SOUTH KOREA: Country Wrap: Markets Pricing in Impeachment.
Dec-12 05:02
- South Korea’s Yoon Vows Defiance as Impeachment Calls Grow (source: BBG).
- Six Ruling Party Lawmakers Support Yoon Impeachment, DongA Says (source: BBG).
- Korean Markets Seem to be Pricing in Yoon’s Impeachment: Lombard (source: BBG).
- Since the news of capital injections from authorities, the KOSPI has been on a tear and is up +0.36% again today.
- KRW: weaker today by -0.219% to 1,432.25
- Bonds: yields drifted higher across the curve by 1bp. 10YR 2.706%.
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JGBS: Subdued Data-Light Session, PPI & 30Y Supply Tomorrow
Nov-12 04:59
JGB futures have pushed into negative territory, -6 compared to settlement levels.
- Outside of the previously outlined M2 & M3 Money Stock, there hasn't been much by way of domestic drivers to flag. Machine Tool Orders data is due soon.
- Cash US tsys are flat to 4bps cheaper in the Asia-Pac session today with a flattening bias. US tsys reopened today after being closed for the Veterans Day holiday yesterday.
- Fed futures are pricing 17bps of cuts at the December meeting with a cumulative 25.7bps of cuts priced in by the January meeting.
- Cash JGBs are little changed across benchmarks beyond the 1-year (+2bps).
- Swap rates are little changed as well.
- Tomorrow, the local calendar will see PPI data alongside 30-year supply.
ASIA STOCKS: Asian Equities Mostly Lower As Semiconductors Struggle
Nov-12 04:52
Asian equities are mostly lower today. Japanese equities have given back session gains to now trade mixed with tech stocks underperforming. Hong Kong listed equities have seen a sharp drop due to concerns about domestic macroeconomic conditions and rising geopolitical tensions, headlines out earlier supporting the China property market have done little to push equities higher. Asian tech stocks are the worst performing today, with the large-cap semiconductor stocks leading the losses. US Tsys yields rose, driving funds into the dollar and pressuring emerging Asian currencies, with the Thai baht and Indonesian rupiah weakening.
- Asia tech is struggling, tracking moves made overnight in the Philadelphia SE Semiconductor Index. Investors are now looking to key earnings reports from Tencent and Alibaba to gauge the impact of business streamlining efforts, and whether consumer spending will recover with potential Beijing stimulus.
- China mainland equities are outperforming Hong Kong listed equities, with the CSI 300 +0.40%, while the HSI is -1.75%, HSTech Index is -2.50%.
- Japanese equities are off earlier highs, with the TOPIX now just 0.10% higher for the day, Recruit Holdings surged 8.20% in early morning trading following better-than-expected operating profit for 2Q however most of those gains have now been erased and trades just 2.5% higher. The Nikkei has erased earlier gains and now trades down 0.70%, with Tokyo Electron (-3.20%) struggling.
- South Korea’s Kospi is trading 1.30% lower, marking a third straight session of losses, driven by foreign and local fund selling, while retail investors stepped in to buy. Taiwan's TAIEX is trading 1.70% lower, largely due to a 2.30% drop from TSMC following a 2.54% fall in the Philadelphia SE Semiconductor Index overnight.
- Australia's ASX 200 is 0.2% lower, primarily impacted by declines in gold miners as bullion prices retreated following volatility in the US. Meanwhile, Australian consumer confidence rose in November, as households appeared less worried about future interest rate hikes.
FOREX: USD Mostly Higher, A$ Weaker On Yuan Loss Spillover
Nov-12 04:38
The USD is tracking higher against all the major currencies, with the exception of the yen, as the first part of Tuesday trade unfolds. The BBDXY index was last near 1275.5, not too far off Monday intra-session highs (1276.43).
- AUD/USD is the weakest performer, last near 0.6555 and off close to 0.35%. Post election lows in the pair (0.6513) remain intact. Spill over from the break higher in USD/CNH, which is threatening a test of 7.2500, is weighing on the AUD.
- Earlier we had brief respite on BBG headlines that China is considering reducing property taxes to aid the sector, but the positive follow through provided short lived. At the break the CSI 300 is up modestly, the Shanghai Composite close to flat.
- Reports from the NYT and WSJ suggest foreign policy hawks could fill key Trump administration positions (Marco Rubio for Secretary of State and former veteran Republican Mike Waltz for National Security Adviser) is likely also in focus.
- US Tsy yields have resumed trading, with a curve flattening bias. The 2yr is up to 4.28%, +3bps, the 10yr sits off earlier highs, last near 4.32%. US equity futures are down slightly, while regional equity sentiment has seen some negative tech spill over.
- USD/JPY spiked above 154.00 earlier, but now sits back at 153.50/55, slightly firmer in yen terms for the session.
- Earlier data showed both consumer and business confidence in Australia rising, but the market impact was negligible. NZ spending data pointed to some improvement in consumer spending trends.
- Looking ahead, the Fed’s Waller, Barkin, Kashkari and Harker speak and the Senior Loan Officer Survey is published. US October small business optimism and NY Fed 1-yr inflation expectations plus UK labour market data and euro area November ZEW print. ECB’s Cipollone and BoE’s Pill appear.
