Lower Aussie CPI Raises Argument For A Rate Cut; Bond Yields Fall: April 24, 2012

(AU) AUSTRALIA Q1 CONSUMER PRICES (CPI) Q/Q: 0.1% V 0.6%E; Y/Y: 1.6% V 2.2%E (lowest since Q3 of 2009)

(JP) JAPAN MAR CORPORATE SERVICE PRICE INDEX Y/Y: -0.3% V -0.6%E (3-month high)

(CN) CHINA MAR CONFERENCE BOARD LEADING ECONOMIC INDEX M/M: 0.8% V 1.0% PRIOR (3-month low)

(NZ) NEW ZEALAND MAR NET MIGRATION: 130.0 V -300 PRIOR

(NZ) New Zealand Mar Credit Card Spending m/m: 0.3% v 0.4% prior; y/y: 5.2% v 4.0% prior (3-month high)

(AR) Argentina Mar Budget Balance (ARS): +849M v +1.3B y/y

Markets Snapshot (as of 04:30GMT)

Nikkei225 -0.9%

S&P/ASX +0.1%

Kospi -0.7%

Taiwan Taiex -0.2%

Singapore Straits Times +0.3%

Shanghai Composite -1.4%

Hang Seng -0.3%

Jun S&P Futures +0.2% at 1,365

June gold +0.3% at $1,637/oz

June Crude -0.1% at $102.97

Overview/Top Headlines

Lower-than-expected inflation in Australia signs possible central bank action at the next meeting in May. Analysts are speculating that there could be a cut in June as well as May. Year-over-year inflation of 1.6% was the lowest level since Q3 2009, the RBA trimmed means also came in at the lowest level in 5 quarters at 0.3% q/q. AUD/USD initially fell over 60 pips to $1.0260 before testing down to $1.0250, AUD/CAD fell to a 5-month low while GBP/AUD rose to a 5-month high above A$1.57.

Australia's 10-yr yield fell to record lows near 3.64%. The S&P ASX rose on the news and expected rate cut in May, while the Shanghai Composite fell over 1%. Australia Treasurer Swan said that core inflation is contained and at the bottom of target range; no risk for deflation. He also said that lower CPI is not a sign of slower growth. USD/JPY weakened to ¥80.87, while Japan 5-yr yields tested 0.265%, the lowest level since October 2010. Bank of Japan (BoJ) will have its rate decision meeting at the end of this week.

Copper rose over 0.5% to $3.64 while silver gained 0.7% to $30.73. Political events in the EU, current French President Sarkozy coming in second to a socialist candidate in Sunday's pre-elections and the threat of the Netherlands losing its AAA rating weighed on the markets. ECB's Nowotny noted that the ECB's bond buying program (SMP) is currently in "sleep mode," new targeted measures can be launched when needed. No chance of a broader euro bond program; Germany would not approve of such measures. Also thought that the 2nd LTRO has started to be felt in real economy.

Speakers/Geopolitical/In the press

(CN) China State Administration of Foreign Exchange (SAFE) reiterates it will ensure national financial security and fight against hot money flows.

(KR) South Korea 2013 budget to focus on welfare, education, and job creation; Aims to restore balanced budget and achieve sustainable growth. - Korean Press

(CN) China Bank Regulator (CBRC): 2012 will be a difficult year; debt crisis in Europe difficult to resolve in short term, risk of eurozone recession rising.

(JP) Japan Econ Min Furukawa: Reiterates he hopes that the BoJ will continue to pursue powerful monetary easing and act accordingly.

(CN) PBoC Gov Zhou: China may first relax controls on borrowing costs and widen the range for deposit rates as part of changes to financial-industry rules. - Caijing Magazine

Equities

NCM.AU: Reports Q3 gold production 532.2K oz v 579K oz q/q; Copper 18.1K tons 18.2K tons q/q.

WES.AU: Reports Q3 Rev A$7.85B v A$7.9Be.

SPT.AU: Pacific Equity Partners makes a second offer for Spotless, values the company at A$745M v A$711M prior.

6665.JP: Toshiba pulls out of the race for Japan's Elpida. - Japan Press

1733.HK: Chalco taking a 29.9% stake in Winsway for HK$2.39B cash.

FBU.NZ: CEO: On track to meet revised forecast; NZ housing market showing signs of improvement, Australia market is weak and faces further deterioration.

US Equities

WFT: Reports Q1 $0.25 (adj) v $0.28e; Rev $3.60B v $3.6Be; -1.5% after hours.

TXN: Reports Q1 $0.22 (incl $0.10 charges on NSM merger) v $0.29e, R$3.12B v $3.1Be; +3.7% after hours.

NFLX: Reports Q1 -$0.08 v -$0.27e, R$870M v $867Me; -16.6% after hours.

USTR: Reports Q1 $0.45 (adj) v $0.41e, R$1.27B v $1.2Be; +2.2% after hours.

CNI: Reports Q1 C$1.75 v C$1.02e, Rev C$2.34B v C$2.3Be; +0.1% after hours.