Japan household spending recovers with greater available employment

Asian Mid-session Update: Japan household spending recovers with greater available employment; TPP on track for completion

Economic Data

- (JP) JAPAN AUG OVERALL HOUSEHOLD SPENDING Y/Y: 2.9% V 0.3%E; 3-month high

- (JP) JAPAN SEPT MONETARY BASE Y/Y: 35.1% V 33.3% PRIOR; MONETARY BASE END OF PERIOD: ¥338.4T v ¥327.4T PRIOR

- (JP) JAPAN AUG JOBLESS RATE: 3.4% V 3.3%E; Job-To-Applicant Ratio: 1.23 v 1.21e; multi-year high

- (AU) AUSTRALIA AUG RETAIL SALES M/M: 0.4% V 0.4%E

- (AU) AUSTRALIA AUG HIA NEW HOME SALES M/M: +2.3% v -0.4% PRIOR

- (NZ) NEW ZEALAND SEPT ANZ COMMODITY PRICE M/M: +5.5% V -5.2% PRIOR; FIRST RISE IN 6 MONTHS

- (KR) SOUTH KOREA AUG CURRENT ACCOUNT BALANCE: $8.5B V $10.1B PRIOR

- (KR) SOUTH KOREA SEPT CPI M/M: -0.2% V +0.2%E; Y/Y: 0.6% V 0.8%E

Index Snapshot (as of 03:00 GMT)

- Nikkei225 flat, S&P/ASX -0.7%, Kospi +0.1%, Shanghai Composite closed, Hang Seng +2.4%, Dec S&P500 +0.1% at 1,919

Commodities/Fixed Income

- Dec gold flat at $1,112/oz, Nov crude oil +0.5% at $45.29/brl, Dec copper flat at $2.31/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 1.8 tonnes to 689.2 tonnes; 2nd straight increase and 2-month high

- SLV: iShares Silver Trust ETF daily holdings rise to 9,907 tonnes from 9,871 tonnes

- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr, ¥400B in 5-10yr JGBs, and ¥1.0T in T-bills

- (AU) Australia MoF (AOFM) sells A$900M in 2.75% 2019 Bonds; avg yield: 1.938%; bid-to-cover: 4.08x

- (US) Weekly Fed Balance Sheet Total Assets for week ending Sept 30th: $4.48T v $4.50T prior; M1 y/y change: 7.4% v 7.4% prior; M2 y/y change: 6.0% v 6.0% prior

Market Focal Points/FX

- Equity and fixed income market volatility is fairly contained, with China remaining closed for holiday and a key US non-farm employment report looming for early US session on Friday. Hang Seng is a notable outperformer regionally in a catch-up rally after returning from a holiday break. S&P futures were up marginally early on in Asia, but have since fallen into modest negative territory below 1,915 in afternoon hours. In USD majors, USD/JPY is in about a 30pip range below ¥120, AUD/USD in a 40pip range below $0.7050, while NZD/USD traded about 15pips on both sides of $0.64. Among notable emerging FX, SGD hit new 6-year lows, with USD/SGD rising some 70pips from the lows above S$1.4360.

- Economic data out of Japan continues to make the case for BOJ standing pat in a pair of high-profile policy decisions this October. Household spending - primary driver of Japan's economy - grew at a near 3% pace, much higher than expected. Unemployment rate rose marginally, but Job-to-applicant ratio rose to its highest level in 23 years, suggesting a very tight labor market and the likelihood of higher wage pressure down the road. Analysts with Barclays and UBS are less convinced however, with both houses noting there was some chance of further BOJ policy easing. Separately, BOJ Tankan survey on inflation cut projections for 1-year CPI to 1.2% from 1.4% and 3-year timeframe to 1.4% from 1.5% - still well below the 2% BOJ target estimated to be achieved by H1 of FY16. Speakers in Japan offered few remarks regarding today's data, but cheered signs of progress in Trans Pacific Partnership negotiations. Econ Min Amari said ministers have scheduled a news conference for this Saturday after today's reports that Japan has finally agreed to cut tariffs on beef and pork, leaving only rice and dairy products as sticking points.

- Australia retail sales were right in line with consensus, erasing the first loss in over a year reported in the prior month. Restaurant and food service component saw the most pronounced advance.

- After yesterday's better than expected China PMI data, ANZ economists estimated China Q3 GDP growth slowing to as low as 6.4% and the overall 2015 GDP coming in at 6.8% - below the soft 7% official target. Offshore Yuan weakened by about a cent to 6.3750 after, just as PBoC Dep Gov Yi Gang called for protective measures such as Tobin tax to defer FX speculation.

Equities

Afterhours US equities/ADRs:

- ATEC: Launches Alphatec Neocore(TM) Osteoconductive Matrix in the U.S.; +25.0% afterhours

- CAMP: Reports Q2 $0.27 v $0.25e, R$69.8M v $68.0Me; +11.2% afterhours

- MU: Reports Q4 $0.37 v $0.37e, R$3.60B v $3.65Be; Guides Q1 $0.20-0.26 v $0.48e, Rev $3.45-3.70B v $3.93Be; +7.0% afterhours

- S: Said to be planning to cut $2.0-2.5B in costs over the next 6 months; +1.7% afterhours

- PRGS: Reports Q3 $0.39 v $0.38e, R$100.7M v $103Me; approves $100M buyback program (7.8% of market cap); -15.8% afterhours

Notable by sector:

- Consumer Discretionary: Wynn Macau 1128.hk +9.9%, Galaxy Entertainment +8.9% (Aug Macau gaming revenue in line w/ ests)

- Technology Toshiba 6502.JP -0.1% (job cuts speculation)

- Industrials: Toyota +1.0% (US sales), Mazda 7261.jp +1.5% (US sales), Mitsubishi 7211.jp +4.1% (US sales), Tsugami 6101.jp +4.5% (share buyback report)