Evening Headlines
Bloomberg:
- Wage Hikes in China Bring Jobs, Factories Back to Japan. Southeast Asia is in focus for Japanese off-shoring. While there is no end in sight to off-shoring by Japanese companies, signs are emerging that surging wages in China are encouraging at least some of them to bring jobs, factories and businesses back home. According to an annual survey of about 3,000 firms by the Japan External Trade Organization, among those that had recently moved or planned to move operations across national borders, 8.5 percent came back to Japan from China. In the first reversal since Jetro began asking the question in 2006, there were fewer cases -- just 6.8 percent -- going to China from Japan, according to poll released in March.
- Citigroup Sees ‘Significant’ Inflows Into China's Bond Market. Citigroup Inc., which obtained a bond underwriting license in China last month, said there may be “significant” inflows into China’s debt market after the government started another channel for offshore investors to access local notes. The U.S. bank became the fifth foreign institution approved to underwrite non-financial corporate bonds in China’s interbank market last month. In July, overseas investors were allowed to invest via Hong Kong through the bond-connect program in the bigger of China’s two debt markets, which has $8.2 trillion of outstanding securities, about 89 percent of all the notes in China.
- Asian Stocks Set to Rise as Risk Appetite Returns. Asian stocks are set to track gains on Wall Street as risk appetite returned to global markets with political tensions taking a back seat to optimism about the Trump administration’s efforts on business-friendly reforms. Futures contracts on Asian indexes pointed to a broadly firmer open. The S&P 500 Index jumped 1 percent and the Dow Jones Industrial Average added almost 200 points amid reports the Trump team and lawmakers may be making progress toward pro-business reforms. The risk-on tone lifted the dollar and weighed on havens from Treasuries to gold. Crude gained ahead of a U.S. government report that’s forecast to show stockpiles fell. Hong Kong trading is likely to be affected as Typhoon Hato moved closer to the city. Contracts on the Nikkei 225 Stock Average added 0.3 percent, while those on the Kospi index climbed 0.6 percent with futures on Australia’s main gauge.
- Harvey Threatens Gulf Coast, Sending Gasoline Higher. The Gulf Coast from Corpus Christi, Texas, to Lake Charles, Louisiana, is home to nearly 30 refineries -- making up about 7 million barrels a day of refining capacity -- and is in the path of heavy rainfall expected to start as early as Friday. Flooding poses risks to operations, while torrential rains can shut units and cause supply disruptions.
Wall Street Journal:
- Mutual Funds Mark Down Uber Investments by Up to 15%. Investors including Vanguard marked down their Uber stakes for the June 30 quarter, while Fidelity maintained its estimate.
- Think Rates Are Going Up? Banks Don’t. The percentage of bank assets that won’t mature or change rates for more than five years reached a new high in the second quarter.
CNBC:
Zero Hedge:
Zero Hedge:
Business Insider:
21st Century Business Herald:
Earnings of Note
Company/Estimate
9:45 am EST
- China's 2017 GDP Growth Expected to Exceed Target. Economic growth in 2017 may exceed target set at the beginning of this year as major indicators in 1H were better than expected, Wang Yiming, deputy director of State Council Development Research Center, wrote.
- Asian equity indices are +.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 81.0 -2.75 basis points.
- Asia Pacific Sovereign CDS Index 21.0 -.5 basis point.
- Bloomberg Emerging Markets Currency Index 73.88 -.02%.
- S&P 500 futures -.05%.
- NASDAQ 100 futures -.05%.
Earnings of Note
Company/Estimate
- (AEO)/.16
- (EV)/.68
- (LOW)/1.63
- (GES)/.10
- (HPQ)/.42
- (PVH)/1.63
- (WSM)/.59
9:45 am EST
- Preliminary Markit US Manufacturing PMI for August is estimated to rise to 53.5 versus 53.3 in July.
- Preliminary Markit US Services PMI for August is estimated to rise to 55.0 versus 54.7 in July.
- New Home Sales for July are estimated at 610K versus 610K in June.
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,257,250 barrels versus a -8,945,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -568,630 barrels versus a +22,000 barrel gain the prior week. Distillate supplies are estimated to rise by +31,000 barrels is estimated to rise by +702,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.29% versus a -.2% decline the prior week.
- None of note
Other Potential Market Movers
- The Fed's Kaplan speaking, Eurozone Services PMI report and the weekly MBA Mortgage Applications report could also impact trading today.
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