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RANsquawk EU Open Rundown 27.06.17

  • Asian equities traded with little in the way of firm direction in what was a relatively data and news-light session
  • A relatively quiet tone persisted in FX markets with the USD-index range-bound to hold above 97.00
  • Highlights include BoE’s FSR, ECB’s Draghi, Coeure, Praet, Fed’s Yellen, Williams, Harker and Kashkari

ASIA

Asia equities traded mixed following a similar close on wall St., where financials outperformed as Fed comments backed the FOMC to continue hiking rates gradually, while the tech sector lagged after the US Supreme Court reinstated much of Trump’s travel ban. ASX 200 (-0.2%) saw broad-based weakness with gold miners also suffering from yesterday’s selling in the precious metal, while Nikkei 225 (+0.3%) was buoyed by a weaker JPY. Shanghai Comp. (-0.1%) and Hang Seng (Unch.) were indecisive with stronger Industrial Profit growth counterbalanced by the PBoC refraining from liquidity injections for a 3rd consecutive day. 10yr JGBs were relatively flat with some mild upside seen despite the positive risk tone in Japan. Furthermore, the curve steepened with outperformance in the short-end following a 2yr bond auction which saw increased demand from prior as the b/c surged to 6.79 vs. Prev. 5.06.

Chinese Premier Li stated that China is able to meet major economic targets this year and that China will ease market entry restrictions, as well as deepen reforms. Furthermore, Premier Li also stated that will maintain stable macro-policies and will not resort to massive stimulus. (Newswires)

Chinese Industrial Profits (May) Y/Y 16.7% (Prev. 14.0%). (Newswires)

PBoC refrained from open market operations for the 3rd consecutive session. (Newswires)

PBoC set CNY mid-point at 6.8292 (Prev. 6.8220)

EUROPE/UK

ECB's Draghi said that rates must be kept low for growth to recover. (Newswires)

YouGov/CEBR stated that UK consumer confidence levels fell after the snap election to levels just above those seen prior to last year's Brexit vote. (Newswires)

FX

A relatively quiet tone persisted in FX markets with the USD-index range-bound to hold above 97.00, while USD/JPY initially extended on the prior session’s gains and briefly broke above 112.00, before meeting resistance. Elsewhere, AUD/USD saw mild support to test the 0.7600 handle to the upside amid a firmer CNY and comments from Premier Li who was optimistic on achieving economic targets and reiterated a prudent monetary policy stance, while NZD was choppy after mixed trade figures.

New Zealand Trade Balance (May) 103M vs. Exp. 419M (Prev. 578M, Rev. 536M). (Newswires)

New Zealand Exports (May) 4.95B vs. Exp. 4.93B (Prev. 4.75B, Rev. 4.70B)

New Zealand Imports (May) 4.85B vs. Exp. 4.48B (Prev. 4.17B, Rev. 4.16B)

Brazil Prosecutor General Janot confirmed to proceed with corruption charges against President Temer, while there were also reports that Brazil Police saw evidence linking Brazilian President Temer to 3 crimes. (Newswires)

COMMODITIES

Gold (+0.1%) languished following yesterday’s losses where prices slipped on a large USD sell-order valued at USD 2.2bln, while the precious was also contained overnight as the greenback held on to its gains. Elsewhere, WTI and Copper saw similar lacklustre price action during Asia hours, with the latter restricted amid an indecisive risk tone.

US President Trump said US and India will ink deals on Nat Gas and try to increase the price, in a joint statement with Indian PM Modi. (Newswires)

GEOPOLITICAL

US White House identified "potential preparations" for another chemical weapons attack by Syria's government and warned that Assad will pay a "heavy price" if this is carried out. (Newswires)

US

Treasury yields were a touch lower across the curve, with traders seemingly unwilling to buy into the hawkish talk that equity reportedly traders were. The US sold USD 26bln of 2yr notes in what was a pretty strong auction: The auction stopped tspanough by 0.6bps, matching last month’s auction of 2s. Dealer takedown was the lowest since May 2016, cover was the strongest since November 2015. Treasury curve spreads then continued to flatten, as has been fashionable to report, lately, although the flattening was small (between 0 to 1bps across the major curves) while Sep’ 17 10-Year T-Note future settled 1.5 ticks higher at 126.25.

CBO stated that the Senate GOP healthcare bill would see deficit reduced by USD 321bln (vs. USD 319bln for the House bill) and that it sees 22mln uninsured by 2026. Following this, US Republican Senators Paul, Heller and Collins were reported to oppose the health care bill which is enough to block its advance, while the White House also responded and stated that the CBO cannot accurately predict how healthcare legislation will impact insurance coverage. (Newswires)

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