
  • Australia ASX up 0.66% to 5,i71.80
  • India NSE50 up 1.39% to 10,886.80
  • UK FTSE so far up 0.2% to 6,869
  • German DAX so far up 0.1% to 10,863
  • French CAC40 so far up 0.2% to 4,772
  • Italian FTSE so far off 0.35% to 19,104

Fixed Income:  Supply and politics dominate the EU market.  Italy issues its first big bond today with E5bn for 2035 seeing E30bn in orders and pricing later this morning. The ECB speech and UK Brexit vote are excuses to hold back even with equities bid on China growth plans. German Bund 10-year yields are up 3bps to 0.21%, UK Gilts off 2bps to 1.28%, French OATs off 1bps to 0.63%. In the periphery, Italy up 1bps to 2.86% on supply while Spain off 3bps to 1.39%, Portugal off 3bps to 1.66% and Greece off 3bps to 4.26%. 

  • US Bonds are bid – curve flatter - with focus on data, earnings– 2Y off 1bps to 2.52%, 5Y off 2bps to 2.51%, 10Y off 2bps to 2.69% and 30Y off 2bps to 3.04%. 
  • Japan JGBs mixed with focus on curve– 2Y flat at -0.15%, 5Y up 1bps to -0.14%, 10Y flat at 0.02%, 30Y flat at 0.70%. 
  • Australian bonds tread water despite China plans, equity bounce– 3Y flat at 1.79%, 10Y flat at 2.27%. 
  • China bonds slightly lower on tax cuts, growth plans – 2Y up 1bps to 2.68%, 5Y up 1bps to 2.95%, 10Y up 2bps to 3.15%. 

Foreign Exchange: The US dollar index is up 0.3% to 95.49 with 95.07-95.53 range. In Emerging Markets USD is bid – EMEA:RUB off 0.15% to 67.102, ZAR off 0.4% to 13.813, TRY off 0.1% to 5.44; ASIA:INR off 0.4% to 71.034 and KRW flat at 1121.20. 

  • EUR: 1.1430 off 0.35%. Range 1.1423-1.1490 with ECB Draghi and Brexit key drivers today and risk for 1.1350 again. 
  • JPY: 108.40 up 0.2%. Range 108.13-108.75 with equities up, rates still low, USD bounce modest and worrying 107.80 to 109 keys. EUR/JPY 123.90 off 0.15%. 
  • GBP: 1.2855 off 0.1%. Range 1.2829-1.2916 with EUR/GBP .8890 off 0.2% - Day of reckoning with more focus and less surprises? 1.26-1.31 big picture. 
  • AUD: .7195 flat. Range .7191-.7226 with focus on China and hopes for growth, NZD flat at .6820. 
  • CAD: 1.3265 off 0.15%. Range 1.3244-1.3284 with 1.3250 still base building and risk for 1.34 as rates and growth focus with oil noise. 
  • CHF: .9860 up 0.5%. Range .9802-.9870 with rebound in $ linked to equities and unwind for safe-haven. EUR/CHF 1.1275 up 0.2%. 
  • CNY: 6.7590 off 0.1%. Range 6.7380-6.7600 with 6.77 now key resistance for 6.73 and 6.71 tests – watching China growth efforts.
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