NZ bond yields move sharply lower

Asia Market Update: Equities again track the rise on Wall St.; NZD initially rose on the RBNZ statement, later pared rise; NZ bond yields move sharply lower.

General trend

- RBNZ: Committee considered whether to increase the OCR by 50 or 75 basis points at this meeting; Lower NZD if sustained poses further upside risks to CPI; Members noted that large movements in wholesale interest rates and exchange rates were causing a deterioration in financial market liquidity.

- Aussie bond yields extend drop after RBA surprise.

- GBP trades modestly lower.

- Hang Seng outperforms following holiday [Standard Chartered and HSBC track gains in the global banks; TECH index rises after the strength in the Nasdaq].

- HK sportswear firms also gain [Beijing to resume annual marathon race on Nov 6th after two-year COVID-19 suspension – press].

- Australian equities remain strong following the recent RBA decision [financials outperform].

- Fast Retailing rises after reporting monthly sales.

- Japanese corporate earnings in focus [Aeon].

- Foxconn rises after issuing guidance.

- US equity FUTs decline.

- Shanghai markets are closed this week for holiday.

- US ADP data due later today, ISM Services also due.

- OPEC meeting in focus.

Headlines/economic data

Australia/New Zealand

- ASX 200 opened +0.3%.

- (NZ) New Zealand 2022 Budget Deficit smaller than estimated at NZ$9.29B; to publish half-year fiscal update on Dec 14th.

- (AU) Australia sells A$800M v A$800M indicated in 1.25% May 2032 bonds; Avg Yield: 3.6829%; bid-to-cover: 2.82x.

- (AU) Australia Sept Final PMI Services: 50.6 v 50.4 prelim.

- (NZ) Reserve Bank of New Zealand (RBNZ) raises official cash rate 50bps to 3.50%; as expected.

Japan

- Nikkei 225 opened +0.8%.

- (JP) Japan Sept Final PMI Services: 52.2 v 51.9 prelim (confirms move back into expansion).

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

Korea

- Kospi opened +1.9%.

- (KR) South Korea Sept CPI M/M: 0.3% V 0.4%E; Y/Y: 5.6% V 5.7%E (core rises fastest since 2008).

- (KR) South Korea and US militaries have test fired 4 surface to surface missiles as a response to North Korea - Yonhap.

- (KR) Bank of Korea (BOK): Reiterates CPI to remain elevated at 5.0-6.0% for 'some time'; CPI upside risks come from weaker KRW and major producer oil production cuts.

- (KR) US to redeploy Aircraft carrier to South Korea East Coast.

China/Hong Kong

- Hang Seng opened +4.3%; Shanghai Composite closed for the week for holiday.

- (CN) According to recent PwC report, US review of China corporate audits are in a "very early stage".

Other

- (SG) Singapore Sept PMI (Whole economy): 57.5 v 56.0 prior (22nd consecutive expansion).

- (TW) Taiwan investigated ALchip on suspected supply to Chinese Military Linked Phytium.

- (TW) Said that Automakers in China are requesting up to 20% price cuts on chips that are in sufficient supply - Digitimes.

North America

- (US) US govt officials reportedly arguing to OPEC+ nations that economic fundamentals do not support an output cut - press.

- (US) Fed's Mester (FOMC voter): No decision taken on whether to adopt a central bank digital currency (CBDC).

- (US) Fed's Daly (non-voter): Reiterates the Fed is committed to getting inflation down.

- (US) Aug  JOLTS job opening: 10.05M V 11.09ME (first reading below 11M since Nov 2021, and lowest since May 2021); quits rate 2.7% v 2.7% prior.

- (US) Aug final durable goods orders: -0.2% V -0.2%E; Durables (ex-transportation): 0.3% V 0.2%E.

- (US) Aug factory orders: 0.0% V 0.0%E.

Europe

- (RU) Russia Ambassador to US: Moscow perceives US Decision to send more aid to Ukraine as immediate threat to Russia's Strategic interests; increases danger of direct military conflict between Russia and the West.

- OPEC+ reportedly considering cut to quota of as much as 2.0M b/d - press.

- (IR) Ireland Central Bank raises 2022 HICP CPI forecast to 8.0% from 7.8%; 2023 HICP to 6.3% from 4.2%; Notes downside risks to economic growth remain.

- (IE) Ireland Sept PMI Services: 54.1 v 54.7 prior ( 19th consecutive expansion).

- (DE) Germany Foreign Min Baerbock: Must take Russia's nuclear threat seriously; Russia is attempting to blackmail us.

- (RU) Russia govt spokesperson Peskov: We do not want to take part in West's rhetoric on nuclear weapons; From very beginning Russia wanted to solve the conflict through negotiations; We will wait for a change on Kyiv's position or a change of Ukraine President.

- (FR) ECB's Villeroy (France): No longer gradual, should raise rates to near 2% by end-2022; Pace of hikes could possibly slow after the end of the year.

- (EU) ECB's Enria (SSM chief): Banks too optimistic on macro risks.

- (UK) Reportedly UK officials see prospect for deal with EU on Northern Ireland’s trade arrangements within months as relations thaw - press.

- (UK) Chancellor of the Exchequer (Fin Min) Kwarteng: Will release fiscal plan on Nov 23rd as planned (refuting yesterday's reports of an accelerated release).

- (UK) BOE buys £0M in APF Gilt purchase operation v £22M yesterday.

Levels as of 01:20 ET

- Nikkei 225, +0.5%, ASX 200 +1.7% , Hang Seng +5.7%; Shanghai Composite closed ; Kospi +0.3%.

- Equity S&P500 Futures: -0.4%; Nasdaq100 -0.5%, Dax -0.3%; FTSE100 -0.4%.

- EUR 0.9990-0.9959 ; JPY 144.33-143.52 ; AUD 0.6526-0.6472 ;NZD 0.5807-0.5685.

- Gold -0.1% at $1,729/oz; Crude Oil -0.2% at $86.33/brl; Copper +0.2% at $3.5030/lb.