Chinese Manufacturing PMI (Jul) M/M 50.1 vs. Exp. 50.5 (Prev. 50.2) (Newswires)
Chinese HSBC Manufacturing PMI (Jul) M/M 49.3 (Prev. 48.2) - Highest reading since February, with the output sub-index showing its first rise in five months at 50.9, however the employment index fell over July. Shanghai Comp last seen higher by 1.00% reacting positively to the data release after several rumours of weak data circulated during yesterday's European and US sessions.
China's securities regulator has appealed for confidence in the domestic stock market, cautioning investors against 'panic selling'. The regulator added that stock valuations are currently very cheap and listed companies with strong capital should consider share buybacks. (Newswires)
JGB's were trading at 144.19 (+18 ticks) at 0628BST, led by short covering and speculation that the BoJ may consider removing the 0.10% floor for its outright purchases of longer-term bonds. The talk arose after today's failure of the BoJ to receive sufficient response for their JGB buying operations. (RANsquawk/IFR)
Both the Japanese finance ministry and the Bank of Japan have ruled out the central bank purchasing foreign bonds as part of monetary policy, as this would be seen as currency intervention. (Newswires) The comments come after last week's remarks from BoJ's Sato, who said buying foreign bonds would be one way to lower Japan's real interest rates.
Spain's economy minister De Guindos was said to have won German finance minister Schäuble's support for aid in the bond markets. (Newswires) De Guindos wants further cuts in health and education spending after the German finance minister said such a move would enable Germany to support any steps by the ECB to push down Spanish borrowing costs according to unnamed officials. ECB President Draghi is also said to back De Guindos' views.
Spanish budget minister Montoro has said Spain are introducing debt ceilings for regions. (Newswires) The Spanish government will introduce debt ceilings for the 17 semiautonomous regions as part of its plan to deepen budget cuts and prevent any default without further burdening the central government's finances. The average limit is 15.1% of GDP for this year and 16% for next year.
In response, Catalonia and Andalusia have rebelled against the calls from the Spanish government as data showed the central government budget shortfall surged at the end of the first half of the year. Catalan officials boycotted the meeting, and the Andalucian representative left the meeting early in protest to the request for further cuts. (FT-More)
USD/JPY traded heavy overnight having traded through bids into the 78.00 level before running stops to a session low at 77.91. Prices have since bounced with the move reflected across the other JPY crosses. Elsewhere, AUD/USD was under pressure since the Asian open with decent sales noted from a local bank, however, the pair has come back toward the option expiry level of 1.0500 in recent trade, helped by better than expected Australian house price data for Q2. (RANsquawk)
WTI crude futures are in minor negative territory and more than USD 2.00 beneath the revered USD 90.00 level as optimism that the central banks will announce further stimulus measures to boost a stalling global economy has now subsided. The decline also comes in spite of last night API numbers, where a draw down of more than 11mln bbls in US stockpiles was reported, currently trading USD 87.95, down USD 0.11, last price taken at 0629BST. (RANsquawk)
US API Crude Oil Inventories (Jul 27) W/W -11605K vs. Prev. 1348K (Newswires)
US API Gasoline Inventories (Jul 27) W/W -1338K vs. Prev. 2348K
US API Distillate Inventory (Jul 27) W/W -1366K vs. Prev. 2641K
US API Cushing Crude OK Inventory (Jul 27) W/W -1396K vs. Prev. 202K
-The large draw-down in Crude inventories was attributed to the fact that Enbridge had been denied restarting of their line 14 crude pipeline by the US government.
US Treasury Secretary Geithner has called upon US lawmakers and European policy makers to spur economic growth now as they seek long-term measures to narrow budget deficits. Geithner added that Europe must act forcefully to stem contagion. (Newswires)
Month-end extension flows failed to support the bond market on Tuesday and instead, better than expected macro economic data prompted selling by real money accounts. The belly of the curve underperformed for much of the session and the latest POMO from the Fed provided market participants with an opportunity to sell 7s. Swaps widening was linked to Euro-periphery debt woes, while agency spreads benefited from month-end related flows in the front-end. At the pit close, T-notes settled at 134.21+, up 3+ ticks. Finally the DJIA finished down 0.49% at 13008.68, the S&P 500 finished down 0.43% at 1379.32 and the Nasdaq 100 finished up 0.02% at 2642.53. Relatively quiet trade overnight in UST's as participants await the FOMC decision due later this evening. At 0632BST UST's were trading up 1+ ticks at 134.22+. (RANsquawk)
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