Markets soft on US Pres debate – Yen continues rise started last night

Asia market update: Markets soft on US Pres debate; Yen continues rise started last night; Focus on US CPI tonight.

General trend

- The Yen rose another 2 Big Figures today on top of last night’s Big Figure rise to the 140 handle, levels not seen since last December, as markets were overall were soft on the US Presidential debate. Nasdaq FUTs fell -0.8% during Asian Trading with USTs -4bps, continuing a drop on fears of a slowdown (esp. in China) with US CPI due tonight.

- After the debate the Real Clear Polling average for the betting markets saw a prior 51-46 advantage for Trump switch to a 50 to 49 lead for Harris. Afterwards, the Harris Campaign said to want a second Presidential debate in October. Reports that Fox News has offered to host a debate.

- Nikkei under-performed in a poor day for equities in Asia, -2.5% on the near 2% rise in the Yen (hitting exporters' profits). 2-yr JGB yields -1.7bps.

- WTI crude prices fell to their lowest level in three years overnight in the wake of the latest release of the OPEC monthly report which cut 2024 and 2025 oil growth demand outlook.

- Chinese yields keep falling across the curve, despite efforts by the PBOC to restrict bond sales in order to keep rates higher.

- BOJ’s Nakagawa reiterated that BOJ will adjust degree of easing if the inflation outlook is realized, and that if long-term rates spike, BOJ could review its taper plan as needed.

- In a light day for macro data, South Korea Aug Total Bank Lending to Household saw its highest monthly growth rate since Jul 2021, while the August unemployment fell to a record low; lowest since data started in June, 1999.

- US equity FUTs -0.6% to -0.8% during the Asia session.

Looking ahead (Asian time zone)

- Wed Sept 11th (Wed eve UK July GDP; Wed night US Aug CPI; CN New Yuan Loans).

- Thu Sept 12th BOJ’s Tamura; (Thu eve ECB rate decision; US PPI).

- Fri Sept 13th.

- Sat Sept 14th China Aug ‘data dump’ (Ind. Production, Retail Sales, etc).

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,015.

- RBA Asst Gov (Econ) Hunter: Our current assessment is that labour market dynamics haven’t fundamentally changed, although we have been surprised by some of the recent data.

- New Zealand July Net Migration: 3.0K v 2.9K prior (revised higher).

China/Hong Kong

- Hang Seng opens -1.1% at 17,051; Shanghai Composite opens -0.4% at 2,742.

- China said to propose tightening rules for securities firms; the report relates to risk management – Shanghai Securities News.

- CATL (300750.CN) Declined comment on speculation related to lepidolite lithium mine suspension - financial press.

- China mortgage rate reductions likely will not be ‘large’; cites property information co. – Shanghai Securities News.

- Canada launching 30-day consultation period on whether to impose surtax on China critical mineral products, batteries, parts, solar products and semiconductors - press.

- China Commerce Ministry (MOFCOM) comments on EU NEV tariffs: Challenging to reach a consensus with EU but will keep talks open on issue [overnight update].

- EU reportedly to lower tariffs on Tesla's and other EV's imported from China; to cut rate on Tesla's from 9% TO 8% - Press.

- China PBOC sets Yuan reference rate: 7.1182 v 7.1136 prior.

- China PBOC Open Market Operation (OMO): Sells CNY210B in 7-day reverse repos; Net injects CNY209B v net injects CNY185B prior.

Japan

- NIkkei 225 opens -0.4% at 36,029.

- Bank of Japan (BOJ) Nakagawa: Reiterates to adjust degree of easing if outlook is realized - speech in Akita.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years; 3-5 Years; 5-10 Years and >25 Years (Inline with prior purchases).

- USD/JPY Declines to the lowest level since Aug 5th; USD/JPY later declines to the lowest level since early Jan.

- Bank of Japan (BOJ) reportedly sees 'little need' to hike interest rates at next week’s policy decision - press [overnight update].

South Korea

- Kospi opens flat at 2,524.

- South Korea Aug Unemployment Rate: 2.4% v 2.6%e (lowest since data started in June, 1999).

- South Korea Aug Total Bank Lending to Household (KRW): 1,130T v 1,120T prior [highest monthly growth rate since Jul 2021].

- Bank of Korea (BOK) Member: Conditions for easing are gradually maturing [overnight update].

Other Asia

- (SG) Monetary Authority Singapore (MAS) Survey of Professional Forecasters.

North America

- (US) Harris Campaign said to want 2nd Presidential debate in Oct – US press.

- *(US) VP Harris/former Pres Trump in US presidential debate (live on ABC).

- (MX) Follow Up: Mexico judicial reform is set to pass (as expected).

- (IR) US State Sec Blinken: To announce further sanctions on Iran on Tues (Sept 10th) - comments alongside UK Foreign Min Lammy.

- (CA) BOC Macklem: Could be appropriate to cut rates more quickly if downside risks materialize with weaker economy CPI - speech.

- (US) Fed Vice Chair for Supervision Barr: Confirming 9% capital increase; Changes to Basel re-proposal would exempt banks under $250B in assets from most new requirements - Bank capital plan.

- (US) Treasury's $58B 3-year note auction results: draws 3.440% V 3.810% prior, bid-to-cover ratio: 2.66 V 2.55 prior and 2.59 over the last 8 auctions.

Europe

- (ES) Spain PM Sanchez: We need to find a compromise between European Commissions and China - financial press.

- (DE) Germany Fin Min Lindner: Federal 2025 budget is in-line with debt brake; Must set example to EU on budget discipline rules - Parliament debate comments.

- OPEC Monthly Oil Report (MOMR): Cuts 2024 and 2025 oil growth demand outlook.

- (RU) US Treasury: Designating 10 individuals and 6 entities in Iran and Russia over Iran's support of Russia's war in Ukraine.

Levels as of 01:20 ET

- Nikkei 225 -2.5%; ASX 200 -0.5%; Hang Seng -1.4%; Shanghai Composite -1.0%; Kospi -1.6%.

- Equity S&P500 FUTs -0.6%; Nasdaq100 FUTs -0.8%, Dax -0.3%; FTSE100 -0.3%.

- EUR 1.1016-1.1049: JPY 140.87-142.48; AUD 0.6644-0.6660; NZD 0.6136-0.6155.

- Gold +0.3% at $2,550/oz; Crude Oil +0.6% at $66.14/brl; Copper +0.7% at $4.1340/lb.