NEW ZEALAND: PMI Up, But Still Well Off Recent Highs, New Orders Bounce
The New Zealand BusinessNZ manufacturing PMI pushed higher in June to 48.8, after a revised 47.4 read in May. The improvement is welcome, but we still sit sub the 50.0 expansion/contraction line, while Feb highs of 54.0 for the index are also some distance away.
- In terms of the detail, the sub index trends were mixed. Production rose to 48.6, from 47.9, while employment edged up to 47.9 from 45.5. Both these indices are well off recent highs though.
- More encouraging was the bounce in new orders too 51.2 from 45.4 in May. This may hint at better momentum going forward. Finished stocks fell to 46.9.
- Still, BNZ noted: "All sub indexes are well below historic averages and overall PMI “adds to the swathe of data that is suggesting the New Zealand economy stalled in 2q”: BNZ senior economist Doug Steel. (via BBG)
- The chart below plots the headline PMI versus NZ GDP y/y growth. The RBNZ held rates steady earlier this week, but maintained an easier bias (and considered cutting rates by 25bps due to the weaker growth backdrop in recent months).
- Note next Monday we get the services PMI for June, along card spending, which can also help inform the end Q2 growth picture.
Fig 1: NZ Manufacturing PMI Versus NZ GDP Y/Y
Source: Bloomberg Finance L.P./BNZ/MNI
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JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.15 @ 16:05 GMT Jun 10
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs hold above recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
JPY: USD/JPY - Large Interest Around 145.00 Should Contain It Until US CPI
The overnight range was 144.43 - 145.04, Asia is currently trading around 144.90. Cross JPY continues to benefit from the better performance in risk and US stocks. This has seen the move lower in USD/JPY stall and return to its recent range of 142.00 - 147.00.
- Kyodo News via Bbg - “The Constitutional Democratic Party of Japan announced its manifesto for the summer House of Councillors election on the 10th. Under the slogan "We will protect you from rising prices," the manifesto clearly states that the consumption tax rate on food will be 0%. As a short-term measure until the tax cuts are implemented, the manifesto also includes the payment of a "dining table support grant" of 20,000 yen per person. The aim is to put measures to combat rising prices at the forefront and show the axis of conflict with the Ishiba administration.”
- Overnight demand returned on dips in USD/JPY as US Stocks continued to press higher.
- The market still seems very confident of a move lower in USD/JPY but with positioning quite large now we have seen the risk of pullbacks increase.
- With the failure to break below 142.00 last week, price is back in the middle of its recent 142.00 - 147.00 range and will need a break either side of that to get a clearer direction. US CPI tonight will dictate price action. Expires below show a lot of interest around the 145.00 area.
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.00($1.14bm). Upcoming Close Strikes : 143.00($1.28b June 12), 140.00($1.22b June 12), 145.00($4.54b June 16).
- CFTC data shows Asset managers maintained their already extensive JPY longs, and leveraged funds are trying again to build their own longs.
Data/Event : PPI
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW500bn 1-Year Bonds
- Thailand to Sell THB25bn of 2030 Bonds
- Thailand to Sell THB9bn of 2050 Bonds
- China to Sell CNY170bn 2026 Bonds
- China to Sell CNY40bn 91-Day Bills
- Vietnam To Sell VND 0.5Tln 2030 Bonds; (TD2530009)
- Vietnam To Sell VND 7.0Tln 2035 Bonds; (TD2535026)
- Vietnam To Sell VND 2.0Tln 2040 Bonds; (TD2540037)
- Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
- Taiwan to Sell NT$30 Billion 28-Day Bills
- India to Sell INR50bn 182-Day Bills
- India to Sell INR90bn 91-Day Bills
- India to Sell INR50bn 364-Day Bills
- South Korea to Sell KRW2tn 63-Day Financial Bills
