BOJ: The Bank of Japan voted unanimously to leave the policy rate at zero
to 0.1% following a two-day policy board meeting (2):
— BOJ: Japan Economy Under Strong Downward Pressure
— BOJ: But Econ Expected to Return to Moderate Recovery Path
— BOJ: Uncertainty About Effects of Quake High
— BOJ Repeats: Must Watch Downside Risks to Japan Economy
MoF: Finance Minister Yoshihiko Noda; To Assess If Small-Scale 2nd Extra Budget Needed; Priority Now Is To Implement 1st Extra Budget
Chicago Federal Reserve Bank President Charles Evans indicated Thursday that he can see no justification for tightening monetary policy this year unless his forecast of unemployment and inflation were to change.
New York Federal Reserve Bank President William Dudley Thursday said the economy has recently entered a cycle of increased household and business spending and job creation
Goldman Sachs. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the securities firm’s mortgage-related business, according to people familiar with the situation, the WSJ reports.
German Fin Min – April total tax revenue +3.4% y/y, Jan-Apr +8.9% y/y
– April federal tax revenue +4.7% y/y, Jan-Apr +11.2% y/y
– Still see 2011 federal net borrowing below E40 bn
– Indicators signal continuation of upswing
– Growth momentum likely to slow compared to 1Q
IMF: The Independent – along with much of the UK press – says Christine Lagarde, the French Finance Minister, has emerged as favourite to succeed DSK as head of the IMF.
Greece: The International Monetary Fund and the European Union have warned the Government in Greece that it will not receive its latest injection of financial aid unless it comes up with a workable plan to sell its assets, the Times reports. The debt stricken country needs to prove that it can raise E50 billion from privatising state-owned assets by 2015 as part of its economic recovery programme, the paper says.
Ireland: Ireland’s largest mortgage lender is seeing a slowdown in the numbers getting behind on their repayments, the Irish Independent says.
Spain: Weekend elections that threaten to drive Spain’s ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country’s drive to avoid an international bailout, the WSJ reports today.
Ireland’s NAMA plans to launch a product for purchasers of residential properties in the autumn that will offer protection against the risk of negative equity in the future, the agencys chairman, Frank Daly, said, the Irish Times reports.
Ireland: The eurozone rescue fund is likely to postpone its next bond sale for Ireland’s EU-IMF bailout until the standoff over the interest rate on the Irish loans is settled. The rethink by the European EFSF also reflects the fact Dublin has no immediate need for new loans from the fund, the paper says.
UK – banks are fighting to reduce a stg 224bn exposure to commercial property in the UK, with about half the loans set to mature by 2013 and a fifth still in breach or default following the crash in values, the FT reports.
UK – The government and banks are again at odds, amid fears that their three-month old Project Merlin peace deal is not delivering enough credit support to Britain’s smaller companies, the FT reports
UK – Britains biggest union will today sign an unprecedented accord with the biggest civil servants union, increasing the chances of widespread strikes this summer and beyond, the Times reports
The economic outlook for Portugal is particularly bleak, the country’s central bank said Thursday, noting that the financial bailout package negotiated with the IMF, the EU and the ECB foresees a new recession in 2011 of a high magnitude that will persist in 2012
The European Union will launch a multibillion-euro bond as early as next week to raise money for the rescues of Portugal and Ireland in an important test of investor sentiment after rows over the Greek debt crisis.
Japan – Demand for electricity from major industrial users in Japan fell 6.2% on year in April, posting the second consecutive monthly y/y drop, following -6.3% in March, data from the Federation of Electric Power Companies show.
South Korea said it will tighten limits on the amount of currency derivatives banks can hold as it seeks to curb swings in capital flow and the won.
China – Beijing is likely to introduce a property tax as soon as the second half of this year, the official China Securities Journal reports, citing an unidentified source..
China: The recovery trend of the world economy is clearer, though levels of uncertainty remain high, People’s Bank of China Governor Zhou Xiaochuan said.
China: Business conditions weakened in May as the growth of new orders fell and financial positions improved only slightly from April, the results of the Market News International China Business Sentiment Flash Survey suggest. The flash survey saw the overall conditions index fall to 60.61 from 69.28 in the final April survey while the index for new orders dropped to 60.85 from 71.37 and the financial positions index fell to 50.51 from 52.82. The production index fell to 65.26 from 72.28. On the positive side, the index for the availability of credit rose to 35.57 from 30.77 in April.
CHINA YUAN: The People’s Bank of China sets the dollar-yuan central parity rate at Cny6.4983 today, compared with Cny6.5048 set for the previous trading day.
FX MARKET
FOREX: The dollar was steady against the euro and the yen Friday, with dealers reporting a subdued pre-weekend session, with little reaction to the BOJ’s unchanged policy decision. Dollar-yen was at Y81.65 late in the session, after a very tight Y81.60 to Y81.77 range, and compared with Y81.55 near the U.S. close overnight. Euro-yen was at Y116.93, up slightly from Y116.73 overnight. Euro-dollar was also almost flat at $1.4310 compared with $1.4315 near the overnight close. The pair traded between $1.4294 to $1.4337 through the Asian morning today. The aussie also traded sideways through the morning amid a lack of any fresh Australian data to inspire market participants. Aussie-dollar was last little changed at $1.0670.
Chinese set new standard in buying gold China overtook India to become the largest market for gold bars and coins in the first quarter of this year, as rising inflation inspired a surge in bullion investment.
OTHER MARKETS
EUROPEAN STOCKS: Major European bourses are initially seen higher Friday. Spreadbetters Cantor Index are calling the FTSE up 21, the DAX up 29 and the CAC up 6.
US STOCKS: Globex traded US index futures are trading very narrowly mixed in Asian trade Friday. The S&P June contract was last 0.3 points higher at 1342.0, while the Nasdaq June contract was lower by 0.75 points at 2368.25. Dow futures are down just a point at 12590.
US STOCK CLOSE: The Dow Jones Industrial Average closed up 45 pts at 12605.32 and the Nasdaq Composite closed up 8 pts at 2823.31
TSYS: Treasuries are trading narrowly mixed in Asian trade Friday, with some light profit-taking after overnight gains. However, the longer-end of the curve outperforms, with buying seen from Japanese life and pension funds, helping the curve continue to flatten. The yield on the 2Y was last at 0.53%, with the 5Y at 1.83%, the 10Y at 3.17% and the Bond at 4.30%.
AUSSIE BONDS: Aussie govvies are trading lower across the board Friday, helped by the overnight UST rally. The yield on the 2Y was last at 4.93%, lower by 0.5 bps, while the yield on the 10Y was 2.5 bps lower at 5.32%. That left the 2/10-yr spread 2 bps flatter on the session at 39 bps.
JGBS: Japanese government bond prices were mostly higher this morning as bond prices were lifted following overnight gains in U.S. Treasury prices. Cash bonds were well supported by moderate buying from investors such as life insurance firms, pension funds and banks. But the rise in JGB prices was somewhat capped by profit-taking.
JAPAN STOCKS: The Nikkei 225 Index is down 0.13% at 9,608.58 midway through the afternoon session, paring the morning’s gains as the market dipped on the Bank of Japan’s decision to keep interest rates on hold and refrain from providing additional stimulus to the economY. The broader-based TOPIX was 0.17% lower at 830.47.
HONG KONG STOCKS: The Hang Seng Index ends the morning session up 0.10% at 23,187.13.
CHINA STOCKS: The Shanghai Composite Index ends the morning session up 0.07% at 2861.68.
OIL: Crude futures are trading higher Friday. The front-month WTI contract was last 35 cents higher at $99.31. The July WTI/Brent spread was last 1 cent higher at $12.28.
COMING UP TODAY( times GMT/ET)
0630/0230 Bank of Japan Governor Masaaki Shirakawa news conference
0600/0200 Germany Apr-11 PPI
0800/0400 Italy Mar-11 industrial orders
0800/0400 ECB Mar-11 current account
0830/0430 UK Apr-11 BOE Capital Issuance
0900/0500 OECD Secretary-General Angel Gurria presents main issues and challenges at OECD ministerial in Paris
1000/0600 France Mar-11 industrial orders
1000/0600 Bundesbank to publish Monthly Bulletin for May
1100/0700 Canada Apr-11 CPI
1130/0730 ECB Governing Council member Christian Noyer speech on “Monetary Policy: Lessons from the Crisis” at conference organized by the Bundesbank, in Hamburg
1200/0800 Brazil May-11 IBGE IPCA-15 consumer prices
1200/0800 New York Federal Reserve Bank President William Dudley speech on economic conditions and outlook to the Dutchess County Chamber of Commerce in Fishkill, NY
1230/0830 Canada Mar-11 Retail trade
1330/0930 SNB Board member Jean-Pierre Danthine speech at the University of St. Gallen
1345/0945 Bundesbank President Jens Weidmann to give closing remarks at conference organized by the Bundesbank, in Hamburg
1400/1000 US Apr-11 BLS Mass Layoffs, State Unemployment
Eastern Europe
POLAND – CPI, April (1200)
POLAND – Industrial output, April (1200)
POLAND – PPI, April (1200)
BULGARIA – IMF mission to brief press on 10-day visit
KAZAKHSTAN – EBRD annual meeting
MONTENEGRO – Cbank news conference (0900)
Michael J Spencer
HSBC Global Research