China is considering rolling out more incentives in the second half of this year to boost domestic consumption amid sluggish overseas demand for China's exports according to reports. (Economic Information Daily) Recent data showed China's export and import growth slowed for the second straight month in July, raising fears about the strength of the world's second-largest economy.
JGB futures were trading flat after the morning's trade in Tokyo, but took a modest bid tone following the well-received 5-yr bond auction from Japan, and are now seen higher by 6 ticks at 143.53 heading into the European open. Last price taken at 0521BST. (RANsquawk)
Spain is considering turning its so-called bad bank into an investment fund, as part of its banking sector overhaul required under the terms of the EU aid package, according to investment banking sources. (Expansion) This Friday, Spain are expected to release the details on the framework of a bad bank to purchase toxic real-estate assets from local banks until external buyers can be found. The report notes that it will be up to the Troika to decide the final structure of the bad bank.
ECB's Asmussen said he backs the ECB buying Spanish and Italian debt to prevent the "disintegration of the Euro", brushing aside warnings from the German Bundesbank that large-scale purchases would amount to debt monetisation and a back-door fiscal rescue of insolvent states in breach of EU treaty law. (Telegraph)
A senior German lawmaker from the German Christian Democratic Union (CDU) said he is open to pulling forward payments to Greece, but the IMF would have to agree to any changes, and an early payment would only be possible if it didn't open up a financing hole later on. (Newswires) The lawmaker said he wants Greece to stay in the Eurozone, but ruled out adding more money to the Greek rescue package.
The Reserve Bank of Australia minutes revealed that no member discussed a rate cut, which in turn resulted in broad based AUD short-covering and saw the major pair trip stops above 1.0470. The central bank revised up their 2012 growth forecast. EUR and GBP also benefited from the renewed sense of risk appetite and are seen in minor positive territory as we head towards the EU open. (Newswires)
WTI crude futures drifted on thin volumes overnight but continue to trade near 3-month highs ahead of the week's first US inventories report after-market tonight, currently trade USD 96.15, up USD 0.18, last price taken at 0606BST. (RANsquawk)
T-notes saw choppy trade in yesterday's US session, although strength was seen with the denial of weekend reports that the ECB plans to target yield spreads against the German benchmark, which led to some dip buying in early trade. Ahead of the buy-back from the NY Fed some buying was noted, although results gave a limited reaction with demand in-line with the previous purchases in a similar maturity range. With a light calendar for US corporate issuance and no auctions from the US Treasury in T-notes, there was demand from hedge funds and Asian accounts for safe-haven bonds. Into the pit close, some profit taking was seen after another day of rumour then denial, with the next large event scheduled on Wednesday with the release of the FOMC minutes from their August meeting. At the pit close, T-notes settled at 132.16+, up half a tick. USTs traded in tandem with JGBs overnight following a well received 5-year bond auction from Japan, currently trade 132.20+, up 4 ticks. (RANsquawk/IFR)
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