• Asian equities traded mostly lower despite some strong US tech earnings after-market as political concerns and softness in commodities tempered gains
• FX markets were relatively quiet with USD/JPY subdued around 111.00 after a slew of mixed data releases
• Looking ahead, highlights include US and Canadian GDP, Chicago PMI, Uni. Of Michigan

ASIA

Asia equity markets traded negative after sspanugging off the mildly positive lead from Wall St where the Nasdaq posted fresh record highs amid strong tech earnings, although upside in the broader market was limited by commodity weakness and temperamental US politics. Nikkei 225 (-0.4%) weakened with Japanese exporters hampered by a firmer currency, while energy and mining names dragged on the ASX 200 (-0.2%). Shanghai Comp. (-0.3%) and Hang Seng (-0.3%) were also subdued ahead of the Labor Day weekend and after the PBoC’s weekly net liquidity injection was more than halved, while KOSPI (-0.1%) exporters were despondent on Trump comments to renegotiate or terminate the South Korea trade deal. 10yr JGBs saw minor gains amid a dampened risk tone seen in the region and after today’s 2yr auction showed the firmest demand since May last year with the b/c rising to 5.51 vs. Prev. 3.82.

Japanese National CPI (Mar) Y/Y 0.2% vs. Exp. 0.3% (Prev. 0.3%). (Newswires)

- National Core CPI Y/Y 0.2% vs. Exp. 0.2% (Prev. 0.2%)

Tokyo CPI (Apr) Y/Y -0.1% vs. Exp. -0.2% (Prev. -0.4%). (Newswires)

- Tokyo Core CPI (Apr) Y/Y -0.1% vs. Exp. -0.2% (Prev. -0.4%)

Japanese Industrial Production (Mar P) M/M -2.1% vs. Exp. -0.8% (Prev. 3.2%). (Newswires)

- Industrial Production (Mar P) Y/Y 3.3% vs. Exp. 3.9% (Prev. 4.7%)

Japanese Retail Sales (Mar) M/M 0.2% vs. Exp. -0.3% (Prev. 0.3%). (Newswires)

- Retail Sales (Mar) Y/Y 2.1% vs. Exp. 1.5% (Prev. 0.2%)

PBoC injected CNY 40bln in 7-day reverse repos, CNY 20bln in 14-day reverse repos and CNY 20bln in 28-day reverse repos, for a weekly net injection of CNY 70bln vs. Prev. CNY 170bln net injection last week. (Newswires)

PBoC set CNY mid-point at 6.8931 (Prev. 6.8896)

EUROPE

FT reports that one of the factors being considered in the upcoming EU meeting this weekend would be preparation to recognise the potential for a united Ireland within the EU post-Brexit. (FT)

UK

UK Gfk Consumer Confidence (Apr) -7 vs. Exp. -7 (Prev. -6). (Newswires)

UK Lloyds Business Barometer (Apr) 47 (Prev. 35)

FX

FX markets were relatively quiet with USD/JPY subdued around 111.00 after a slew of mixed data releases in which National CPI printed softer than expected but Tokyo CPI beat estimates and while Industrial Production data disappointed, this coincided with firmer Retail Sales. The greenback remained range-bound, while KRW was mildly pressured following comments from US President Trump who wants to either renegotiate or terminate the trade deal with South Korea and wants USD 1bln payment for the THAAD missile defence system.

COMMODITIES

WTI crude futures recovered from yesterday’s losses to trade back above the USD 49/bbl level, while the metals complex remained relatively flat as the markets close in towards week-end trade, with gold (+0.1%) prices languishing amid mild gains in the greenback. Elsewhere, copper proceeded sideways overnight with resistance seen around the USD 2.60/lb level.

GEOPOLITICAL

US President Trump said there is chance of a major, major conflict with North Korea and that he would like to resolve the situation diplomatically which is very difficult. In related news, US Secretary of State Tillerson said China informed US that it warned North Korea not to conduct another nuclear test (Newswires)

US

Treasuries followed their European counterparts higher post-ECB, and took a fresh leg up following a strong 7Y auction, although the auction induced strength waned into the close. 10Y futures settled up .02+ at 125.20+.

US President Trump said to renegotiate or terminate South Korea trade deal and wants USD 1bln payment for THAAD missile defence system, while Trump also commented Saudis are not paying fair share for US defence. (Newswires)

US President Trump said the administration is prepared if there is a shutdown and added "If there's a shutdown, there's a shutdown". (Newswires)

US Representative Jordan of the Freedom Caucas said that lawmakers have the votes needed to pass the healthcare bill. However, there were later comments from US House Majority Leader McCarthy that the US House will not conduct vote on healthcare bill this week. (Newswires)