HALISTER1: Japanese Investors Sold Foreign Debt on BOJ, Fed Outlook: BofAML

Japanese Investors Sold Foreign Debt on BOJ, Fed Outlook: BofAML

(Bloomberg) -- Japanese investors sold overseas bonds due to uncertain outlook for BOJ’s monetary policy and rising expectations for Sept. Fed rate hike, says Shuichi Ohsaki, chief Japan rate strategist at Bank of America Merrill Lynch.
  • Steepening of yield curves in Japan and the U.S. and upcoming end-1H of Japan’s fiscal year may have also caused some selling, says Tokyo-based Ohsaki by phone
  • At this time, domestic investors don’t seem to be buying super-long JGBs: Ohsaki
  • Focus is on what measures BOJ would take on its JGB purchase program, what is central bank’s intention toward steepening of yield curve and whether BOJ’s policies are sustainable as key factors for determining if Japanese investors resume JGB investments in 2H of this fiscal year
  • NOTE: Japanese investors sold a net 1.06t yen ($10.3b) of overseas equities and bonds in week ended Sept. 9 after offloading 1.25t yen worth of securities a week earlier; that’s the first back-to-back selling since April
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Shuichi Ohsaki (Merrill Lynch Japan Securities Co Ltd)

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HALISTER1: AXA Sees More Value in Sovereign Bonds of Asian Frontier Markets

AXA Sees More Value in Sovereign Bonds of Asian Frontier Markets

(Bloomberg) -- While sovereign bonds of traditional Asian emerging markets are expensive, AXA Investment Managers prefers to focus on frontier markets in the region, says Jim Veneau, the company’s head of Asia fixed income.
  • Pakistan, Mongolia and Sri Lanka offer relative value
  • Philippines and Korea are “clearly expensive”
    • Indonesia short-end govt bonds are expensive while long- end is super volatile; prefers quasi sovereign for higher yield
    • Mongolia has been a bit volatile lately, but good in terms of return and diversification within Asia
  • Value in Chinese govt and policy bank bonds onshore
    • CNH corporate bond market is a “sweet spot” for short duration investment; prefers BB to BBB ratings; onshore bonds are extremely tightly valued and almost in a bubble
  • U.S. rate decision is a risk for Asia, with long duration Philippines and Indonesia bonds particularly sensitive to a hike
    • Fed likely to hike at yr-end, not in Sept.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jim Veneau (Axa Investment Managers Asia Ltd)

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HALISTER1: Former Brazilian President Lula Charged in Massive Corruption Scandal

Former Brazilian President Lula Charged in Massive Corruption Scandal

Alert: HALISTER1
Source: WPT (Washington Post)

Tickers
PETR4 BZ (Petroleo Brasileiro SA)

People
Luiz Inacio Da Silva (Federative Republic of Brazil)
Dilma Rousseff (Federative Republic of Brazil)
Sergio Moro (Federative Republic of Brazil)

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HALISTER1: Aussie May Rally on Full-Time Job Gains, Patient Fed: Analysis

Aussie May Rally on Full-Time Job Gains, Patient Fed: Analysis

(Bloomberg) -- AUD/USD could test 50-DMA at 0.7584 if August full-time jobs rebound from a nearly three-year low and halt 2016’s downward trend, writes Bloomberg analyst Michael Wilson.
  • Full-time roles fell by 46.1k in July, and for 2016 so far, all net job creation has been part-time; such positions spiked by 71.6k in July, most in seven years
  • Dominance of part-time suggests slack in labor market, and wage pressures needed to lift inflation toward RBA’s goal may be missing, analysts said after July report
  • Downward revisions have been made to full-time jobs component in 8 of last 10 data releases while 12-month moving average of part-time work is at highest since 2010
  • For August, employers probably added a total of 15k full and part-time jobs, based on median estimate of 26 economists in Bloomberg survey; forecast range is 18k losses to 45k additions (prior revised +25.3k); unemployment rate est. 5.7% (prior 5.7%); data due at 11:30am Sydney
  • Should full-time component rebound, AUD/USD may gain, helped by weaker expectations for U.S. rate hike since Fed Gov. Brainard’s comments Monday; Fed now in blackout until FOMC
  • AUD/USD up 0.1% to 0.7474; a close above 50-DMA sets up a test of trend-line resistance adjacent to 0.7732, Sept. 8 high
  • NOTE: Michael Wilson is an FX strategist who writes for First Word. The observations he makes are his own.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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