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Late last week the property developer made an agreement with domestic bond holders on a yuan-denominated bond.
On Thursday (last week) a US$83.5m coupon payment (on a US42bn offshore bond) became due. I posted on this at length so won’t do so again, suffice to say there is a 30-day ‘grace’ period in which to make payment. What this means is that if payment is made within this time window there is no ‘default’ registered.
Coming up this week is another payment due, $US47.5m. Again, there is the 30 day grace period. Its likely there will be no payment until this period expires … if at all is the bigger question.
USD/JPY inches up to five-week highs
The dollar sits in a good spot to start the day as it continues the more solid momentum from last week, with the US jobs report on Friday providing a springboard for the greenback to push higher against the rest of the major currencies bloc.
In particular, the rise in 10-year Treasury yields above 1.30% (currently near 1.37%) is helping to bolster USD/JPY to fresh highs in five weeks at 110.75. The pair will be looking towards the 111.00 handle next after pushing past the 14 July high @ 110.70.
Elsewhere, EUR/USD continues to linger at the year’s lows, testing support @ 1.1704-11. GBP/USD is also down 0.2% to 1.3815 and heading for a fourth straight down day, while AUD/USD is down 0.3% to 0.7325 near its lowest levels in two weeks.
The ‘chip lead time’, which is the time from ordering a semiconductor to taking delivery, increased 8 days in July from June.
- Now more than 20 weeks
The shortages are constraining production of autos, industrial equipment, IT devices, amongst others.
Data comes from Susquehanna Financial Group, reported here (link).
The shortages are not evenly spread across types of chips, some waits are longer than others. More at that link.
Washington Post with the report that the Biden administration is considering a near wholesale rollback of some of the most stringent Trump-era sanctions imposed on Iran
- in a bid to get the Islamic Republic to return to compliance with a landmark 2015 nuclear accord
WaPo citing “according to current and former U.S. officials and others familiar with the matter”
Talks are rolling on this week in Vienna re resuscitating the nuclear deal.
A slightly better day for Asian equities
That said, the signals are more mixed with some retreat seen towards the latter stages. Japanese stocks fared better with the Topix also closing up 0.2%.
The Hang Seng is up 0.6% but mainland Chinese equities are down, with the Shanghai Composite shedding 0.5% after holding gains earlier in the day.
The sluggish mood in US futures isn’t helping as Treasury yields keep higher ahead of European morning trade. 10-year yields are up nearly 3 bps to 1.694% with S&P 500 futures and Nasdaq futures seen down 0.1% and 0.2% respectively.
Broad US dollar bid
There was a broad US dollar bid into the 4 pm London fix. It was particularly visible in the euro and sterling and boosted the dollar to the best levels of the day.
The Dollar Index has crept up above Thursday’s high and is flirting with 93.00.
Watch for stops in EUR/USD as the pair flirts with the late-March lows. Here’s the 8-hour chart: