• Asian equities traded mostly higher after a firm Wall St close which saw the DJIA post record highs with Chinese data supporting domestic bourses
• BoE’s McCafferty said that BoE should consider unwinding its QE programme earlier than planned
• Looking ahead, highlights include IEA oil market report, US PPI, weekly jobs, Fed’s Yellen, Evans and Brainard

ASIA

Asia stocks were higher across the board as the region maintained the momentum from its global counterparts, in which the DJIA posted record highs after a dovish testimony from Fed Chair Yellen, while participants also mulled over key Chinese data. ASX 200 (+1.1%) and Nikkei 225 (unch) were lifted from the open, although gains in the latter were pared as JPY firmed. China conformed to the upbeat tone with the Hang Seng (+1.1%) and Shanghai Comp. (+0.4%) traded in the green after better than expected Aggregate Financing, New Yuan Loans and Trade data. 10yr JGBs track upside seen in T-notes as Yellen’s comments eased yields, while outperformance was seen in 20yr JGBs despite mixed 20yr auction results.

PBoC refrained from open market operations, but conducted CNY 360bln 1yr Medium Term Lending Facility at 3.2% (Newswires)

PBoC set CNY mid-point at 6.7802 (Prev. 6.7868)

Chinese Trade Balance (CNY)(Jun) M/M 294.3bln vs. Exp. 275.1bln (Prev. 281.6bln)

- Imports (CNY)(Jun) Y/Y 23:1% vs. Exp. 22.3% (Prev. 22.1%)

- Exports (CNY)(Jun) Y/Y 17.3% vs. Exp. 14.6% (Prev. 15.5%)

Chinese Trade Balance (USD)(Jun) 42.8B vs. Exp. 42.6B (Prev. 40.79B)

- Imports (USD)(Jun) Y/Y 17.2% vs. Exp. 14.5% (Prev. 14.8%)

- Exports (USD)(Jun) Y/Y 11.3% vs. Exp. 8.9% (Prev. 8.7%)

EUROPE/UK

BoE’s McCafferty (Hawk) said that BoE should consider unwinding its QE programme earlier than planned, adding that the programme should be reviewed when rates are close to 2%. (Times) As a guide, McCafferty was one of the MPC members who voted for a hike at the last meeting and in the interview said that he would be minded to vote for a hike again next month.

UK PM May is set to publish her ‘repeal bill’ today which will be the first of eight Brexit bills to remove Britain from the EU. (FT)

UK RICS House Price Balance (Jun) M/M 7% Exp. 15% (Prev. 17%); lowest in 11-months. (Newswires)

FX

USD was subdued in which the USD-index languished firmly below 96.00 and USD/JPY slipped to test 113.00 after yesterday’s dovish tone from Fed Chair Yellen, who stated that the FOMC wouldn't need to raise rates much further to reach the neutral rate. The rest of the majors were range-bound with GBP/USD contained by resistance at 1.2900, while antipodeans were mildly supported amid better than expect Chinese trade figures.

COMMODITIES

Gold prices consolidated around yesterday’s highs with the softer USD keeping the greenback afloat, while Brent and WTI crude futures traded relatively sideways overnight with the latter just south of USD 45.50. (Newswires)

Nigerian oil minister said they are currently producing 1.7mln bpd. Nigerian oil minister added that they will support joining the output cap when can produce 1.8mln bpd in a stable manner. (Newswires)

US

US Treasury yields were lower across the curve after the market interpreted comments by Fed chair Janet Yellen as dovish. Some argued that Yellen’s comment that the FOMC wouldn’t need to raise rates much further in order to hit the neutral rate was a hint that the Fed was moving towards the opinion that the terminal rate was too high, as some have made the case in recent weeks. Curve spreads were little changed with 2s5s, 2s10s, 2s30s and 5s10s at best around 1bps narrower; 5s30s and 10s30s steepened by just under 1bps. The Sep 2017 T-note settled 11 ticks higher at 125-16+.

Fed’s Beige Book said activity was expanding in all 12 districts with pace ranging from slight to moderate. Most district reported modest to moderate wage pressures. (Newswires)

Fed’s George (non-voter, hawk) favours balance sheet reduction in the near future. George added that holding long-term rates low amid improving economy risks creating financial imbalances. (Newswires)