HALISTER1: INSIDE G-10: AUD Holds Post FOMC Gain; Kiwi Slips After RBNZ

INSIDE G-10: AUD Holds Post FOMC Gain; Kiwi Slips After RBNZ

(Bloomberg) -- AUD retained overnight FOMC inspired gains throughout a neutral first appearance as RBA governor by Philip Lowe before parliament. NZD facing downward pressure after a dovish RBNZ.
  • USD/JPY failed to hold on to early rise toward 100.47 as meeting today between BOJ, FSA and MOF officials isn’t seen as market moving; pair down 0.1% to 100.23
  • NZD/USD drops 0.2% to 0.7335 vs 0.7325-0.7369 range
    • Fonterra expects only gradual increase in dairy prices
    • RBNZ leaves rates unchanged at 2%, signals further easing
  • AUD/USD up 0.3% to 0.7645 vs 0.7535-0.7550 range
    • Key takeaways from Lowe’s speech to parliament;
      • Unlikely RBA would resort to unconventional monetary policy measures. A flexible inflation- targeting policy which takes account of financial risks is most appropriate
      • It would be a “surprise” if Donald Trump were elected U.S. president; RBA doesn’t have a specific “contingency plan” in place should the Republican nominee win
      • Governor is “somewhat more comfortable” with the situation on housing following signs that it has slowed
  • EUR/USD sidelined at 1.1196 ahead of Draghi speech
    • Greek Prime Minister Alexis Tsipras says in interview with Reuters, hopes Greece could within next 6 months be included in ECB’s quantitative easing program
    • German GDP growth is likely to slow in the second half, though consumer confidence is “robust,” the Finance Ministry says in its monthly report
  • BBDXY slips 0.2% to 1182.10
  • WTI crude oil and copper gain; gold falls
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
40005Z AU (Reserve Bank of Australia)

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Philip Lowe (Reserve Bank of Australia)
Alexis Tsipras (Hellenic Republic)
Donald Trump (Trump Hotels & Casino Resorts Inc)

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HALISTER1: Flows to EM Bonds ’Here to Stay’ on Dollar Outlook: Commerzbank

Flows to EM Bonds ’Here to Stay’ on Dollar Outlook: Commerzbank

(Bloomberg) -- EM bonds are an asset class that is “here to stay” because Fed policy suggests there’s unlikely to be any aggressive dollar appreciation, says Peter Kinsella, Commerzbank’s Head of Emerging Market Economic & FX Research.
  • “There’s talk of a Dec. rate hike given the hawkish guidance for Dec. but at the margin that doesn’t make a huge difference to the EM story,” Kinsella says in an interview. “Yield pick-up in EM U.S. dollar denominated issuance is going to stay for quite some time.”
  • Expects to see more asset managers and hedge funds setting up dedicated EM currency bond funds, both in local and hard currencies
  • Market debate has concluded that G10 rates will stay “low forever” instead of “low for longer”
  • U.S. yield curve’s steepening in recent weeks isn’t significant and that’s why the broader EM story for investors looking for higher-yielding assets is still relevant
  • NOTE: Fed’s dot plot shows officials expect one 25-bps rate increase this year, followed by two next year. In Jan., it was showing four hikes for 2016 followed by another four in 2017
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Peter Kinsella (Commerzbank AG)

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HALISTER1: INDIA RATINGS: URC Infotec Cut; GSPC Pipavav, Vadilal Raised

INDIA RATINGS: URC Infotec Cut; GSPC Pipavav, Vadilal Raised

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.
  • To get this story sent to your inbox real-time, run NI INRATINGS , click on Display & Edit, then Set Alert Delivery
DOWNGRADES
  • URC Infotec
    • Long-term loan facilities cut to D from B- at Crisil
    • Cites instances of delay in servicing term debt
UPGRADES
  • Chaitanya India Fin
    • LT bank facilities, NCDs raised to BBB- from BB+ at ICRA
    • Cites improvement in company’s capitalization following equity infusion from investors
  • GSPC Pipavav Power
    • LT bank facilities raised to BBB from BBB- at Care
    • Cites two-year record of payments of fixed charges by Gujarat Urja Vikas Nigam, which has a power purchase agreement with the company
  • Swarna Tollways
    • Term loans, NCDs raised to AA from AA- at Care
    • Cites increase in profits
  • Vadilal
    • LT bank facilities raised to BBB from BBB- at Care
    • Cites continuous growth in scale of operations
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
VDI IN (Vadilal Industries Ltd)
1053200D IN (Chaitanya India Fin Credit Pvt Ltd)
1304809D IN (MAIF Investments India 3 Pte Ltd)

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HALISTER1: INSIDE ASIA: Currencies Gain After FOMC; BI, BSP Decisions Due

INSIDE ASIA: Currencies Gain After FOMC; BI, BSP Decisions Due

(Bloomberg) -- Most Asian currencies advance, led by won and ringgit, after FOMC damped outlook for higher U.S. interest rates. New Zealand dollar declines as RBNZ signaled further easing after leaving rates unchanged.
  • “Asia FX and bond markets are taking comfort from Fed’s policy meeting,” Stephen Chang, head of Asian Fixed Income at JPMorgan Asset Management says in interview. “We expect the path of higher Fed interest rates to be quite shallow and this means the demand for Asian bonds are likely to remain strong”
  • Regional bonds rise as Fed’s dot plot shows it expects one 25-bps rate increase this year, followed by two in 2017; whereas in Jan., it showed four hikes for 2016 followed by another four in 2017
    • Australia’s 10-year yield drops 7 bps to 2.062%, New Zealand’s 10-year yield slips 11 bps to 2.505%; yield on China’s 2.74% govt bond due Aug. 2026 falls 1 bp to 2.750%
  • Rupiah strengthens to touch strongest in almost two weeks ahead of Bank Indonesia’s decision
    • BI may lower its policy rate by 25 bps to 5.00% today, according to 16 of 19 economists surveyed by Bloomberg; rest see no change
    • ING predicts a 25bps cut to 5% today and one more cut to 4.75% in 4Q as well as cumulative 50-bps reductions in 2017, according to note yday
  • Peso advances for first time in six days ahead of Bangko Sentral ng Pilipinas’s decision
    • Philippines central bank seen holding overnight borrowing rate at 3.00% by all 16 economists in Bloomberg survey; decision due at 4:00pm local time
  • Australian dollar advances for a fourth day as Bloomberg Commodity Index extends gains
    • Inflation is expected to remain low for some time, but then to gradually pick up as labor market conditions strengthen further, RBA governor Philip Lowe comments to parliamentary committee; expects economy to continue to be supported by low rates and depreciation of exchange rate since early 2013
    • Australia ‘not at all’ running out of policy options, RBA’s Lowe says
  • New Zealand dollar drops for first time in four days
    • RBNZ says further monetary easing will be needed even as nation’s economy grows; click here for RBNZ statement and here for roundup
    • AUD/NZD has risen to near 1.0400 after today’s RBNZ meeting, but relative terms of trade trend between Australia and New Zealand suggest relief rallies in AUD/NZD will be limited, CBA writes in note today
  • Won gains, outperforming regional peers
    • Economic data including exports, sentiment, and employment improved somewhat in Aug. but pace of recovery isn’t steady: Finance Minister Yoo said yday
    • Finance Ministry says it will closely monitor impact on financial markets of FOMC’s decision and progress of North Korea’s nuclear weapons program, and will respond to prevent excessive volatility in FX market
    • USD/KRW could fall to as low as 1,070 per dollar by next week, though beyond that level vigilance over govt intervention could heighten, Ha Keon Hyeong, economist at Shinhan Investment Corp in Seoul, says
  • Taiwan dollar strengthens, touching highest since July 2015
    • Island’s Aug. jobless rate stood at 3.95% vs median est. 3.99%; prior 3.96%
    • Aug. export orders due at 4:00pm local time; est. 0.5%, prior -3.4%
  • Ringgit rises for a second day
    • Malaysia ensuring fiscal prudence theme of 2017 Budget means no big election giveaways, UOB wrote in note yday; expects fiscal deficit of 3.1% of GDP in 2017, vs est. -3.1% in 2016
  • Yen swings between gains and losses
    • BOJ, FSA and MOF to hold meeting at 2pm local time today, which is a public holiday in Japan
    • AUD/JPY bid by Japanese banks as RBA Lowe speaks: trader
    • BOJ should have made its latest changes contingent on govt adopting more economic reforms: Mohamed A. El-Erian
  • Yuan declines in both offshore and onshore markets
    • Yuan depreciation would still resume towards year-end given Dec. hike more likely, Natixis Greater China senior economist Iris Pang says
    • PBOC official says yuan to be international finance currency, Shanghai Securities News reports
    • Central bank pushes yuan clearing services along belt and road, China Daily reports, citing Deputy Governor Chen Yulu
    • China allows Arab Monetary Fund to enter onshore FX market, according to a statement on Chinamoney.com.cn yesterday
    • PBOC said to plan direct yuan trading with dirham, riyal
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Chen Yulu (People's Bank Of China)
Iris Pang (Natixis SA)
Keon-Hyeong Ha (Shinhan Investment Corp)
Philip Lowe (Reserve Bank of Australia)

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HALISTER1: Indonesia Bonds Supported by BI Easing Bias, Fed on Hold: DBS

Indonesia Bonds Supported by BI Easing Bias, Fed on Hold: DBS

(Bloomberg) -- Yield on Indonesia’s 10-year govt bond drops for sixth straight day, longest stretch since Aug. 2, amid expectations that central bank will cut policy rate today.
  • Yield on 8.375% govt bond due Sept. 2026 slips 6 bps to 6.898%, according to IDMA data; BI may cut key rate by 25 bps to 5.00% today, according to 16 of 19 economists in Bloomberg survey with rest seeing no change
  • Combination of easing bias by BI and the “on hold stance’ by the Fed renders conditions positive for Indonesia’s bonds, says Eugene Leow, Singapore-based fixed-income strategist at DBS
  • Markets are also relieved that the Fed put in ‘‘a much slower rate-hike profile” for 2017
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Eugene Leow (DBS Group Holdings Ltd)

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HALISTER1: INSIDE PHILIPPINES: Peso Rising Ahead of Central Bank Decision

INSIDE PHILIPPINES: Peso Rising Ahead of Central Bank Decision

(Bloomberg) -- Peso gains ahead of BSP rate decision amid broad-based dollar weakness after Fed held rates at yesterday’s policy meeting and indicated slower rate of increase next year.
  • Philippines central bank seen holding overnight borrowing rate at 3.0% by all 16 economists in Bloomberg survey; data due 4pm local time
    • Rate was lowered to 3.0% on May 16
  • USD/PHP may breach year-to-date high in short-term as investors dumping local equities outweigh an expected decision by central bank to hold rates, Bloomberg strategist David Finnerty writes
    • Pair falling for first time in six days; down 0.2% to 47.770, according to bankers’ association data
  • Philippines’ strong macroeconomic fundamentals should hold sway over short-lived negative market view, BSP deputy governor Guinigundo says
  • Global funds were net sellers of $7.3m of local equities yesterday, 20th straight day of outflows: exchange data
  • Yield on 3.625% govt bonds due Sept. 2025 falls to 3.5800% from 3.6150% yday, according to Tradition pricing
  • 5-yr credit protection costs for Philippines fall 1.4 bps to 105.3 bps, according to CMA New York data
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: USD/PHP May Test 49 Even as BSP Forecast to Hold Rates: Analysis

USD/PHP May Test 49 Even as BSP Forecast to Hold Rates: Analysis

(Bloomberg) -- USD/PHP may breach the year-to-date high in the short-term as investors dumping local equities outweigh an expected decision by the Philippine central bank to hold rates, Bloomberg strategist David Finnerty writes.
  • Peso is the worst-performing Asian currency versus USD this month, with overseas investors been net sellers of equities every day this month
    • S&P said Sept. 21 that it sees “rising uncertainties surrounding the stability, predictability, and accountability” of President Duterte’s govt.
  • FX pair formed a bullish breakout gap on Sept. 9, which was followed by a continuation gap on Sept. 13
    • Breach of resistance at 48.005, year-to-date high, may see FX pair eye test of 49.010, Sept. 2, 2009 high in short-term
    • MACD remains bullishly above zero and signal line
  • Bangko Sentral ng Pilipinas will probably leave its overnight borrowing rate unchanged at 3.000%, according to all 16 economists in Bloomberg survey; decision due 4:00pm local time
    • Rate to be on hold though inflation is falling below the central bank’s target corridor of 2%-4% for 2016-18; CPI rose 1.8% y/y in Aug.
    • BSP said last month that it expects CPI to settle slightly below the target range this year, before rising toward the mid-point in 2017 and 2018, signaling that it doesn’t need to cut rates to spur CPI
  • NOTE: David Finnerty is an FX strategist who writes for Bloomberg. 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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BSNZ PM (Bangko Sentral ng Pilipinas)

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HALISTER1: Indonesian Bond Yields May Make Year Lows on Dovish BI: Analysis

Indonesian Bond Yields May Make Year Lows on Dovish BI: Analysis

(Bloomberg) -- Yield on Indonesian 5-yr bonds may fall below 6.60%, year-to-date low, in short-term if Bank Indonesia cuts rates and signals potential for more, Bloomberg strategist David Finnerty writes.
  • With inflation declining, BI is expected to lower 7-day reverse repo rate by 25 bps to 5.00% according to 16 of 19 economists in Bloomberg survey; 3 predict no move; decision today; central bank last cut on June 16, by 25 bps
  • CPI in Aug. fell to 2.79% y/y, core CPI declined to 3.32%; BI has 3%-5% target for 2016 so inflation below lower boundary of that corridor provides room for further easing
    • Cutting interest rates may also provide support to local economy; BI highlighted in Aug. statement that global growth likely to remain sluggish and concern that domestic growth may be undermined if govt spending falls in 2H
  • Central bank may signal room for future rate cuts as Fed has lowered its dot path for 2017 onwards; see chart here; this should aid rupiah strength
    • BI says it wants to maintain exchange rate stability; lower Fed dot plot helps offset impact lower Indonesian interest rates have on exchange rate
  • Overseas borrowers have been net buyers of $7.9b of Indonesian bonds this year as dovish Fed spurred investor appetite for high yielding debt
  • Yield on Indonesian govt bond due July 2021 at 6.797%
  • NOTE: David Finnerty is an FX strategist who writes for Bloomberg. 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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