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DJ Chinese Bonds Still Seen as Attractive Investment -- Market Talk

· 02/05/2021 01:47

0647 GMT - Pictet Asset Management considers Chinese bonds continuing to be an attractive investment, as they are a source of yield. The Chinese economy is staging a V-shaped recovery from the pandemic-induced slowdown, boosting the bond market's real yield differential with the U.S. to a record 400 basis points, Pictet AM says. Meanwhile, core inflation in China stands at a 10-year low of 0.4% which should prevent a tightening of monetary policy in the country, the asset manager says. (emese.bartha@wsj.com)

0641 GMT - The Netherlands' new July 2031 DSL and Germany's new April 2033-dated inflation-linked bonds are among government bond issuance in the eurozone next week. The Dutch State Treasury Agency will launch the new 10-year bond at a direct auction, aiming to raise EUR4 billion-EUR6 billion on Tuesday. On the same day, the German Finance Agency will launch the April 2033-dated linker with EUR1.5 billion on offer. Germany on Wednesday will auction EUR4 billion in April 2026 Bobl. Italy is set to round up next week's supply on Thursday, with the exact details of that auction to be announced on Monday. (emese.bartha@wsj.com)

0641 GMT - Commerzbank expects Portugal to skip a government-bond auction window next week after a EUR3 billion 30-year bond-issuance this week. Portugal's debt agency keeps the second and fourth Wednesdays of a month open for a government bond auction and it usually takes the first window, which would be Feb. 10. Still, if Portugal's debt agency wants to hold an auction next week, it will announce an auction later on Friday. (emese.bartha@wsj.com)

0608 GMT - The Nikkei Stock Average ended up 1.5% at 28779.19, supported by transportation and real estate stocks. Corporate earnings remain closely watched. Transportation stocks were among the top gainers, with East Japan Railway 3.4% higher, West Japan Railway up 6.3% and Tobu Railway up 3.3%. Real estate stocks also rose, with Nomura Real Estate up 2.3%, Star Mica Holdings and Hulic Co. each advancing 2.9%. USD/JPY was at 105.50 compared with 105.55 late Thursday in New York. The yield on the 10-year Japanese government bond was unchanged at 0.055%. (justina.lee@wsj.com)

0247 GMT - Asian currencies mostly weaken against USD, as improved economic prospects for the U.S. versus the rest of the world increase the appeal of USD-denominated assets. The USD's outperformance reflects the better near-term outlook for the U.S. economy compared to the Eurozone and Japan, partly due to the faster rate of Covid-19 vaccinations in the U.S., CBA says. USD/KRW climbs 0.5% to 1,125.82, USD/SGD rises 0.1% to 1.3382, while USD/JPY is little changed at 105.54. (ronnie.harui@wsj.com)

2353 GMT - RBA Governor Phil Lowe has rejected assertions made in a parliamentary hearing that the central bank has become too insular and that its decision-making processes are therefore weakened. Strangely, the criticism of the RBA then extended to questions around having central bank outsiders appointed to its nine-member, interest-rate setting board. There are seven people not from the RBA on the board, comprising six people from the business sector and the Treasury Secretary. (james.glynn@wsj.com ; @JamesGlynnWSJ)

2349 GMT - Japanese stocks may rise on hopes for corporate earnings recoveries and a weaker yen. Nikkei futures open up 230 points at 28620 on the SGX. USD/JPY is at 105.55, up from 105.14 as of Thursday's Tokyo stock market close. Some Japanese exporters' shares may benefit from the yen's recent trend weaker. Mitsui Fudosan, Nippon Steel, Nippon Telegraph & Telephone are set to report their results later in the day, among other big companies. The Nikkei Stock Average fell 1.1% at 28341.95 on Thursday. (kosaku.narioka@wsj.com)

2313 GMT - RBA Governor Philip Lowe has told financial markets to put aside any talk of near-term tapering of QE or withdrawal of other forms of monetary stimulus. Lowe has told parliament that day will eventually come, but there is a long road ahead for the economic recovery. The cash rate will remain at 0.1% for as long as necessary, for now that could be as far out 2024. Lowe is conscious that low rate will feed property speculation, but he stands ready to propose a tightening of bank mortgage lending criteria if needed. The RBA has no appetite for a move toward negative interest rates. (james.glynn@wsj.com)

2042 GMT - Peruvian President Francisco Sagasti says his government signed a deal with Pfizer to receive 20 million coronavirus vaccines. Sagasti says the first 250,000 shots will arrive in March, and another 300,000 in April. Peru also has contracts with Sinopharm, which is expected to deliver the first million doses of its vaccine on Feb. 13, Sagasti says. The country has also inked a deal to receive vaccines from AstraZeneca and through the Covax initiative. (ryan.dube@wsj.com; @duberyan)

2114 GMT - NZ's economic outperformance has seen the yield curve steepen more than most, ASB says. Traders have revised expectations for New Zealand's official cash rate following Wednesday's upbeat jobs report, with yesterday's ANZ confidence survey providing another boost. ASB notes implied pricing is now pointing to a 0.25% OCR through 2021, with an around 20% chance of the RBNZ raising rates by April 2022. One effect is New Zealand 10-year swap yields rising by 25bps this week. "While you could argue markets are perhaps overdue a pullback, we think the trend will remain for a steeper curve and upward momentum in wholesale yields given the performance of the economy and the fact the RBNZ is not far from achieving its twin objectives," ASB says. (david.winning@wsj.com; @dwinningWSJ)

2000 GMT - The NZD/USD makes an about turn overnight as the greenback strengthens amid higher interest rates and rallying equities, but it remains within well-established ranges, Australia & New Zealand Banking Group says. "This recent fall is somewhat surprising given that the market has adopted the view that the RBNZ will be one of the earlier 'hikers,' and given the performance of recent economic data," ANZ says. The NZD/USD is at 0.7156 early, with U.S. employment data looming later on Friday. "Nonetheless, having not completely broken down, we're more inclined to characterize" the overnight trade as merely a correction, ANZ adds. (david.winning@wsj.com; @dwinningWSJ)

1952 GMT - Private-equity and venture-capital firms worldwide reached a record of $4.74 trillion in assets under management in June, up 6.1% from the end of 2019, according to a report by Preqin. Private-equity's expansion is likely to accelerate as investors in general expect to increase their allocations to the asset class this year, the data provider says. The median allocation in the US, at 6.3% of AUM, is higher than in developing markets, but those are expanding fast. In Asia, for one, investors during 2020 bumped up their median allocation to private equity to 5% of AUM from 3.6%. (luis.garcia@wsj.com; @lhvgarcia)

(END) Dow Jones Newswires

February 05, 2021 01:47 ET (06:47 GMT)

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