Halister News

(Bloomberg) -- Cook leaves after almost six years at the bank, according to an internal memo seen by Bloomberg News.

• BNP announced changes on June 3 to “optimize” its cash- equities operation, according to memo
• Cook will “pursue new opportunities outside the industry”: memo
• Cook and Jeremy Hughes, BNP spokesman, decline to comment
• In revamped operation, Ken Chen to head research, reporting to Hugo Leung, head of global markets Hong Kong: memo
• Leung to lead activities in Greater China, Douglas Butcher to head equity-cash platform in Japan: memo

NOTE: Click here for previous story on BNP shrinking Asian cash-equities business

(Bloomberg) -- Decline in Singapore’s 5-year interest-rate swaps may stall near 50-DMA at 1.9820% as momentum shows signs of turning neutral, Bloomberg strategist Mark Cranfield writes.

• SGD swaps slide 8.5bps today, most in two months to 2.0150% after weak U.S. jobs report left odds of July Fed rate increase at 27% vs 55% one day earlier
  • Markets will be watching Fed Chair Yellen’s speech tonight
• Click here for SGD chart
• Momentum studies falling toward neutral readings:
  • MACD dropping toward signal line
  • Slow stochastics %K at 57, Williams %R -51
• Breach of 50-DMA in 5-yr swap opens the next support near May 19 low at 1.9275%
• NOTE: Mark Cranfield is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- Asian currencies mixed as dollar recovers some of Friday’s payroll-driven losses, with yuan, yen and Aussie among decliners, while ringgit and rupiah climb.

• EM currencies staging relief rally as markets factor out imminent U.S. rate hike, says Stephen Innes, a senior trader at Oanda Asia Pacific; sustainability uncertain given considerable local headwinds; risk-off sentiment may filter back into markets unless strong China economic data seen this week
  • NOTE: Probability of June hike now 4.0% vs 22.0% ahead of Friday payrolls data; July now only 27.0% vs 54.8%
• Offshore yuan falls 0.40%, most since May 18, while onshore yuan declines 0.20%; sharp gains Friday after U.S. data mean CNY remains around 300 pips off 5-yr low hit in Jan.
  • PBOC strengthens CNY fixing 0.45%, most since April 29 but still less than some expected; prompted broad-based USD/CNH buying, according to traders
  • U.S.-China Strategic & Economic Dialogue begins in Beijing; President Xi says the two nations should have more dialogue on macroeconomic issues; progress made in bilateral ties, including cyber and military cooperation
  • China must improve monetary policy communication, U.S. Treasury Secretary Lew said Sunday, ahead of SED meeting; progress has been made on exchange-rate debate
  • PBOC methodology adjustment to banks’ RRRs means they will from July 15 be calculated based on average daily deposits over a period rather than period-end rate
  • May FX reserves data tomorrow could reveal PBOC restraint, analysts say
• Aussie drops, bonds surge at open in response to smallest U.S. jobs gain in almost six years; small leveraged accounts selling AUD/USD under 0.7366 and leaving buy stops above 0.7402 May 11 high, according to Asia-based FX trader
  • RBA won’t cut tomorrow, preferring to wait for 2Q inflation data in July, according to CBA note today
  • NZD/USD selling led by leveraged and macro accounts, Asia-based FX trader says
• Japanese yen falls 0.6% after strengthening to as much as 106.39 vs dollar following U.S. data; dollar gains Monday morning, with DXY rising 0.21% and BBDXY up 0.30%
  • USD/JPY may be supported by speculation of intervention and additional BOJ stimulus, says Toshiya Yamauchi, chief manager for FX margin trading at Ueda Harlow; however, intervention and monetary easing are unlikely; USD/JPY to test 106.00 on drop in Nikkei 225
  • Chief cabinet secretary Suga says govt is watching currencies closely and will take action when necessary
  • Prime Minister Abe’s LDP party has no reference to monetary policy in its campaign platform for election next month
  • Asashi poll shows cabinet approval rating rises 2 ppts to 45%; Yomiuri poll says cabinet approval rating flat at 53%
  • BOJ to hold third round of bond market group meeting on June 6-7
• Indonesia’s rupiah advances as much as 1.0%, most since March 30, to 13,460 vs dollar; Bank Indonesia will issue looser lending rules in 3Q at latest, Gov Martowardojo said on June 3
  • BI likely to keep policy rate unchanged at next meeting following 75-bp cuts in 1Q, and instead focus on better monetary policy transmission and its interbank market, Goldman Sachs writes in June 3 note
• Malaysia’s ringgit tops Asian gainers, rising as much as 1.4%, most since March 30; weaker U.S. data reduces chances of Fed rate increase and lowers outflow pressure in emerging markets
  • “I think the Malaysian ringgit will do quite nicely -- and other Asian currencies will do quite well -- in this environment where the dollar has got destroyed and market probability for Fed tightening has come back quite sharply,” says Chris Weston, chief market strategist at IG Ltd. in Melbourne

(Bloomberg) -- HKD 5-year interest-rate swaps drop 10 bps, most since March 17, to 1.3200%, lowest since April 12.

• HKD 2-year swaps down 8.5 bps to 1.0000%
• Spread between 2-year and 10-year swaps narrows to 62 bps vs 63.5 bps on June 3; click here for chart
• Spot USD/HKD -0.01% to 7.7677

(Bloomberg) -- With RBA expected to hold rates tomorrow, its assessment of domestic inflation and global economic risks will be studied for changes to expectations for an August cut, Bloomberg strategist Michael G. Wilson writes.

• RBA is first G-10 central bank to hold meeting post U.S. jobs data on Friday, which didn’t meet expectations
• 1-month AUD/USD risk-reversals tightened this morning in wake of Friday’s NFP; 1-month volatility below all major moving averages
• AUD long positioning is at its lowest since March 1, giving scope for investors to increase purchases should RBA commentary lead to deferred expectations for a rate cut, which is expected in Aug
  • A cut to 1.5% is seen in August, according to the estimates, though 1Q GDP data showed economic growth accelerated in the first qtr
  • RBA would prefer to wait until Q2 inflation data in late July to make decision, CBA says today
• RBA cited low, broad-based inflation as factor behind May 3 cut, then Governor Stevens on May 24 said the 2% to 3% target band isn’t rigid
  • AUD fell during his comments
• RBA will leave benchmark rate at 1.75%, according to all but 1 of 26 economists surveyed by Bloomberg; the rest see no change; decision due 2:30pm Sydney
  • Latest OIS pricing shows only 7% chance of easing
• AUD/USD down 0.6% to 0.7326

(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

UPGRADES

• Janalakshmi Financial
  • Long-term bank facilities raised to A+ from A at ICRA; NCDs also revised to A+ from A
  • Cites improvement in capitalization after equity infusion of INR10b

• Paschim Hydro Energy
  • LT loan facilities raised to BBB from BBB- at Crisil
  • Cites steady cash flows, strong liquidity management

(Bloomberg) -- RBI may maintain rates while signaling a continued accommodative monetary stance at its policy meeting tomorrow, economists say.

• RBI may want gauge the effect of recents rate cuts and also wait to see how the monsoon season develops
• The central bank is forecast to keep the repo rate steady at 6.5%, according to all 19 economists surveyed by Bloomberg
• Meeting comes amid increased speculation about whether RBI Gov. Rajan will get an extension when his first term ends in early Sept; markets will watch Rajan on the issue during a press conference at 11am local time

• KEY MACRO PARAMETERS
  • 1Q growth beat estimates at 7.9% y/y; 7.2% prior quarter
  • CPI quickens more than estimates; consumer prices rose 5.39% in April vs 5.05% est
  • Wholesale prices rose for first time in 18 months in April
  • Monsoon rain seen best since 1994 as La Nina set to emerge
  • FY16 budget deficit at 5.32t rupees, 99.5% of target
  • RBI reduced its policy rate by a larger-than-expected 125 bps in 2015, yet the 12-month lending rate fell 38 bps on average during the period: Bloomberg Intelligence

• FACTORS TO WATCH IN RBI STATEMENT:

• Firmer inflation indicators:
• Recent uptick in inflation warrants a wait-and-watch attitude, ANZ writes in note dated June 3
  • RBI in no hurry to ease based on above-normal monsoon forecast
  • RBI may also want a better sense of magnitude and timing of impact from pay panel recommendations on inflation

• Guidance
• RBI likely to retain easing bias but won’t cut rates until later this year, Moody’s Analytics says in note dated June 2
  • Better monsoon forecast should keep food inflation at bay and help RBI cut rate later in the year
• RBI has room to cut another 25 bps in FY17, but it is unlikely to happen in this policy meeting, India Ratings & Research says in note dated June 3

• Liquidity
• Investors will keenly watch RBI’s assessment about money market liquidity, Deutsche Bank says in note dated June 3
  • RBI’s OMOs have helped to some extent but there is long way to go before liquidity can be brought to neutral
  • Steady fall in nominal deposit growth rate and sharp spike in currency-in-circulation growth complicating task
• NOTE: RBI said in its April policy that it will transit the banking system to neutral liquidity from deficit for better monetary transmission; $26b of deposit repayments to overseas Indian are due between Sept-Nov which may create liquidity mis-matches

(Bloomberg) -- Australia May Melbourne Institute Inflation gauge due.

• Melbourne Institute Inflation Index m/m; no est., prev. 0.1%
• Melbourne Institute Inflation Index y/y; no est., prev. 1.5%
• See previous table