E Markets: Resolution?

  • Japan Nikkei off 2.06% to 21,810.52
  • Korea Kospi off 0.44% to 2,071.23
  • Hong Kong Hang Seng up 0.62% to 25,792.87
  • China Shanghai Composite up 0.93% to 2,654.88
  • Australia ASX off 1.74% to 5,922.60
  • India NSE50 up 0.96% to 10,582.50
  • UK FTSE so far up 0.15% to 7,065
  • German DAX so far up 0.60% to 11,395
  • French CAC40 so far up 0.25% to 5,070
  • Italian FTSE so far off 0.20% to 19,014

Fixed Income: The Italian sale of E5.5bn bonds ahead of the EU budget deadline was a key focus for EU bonds today. The data and the on-again risk mood adding to the negative backdrop. UK focus on Brexit continues with UK Gilt 10-year yields up 2.5bps to 1.475%, German Bunds flat at 0.395% while French OATs flat at 0.777% but Italy up 4bps to 3.472%, Spain up 1bps to 1.605%, Portugal up 1bps to 1.95% and Greece up 3bps to 4.40%. 

  • Italy sold E1.25bn of 20Y 2.95% BTP at 3.90% with 1.41 cover– previously 3.79% with 1.90 cover – good auction but not enough to counter budget fears; Italy also sold E2.5bn of 3Y 2.3% 2021 BTP at 1.98% with 1.52 cover– previously 2.51% with 1.26 cover; and Italy sold E1.75bn of 7Y 2.5% 2025 BTPs at 3.12% with 1.52 cover– previously 3.28% with 1.90 cover. 
  • Germany sold E3.1465bn of 2Y 0% 2020 Schatz at -0.58% with 1.88 cover
  • Spain sold E3.851bn of 12M t-bills at -0.323% with 2.05 cover and E600mn of 6M t-bills at -0.419% with 4.59 cover. 
  • US Bonds rally with bull curve steepening catching up to equities– 2Y off 2.5bps to 2.899%, 5Y off 2.7bps to 3.008%, 10Y off 1.8bps to 3.164%, 30Y off 1.3bps to 3.371%. 
  • Japan JGBs rally with risk-off focus, strong 30Y sale– 2Y off 0.1bps to -0.147%, 5Y flat at -0.093%, 10Y off 0.3bps to +0.104%, 30Y off 1bps to 0.863%. The MOF sold Y563bn of 30Y 0.9% JGBs at 0.874% with 3.99 cover up from 3.92% previously. 
  • Australian bonds rally with US, waiting for wage data next– 3Y off 1.5bps to 2.085%, 10Y off 1bps to 2.727%. 
  • China PBOC skips open market operations again, leaves liquidity neutral. Notable HIBOR CNH jumps to 1-month highs with 1M Hibor up 45bps to 4.407% and 3M up 24bps to 4.418%. China Development Bank sold 1Y bonds at 2.5908% today, while China Dalian sold 3Y at 3.51% and special 7Y at 3.88%. The local government bonds rallied on the weaker M2 data – 2Y flat at 2.85%, 5Y off 2bps to 3.25% and 10Y off 2.5bps to 3.45%. 

Foreign Exchange: The US dollar index is off 0.1% to 97.44 after at 972.42-97.66 range – sold in Asia on trade talk hopes, bought back in Europe with Italy/UK doubts. In emerging markets – USD is mixed – EMEA: ZAR up 0.3% to 14.44, TRY off 0.45% to 5.49, RUB u 0.25% to 67.75; ASIA: TWD flat at 30.88, KRW flat at 1133, INR up 0.3% to 72.67.

  • EUR: 1.1250 up 0.25%.Range 1.1217-1.1257 with focus on rates, ECB vs. FOMC talk and 1.1187 vs. 1.13. 
  • JPY: 114.00 up 0.15%.Range 113.58-114.15 with Abe and US/China trade comments driving – EUR/JPY 128.25 up 0.45%. 
  • GBP: 1.2925 up 0.55%.Range 1.2842-1.2925 with Brexit the only focus still – jobs ignored – EUR/GBP .8705 off 0.25%. 
  • AUD: .7200 up 0.35%.Range .7164-.7218 with China trade hopes driving but data ahead matters and .7220-50 resistance. NZD up 0.55% to .6750 with RBNZ and China driving. 
  • CAD: 1.3240 off 0.1%.Range 1.3215-1.3257 with oil and with BOC focus – little to prevent 1.34 again.
  • CHF: 1.0095 off 0.1%.Range 1.0094-1.0128 with EUR/CHF 1.1360 up 0.2%. Focus is on Italy but EUR drives show 1.02 key for $. 
  • CNY: 6.9570 off 0.1%. Range 6.9467-.69739 even with weaker fixing 6.9629 off 0.22% from 6.9476, CNY gains vs. USD on trade talk hopes, tighter HIBOR rates. 
View single page >> |

View TrackResearch.com, the global marketplace for stock, commodity and macro ideas here.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.