1) UST 10y yield dropped more than 8bps last night as react the shock of Chinese RMB devaluation in line with tumbled US stock market with about 1% decline.
Market expects Fed should consider this aspect of so-called currency war from China.
2) Oil price turned weak again and BDI tumbled more than recent move after a long time.
Is the end of bullish momentum amplified by seasonal effect including increasing trade of agriculture and in Pacific seas? Had we dreamed for a short time?
How is oil price? (See another attached post today)
3) I was maybe incorrect because I thought this devaluation by PBOC was not so surprising news as market participants expected this change for some time.
4) This is likely correct that "Beijing signals growth fears with surprise move" via WSJ. On this side, market reactions seems somewhat reasonable.
Meanwhile, IMF welcomed the change of China. What is what they really want?
5) PBOC devalued CNY to lower fixing rate against USD by 1.6% to 6.3306 once again.Their comment that they shot the fixing rate rapidly as one-off adjustment reflecting their willingness of restructuring FX system was just bluffing!
While USD/CNY spot was up a further 1.5% above today's fix, USD/CNH jumped 1.9% in response. And then, should PBOC lift fix rate further tomorrow? Maybe yes...
(Additionally, PBOC seemed to intervent FX market to prevent exchange rate from too devaluation further. So, we expect the pace of additional depreciation would be slow, a little bit...)
6) Chinese economic indicators were disappointed in July.
I.P was up 6.0% yoy, less than 6.6% of consensus and 6.8% of last month.
Retail sales increased by 10.5% which is similar with 6.6% of both of consensus and last month's data.
FAI growth was at 11.2%, lower than 11.4% of consensus and 11.5% in June.
July's auto sales was disappointed, either. This contracted by -6.6% yoy following last month's decline and in two consecutive months.
7) In line with additional RMB depreciation, USD/KRW reached almost 1,200 won, ended at 1,190.8 won increased by 11.7 won today. KOSPI was down -0.56% as shape a hang-in man candle.
8) UST 10y rate tumbled further, by about 8bps in Asian futures market. And it was same with Korean treasury market.
However, in Chinese on-shore bond market, the yield is pushed higher following CNY devaluation in terms of the fear about capital outflow. Credit bond is weaker than treasury, especially. Govi 5y was up 8bps yesterday.
If then, how will be in Korean bond marekt? Different from China?
Current long-end yield level seems very low. (see the another post written today)
9) Greece and creditors agreed on bailout deal. Greece could take 86 mil. euro in financing over the next three years. Sadly, however, they seems much far from market interests.
10) Abe adviser sees a need for economic stimulus via WSJ. Does the power remain in Abe, yet?
11) BRL was strong rather than depreciated further. Somewhat interesting... RUB seemed not affected by CNY, neither.
12) Anyway, I bought long-end UST for moderate short-cover...
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