Chinese Trade Balance (USD) (Jul) M/M 25.1bln vs. Exp. 35.05bln (Prev. 31.72bln, Rev. 31.72bln)
Chinese Exports (Jul) Y/Y 1.0% vs. Exp. 8.0% (Prev. 11.3%)
Chinese Imports (Jul) Y/Y 4.7% vs. Exp. 7.0% (Prev. 6.3%). (Newswires)
Resurgent property prices and the threat of a rebound in CPI means the People's Bank of China is going to be more cautious in monetary easing, according to reports. (China Securities Journal/Shanghai Securities News) Elsewhere, a State Information Centre economist said yesterday's Chinese CPI data should be viewed in light of very high price growth in the same month a year ago, which resulted in the current high price levels.
JGB's traded modestly higher overnight trading at 143.92 (+5 ticks) at 0626BST with Nikkei down over 1%. Short covering also noted in the 10s and 30s heading into the weekend as around a third of fund managers are expected to take days off next week for the "Obon" holidays in Japan. (RANsquawk/Newswires) In other news, the Bank of Japan maintained its economic assessment in August, adding that Japanese economic activity has started picking up moderately as domestic demand remains firm.
Japanese Industrial Production (Jun F) M/M 0.4% vs. Prev. 0.1%
Japanese Industrial Production (Jun F) Y/Y -1.5% vs. Prev. -2.0%. (Newswires)
Spanish PM Rajoy is demanding an urgent meeting of EU finance ministers in order to eliminate the confusion over how the ECB and EU bailout funds can be used to drive down high bond interest rates. (Newswires) The Spanish PM also wants to establish a definitive time frame for finalizing moves to establish a Euro banking and financial union in order to remove doubt about whether the EMU will survive.
France's constitutional council ruled that the EU fiscal pact does not require a change to France's constitution. (Newswires) The ruling opens the way for French President Hollande to implement the pact as soon as September using a "super-law" that requires only a simple majority in parliament.
The German economy ministry said that they see a moderate increase in Q2 GDP. (Handelsblatt) Seasonally adjusted quarterly GDP for Germany is due on 14th August at 0700BST and is expected at 0.1% against a previous reading of 0.5%.
Finnish PM Katainen has proposed a banking sector-funded EU crisis fund to recapitalized troubled banks as part of Europe's plans for a banking union to tighten supervision. (Newswires) The Finnish PM also said Finland will continue to push its proposal to help Euro-area nations obtain funding by selling covered bonds, a proposal initially discussed at the EU summit in June which was rejected.
AUD has weakened across the board overnight despite the Reserve Bank of Australia raising its growth forecast as the central bank said that sustained currency strength could prove more of a drag on the economy than in the past. Elsewhere USD/JPY has held a tight range after further jaw boning from Japanese PM who reiterated he wants the Bank of Japan to continue powerful monetary easing. Noda is due to hold a press conference at 1040BST today, but topic of his speech is unknown. (RANsquawk)
WTI Crude futures are trading lower by USD 0.40 at USD 92.95 as Chinese data shows their trade balance surplus narrowing in July, heightening caution towards one of the world's largest energy consumers. (RANsquawk)
T-notes finished the session yesterday flat. At the start of the CBOT open dealers set shorts into the 30y auction. The event itself saw the yield higher that expected, with below-par buy-side demand from foreign and domestic accounts, the result was a sharp spike lower in 30y bond futures, however this was quickly pared as dealers covered shorts and bought the lows once the supply from the Treasury as there are no more supply events scheduled from the US treasury until the end of this month. UST's have traded higher overnight after weaker than expected Chinese trade numbers and assisted by dip-buying from Japanese names targeting the long end of the curve flattening the 2/10s and 2/30s. At 0634BST UST's were trading 133.21+ (7 ticks). (RANsquawk)
USD 16bln 30y note auction drew yield 2.825% vs. Exp. 2.813% (WI stopped at 2.810%), and b/c 2.41 vs. Avg. 2.66 (Prev 2.70). Indirects took 36.7% vs. Avg. 32.06% (Prev. 36.92%) and allotted at high was 91.84%. (Newswires)
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