HALISTER1: JAPAN RATES WEEKLY: Yen Gains Spur BOJ Bets, Supporting Bonds

JAPAN RATES WEEKLY: Yen Gains Spur BOJ Bets, Supporting Bonds

(Bloomberg) -- Yen is set for the longest weekly advance in three years, buoying Japanese govt bonds amid rising speculation BOJ will expand monetary stimulus.
  • Click here for a weekly change in the sovereign yield curve and here for a market snapshot
  • USD/JPY has fallen 1.2% since Aug. 12, poised for a fourth weekly decline; that would be the longest losing streak since June 2013
  • July nationwide CPI data due Aug. 26 will be the last inflation report before BOJ’s next meeting on Sept. 20-21 when the central bank’s comprehensive policy assessment will be presented
    • Etsuro Honda, an adviser to Prime Minister Abe, sees “bold” BOJ action next month, he said in interview with WSJ
  • Finance ministry to auction 1.1t yen of 20-yr bonds on Aug. 23
  • The ministry will also sell 500b yen worth of JGBs at additional auction on Aug. 25 with remaining maturities of 5-15.5 yrs
  • WHAT THEY SAY
  • MassMutual Life Insurance (Satoshi Shimamura, head of rates and markets at investment strategy department)
    • BOJ’s comprehensive policy review in Sept. is more likely to ensure continuation of the current policy and coordination with the govt considering the weak stocks, stronger yen and rising bond issuance
    • The appreciation pressure on yen amid the dollar weakness will support the bond market
  • Barclays (Naoya Oshikubo, rates strategist)
    • Concern has eased that BOJ will scale back easing
    • It looks as though BOJ won’t be able to avoid expanding stimulus including a rate cut as yen continues to rise
  • PineBridge Investments Japan (Tadashi Matsukawa, head of fixed income investment)
    • If 20-yr bond issuance is absorbed smoothly, the sovereign curve is likely to flatten especially given a large amount of JGB redemption in Sept.
    • The market appears to have started to price in a possible increase in BOJ’s bond purchases
    • NOTE: JGBs worth 19.4t yen will mature in Sept., according to Bloomberg data
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Etsuro Honda (Japan)
Naoya Oshikubo (Barclays PLC)
Satoshi Shimamura (Massachusetts Mutual Life Insurance Co)
Tadashi Matsukawa (PineBridge Investments Holdings US LLC)

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UUID: 7947283

HALISTER1: CORRECT: INSIDE ASIA: Won Leads Decline; Aussie Fall on Moody’s

CORRECT: INSIDE ASIA: Won Leads Decline; Aussie Fall on Moody’s

(Bloomberg) -- (Corrects size & scope for Korea’s PPI data.) South Korea’s won led the decline in Asian currencies as Fed minutes and comments spur uncertainty. Aussie slides after Moody’s slapped a negative outlook on the nation’s banks.
  • Job growth to drive rate decision, not GDP, NY Fed Pres. William Dudley said. SF Fed Pres. John Williams, non-voter, said it makes sense to return to pace of gradual rate increases
    • Following Dudley’s hawkish comments this week, RBC says market awaits Yellen’s Jackson Hole appearance to see whether she adds credence to this recent Fed bluster
    • “There is a growing divide between Fed members and that is bringing a lot of uncertainty, which tends to see riskier assets not do so well,” says Stephen Innes, senior Asia Pacific FX trader at Oanda
    • Fed July minutes reveal a split btw officials on how to interpret slowdown in job growth
  • Aussie drops after Moody’s revised its outlook on five Australian banks to negative
    • Macro and hedge accounts have sold AUD/USD this morning citing the Moody’s revision, according to an Asia-based FX trader
  • Yen snaps five-day gain amid more verbal intervention from Japanese officials
    • Should USD/JPY decline to 95-96 before the BOJ’s monetary policy meeting on Sept. 20-21, govt likely to intervene, according to JPMorgan
    • June all industry est. at +0.9%, highest since Jan.
  • Yuan slips in both onshore and offshore markets
    • USD/CNH is bidding higher as shorts are profit-taking on USD amid thin liquidity, driving broader gains in the greenback: Sue Trinh, head of Asia FX Strategy at RBC Capital Markets
    • China is facing increasing pressure to ease monetary policy as domestic economic pressures are “relatively large” and as other countries lower interest rates, China Securities Journal commentary says
  • Won heads for biggest weekly decline in 6 weeks before release of Korea 2Q average monthly household income data
    • July PPI -2.4%, smallest decline since Dec. 2014
    • Koreans teeter on ‘rate cliff’ as personal lending jumps 13-fold
  • Southeast Asian currencies decline, led by ringgit
  • Rupiah slips before central bank’s monetary-policy decision
    • Indonesia’s central bank will cut its 7-day reverse repo rate to 5% from 5.25%, according to half of 22 economists surveyed by Bloomberg; rest expect no change
  • Taiwan 2Q GDP final est. +0.7% vs previous forecast +0.69%
Story Link:NSN OC50PU6K50XZ
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
John Williams (Upland Resources Inc)
William Dudley (Federal Reserve Bank of New York)
Stephen Innes (OANDA Corp)

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UUID: 7947283

HALISTER1: INSIDE INDIA: Bonds Head for Weekly Drop as New RBI Gov. Awaited

INSIDE INDIA: Bonds Head for Weekly Drop as New RBI Gov. Awaited

(Bloomberg) -- Govt bonds head for weekly decline ahead of naming of a successor to RBI Governor Rajan whose term ends in early September.
  • NOTE: PM Modi and Finance Minister Jaitley met yday to discuss names, Economic Times reports; “We will let you know when we decide,” Jaitley was quoted as saying
  • New RBI governor needs to maintain independence of central bank and enhance foreign investors’ confidence, which then will be INR-supportive, Scotiabank writes in note
  • Panel recommends allowing corporate bonds under repo ops
  • Public banks were biggest buyers of govt bonds on Aug. 18 at 64.2b rupees: CCIL data; private banks were biggest sellers at 38.6b rupees
  • Global funds raised INR bond holdings by 1.7b rupees on Aug. 18: NSDL
  • India to sell 150b rupees of govt bonds today; RBI to conduct 190b rupees 14-day term repo auction
  • Yield on 10-year govt bonds up 1 bp at 7.15%, poised for weekly increase of 4 bps
  • While technicals of weaker USD and high carry are supportive of INR, markets are cautious ahead of RBI governor announcement as well as upcoming non-resident deposit repayments, Morgan Stanley writes in note dated yday
    • Stronger fundamentals of lower current-account deficit and high FX reserves as well as RBI’s forward purchases to prepare for dollar-deposit redemptions should help offset impact from these uncertainties
  • Rupee drops 0.2% to 66.9463 per dollar
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: INSIDE ASIA: Won Leads Decline in Asia; Aussie Fall on Moody’s

INSIDE ASIA: Won Leads Decline in Asia; Aussie Fall on Moody’s

(Bloomberg) -- South Korea’s won led the decline in Asian currencies as Fed minutes and comments spur uncertainty. Aussie slides after Moody’s slapped a negative outlook on the nation’s banks.
  • Job growth to drive rate decision, not GDP, NY Fed Pres. William Dudley said. SF Fed Pres. John Williams, non-voter, said it makes sense to return to pace of gradual rate increases
    • Following Dudley’s hawkish comments this week, RBC says market awaits Yellen’s Jackson Hole appearance to see whether she adds credence to this recent Fed bluster
    • “There is a growing divide between Fed members and that is bringing a lot of uncertainty, which tends to see riskier assets not do so well,” says Stephen Innes, senior Asia Pacific FX trader at Oanda
    • Fed July minutes reveal a split btw officials on how to interpret slowdown in job growth
  • Aussie drops after Moody’s revised its outlook on five Australian banks to negative
    • Macro and hedge accounts have sold AUD/USD this morning citing the Moody’s revision, according to an Asia-based FX trader
  • Yen snaps five-day gain amid more verbal intervention from Japanese officials
    • Should USD/JPY decline to 95-96 before the BOJ’s monetary policy meeting on Sept. 20-21, govt likely to intervene, according to JPMorgan
    • June all industry est. at +0.9%, highest since Jan.
  • Yuan slips in both onshore and offshore markets
    • USD/CNH is bidding higher as shorts are profit-taking on USD amid thin liquidity, driving broader gains in the greenback: Sue Trinh, head of Asia FX Strategy at RBC Capital Markets
    • China is facing increasing pressure to ease monetary policy as domestic economic pressures are “relatively large” and as other countries lower interest rates, China Securities Journal commentary says
  • Won heads for biggest weekly decline in 6 weeks before release of Korea 2Q average monthly household income data
    • July PPI -2.4%, smallest decline since Jan. 2015
    • Koreans teeter on ‘rate cliff’ as personal lending jumps 13-fold
  • Southeast Asian currencies decline, led by ringgit
  • Rupiah slips before central bank’s monetary-policy decision
    • Indonesia’s central bank will cut its 7-day reverse repo rate to 5% from 5.25%, according to half of 22 economists surveyed by Bloomberg; rest expect no change
  • Taiwan 2Q GDP final est. +0.7% vs previous forecast +0.69%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
John Williams (Upland Resources Inc)
William Dudley (Federal Reserve Bank of New York)
Stephen Innes (OANDA Corp)

To de-activate this alert, click here

UUID: 7947283