HALISTER1: Aussie May Stay Bid on Haven Buying If Jobs Misses Est: Analysis

Aussie May Stay Bid on Haven Buying If Jobs Misses Est: Analysis

(Bloomberg) -- Haven buying of A$ ahead of Brexit vote may lessen any dip reaction in A$ if Australia added less jobs than expected in May, Bloomberg strategist Michael G. Wilson writes.
  • Aussie may be the best AAA rated and far removed port available in the oncoming Fed, BOJ and Brexit/Eurozone risk storm
  • Australia likely created net 15k jobs, up from a revised 10.6k in April, according to median est. of 25 forecasts in Bloomberg survey; range of ests. from -7k to +35k; data due at 11:30am local
  • Unemployment rate is seen unchanged at 5.7%
  • GBP/AUD has fallen 7.7% from 2.0534 May 26 high, closed below 1.9417 50% Fibonacci retracement low on Friday
    • However still short of triple bottom near 1.8300 on April 21
  • U.K. referendum should keep this cross bid and supportive of AUD/USD through the legs
  • GBP/AUD 1-month risk reversals at record negative skew
    • 1-month volatility at 24.9%, its highest since GFC
  • Leveraged funds’ A$ positioning flipped from long to short last week, may see muted reaction on a data miss as this client segment already short: CFTC data shows
  • Risk to view may be BOJ easing later on Thursday, which could see USD catch a bid, thus weakening the Aussie
  • AUD/USD down 0.3% to 0.7335
  • NOTE: Michael G. Wilson is an FX strategist who writes for First Word. The observations he makes are his own.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: INSIDE MALAYSIA: Ringgit Falls; 5-Yr CDS Costs at 3-Month High

INSIDE MALAYSIA: Ringgit Falls; 5-Yr CDS Costs at 3-Month High

(Bloomberg) -- Ringgit falling for fourth day ahead of inflation data at noon local time; median est. in Bloomberg survey is +2.0% vs +2.1% in April.
  • Five-year credit protection costs for Malaysia rose 4 bps yday to 172 bps, highest daily close in three months, according to CMA New York data
  • Ringgit down 0.1% to 4.1115 per dollar, according to onshore prices
  • USD/MYR momentum studies turning bullish with pair holding above 50-DMA at 4.0067 for past month; click here for chart
    • Moving toward 200-DMA resistance at 4.1818; other resistance levels at 4.1125 June 1 low, 4.1392, June 6 high
  • SGD/MYR rising for fourth day, up 0.1% to 3.0310
  • 1MDB to review IPIC arbitration once served with copy
  • PM Najib says he didn’t abuse power or derail probes
  • 10-yr govt bond yield closed yday up 1 bp at 3.882%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: Brexit Risk to Keep Spurring Yen as BOJ Seen on Hold: Preview

Brexit Risk to Keep Spurring Yen as BOJ Seen on Hold: Preview

(Bloomberg) -- The yen could advance beyond its May high to around 105 vs dollar if Bank of Japan decides against easing at its policy meeting this week, with Brexit risk continuing to drive demand for haven assets, according to analysts.
  • BOJ will maintain policy Thursday, according to 29 of 40 economists surveyed by Bloomberg; 11 expect stimulus
  • USD/JPY declines increasingly coincide with greater readership of Brexit stories, suggesting that Gov Kuroda’s influence on yen may be limited, according to Bloomberg analysis
  • USD/JPY currently little changed at 106.10 after falling for three straight days
  • Yen has risen 13% vs U.S. dollar this year and is best- performing G10 currency; May high vs USD was 105.55
  • NOTE: USD/JPY option traders vulnerable to BOJ surprise: analysis
  • Yen outlook:
  • SBI Securities (Tsutomu Soma, GM fixed-income department)
    • Yen should strengthen if BOJ holds; likely to breach May 3 high of 105.55
    • Gains may be limited as investors await results of July election in Japan and outcome of U.K. referendum next week, though concerns on Brexit lift currency
    • BOJ staying on hold this week would boost expectations of July easing, and markets may try to price that in toward next meeting, dragging yen down to around 110 per dollar
    • No move in June; expansion of negative rate and quantitative easing to 100t yen from 80t yen in July, esp if ruling LDP wins election
  • Daiwa Securities (Yuji Kameoka, chief currency strategist)
    • Weaker yen trend unlikely as BOJ doesn’t have many effective additional easing tools left
    • Even if BOJ expands easing, would only leave fewer options for future
    • USD/JPY trading range of ~102 to 110 for rest of yr, though floor at 105 over next month
    • Intervention isn’t expected when USD/JPY trades above 100; international community sees latest yen move as correction from weaker yen caused by BOJ policy, so unlikely to support idea of intervention
  • JGB outlook:
  • Mizuho Securities (Noriatsu Tanji, senior bond strategist)
    • BOJ is expected to stay on hold this week, but bond yield is likely to remain under pressure as investors continue to see possible further easing in July
    • BOJ may be “forced” to move in July if U.K. decides to exit EU, which would probably add appreciation pressure on yen and encourage Fed to stay on hold
    • If that happens, JGBs may trade as in Jan. when BOJ introduced negative rate, with short-to-medium tenor rates falling first to steepen the curve, and then long- and super long-sector rates rallying to flatten the curve
  • Okasan Securities (Makoto Suzuki, senior bond strategist)
    • Medium-to long-dated yields have been falling recently due to concerns about Brexit rather than expectations for BOJ easing
    • BOJ likely to stand pat at this meeting; impact will probably be limited
    • Yields likely to remain under downward pressure toward U.K. vote on June 23; should be little changed in July as “massive redemption” that has supported JGBs ends this month
  • Economic conditions:
  • Totan Research (Izuru Kato, chief economist)
    • Logical to expect more easing given weak inflation expectations, but may be hard for BOJ to act in June as decline in yen from easing may be limited since Fed is unlikely to raise rates soon
    • Expanding negative rates is undesirable before July election as policy isn’t popular among Japanese voters
    • BOJ probably wants to take action at most effective time amid limited options for easing; greater chance of move in July
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
8301 JP (Bank of Japan)

People
Izuru Kato (Totan Research Co)
Makoto Suzuki (Okasan Securities Group Inc)
Noriatsu Tanji (Mizuho Securities Co Ltd)
Tsutomu Soma (Softbank Corp)
Yuji Kameoka (Daiwa Securities Capital Markets Co Ltd)

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UUID: 7947283

HALISTER: BofA Said to Hire Patel to Lead Electronic Trading in Americas

BofA Said to Hire Patel to Lead Electronic Trading in Americas

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
BAC US (Bank of America Corp)
CSGN VX (Credit Suisse Group AG)

People
Pankil Patel (Credit Suisse Group AG)
Dan Mathisson
Selena Morris (Bank of America Corp)

Topics
Who's News - People

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UUID: 7947283

HALISTER1: Loomis, Franklin Help Long Corporate Bonds Rise to Top of Heap

Loomis, Franklin Help Long Corporate Bonds Rise to Top of Heap

Alert: HALISTER1
Source: BN (Bloomberg News)

Tickers
BEN US (Franklin Resources Inc)

People
Jeff Cucunato (BlackRock Inc)
Jordan Chalfin (Creditsights Inc)
Marc Kremer (Franklin Resources Inc)
Mark Kiesel (Pacific Investment Management Co LLC)
Neil Burke (Loomis Sayles & Co LP)

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UUID: 7947283