Five Things You Need to Know to Start Your Day
Treasury bill rates are in the spotlight, HNA might need to slim down even more and Theresa May said she won’t let there be another vote on Brexit. Here are some of the things people in markets are talking about.
This year’s relentless climb in short-end U.S. rates may be about to take a break as the Treasury dials back bill auctions for a change. But any dip in rates may prove short-lived with another Federal Reserve hike looking imminent. The Treasury will sell a combined $145 billion of bills Tuesday when the market reopens after the Labor Day holiday. The total is down $16 billion from last week, for the first across-the-board cut in bill supply since April. Bill rates have climbed steadily this year, pushing three-, six- and 12-month yields above 2 percent for the first time in a decade. The dropoff in supply probably won’t last long. Traders anticipate increased issuance across the curve to finance the nation’s ballooning budget deficit and offset the Federal Reserve’s balance-sheet unwind. What’s more, Friday’s release of the latest labor-market data may solidify expectations for a quarter-point Fed rate hike this month: Job growth likely accelerated in August, analysts predict.
HNA Slimming Down
HNA Group Co. is getting leaner as it sells assets, but the embattled Chinese conglomerate may need to work even harder to gain the trust of investors. Total debt fell 9.5 percent to 541.6 billion yuan ($79 billion) at the end of June, down about $8.3 billion from a record set at the end of last year, according to figures derived from a half-year report dated Friday. It’s the first time the number has fallen, based on public data compiled by Bloomberg stretching back to 2005. The lighter load may ease the pressure on HNA, which is seeking to recover from a binge that involved borrowing tens of billions of dollars to fund purchases ranging from big stakes in Deutsche Bank AG to skyscrapers in Manhattan. But debts remain high and the results weren’t enough to shake off concerns about the company.
The pound slipped as U.K. Prime Minister Theresa May ruled out a second Brexit vote. In a comment piece on the Sunday Telegraph she said another referendum would be a “gross betrayal of our democracy.’’ Lawmakers in Britain are back to work after sterling volatility left political pundits scratching their heads last week. European Union Chief Negotiator Michel Barnier’s promise to offer the U.K. an unprecedented partnership sent the currency soaring more than 1 percent even though he had said it before.
Mixed Start to Week
Asian stocks are set for a mixed start to the week, with little over the weekend to move the dial on trade tensions or growth projections. Equity futures edged higher in Australia, were largely flat in Japan, while Hong Kong was poised for small declines. The S&P 500 closed flat Friday as gains in consumer shares offset losses in energy stocks, while Treasuries slipped. U.S. markets are closed for Labor Day Monday. Here are a few themes Asian stock investors should watch in the final stretch of the year.
President Donald Trump slammed what he termed “decades of abuse” by Canada with a new threat to terminate the North American Free Trade Agreement, a day after talks with the U.S.’s northern neighbor stalled hours before a deadline. “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out,” Trump said on Twitter on Saturday. “Congress should not interfere w/these negotiations or I will simply terminate NAFTA entirely & we will be far better off.”
What we’ve been reading:
- Trump snubs two major Asian summits…
- … While Leon Panetta brands the U.S. president’s meeting with North Korea’s Kim Jong Un a failure.
- Sydney mortgages signal Australia’s central bank will be on hold until 2020.
- JD.com says CEO cleared in U.S. after investigation.
- South Korea’s Moon to send security head, spy chief to Pyongyang.
- Fixing the most annoying parts of city life.
- How to avoid crummy hotels forever.
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