HALISTER1: DBRS: CIBC Reports Record Q3 2016 Net Income

DBRS: CIBC Reports Record Q3 2016 Net Income

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
CM CN (Canadian Imperial Bank of Commerce/Canada)

People
Michael Driscoll (DBRS Inc)

Topics
Fixed Income Research
Reports
Research Comments
Credit Analysis Research
Credit Research

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UUID: 7947283

HALISTER1: U.S. ECO PREVIEW: Personal Income/Spending Due in 5 Minutes

U.S. ECO PREVIEW: Personal Income/Spending Due in 5 Minutes

(Bloomberg) -- Personal income seen rising 0.4% in July after increasing 0.2% in June (forecast range +0.2% to +0.8%); tracks wages and salaries, investment and rental income, transfer payments.
  • Personal spending seen rising 0.3% in July after increasing 0.4% in June (forecast range +0.1% to +0.4%); tracks spending on goods and services, is used to calculate GDP
  • Prior report showed saving rate declined to 5.3% in June, lowest since March 2015
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: Hong Kong Releases Man Over Austria’s FACC Fraud on Bail

Hong Kong Releases Man Over Austria’s FACC Fraud on Bail

(Bloomberg) -- The 29-year-old Chinese man was arrested for money laundering on July 1, Hong Kong Police say in an emailed statement.
  • Arrest made following report H.K. Police received in Jan. about fictitious emails that directed foreign co. to transfer funds to a Hong Kong bank account,causing EU4m loss
  • Investigations are underway, H.K. Police say
  • The 29-year-old was released on bail and will report back to police in late September
  • NOTE: Hong Kong Arrested Man Over FACC Fraud, Austrian Police Say NSN OCILT26K50YE
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: EU RATES ROUNDUP: Analysts Turn More Bearish as Supply Re-Starts

EU RATES ROUNDUP: Analysts Turn More Bearish as Supply Re-Starts

(Bloomberg) -- Analysts veer toward a bearish bias in core EGBs; upcoming EGB supply seen by some as a negative; ratings risks in Portugal continue to get attention.
  • Barclays (strategists including Giuseppe Maraffino)
  • Resilience of euro area business surveys suggests ECB’s Sept. meeting likely to be very open; continue to believe outright duration, peripheral spread positions don’t offer good risk-reward
    • Maintain trades that have relative short German duration, steeper curve, long ASW bias: short 10y bunds vs Treasuries, receive the 15y fwd point on EUR swap curve vs wings, long PGB 4s30s steepeners, long 7y French ASWs
  • SocGen (strategists including Vincent Chaigneau)
    • Vol market is pricing increasingly higher premiums on high-strike payers vs low-strike receivers, allows set- up of zero-cost proxies for conditional bear-steepeners, an attractive way to hedge against a sell-off
      • Recommend buying 1y15y ATMF/+45bps payer spread vs selling 1y5y ATMF payers at zero-cost
    • Continue to favor leveraged carry via mid-curve ratio receiver spreads in the belly; ECB unlikely to cut rates, which limits potential for intermediate rates to decline
    • Heavy issuance calendar likely to weigh on bond performance, with new benchmarks to be launched: desire to lengthen duration of debt at these record-low yields should continue to limit EUR flattening potential beyond 10y
    • Given risks around DRBS rating on Portugal, turn more defensive on non-core debt; continue to prefer SPGBs to BTPs and PGBs; SPGB/bund compression trade flirting with 100bps profit level, recommend lightening exposure given supply, non-core risk events
  • Commerzbank (strategists including David Schnautz)
    • Remain cautious PGBs; unlikely to enter calmer waters over coming month given challenging rating calendar, submission of 2017 budget to European Commission by Oct. 15 as well as supply outlook
  • BNP (strategists including Patrick Jacq)
    • Expect yields to push higher in both core, peripheral space as market activity and supply resume; curves likely to re-steepen, continues to recommend 2s10s swap steepeners
    • 30Y ASW tightening suggests market expects ECB to tackle scarcity issue by removing depo rate floor or deviate from the ECB capital key
    • In periphery, SPGB/BTP spread is currently at widest end of the 0bp to -20bp range seen in recent months, due to removal of the Spanish political risk premium; expect this range to hold if long upcoming Italian referendum doesn’t take center stage
  • TD Securities (strategists including Renuka Fernandez)
    • Rates to remain persistently low, pension/insurance gilt holdings to rise, exacerbating constraints on BOE to buy in the 15y+ sector
      • BOE will rely on other financial institutions, predominantly asset managers, to sell gilts; as these holdings aren’t large, lower cover/ratios of 15y+ reverse auctions should persist until late Sept.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Giuseppe Maraffino (Barclays PLC)
David Schnautz (Commerzbank AG)
Patrick Jacq (BNP Paribas SA)
Renuka Fernandez (Toronto-Dominion Bank/The)
Vincent Chaigneau (Societe Generale SA)

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HALISTER1: TWD Trims Losses as Exporters Sell USD on Rally; Yields Rise

TWD Trims Losses as Exporters Sell USD on Rally; Yields Rise

(Bloomberg) -- Taiwan dollar trims losses to fall most in a week as exporters selling of U.S. dollar helped to offset broad USD strength after the Jackson Hole summit.
  • Some foreign investors bought dollars earlier in the morning, two traders say
    • But exporters were actively selling USD/TWD above 31.8 level as pair has hardly broken above this level in August; exporters tend to sell dollar at month-end, one of the trader said
  • TWD falls 0.4%, most since Aug. 22, to close at 31.801 per dollar, after retreating to 31.878, lowest since Aug 1
  • Likelihood of Fed rate hikes will continue to drive dollar valuation in coming weeks, Scotiabank Asia FX strategist Gao Qi writes today
    • Expects USD advance vs EM Asian currencies early this week after Fed vice-chair Fischer’s remarks significantly increased the possibility of a Sept. rate rise
    • BOJ governor Kuroda’s Friday comments imposes depreciation pressure on JPY and subsequently weakens TWD to some extent
  • Yield of 10-yr Taiwan govt bond rises 2 bps to 0.6558%
  • Local bonds retrace after U.S. Treasury yields increased on Friday, Yuanta Securities bond trader Tobby Lin says
    • But liquidity still ample on the island; Taiwan bonds will fluctuate along with Treasury trend in near term
    • 20-yr govt bond faces correction after recent gains
    • Sees 10-yr govt bond yield in 0.65%-0.68% range; 5-yr yield to trade within 0.50%-0.52%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Qi Gao (Bank of Nova Scotia Asia Ltd/Singapore)
Tobby Lin (Yuanta Securities Co Ltd)

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HALISTER1: Asian Bonds, Currencies Fall on Concern Fed Hike May End Rally

Asian Bonds, Currencies Fall on Concern Fed Hike May End Rally

(Bloomberg) -- Asian govt bonds and currencies drop on renewed concerns that a Fed rate increase as early as Sept. this year may put an end to the rally in emerging market assets.
  • Analysts expect Asian bonds and currencies to stay under pressure in the coming sessions
  • Indonesia’s 10-year yield climbs 7 bps to 7.132% and Thailand’s equivalent rate rises 6 bps to 2.227%; South Korea’s 10-year rate up 2 bps to 1.446% and China’s increases 4 bps to 2.775%
  • In Japan, 40-year yield increases 3 bps to 0.435%
  • Fed funds futures showed 42% chance of a rate hike in Sept. on Friday vs 22% a week earlier, and 65% chance for Dec. compared with 51%
  • South Korea’s won lead declines among Asian currencies with 1% decline, followed by Malaysia ringgit’s 0.7% drop and Indonesia rupiah’s 0.5% slide; Taiwan dollar weakens 0.4%
  • NOTE: Fed Chair Yellen said Friday the case to raise rates is strengthening as economy approaches the central bank’s goals
  • DBS (Eugene Leow, fixed-income strategist)
    • Traders and investors are refocusing on chances of Fed tightening, and the rally in Asian govt bonds is likely to stall
    • There is “tremendous uncertainty” over where UST yields would settle in the run-up to Sept. meeting, weighing on Asian EM bonds
    • In addition, stronger USD is likely to act as headwind for carry trades that have supported Asian govt bonds
  • Standard Chartered (Nagaraj Kulkarni, senior Asia rates strategist)
    • Weakness in Treasuries is spilling over to Asian local market and is likely to continue if the employment data in U.S. this week comes out strong
    • U.S. Aug. nonfarm payrolls due Sept. 2; est. 180k vs prev. 255k
  • Mitsubishi UFJ Kokusai Asset Management (Hideo Shimomura, chief fund investor)
    • There is now a growing chance for a Fed rate increase in September and pressure is on short-term UST yields to rise
    • Fed officials probably think it’s necessary to boost market speculation about a rate hike
    • Shimomura said a meeting he had with Fed officials last month showed they are concerned over the flat U.S. yield curve, excessive risk taking by investors and the negative impact of curve flattening on banks’ revenues
    • Highly likely Fed will maintain hawkish bias, which would be negative for EM assets in the short-term
  • IMPACT ON ASIAN CURRENCIES
  • Scotiabank
    • USD is expected to advance against emerging currencies in Asia early this week, according to a note from the bank
    • USD/KRW and USD/MYR could rise at a relatively faster pace compared to regional peers, heading for 1,150 and 4.10 level respectively in coming sessions
    • Gap between onshore and offshore dollar/yuan may widen
    • BOJ Governor Kuroda reiterated on Friday he won’t hesitate to boost monetary stimulus if needed; may exert depreciation pressure on JPY for a while and subsequently weaken KRW and TWD
  • Shinkin Asset Management (Jun Kato, senior fund manager)
    • If BOJ stays on hold in Sept., USD/JPY may drop temporarily to as low as 98 before rebounding to 100-105 on expected BOJ easing and speculation of Fed rate hike in Dec.
    • Pair could briefly hit 107.50 but strong bias unlikely to sustain unless traders and investors begin to speculate the Fed will deliver series of rate increase, such as once every quarter
    • USD/JPY strengthens 0.5% to 102.23, extending 1.3% gain on Friday
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Eugene Leow (DBS Group Holdings Ltd)
Hideo Shimomura (Mitsubishi UFJ Financial Group Inc)
Jun Kato (Shinkin Central Bank)
Nagaraj Kulkarni (Standard Chartered PLC)

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HALISTER1: INDIA RATINGS: Hamon Shriram Cut; Goldstone, Spykar Raised

INDIA RATINGS: Hamon Shriram Cut; Goldstone, Spykar 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
  • Basudha Udyog
    • Long-term loan facilities cut to D from BB at Crisil
    • Cites delays in meeting term debt obligations due to weak liquidity
  • Hamon Shriram Cottrell
    • LT bank facilities cut to C from BB+ at Care
    • Cites delay in servicing term loan
  • P.S.K. Engineering
    • LT loan facilities cut to BBB- from BBB at Crisil
    • Cites significant decline in revenue
  • Total Transport
    • LT loan facilities raised to BB+ from BBB- at Crisil
    • Cites stretched liquidity, deterioration in business risk
UPGRADES
  • Ashirvad Pipes
    • LT loan facilities raised to A+ from A at Crisil
    • Expects to sustain steady improvement in operating performance over the medium term
  • Corona Remedies
    • LT loan facilities raised to BBB+ from BBB at Crisil
    • Expects company’s profile to improve over the medium term due to private equity infusion
  • Goldstone Infratech
    • LT loan facilities raised to BB+ from BB at Crisil
    • Cites substantial, continued increase in profitability
  • Neuland Laboratories
    • LT bank facilities raised to BBB from BBB- at Care
    • Cites significant growth in operating income, profit level
  • Spykar Lifestyles
    • LT bank facilities raised to BBB from BBB- at Care
    • Cites improvement in operating performance
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
GTSL IN (Goldstone Infratech Ltd)
6589308Z IN (Ashirvad Pipes Pvt Ltd)
1019813D IN (Corona Remedies Pvt Ltd)
9536738Z IN (Hamon Shriram Cottrell Pvt Ltd)
NLL IN (Neuland Laboratories Ltd)

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HALISTER1: INSIDE ASIA: Won Leads Decline as Fed Speeches Spur Hike Talk

INSIDE ASIA: Won Leads Decline as Fed Speeches Spur Hike Talk

(Bloomberg) -- The won leads a broad drop in currencies in Asia Pacific after comments by Fed speakers last Friday raised the possibility of a September rate hike, spurring dollar gains.
  • Most Asian currencies are reacting to a stronger dollar as Fed Chair Yellen adopted a more hawkish tone than expected, says Iris Pang, a senior economist of Greater China at Natixis
  • 2-yr Treasury yields may extend post-Jackson Hole gains toward three month highs, see here for chart
  • Markets imply 42.0% probability of Fed rate hike in September, and 65% in December. Had projected a 32% chance for an increase next month before Fed speeches at Jackson Hole
  • There is now a growing chance for a Fed rate increase in September, with pressure on short-term UST yields to rise, Hideo Shimomura, chief fund investor at Mitsubishi UFJ Kokusai Asset Management, says in interview
    • Bank of Japan may also deliver easing earlier than expected, and the JGB yield curve will probably steepen
  • Yen falls to lowest in two weeks against dollar
    • BOJ Governor Kuroda said over the weekend at Jackson Hole that BOJ will act decisively. Adds “zero lower bound is no longer insurmountable” as a policy constraint, and that the current rate is still far from a lower range
  • Buy-the-dip strategy for USD/JPY may work ahead of U.S. nonfarm payrolls data on Friday, says Koichi Takamatsu, head of G10 spot trading for Japan at Nomura Securities
  • China’s reference rate today was stronger than some analysts expected, spurring dollar selling from Asia-based leveraged accounts, according to traders in North Asia
    • PBOC may be seeking to limit a decline in the currency in order to contain volatility ahead of the G-20 Summit, Mizuho Bank Asian FX strategist Ken Cheung says
  • Chinese central bank continues to inject liquidity into the system with 7-day and 14-day reverse repos
  • Korean won falls as much as 1.3%, while sovereign bonds decline across the curve
  • Aussie drops to lowest level in almost a month against dollar, though later pares losses
    • Australia’s new home sales -9.7% m/m in July vs +8.2% in June
  • Southeast Asian currencies decline, except for Thai baht
  • Rupiah snaps two-day gain
  • Bank Indonesia sees CPI -0.04% m/m in last week of Aug.: Kontan
  • Indonesians submitted 103t rupiah ($7.76b) assets to tax amnesty program
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Iris Pang (Natixis SA)
Hideo Shimomura (Mitsubishi UFJ Financial Group Inc)
Ken Cheung (Mizuho Financial Group Inc)

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HALISTER1: INSIDE CHINA: Onshore Yuan Dips to Weakest in Month as USD Gains

INSIDE CHINA: Onshore Yuan Dips to Weakest in Month as USD Gains

(Bloomberg) -- Onshore yuan drops to its weakest level in a month, tracking a decline in the region after comments by Fed officials at Jackson Hole spurred dollar gains.
  • CNY falls 0.1% to 6.6786, after dipping to as low as 6.6850
    • Decline was limited by a fixing that was better than what some analysts had expected, with the PBOC setting the reference rate at 6.68560
    • USD/CNH was sold by leveraged accounts after the fixing
  • PBOC’s fixing shows it wants to defend USD/CNY at 6.7, a key physiological level, says Iris Pang, a senior economist of Greater China at Natixis
    • China may be seeking to limit a decline in the currency in order to contain volatility ahead of the G-20 Summit, Mizuho Bank Asian FX strategist Ken Cheung says
  • USD/CNH falls 0.07% to 6.6885
    • USD/CNY support at 6.6655, 6.6477, 6.6230; resistance 6.7003, 6.7007, 6.7195
  • PBOC sells 60b yuan 7-day reverse repo at 2.25% and injects 30b yuan 14-day money at 2.4%, continuing to pump liquidity into the financial system after money-market rates jumped last week
    • The Chinese central bank gauges demands for 7-day and 14-day reverses repos for tomorrow: trader
  • 7-day repo rate falls 11 pips to 2.2589%, a third day of decline. The overnight rate climbs
  • Fear of a liquidity squeeze after the PBOC resumes its 14- day reverse repo operations may be overblown, OANDA senior trader Stephen Innes writes in a note today. After the initial negative fallout, the money markets will quickly normalize
    • China Aug PMI will be closely watched, as July reading indicated a weak start in 3Q
  • Aug. PMI is due Thursday, with Bloomberg survey showing a median estimate of 49.9, the same as in July
  • China may limit monetary easing as industrial profit rises, CICC economists Eva Yi, Liu Wenqi and Liang Hong write in a note
  • July industrial companies’ profit rises 11% y/y, more than double the rate of expansion in June
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Eva Yi (China International Capital Corp Ltd)
Iris Pang (Natixis SA)
Ken Cheung (Mizuho Financial Group Inc)
Liang Hong (China International Capital Corp Ltd)
Stephen Innes (OANDA Corp)

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UUID: 7947283