EU Moves Closer To Fiscal Union And OK China Data Is Released For MayEconomic Data
(CN) CHINA MAY TRADE BALANCE: $18.7B V $16.2BE; Exports Y/Y: 15.3% v 7.2%e; Imports Y/Y: 12.7% v 5.5%e
(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 9.6% V 9.8%E; YTD Y/Y: 10.7% V 10.8%E
(CN) CHINA MAY RETAIL SALES Y/Y: 13.8% V 14.2%E; YTD Y/Y: 14.5% V 14.6%E
(CN) CHINA MAY CONSUMER PRICE INDEX (CPI) Y/Y: 3.0% V 3.2%E (lowest level since May 2010); -0.3% M/M
(CN) CHINA MAY PRODUCER PRICE INDEX (PPI) Y/Y: -1.4% V -1.2%E
(CN) CHINA MAY FIXED ASSETS URBAN INVESTMENT YTD Y/Y: 20.1% V 20.0%E
(NZ) NEW ZEALAND Q1 MANUFACTURING ACTIVITY VOLUME Q/Q: 0.7% V 1.3% PRIOR; MANUFACTURING ACTIVITY Q/Q: -1.8% V 0.9% PRIOR
(JP) JAPAN MAY CONSUMER CONFIDENCE: 40.7 V 39.8E
(MA) MALAYSIA APR INDUSTRIAL PRODUCTION Y/Y: 3.2% V 2.0%E V 0.6% PRIOR; MANUFACTURING SALES VALUE Y/Y: 5.3% V 4.4% PRIOR
(SG) SINGAPORE MAY ELECTRONICS EXPORTS Y/Y: 3.9% V 2.5%E; NON-OIL DOMESTIC EXPORTS M/M: -2.1% V -1.5%E; Y/Y: +3.2% V 3.0%E
(JP) JAPAN MAY MONEY STOCK M2 Y/Y: 2.1% V 2.5%E; M3 Y/Y: 1.9% V 2.2%E
(JP) JAPAN Q2 BSI LARGE ALL INDUSTRY Q/Q: -3.1 V -2.7 PRIOR; BSI LARGE MANUFACTURING Q/Q: -5.7 V -7.3 PRIOR
(UK) UK MAY LLOYDS EMPLOYMENT CONFIDENCE INDEX: -59 V -59 PRIOR
(KR) SOUTH KOREA MAY PRODUCER PRICE INDEX (PPI): 1.9% V 2.4% PRIOR
Markets Snapshot (as of 05:00GMT)
Nikkei225 +1.7%
S&P/ASX closed
Kospi +1.4%
Singapore Straits Times Index +1.5%
Shanghai Composite +0.3%
Hang Seng +2.1%
June S&P Futures +1.1% at 1,343
Aug gold +0.5% $1,599/oz
July Crude +2.3% at $86.07
Overview/Top Headlines
EUR/USD tested above $1.2665 after Spain made a formal request for aid for its banks, eurozone leaders agreed to loan Spain up to €100B euros to support bank recapitalization at a rumored rate of 3.0%. The money will be paid out of the European Financial Stability Facility (EFSF) and the European Stability Mechanism. De Guindos said the "financial assistance has nothing to do with a rescue," describing the aid as a loan the Spanish banks will receive under very favorable conditions to be determined in the coming days. Spain is expected to request €40-80B in total. PBoC Deputy Head Zhu Jun affirmed that China will continue to buy EFSF bonds and contribute to IMF funding.
The other major news out of the European region, being reported in the German press that several high ranking EU officials have been appointed to come up with a draft for a EU fiscal union including creating joint eurozone bonds to help countries pay for incremental deficit spending. Governments would only be able to decide how to spend money that is covered through their revenues. Note, previously German was against the bonds but is said to be warming to the idea. It also points to a body of finance ministers that would oversee the deeper union.
AUD/USD rose above parity to $1.0010 on the back of moderate China data. CPI came in at a May 2010 low at 3.0%. China's trade surplus and high exports and stronger than expected imports gave some hope that China was not heading for a hard landing. China's commodity imports were all noticeably higher m/m which should give a boost to the ASX and large miners BHP and Rio Tinto tomorrow when the market re-opens. However, China Trade Min Chen Deming said that China is facing a grim trade situation; if we are "lucky" we will reach 10% trade growth this year, this is a change from March when the 10% target was first spoke of.
USD/CNY fell 0.83% below mid-point (largest divergence from mid-point on record), while copper gained over 2.5% to $3.40 and silver rose to $29.00, +1.6%. Both corn and wheat futures gained over 0.5% as well. Crude futures rose over 2% after Saudi Arabia showed a trimmed oil production for May. Iran and other OPEC nations are expected to pressure Saudi Arabia to trim back its oil production at the OPEC meeting this week due to falling oil prices.
Speakers/Geopolitical/In The Press
(CN) China Institute of Fiscal Science's Jia: China will cut tariffs on 700 imported goods this year as part of deeper reforms on taxes and international trade.
(JP) Bank of Japan (BoJ) Member Shirai: BoJ is addressing deflation in earnest, efforts need to be made to strengthen growth potential.
(FR) France Socialists and their allies won 31-35% of the vote and the other leftist parties expected to back Hollande won 12-13% of the vote in the first round of parliamentary elections.
(NZ) New Zealand PM Key: Domestic economy is in pretty good shape; EU slowdown will impact domestic economic activity.
(CN) China Trade Min Chen Deming: China is facing a grim trade situation; if we are "lucky" we will reach 10% trade growth this year. - Chinese press
Equities
Hong Kong Exchanges & Clearing, 388.HK: Expected to be the top bidder for the London Metal Exchange (LME) for £1.3B. - Sunday Times
Henderson, 12.HK: Exec: Hong Kong home prices to remain stable as a result of strong demand; next 2-3 months not ideal time to invest in property due to volatility.
Air China, 753.HK: Exec: International markets are worse than in 2008; Govt support has boosted domestic flights.
China Eastern Airlines, 670.HK: Chairman: Expects domestic market will slow; targeting to cut gearing ratio below 70% by the end of 2015.
China Unicom, 762.HK: Telefonica sells back 4.56% stake to China Unicom for HK$10.21/shr.
1398.HK: ICBC and Merchants bank are both offering discounted mortgages. - Chinese press