ASIA STOCKS: Japan Markets Surge, Led By Autos, On US 15% Tariff Deal
Jul-23 04:01
Japan stocks are the standout, as headlines cross of a US-Japan trade deal, which will see the reciprocal tariff rate set at 15%. This includes the important auto sector as well. Benchmark Japan indices were last up +3%. US equity futures have edged higher, but Eminis are only +0.20% firmer at this stage. EU stock futures are doing better, last around 1.15% higher for Euro Stoxx.
- The trade deal is seen as a win for Japan, particularly the 15% auto tariff (after 25% was threatened by US President Trump). Other details include $550bn of Japan investment into the US, although specific projects/timelines for this weren't apparent. Headlines also crossed that PM Ishiba plans to resign in August, which gave markets another leg higher. This could prompt further fiscal support for the economy. The Topix is up over 3%, last above 2925, which is fresh highs back to July last year. The auto and transport sub index is up close to 10%.
- China and Hong Kong stocks continue to rally as well. The HSI is up over 1%, while the CSI 300 has gained close to 0.75%, putting the index near 4150. General positive sentiment around US-China trade/relations is aiding sentiment. US Tsy Secretary Bessent will meet China officials in Stockholm next week, with the aim of extending the trade truce and expanding talks. US President Trump also stated overnight he may meet China President XI in the not too distant future (per BBG).
- Taiwan markets are firmer, the Taiex up over 1.10%, but South Korea's market has struggled for positive momentum as it can't sustain moves above 3200.
- In SEA, Thailand stocks are up strongly, last over +2% firmer, putting the index comfortably above the 1200 level. Indonesian stocks are also higher, along with other bourses in the region.
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US TSYS: Asia Wrap - Yields Edge Higher Led by the Long-End
Jun-23 04:00
The TYU5 range has been 110-25+ to 111.04 during the Asia-Pacific session. It last changed hands at 110-27+, down 0-04 from the previous close.
- The US 2-year yield has edged higher trading around 3.916%, up 0.01 from its close.
- The US 10-year yield has bounced higher trading around 4.392%, up 0.02 from its close.
- (Bloomberg) -- “Treasuries may benefit from demand for haven assets and concerns over an economic slowdown unless oil prices rise dramatically, according to Nomura Securities Co.”
- Lance Roberts on X: “While the Fed is quietly sitting on the hands as economic data slows and tariff inflation remains non-existent, other central banks are rapidly cutting rates with the Swiss restarting NIRP. The Fed is likely going to be too late once again adjusting monetary policy which is its history.”
- The 10-year yield continues to find decent supply back towards its 4.30/35% support, this area needs to hold if yields are to move higher. The range looks to be 4.30% - 4.60% for now a break either side would provide a clearer direction.
- Data/Events: S&P Global US PMI’s, Existing Home Sales
CHINA: Bond Futures Move Lower
Jun-23 03:17
- China's bond futures have all moved lower in morning trade as major equity bourses are mixed.
- The 10YR future is down -0.05 at 109.10, remaining above all major moving averages. The nearest is the 20-day EMA of 108.98
- The 2YR future is down -0.02 at 102.52 and sits between the 100-day EMA of 102.61 and the 50-day EMA of 102.50
- Having closed Friday at 1.64% the 10YR CGB is at 1.63% this morning, lower by -0.5bp
AUSSIE BONDS: Weaker After Early Strength Reversed
Jun-23 02:34
ACGBs (YM -1.0, XM -4.0) have weakened, reversing early modest gains following reports of US airstrikes on Iranian nuclear sites over the weekend.
- Outside of the previously outlined S&P Global PMIs (P), there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are 1-2bps cheaper in today's Asia-Pac session.
- (Bloomberg) Australia’s 30+ day conforming mortgage arrears rose by 23bps q/q to 1.36% in 1Q, while non-conforming arrears rose more sharply by 39bps to 5.32%, Fitch Ratings says in a statement.
- Cash ACGBs are flat to 4bps cheaper with the AU-US 10-year yield differential -17bps.
- The bills strip has cheapened slightly, with pricing flat to -2.
- Today’s Nov-32 auction reflected solid pricing for ACGBs, with the weighted average yield coming in 0.74bps below prevailing mid-yields, according to Yieldbroker. Moreover, the cover ratio nudged higher to 3.3550x from 3.2100x in the previous auction.
- RBA-dated OIS pricing is modestly softer across meetings today. A 25bp rate cut in July is given an 84% probability, with a cumulative 74bps of easing priced by year-end.
