• Asian equity markets traded mixed as the region digested a slew of tier-1 Chinese data and with the absence of Japanese participants adding to the initial lull
• Chinese data proved to be mostly better than forecast, although showed China’s economic growth slipped to 6.2% Y/Y as expected
• DXY was relatively stable with marginal gains seen as it briefly attempted to nurse some of last week’s losses, while price action for its major counterparts was mixed
• Looking ahead, highlights include US NY Fed Manufacturing, NZ CPI, Fed’s Williams

ASIA-PAC

Asian equity markets traded mixed as the region digested a slew of tier-1 Chinese data and with the absence of Japanese participants adding to the initial lull. ASX 200 (-0.4%) was negative with the downside led by underperformance in tech and telecoms, while financials also weighed on the index with AMP Capital shares down around 15% after it noted the unlikelihood it will proceed with its life insurance unit sale due to opposition by the RBNZ. Conversely, Hang Seng (+0.2%) and Shanghai Comp. (+0.3%) were pressured at the open after the recent mixed lending and trade data from China, while participants were also cautious as they awaited more tier-1 releases from the world’s 2nd largest economy including Chinese GDP, Industrial Production and Retail Sales. The data then proved to be better than expected as most of the figures topped estimates which inspired a recovery in stocks, although still showed China’s economic growth slipped to 6.2% Y/Y as expected which was the slowest pace since 1992.

PBoC skipped open market operations but injected CNY 200bln via 1yr MLF at rate kept at 3.3%, while it implemented the 3rd phase of RRR cuts for county-level rural commercial banks that would release long-term funds of about CNY 100bln. (Newswires) PBoC set CNY mid-point at 6.8677 (Prev. 6.8662)

Huawei is said to plan deep job cuts in US as it struggles with the US blacklisting, while there were separate reports that US firms may get the go ahead to restart new sales to Huawei in the next 2-4 weeks. (WSJ/Newswires)

China detained another Canadian citizen which is said to add to the high tensions between the two countries. (NYT)

Chinese GDP (Q2) Q/Q 1.6% vs. Exp. 1.5% (Prev. 1.4%). (Newswires) Chinese GDP (Q2) Y/Y 6.2% vs. Exp. 6.2% (Prev. 6.4%); slowest pace of growth since 1992. Chinese Industrial Production (Jun) Y/Y 6.3% vs. Exp. 5.2% (Prev. 5.0%) Chinese Retail Sales (Jun) Y/Y 9.8% vs. Exp. 8.3% (Prev. 8.6%) Chinese China House Prices (Jun) Y/Y 10.3% (Prev. 10.7%)

UK/EU

UK PM candidate Boris Johnson will seek a UK trade deal with US in first move if he becomes PM. In related news, there were reports that US President Trump’s negotiators signalled that hopes of a post-Brexit trade deal with the US rest on the willingness of the next PM to fall in line with tough American policies against Huawei. (Newswires/Times/Telegraph)

A hard Brexit could be made more likely because European Union leaders have failed to grasp the firming of opinion in Britain, Latvia’s foreign minister has warned. (Telegraph)

Conservative candidate Hunt has declared that he would take on the role of Brexit Secretary himself because it is “too big” a responsibility not to be carried out by the prime minister. (Telegraph)

UK Chancellor Hammond has vowed to oppose a no-deal Brexit from the back benches in a valedictory speech to civil servants last week, according to The Times. (Times)

Direct rule will be implemented in Northern Ireland within the next three months to see through Brexit, ministers believe. (Times)

UK Rightmove House Prices (Jul) M/M -0.2% (Prev. 0.3%). (Newswires) UK Rightmove House Prices (Jul) Y/Y -0.2% (Prev. 0.0%)

FX

DXY was relatively stable with marginal gains seen as it briefly attempted to nurse some of last week’s losses, while price action for its major counterparts were mixed with EUR/USD and GBP/USD little-changed amid a lack of pertinent news flow for the pairs over the weekend. Conversely, antipodeans benefitted from the latest Chinese data in which AUD/USD broke through last week’s resistance and NZD/USD gained a footing above 0.6700, while there was also a note from Westpac on NZD/USD which it sees appreciating in the next few weeks if the Fed provides dovish guidance, before dropping to below 0.6600 in August should the RBNZ reduce rates again. Elsewhere, USD/JPY just about reclaimed the 108.00 handle and JPY-crosses were also lifted in the aftermath of the Chinese data but with upside restricted due to absence of Tokyo participants.

Brazil's lower house of Congress may not vote on the pension reform bill until next month as tough negotiations over amendments delayed the process and reduced savings derived from the overhaul. (Newswires)

Turkish President Erdogan reportedly said that Turkey will make serious cuts to interest rates, according to Haberturk. And that Turkey is aiming to reduce inflation to a single digit figure by the years end. (Newswires) For reference the next CBRT decision is July 25th.

US President Trump’s team has reportedly agreed on a package of sanctions to be placed on Turkey in response to their reception of the S-400 Russian missile system; with the source stating this is to be announced later in the week. (Newswires)

Fitch downgraded Turkey to 'BB-'; Outlook Negative. (Newswires)

COMMODITIES

Commodities were varied and largely reflected the mixed trading session in which WTI crude futures briefly slipped below the USD 60.00/bbl level as Asia markets began the trading day with losses across the board, but later rebounded off lows as sentiment eventually improved post-China data. In terms of the latest developments regarding the Gulf of Mexico disruption, crude output was said to have been cut by 70% on Friday and Barry has since been downgraded to a tropical depression, although several tornado warnings have been issued with a high risk of flooding due to heavy rain. Elsewhere, gold marginally weakened amid a steady greenback and as the risk tone began to pick up, while copperoutperformed helped by the China data and as it broke through prior resistance at USD 2.70/lb.

US Baker Hughes Rig Count (12 July): Oil rigs -4 at 784, NatGas rigs -2 at 172, total rigs -5 at 958 rigs. (Newswires)

BSEE said Gulf of Mexico crude output was cut by 70% on Friday and natural gas output was reduced by 56% due to storm preparations, while the NHC stated on Sunday that Barry weakened to a tropical depression over north-western Louisiana and that life-threatening flooding rains will continue into Monday. (Newswires) 

GEOPOLITICS

Iran President Rouhani said Iran is ready and willing to hold talks if US sanctions are lifted and US returns to the 2015 nuclear deal, while there were separate comments from Iran Foreign Minister Zarif that Iran will continue with its oil exports no matter what the conditions. (Newswires)

South Korea official voiced uncertainty over US-North Korea talks this month and said the US appears to be waiting for a response from North Korea. (Yonhap)

US

A lacklustre session saw Treasury yields come in by around a basis point or so. Fed speak (Evans, Kashkari, Brainard) was generally positive for the complex given the dovish rhetoric. The yield curve steepened slightly. Major curve spreads were mixed, but relatively unchanged. US T-note futures (U9) settled 4 ticks higher at 127-03+.

US President Trump will not impose uranium quotas despite assessment by the Commerce Department that US use of foreign uranium raises security concerns. (Newswires)

Fed's Barkin (Non-Voter, Hawk) said the fact that inflation is low is a victory is not a defeat and that consumer spending is incredibly strong. (Newswires)