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Market Talk Roundup: Latest on Trump, U.S. Politics

23 Mar 2017 8:21 am

0821 GMT Asia's high yield issuers are pushing out more deals, undeterred by the Trump-induced volatility seen in recent sessions in global credit markets. Xinjiang Guanghui, a Chinese energy and property firm, is out with a $200-$300 million 3-year bond shown at a yield of 8%. Zhuhai Huafa, also a mixed-purpose firm with a focus on property, is in the market with a $100 million 3-year tap of an existing deal, indicated at 3.75%. The China/Macau hotel and property firm Emperor International is marketing a 5-year deal, with a tranche in Hong Kong dollars (shown at 4.8%) and a tranche in dollars (indicated at 5.25%). Finally, the Indonesian agri-food concern Japfa Comfeed is seeking $100 million via a 5-year bond indicated at 5.875%. Proceeds will refinance a 2018 bond with a 6% coupon. (jasper.moiseiwitsch@wsj.com; @moiseiwitsch)
Editor: JFN 

19:52 ET - The governors of California, Oregon and Washington have issued a joint statement voicing their opposition to a possible Trump executive order which would call for the withdrawal and rewriting of the Clean Power Plan, an Obama policy to cut greenhouse-gas emissions. "Any attacks on the Clean Power Plan would move our nation in the wrong direction and put American prosperity at risk," the trio contends. "We will assert our own 21st-century leadership and chart a different course." (cassandra.sweet@wsj.com; @CassandraSweet)

2320 GMT [Dow Jones]--Japanese stocks may struggle to gain due to continuing skepticism over U.S. President Donald Trump's ability to push through his legislative agenda, after the Japanese stock benchmark index posted the biggest loss since Nov. 9. Despite a modest recovery in the S&P 500 and Treasury yields, the dollar remained under pressure, which tends to be negative for Japanese stocks. Nikkei futures ended Wednesday's night session at 18920, compared with the earlier day-time close at 18910. Nikkei ended down 2.1% on Wednesday at 19041.38.(kosaku.narioka@wsj.com)

17:30 ET - Bank of Nova Scotia warned prior to the release of Canada's 2017 budget plan there would be little to get market participants excited. The firm's call proved prescient. Little in the budget changed the overall macro picture for Canada. The bulk of the budget was dominated by small measures, with tens of millions allocated over a number of years. In many ways, this was a placeholder budget for the Liberal government, until it gets a clearer sense where the Trump administration moves on trade and tax relief, and whether senior Republicans in Congress succeed with their proposed border-adjusted tax--which would hit Canadian exports and pose a blow to the trade-dependent economy. (paul.vieira@wsj.com; @paulvieira)

16:48 ET - Bank stocks are losing steam as the "Trump trade" starts to unwind. Five of the six biggest US banks lost ground today, and Goldman Sachs (GS) shares fell 1% to $231.07. The exact triggers aren't clear, but a flattening of the yield curve -- with 10-year Treasuries yielding less relative to shorter-term debt -- is never kind to bank stocks. Plus, congressional Republicans are struggling to find enough support within their own ranks to pass a health-care bill, raising questions about their ability to push through tax reform, financial deregulation and other things that had sent bank stocks soaring after the election. KBW Nasdaq Bank Index is off 5% this week. (liz.hoffman@wsj.com; @lizrhoffman)

16:09 ET - A representative of the National Center for Public Policy Research, a conservative think tank, took Starbucks (SBUX) to task for its promise to hire refugees, citing a study that showed brand perception levels dropped in the wake of the pledge, and criticized the company for being too political. CEO Howard Schultz said the company's stance on social issues "isn't based on politics but on principles and core beliefs" and that there is "zero evidence" of any effect to the brand or business "as a result of being compassionate." (julie.jargon@wsj.com)

15:03 ET - A big question this year is whether the equity-market euphoria and bond-market skepticism reflect the correct read on US policy risks. The equity market finally blinked Tuesday as difficult health-care negotiations continue to delay tax reform, says BofA Merrill Lynch Global Research. It's unclear for now whether that warrants a more defensive credit stance, but volatility should be higher going forward, BofA says. "We should see more days like" Tuesday, when the Dow fell 1.1%, its biggest percentage point decline since October, it says. A stock-market correction is the biggest near-term risk to high-grade spreads, and one could be triggered by a rise in US policy risks, particularly related to tax reform, it says. (Daisy.Maxey@wsj.com; @DaisyMaxey)

1704 GMT - Eurozone funds have continued to register net outflows in March as political uncertainty weighed during the month but the outcome of the Dutch election and the widening gap between French presidential candidates Emmanuel Macron and National Front leader Marine Le Pen could curb outflows from the eurozone, say BBVA analysts. BBVA also says investor appetite for emerging markets and U.S. has returned. For emerging markets, the upward trend in commodity prices and the cautious tone of U.S. Fed officials in tightening process has been supportive of inflows, even though last week oil prices dropped and the Fed's hike diminished the appetite. As for the U.S., inflows remained in both equity and bond funds, BBVA says. (emese.bartha@wsj.com ; @EmeseBartha)

12:38 ET - The alcohol industry is lobbying to stop Utah Gov. Gary Herbert from signing a bill lowering the state's legal threshold for drunken driving to a .05 blood-alcohol level from .08. Utah would be the first state to do so. The American Beverage Institute, an industry group, has opposed similar proposals in Hawaii and Washington state as part of a broader effort to push back against what the group has described as "an unprecedented and coordinated attack on moderate drinking." The group plans to run an ad in USA Today later this week, saying, "Utah: Come for Vacation, Leave on Probation." (jennifer.maloney@wsj.com; @maloneyfiles)

12:26 ET - Alexander Acosta, Trump's nominee for Labor Secretary, pledges to follow the White House's order in reviewing a landmark retirement-advice rule, stressing that specific standards laid out in the president's executive order determine the Labor Department's approach to the rule. Speaking at a Senate confirmation hearing, Acosta says those three criteria are: Whether the rule reduces investment options, increases litigation and financially affects retiree investors. The Labor Department has proposed to delay the implementation of the rule from April 1 to give the department time to review the Obama-era regulation. Trump's executive action directs the department to repeal or revise the regulation--known as the fiduciary rule--if any of the criteria laid out in that executive order is found, Acosta says. "So that criteria really regulates and determines the Department of Labor's approach to the fiduciary rule," he says. (yuka.hayashi@wsj.com; @TokyoWoods)

11:52 ET - Bank of Canada Deputy Governor Lawrence Schembri highlighted how the US shift toward protectionist trade policies could raise inflationary pressures in Canada. Schembri said during a speech in Vancouver on Wednesday that "inward looking" trade policies would dampen global trade and either directly or indirectly reduce Canadian exports and business investment. "Canada, however, has resisted this protectionist tilt," he said. Schembri points to recent changes to immigration policy and a new free trade agreement with the EU as positive steps aimed at increasing growth over the medium-to-long term. (david.george-cosh@wsj.com; @itsdgc)

11:48 ET - BMI stays bullish on the Mexican peso. After the peso strengthened around 15% to the US dollar since late January, Fitch believes the negative sentiment towards the currency in the wake of Trump's triumph in the US election is overdone. "Softening rhetoric towards trade with Mexico and Nafta by Trump administration officials reaffirm our view that Mexico will surprise to the upside this year, even if a trade deal has yet to materialize," BMI says. However, the firm sees some downside risks in the near term, as trade policy uncertainty will persist until the latter part of the year and renewed tensions can't be discounted. The peso is often used as a hedge, making it subject to bouts of financial volatility. BMI maintains its end-year forecast of 19.50 to the US dollar; the peso's currently at 19.08. (juan.montes@wsj.com)

(END) Dow Jones Newswires

March 23, 2017 04:21 ET (08:21 GMT)

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