AU yields extend lower ahead of Tuesday’s RBA decision

Asian Market Update: Stocks Trade Mixed During US Holidays; AU yields extend their decline ahead of Tuesday’s RBA decision.

General trend

– Chinese stocks traded mixed during morning trading.

– Nikkei 225 reduced gain.

– Fast Retailing to report monthly sales after market close.

– AU REITS outperforms thanks to falling bond yields.

– Fall in US equity FUTs.

Securities/Economic data

Australia/New Zealand

The ASX 200 opened +0.1%.

(AU) Australia Building permits May M/M: +9.9% V -2.0%E.

– (AU) Australia Jun Melbourne Institute Inflation M/M: 0.3% vs. +1.1% before; Y/Y: 4.7% vs. 4.8% before.

(AU) Australia May HOME loans M/M: +1.7% V -2.5%E; M/M investment loans: +0.9% V -4.5% before.

– (AU) Australia June Job Announcements ANZ M/M: 1.4% vs. 1.0% prior.

Japan

The Nikkei 225 opened +0.6%.

– (JP) The Bank of Japan (BOJ) is offering to buy 5 to 10 year JGBs at a fixed rate of 25 basis points; Opens a window to buy unlimited 10-year JGBs at 0.25% [as expected].

– (JP) Monetary base of Japan in June Y/Y: 3.9% against 4.6% before [matches the slowest pace since May 2020].

– (JP) Japan’s financial regulator FSA is expected to require limited liability companies (LLCs) to register in the country – Nikkei.

– (JP) Expects ruling parties in Japan to retain majority after July election – Nikkei (online).

Korea

Kospi opened +0.2%.

– (KR) The Bank of Korea sells KRW970B against KRW900B in 3-month monetary stabilization bonds (MSB); Average return 1.970% vs. 1.720% before.

– (KR) Bank of Korea (BOK): understanding shared with the Ministry of Finance that the negative risks linked to the rise in interest rates on households and financial markets must be closely monitored.

China/Hong Kong

Hang Seng opened opened -0.8%; Shanghai Composite opened -0.2%.

– (CN) China PBOC Open Market Operation (OMO): sells CNY3 B in 7-day reverse repos against CNY10 B previously; CNY97B net drain v CNY50B front net drain.

– (HK) Hong Kong Monetary Authority (HKMA): China and Hong Kong to extend currency swap agreement to CNY800B (before CNY500B) [the agreement is a standing swap agreement].

– (HK) Hong Kong Securities Regulator and ChinaPBOC announce Swap Connect, launch date will be announced in due course.

– (CN) The Chinese PBOC sets the reference rate for the yuan: 6.7071 against 6.6863 previously.

– (CN) China’s PBOC to improve legal systems to deal with bond defaults – Chinese press.

— (CN) Anhui reports 287 local COVID cases for Sun (July 3).

– (HK) Macau adds 68 COVID cases to recent outbreak [total at 852 cases].

– (HK) Macau Jun Casino Rev (MOP) 2.48B v 3.34B front; Y/Y -62.1% vs. -68.0% before [Jul 1st].

– (HK) Global fund managers will be able to buy in 83 ETFs on Shanghai and Shenzhen exchanges [under the Stock Connect program]starting Monday (July 4).

North America

– (US) Secretary of Health and Human Services Xavier Becerra: Will pursue options for women’s abortion rights and protect access to medications and will even continue to provide women with transportation to states where abortion continues to be legal – NBC Interview.

Europe

– (UK) JP Morgan predicts that oil could reach up to $380/bbl if Russia imposes a maximum crude oil production cut of 5 Mbb/day.

– (EU) ECB to discuss blocking banks of multi-billion euro windfall amid rising rates [refers to the central bank’s subsidized loan scheme] -FT.

Levels starting at 1:20 a.m. ET

– Nikkei 225, +0.6%, ASX 200 +1.1%, Hang Seng -0.4%; Shanghai Composite +0.1%; Kospi -1%.

– S&P500 equity futures: -0.7%; Nasdaq100 -0.8%, Dax -0.4%; FTSE100 -0.4%.

– €1.0444-1.0418; JPY135.33-134.78; AU$0.6828-0.6792; NZ$0.6218-0.6193.

– Gold +0.7% to $1,814/oz; Crude Oil -0.1% to $108.32/bl; Copper -0.3% to $3.5985/lb.

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