Halister News

Economic Release Details: {CNLNSFIN Index ECOD} --SIMON LEE

Economic Release Details: {CNLNNEW Index ECOD} --SIMON LEE

(Bloomberg) -- Net EGB buying was led by Germany while net selling was led by Italy last week, Citigroup strategist Aman Bansal writes in client note.

• On the curve, net buying of the core was concentrated in the 5y-10y sectors
• Net selling of the non-core was led by the 15y sector
• There was small net buying of gilts last week
  • On the curve, net selling in the 30y sector continued for the sixth consecutive week, partially offsetting net buying of 10y and 30y+

(Bloomberg) -- Although the bear-steepening in developed market yield curves has spilled over to Asian bond markets, inflation in Asia remains subdued and real-policy rates are positive, Nagaraj Kulkarni, senior Asia rates strategist at Standard Chartered says.

• “So, do not expect a sustained steepening of curves as yet,” Kulkarni says
• Countries with high foreign holdings of their local currency debt are susceptible to higher U.S. yields
• However, a broad improvement has been seen in the region’s current accounts and fiscal balances since taper-tantrum; thus, any weakness may be limited
• NOTE: Fed chair Yellen spoke about letting the economy run “hot” on Friday, while vice chairman Fischer yesterday warned of risks to that approach

(Bloomberg) -- Malaysia PM Najib is expected to unveil a slightly narrower budget deficit of 3.0% of GDP for 2017 and refrain from announcing out sized figures, Su Sian Lim, economist at HSBC writes in note today

• 2017 budget to be announced on Oct. 21; next general election must take place by Aug. 24 2018, although politicians have indicated an early election as soon as March with Najib having weathered turmoil over 1MDB
• This is achievable only if expenditure is kept from over expanding, as revenue is likely to rise by a mere 2% on moderately higher oil prices
• Small bounce in revenue on the back of higher oil prices will hardly be enough to embolden the govt to deliver personal income tax cuts, much less reduce or abolish GST
• Expects budget deficit of 3.2% of GDP for 2016 vs govt deficit target of 3.0-3.1% vs 2015 deficit 3.2%

(Bloomberg) -- India’s looming festive season is likely to further strain liquidity in the banking system and may spur RBI to conduct its first OMO in over a month, Soumyajit Niyogi, associate director at India Ratings says.

• Higher currency in hands of public due to festive spending is adding to banking system cash strain which has already tightened due to non-resident deposit outflows
• Currency in circulation rose by 285.73b rupees for the week ending Oct. 7
  • Cumulative fiscal year-to-date increase stands at 929.9b rupees or 5.6% increase compared to 3.7% in the corresponding period last year
• NOTE: RBI last held an OMO on Sept. 8
• NOTE: Average system liquidity tightened to a deficit of 90.95b rupees for the week ending Oct. 15 compared to a surplus of 328.67b in prior week, according to Kotak Mahindra estimates
• Yield on 6.97% 2026 bond down 1 bp to 6.73%

(Bloomberg) -- Asian currencies rise as dollar weakens for second day with data overnight pointing to weakness in U.S. manufacturing; onshore yuan pares gains after eyeing first daily gain this month.

• Treasury yields declined after warning by Fed’s Fischer on running a high-pressure economy countered Yellen speech, Rabobank’s head of Asia-Pacific financial markets research Michael Every says
  • U.S. 10-year Treasury yield fell 3 bps to 1.77% overnight
• New Zealand 10-year govt bond yield rises 7 bps to 2.63% after better than expected inflation data; 10-year Australia govt bond yield rising for third day, up 3 bps to 2.34%
• Measure of daily portfolio flows to emerging markets fell sharply over past week: Institute of International Finance
• Aussie rises for fifth day, at 2-week high
  • RBA Governor Lower says central bank has to guard against fall in inflation expectations; minutes of Oct. 4 meeting released today; Australia’s growth prospects look reasonable
  • Underlying 3Q CPI of 0.3% or lower will trigger an RBA rate cut at Nov. meeting, CBA writes in note today; CPI data due Nov. 26; 2Q was +1.0% y/y
• N.Z. 3Q CPI +0.2% y/y & q/q vs est. 0.1% & 0.0%; kiwi jumped sharply before data release; holds gains, up 0.7% at 0.7182 vs USD
  • RBNZ Nov. rate-cut odds fall to 79% vs 84% yesterday
  • 2-year IRS jumps 5 bps, most since July, to 2.125%
  • Dealers still mulling why NZD/USD spiked before 3Q CPI, trader says
• Yen gaining for second day, now at 103.85 per dollar
  • USD/JPY has retreated to 103.50-104.50 range as top side was heavy; may consolidate this week without fresh impetus: Sumitomo Mitsui Banking
  • Govt plans to announce revision to GDP figures at year- end
• Onshore yuan little changed after edging higher earlier; hasn’t strengthened vs USD on daily basis since Sept. 29; PBOC strengthens CNY fixing by 0.11%
  • Offshore yuan up 0.03%, in line for only second daily gain since end-Sept.
  • Some investors trimmed USD/CNH exposure ahead of fixing, tracking broad USD weakness: traders; China 3Q GDP due tomorrow, median est. is 6.7% growth, same as 1Q and 2Q
  • China Sept. outbound investment 106.3b yuan, +56.9% y/y
• Philippines President Duterte starts visit to China
  • Duterte looks for export boost in talks with Xi: Chart
  • Peso edges higher after two days of losses
• Won outperforms
  • S. Korea’s deputy finance minister said yesterday economy should achieve 2.8% growth this year, even with negative impact of Samsung Galaxy Note 7
• Singapore-U.S. dollar curve may widen on dovish MAS: Charts

(Bloomberg) -- China Agri-Industries turnaround expected to start in 2H16 on improving supply/demand dynamics for soybean-crushing and corn-processing divisions, UBS said in note dated Oct. 14.

• Continued recovery in sugar price should drive further upside for biochemical profitability in addition to cost benefits from cheaper corn prices
  • Expects potential transfer of China Foods’ consumer edible oil business to China Agri in 2017
  • Share underperformance since 2014 likely to reverse
  • Raised to buy, PT raised to HK$3.63 vs HK$2.20
• China Agri posts 3-day 6.8% gain
  • NOTE: 5 buy, 1 hold ratings, avg PT HK$3.33: Bloomberg data