Trump/Xi truce initially looks disappointing

Asia market update: Trump/Xi truce initially looks disappointing; CN traders sold the news, CNY extends decline; AU Jobs mixed ahead of expected rate hike next week; Iran uncertainty persists as gov’t bond yields spike; Weak APAC PMIs.

General trend and developments

- Equity Trend: Mixed and cautious trading has prevailed. Bond yield spike appears unhelpful. Japan trades to the upside, plays catchup post 3-day holiday; CN traders sell the trade truce news; Miners and FINs weigh on the ASX 200. Thursday-Fri South Korea holiday might impact liquidity and volatility.

- The Trump-Xi summit scheduled today at 18:00pm ET [Open Press] went underway at Joint Base Andrews, Maryland. Treasury Secretary Scott Bessent started off the summit with an interview on Fox News, stating that trade deals between the US and China—known as the Busan agreement—have been extended until January 10th, 2027. The two sides are also exploring removing tariffs on roughly $30B of trade in each direction. Trump called his greeting with Xi “great” and confirmed tech and banking executives will attend tomorrow’s dinner. China’s Foreign Ministry in a statement stated Xi is looking to expand cooperation in “various areas”.

- US/China trade truce extension only 2 months amid continued rare earth uncertainty? Recall, reportedly the US proposed extending the truce by 6 months, while China pushed for a longer extension, said the NYT on Sept 21st.

- Trump/Xi meetings in focus for Thursday: The White House issued the Trump-Xi summit schedule tomorrow. President Trump is set to greet China's President Xi at 10am ET, followed by joint remarks at 10:15am ET, a bilateral meeting at 11:30am ET, and remarks at the state dinner at 7:55pm ET.

- The US September preliminary S&P Manufacturing PMI came in at a strong 57.0, well above the 53.7 expected and the highest reading since May 2022, putting the sector on track for a 13th consecutive month of expansion, though the overall rate of inflation also hit its highest level since October 2022. Fed Governor Barr (a voter) noted that inflation is not clearly trending toward the 2% target in a timely manner and that further rate hikes are likely needed. Meanwhile, the Treasury left its buyback target for 20-30-year debt unchanged at $6 billion. (**Reminder: The US Treasury announced buyback operations of $6.0B in nominal coupons on September 9th, up from $4.0B and the previous $2.0B announced on August 19th.).

- US Energy Sec Wright was said to confirm a diesel ban is not being discussed currently [NYT]

- Australia’s August Jobs data mixed as employment rose stronger-than-expected to 39.5k (vs. 23.5k expected), the unemployment rate edged higher to 4.6% (vs. 4.5% expected), while the participation rate climbed to 67.1% (v 66.9% expected). Equity markets reacted, with the ASX 200 paring losses by -1.1%, while three-year yields jumped +14bps to their highest level since 2011, tracking the move in US Treasuries. Attention now turns to next week’s RBA decision on 29th September, with inflation and OIS pricing remaining the dominant focus as the ASX 30-day interbank cash rate futures October 2026 contract trades at 95.435, indicating an 86% expectation of a +25bps rate increase to 4.60%.

- Additionally, Japan’s 10-year “benchmark” JGBs yield rose +10bps amid a broader global bond selloff. Japan recorded a softened PMI data reading this week, with the manufacturing PMI registering slightly lower at 54.1 (vs. 54.9 prior), Services PMI at 51.6 (vs. 52.5 prior), and Composite PMI at 52.5 (vs. 53.5 prior). Japanese business rate of expansion slipped to a four-month low, both manufacturing and service providers recorded slower rates of output and new order growth compared to the previous month. Additionally, companies continued to add to their payrolls at the steepest rate in seven months, amid greater optimism around the 12-month business outlook.

- BOJ daily accounts data might garner some interest after FX rate check speculation from Fri [The data is generally released around 5 AM ET]

- No fresh developments after the market close/overnight. Iran is reviewing the U.S. response to its proposal to end hostilities, with Tehran emphasizing that permanently ending the conflict and lifting the U.S. blockade remain its key priorities, despite prior reports that Iran’s Secretary Chief maintained that the Strait of Hormuz will not reopen and negotiations will not resume until Iranian conditions are met. Amid this backdrop, U.S. Secretary of State Marco Rubio again reported that Iran fired on commercial vessels and affirmed that the U.S. will keep defending vessels and holding the Strait of Hormuz open. As a result, WTI and Brent crude futures opened broadly flat at $92.67/bbl (vs $92.69/bbl prior) and $103.43/bbl (vs $103.42/bbl prior), respectively.

- Indonesia’s central bank (Bank Indonesia) left its benchmark BI Rate unchanged at 5.75% for a third consecutive meeting, as expected, while also holding the deposit facility rate at 4.75% and the lending facility rate at 6.50%. The decision aims to maintain 2026 inflation between the 1.5-3.5% range, maintain 2026 GDP growth between the 4.9-5.7% range, and maintain 2027 inflation between the 1.5-3.5% range.

- US equity FUTs -0.3% to -0.2% during Asia trading.

Looking ahead (Asian-weighted focus, using EST/EDT time-zone)

-Tue Sep 22nd: EU Prelim Sept Consumer Confidence, (Mon night, AU Prelim Sept S&P Mnfg/Svcs PMI, IN Prelim Sept HSBC Mnfg/Svcs PMI, SG Aug CPI & Core CPI, ID Interest Rate Decision, TW Aug Industrial Production).

-Wed Sep 23rd: EU Prelim Sept HCOB Mnfg/Svcs/Composite PMI, US Prelim Sept S&P Mnfg/Svcs/Composite PMI, (Wed night, JP Prelim Sept S&P Mnfg/Svcs PMI, AU Aug Unemployment Rate).

-Thu Sep 24th: EU ECB Economic Bulletin, HK Aug Trade Balance, US Aug Building Permits & New Home Sales, (Thu night, SG Aug Industrial Production).

-Fri Sep 25th: US Aug Durable Goods Orders.

Holidays in Asia this week

- Mon Sep 21st: Japan.

-Tue Sep 22nd: Japan.

-Wed Sep 23rd: Japan.

-Thu Sep 24th: South Korea.

-Fri Sep 25th: China, South Korea, Taiwan.

Headlines/Economic data

Australia/New Zealand

-(AU) ASX 200 Index opens -1.3% at 8,658.

-(AU) Australia Aug employment change: 39.5k v 23.5ke; unemployment rate: 4.6% V 4.5%E.

-(AU) Australia three-year yields rises +14bps, highest level since 2011; tracks rise in UST yields, Sept 29th (Tues) RBA rate decision also in focus.

-(AU) Australia Defense Minister: Impact from OpenAI breach minor; This incident is a warning on AI development; OpenAI hack was a "serious incident"; OpenAI being cooperative, but situation is unacceptable.

-(AU) Amaero Inc.postpones U.S. Initial Public Offering; cites market conditions.

-(AU) QAN.AU Australia's Transport Workers' Union: Hundreds of Qantas airport workers strike for 24 hours at Sydney, Adelaide, Brisbane, Perth airports; Qantas workers are seeking fair pay in line with industry standards, others.

-(NZ) New Zealand sells NZ$475M vs. NZ$475M indicated in 2030 inflation-indexed bonds, 2031 and 2037 bonds.

China/Hong Kong

-(CN) Shanghai Composite Index opens -0.3% at 3,925; (HK) Hang Seng Index opens -0.7% at 24,649.

-(CN) China President Xi: Look forward to in-depth exchanges with President Trump; To expand cooperation between two countries in various areas - Statement released by China's Foreign Ministry.

-(CN) China Pres Xi has arrived in US for state visit.

-(CN) China President Xi’s US visit begins with ‘rare’ airport welcome from Trump, trade truce extension - SCMP.

- (CN) China PBOC to offer banks up to CNY1T [record amount of overnight funds] a day over the Mid-Autumn Festival holidays between October 1st-7th, 2026 - US financial press.

-(CN) World Robotics 2026 Report by International Federation of Robotics: China installed 354,000 industrial robots in 2025, nearly 3 in 5 worldwide

-(CN) China PBOC sets the yuan mid-point at 6.7489 v 6.7468 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY52B in 7-day Reverse Repos; Net drains CNY111B v drains CNY102B prior.

-(HK) Hong Kong is looking to sell up to $2.6B in digital bonds - Press.

-(HK) 9969.HK Enters into strategic collaboration and license agreement with Eli Lilly; Eligible for up to $100M upfront and $3.25B in milestone payments.

Japan

-(JP) Nikkei 225 Index opens +0.6% at 65,442.

-(JP) Japan Sept preliminary Manufacturing PMI: 54.1 V 54.9 PRIOR (9th month of expansion).

-(JP) Japan 10-year bond yield rises +10bps amid global bond selloffs.

-(JP) Japan Chief Cabinet Sec Kihara: Watching US-China summit with strong interest - Tokyo, Japan.

-(JP) Japan Fin Min Katayama: Reiterates principles on Forex established since coordinated Japan-US intervention remain in effect - Tokyo, Japan.

-(JP) Japan's Finance Ministry to discuss reducing issuance under liquidity-enhancement auctions for medium-terms JGBs - Sources.

-(JP) Japan PM said to be cautious about setting a GDP defense spending target - Nikkei.

-(JP) Tokyo used condo sales decline for the first time in >2 years; cites Aug data - US financial press.

-(JP) HMC Said to be in the final stage of preparation to build a new hybrid vehicle production plant in Ohio for an investment of ¥300-400B; production is expected to begin during 2030 - Nikkei.

Korea

-(KR) Kospi Index closed for the 'Korean Thanksgiving Day' holiday.

-(KR) North Korea conducted test fire of updated guided rocket artillery shells on Sept 22nd.

-(KR) North Korea Foreign Minister Choe: The more the US and its allies advocate denuclearization, the more it strengthens our stance towards the US - Statement.

-(KR) 042660.KR South Korea's Presidential Office: President Lee discussed warship construction with US President Trump.

Other Asia

-(ID) Indonesia central bank (BI) leaves bi rate unchanged at 5.75%; as expected [EU market close].

-(ID) Indonesia Central Bank (BI) Gov Damayanti: Measures to stabilize rupiah will be strengthened; Going forward rupiah is seen stable; Domestic economic growth remains good - pre-rate decision press conference [EU market close].

-(ID) Indonesia Aug M2 Money Supply Y/Y: 8.2% v 8.3% prior.

-(ID) Indonesian Rupiah weakens to 17,900/USD, lowest level since August 7th 2026.

-(ID) Indonesia Central Bank (BI) Official: In general, Rupiah movement is in line with regional currencies; Is in the market to maintain rupiah stability to reflect fundamentals.

-(IN) India Central Bank (RBI) said to conduct at least $10B FX swaps to drain cash - US financial press.

-(IN) India Minister of External Affairs (MEA): G4 ministers emphasized it is crucial to implement United Nations Security Council (UNSC) reform.

-(IN) India copper producers seek tax cut – US financial press.

-(IN) India Central Bank (RBI) said to be likely selling USD through state-run banks to limit the Rupee weakness – traders.

-(TH) Thailand Foreign Minister Sihasak: Thailand in serious discussions with US on tariffs.

-(PH) Philippines: To offer 2.5-year retail bonds due 2029 on Sept 29th.

North America

-(US) Treasury Sec Bessent: Agreed to extend China trade truce until January 10th [2027] - Fox News.

-(US) Sept preliminary S&P Manufacturing PMI: 57.0 V 53.7E (highest since May 2022 and on track for 13th straight expansion); Overall rate of inflation hitting the highest since October 2022 [US market close].

-(US) Fed's Barr (voter): Inflation is not clearly trending toward target in a timely way; Further rate hikes are likely needed to ensure a timely return to 2% inflation target [US market close].

-(US) Treasury leaves buyback target at $6B for 20-30-year debt, unchanged from last week [US market close].

-(US) US, Mexico postpone USMCA discussions until October, 2026 - El Universal.

-(US) Treasury $70b 5-year note auction draws 5.033% V 4.393% prior, BTC 2.21 V 2.37 PRIOR, (auction tailed by 3.1 bps) [US market close].

-(US) DOE CRUDE: +3.0M V -0.5ME; GASOLINE: -1.7M V 0ME; DISTILLATE: -0.4M V -0.5ME [US market close].

-(US) White House: Not considering diesel export ban, any report is "fake news" [denies earlier Politico report of a 90-day diesel ban being planned] [US market close].

-(US) Energy Sec Wright: Diesel export ban would not work, it would raise gasoline prices [US market close].

-(US) Trump officials said to be considering rolling back beef import plan - press [US market close].

-(US) MBA Mortgage Applications w/e Sept 18th: -1.5% v -4.1% prior [US market close].

-(US) President Trump: Great greeting with Xi; [Asked on Trump-Xi visit US attendees] Entire tech, banking worlds will be at dinner tomorrow - The President participates in an Arrival Ceremony with the President of the People's Republic of China [Open Press], The White House.

-(US) State Department: US pledges additional $267M for DRC Ebola outbreaks.

-(US) White House releases schedule for Trump-Xi summit on Thursday [September 24th, 2026].

-(US) Senate Majority Leader Thune believes Pres Trump is open to implementing AI guardrails despite his public defiance on the issue - Axios.

-(US) US considers initiative to promote dollar-backed stablecoin abroad - US financial press.

-(US) META CEO Zuckerberg: Meta expects to make money from Muse by taking small fee from transactions [Meta debuts $349 camera-free ray-bans, brings Muse to glasses] - Annual Connect Conference in Menlo Park, California.

-(US) BA US President Trump: Today, Türkiye and Bangladesh announced purchases totaling 111 Boeing Airplanes—with options for 50 more—following support from Howard Lutnick and the Department of Commerce.

-(US) OPENAI.IPO Statement: ChatGPT advertisements will begin rolling out across Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, and Taiwan [update].

-(CA) Canada PM Carney prepared for risk that Trump might order military action against Canada - The Globe and Mail.

-(VE) Venezuela Acting Leader Delcy Rodriguez: Recent energy deal with US will help global energy balance; US oil deal will help support global energy balance - UNGA.

-(AR) Argentina, US launch Andes-Atlantic economic corridor; US to fund $7B for Argentina's critical minerals, energy - Joint-Statement.

Europe

-(EU) EU27 Aug New Car Registrations: 5.3%.

-(EU) European Council President Costa: Spoke to Iran president, urged Iran to resume its cooperation with the IAEA.

-(EU) ECB Lane: We are not seeing any big wage response to the energy shock [EU market close].

-(UR) Ukraine [Kyiv] Mayor Klitschko: One dead, two medics injured in Russian missile attack in the city.

-(UK) Reportedly UK Treasury is open to smaller fiscal headroom to reduce tax increases - FT.

-(UR) Ukraine [Kyiv] Mayor Klitschko: One dead, two medics injured in Russian missile attack in the city.

-(ZA) South Africa central bank (SARB) raises interest rate by 25bps to 7.25%; as expected [EU market close].

-(FI) Finland Aug PPI M/M: % v 0.1% prior; Y/Y: 7.3% v 6.9% prior.

Middle East

-(IR) Iran Senior official: Tehran is reviewing the US response to its proposal to end hostilities; There are still many differences between Iran and the US but diplomacy continues [EU market close].

-(IR) US Sec State Rubio: Iran fired at commercial ships again this morning; US will continue to defend ships and hold the Strait of Hormuz open [US market close].

-(YE) Yemen Houthis are increasingly supplied by China; Chinese firms are the 'biggest' sources of seized goods bound for the group – WSJ [update].

-(IR) Iran Sec Chief Rezaei: As long as Iran's conditions are not met, Hormuz will not be reopened and there will be no negotiations [EU market close].

-(IR) Iran has a ‘secret’ weapon in its war with America; Iran customs data shows thousands of shipments of dual-use components from China - WSJ.

-(IR) Commodity vessels transiting via Strait of Hormuz at 10, below the 10-day moving average of ~17; cites shipping data - financial press.

Levels as of 01:20 ET

Nikkei 225 +1.3%; ASX 200 -0.7%; Hang Seng -0.6%; Shanghai Composite -1.0%; Kospi closed for the 'Korean Thanksgiving Day' holiday.

Equity S&P500 Futures -0.2%; Nasdaq100 -0.3%; DAX -0.3%; FTSE100 -0.3%.

EUR 1.1389-1.1369 ; JPY 158.37-157.80; AUD 0.7052-0.7018; NZD 0.5686-0.5668.

Gold +0.1% at $4,291/oz; BTC -2.7% at $84,152; WTI Crude Oil -0.7% at $91.53/bbl; Copper -0.4% at $6.7630/lb.