Asia equities claw back early losses

Asia market update: JP gov’t officials appear to walk back Ueda weekend comments; Asia equities claw back early losses; Country Garden lives to fight another day for now; US CPI tomorrow night.

General trend

- After the strong push back in the Yen and Yuan yesterday, today a much quieter day in Asia currencies.

- Shortly after the open JP 10-yr yields rose above yesterday’s 9-year highs to hit 0.710%, the highest since Jan 2014. Currently higher again at 0.7210%.

- However, today various Japan gov’t officials appeared to offer a more nuanced interpretation of BOJ Gov Ueda’s weekend comments pointing at a “chance of ending negative rates this year”.

- Both Finance Min Suzuki and Chief Cabinet Sec Ueda said they expect the BOJ to “closely communicate” with Japan gov’t and “conduct policy appropriately”

- Senior LDP Official Seko was more direct, saying that he took Gov Ueda's media interview to mean the BOJ will continue with easing until after the 2% inflation rate is achieved.

- USD/JPY currently bidding at the day’s highs, having retraced ~50% of yesterday’s Yen gains on Ueda’s comments.

- Troubled China real estate developer Country Garden shares up by ~10% as it announced that 6 out of 8 onshore Yuan bonds have agreed to extend by 3 years. (The other two bond-holders’ vote has been delayed to tonight)

- China Evergrande also up 16%, with the Hang Seng Mainland Properties Index +1.5% during morning trading.

- Japan’s Nikkei led Asia, +0.8% in a mixed day for equities, with most indices still struggling to break into positive territory after opening lower.

- In Australia, business confidence remained stable to the prior month, while consumer confidence fell in both weekly and monthly measures.

- US equity FUTs are slightly down in Asia trading

Looking ahead (Asian time zone)

- Wed night US CPI

- Thu AU employment

- Thu night ECB rate decision & US Retail Sales & US PPI & US initial jobless

- Fri CN “Data Dump”: Industrial Production, Retail Sales, House Prices, Unemployment, Fixed Assets

- Fri night Michigan Consumer Sentiment

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,201.

- Australia Sept Consumer Confidence: 79.7 v 81 prior.

- Australia Aug Business Confidence: 2 v 2 prior.

- Australia ANZ/Roy Morgan Weekly Consumer Confidence: 77.6 v 78.7 prior.

- Australia sells A$150M v A$150M indicated in 1.25% Aug 2040 indexed bonds: Avg Yield: 1.8119% v 1.8125% prior; bid-to-cover: 2.83x v 3.50x prior (Aug 7th 2023).

- Australia raised gold holdings by 8.989 tons to 76.89 tons in 2023 – IMF.

- Chevron (CVX) Follow Up: Australia union alliance is opposed Co's untested "intractable bargaining declaration" with industrial umpire for its Gorgon and Wheatstone LNG plants.

- New Zealand Aug Total Card Spending M/M: 0.9% v -0.9% prior.

- New Zealand July Net Migration: 5.7K v 5.0K prior.

- New Zealand Treasury & Debt Management Office pre-election economic and fiscal update; Forecasts budget deficit of NZ$11.4B for FY24, with a return to surplus in 2026/27, one year delayed.

China/Hong Kong

- Hang Seng opens -0.4% at 18,015.

- Shanghai Composite opens -0.1% at 3,140.

- Country Garden (2007.HK) Wins approval to extend six out of eight onshore bond repayments by 3 years.

- China PBOC Gov Pan Gongsheng attended BIS meeting.

- China said to tighten scrutiny of Local Govt Financial Vehicles (LGFVs) as parts of its rescue package – press.

- China PBOC said to scrutinise bulk US Dollar purchases of $50m or above by domestic firms.

- China Foreign Ministry Daily Briefing: UK spy activity is 'non-existent'; UK should stop framing China (overnight update).

- China Aug Vehicle Wholesales Y/Y: +8.4% v -1.4% prior – CAAM (overnight update).

- China PBOC sets Yuan reference rate: 7.1986 v 7.2148 prior.

- China PBOC Open Market Operation (OMO): Sells CNY209B in 7-day reverse repo; Net CNY195B v injects CNY203B prior.

Japan

- Nikkei 225 opens +0.5% at 32,629.

- Japan Fin Min Suzuki: Hoping BOJ will conduct appropriate policy towards its goal.

- Japan Chief Cabinet Sec Matsuno: Monetary policy specifics are up to BOJ to decide; Expects BOJ to closely communicate with Japan govt and conduct policy appropriately.

- Japan LDP Senior Official Hiroshige Seko: Took Gov Ueda's comments in weekend media interview to mean BOJ will continue with easing.

- Japan Chief Cabinet Sec Matsuno: Monitoring North Korea & Russia leader's talks with concern in regard to UN resolution banning North Korea's weapons exports, and impact on Russia's invasion of Ukraine - financial press.

- Japan Fair Trade Commission raided offices of Shinmayway, IHI unit, Sumitomo Heavy unit and others for suspected antitrust breach - Japan press.

- Japan Aug Preliminary Machine Tool Orders Y/Y: -17.6% v -19.7% prior (overnight update).

- Japan sells ¥2.02T in 5-year JGB bonds; ; AVG yiled: 0.2910% V 0.1890% prior; bid-to-cover: 4.41X V 3.35X 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 opens +0.4% at 2,566.

- South Korea Pres Yoon says will pursue Summit with Japan, China.

- Moscow will give South Korea details of North Korea leader Kim's visit to Russia if Seoul desires - Russia Deputy PM and spokesman Peskov to Russia state media.

- US White House again urges North Korea not to provide weapons to Russia.

- North Korea leader Kim Jong Un said to have departed to Russia via train for a meeting with Putin.

Other Asia

- Taiwan Ministry of Defense 2023 National Defense Report: China's military intimidation and intrusions a new normal.

North America

- US House Speaker McCarthy says Gov't shutdown can be avoided - speaking to reporters.

- US Dep Treasury Sec Adeyemo: Auto industry and UAW union are in good position to cut deal; US economy is moving in the right direction and has limited exposure to Chinese economy.

Europe

- Czech Central Bank (CNB) Prochazka: 'Definitely' does not expect a rate cut in Sept.

- NATO said to be preparing its biggest live joint command exercise since the Cold War during Feb-Mar 2024.

- The drill will take place across Germany, Poland and the Baltics to simulate how the alliance would attempt to repel Russian aggression against one of its members - FT.

- UK Chancellor of the Exchequer (Fin Min) Hunt: To announce more growth measures in the months ahead.

- UK BOE's Mann (hawk): Need to do what is necessary to achieve 2% target sooner rather than later.

Levels as of 01:20 ET

- Nikkei 225, +0.2%, ASX 200 +0.8% , Hang Seng -0.2%; Shanghai Composite -0.2% ; Kospi -0.2%.

- Equity S&P500 Futures: -0.1%; Nasdaq100 -0.1%; Dax +0.1%; FTSE100 +0.3%.

- EUR 1.0737-1.0768 ; JPY 146.44-147.87 ; AUD 0.6414-0.6462 ; NZD 0.5906-0.5927.

- Gold -0.2% at $1,943/oz; Crude Oil +0.4% at $87.62/brl; Copper -0.1% at $3.7947/lb.