Halister News

(Bloomberg) -- KRW and HKD swap rates had underperformed in run-up to U.S. nonfarm payrolls data, so are likely to see slightly more downside, Frances Cheung, head of Asia ex-Japan rates strategy at Societe Generale, writes in note today.

• KRW rates market is only pricing in a small 20% chance for a rate cut in next three mos., hence if there’s any risk of correction in pricing, it’s likely to be on dovish side
• Overall reaction should be muted, however, because of lingering uncertainty over timing of next Fed hike
• NOTE: BOK will keep 7-day repo rate unchanged at 1.25% at Sept. 9 meeting, according to all 21 economists in Bloomberg survey
• Yield on 1.875% govt bond due June 2026 slips 2 bps to 1.513% after climbing 11 bps last week: Korea Exchange data
• 1-yr IRS down 1 bp at 1.2850%; 5-yr IRS down 2 bps at 1.2825%

(Bloomberg) -- Bangko Sentral ng Pilipinas is finalizing rules that will start its regulation of digital currencies and other products created by an evolving financial technology as it intensifies campaign against money laundering, Deputy Governor Nestor Espenilla tells reporters in Manila.

• An overhaul of an existing circular 471 that covers money- changing cos. is being reviewed by central bank’s legal team and also presented to affected groups, stakeholders
• Pawnshops, financial-service providers operating through Internet will also be covered by expanded, tighter rules to prevent money laundering
• NOTE: Circular 471 http://tinyurl.com/hjj48hf
• Broader plan to expand Bangko Sentral’s supervisory powers including its ability to impose penalties is included in proposed changes to central bank charter
• “In the way we analyze fintech companies, the rules are not really blanket,” Espenilla says. “Some bitcoin companies are transferring value form one point to another point and that is remittance business. Some fintechs are involved in credit, they’ll fall under credit cards. The circular will clarify that.”
• NOTE: Philippines Boosts Defenses Against Cyber Attacks, Laundering Link
• Policy makers approved entry of another foreign lender to nation with one other bank formally applying, he says, without providing details as cos. are listed overseas

(Bloomberg) -- BBL Asset accumulates specific Thai stocks as a slump in prices boosts their appeal relative to the outlook for earnings, Voravan Tarapoom, BBL Asset’s chief executive officer, tells reporters Monday.

• Co. says money flowed in to its equity fund Monday after an early slump in Thai stocks
• Medium- to long-term outlook for Thai stocks remains sound, with companies offering attractive dividend yields
• Investors should be cautious when assessing market rumors or negative news during a period of volatility: Voravan
• NOTE: Thailand’s SET Index fell as much as 2.9% Monday and traded down 1.4% at the midday trading break

(Bloomberg) -- Long-end core EGB yields could rise even if ECB delivers more easing measures this week; still, EUR unlikely to benefit meaningfully with front-end rates seen anchored, BNP Paribas strategists write in client note.

• See evolving U.S. rate trends as the main driver for EUR/USD moves this week
• BNP Paribas economists expect ECB to announce an extension of its QE program beyond its March 2017 expiration at this week’s meeting, along with changes to the rules governing its purchase of government bonds
  • Changes could include increasing the issue-share limit, removing deposit-rate floor, moving away from capital key-based allocation of purchases
• Expect Fed speakers to be “out in force in the week ahead,” guiding markets toward a September rate move after erratic price action following last week’s August employment report

(Bloomberg) -- EU credit markets look set to maintain their buoyant tone this morning, with Asian equities stronger overnight and CDS indexes net tighter in the wake of Friday’s U.S. NFP data. Focus will be firmly on the pace of new issue supply, writes Bloomberg strategist Simon Ballard.

• Brexit concerns may weigh on GBP credit risk as Japanese govt calls on U.K., EU to increase predictability of Brexit process
  • Raises specter of bank, pharma relocations out of U.K. if Brexit terms prove unfavorable
• ECB decision on Thursday will be key economic event of the week; market looking for further commitment from central bank to address persistently low euro zone inflation

• Risk Appetite Model sees further compression in post-NFP sweet spot
• Bloomberg Barclays Eur-Agg Corporate index closed Friday at 108bps (unchanged); Bloomberg Barclays Eur HY index closed at 359bps (-4bps)
• CDX IG closed -1.3bps at 76.50 in overnight session; iTraxx Asia Ex Japan IG currently -0.7bps at 111.75 and iTraxx Australia quoted -1.6bps at 97.69

NEWS

• Corporate News
• Glaxo Says Had Positive Results From COPD Salford Lung Study
• Altice Offers $2.7 Billion to Buy Rest of French Carrier SFR
• Plus500 1H Net, Rev. Up, Sees FY Margins ‘Slightly Lower’
• Samsung Note 7 Recall Will Be Pricey, But Probably Worth It
• Telefonica Ready to List O2 This Year If Needed, Pallete Says

• Financial News
• Barclays Said Close to Naming Throsby to Run Investment Bank
• Helvetia Group 1H Profit Rises; Combined Ratio Declines
• Credit Suisse Names Zeller Chairman of Swiss Unit Ahead of IPO
• CaixaBank Mulls Pulling Banco BPI Bid, El Confidencial Reports
• Bank Norwegian Contemplates Issuance of Subordinated Bonds

• Credit Rating News
• SoftBank’s $120 Billion Debt Nears Moody’s Downgrade Trigger
• Brazil’s Sovereign Rating Has Probably Bottomed Out; Fitch
• S&PGR Affirms China Mobile ’AA-’ Rating; Otlk Remains Neg
• Fitch Affirms Hong Kong at ’AA+’; Outlook Stable
• NZ’s Co-Operative Bank Upgraded to BBB from BBB-; Fitch

• Other News
• Draghi Nears His QE3 as ECB Seen Relying on Ever-More Stimulus
• China Banks Play Capital Raising Catch-Up as Bad Loans Soar

ANALYST VIEWS

• Corporate bond markets are meant to be boring: buy the bond, clip the coupon, get money back at maturity and buy the next one. We get performance and for now, that’s all that matters. Boring probably is good: creditmarketdaily.com

NEW ISSUES

• Schneider Electric EU800m 8Y MS +27
• European IG credit pipeline here and HY credit pipeline here
• Issuers exposed to S-T rollover and interest-rate reset risk here

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

--ALEXANDER KELL

(Bloomberg) -- “Any action that limits or halts the provision of services to Iranian individuals and institutions, citing U.S., EU sanctions or those of other countries or international institutions, has no basis within JCPOA and Iran’s other international obligations,” central bank says in statement, referring to nuclear deal.

• “All banks can act for all customers” in accordance w/ nation’s laws, terms of their own banking and business services
• NOTE: Central bank releases circular after conservative media criticized local banks for declining to provide FX services to Revolutionary Guard Corps-related companies, citing anti-money laundering laws adopted by Iran recently

(Bloomberg) -- China highlighting fiscal support for economy signals there is limited room for further monetary easing and is negative for the bond market, according to Citic Securities.

• Depreciation pressure on yuan after G20 will also limit room for further monetary easing; bond market to see correction under liquidity pressure, head of fixed income research Ming Ming writes in note today
• NOTE: Xi and Obama agree China and U.S. will use monetary, fiscal and structural policy tools to boost confidence and strengthen growth, Xinhua reported Sunday
  • China will enhance two-way flexibility of exchange rate
  • Related: Bonds decline for third week as PBOC easing odds fade
• China’s efforts to strengthen fiscal support and step up structural reforms to cut overcapacity and reduce leverage are bearing fruit
• Heavy truck sales +45% y/y in Aug., a traditional off season, indicating demand in real economy may have picked up as fiscal spending supports infrastructure activity
• Yuan volatility may rise as Beijing looks to increase two- way flexibility
  • Yuan under depreciation pressure; Fed will probably still hike this year
• NOTE: Overnight repo rate rises 1 bp today to 2.0607%, highest since Tuesday
  • PBOC net drained 173.5b yuan in open mkt last week after net injecting for three weeks
  • Yield of 10-yr govt bond rises 2 bps to 2.8%

(Bloomberg) -- USD/MYR may rally short-term to test 200-DMA if Bank Negara Malaysia adopts a dovish stance at its meeting given weaker-than-expected 2Q GDP and July CPI, Bloomberg strategist David Finnerty writes.

• Malaysian central bank surprised markets by cutting its interest rate by 25 bps at its July meeting, citing “increasing signs of moderating growth momentum in the major economies”
• Since that meeting, CPI has fallen to 1.1% y/y in July, lowest level since March 2015, while 2Q GDP declined to 4.0% y/y from 4.2% in 1Q, the weakest reading in at least 5 yrs
• USD/MYR’s MACD remains bullishly above zero and signal line
• Bank Negara Malaysia is expected to leave its overnight policy rate at 3.0%, according to 11 of 13 economists in Bloomberg survey with 2 forecasting a 25 bp cut; decision due 3pm local time on Sept. 7
• 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.

(Bloomberg) -- Asian EM currencies advance as regional stocks rise after weaker-than-expected U.S. non-farm payrolls boost risk sentiment. Yen gains as BOJ Governor Kuroda’s comments fail to boost speculation of further easing.

• U.S. jobs report doesn’t signal Sept. Fed hike; see Research Roundup
• Asian currencies are broadly firmer as U.S. jobs data failed to further boost Sept. Fed rate hike speculation, leading to some correction from earlier sell-off in regional currencies, Mizuho Bank EM trader Masakatsu Fukaya says
  • Downward pressure on dollar amid risk-on sentiment is likely to continue esp. against the Southeast Asian currencies where carry-trade is likely to support
• Standard Chartered revises Fed rate call to no change in 2016 from previous forecast for a rate cut, according to note today
• Yen strengthens versus dollar after BOJ Governor Kuroda’s comments failed to satisfy USD bulls carried over from last week, Asia-based FX trader says
  • Kuroda says most powerful easing measures are needed for Japan and BOJ shouldn’t hesitate to ease if benefits outweigh costs; reduction in the level of monetary policy accommodation, as called for by “some market participants,” won’t be considered
  • Macro and leveraged investors are cutting long USD/JPY positions in response to Kuroda’s comments, according to an Asia-based FX trader
  • BOJ to confirm plans to strengthen monetary easing towards achieving 2% inflation target at Sept. meeting, Nikkei reports
  • Leveraged funds increased net yen long position by 8,745 to 57,380 in week ended Aug. 30, most since July 2008: CFTC data
  • Japan’s Finance Minister Aso says told G-20 of need for market stability
  • Japan’s 30-year govt bonds drop ahead of auction tomorrow; yield curve is steepening, led by super-long tenors on worries the 30-year auction may face weak demand: SMBC Nikko Securities
• Yuan firmer on broad USD strength even as PBOC sets reference rate weaker for the first time in three days
  • Caixin China Aug. composite PMI came in at 51.8 vs 51.9 in July; services PMI at 52.1 vs 51.7 in July
• China will enhance two-way yuan flexibility, according to consensus made between Chinese President Xi and U.S. President Obama in meeting ahead of G20 summit, according to Xinhua News Agency yday
  • Yuan depreciation pressure is likely to peak in Nov, given a higher chance of a Fed rate increase toward year-end: Bocom
• Aussie and kiwi both strengthen for fourth straight day
  • With the RBA seen on hold this week and the rest of 2016, diverging central-bank outlooks may see AUD/NZD this year test the all-time low of 1.0021 set in April 2015: analysis
  • Australia’s economic strength supports AAA rating, Moody’s says
  • ANZ Bank raises kiwi dollar forecast on growth, Fed outlook
  • Kiwi strengthens on commodity data, macro buying versus Aussie: trader
  • RBNZ confirms will enforce previously announced new rules that tighten restrictions on lending to residential property buyers throughout country
• Asian currencies mostly higher, led by Korean won and Taiwan dollar
  • BOJ’s Kuroda triggers USD selling vs Asian currencies: trader
• Won among top gainers in region
  • South Korea’s end-Aug. FX reserves climbed to $375.46b compared with $371.38b from previous month, BOK says
• Thai baht bucks regional trend to decline as stocks drop as much as 2.9%