JGBS: Light Cheapening Seen
Nov-30 02:59
A sedate round of morning dealing saw a modest uptick in JGB yields, while JGB futures traded on the backfoot. This was perhaps a catch-up play to Tuesday’s cheapening in U.S. Tsys, which left the futures contract -7 at the lunch bell
- The space looked through softer than expected Chinese PMI data, while softer than expected domestic industrial data also failed to inspire price action.
- Broader domestic headline flow was limited at best.
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JAPAN DATA: Japan Sep Retail Sales +4.5% Y/Y; 7th Monthly Rise
Oct-31 02:30
- Japanese retail sales rose 4.5% y/y in September, accelerating from the 4.1% y/y growth reported last month, marking the seventh monthly rise.
- On a monthly basis, retail sales grew 1.1%, slower than the 1.4% growth in August.
- General merchandise sales jumped up 8.8% y/y, after rising 10.1% y/y last month, while sales of fabric apparels and accessories dropped 3.6% y/y, comparing with rising 7.8% y/y in August.
- Sales of food and beverages edged down 0.4%, following the 0.1% decrease last month.
- Fuel sales, another key driver, rose 7.1% y/y, slower than the previous 10.8% y/y growth.
- Sales of machinery and equipment registered a rise of 3.7% y/y, after dropping 6.3% y/y in August.
CNH: USD/CNH Eyeing 7.3000 Level, Onshore 10yr Yield Close to YTD lows
Oct-31 02:25
USD/CNH got to a high of 7.2933 post the weaker than expected PMI releases. We are now back to 7.2850. Dips in the pair are generally supported though. Onshore spot is gravitating higher as well. We last at 7.2670/80, around +0.20% above closing levels from last week.
- 7.3000 is likely to be the upside focus point for both pairs, although arguably more so USD/CNY. Recall last week the breach of this level appears to have spurned USD selling from state banks. So, moves to this region may prompt further resistance.
- Today's PMIs will underscore concerns around the economic backdrop for China, with calls around fresh policy to linger.
- Onshore bond yields are lower today, but more so in the back end, 10yr down 3bps to 2.64%. Note lows from mid-August/early September come in around the low 2.60% region.
JAPAN DATA: Japan Sept Ind. Output -1.6% M/M; 1st Drop In 4 Mths
Oct-31 01:58
- Japan's industrial production marked the first monthly drop in 4 months by 1.6% m/m in September, led by auto mobile industry, due to the rebound from previous increases.
- Shipments fell 2.4% m/m from last month, automobile industry made the most contribution to the decrease among 15 industries.
- Inventories rose for the forth month by 3.0% m/m. The electrical and information and communication equipment industry made the largest contribution to the increase.
- METI keeps its assessment as "production recovering moderately" and sees production falling 0.4% (revised down from 3.2%) in October before rising 0.8% in November.
