Overview:
Activity in the global capital markets is subdued as investors await fresh developments. New wording for the Irish backstop apparently is being drafted. US-China trade talks resume. No decision has been made on US auto tariffs, but European and Japanese officials seem to be playing down the threat. Separately, BOJ's Kuroda said there was more room to lower rates or buy more assets if needed, while the minutes from the Reserve Bank of Australia confirmed the shift to a neutral stance. Sweden's softer-than-expected CPI weighed on the krona. The dollar is sporting a firmer profile against most of the major and emerging market currencies. Global equity markets are narrowly mixed, and benchmark 10-year yields are mostly a little softer. Gold has edged higher to trade at fresh 10-month highs, while oil firms to a new three-month high.
Asia Pacific
Bank of Japan Governor Kuroda took a dovish tact and warned that although the yen is not targeted if yen appreciation knocks the economy, more assets could be bought, and rates could be lowered. This would be a policy-reversal insofar as the BOJ has been slowly reducing the amount of bonds it buys. Note that the generic 10-year yield has not been above zero this month, and the bid-cover at today's 20-year bond auction (4.67x) was the strongest in five years. Japan's economic minister was quoted in the press playing down the likelihood of auto targets, while US-Japanese trade talks have just begun. Lastly, Prime Minister Abe indicated this will be his last term as head of the LDP (and prime minister).
The minutes from the Reserve Bank of Australia meeting early this month confirmed a shift to neutrality. Going forward, investors may be sensitive to consumption data as this is the concern of officials. Weakening property prices, high household debt, and
