Asian officials address long-rate volatility as Tokyo CPI jumps

Asia Market Update: Asian officials address long-rate volatility as Tokyo CPI jumps; Nike’s CN issues persist; Iran remains uncertain pre-weekend; US jobs due later along with EU diesel meeting.

General trend and developments

-JGB curve extends steepening amid volatility in 30-year yields: The hotter Sept Tokyo CPI appears unhelpful for long-rates and possibly the credibility of authorities in Japan. Thus, Japanese officials have stepped up their communication with markets in recent days. Japanese Fin Min Katayama has again affirmed the ‘DOGE’ cost cutting efforts, while PM Takaichi repeated pledges to control issuance. Economy Minister Kiuchi continued to affirm the BOJ’s independence. It may be necessary for the BoJ to take into account its estimates on the neutral rate and the cumulative impact of the prior tightening moves, said a Japanese Cabinet member at the Sept Bank of Japan rate decision. The US Treasury finally accepted the maximum amount of $6.0B at the earlier debt buyback operation, but this came as sell offers jumped to >$46.0B. Officials in Asia have continued to address the rise in long rates.

-2-year JGB yields have tracked the recent decline in USTs. During the NY session, yields finally seemed to find a level where buyers were willing to step up, resulting in a noticeable mid-day reversal in the US Treasury market. 2-year UST yields led the way lower after the Fed's Jefferson echoed Williams by suggesting it makes sense for the Fed to hold rates at the FOMC meeting later this month. Little initial market impact has been seen following the hawkish Fed Logan comments which came during early Asia.

-Tokyo CPI data released today showed stronger-than-expected inflation readings, with September figures rising +2.7% year-on-year (vs. 2.5% expected), core CPI (ex-fresh food) also advanced +2.7% (vs. 2.4% expected), and core-core CPI (ex-fresh food and energy) accelerated to +3.0% (vs. 2.5% expected)—its fastest pace since August 2025. This follows from the BoJ’s September 17th decision to raise the policy target rate by +25 basis points to 1.25%, as expected. As the BoJ’s primary inflation gauge, national core CPI had fallen below the 2% target in January for the first time in 47 months and remained below for nine months; today’s Tokyo data now points to it moving back above target.

-Oil prices have remained a focal point for bond traders, especially approaching another weekend with the lingering Iran-related uncertainty. During NY trading, crude prices rose late in the session following a WSJ headline the Trump Administration was sending troops and a third aircraft carrier group to the Middle East. Axios added the US also sent more patriot missiles to energy sites in Saudi Arabia and Qatar.

-Meanwhile, diesel is still on the radar, especially given Thursday’s weakness in French bonds and the EUR, as the Trump administration continues to apply pressure on Europe. Trump confirmed the US might ‘ask’ Europe to release its diesel stockpiles, according to remarks made post NY close. As such, the EU energy union taskforce will meet on Friday to discuss possible diesel stock releases.

-South Korea’s September CPI data released today came in broadly in line with expectations, rising +0.3% month-on-month (vs. 0.4% expected) and +2.9% year-on-year (vs. 2.9% expected), while core CPI (ex-food/energy) held steady at +2.8% year-on-year (vs. 2.8% expected). This keeps inflation well above the Bank of Korea’s 2.0% target. (**Note: On Aug 26th Bank of Korea (BOK) raised the 7-Day Repo Rate by 25bps to 3.00% (as expected) for its 2nd straight rate hike under the current tightening cycle. The next rate decision is scheduled for October 22nd, 2026.).

-Looking ahead for the rest of this week (Asian-weighted focus, EST/EDT), the data release is the US September Unemployment Rate & Non-Farm Payrolls & Average Hourly Earnings & Participation Rate on Friday 2nd October.

-US equity FUTs +0.3% to +0.5% during Asia trading.

Looking ahead (Asian-weighted focus, using EST/EDT time-zone)

-Mon Sep 28th: IN Aug Industrial Production, MX Aug Trade Balance, (Mon night, AU RBA Interest Rate Decision & Statement, JP July Leading Index & Coincident Indicator).

-Tue Sep 29th: EU Sept Economic Confidence, CA July GDP, US Sept CB Consumer Confidence, US Aug JOLTS Job Openings, (Tue night, KR Aug Industrial Production & Retail Sales, JP Aug Industrial Production & Retail Sales, AU Aug Building Approvals, CN Sept Government & RatingDog Mnfg/Svcs/Composite PMI, JP Aug Housing Starts & Construction Orders, UK Q2 GDP).

-Wed Sep 30th: IN Q4 Trade Balance, US Q2 GDP, US Aug PCE & Aug Core PCE, RU Aug GDP & Retail Sales & Unemployment Rate, CO BanRep Sept Interest Rate Decision, (Wed night, Global Asia Sept S&P/HCOB Mnfg PMIs Day, JP BoJ Sept Summary of Opinions, JP Q3 Tankan Index, KR Sept Prelim Trade Balance, AU Aug Trade Balance & RBA Financial Stability Review, ID Aug Trade Balance).

-Thu Oct 1st: Global Europe Sept S&P/HCOB Mnfg PMIs Day, EU Aug Unemployment Rate, US Sept S&P/ISM Mnfg PMI, (Thu night, KR Sept CPI, JP Sept Tokyo CPI & Core CPI, JP Aug Unemployment Rate, HK Aug Retail Sales).

-Fri Oct 2nd: US Sept Unemployment Rate & Non-Farm Payrolls & Average Hourly Earnings & Participation Rate, SG Sept S&P Mnfg PMI, (Fri night, VN Q3 GDP, Sept CPI & Trade Balance & Retail Sales & Industrial Production).

Holidays in Asia this week

-Mon Sep 28th: Taiwan.

-Thu Oct 1st: China, Hong Kong.

-Fri Oct 2nd: China, India.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens +0.5% at 8,659.

-(AU) Australia reports FYTD underlying cash deficit: A$8B.

-(AU) Australia Government: resources and energy export earnings set to remain high - update.

-(AU) [Australian co.] Firmus to have A$43.7B market cap after listing - Terms.

-(AU) Australia sells A$1.2B v A$1.2B indicated in 4.50% Apr 2033 Bonds: Avg Yield: 5.1080% v 4.662% prior, bid-to-cover: 3.00x v 4.29x prior.

-(AU) YAL.AU Australia Mining and Energy Union: Premier coal workers reject deal and demand fair share.

-(NZ) New Zealand Sept ANZ Consumer Confidence Index: 97.6 v 98.0 prior.

-(NZ) New Zealand National Party would require data centers to provide their own power - Local press.

China/Hong Kong

-(CN) Shanghai Composite Index closed for the National Day of the People's Republic of China holiday; (HK) Hang Seng Index opens -2.1% at 24,100.

-(CN) China and US could advance AI risk standards in the scheduled Nov talks - CCTV.

-(CN) China-backed financing co. said to have funded the purchase of chips from Nvidia - US financial press [update].

-(CN) A California man Greg Liu has been charged by the US with illegally shipping Nvidia chips to China – Press [update].

-(CN) Three Chinese Aerospace IPOs put on hold for financial data updates - US financial press.

Japan

-(JP) Nikkei 225 Index opens -0.9% at 68,296.

-(JP) JAPAN SEPT TOKYO CPI Y/Y: 2.7% V 2.5%E; CPI (EX-FRESH FOOD) Y/Y: 2.7% V 2.4%E.

-(JP) Japan Aug Jobless Rate: 2.5% v 2.4%e.

-(JP) Japan Sept Monetary Base End of Period: ¥535.42T v ¥543.8T prior; Y/Y: -15.2% v -15.7% prior.

-(JP) Japan PM Takaichi: Will appropriately control total annual issuance of government bonds, taking into account both initial and supplementary budgets [EU market close].

-(JP) Japan PM Takaichi: Won't allow negative impact from fiscal policy [inline from previous comments] - NTV.

-(JP) Japan Fin Min Katayama: Will beef up efforts to promote Japanese version of DOGE review of subsidies and funds; There are about 200 existing funds, worth about ¥7.0T.

-(JP) Japan Defense Minister declines to elaborate on remarks at BoJ meeting.

-(JP) Japan Econ Minister Kiuchi: Won't comment on monetary policy which falls under jurisdiction of BoJ.

-(JP) Japan sells ¥3.50T vs. ¥3.50T indicated in 3-Month Bills; Avg Yield: 1.2793% v 1.2555% prior; bid-to-cover: 4.34x v 3.31x prior.

-(JP) 6594.JP JICPA: Auditor opinion being withheld is regrettable situation.

Korea

-(KR) Kospi Index opens -0.5% at 6,938.

-(KR) SOUTH KOREA SEPT CPI M/M: 0.3% V 0.4%E; Y/Y: 2.9% V 2.9%E.

-(KR) Bank of Korea (BOK): Sees Oct CPI around 3.0%; cites rising prices for core goods.

-(KR) South Korea Finance Ministry: Reiterates South Korea may cut treasury bond issuance further if needed - Statement after F4 meeting.

-(KR) South Korea President Lee: Expresses grave regret over Ukraine's response to dispute over disclosure of North Korean POW repatriation talks - post on X.

-(KR) Bank of Korea (BOK) sells 3-month Monetary Stabilization Bonds (MSBs): Yield 3.170% v 3.140% prior.

-(KR) KB Kookmin Bank hit by customer data leak; 100 affected - Yonhap.

Other Asia

-(ID) Indonesia Finance Minister: Bank Indonesia (BI) doing what it can for Rupiah; Indonesia still has room for global bond sale this year; Indonesia Finance Ministry won't take in stock exchange.

-(ID) GIAA.ID Indonesia Bourse puts Garuda in special monitoring board.

-(TW) US sees China invasion of Taiwan as being NOT likely - financial press [update].

-(VN) Vietnam Official: Vietnam's largest refinery to shut for around 50 days from August next year for regular maintenance.

North America

-(US) Pres Trump: I do not think Fed should hike rates; Iran economy is gone. On “annihilate Iran”: “Yeah, I would do that. It’s possible" - Time Magazine interview [US Market Close].

-(US) SEPT S&P FINAL GLOBAL MANUFACTURING PMI: 55.9 V 57.0E (confirms highest since May 2022 and 14th straight expansion) [US Market Close].

-(US) SEPT ISM MANUFACTURING: 54.5 V 55.0E; Prices Paid: 77.9 v 73.0e [US Market Close].

-(US) INITIAL JOBLESS CLAIMS: 197K V 200KE; CONTINUING CLAIMS: 1.701M V 1.725ME [US Market Close].

-(US) Fed's Jefferson (voter): Fed may need "more time" to assess the data; Not seeing spill over from tariffs or energy; Inflation risks tilted to the upside [US Market Close].

-(US) Fed's Kashkari (voter in 2026; non-voter in 2027): Big gap between 2-year yields and short rates; Don't know how high rates need to go; Clearly not a wage-price spiral today - TV interview [US Market Close].

-(US) Fed’s Logan (voter, hawk): Policy stance has been offsides, FOMC should raise rates; Higher term premiums might help slow economy; How high the policy rate needs to be to get inflation headed back to 2% is uncertain - Dallas Fed Event [Prepared Remarks], TX.

-(US) AMZN *Seeking to sell $8.0B worth of Nvidia chips to external investors through a new vehicle aimed at strengthening its balance sheet - FT.

-(US) WEEKLY EIA NATURAL GAS INVENTORIES: +64 BCF VS. +63 BCF TO +65 BCF INDICATED RANGE [US Market Close].

-(US) USTR Greer: Europe has to act on issue of excess capacity; Europe should release some diesel inventories [US Market Close].

-(US) US Commerce Dept slows export licensing for airplane parts bound for China; Officials weigh draft rule that would make it easier to restrict landing gear and other aircraft parts - press [US Market Close].

-(US) Treasury liquidity buyback targets coupons maturing 2037-2046; Receives $46.4B of offers for buyback, accepts $6B (accepts full $6B after falling short of maximum the prior 2 week) [US Market Close].

-(US) Fed's Schmid (hawk; non-voter in 2026): We have work to do on inflation [US Market Close].

-(US) Fed's Collins (non-voter): Economic growth near trend or above; Won't get ahead of the next meeting [US Market Close].

-(US) President Trump urged China President Xi to hold talks with Japan PM Takaichi - Yomiuri.

-(US) President Trump: Pretend I'm running in this election; If we don't win, they'll end up impeaching me - The President delivers Remarks [Pre-Credentialed Media], Choctaw Event Center, Durant, OK.

-(US) IMF executive board concludes the second and third reviews under the extended fund facility for El Salvador: IMF approves $139M disbursement for El Salvado after waiver for bitcoin breach.

-(US) Flexport Global Logistics Update: Container rates at Ocean TPEB highest level since mid-2022, container rates at ocean FEWB have eased for ~12 straight weeks, container rates at ocean TAWB westbound spot rate have "roughly doubled".

-(US) President Trump: To the Great People of Oklahoma, stay tuned — I’ll be there soon! - post on Truth Social..

-(US) Trump: We need [Texas Senate candidate] Paxton so badly, and that's why I'm here - Texas rally.

-(US) GM Reports Q3 US deliveries 671K, -5.5% y/y; reflected the much smaller EV market and discontinued vehicles.

-(US) ANTHROPIC.IPO Reportedly targeting IPO ahead of the Thanksgiving Holiday, as early as week of Nov 9th - press.

-(US) NKE Reports Q1 $0.48 v $0.43e, Rev $11.2B v $11.4Be; - Greater China Rev $1.18B, -22% y/y; Diluted earnings per share was $0.72 for the fourth quarter, including a $0.52 benefit related to the expected recovery of the IEEPA tariffs.

-(US) SPCX NASA: First moon base mission to launch in December on SpaceX rocket.

-(CA) Canada Sept Manufacturing PMI: 51.5 v 53.0 prior (6th straight expansion; Lowest since Mar 2026) [US Market Close].

-(CA) Canada PM Carney fast tracks approval of new West Coast pipeline, designating it a 'project of national interest' [US Market Close].

-(MX) Mexico Econ Min Ebrard: Mexico to send trade mission to the EU next Spring along with a second trade mission to Canada.

-(BR) Brazil Sept Manufacturing PMI: 44.8 v 46.3 prior (3rd straight contraction) [US Market Close].

-(BR) National Election 1st Round Poll: [Current] President Lula at 42%, Senator Flávio Bolsonaro at 38% - Datafolha.

Europe

-(RU) Russia President Putin: We have to think how to avoid catastrophic scenarios; World is at a turning point; Russia is not threatening anyone [EU Market Close].

-(EU) Trade Commissioner Sefcovic: Discussed high diesel prices with Greer: Expressed EU's desire for coordinated approach [EU Market Close].

-(FR) France Fin Min Lescure presents 2027 budget: Sees €54B effort, 5% deficit goal; Target of reducing the budget deficit to 3% of GDP by 2029 remains possible [EU Market Close].

-(EU) EU said to be in contact with member states on emergency diesel stocks - press [EU Market Close].

-(UK) BOE’s Mann: Current stance is not sufficiently tight; Can't rely on risk premia to do the work of policy; Need to follow through with rises at some point [EU Market Close].

-(DE) ECB's Nagel (Germany): On rise in bond yields, all ECB instruments are for delivering price stability not for certain yield levels [EU Market Close].

-(DE) German Econ Ministry on diesel reserves: At this time, no new requirements from IEA; We do not speculate about possible future events [EU Market Close].

-(FR) France PM Lecornu reportedly wants €43B in new savings in the budget - French [EU Market Close].

-(IE) Ireland Sept Preliminary CPI EU Harmonized M/M: 0.2% v 0.6% prior; Y/Y: 3.9% v 3.4% prior [EU Market Close].

-(RU) Russia Local Governor: Ukrainian drones attacked industrial facilities in Russia's Volgograd.

-(UK) PM Burnham said to be preparing the "old" elections during May 2027 - London Telegraph [update].

-(UK) Hong Kong Commerce Secretary Chan: ‘Money is money’: US, UK firms still coming to Hong Kong - SCMP.

-(UK) UK Research & Innovation: Faster dementia diagnosis efforts backed by up to £80M funding.

-(NL) Netherlands Sept Preliminary CPI Y/Y: 3.4% v 3.4%e.

Middle East

-(IR) Reportedly US to send up to 10K more troops and a 3rd aircraft carrier group to the Middle East - WSJ [US Market Close].

-(SA) US sent more patriots to Saudi Arabia, Qatari energy sites - Axios [citing two US officials].

-(SA) Saudi-led coalition: Intercepted, destroyed ballistic missile launched by Yemen's Houthis toward Khamis Mushait.

-(YE) Yemen Armed Forces Spokesperson: Air force carried out 20 strikes on Houthi targets across several areas of Taiz province over past three hours - post on X.

Levels as of 01:20 ET

Nikkei 225 -0.9%; ASX 200 +0.7%; Hang Seng -2.8%; Shanghai Composite +0.3%; Kospi +0.2%.

Equity S&P500 Futures +0.3%; Nasdaq100 +0.5%; DAX +0.3%; FTSE100 +0.4%.

EUR 1.1256-1.1231; JPY 158.22-157.76; AUD 0.6939-0.6913; NZD 0.5619-0.5586.

Gold +0.3% at $4,188/oz; BTC +2.4% at $86,357; WTI Crude Oil -0.5% at $92.39/bbl; Copper +0.7% at $6.5868/lbs.