BoJ SOP revealed little on Oct thinking

Asia market update: BOJ SOP revealed little on Oct thinking; JGB curve steepens to begin Q4; Iran received US feedback on ceasefire proposal; MU margins in focus; Mixed APAC PMIs and JP Tankan data.

General trend and developments

-BOJ confronted with mixed Tankan pre-Oct rate decision (**Note: The BoJ has raised its key rate six times under the current tightening cycle by a total of 125bps.): BOJ’s Sept Summary of Opinions suggested the central bank could be cautious about whether to raise rates back-to-back when it next meets in Oct. This was consistent with the 2 dovish dissenters at the Sept decision. Oct rate hike expectations had already declined to about 21% ahead of the BOJ release. Fed rate hike expectations have also sharply declined after the NY’s Fed Williams recently expressed caution regarding back-to-back tightening moves, possibly leaving less work for the BOJ.

-The BOJ’s Q3 Tankan Survey, incidentally, painted at mixed picture as the large manufacturing and CAPEX indices disappointed. However, the BoJ noted that big manufacturers’ sentiment improved for a sixth consecutive quarter, recording its highest level since March 2018. Current economic and price developments do not appear to have substantially accelerated compared to before, and in this context, it is not appropriate for the Bank to raise the policy interest rate at this time, according to one of the two dissenters at the Sept meeting.

-Amid today’s macro releases out of Japan, USD/JPY and the US Dollar Index have gained to start Q4. Focal points have included rate differentials, higher UST yields and the generally better than expected US data seen ahead of Friday’s nonfarm payrolls report. The US labor market looks ‘pretty good’, according to the Fed’s Kashkari [formerly of PIMCO].

-Global PMI Day: During the Global Asia September Manufacturing PMI release, Japan confirmed its 9th month of expansion, citing second-fastest employment rise since April 2018, selling prices recorded at one of its sharpest rates recorded since late-2022 rounding off the best quarterly performance since Q1 2014. South Korea, Taiwan, Indonesia, Taiwan, and Thailand all expanded with readings above >50. Malaysia and Philippines contracted with readings below <50.

-Aussie Aug Trade Surplus collapsed on higher imports. The data was driven by factors including higher imports of AI-related ADP equipment. Interestingly, Australia is also major in terms of diesel imports.

-Are chipmaker margins peaking? Micron beat on all metrics, except Q1 gross margin guidance, which implies the possibility for a q/q decline. Nvidia’s CFO had previously noted his company was resetting expectations on margins due to extreme pricing conditions for memory and higher component costs [post earnings comments from Aug 26th]. TSMC also guided its Q3 operating margins lower q/q [Jul 16th]. Samsung Electronics generally issues its Q3 prelim figures in early Oct.

-Japanese chip-equipment cos. gain on Micron’s raised FY27 CAPEX guidance. ASML’s shares should, also, be in focus for the European session.

-Australian rare earths-related M&A: Lynas announced a A$968M all-stock deal for Meteoric Resources Limited. The transaction brings Meteoric’s flagship Caldeira Rare Earth Project (“Caldeira”) and Brazilian expertise together with Lynas’ existing industry leading operations [Lynas statement].

-Berkshire continues to raise its stake in homebuilder Lennar, despite higher long-term interest rates.

-US equity FUTs +0.6% to +1.1% 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: AU Sept Preliminary CPI & Core CPI, 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 -0.7% at 8,728.

-(AU) Australia Aug Trade Balance (A$): 0.5B v 1.9Be.

-(AU) Australian Financial Stability Review: Households, businesses well placed to whether slower economy, falling house prices - Statement.

-(AU) Australia Aug Job Vacancies Q/Q: -0.9% v -2.1% prior.

-(AU) Australia Sept Final Manufacturing PMI: 49.6 v 49.3 prelim (confirms 1st month of contraction).

-(NZ) New Zealand Aug Building Permits M/M: +5.6% v -4.5% prior.

-(NZ) NZD/USD NZD declines to the weakest level since November 2025.

-(NZ) New Zealand sells NZ$450M vs. NZ$450M indicated in 2031 and 2035 bonds.

China/Hong Kong

-(CN) Shanghai Composite Index closed for the National Day of the People's Republic of China holiday; (HK) Hang Seng Index closed for the National Day of the People's Republic of China holiday.

-(CN) China Finance Minister: To implement proactive fiscal policy; To support achievement of full-year economic goals.

-(CN) 601857.CN Chinese refiner PetroChina suspends October fuel exports to regions beyond Hong Kong, Macau - US financial press [citing four people familiar with the matter].

-(CN) LI Reports Sept Vehicle Deliveries: 31.8K v 37.7K m/m; Cumulative deliveries 1,833,651.

-(CN) NIO Reports Sept Vehicle Deliveries: 37.4K v 35.8K y/y; Q3 deliveries: 109.2K units, +25.4% y/y.

-(HK) Macau Sept Casino Rev (MOP): 18.1B, -1.2% y/y.

-(HK) 1810.HKDelivered >40,000 cars in September v >30.0K prior.

Japan

-(JP) Nikkei 225 Index opens +0.6% at 67,107.

-(JP) Japan Q3 Tankan large Manufacturing index: 24.0 V 25.2E; large Manufacturing outlook: 21.0 V 22.4E.

-(JP) BoJ Summary of Opinions [September Decision]: Reiterates important to stabilize price trend around 2%, phase of policy conduct has shifted; Communication with market participants needs to be conducted effectively, in order to prevent one-sided monetary policy expectations from being factored into the market.

-(JP) Japan Econ Minister Kiuchi: Closely communicating with BOJ at various levels, don't think there is a big gap on economy, price views [EU Market Close].

-(JP) Japan Sept Final Manufacturing PMI: 54.1 v 54.1 prelim (confirms 9th month of expansion).

-(JP) Japan releases weekly flows data [period ended Sept 25th]: Foreign buying of Japan equities: -¥362.0B v -¥1.52T prior; Japan buying of foreign bonds: -¥684.5B v ¥1.08T prior.

-(JP) Follow up: Japan Chief Cabinet Secretary Kihara: BoJ Tankan business sentiment in line with government view - Tokyo, Japan.

-(JP) Japan business leaders arranging China visit for March, 2027 - Kyodo.

Korea

-(KR) Kospi Index opens -0.3% at 6,814.

-(KR) South Korea Sept Trade Balance: $49.9B v $38.9Be.

-(KR) South Korea President Lee: Alaska LNG project work to begin only if commercial viability confirmed and in compliance with South Korean legal procedures.

-(KR) South Korea Sept Manufacturing PMI: 53.9 v 52.3 prior (10th month of expansion).

-(KR) South Korea Industry Min: US has indicated tariff rate on Korea will be maintained at 15% level.

-(KR) South Korea Finance Minister: Will closely monitor financial markets, take pre-emptive action if needed.

-(KR) South Korea President Lee: South Korea to upgrade missile defense systems including AI-based command networks and laser interceptors; To keep pursuing measures to reduce military tensions.

-(KR) South Korea to allow anonymous analyst reports on sell calls.

Other Asia

-(IN) India Finance Ministry Releases Monthly Economic Report: Geopolitical tensions, elevated crude oil prices could add to imported inflation pressures.

-(IN) India Sept Final PMI Manufacturing: 55.1 v 55.7 prelim (confirms 63rd month of expansion).

-(IN) India Trade Minister Goyal: Discussed with USTR Greer towards early conclusion of interim agreement under India-US bilateral trade deal [comments on sidelines of G20 meeting].

-(ID) Indonesia Sept CPI M/M: 0.3% v 0.3%e; Y/Y: 3.3% v 3.3%e.

-(ID) Indonesia Aug Trade Balance: $3.6B v $0.6Be.

-(SG) Singapore Q3 Preliminary URA Private Home Prices Q/Q: 1.4% v 0.5% prior.

-(SG) Singapore MAS to release January policy statement "no later" than January 29th, 2027 - US financial press.

-(TH) Thailand Sept Manufacturing PMI: 54.3 v 53.8 prior (17th month of expansion).

-(VN) Vietnam Sept Manufacturing PMI: 51.9 v 53.3 prior (15th month of expansion).

-(TW) Taiwan Sept Manufacturing PMI: 56.7 v 54.7 prior (10th month of expansion).

-(ID) Indonesia Sept Manufacturing PMI: 52.4 v 49.8 prior (moves back into expansion after 1 month of contraction).

-(MY) Malaysia Sept Manufacturing PMI: 49.9 v 50.2 prior (moves into contraction after 3 months of expansion).

-(PH) Philippines Sept Manufacturing PMI: 49.6 v 54.9 prior (moves into contraction after 4 month of expansion).

North America

-(US) Pres. Trump: Former Fed Chair Powell should be forced to resign from the Fed board; If he doesn't resign he should be sued by the US govt for either corruption or incompetence [US Market Close].

-(US) Fed's Kashkari (voter): Inflation is still too high, is around 3% rate, new data didn't change that story - Participates in fireside chat before the Council on Foreign Relations C. Peter McColough Series on International Economics event, NYC.

-(US) Q2 Final GDP price index: 6.1% v 6.4% prelim; core PCE price index: 3.3% v 3.6% prelim [US Market Close].

-(US) AUG PCE PRICE INDEX M/M: 0.3% V 0.4%E; Y/Y: 3.4% V 3.7%E [US Market Close].

-(US) AUG PERSONAL INCOME: 0.2% V 0.5%E; PERSONAL SPENDING: 0.9% V 0.9%E [US Market Close].

-(US) AUG CHICAGO PURCHASE MANAGERS INDEX (PMI): 58.8 V 51.0E [US Market Close].

-(US) DOE CRUDE: +0.9M V -1ME; GASOLINE: -1.7M V -0.5ME; DISTILLATE: -2.3M V 0ME [US Market Close].

-(US) Atlanta Fed GDP Now: Cuts Q3 GDP estimate from 5.0% to 3.7% [US Market Close].

-(US) USTR Greer: 10 more trade deals are on the way; In fairly frequent contact with Canada counterpart, if they want a deal the door is always open - Fox Business interview [US Market Close].

-(US) Federal Reserve Inspector General Report: Finds no criminal or administrative misconduct regarding Fed building renovation cost overruns [US Market Close].

-(US) Trump: Studying our response to Iran right now; Still thinking about a diesel export ban; China is going 'full blast' on AI.

-(US) Interior Sec Burgum: Europe refined fuel stockpile release could lower prices; Europe voluntary release of diesel stockpile would help.

-(US) Largest US grid reportedly suspends plan for new data center power auction - press [US Market Close].

-(US) President Trump: [Confirms US-South Korea Trade Agreement] In New York, I met with Lee Jae Myung, the President of the Republic of Korea, and we agreed to launch 200 Billion Dollars of new Investments in AMERICA! We will build American Energy and American Power across the United States under my 350 BILLION DOLLAR Korea Strategic Trade and Investment Deal that I reached with President Myung last year - post on Truth Social.

-(US) Fed's Goolsbee (non-voter in 2026; voter in 2027): Record divergence between vibes of consumer sentiment and hard data of spending.

-(US) White House Science & Tech Advisor Sacks: Need AI-powered cyber defense to respond to AI attacks ; AI companies agreed to new internal controls and audits - Fox Business.

-(US) US Treasury Sec Bessent reportedly settled 'tax issue' with federal government this summer - WSJ.

-(US) Trump: Notes South Korea energy investment deal announced today was part of $350B investment pledge last year that got auto tariffs reduced from 25% to 15%.

-(US) Commerce Sec Lutnick: Southeast Asia to lean on US for gas after Alaska pipeline project - comments from White House.

-(US) US Energy Sec Wright: Will hear announcements from Europe about new diesel supplies soon - White House Q&A with Trump.

-(US) Elon Musk along with Anduril Industries founder Luckey and former House Speaker Gingrich to lead Pentagon study of future warfare - Axios citing Def Sec Hegseth comments earlier today.

-(US) FHFA Dir Pulte: Spoke with Fico CEO Will Lansing tonight - post on X.

-(US) MU Reports Q4 $33.42 v $31.61e, Rev $54.2B v $51.0Be; MU Raises FY27 capex implying >$50B v >$40B prior; Sees Q1 capex $11.5B; Industry demand has strengthened since last earnings call; Expect server unit growth in the high-teens percentage range - prepared remarks [US Market Close]

-(US) SNPS Signs multi-year, $1B+ silicon IP agreement with Amazon [US Market Close].

-(US) CEG Signs 20-year agreement with Amazon for 690 MW of Calvert Cliffs power; $3B+ investment [US Market Close].

-(US) OPENAI.IPO Statement: Aware of reports of OpenAI models attempting to access publicly available information from Canadian government websites; Reviewing these findings and have provided an initial briefing to Canadian officials conducting the government's review.

-(US) BA Pres. Trump: Congratulations to the GREAT Boeing Company for producing a plane, the 737 Max, that was able to wit... - post on Truth Social

-(US) ORCL Statement on Southern New Mexico Floods: No critical infrastructure was damaged; Project Jupiter remains on schedule after flooding reaches campus - update.

-(PE) Peru Government seeks $2.3B in extra funding - Canal N.

-(CA) Researchers: AI agents tried to hack a Canadian government website - The Washington Post.

Europe

-(RU) Russian Foreign Ministry Spokeswoman: Weapons factories in Europe that produce arms for Ukraine are legitimate military targets for Russia [EU Market Close].

-(EU) ECB’s Schnabel (Germany): There is no one-to-one link between energy prices and rates; Key is how energy feeds into underlying inflation [EU Market Close].

-(EU) ECB Chief Lagarde: France's debt situation is serious at 120% of GDP and without a path to lowering - La Croix newspaper interview [EU Market Close].

-(UK) UK PM Burnham: Cannot have unfunded plans in budget; Looking at all things including fuel duty ahead of budget - interview comments [EU Market Close].

-(UK) BOE Gov Bailey: AI boom could trigger market shocks; AI asset prices could see correction; AI investment brings 'substantial risks' - BBC Interview.

-(IE) Ireland Sept Manufacturing PMI: 55.5 v 55.4 prior (21st month of expansion).

-(NL) Netherlands Sept Manufacturing PMI: 55.6 v 53.8 prior (16th month of expansion).

Middle East

-(SA) OPEC+ Oil producers set to keep output targets steady at Sunday meeting - press [EU Market Close].

-(IR) President Trump: You will see things happening very soon on Iran; We have "almost total control" of the Strait of Hormuz; Oil flowing out of the Strait has been at historic levels in the past 3 days [US Market Close].

-(IR) Iran Foreign Min Araqchi said to have received US feedback to 7-day proposal which he will discuss in Iran on Wed, Sept 30th; Main disagreements are on sequencing, not on elements - press [EU Market Close].

-(IL) Reportedly Israel PM Netanyahu is holding consultations over flydubai flight from the UAE to Israel that was diverted from its path; Reports on 'violent incident' between pilots, the aircraft landed safely in Saudi Arabia - press [EU Market Close].

-(IL) Israel PM Netanyahu: Flydubai attacking pilot is now being investigated; Israel will be participating in probe; Too early to say when asked about motivation - Fox News.

Levels as of 01:20 ET

Nikkei 225 +3.3%; ASX 200 -1.7%; Hang Seng +0.4%; Shanghai Composite +0.3%; Kospi +1.7%.

Equity S&P500 Futures +0.6%; Nasdaq100 +1.1%; DAX -0.4%; FTSE100 -0.4%.

EUR 1.1337-1.1315; JPY 158.35-157.32; AUD 0.6956-0.6940; NZD 0.5652-0.5618.

Gold +0.7% at $4,184/oz; BTC +1.0% at $84,273; WTI Crude Oil -1.7% at $88.87/bbl; Copper +0.1% at $6.6243/lbs.