The Chinese government have approved 30 infrastructure projects, adding to the 25 rail projects already approved, with the full value of expenditure totalling CNY 1trl (USD 157bln). (China Securities Journal)
Chinese CPI is unlikely to see a major rebound this year, and August CPI is to be around 2% according to a state economist. (China Daily) The economist added that if inflation rebounds above 3.5%, China's ability to use economic stimulus will be limited. Of note, China's July CPI Y/Y reading came in at 1.8%.
UBS have revised their 2012 Chinese growth forecast lower to 7.5% from their previous estimate of 8.0%. (Newswires) Additionally, the bank took similar steps to their 2013 forecast, revising the figure lower to 7.8% from 8.3%. Of note, China's Real GDP Y/Y for Q2 came in at 7.6%.
The Japanese Ministry of Finance have said the government is to delay around JPY 5trl worth of budget spending to weather the state's cash shortage, warning that the government could nearly run out of money by the end of November despite the spending delays. (Newswires) The finance minister Azumi warned opposition parties that further delays could threaten the Japanese recovery.
JGBs traded lower overnight, with JPY swap rate curve steepening, as market participants in Asia reacted to the decision by the ECB on the new debt buying programme called OMT. Still, some dip buying was noted by regional accounts ahead of the Sep.20th redemption. At 0620BST, JGBs were trading down 20 ticks at 143.89. (RANsquawk)
ECB's Coene says October rate cut may be a possibility although will depend on economic development. (Newswires) Elsewhere, ECB's Asmussen said the bank sees no inflationary pressures, adding that action from central banks cannot replace that of governments.
Italian PM Monti said it is too early to say if constitutionality would be an obstacle to seeking ECB help to lower yields. (Newswires)
German finance minister Schaeuble said it would be a problem if we choose to solve fiscal policy via the more convenient means of monetary policy. (Newswires)
French President Hollande's government faced questions last night over whether it was preparing to back down from the controversial 75% marginal tax rate for the rich. (FT-More) Reports stated that the rate could be reduced to 67% and couples would pay it only on joint income above EUR 2mln.
The UK's pay growth slowed in August, with the manufacturing sector taking a majority of the slowdown in pay rises, according to VocaLink. (Newswires)
EUR/USD and GBP/USD traded steady overnight, in consolidation mode following yesterday's gains. Offers in EUR/USD at 1.2650 from sovereign accounts capped the topside. AUD was firmer overnight, supported by carry trade related buying from regional accounts, as well as the follow-through buying following the ECB rate decision on Thursday in Europe. (RANsquawk)
Australian Trade Balance (Jul) M/M -556mln vs. Exp. -300mln (Prev. 9mln, Rev. -227mln) (Newswires)
After a meeting with US defence officials, Israeli defence minister Barak commented that there may be no need for an Israeli strike on Iran, as US forces have impressive preparations to counter Iran on all fronts. (Newswires)
Late yesterday, following the NYMEX pit close, there was market talk of a possible coordinated SPR release as early as last night- Unconfirmed. (RANsquawk) According to the latest reports, Obama administration officials met with oil market experts yesterday to consider the pros and cons of another reserves release - potentially one much larger than the last. (Newswires)
WTI crude future is seen lower by USD 0.28 at USD 95.25 heading into the European open as investors speculated that recent gains had been overdone, and rumours circulate that the US government could act on an SPR release. Last price taken at 0630BST. (RANsquawk)
T-notes were under pressure throughout yesterday's session, with talk of CTA's selling from the CBOT pit open, some desks drew attention to technical sell-signals and a reduced need for FOMC action next week following the ECB initiatives. This pushed 10y yields to their highest levels in a month to 1.67% on the boost in risk appetite, with talk of asset allocation trades out of bonds and into equities. At the pit close, t-notes settled at 132.23+, down 20 ticks. Finally, the DJIA finished up 1.87% at 13292.00, S&P 500 finished up 2.04% at 1432.03 and the Nasdaq 100 finished up 2.27% at 2829.7. Heading into the European open, T-notes trade lower by 4+ ticks at 132.19. Last price taken at 0630BST.(RANsquawk)
The Fed's economic and interest rate forecasts will include a 2015 outlook according to Fed watcher Hilsenrath (WSJ) A spokeswoman said the next round of forecasts will include forecasts for 2015, reflecting the advancing calendar.
US Monster Online Employment Index (Aug) M/M 156 (Prev. 147) (Newswires)
The rise in the index was led by jobs available in the agriculture, forestry, fishing and hunting industries, according to Monster.
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