Markets looking to end-of-week inflation data

Asia market update: USD pressure on Asian currencies intensifies; Evergrande woes continue with more arrests; Directionless trading seen; PBOC makes massive cash injection ahead of quarter-end; Markets looking to end-of-week inflation data.

General trend

- Perhaps exacerbated by end-of-month flow demand for USD, Asian currencies continued to struggle, with trader reports of onshore dollar interventions by Chinese state banks at the same time as the PBOC was said to be adding more cash to market operations to keep liquidity stable.

- PBOC also net injected a massive CNY412B today.

- The Indian Central Bank was also said to be selling USD.

- HKMA in Hong Kong reportedly used up 95% of its intra-day funding as of 11am local time.

- Continued jawboning from Japan’s finance minister about Yen volatility, today also joined by top finance and central bank officials from South Korea and Indonesia.

- The Malaysian Ringgit saw a 10-month low, on top of yesterday seeing the year’s lows for the Indonesia Rupiah and Thai Baht.

- Pressure grew even more on China Evergrande with the news that its billionaire Founder and Chairman was under police control. While its offshore creditors plan to join a winding-up petition if there is no new restructuring plan by end-October.

- Real estate developer CIFI also returned to trading for the first time since being suspended in March, reporting a delayed net loss of almost -$1.2B and promptly slumping 54% upon its relisting.

- Of note during this 6-month period, share prices of distressed property names in China have dropped -38% on average, vs. MSCI China index -15%.

- Asian equities overall were mixed with HK and Shanghai modestly higher while the Nikkei, ASX and Kospi were all down slightly following the large losses in NY overnight.

- In a light day for macro data, Japan’s BOJ Monetary Policy Meeting Minutes comments were inline (continued easy monetary policy is appropriate) and Australian CPI figures were also inline.

- Industrial profits in China +17% for August vs prior, however the YTD figure is still -11.7% y/y.

- US equity FUTs up slightly in Asian trading.

- End of week inflation data includes EU and Tokyo CPI, with US PCE.

Looking ahead (Asian time zone)

- Tonight US Durable Goods.

- Thu AU prelim Retail Sales.

- Thu night US GDP & initial Jobless Claims.

- Fri JP Tokyo CPI, JP Retail Sales, Unemployment & Consumer Confidence.

- Fri night EU CPI, US Core PCE / Personal income & spending.

- Sat CN Official Mnfg & non-Mnfg PMI.

- Sun CN Caixin Mnfg & Services PMI.

Holidays in Asia this week

- Thu Sep 28 Indonesia, Malaysia, South Korea.

- Fri Sep 29 China, Taiwan.

- (Note: all of next week is a holiday for Chinese markets).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,030.

- (Follow up): Former RBA Gov MacFarlane says RBA revamp is 'huge risk' - Australia Press.

- Reserve Bank of New Zealand (RBNZ): Purchased net NZ$84M in Aug.

- New Zealand Fin Min Robertson: Balance sheet can absorb another external shock.

- New Zealand PM Hipkins: Economic pressure on next gov't will be tight; Gov't releases fiscal plan.

- New Zealand RBNZ proposes tighter rules for overseas-owned insurers.

China/Hong Kong

- Hang Seng opens flat at 17,472.

- Hong Kong Aug Trade Balance (HKD): -25.6B v -24.3Be (overnight update).

- Hong Kong Exchanges & Clearing (388.HK) Confirms new Hong Kong IPO settlement platform (FINI) to go live on Nov 22nd (Wed).

- Shanghai Composite opens +0.1% at 3,104.

- China Aug Industrial Profits Y/Y: +17.2% v -6.7% prior; YTD Y/Y: -11.7% v -15.5% prior.

- Funding round by China to support chip industry said to be struggling in the initial phases to raise the targeted $41.0B – FT.

- Evergrande (3333.HK) China puts Evergrande Founder/Chairman Hui Ka Yan under police control.

- China PBOC policy committee holds meeting on Q3 monetary policy; Vows to step up policy coordination at quarterly meeting.

- PBOC to add more cash to market operations to keep liquidity stable - China Securities Journal.

- China state banks said to be selling dollars onshore to boost Yuan - financial press.

- China NDRC releases measures to increase green power consumption; asks local governments to set green power consumption targets for energy and emissions-intensive companies.

- China Cyberspace Regulator (CAC); Releases first batch of mobile app stores that have completed filing under new laws.

- Tesla (TSLA) Shanghai plant begins new Model Y production with cost-cutting manufacturing methods.

- US restricts imports from three further Chinese companies connected to forced labor.

- China Foreign Minister Wang Yi: Reiterates want US to take more actions to reduce restrictions.

- China Commerce Ministry (MOFCOM) Official: Express serious concern and strong dissatisfaction that the EU to launch countervailing investigation over Chinese EVs - after meeting EU Trade Chief (overnight update).

- Evergrande (3333.HK) Reportedly some Evergrande offshore creditors plan to join winding-up petition if no new debt restructuring plan submitted by end-Oct (overnight update).

- China Vice President: China-US relations are the most important bilateral relations in the world today; Hope to promote healthy and stable China-US relations; China to deepen reform and opening up (overnight update).

- China's one-year Dollar/Yuan swap falls to lowest since Jun 2008, at -2,720 points (overnight update).

- China Foreign Ministry Daily Briefing: China 'advises' Philippines not to cause troubles (overnight update).

- China Pres Xi: To promote healthy and stable ties with Italy (overnight update).

- China Foreign Ministry Daily Briefing: Discussing Summit with Japan and South Korea.

- China PBOC sets Yuan reference rate: 7.1717 v 7.1727 prior.

- China PBOC Open Market Operation (OMO): Sells CNY200B in 7-day reverse repos v CNY0B prior; Sells CNY417B in 14-day reverse repos v CNY378B prior; Net injects CNY412B v Net injects CNY170B prior.

Japan

- Nikkei 225 opens -0.9% at 32,023.

- Bank of Japan (BOJ) July 28th Minutes (2 decisions ago): Important to continue with monetary easing to stably, sustainably hit price target.

- Japan Fin Min Suzuki: Watching FX with a 'strong sense of urgency'.

- Japan Cabinet official: BOJ Gov Ueda told top economic council meeting it was important to nurture positive signs of change in corporate behavior (overnight update).

- Japan Fin Min Suzuki: As said at the morning press conference, I’m watching FX market trends with a high sense of urgency (overnight update).

- Japan said to consider low-income-earner benefits as a part of upcoming economic measures (overnight update).

- Ruling LDP senior lawmaker Seko: Important to extend, expand measures to cushion rising energy prices (inline comments) [overnight update].

- Bank of Japan (BOJ) announcement related to daily outright bond buying operation:

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00% [2nd operation during today's session].

South Korea

- Kospi opens -0.6% at 2,447.

- South Korea Oct Business Manufacturing Survey: 67 v 69 prior.

- Samsung (005930.KR) and SK Hynix (000660.KR) may get indefinite waiver on China exports (relates to US export restrictions).

- South Korea Ministry of Land: To.

- South Korea Finance Chief: Reiterates FX rate is determined by market levels, to take steps on FX if needed expand guarantees for project financing loans to KRW25T (from KRW15T prior) in order to increase housing supply (overnight update).

- South Korea regulator: Optimistic on World Gov't Bond Index (WGBI) inclusion – FT (overnight update).

Other Asia

- MYR declines to the lowest level since Nov 10th 2022.

- India Central Bank (RBI) said to have sold US dollars in the NDF market.

- Indonesia Central Bank (BI) Official: Rupiah's weakness due to hawkish US Fed, dividend payment demand.

- (PH) China Foreign Ministry Daily Briefing: China 'advises' Philippines not to cause troubles (overnight update).

North America

- Costco (COST Reports Q4 $4.86 v $4.71e, Total Rev $78.9B v $78.6Be.

- (US) (Follow up): House Speaker McCarthy (R-CA): House to vote on stopgap bill with border measure 'probably' on Friday.

- (US) AUG NEW HOME SALES: 675K V 698KE; Months supply (seasonally adjusted): 7.8 v 7.3 prior (overnight update).

- (US) Fed's Kashkari (voter): Put a 60% probability on a soft landing; puts a 40% probability on a scenario where Fed will have to raise rates significantly higher to beat inflation (overnight update).

Europe

- China PBOC Gov Pan Gongsheng discussed financial cooperation with EU's Dombrovkis.

- ECB’s Holzmann (Austria, ultrahawk): Unclear whether we're at peak rates yet (overnight update).

Levels as of 01:20 ET

- Nikkei 225, -0.3%, ASX 200 -0.3% , Hang Seng +0.4%; Shanghai Composite +0.1% ; Kospi -0.3%.

- Equity S&P500 Futures: +0.2%; Nasdaq100 +0.2%, Dax +0.2%; FTSE100 -0.2%.

- EUR 1.0556-1.0575; JPY 148.87-149.10 ; AUD 0.6377-0.6410 ; NZD 0.5923-0.5957.

- Gold -0.3% at $1,914/oz; Crude Oil +1.0% at $91.32/brl; Copper -0.3% at $3.6355/lb.