HALISTER1: INSIDE CHINA: Yuan Declines as Investors Await U.S. Jobs Data

INSIDE CHINA: Yuan Declines as Investors Await U.S. Jobs Data

(Bloomberg) -- Yuan heads for third-straight weekly drop; sentiment in bond market soft as PBOC tightens funding conditions.
  • CNY down 0.04% at 6.6810 per dollar; CNH down 0.13%, little changed on week
  • Investors sold dollar as DXY picked up in afternoon; at least one big Chinese bank selling at ~6.6800 to stop yuan from further decline, three traders say; NOTE: DXY up 0.13%
    • Yuan is supported as dollar bulls square positions after seeing Chinese banks sell dollar at this level for two days
  • Better-than-expected U.S. non-farm payrolls would send USD/CNY spot and fixing above 6.7, Scotiabank Asia FX strategist Gao Qi writes in note today
  • PBOC likely to defend yuan at 6.7 on Monday if payrolls spur dollar buying, Commerzbank senior economist Zhou Hao says
  • G20 summit starts in Hangzhou this weekend
    • Watch: China’s Growth Blueprint on Display at G20
  • China can guide yuan expectations and has monetary policy tools in case of abnormal yuan moves, PBOC Deputy Governor Yi Gang says
  • Vice Finance Minister Zhu Guangyao calls for more fiscal policy support
  • China GDP growth to slow modestly in 2H; impact of earlier stimulus measures continues to fade, UBS said in note yesterday
    • RRR cuts remain possible this year, though PBOC will likely continue using alternative liquidity provisioning tools instead
  • PBOC unlikely to conduct broad-based easing in 2H, BOCI chief macroeconomy analyst Zhu Qibing says
  • Yield of 2.9% govt bond due May 2026 falls 1 bp to 2.783%; up 5 bps on week
  • China bond market correction has long way to go as it’s clear PBOC aims for gradual deleveraging, Huachuang Securities analyst Qu Qing writes in note today
    • Liquidity still ample because institutional investors have been cutting leveraged positions since resumption of 14-day reverse repo sales
    • PBOC will drain excessive funds through OMO to keep liquidity relatively tight
  • China’s bonds head for third weekly decline as PBOC tightens funding conditions and economy shows signs of stabilizing
  • Central bank conducted 800m yuan SLF, 289b yuan MLF, net PSL 68.3b yuan in Aug.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Qi Gao (Bank of Nova Scotia Asia Ltd/Singapore)
Qu Qing (Huachuang Securities Co Ltd)
Yi Gang (People's Bank Of China)
Zhu Qibing (Bank of China Ltd)

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UUID: 7947283

HALISTER1: German football legend Franz Beckenbauer under investigation for corruption during 2006 World Cup (Transcript)

German football legend Franz Beckenbauer under investigation for corruption during 2006 World Cup (Transcript)

Alert: HALISTER1
Source: AUB (Australian Broadcasting Corporation)

People
Joseph Blatter (FIFA)

Topics
Germany Football
Soccer
World Cup

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UUID: 7947283

HALISTER1: EUR Spread Options Attractive on Shift to Steeper Curve: Citi

EUR Spread Options Attractive on Shift to Steeper Curve: Citi

(Bloomberg) -- EUR spread options attractive for curve-steepening view with the implied correlation in the 6m 5s30s trading at the highs, Citigroup strategists including Harvinder Sian write in client note.
  • Buy EUR 6m 5s30s 1.0%/1.3% cap spread at 5.5c on the idea that medium-term steepening risks are emerging from technical shifts in ECB PSPP parameters
    • Payout ratio is close around 5.5-to-1
  • Prefer to trade in the option space at this stage; slope trades in vanilla space run the risk of needing excess precision in capturing the right ECB policy and parameter response, and also in the right sequence
  • Bund scarcity issue means that the medium-term picture is a steepening of the curve
    • Steepening could also be seen via a failure to extend the QE timetable, or a PSPP parameter shift on the depo rate floor or capital key
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Harvinder Sian (Citigroup Inc)

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UUID: 7947283

HALISTER1: *PUTIN BLASTS TRUMP, CLINTON FOR USING ‘SHOCK’ CAMPAIGN TACTICS

*PUTIN BLASTS TRUMP, CLINTON FOR USING ‘SHOCK’ CAMPAIGN TACTICS

--SCOTT ROSE
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Donald Trump (Trump Hotels & Casino Resorts Inc)
Hillary Clinton (United States of America)
Vladimir Putin (Russian Federation)

Topics
First Word DC - Foreign Policy

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UUID: 7947283

HALISTER1: INDIA RATINGS: Fedders Lloyd Cut; Apis, Piramal Finance Raised

INDIA RATINGS: Fedders Lloyd Cut; Apis, Piramal Finance 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
  • Fedders Lloyd
    • Long-term bank facilities cut to BBB+ from A- at Care
    • Cites deterioration in financial profile due to declining profitability
  • Malaxmi Wind Power
    • LT loan facilities cut to D from B- at Crisil
    • Cites instances of delay in servicing debt due to weak liquidity
UPGRADES
  • Apis India
    • LT loan facilities raised to BBB from BBB- at Crisil
    • Cites healthy demand in export market
  • Davanam Jewellers
    • Fund based facilities raised to B from D at ICRA
    • Cites regularization of cash credit facility
  • Piramal Finance
    • LT bank facilities raised to AA from AA- at ICRA
    • Cites strong management at co.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
SMT IN (Apis India Ltd)
FDLC IN (Fedders Lloyd Corp Ltd)
0885126D IN (Piramal Finance Pvt Ltd)

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UUID: 7947283

HALISTER1: Risks Skewed to EUR Long-End Steepening, 10s30s Vol Cheap: SG

Risks Skewed to EUR Long-End Steepening, 10s30s Vol Cheap: SG

(Bloomberg) -- Risks are skewed toward EUR long-end steepening, and the potential contrasts with historically cheap EUR 10s30s spread vol, Societe Generale strategist Adam Kurpiel writes in client note.
  • Long-end curve vol is low even compared to short-rates swaption volatility, with the latter set to remain depressed as the market further prices out ECB rate cut expectations
  • ECB inaction or signs that changing PSPP rules may relieve the pressure at the long-end are likely to exert temporary steepening pressure
  • Buy EUR 300m 4m expiry single-look ATM cap on EUR 10s30s CMS spread vs sell EUR 148.4m 4m2y ATMF receivers
  • Alternatively, buy EUR 300m 4m expiry single-look EUR 10s30s CMS spread straddles vs sell EUR 148.4m 4m2y straddles
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Adam Kurpiel (Societe Generale SA)

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UUID: 7947283