Markets Continue To Be Cautious; Aussie Home Loans Fall

(AU) AUSTRALIA MAY HOME LOANS M/M: -1.2% V +0.8%E (first decline in 3 month); OWNER OCCUPIED HOME LOANS M/M: 0.2%T V 0.9% PRIOR; INVESTMENT LENDING Y/Y: 4.6% V 1.7% PRIOR

(AU) AUSTRALIA JUL WESTPAC CONSUMER CONFIDENCE INDEX: 99.1 V 95.6 PRIOR; m/m: +3.7% v 0.3% prior (5-month high)

(JP) JAPAN MAY TERTIARY INDUSTRY INDEX M/M: 0.7% V 0.2%E (5-month high)

(JP) JAPAN JUNE DOMESTIC CGPI M/M: -0.6% V -0.4%E; Y/Y: -1.3% V -1.0%E (biggest decline since March 2010)

(KR) SOUTH KOREA JUNE UNEMPLOYMENT RATE: 3.2% V 3.3%E

(MA) MALAYSIA MAY INDUSTRIAL PRODUCTION Y/Y: 7.6% V 4.6%E; MANUFACTURING SALES VALUE Y/Y: 10.0% V 5.3% PRIOR

(KR) SOUTH KOREA JUNE BANK LENDING TO HOUSEHOLDS (KRW): 457.1T V 455.8T PRIOR

(KR) SOUTH KOREA MAY MONEY SUPPLY L Y/Y: 9.2% V 8.6% PRIOR; M2 M/M: 0.3% V 0.6% PRIOR

(SL) SRI LANKA CENTRAL BANK LEAVES REPURCHASE RATE UNCHANGED AT 7.75%; REVERSE REPO RATE UNCHANGED AT 9.75%; BOTH AS EXPECTED

(JP) JAPAN MAY CONFERENCE BOARD LEADING ECONOMIC INDEX: 96.4 V 97.5 PRIOR

Markets Snapshot (as of 04:30GMT)
Nikkei225 -0.4%

S&P/ASX -0.1%

Kospi -0.2%

Taiwan's Taiex -0.1%

Singapore Straits Times +0.3%

Shanghai Composite -0.2%

Hang Seng -0.4%

September S&P unchanged

August gold -0.3% at $1,574/oz

August Crude oil +0.8% at $84.54/brl

Overview/Top Headlines
Markets were weaker for the session with some flirting into positive territory in Singapore, Taiwan and Australia. Japan's 10-yr JGB yield fell to a June 2003 low at 0.785%. Australia May home loans fell for the first time in 3 months, investment lending was up m/m. AUD/USD gained around 0.2% to $1.0207. Australia Treasurer Swan was visiting in China, is looking to secure a AUD/CNY exchange agreement with their largest trading partner. EUR/JPY tested ¥97.10 (nearly a 1-month low) ahead of Bank of Japan rate decision tomorrow. USD/JPY fell 0.1% to USD/JPY fell 0.1% to ¥79.35.

After the US close Fitch affirmed the US's AAA sovereign rating, but fears of a global slowdown weighed on the greenback. Tension increased between Japan and China as 3 China patrol ships entered Japanese waters near disputed Senkaku islands.

RBA Deputy Governor Lowe affirmed that the EU crisis is having a significant impact on the Aussie financial system; mortgage rate to cash rate spread is near 270 points. In the Q&A Lowe said very low chance of approaching zero cash rate in Australia but cannot completely rule it out because of EU crisis. Former BHP Chairman Argus noted that the federal budget's projected AUD 1.5B surplus could be wiped out "twice over" in the current FY if the terms of trade drop by 5%.

Markets remain on the lookout for fresh China data including new yuan loans, foreign reserves and money supply.

Speakers/Geopolitical/In The Press
(CN) China Index Academy: 34 of 40 cities saw a y/y increase in home sales revenue in July 2nd-8th period. - China Daily

(KS) South Korea Deputy Trade Minister Lee: In no hurry to join ASEAN-China free trade pact.

(AU) Australia Treasurer Swan: In support of China's move towards freely traded currency.

Equities
BHP: (AU) Australia Mineral and Resources Minister Koutsantonis: South Australia will produce enough uranium to fuel a third of the world's nuclear power plants if the Olympic Dam expansion goes ahead. - Australian press

NAB.AU: (UK) To reduce presence in the UK by 730 jobs. - financial press

023530.KR: Lotte Supermarket to open its first supermarket branch in Beijing within a year. - Korean press

2600.HK: Chalco, Minmetals and Baotao Steel Rare-Earth are all involved in rare earth reserve project in China. - Chinese press

US Equities
JPM: "London Whale" loss to amount to about $5.0B; future losses on trading projected to stay below $1.0B. - financial press

GG: Reports Q2 Gold Production 578.6K oz, +10% q/q; Lowers FY12 production guidance to 2.35-2.45M from 2.6M oz; -3.0% after hours.

AAPL: BGR blog discusses BMO note this morning that suggested Q3 could be challenging for Apple; -0.3% after hours.