Halister News

Economic Release Details: {CNGDPYOY Index ECOD} --JEFF KEARNS

(Bloomberg) -- China is scheduled to release 2Q GDP as well as June industrial production, retail sales and fixed-assets investments at 10am local time. Data may be released earlier or later than officially scheduled.

• 2Q GDP y/y est. 6.6% vs prev. 6.7%
• 2Q GDP q/q est. 1.6% vs prev. 1.1%
• June industrial production y/y est. 5.9% vs prev. 6.0%
• June retail sales y/y est. 9.9% vs prev. 10.0%
• June fixed asset investments est. 9.4% vs prev. 9.6%

(Bloomberg) -- Sompo Japan Nipponkoa Asset Management is “overweight” on super-long-tenor Japanese govt bonds, a strategy aimed at beating returns indicated by the benchmark index it follows.

• “We have been mainly buying 20-year JGBs that offer better carry and rolldown across the curve,” Shinji Hiramatsu, general manager of the fixed-income investment department in Tokyo, said in July 14 interview. “We don’t buy them at negative yields. We also don’t like to keep extending duration because the bond markets seem to be facing a bubble.”
• BOJ’s introduction of negative interest rate on Jan. 29 dragged yields of govt securities with maturities up to 15 years to sub-zero; benchmark 20-year rate rebounded to 0.1% this morning after touching -0.005% on July 6
• Sompo Japan, which oversees about $17b of assets as of end- March, also likes a position that benefits from the shape of yield curve
  • This may include going long on 10-year securities when they are relatively cheap and offer better carry against the short- and medium-term notes, Hiramatsu said

(Bloomberg) -- NZD/USD is likely to test its bull trend support if N.Z. 2Q inflation is weaker than forecast and raises the odds of an RBNZ rate cut next month, Bloomberg strategist David Finnerty writes.

• Markets are currently pricing in a 64% chance of a RBNZ rate cut at its Aug. meeting
• 2Q CPI will likely show a 0.5% q/q rise, up from 0.2% q/q in 1Q, according to median est. of economists in Bloomberg survey; data due July 18 at 10:45am local time
• On July 7, RBNZ’s Spencer said further rate cuts could threaten financial stability, but the CPI outlook will ultimately determine monetary policy
• RBNZ said yesterday it would issue a brief update on its economic assessment on July 21; this has spurred speculation the update will prepare the ground for a rate cut in Aug.
• At its June meeting, RBNZ said the exchange rate was higher than appropriate given low export commodity prices and, along with weak overseas inflation, was holding down tradables inflation
• Breach of NZD/USD’s bull trend may see the FX pair test support at 0.6964, the June 15 low, in medium-term
• Slow stochastics have turned bearish with %D reading of 60 and falling
• NOTE: Lower rates by themselves are no guarantee of a weaker exchange rate; RBNZ has eased by 125 bps since mid-2015, but the kiwi has risen 2.3% on a trade-weighted basis during that time
• 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.