HALISTER1: JAPAN RATES WEEKLY: Curve Bull-Flattens on BOJ and Trump Risk

JAPAN RATES WEEKLY: Curve Bull-Flattens on BOJ and Trump Risk

(Bloomberg) -- Japan govt bonds rally this week led by super-longer tenors as BOJ refrained from cutting purchases of very-long-term debt in its November plan while looming U.S. presidential election fuels risk aversion.
  • Click here for weekly change in yield curve and here for market snapshot
  • BOJ announced on Tuesday that it will maintain purchases of bonds due in over 10 years
  • BOJ kept policy unchanged on Tuesday, shifted timetable for 2% inflation target to second half of period running through March 2019; trimmed CPI forecasts for FY2016 to FY2018, and says “risks to economic activity and prices are skewed to the downside”
  • Extra auction of bonds with remaining maturities of 1-5 years drew bid-to-cover ratio of 4.95 on Wednesday, up from 4.89 at similar-maturity auction on Sept. 15
  • September industrial output unchanged m/m vs est. +0.9%
  • Ministry of Finance to sell 2.4t yen of 10-year bonds on Nov. 8 and 800b yen of 30-year bonds on Nov. 10
  • WHAT THEY SAY
  • Mitsubishi UFJ Trust and Banking (Hideo Suzuki, chief manager)
    • Bonds likely to be supported by risk-off sentiment amid uncertainties over U.S. presidential election but fluctuation of JGBs may be limited as they are less sensitive to external factors under BOJ’s yield control policy
    • Auctions of 10- and 30-year notes are likely to be smooth given lower volatility and these tenors are easier to sell to BOJ in the secondary market under central bank’s bond purchase operation
  • Okasan Securities (Makoto Suzuki, senior bond strategist)
    • If Clinton wins, markets will probably see a return to weaker yen/higher stock trend eventually with concern about the stronger yen likely to remain for a while
    • Due to lingering risks of yen gains, it’s hard to predict a significant reduction in BOJ’s bond purchases
    • Investors may remain cautious of aggressively buying JGBs due to continued flattening of yield curve while there’s no drastic change in expectations for Fed rate hike
    • Auction of 10- and 30-year bonds may go smoothly but they may limit gains in JGBs
  • Deutsche Securities (Makoto Yamashita, chief Japan interest- rate strategist)
    • Risk sentiment could swing depending on combination of president and parliament vote
    • Clinton has more fiscal expansionary policy than Obama while Trump has a more fiscal expansionary stance than Clinton
    • Both candidates could be factors for U.S. yields to rise
    • If Trump wins, JGB yields could rise somewhat on rising U.S. yields
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Hideo Suzuki (Mitsubishi UFJ Financial Group Inc)
Makoto Suzuki (Okasan Securities Group Inc)
Makoto Yamashita (Deutsche Bank AG)

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HALISTER: BMW 3Q Profit Beats Estimate; FY Forecast Confirmed

BMW 3Q Profit Beats Estimate; FY Forecast Confirmed

(Bloomberg) -- BMW 3Q Ebit EU2.38b, est. EU2.37b. Year ago EU2.35b.
  • Rev. EU23.4b, est. EU23.2b. Year ago EU22.3b
  • Auto unit margin 8.5%, est. 8.9%. Year ago 9.1%
  • Confirms FY forecast
    • Co previously forecast slight increase in pretax profit; slight increase in auto unit volume and revenue, auto Ebit margin in range 8%-10%
  • Webcast at 10am CET for journalists and 2pm for investors
  • Shares down 23% YTD
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
BMW GR (Bayerische Motoren Werke AG)

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HALISTER1: Megaworld Rises Most in Five Weeks After JPMorgan Upgrade

Megaworld Rises Most in Five Weeks After JPMorgan Upgrade

(Bloomberg) -- Real-estate and hotel company’s shares head for biggest gain since Sept. 29 after co. raised to overweight from neutral at JPMorgan, which kept 12-mo. PT at 5 pesos.
  • Stk +3.6% to 4.02 pesos as of 2:26pm in Manila after closing at lowest level since May 10 on Thursday following 6-day slump
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
MEG PM (Megaworld Corp)

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HALISTER: LafargeHolcim 3Q Adjusted Op. Ebitda a Beat; Confirms FY Targets

LafargeHolcim 3Q Adjusted Op. Ebitda a Beat; Confirms FY Targets

(Bloomberg) -- LafargeHolcim 3Q net sales CHF7.04b vs est. CHF7.37b.
  • 3Q adjusted operating Ebitda CHF1.69b vs est. CHF1.65b
  • On track to achieve FY targets, 2018 objectives
  • FY expectations remain unchanged, except for synergies
    • Now expects to deliver at least CHF550m of incremental synergies in 2016
  • FY incremental synergies target of CHF450m achieved at end 3Q
  • Statement
RELATED
  • NOTE Oct. 14: LafargeHolcim CEO ‘Increasingly Confident’ to Hit Targets: FuW
  • NOTE Oct. 14: LafargeHolcim Considering Name Change, CEO Tells Les Echos
  • NOTE Oct. 3: EU Construction 3Q Review: Beats Market Led by LafargeHolcim
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
LHN VX (LafargeHolcim Ltd)

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UUID: 7947283

HALISTER1: INSIDE G-10: JPY Whipsaws, Nikkei Plunges Ahead of Payrolls

INSIDE G-10: JPY Whipsaws, Nikkei Plunges Ahead of Payrolls

(Bloomberg) -- Risk aversion prevails as a steady stream of U.S. election polls show fluctuating leads and ahead of the monthly U.S. jobs report. JPY whipsaws around 103 as Nikkei index slides to a three-week low.
  • U.S. non-farm payrolls due at 8:30pm HKT; Morgan Stanley and BMO have flagged downside risk to the jobs number given weak ADP. Survey suggests employers added 173,000 workers in October vs 156,000 in September
  • Treasury curve flattens slightly as 10-year yield drops by 1bp to 1.805%; BBDXY rising for first time this week, +0.06%
  • USD/JPY +0.08% to 103.06 vs 102.83-103.20 range
    • Trades back and forth around 103.00, driven by yen fixing flows and slumping Japanese stocks
    • Buy stops above 103.50 for leveraged and proprietary accounts, bids for Tokyo importers layered down to 102.50: trader
  • AUD/USD -0.04% to 0.7679 vs 0.7674-0.7697 range
    • Fresh aussie shorts were put on during the rally seen in response to better-than-expected headline retail sales data, trader says
    • Leveraged funds sold above 0.7690, leaving buy stops above 0.7734 Oct. 20 high; option-related selling seen ahead of 0.7700 strikes
    • RBA forecasts little changed in quarterly statement
  • EUR/USD -0.08% to 1.1096 vs 1.1088-1.1110 range
    • Euro 1-month risk reversals favoring calls over puts by most since February; chart here
  • NOTE: Mark Cranfield is an FX strategist who writes for First Word. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283