Trump commented on speculation about ‘interim’ trade deal with China

Asia Market Update: Trump commented on speculation about ‘interim’ trade deal with China, ‘low-level’ US/China trade talks expected next week [date yet to be confirmed]; Bonds drop amid ECB, more key rate decisions seen next week

General Trend:

- With China on holiday, Asian equity indices track Thursday’s US gains

- Trump said he would rather get a 'whole deal' with China rather than an interim deal, guess I'd consider an interim trade deal with China (comments from Thursday)

- Lower-level China/US officials are expected to meet next week in Washington D.C. [date unknown], talks are expected to lay groundwork for the higher-level negotiations expected in early Oct

- Hang Seng rises as China said to ask Chinese state firms to increase investments in HK

- Geely leads gains in HK, Chinese city announces removal of car purchase limits

- Sun Hung Kai Properties declines in HK on weaker than expected earnings

- Nikkei supported by recent yen weakness; REITs outperform, US real estate stocks also rose on Thursday

- New Zealand Manufacturing PMI contracts for the 2nd straight month in Aug [July reading was the first contraction since 2012]

- EUR trades flat in Asia after recent ECB decision

- Offshore yuan (CNH) rises amid trade speculation and holiday trading conditions

- US Treasury Futures extend declines during Asia as traders focus on the ECB’s easing measures, US/China trade speculation and upcoming central bank decisions

- US Fed is due to hold policy meeting on Sept 17-18th (Tues-Wed), BoJ to meet Sept 18-19th (Wed-Thursday)

- Various Japanese officials reiterate monetary policy is for the BoJ to decide ahead of next week’s meeting; Japan’s new Economy Min said’ ‘our hope on BoJ is not about additional monetary easing’

- Japan Fin Min Aso: Not thinking of more economic measures at the moment, tax measures have proven effective so far; economic fundamentals remain ‘solid’

- Mnuchin commented on 50 and 100-year bonds

- Philippines Central Bank Chief commented on the prospects for near-term policy easing

- Japan closed on Monday (Sept 16th) for holiday

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.2%

- (AU) Australia APRA: Allocates A$223B to committed liquidity facility (CLF) for 2020 v A$243B y/y [Since January 2015, the Reserve Bank of Australia has provided the CLF as part of Australia's implementation of the Basel III liquidity reforms]

- (NZ) New Zealand Aug Business Manufacturing PMI: 48.4 v 48.1 prior (2nd consecutive contraction)

China/Hong Kong

-Shanghai closed for holiday, Hang Seng opened +0.3%

-(CN) China reportedly asking Chinese state firms to boost Hong Kong investments; These state-owned enterprises (SOEs) pledged that they would invest more in key Hong Kong industries, such as real estate and tourism. – press

- (CN) China Commerce Ministry (MOFCOM) spokesperson Gao Feng: Chinese companies have started inquiring prices on US agricultural goods; possible purchases include soybeans, pork, others; does not respond to question on date of possible talks (comments from Sept 12th)

- (CN) China Vice Premier Liu He: Reiterates China and US working-level officials will meet next week (comments from Sept 12th)

- (CN) China said to be looking to narrow the scope of trade negotiations to only trade matters

-(CN) Chinese importers said to buy 600K tons of US soybeans in Oct-Dec shipment from Pacific Northwest - press

Japan

- Nikkei opened +0.7%

- (JP) Nikkei 225 Sept Futures and Options said to settle at ~21,981

- (JP) Japan Econ Min Nishimura: Our hope on BoJ is not about additional monetary easing; up to BOJ to decide on monetary policy

- (JP) Japan Fin Min Aso: Not thinking of more economic measures at the moment, economic fundamentals remain solid; No comment on ECB's easing

Korea

- Kospi closed for holiday

- (KR) South Korea President Moon to meet president Trump during his trip to the US from Sept 22-26, to give speech to UN on Sept 24th

Other Asia

- (PH) Philippines Central Bank Chief Diokono: 25 bps rate cut and RRR cut may come sooner rather than later and may come at the same time; may see key rate cut in Sept or Oct; inflation picture is improving

North America

- (US) Pres Trump says he will announce a tax cut for middle-income Americans sometime next year

- (US) Treasury Sec Mnuchin: looking at 50-year bonds; if there is proper demand, will consider 100-year bonds; confirms meeting with Chinese officials next week; hopes for meaningful progress in US, China trade talks in next few weeks

Europe

- (EU) ECB CUTS DEPOSIT RATE BY 10BPS TO -0.50%; AS EXPECTED; Relaunching QE at €20B/month; revises forward guidance (both with no specific end date) – from Sept 12th

- (EU) French, German, Dutch, Austrian, and Estonian governors all opposed ECB QE resumption; ECB QE motion passed with relatively narrow majority - press

- (UK) EU reportedly ready to grant a third Brexit extension to the UK in Oct in order to avoid 'no deal' Brexit – press

- (UK) DUP reportedly could agree to Northern Ireland accepting some EU rules after Brexit as part of deal to replace backstop - UK's Times

Levels as of 1:20 ET

- Nikkei 225, +0.9%, ASX 200 +0.1%, Hang Seng +0.5%; Shanghai Composite closed; Kospi closed

- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.2%; FTSE100 +0.3%

- EUR 1.1074-1.1055 ; JPY 108.26-108.02 ; AUD 0.6876-0.6856 ;NZD 0.6410-0.6397

- Gold -0.2% at $1,504/oz; Crude Oil +0.1% at $55.13/brl; Copper +0.5% at $2.656/lb