Markets under pressure – Global gov’t yields grind higher

Asia market update: Markets under pressure; Global gov’t yields grind higher; More red ink in Asian equities; Asian currencies under further duress against USD.

General trend

Gov’t bond yields higher

- Global gov’t bond yields again track rise in UST yields; 10-Year JGB yield rose to 0.780%; highest Since Sep 2013, pared rise post auction.

- Australia 10-yr yield rose +11bps to 4.59%, the highest since 2011, later retracing to 4.57%.

Asian equities down

- Nikkei now at its lowest level since Aug 21st, impacted by energy stocks falling following crude oil prices falls overnight. Toyota also down >2%.

- Evergrande Real Estate and Evergrande Property Services resumed trading in HK, after the confirmation of news that Founder and Chairman Hui Ka Yan is under police control. Evergrande recovered ~20% of recent losses, but is still - Hang Seng Mainland Properties Index down -4.1%.

- US equity FUTs down -0.2% in Asian trading.

Currencies in Asia (and EU) continued their broad fall against USD

- Thai Baht down over -0.5% at an 11-month low of 37.095, prompting the Deputy Fin Min to say that the Gov't is confident that it can take care of Baht weakness and the PM to say that Baht movement should be based on the market.

- Indonesia Rupiah fell -0.45% to 15,595, the lowest since Jan 10th, 2023, with the Indonesia Central Bank saying it is ‘in the market’ to keep FX supply-demand in balance and build market confidence.

- Taiwan Central Bank reported selling $880M in FX markets to keep the NT$ stable, adding that the Taiwan dollar has depreciated against USD so far this year, but is relatively stable against other major currencies.

- Malaysian Ringgit falls to 4.724, lowest since Nov, 2022.

- Singapore dollar falls to 1.3748, lowest since Nov, 2022.

- Aussie dollar recovered a little after the Australian RBA held rates steady at 4.10%, but the Aussie still continued its steep fall since late Friday, trading at an 11-month low.

- Kiwi dollar fell -0.5% at 0.5918.

- Japanese yen edged down only slightly, but nonetheless at ~149.90 is at its lowest level since Oct 21st, 2022.

- Chinese offshore Yuan without Gov’t daily fixes due to the holidays all week at nearly 7.33 appears to be heading back towards early Sept highs of ~7.37.

- Even the European majors were not immune, with Sterling falling to 1.2065, lowest since Mar 16th, 2023, and the Euro also falling to 104.61, lowest since Nov, 2022.

Looking ahead (Asian time zone)

- Tonight US JOLTS job openings.

- Wed Oct 4 NZ RBNZ rate decision; AU & JP Services PMI.

- Wed night US Services PMI.

- Thu Oct 5 AU Balance of Trade, DE Balance of Trade.

- Fri night US Non-Farm Payrolls / Unemployment.

Holidays in Asia this week

- China markets are on holiday all this week through to and including Oct 6 (Friday).

- South Korea Tues Oct 3.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 7,009.

- *(AU) Reserve Bank of Australia (RBA) leaves cash rate target unchanged at 4.10%; as expected.

- Australia 10-yr yield +11bps to 4.59%, highest since 2011.

- New Zealand Q3 NZIER Business Confidence: -52% v -63% prior (update).

China/Hong Kong

- Hang Seng opens -1.5% at 17,546.

- Shanghai Composite closed for holiday all this week.

- HUAWEI.CN (CN) Certain tech firms in Taiwan said to be helping Huawei with China chip plants - US press.

- Evergrande Real Estate (3333.HK) Resumes trading.

- Evergrande Property Servcies (6666.HK) Resumes trading.

- Biden Administration said to tell China to expect updated rules curbing shipments of AI chips as soon as this month - press.

Japan

- Japan Fin Min Suzuki: Reiterates important for currencies to move in stable manner reflecting fundamentals; declines comment on currency intervention.

- Japan Fin Min Suzuki: Decline to comment on possible FX intervention; Watching FX moves with strong sense of urgency (overnight update).

- Japan Chief Cabinet Sec Matsuno: Reiterates watching FX moves with high sense of urgency (overnight update).

- *(JP) Japan sells ¥2.7T V ¥2.7T indicated in 10-year JGB bonds; avg yield: 0.7680% V 0.6570% prior; bid-to-cover: 3.93X V 4.02X prior.

- 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%.

South Korea

- Kospi closed for holiday.

- Japan FSA, Korea FSC to have first meeting since 2016 in Seoul on Dec 19-20, 2023.

Other Asia

- USD/TWD Taiwan Central Bank sold net $880M intervening in FX markets in H1 2023; Sees 2024 CPI trending lower.

- USD/THB Thailand Deputy Fin Min Krisada: Gov't is confident that it can take care of Baht weakness.

- USD/MYR Malaysia Central Bank (BNM) Gov Ghaffour: Malaysia inflation to continue to trend lower.

- USD/IDR Indonesia Central Bank (BI): In the market to keep FX supply and demand balance, build market confidence.

- Thailand PM Srettha: Urges postponement of 2024 arms procurement.

North America

- GM: UAW reportedly makes new counter offer - financial press.

- BYTEDANCE.IPO: (Tiktok owner) Co's Q1 FY23 Op reportedly nearly $6B; FY22 Op ~$20B – WSJ.

- META Meta subscription proposes charging €10/month for Facebook or Instagram without ads.

- US Fed's Mester (non-voter): Need for more than one rate hike is dependent on the economy.

- US Fed's Bowman (voter): Inflation remains too high; Will likely be appropriate to raise rates further and hold them at restrictive levels for some time.

- US Fed Chair Powell: Fed's focus is on a healthy economy.

Europe

- Follow up: EU Official: EU to assess risks of four critical technologies being weaponized by third countries.

- United Arab Emirates (UAE) Energy Min Mazrouei: OPEC+ is doing its best to maintain supply and demand at healthy balance.

- Italy reportedly considering car buying incentives to reduce China EV price advantage - press.

- BOE's Mann (hawk): I am a hawk on interest rate policy.

Levels as of 01:20 ET

- Nikkei 225, -1.9%, ASX 200 -1.3% , Hang Seng -3.6%; Shanghai Composite closed ; Kospi closed.

- Equity S&P500 Futures: -0.2%; Nasdaq100 -0.2%, Dax -0.6%; FTSE100 -0.2%.

- EUR 1.0460-1.0483; JPY 149.77-149.93; AUD 0.6311-0.6371; NZD 0.5906-0.5955.

- Gold -0.6%% at $1,835/oz; Crude Oil -0.8% at $88.09/brl; Copper -1.1% at $3.6065/lb.