Market ignores PBOC’s FX forwards move?

Asia Market Update: GBP extends drop, hits record low; Market ignores PBOC’s FX Forwards move?; Equity markets trade mixed; Volatility continues.

General trend

- Gilt yields drive increase in global bond yields.

- Analysts debate if the BOE will support the pound?

- UK sovereign rating in focus following budget update/increase in Gilt issuance.

- USD rises.

- USD/CNY was fixed above 7.00 [first fix above 7 level in 2 years)].

- Will BOK have to increase rate hike pace amid currency weakness?

- Stronger USD and growth concerns weigh on metals.

- PBOC continues to inject liquidity ahead of upcoming holiday.

- Chinese markets rebound amid continued support measures.

- HK Casino firms rise [Macau said to plan to resume tours].

- Shanghai Property index rises, but remains volatile [China Construction Bank forms CNY30B housing rental fund].

- HSBC and Standard Chartered decline on UK concerns.

- Japanese equities lag after holiday.

- Commodity-sensitive indices lag in Australia.

- US equity FUTs extend declines.

- Australia’s budget outcome is due this week.

- Australia’s Monthly CPI indicator is due on Sept 29th (Thurs).

- Reserve Bank of New Zealand (RBNZ) Gov Orr to speak on Sept 27th and Sept 30th.

- BOJ officials may speak later today [Kuroda, Amamiya] (not confirmed).

Headlines/economic data

Australia/New Zealand

- ASX 200 opened -0.5%.

- (AU) RBA Issues White Paper on CBDC Research Project.

- (AU) US reportedly may build the first few nuclear submarines for Australia - press (From Friday).

Japan

- Nikkei 225 opened -1.4%.

- (JP) Japan Sept preliminary PMI manufacturing: 51.0 V 51.5 PRIOR.

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Unchanged.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Japan Fin Min Suzuki: Believes there was an impact from FX intervention last week; Reiterates various factors decide FX market moves; Rate difference alone doesn't decide the FX market.

- (JP) Japan Chief Cabinet Sec: North Korea launch completely unacceptable; Hoping to spur more travel demand for Oct holidays [follows launch of ballistic missile by North Korea on Sun].

Korea

- Kospi opened -1.3%.

- (KR) Bank of Korea (BOK) Gov Rhee: Rate hikes are inevitable; Won weakness is amplifying inflation; Will take action to boost stability if needed; pace of rate hike requires board discussion.

- (KR) South Korea Vice Fin Min: Reviewed FX market in meeting; Reiterates to closely monitor market.

- (KR) South Korea Prosecutors: Do Kwon [co-founder of Terraform Labs] placed on the Interpol Wanted List.

- (KR) Bank of Korea sells 3-month Monetary Stabilization Bonds (MSB): Avg yield 2.790%.

- (KR) South Korea sells 5-year bonds: Avg Yield: 4.345% v 3.315% prior.

China/Hong Kong

- Hang Seng opened -0.8%; Shanghai Composite opened -0.7%.

- (CN) US Sec of State Blinken said disrupting Taiwan chip production would be 'devastating' - 60 Minutes Interview.

- (CN) China Maike Metals to sell assets and undergo restructuring - FT.

- (CN) China NDRC: Reiterates to accelerate new infrastructure construction; Will frontload major infrastructure projects.

- (CN) Shanghai Securities News: Sees signs that the China stock market is 'bottoming out'; notes low trading turnover and equity risk premiums.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY42B in 7-day reverse repos v CNY2.0B prior; Sells CNY93B in 14-day reverse repos v CNY21B prior; Net inject CNY133B v Net inject CNY21B prior.

- (CN) China PBOC has imposed a 20% risk reserve requirement (RRR) for FX forwards from 0% starting Sept 28th (Wed).

- (CN) China Commerce Ministry (MOFCOM): To increase efforts to attract foreign investments.

North America

- (US) Fed's Bostic (non-voter): We do know that some bottlenecks are staring to ease, but inflation is too high; There will likely be some job losses; We are going to do everything we can to avoid deep, deep pain.

- (US) Nat Sec Adviser Sullivan: US privately and at a very high level informed Russia that any use of nuclear weapons would lead to catastrophic consequences for Russia, because the US and its allies will give a decisive response.

- (US) FDA: New FDA draft guidance aims to protect children who participate in clinical trials.

- (US) Follow Up: NHC issues update on Tropical Storm Ian, is forecast to become a hurricane on Monday and a major hurricane on Tues [prior mid-week]; Ian will then emerge over the southeastern Gulf of Mexico on Tuesday.

Europe

- (IT) Follow Up: Meloni Bloc has 114-126 seats in the Senate, cites projection.

- (UK) Sept Rightmove House Prices M/M: +0.7% v -1.3% prior; Y/Y: 8.7% v 8.2% prior.

- (IE) Ireland Sept Economic Pulse: 70.6 v 72.4 prior.

- (UK) UK Chancellor of the Exchequer (Fin Min) Kwarteng reiterated not focused on short-term market moves - press.

- (UK) Decline in UK assets leads to talk of emergency rate hike - US financial press [update].

- (HU) Hungary Sept Consumer Confidence: -52.6 v -49.2 prior; Business Confidence: -1.1 v -2.1 prior.

- (UK) PM Truss: Want to find a way forward with a negotiated solution with EU; US Pres Biden and I agree it is vital to protect Northern Ireland Good Friday agreement.

- (RU) Russia may spend RUB939B on FX purchases in 2023 - Russia media.

Levels as of 01:20 ET

- Nikkei 225, -2.6% , ASX 200 -1.3% , Hang Seng -0.3%; Shanghai Composite -0.1%; Kospi -3.1%.

- Equity S&P500 Futures: -0.6%; Nasdaq100 -0.7%, Dax -0.8%; FTSE100 flat.

- EUR 0.9569-0.9710 ; JPY 143.28-144.21; AUD 0.6490-0.6538; NZD 0.5710-0.5713.

- Gold -0.4% at $1,636/oz; Crude Oil -0.6% at $78.27/brl; Copper -2.3% at $3.2920/lb.