Sovereign Debt Markets
The global fall in bond yields continued in Asia. Australia’s 10 yr. yield is lower by more than 5 basis points reaching an all time low. Japan’s 10 yr. yield is off 1.4 basis points. Europe is stemming the tide. The debt markets are rising there but the German 10 yr. Bund still has a negative yield. The U.S. 10 yr. yield is higher by c. 3 basis points.
Following Friday’s losses in the West and the inversion of the U.S. yield curve, Asian markets saw heavy selling across the board. There may be one “silver lining” in today’s trading activity. Many of the local exchanges saw turnover well below the 20 dmavg. Japan and Hong Kong are exceptions to that statement.
All the major sectors are lower. Financials, industrials, telcos, consumer staples and healthcare end the day off 2% or more.
Europe opened to the downside with the Euro Stoxx 600 hitting a low of c. 0.8%. However, the index pared more than half of the advance but the rally has petered out. Italy and Spain try to cling to earlier gains.
Most sectors are in the red. Media, retail and technology seeing losses of about 1%. Banks are now down small after gaining more than 0.5% earlier. Telecoms are the only sector to remain green.
Regarding Brexit, PM May is facing a tough meeting today. There are numerous reports in the U.K. press saying members of her cabinet may look to replace her with possibly David Lidington or Michael Gove. Chancellor of the Exchequer Hammond came to her defense. He stated a change in leadership at this point will not impact the overall issues the nation must decide.
On the lighter side of things related to Brexit, a French minister is calling her cat Brexit. Here is why.
Important International Headlines
- The U.S. and China are scheduled to hold further trade talks later this week in Beijing.
- Chinese Pres. Xi is in France as he continues a tour throughout Europe.
- Sinopec’s -3.4% earnings are not up to market expectations. There are also several devils in the details. Jefferies notes higher than anticipated upstream losses along with a lower than expected dividend.
- China Shenhua -6.9% sees its FY IFRS NI at CNY44.14b vs. consensus of CNY46.31b. This was released after Friday’s close.
- Westpac Banking Group -1.5% is taking A$260m in provisions for violations related to financial advice. The bank indicated there will most likely be more to come.
- Japan Exchange Group -2.5% is expected to announce the purchase of the Tokyo Commodity Exchange following a board meeting on Thursday.
- Fiat Chrysler +2.5% is said to have had a bid approach from Peugeot -1.y%. They have ended talks but bid speculation is pushing Fiat higher.
- A consortium of private equity and pension funds is purchasing Inmarsat +9.0% for $3.4b. The bid price is $7.21 per share or 546 pence. That represents a c. 8% premium to Friday’s close.
On Our Side of the Pond
- The Mueller report will be front and center in the nation’s capital. The question now will be how hard with Democrat leaders push to see the full document.
- Apple will unveil its streaming service plans after today’s close.
- Chicago and Dallas Fed activity reports are due.
- Down in Venezuela, a Russian plane has landed with military personnel. The government stated its was part of continued “military cooperation” between the two nations.
Markets & Macro
- In South Korea, the BoK signals it will maintain an accommodative policy as growth is moderating and exports slow.
|JN||All Industry Activity Index MoM||Jan||-0.40%||-0.20%||-0.40%||-0.60%|
|GE||IFO Business Climate||Mar||98.5||99.6||98.5||98.7|
|GE||IFO Current Assessment||Mar||102.9||103.8||103.4||103.6|
|US||Chicago Fed Nat Activity Index||Feb||-0.38||—||-0.43||—|
|CA||Bloomberg Nanos Confidence||22-Mar||—||—||55.2||—|
|US||Dallas Fed Manf. Activity||Mar||8.5||—||13.1||—|