PBOC finally stepped up liquidity injection

Asia Market Update: Equity markets trade generally higher; AU and NZ curves steepen after move in USTs; CN new home prices saw first decline in years amid Evergrande concerns; PBOC finally stepped up liquidity injection; UK CPI due later today.

General trend

- AUD and NZD extend gains; CNH declines after prior rise.

- USD/JPY hit the highest since late 2017 amid Gotobi day, rise in UST yields.

- China priced USD bonds at tighter spreads than the initial pricing guidance, orders exceeded $23.0B.

- HKMA to withdraw additional liquidity.

- China coal FUTs drop after NDRC comments.

- Nikkei has pared gain.

- Hang Seng has remained higher [TECH index rises].

- Shanghai Composite ended morning trading flat [Property index continues to lag].

- S&P ASX 200 has extended gain [Resources index has outperformed].

- Companies due to report during the NY morning include Abbott Labs, Anthem, Biogen, Baker Hughes, Canadian Pacific, Knight-Swift Transportation, Lithia Motors, Nasdaq, Verizon, Winnebago.

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened +0.3%.

- BPT.AU Reports Q1 Production 5.7 MMBOE v 6.8 y/y; Rev A$388M v 361M y/y.

- (AU) Australia Sept Westpac Leading Index: -0.0% v -0.3% prior (5th straight decline).

- RHC.AU Changes to Surgical Restrictions in NSW and Victoria will have a material impact on FY22 earnings and will depend on their geographic coverage, extent and duration.

- (AU) Australia sells A$1.5B v A$1.5B indicated in 4.50% Apr 2033 bonds, avg yield 1.8291%, bid to cover 3.03x.

Japan

-Nikkei 225 opened +0.6%.

- (JP) Bank of Japan (BOJ) Said to be inquiring banks on legacy LIBOR as the BOJ and FSA are looking into any remaining LIBOR Linked contracts.

- (JP) Japan Sept Trade Balance: -¥622.8B v -¥530.4Be; Adj Trade Balance: -¥624.8B v -¥586.4Be.

- (JP) Japan METI expected to announce transition finance plans for the steel industry, which is Japan's largest carbon emitter – press.

- (JP) Japan PM Office: Mount Aso has erupted at 11:44 AM JST, flow has reached 1km away.

Korea

-Kospi opened +0.5%.

- (KR) North Korea confirms firing of short-range missile from submarine (SLBM).

- (KR) South Korea Fin Min Hong: Govt considering cut to fuel tax due to high oil prices.

China/Hong Kong

-Hang Seng opened +1.1%; Shanghai Composite opened -0.3%.

- (CN) China PBOC Backed Newspaper, Financial News: Expectation for a RRR Cut in Q4 has eased due to high factory gate inflation.

- (CN) CHINA SEPT NEW HOMES PRICES M/M: -0.1% V +0.2% PRIOR; Y/Y: 3.8% V 4.2% PRIOR (first decline since 2015).

- (CN) China Sept Foreign Direct Investment (FDI) YTD Y/Y: 19.6% v 22.3% prior.

- (HK) Hong Kong Monetary Authority (HKMA) raises issues size of 91 day exchange fund bills by up to HK$40.0B, HK$5.0B each in 8 regular tenders.

- (CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: LEAVES BOTH 1-YEAR AND 5-YEAR RATES UNCHANGED (18th straight month of steady rates).

- (CN) China PBOC Open Market Operation (OMO): Injects CNY100B in 7-day reverse repos v CNY10B prior; Net inject CNY90B v Net CNY0B prior, increased injections due to tax and govt bond issuance payments.

- (CN) Some China exporters said to be raising prices by 20% - financial press.

- (CN) China PBOC sets Yuan reference rate: 6.4069 v 6.4307 prior (strongest fix since June 11th).

- (CN) China State Planner (NDRC) Officia: Govt needs to closely monitor operation issues for property developers.

- (CN) Reportedly China to scale down test of property tax plan after Pres Xi saw largely negative feedback and resistance from within the Party – press.

- (CN) China Ministry of Finance (MOF) prices $4.0B in 3-year, 5-year, 10-year and 30-year bonds [as indicated, smallest USD bond offering by China since 2018]; orders totaled $15.0B.

- (CN) China Vice Commerce Min: Will roll out measures to boost consumption.

- (CN) China's govt advisor Yao Jingyuan: PBoC should cut RRR in order to boost liquidity and support economic growth (yesterday later in session).

North America

- (US) Weekly API Crude Oil Inventories: +3.3M v +5.2M prior.

- (US) US govt likely to recommend COVID booster shots for people as young as 40 who received Moderna or Pfizer vaccine – CNN.

- NFLX Exec: Customer churn is down from past years; Viewing per member down from distorted COVID figures of 2020, no one is sure we can get back to past growth levels - post earnings call.

- (US) President Biden said to tell democrats that they can secure new deal of $1.75-1.90T for spending proposal.

- (PR) Puerto Rico House of representatives approves bill to restructure debt, Senate to vote on measure Thursday.

Europe

- (UK) UK govt reportedly plans to cut tax surcharge on bank profits by over 60% from 8% to 3%; Would begin in April 2023 - FT.

Levels as of 01:15ET

- Hang Seng +1.1%; Shanghai Composite +0.0%; Kospi -0.3%; Nikkei225 +0.2%; ASX 200 +0.5%.

- Equity Futures: S&P500 -0.0%; Nasdaq100 -0.1%, Dax -0.0%; FTSE100 +0.0%.

- EUR 1.1652-1.1628; JPY 114.71-114.33; AUD 0.7503-0.7465; NZD 0.7179-0.7147.

- Commodity Futures: Gold +0.2% at $1,774/oz; Crude Oil -0.6% at $81.97/brl; Copper -1.2% at $4.63/lb.