Asia Morning Bites - 19.04.2023

Global Macro and Markets

• Global markets: After a strong open, US stocks dropped back yesterday, and both the NASDAQ and S&P 500 finished the day almost unchanged. There was a mixed performance too in Chinese stocks, despite the stronger Chinese activity data – spirits possibly dampened by reduced expectations of additional government stimulus.

  US Treasury markets trod water. Yields on 2Y Treasuries rose 0.3bp. Those on 10Y Treasuries drifted back 2.5bp to 3.576%. In central bank news, the Fed’s Raphael Bostic remarked that he saw one more hike and then a pause for some time. James Bullard is also reported as favouring more hikes. EURUSD made back some of the ground it had lost in recent days, rising back to 1.0975. The AUD has also recovered back to 0.6730, Cable has risen back to 1.2428, and the JPY has also made gains, moving down to just over 134. It was another mixed day for Asian FX, with the SGD and THB tracking the G-10 currency gains, the CNY and CNH doing very little, and the rest making moderate losses.

• G-7 Macro: There wasn’t a lot on the G-7 Macro calendar yesterday. The UK reported some softer labour market data, which will help bolster the case that the Bank of England is finished with hiking. US housing starts and building permits for March were mixed, with starts down but better than expected, but permits – an indicator of future construction activity, much softer. Germany’s ZEW survey was also mixed, with an improvement in the current situation offset by poorer expectations. Today, March UK inflation will likely slow further. April mortgage applications are the “main” US release. There is nothing of note today in terms of Fed speaker engagements, though there are a bunch of ECB members slated to make public comments. Philip Lane yesterday indicated his preference for further hikes in May, with the size of the hike to be determined by data flows. 

• Philippines: The PHP continued to underperform due to solid corporate dollar demand. Recent dovish comments from the BSP Governor suggesting he was open to a pause in May have also contributed to the recent slide.

Read next: FX Daily: Choppy trading| FXMAG.COM

What to look out for: Fed speakers

• Malaysia trade balance (19 April)
• US mortgage applications (19 April)
• Fed's Goolsbee and Williams speak (20 April)
• New Zealand CPI inflation (20 April)
• Japan trade balance (20 April)
• China loan prime rate (20 April)
• Malaysia CPI inflation (20 April)
• Taiwan trade balance (20 April)
• US initial jobless claims and existing home sales (20 April)
• Japan CPI inflation and Jibun PMI (21 April)
• South Korea early trade balance (21 April)
• Hong Kong CPI inflation (21 April)