US BASIC INDUSTRIES: Eastman Chemical (EMN): 2Q26 Results
Modest credit negative - 2026 cost initiatives remain on track, but we see leverage and FFO/debt at ~3.4x and 10% by year end. S&P’s downgrade threshold is FFO/Debt <20% suggesting downgrade likelihood although management remains committed to a solid IG rating with a target net leverage of 2.5x. EMN's intermediate-curve spread to peers WLK, CF and ALB over the last year sits at the 8th, 57th and 78th percentile, respectively, with an average z-score of 0.04.
• Revenue was above street consensus at $2.51B ($2.37B est.), and was +9% YoY in constant currency driven by volume, +5% YoY and pricing +4%.
• EBITDA increased by 12% YoY and margins were stable at 18%.
• FCF was $28M compared to -$12M in the prior year quarter and the company kept buybacks paused. The company expects to buy back $50M-$100M stock over the next two quarters.
• Gross and net leverage ended the quarter at 3.8x and 3.3x, -0.1x sequentially.
• 3Q26 adj. EPS guidance of $1.97 beat $1.91 estimates.
• FY26 CFO guidance was lowered to $900M ($923M est.) from ~$1B. Capex is still expected to be ~$400M ($402M est.).
• Opex cuts for 2026 were reiterated at $125M-$150M.
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JGB TECHS: (U6) Downside Momentum Intact
- RES 3: 133.15 - High Feb 24 ‘26
- RES 2: 131.06 - 61.8% retracement of the Feb - May Bear Leg
- RES 1: 129.01 - 50-dma (cont)
- PRICE: 127.62 @ 16:56 BST Jun 30
- SUP 1: 127.40/41 - Low May 18 / Jun 22
- SUP 2: 126.19 - 2.0% 10-dma envelope
- SUP 3: 125.70 - Low Feb 1999
Bearish pressure has eased, but the broader theme remains negative in JGB futures. Through the latest sell-off, the price printed through the lower 1.0% 10-dma envelope on the continuation contract, signalling the strength of downside pressure. This widens the gap with the 50-dma, a break above which is needed to highlight a stronger short-term reversal and signal scope for any recovery. The 50-dma is currently at 129.01. A strong bull rally would open 131.80, a Fibonacci retracement.
GOLD: Buyers Emerge Near $3,950 - Downward Pressure to Remain
- Whilst gold finished lower during the US trading day, it did see buyers emerge and saw buyers emerge near $3,950 again and ended back above $4,000.
- Gold ended down -0.20% at US$4,006 - having traded in a range of $3,943 to $4,063.
- The emergence of buyers coincided with gold reaching oversold on the 14-day relative strength index ashe precious metal remains below all major moving averages.
- The break back above $4k is the second time that buyers have emerged around $3,950. We now expect that gold will likely trade in a $3,800 - $4,100 leading into the NFP key to its next major move. It is unlikely that the NFP will alter the pathway for rates and as such we see further downward pressure likely to build for bullion.
CNH: CNH/JPY Strong Uptrend, Yuan Reserve Allocation Flows A Long Term Support
Spot USD/CNH tracks close to 6.7910 in early Wednesday dealings, after CNH posted a 0.13% gain for Tuesday's session. This outperformed a modest tick up in the USD BBDXY index, although the USD was sold around the month/quarter end fix before recovering. Risk appetite was better in the equity space, which saw higher beta plays outperform safe havens, with yen weakness the main focus point (post the break above 162.00). Spot USD/CNY finished up at 6.7870, while the CNY CFETS basket tracker lost a little ground to 102.58.
- For spot USD/CNH downside focus will rest on a break back under the 20-day EMA support point, which rests near 6.7890 currently, so near current spot levels. June lows (6.7539) may be hard to reach though given still elevated USD index levels. Moves above the 50-day EMA (6.8015) drew selling interest in late June.
- The CNH/JPY cross is trending towards 23.95, which is fresh record highs and beyond there lies the 24.00 upside target. The pair remains in a strong uptrend, with the 20-day EMA back near 23.742. Most risk lies with the JPY leg, with USD/JPY pushing above 162.00 and testing the authorities resolve around yen weakness.
- Structural underlying support for the yuan is likely to be evident from central bank diversification flows. Via BBG, "Emerging market reserve managers plan to increase their net positions in the yuan in the next 12-24 months, as well as over the next decade, driven by a desire to decrease dollar allocations." (via a Official Monetary and Financial Institutions Forum survey). See this link.
- Today we get the RatingDog PMI for manufacturing. The market expects a 52.0 outcome (prior was 51.8). yesterday we saw the official June PMIs edge up but remain near 50.0. The PMI reads will be assessed for fresh easing risks in China given softer retail sales, fixed asset investment trends in Q2.
