Cautious session amid holidays and continued uncertainty

Asia Market Update: Cautious session amid holidays and continued uncertainty; WTI Crude FUTs drop on Iran’s proposal; Yen firms on Trump concerns ; Xi to depart from the US on Fri; China has yet to confirm the approx. 2-month trade truce extension with the US; RBA may hike rates on Tues.

General trend and developments

-As the Trump-Xi summit continues in Washington, D.C., no comprehensive new trade agreement was finalized during the Trump-Xi remarks scheduled at 19:55ET in the East Room of the White House. Despite [Fox News Interview] Treasury Secretary Scott Bessent’s previously announced 2-month extension vs. 6-month extension expected, of the existing Busan agreement to January 10th, 2027, and the exploration of the removal of tariffs on roughly $30 billion of non-sensitive goods in both directions, no confirmation has been made by either US-China party. Market attention now remains in further focus, as key topics include a two-way investment between US/China, the Iranian conflict, and AI, towards maintaining peace, prosperity, and managed competition between the two nations.

-JGB yields have continued to rise on Friday, tracking the global trend. In NY, the bond market stress was further exacerbated mid-afternoon when the US Treasury's 20-30-year buyback drew $10.5B in offers but accepted only $4.1B against the $6B maximum, falling well short of the maximum operation for 2nd week in a row. Further, the 7-year UST bond auction results appeared unhelpful, especially after the 5-year UST auction on Wed also saw weaker demand, despite the higher yield offered. For next week, quarter/month end flows and Japan MOF’s meeting with primary dealers [Sept 28th] could be focal points given the strains being seen in bond markets, globally.

-Over the Asia market session, Japanese Finance Minister Katayama stated that US President Trump expressed concerns about the weak yen during the sidelines of the UN summit. The weakening yen strengthened on the comments by -0.25% to 158.47000 following the remarks. Katayama then stated that Takaichi also expressed concerns by pointing out that the yen’s undervaluation is an issue, while noting that the BoJ’s latest rate hike was done “to achieve inflation target”. This indicates a concerning backdrop for the Japanese economy ahead of the October 29th–30th rate decision, as the BoJ navigates a tightening cycle that has seen it resume rate hikes, with the previous decision marking the sixth increase overall. Over 1,400 Japanese firms trade ex-dividend on Sept 29th [Tues].

-In the past Trump, also expressed concerns about Yuan weakness [Mar 2025] Since then, however, the PBOC has strengthened the yuan and there have even been recent signs that the central bank is becoming uncomfortable with one-way CNY appreciation bets. [link to 2 straight weaker Yuan fixes and herd comment].
-The first day of the Chinese Mid-Autumn holidays officially begins, with Mid-Autumn Festival between September 25th-28th, an interim period between September 28th-30th, followed by Golden Week between October 1st-7th. China PBOC to offer banks up to CNY1T [record amount of overnight funds] each day over the Golden Week holidays to ensure ample liquidity during the extended holiday period. This comes after a sustained period from September 22nd (vs. the prior weakening of the yuan on September 8, 2026), during which the PBOC had been weakening the yuan mid-point fix, coincidentally ahead of the Trump-Xi summit in Washington, D.C., while seeking to avoid two-way FX risk typically associated with heightened cash requirements around Chinese holidays and month- and quarter-end.

-WTI crude futures opened the overnight session -0.3% lower at $94.53/bbl (vs. $94.81 prior), while Brent opened -0.8% lower at $106.24/bbl (vs. $107.04 prior). Oil prices have moved gradually lower as the session has progressed. It was reported during the NY afternoon that the US and Iran were said to discuss a phased deal to reopen Strait and end blockade [press]. More recent reporting has indicated Iran is said to offer a 7-day ceasefire proposal [FT]. Previously, Iran has said it could reopen Hormuz within seven days if the U.S. eased military pressure and lifted its blockade.

-Hong Kong August Trade Balance narrowed significantly lower compared to estimates of -HK$71.2B (vs. -HK$9.2B estimates). Further investigation suggested that global AI trade demand had led Hong Kong to demand significantly greater electrical and electronic equipment (by +$139.0B, +64.5% y/y), computers and IT equipment (by +61.4B, +154.5% y/y), and telecommunications and audio-visual equipment (by +$29.2B, +50.4% y/y) particularly from South Korea (+265.8% y/y).

-US equity FUTs -0.1% to +0.1% during Asia trading.

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

-Mon Sep 21st: DE Buba Monthly Report (Mon night, TW Aug Unemployment Rate).

-Tue Sep 22nd: EU Prelim Sept Consumer Confidence, (Tue night, AU Prelim Sept S&P Mnfg/Svcs PMI, IN Prelim Sept HSBC Mnfg/Svcs PMI, SG Aug CPI & Core CPI, ID Interest Rate Decision, TW Aug Industrial Production).

-Wed Sep 23rd: EU Prelim Sept HCOB Mnfg/Svcs/Composite PMI, US Prelim Sept S&P Mnfg/Svcs/Composite PMI, (Wed night, JP Prelim Sept S&P Mnfg/Svcs PMI, AU Aug Unemployment Rate).

-Thu Sep 24th: CH SNB Interest Rate Decision, EU ECB Economic Bulletin, HK Aug Trade Balance, US Aug Building Permits & New Home Sales, (Thu night, SG Aug Industrial Production).

-Fri Sep 25th: US Aug Durable Goods Orders.

Holidays in Asia this week

-Mon Sep 21st: Japan.

-Tue Sep 22nd: Japan.

-Wed Sep 23rd: Japan.

-Thu Sep 24th: South Korea.

-Fri Sep 25th: China, South Korea, Taiwan.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens -0.4% at 8,667.

-(NZ) New Zealand Finance Minister Nicola Willis names Rebecca Williams to RBNZ MPC.

-(AU) Australia sells A$1.0B v A$1.0B in 2.50% May 2030 Bonds: Avg Yield: 5.0368% v 4.6947% prior ; bid-to-cover: 4.34x v 3.82x prior.

-(AU) IAG.AU Announces settlement of Credit Suisse proceedings in Federal Court of Australia; Credit Suisse proceedings claimed about A$2.8B + Interest.

-(AU) BHP.AU Follow up: Statement: [Regarding BHP's Escondida mine in Chile] Continues to assess conditions for a gradual resumption of mine activities.

-(NZ) RBNZ Q3 Nowcast GDP Est at 0.6% q/q, the est for Q4 is +0.4% q/q.

China/Hong Kong

-(CN) Shanghai Composite Index closed for the first day of the "Mid-Autumn Festival" holidays; (HK) Hang Seng Index opens -1.0% at 24,524.

-(CN) China Pres Xi: We must avoid conflicts and increase points of cooperation; We have a responsibility to manage AI - statement from White House [EU market close].

-(HK) Hong Kong Aug Trade Balance (HKD): -71.2B v -9.2Be; Exports Y/Y: 53.0% v 51.0%e; Imports Y/Y: 60.0% v 44.3%e [EU market close].

-(CN) China Aug Global EV Exports: 284.6K units, +33% y/y- US financial press.

-(CN) China EV and battery makers 'tussle' over paying the resumed lithium-ion tax; cites sources - SCMP.

-(CN) China tested a handheld submarine detector – SCMP.

Japan

-(JP) Nikkei 225 Index opens +0.2% at 65,640.

-(JP) Japan Fin Min Katayama: Trump expressed concerns about weak yen during summit; PM Takaichi expressed concern over yen weakness in general; Takaichi pointed out yen's undervaluation is issue [comments from sidelines of UN] - Tokyo, Japan.

-(JP) Japanese yen strengthens as dollar/yen falls by -0.25% to 158.4700 following Katayama comments on Trump.

-(JP) BOJ Aug Core CPI (ex special factors) Y/Y: 2.6% v 2.3% prior; Core-Core CPI (ex special factors) Y/Y: 2.2% v 2.2% prior.

-(JP) Japan 30-year bond yield rises +5.0bps to 4.21%, highest level since 1999 debut.

-(JP) Japan Chief Cabinet Sec Kihara: Not in position to comment on US-China meeting; Stable US-China ties important for global stability - Tokyo, Japan.

-(JP) Japan Econ Minister Kiuchi: Not in era to do monetary easing.

-(JP) Japan sells ¥3.5T vs. ¥3.5T indicated in 3-Month Bills; Avg Yield: 1.2555% v 1.2067% prior; bid-to-cover: 3.31x v 3.22x prior.

-(JP) Japan sells ¥650B vs ¥650B indicated in Liquidity Enhancement Auction [remaining maturities of 5-11 years].

-(JP) USD/JPY Goldman Sachs: Lowers its USD/JPY exchange rate twelve-month forecast to 150 (vs. 165 prior), three-month forecast to 158 (vs. 162 prior), six-month forecast to 155 (vs. 163 prior).

Korea

-(KR) Kospi Index closed for the 'Korean Thanksgiving Day' holiday.

Other Asia

-(IN) India Oil Min Puri: There is no shortage of crude oil; No plans to cut fuel product exports [EU market close].

-(IN) India "benchmark" 10-year government bond yield rises to highest level since May 20th, 2026.

-(TH) Thailand Aug Customs Trade Balance: -$2.5B v -$3.6Be.

-(MY) Malaysia Minister to meet Indian officials for palm oil cooperation - US financial press.

North America

-(US) President Trump: Delighted to welcome Xi to White House; Celebrating long history between US and China - The President and the President of the People's Republic of China deliver Remarks [White House Press Pool], East Room.

-(US) Pres Trump: Encouraged by more balanced trading relationship with China; Will be discussing issues in security, AI and technology - White House comments [US market close].

-(US) Treasury debt buyback targets coupons maturing 2037-2046; Receives $10.5B of offers for buyback, accepts $4.1B (v maximum of $6B for the operation; falls short of maximum for 2nd week in a row) [US market close].

-(US) Q2 CURRENT ACCOUNT BALANCE: -$246.0B V -$257.4BE [US market close].

-(US) TREASURY $44B 7-YEAR NOTE AUCTION DRAWS 5.085% V 4.512% PRIOR; BID-TO-COVER RATIO: 2.42X V 2.50X PRIOR AND 2.48X OVER THE LAST 12 AUCTIONS [US market close].

-(US) INITIAL JOBLESS CLAIMS: 197K V 201KE; CONTINUING CLAIMS: 1.719M V 1.74ME [US market close].

-(US) AUG NEW HOME SALES: 684K v 616Ke; Months supply (seasonally adjusted): 8.5 v 9.6 prior m/m [US market close].

-(US) WEEKLY EIA NATURAL GAS INVENTORIES: +53 BCF VS. +52 BCF TO +54 BCF INDICATED RANGE [US market close].

-(US) Fed's Hammack (voter, hawk): Price stability is central banks responsibility; Inflation remains elevated amid solid output demand [US market close].

-(US) Fed Pres Paulson (voter): September inflation drove rate hike; May need to raise rates again to address inflation; Inflation remains stubbornly elevated and some modest further tightening may be warranted [US market close].

-(US) Fed’s Barkin (non-voter): Inflation persistence is clearer this summer [US market close.

-(US) President Trump: State dinner for Chinese President Xi to be spectacular; Media will attend.

-(US) White House releases schedule for Trump-Xi summit on Friday [September 25th, 2026].

-(US) White House releases Trump-Xi state dinner attendees list: Fed Chair Kevin Warsh, Blackstone CEO Stephen Schwarzman, Goldman Sachs CEO David Solomon, LVMH CEO Bernard Arnault, David Ellison, Citi CEO Jane Fraser, and.

-(US) Airlines for America (industry group): Oppose allowing Chinese airlines to add more flights to the US.

-(US) Follow up: US Senators delay effort to permanently ban Chinese cars - SCMP.

-(US) President Trump and House Speaker to meet with TECH CEOs on Sept 29th; the topic will be AI - Axios GM CEO Mary Barra listed among the state dinner attendees.

-(US) ORCL Sends force majeure notice over New Mexico data center and trying to put off payments on project if it is delayed - press [US market close].

-(US) ORCL CNBC: Oracle statement: Remain committed to New Mexico data center project [US market close].

-(US) ORCL Has guaranteed payouts to investors on New Mexico data centre even if it fails to secure electrical power before project comes online - FT.

-(US) COST Reports Q4 $6.60* ex-tariff refund v $6.48e, Rev $95.7B v $94.8Be [US market close].

-(US) AKAM Secures $11.6B, 7-year Anthropic cloud commitment; Potential expansion of up to $9B; Issues warrants for 7.7M shares to Anthropic [US market close].

-(US) PEP Plans to raise prices on some chips, dips and soda; Taking price increases after some price cuts failed to increase sales - press [US market close].

-(US) ANTHROPIC.IPO Reportedly plans to give 7 founders 50.1% voting control in new corporate structure ahead of the IPO - TheInformation.

-(US) OPENAI.IPO Preparing to preview its latest cybersecurity-focused model, GPT-6 cyber, in the coming days; To unveil a new product to help customers deploy GPT-6 Cyber in a more secure, automated manner - Fortune.

-(US) POLYMARKET.IPO Follow up: Polymarket sues New York AG, other officials, seeking to block the state from regulating its prediction market - US financial press.

-(CA) Canada Sept CFIB Business Barometer: 47.9 v 57.7 prior [US market close].

-(BR) Brazil Sept FGV Consumer Confidence: 84.2 v 84.7 prior [US market close].

-(BR) Brazil Pres Lula to sign personal debt refinancing measure and measure banning online gambling.

Europe

-(RU) Denmark warns Russia could launch a limited attack on NATO country within months - FT [EU market close].

-(FR) French President Macron: Maybe we could think about releasing strategic oil reserves in a coordinated way; CIA has not warned France about Russian threats - television interview [US market close].

-(EU) ECB's Radev (Bulgaria): Rate hike doesn't put ECB on predetermined path; Risks to inflation tilted to upside, growth to downside [EU market close].

-(EU) ECB’s Schnabel (Germany, hawkish) said to leave ECB board early for IMF job - press [EU market close].

-(EU) EU urges UK to raise tariffs on Chinese cars to avoid "made in Europe" barriers - FT.

-(RU) Russia Local Governor: Russia's Novoshakhtinsk oil refinery halts after drone attack.

-(UK) Sept CBI Retailing Reported Sales: -55 v -48 prior [EU market close].

-(UK) Sept GfK Consumer Confidence: -13 v -16e (highest level since August, 2024).

-(UK) BOE’s Breeden: Larger and longer the energy shock, the more likely policy will need to respond; Can't wait too long for conclusive evidence of 2nd round effects [EU market close].

-(UK) FM Miliband [warns Iranian counterpart]: UK will "not tolerate hostile activity on British soil" - Sky News.

-(BE) Belgium Sept Business Confidence: -12.1 v -13.2 prior [EU market close].

Middle East

-(IR) Follow-up: Iran said to offer a 7-day ceasefire proposal - FT.

-(IR) US and Iran said to discuss phased deal to reopen Strait and end blockade - press [US market close].

-(IR) Iran President Pezeshkian: Houthis are responsible for their own actions; No contact with Houthis directing them to engage - Fox News Interview.

-(SA) Saudi Foreign Ministry: Saudi Arabia, Turkey, Pakistan to hold urgent chiefs-of-staff meeting to discuss support for Riyadh under joint defense pact.

-(IR) Commodity vessels transiting via Strait of Hormuz fall to single-digits, remaining below yesterday's 10-day moving average of ~17 - Preliminary Shipping Data.

-(QA) Qatar: Categorically rejects Netanyahu’s accusation that it is conducting campaign to influence public opinion against Israel.

Levels as of 01:20 ET

Nikkei 225 +1.2%; ASX 200 -0.5%; Hang Seng -1.8%; Shanghai Composite closed; Kospi closed.

Equity S&P500 Futures -0.1%; Nasdaq100 +0.1%; DAX +0.6%; FTSE100 +0.2%.

EUR 1.1383-1.1368 ; JPY 159.00-158.12; AUD 0.7018-0.7004; NZD 0.5672-0.5651.

Gold -0.3% at $4,261/oz; BTC +0.2% at $84,117; WTI Crude Oil -1.5% at $93.17/bbl; Copper -0.4% at $6.7493/lbs.