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China Q3 GDP was mixed, while September activity figures were better than forecast, although property remains a clear drag. The data continues to underscore the challenges of meeting this year's growth target.
China Equity sentiment has been buoyed, as the PBoC Governor spoke of the take up of the swap facility designed to support the market. USD/CNH is modestly lower.
USD/JPY is lower as verbal rhetoric around FX has picked up following the recent break above 150.00. Japan core CPI data was slightly stronger than forecast. JGB futures are holding weaker, -16 compared to settlement levels.
Looking ahead in the UK we have retail sales, we have housing starts in the, along with Fed speak from Bostic and Waller.
Tsys futures have traded in narrow ranges throughout the session, there was earlier a TU/UXY block steepener, and a block seller of FV. TU is +00⅞ at 103-13¼, while TY is trading +01 at 112-02+
Cash tsy curve has twist-steepened, yields are +/-1bps. The 2yr is -0.9bps at 3.963%, while the 10yr is trading unchanged at 4.091%.
Focus in the region today has been all on China data, with GDP coming in slightly above estimates at 4.6% vs 4.5% expected, retail sales 3.2% vs 2.5% & Industrial Production 5.4% vs 4.6%. China's banks have also cut yuan deposit rates.
Fed fund futures are pricing in 23bps or 92% chance of a cut at the November meeting, and 43.3bps of cuts by the December meeting both little changed over the past few sessions. Looking further out the curve there is 143.6bps priced in through to October 2025.
Today's data schedule is a little less eventful, with housing starts/building permits featuring. We get plenty of Fed speakers though, including Bostic, Kashkari, Waller, and Bostic.
JGB futures are holding weaker, -16 compared to settlement levels, after this morning National CPI data printed core measures above expectations.
Japan’s Headline National CPI for September printed in line with expectations at +2.5% y/y versus +3.0% prior. However, the Core and Core-Core measures printed above expectations at +2.4% y/y and +2.1% y/y respectively versus estimates of +2.3% and +2.0% and priors +2.8% and +2.0%.
“Daido Life Insurance Co. will buy more long-term bonds if yield on 30-year Japanese government debt rises to around 2.5% in second half of fiscal year, according to an investment briefing by the insurer on Friday.” (per BBG)
Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases. However, several Fed speakers are lined up, including Bostic, Kashkari, Waller, and Bostic.
Cash JGBs are flat to 4bps cheaper across benchmarks, with the curve flatter. The benchmark 10-year yield is 1bp higher at 0.979% versus the cycle high of 1.108%.
Swap rates are 1-5bps higher, with the curve also steeper. Swap spreads are tighter out to the 7-year and wider beyond.
The local calendar is light on Monday with Tokyo Condominiums for Sale as the sole release.
In the $-bloc, official rate expectations out to July 2025 have mostly softened over the past week. Canada led with a 17bps decline, followed by New Zealand at -12bps, and the US at -2bps. Australia was the outlier, with a modest increase of +4bps.
In Canada, easing expectations were supported by September’s CPI data, which showed the slowest annual inflation since February 2021 at +1.6% year-on-year, below the forecast of +1.8% and August’s +2%. Month-on-month, CPI fell -0.4%, below the expected -0.3%.
In New Zealand, the Q3 CPI also printed lower than expected, bringing annual headline inflation back within the RBNZ’s 1-3% target range for the first time since early 2021. Core inflation measures like the trimmed mean dropped to 2.5% y/y from 3.7%, while the weighted median eased to 2.8% y/y from 3.5%. This likely reassured the RBNZ that price pressures are softening.
In contrast, Australia’s stronger-than-expected employment report signaled that the labour market’s gradual weakening may have stalled or reversed, reinforcing the likelihood that policy will remain “sufficiently restrictive” for now.
Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.59%, -128bps; Canada (BoC): 2.73%, -152bps; Australia (RBA): 3.85%, -47bps; and New Zealand (RBNZ): 3.23%, -152bps.
ACGBs (YM -5.0 & XM -6.5) are weaker and near Sydney session lows. That said, ranges have been relatively small on a data-light day.
Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases. However, several Fed speakers are lined up, including Bostic, Kashkari, Waller, and Bostic.
Cash ACGBs are 4-6bps cheaper on the day and 11-12bps cheaper than yesterday’s pre-jobs levels. The AU-US 10-year yield differential is at 22bps.
Swap rates are 4-6bps higher, with the 3s10s curve steeper.
The bills strip has bear-steepened, with pricing -1 to -5.
RBA-dated OIS pricing is 3-5bps firmer for 2025 meetings. A cumulative 4bps of easing is priced by year-end.
On Monday, the local calendar is empty apart from a fireside chat by Andrew Hauser, RBA Deputy Governor, at the CBA 2024 Global Markets Conference.
Next week, the AOFM plans to sell A$700mn of the 3.25% 21 April 2029bond on Monday, A$800mn of the 4.25% 21 December 2035bond on Wednesday and A$300mn of the 4.25% 21 June 2034bond on Friday.
NZGBs closed flat to 4bps cheaper, but 2-3bps better than its worst levels. The 2/10 curve closed steeper, with the 2-year yield sitting 7bps lower than Wednesday’s pre-CPI level. By contrast, the 10-year yield sits 3bps higher after being pressured by higher US tsy yields, following yesterday’s robust US retail sales data.
Nevertheless, the NZGB 10-year has outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 3-4bps tighter on the day.
Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases.
RBNZ dated OIS pricing closed little changed for 2025 meetings today but remains 5-9bps softer compared to pre-Q3 CPI levels. The market is currently pricing 56bps of easing for the November meeting, with a cumulative 100bps expected by February and 159bps by July.
The local calendar is empty on Monday, with Trade Balance data and a speech on Financial Markets by RBNZ Assistant Governor Silk on Tuesday. RBNZ Governor Adrian Orr will speak about monetary policy at the Peterson Institute on Thursday.
G10 FX trends have moved slightly against the USD in the first part of Friday trade. The USD BBDXY index sits down slightly, last near 1253.25, off a little over 0.10%.
This comes after the index made fresh highs above 1256 in Thursday US trade, levels last seen in early August.
USD/JPY has ticked back under 150.00, last near 149.90, around 0.20% stronger in yen terms. Earlier data showed the Sep CPI was slightly above market expectations for the core metrics, with ex fresh food and energy rising 2.1%y/y (2.0% forecast). Services prices were slightly softer though in y/y terms.
With the breach of 150.00 in USD/JPY we have official rhetoric on FX stepping up, with Deputy Cabinet Secretary AOKI stating the authorities are watching FX markets closely.
AUD/USD got close to 0.6720, but sits back near 0.6700/05 in latest dealings only a touch above end Thursday levels in US trade. China Q3 GDP was mixed with q/q growth below forecasts but y/y growth a touch above. Sep activity figures saw IP and retail beat, but property remains soft.
China/HK equities rallied as the PBoC Governor spoke about the swap facility to support local bourses, although at the break markets are off highs. Iron ore and copper are also off earlier highs.
NZD/USD is little changed, last near 0.6060. Earlier highs were above 0.6070.
US equity futures sit close to unchanged. US yields are down a touch in terms of Tsys.
Looking ahead in the UK we have retail sales, we have housing starts, along with Fed speak from Bostic and Waller.
Asian equities are mixed today, with Chinese stocks leading the gains after the PBOC introduced a relending mechanism to support share buybacks. Chinese economic data for September exceeded expectations, adding to the positive sentiment. The MSCI Asia Pacific index gained 0.9%, led by Taiwan and TSMC's strong performance. Despite today’s rebound, the index is still set for its third consecutive weekly loss as regional focus shifts to earnings reports.
In China, the CSI 300 is +0.8%, while small-cap focused indices outperformed today with the ChiNext rallying more than 3%, CSI 1000 +1.75% & CSI 2000 +1.15%. The PBOC’s new relending mechanism aimed at boosting share buybacks added momentum. Retail sales grew 3.2% in September, beating estimates, though concerns remain over property prices, with new-home prices falling 0.71% m/m in September. Investors are also concerned about the longer-term economic outlook, especially in the property sector.
While in HK the HSI is 0.75% higher, bolstered by gains in tech shares, HSTech Index +1.05%.
Taiwan’s Taiex surged 2%, driven by a strong performance from TSMC +5.30%, which hit a record high following robust earnings and raised its sales forecast.
South Korean equities are lower today, with SK Hynix falling 4.60%, while Samsung is trading 0.70% lower. Foreign investors have again been selling local tech stocks, with a net outflow for the KOSPI of $280m, the KOSPI is trading 0.70% lower.
Japanese equities are little changed today, there was early support for exporters as the yen initially weakened above 150, however comments from Japan’s currency chief Mimura warned against one-sided moves which then saw some support for the currency. Earlier, Japan’s Headline National CPI for September printed in line with expectations at +2.5% y/y versus +3.0% prior. However, the Core and Core-Core measures printed above expectations at +2.4% y/y and +2.1% y/y respectively versus estimates of +2.3% and +2.0% and priors +2.8% and +2.0%.
Australia's ASX 200 is 0.90% lower today, giving back some of the week's gains. Mining stocks were the biggest drag, with iron ore futures falling sharply, pulling down major miners like BHP (-2.3%), Rio Tinto (-1.4%), and Fortescue (-3.1%). Gold miners, however, gained as gold extended its rally above $2,700 per ounce. New Zealand's NZX 50 closed 0.43% higher.
Flows were mixed on Thursday, Taiwan saw inflows likely linked to TSMC's earnings beat, while all other regions saw mixed flows.
South Korea: Recorded outflows of -$292m yesterday, bringing the 5-day total to -$1.05b. YT) flows remain positive at +9.14b. The 5-day average is -$210m, worse than the 20-day average of -$194m and the 100-day average of -$60m.
Taiwan: Saw inflows of +$135m yesterday and +$769m over the past 5 days. However, YTD flows remain deeply negative at -12.47b. The 5-day average is +$154m, better than the 20-day average of +$108m, and above the 100-day average of -$166m.
India: Experienced outflows of -$305m yesterday, with the past 5 days totaling -$1.95b. YTD inflows stand at +$3.42b. The 5-day average is -$391m, worse than both the 20-day average of -$259m and the 100-day average of +$65m.
Indonesia: Posted inflows of +$79m yesterday, bringing the 5-day total to +5$4m. YTD flows remain positive at +$2.90b. The 5-day average is +$11m, better than the 20-day average of -$37m but lower than the 100-day average of +$30m.
Thailand: Recorded outflows of -$77m yesterday, and -$104m over the past 5 days. YTD flows are negative at -$3.12b. The 5-day average is -$21m, worse than both the 20-day average of -$26m and the 100-day average of -$12m.
Malaysia: Saw inflows of +$53m yesterday, contributing to a 5-day inflow of +$16m. YTD flows stand at +$626m. The 5-day average is +$3m, better than the 20-day average of -$18m and in line with the 100-day average of +$5m.
Philippines: Reported minor outflows of -$1m yesterday, but net inflows of +$15m over the past 5 days. YTD flows are +$94m. The 5-day average is +$3m, better than the 100-day average of +$4m, but below the 20-day average of +$14m.
Oil Prices arrested their decline to move higher in the Asia morning session.
Oil prices reacted to data on inventory levels in the US as the API reported US crude inventories decreased 1.6 million bbl last week.
Stockpiles in independent storage fell in Europe's Amsterdam-Rotterdam-Antwerp oil-trading hub also, according to Insights Global.
WTI dipped initially, breaching a key technical level of US$70 to reach $69.44 before rebounding back in the Asia aternoon session at $70.85.
The rebound wasn’t enough to see WTI down over 6% for the week.
Brent too dipped on the news to US$73.26 before recovering into the afternoon to $74.65.
Brent declined for the week losing 5.5%.
Middle East tensions remain in focus with news Israel soldiers killed Hamas leader Yahya Sinwar, considered the architect of the October 7 attack.
The news likely will increase US pressure on Israel to cease military activities in the Gaza strip, a move so far ignored by the Prime Minister Netanyahu.
Israel had claimed earlier in the week that any potential attacks against Iran would not be targeting Oil infrastructure, rather the focus being on military targets.
JPMorgan released a research note suggesting that the global economy is no where near peak demand for oil and their research suggests consumption will increase, though the demand curve is flattening.
Gold is trading just below its all-time high of $2,711.99, up 0.6% in today’s Asia-Pacific session, following a 0.7% gain yesterday—its third consecutive daily rise.
Geopolitical tensions remain high amid reports of Hamas leader Sinwar being killed in Gaza.
Safe-haven demand outweighed the impact of stronger-than-expected US economic data, which continues to reflect a resilient economy. US Treasury yields jumped higher, with the 2-year yield up 3bps to 3.97% and the 10-year up 8bps to 4.10%. Lower rates are typically positive for gold, which doesn’t pay interest.
US retail sales were stronger than expected across the board and with upward revisions, with the headline index up 0.4% m/m and the core figure and control group measures, up an even stronger 0.7% m/m. Control-group sales rose at an annualised pace of 6.4% in Q3, suggesting a strong pick-up in spending, and contributing to the Atlanta Fed’s GDPnow estimate rising to 3.4%.
Meanwhile, initial jobless claims (241k) were elevated by 2024 standards but below the 259k expected.
According to MNI’s technicals team, the next resistance is seen at $2,720.5.
In September, China's home prices fell 0.71% m/m, slightly better than the 0.73% decline in August, according to data from the National Bureau of Statistics. New home prices dropped 6.09% y/y, worsening from a 5.69% fall in August.
New home prices rose in 3 cities m/m, up from 2 in August, while only 2 cities saw y/y gains (unchanged from August).
Used home prices decreased by 0.93% m/m and 9.02% y/y, slightly worse than the previous month’s figures.
No city reported a rise in used home prices either monthly or yearly.
China property stocks have saw little reaction to the data, Mainland Property Index trades +0.10% last, while BBG China Property Developer Gauge is +0.36%.
China’s third quarter GDP came in at +4.6%, marginally ahead of expectations.
Declining from +4.7% in Q2, today’s print is below the government’s stated target of achieving 5% in 2024.
A raft of policies has been announced over the quarter and it was not expected that today’s GDP release would show any impact yet from the new initiatives.
Going forward, the various stimulus measures aimed at arresting the decline in the property sector particularly should likely start to show up in the data.
USD/CNH sits near 7.1300 in latest dealings, modestly firmer in CNH terms, but tracking recent ranges. We got to lows of 7.1225 amid a more positive onshore equity mood, as PBoC Governor Pan unveiled details of the swap facility take up to support local equities.
Equity markets are in positive territory at the break but off session highs (CSI 300 +0.78%). Governor Pan also spoke about further policy support via a potential RRR cut before year end and that the LPRs will be cut by 20-25bps this coming Monday. He also mentioned lower 7-day repo rates and MLF, although it appears this referred to Sep moves, rather than fresh cuts.
Q3 GDP was softer in q/q terms but firmer in y/y terms, albeit at 4.6% still sub the government's 5% target. IP and retail sales were firmer than forecast, but property measures mostly remain in negative territory by more than double digits. The authorities hope for improving trends through Oct and Q4 and still have optimism around hitting the growth target.
USD/KRW spot is little changed, last near 1371, slightly off earlier highs close to 1374. Local equities are down by around 0.75% at this stage, with the Kospi under 2600. Offshore investors have sold a further $300mn of local stocks today.
USD/TWD spot is slightly lower, but at 32.16 remains close to recent highs. Better sentiment following TSMC's better earnings yesterday hasn't done much for TWD.
Most South East Asia currencies are firmer against the USD in the first part of Friday trade. This is in line with the slightly stronger tone of the G10 against the USD, although aggregate moves are modest. Equity sentiment is mostly positive in SEA markets, but again overall moves are modest.
USD/THB is down around 0.25%, the pair last near 33.10/15. The baht is tracking a little over 0.60% firmer for the week. The earlier BoT cut has done little to disturb baht sentiment. The government is planning on more fiscal stimulus before year end to tourism areas impacted by floods (per RTRS) and is hoping for growth of 3% this year and +3% next year. Levels wise for USD/THB 33.00 is likely to be targeted on the downside, we are sub the 20-day EMA near 33.24.
USD/MYR is only down a touch and holding above 4.3060 in latest dealings. Data earlier showed that export growth in Sep fell into negative territory, the first such fall since March of this year. It is in line with generally softer trends in export growth throughout the region.
USD/IDR is softer, the pair back under 15470, up around 0.35% in IDR terms. The rupiah is the best performing EM Asia currency over the past week. Equity inflows have improved, while bond flows have not been negative, despite a resilient USD/Yield backdrop. Policy continuity from the local government may be aiding sentiment. USD/IDR could target 15400 on the downside.
USD/PHP is back to 57.65, having met some resistance above 57.90 in the past week.
Exports declined -0.30%, with market expecting a 8.0% expansion.
Imports expanded +10.90% following +26.2% expansion in August.
The trade surplus expanded to MYR13.19bn.
Malaysian PM Ibrahim will announce his third budget on Friday, following a good 2024 for the Southeast Asian economy. The country's economy is growing faster than expected, investors are flocking to its stock market, and companies like Microsoft and Google are pledging billion-dollar projects (source: BBG).
Equity markets shook off the weaker than expected trade date with the FTSE Malay KLCI rising +0.35%.
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.
Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI (SYDNEY)
China Q3 GDP was mixed, while September activity figures were better than forecast, although property remains a clear drag. The data continues to underscore the challenges of meeting this year's growth target.
China Equity sentiment has been buoyed, as the PBoC Governor spoke of the take up of the swap facility designed to support the market. USD/CNH is modestly lower.
USD/JPY is lower as verbal rhetoric around FX has picked up following the recent break above 150.00. Japan core CPI data was slightly stronger than forecast. JGB futures are holding weaker, -16 compared to settlement levels.
Looking ahead in the UK we have retail sales, we have housing starts in the, along with Fed speak from Bostic and Waller.
Tsys futures have traded in narrow ranges throughout the session, there was earlier a TU/UXY block steepener, and a block seller of FV. TU is +00⅞ at 103-13¼, while TY is trading +01 at 112-02+
Cash tsy curve has twist-steepened, yields are +/-1bps. The 2yr is -0.9bps at 3.963%, while the 10yr is trading unchanged at 4.091%.
Focus in the region today has been all on China data, with GDP coming in slightly above estimates at 4.6% vs 4.5% expected, retail sales 3.2% vs 2.5% & Industrial Production 5.4% vs 4.6%. China's banks have also cut yuan deposit rates.
Fed fund futures are pricing in 23bps or 92% chance of a cut at the November meeting, and 43.3bps of cuts by the December meeting both little changed over the past few sessions. Looking further out the curve there is 143.6bps priced in through to October 2025.
Today's data schedule is a little less eventful, with housing starts/building permits featuring. We get plenty of Fed speakers though, including Bostic, Kashkari, Waller, and Bostic.
JGB futures are holding weaker, -16 compared to settlement levels, after this morning National CPI data printed core measures above expectations.
Japan’s Headline National CPI for September printed in line with expectations at +2.5% y/y versus +3.0% prior. However, the Core and Core-Core measures printed above expectations at +2.4% y/y and +2.1% y/y respectively versus estimates of +2.3% and +2.0% and priors +2.8% and +2.0%.
“Daido Life Insurance Co. will buy more long-term bonds if yield on 30-year Japanese government debt rises to around 2.5% in second half of fiscal year, according to an investment briefing by the insurer on Friday.” (per BBG)
Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases. However, several Fed speakers are lined up, including Bostic, Kashkari, Waller, and Bostic.
Cash JGBs are flat to 4bps cheaper across benchmarks, with the curve flatter. The benchmark 10-year yield is 1bp higher at 0.979% versus the cycle high of 1.108%.
Swap rates are 1-5bps higher, with the curve also steeper. Swap spreads are tighter out to the 7-year and wider beyond.
The local calendar is light on Monday with Tokyo Condominiums for Sale as the sole release.
In the $-bloc, official rate expectations out to July 2025 have mostly softened over the past week. Canada led with a 17bps decline, followed by New Zealand at -12bps, and the US at -2bps. Australia was the outlier, with a modest increase of +4bps.
In Canada, easing expectations were supported by September’s CPI data, which showed the slowest annual inflation since February 2021 at +1.6% year-on-year, below the forecast of +1.8% and August’s +2%. Month-on-month, CPI fell -0.4%, below the expected -0.3%.
In New Zealand, the Q3 CPI also printed lower than expected, bringing annual headline inflation back within the RBNZ’s 1-3% target range for the first time since early 2021. Core inflation measures like the trimmed mean dropped to 2.5% y/y from 3.7%, while the weighted median eased to 2.8% y/y from 3.5%. This likely reassured the RBNZ that price pressures are softening.
In contrast, Australia’s stronger-than-expected employment report signaled that the labour market’s gradual weakening may have stalled or reversed, reinforcing the likelihood that policy will remain “sufficiently restrictive” for now.
Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.59%, -128bps; Canada (BoC): 2.73%, -152bps; Australia (RBA): 3.85%, -47bps; and New Zealand (RBNZ): 3.23%, -152bps.
ACGBs (YM -5.0 & XM -6.5) are weaker and near Sydney session lows. That said, ranges have been relatively small on a data-light day.
Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases. However, several Fed speakers are lined up, including Bostic, Kashkari, Waller, and Bostic.
Cash ACGBs are 4-6bps cheaper on the day and 11-12bps cheaper than yesterday’s pre-jobs levels. The AU-US 10-year yield differential is at 22bps.
Swap rates are 4-6bps higher, with the 3s10s curve steeper.
The bills strip has bear-steepened, with pricing -1 to -5.
RBA-dated OIS pricing is 3-5bps firmer for 2025 meetings. A cumulative 4bps of easing is priced by year-end.
On Monday, the local calendar is empty apart from a fireside chat by Andrew Hauser, RBA Deputy Governor, at the CBA 2024 Global Markets Conference.
Next week, the AOFM plans to sell A$700mn of the 3.25% 21 April 2029bond on Monday, A$800mn of the 4.25% 21 December 2035bond on Wednesday and A$300mn of the 4.25% 21 June 2034bond on Friday.
NZGBs closed flat to 4bps cheaper, but 2-3bps better than its worst levels. The 2/10 curve closed steeper, with the 2-year yield sitting 7bps lower than Wednesday’s pre-CPI level. By contrast, the 10-year yield sits 3bps higher after being pressured by higher US tsy yields, following yesterday’s robust US retail sales data.
Nevertheless, the NZGB 10-year has outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 3-4bps tighter on the day.
Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases.
RBNZ dated OIS pricing closed little changed for 2025 meetings today but remains 5-9bps softer compared to pre-Q3 CPI levels. The market is currently pricing 56bps of easing for the November meeting, with a cumulative 100bps expected by February and 159bps by July.
The local calendar is empty on Monday, with Trade Balance data and a speech on Financial Markets by RBNZ Assistant Governor Silk on Tuesday. RBNZ Governor Adrian Orr will speak about monetary policy at the Peterson Institute on Thursday.
G10 FX trends have moved slightly against the USD in the first part of Friday trade. The USD BBDXY index sits down slightly, last near 1253.25, off a little over 0.10%.
This comes after the index made fresh highs above 1256 in Thursday US trade, levels last seen in early August.
USD/JPY has ticked back under 150.00, last near 149.90, around 0.20% stronger in yen terms. Earlier data showed the Sep CPI was slightly above market expectations for the core metrics, with ex fresh food and energy rising 2.1%y/y (2.0% forecast). Services prices were slightly softer though in y/y terms.
With the breach of 150.00 in USD/JPY we have official rhetoric on FX stepping up, with Deputy Cabinet Secretary AOKI stating the authorities are watching FX markets closely.
AUD/USD got close to 0.6720, but sits back near 0.6700/05 in latest dealings only a touch above end Thursday levels in US trade. China Q3 GDP was mixed with q/q growth below forecasts but y/y growth a touch above. Sep activity figures saw IP and retail beat, but property remains soft.
China/HK equities rallied as the PBoC Governor spoke about the swap facility to support local bourses, although at the break markets are off highs. Iron ore and copper are also off earlier highs.
NZD/USD is little changed, last near 0.6060. Earlier highs were above 0.6070.
US equity futures sit close to unchanged. US yields are down a touch in terms of Tsys.
Looking ahead in the UK we have retail sales, we have housing starts, along with Fed speak from Bostic and Waller.
Asian equities are mixed today, with Chinese stocks leading the gains after the PBOC introduced a relending mechanism to support share buybacks. Chinese economic data for September exceeded expectations, adding to the positive sentiment. The MSCI Asia Pacific index gained 0.9%, led by Taiwan and TSMC's strong performance. Despite today’s rebound, the index is still set for its third consecutive weekly loss as regional focus shifts to earnings reports.
In China, the CSI 300 is +0.8%, while small-cap focused indices outperformed today with the ChiNext rallying more than 3%, CSI 1000 +1.75% & CSI 2000 +1.15%. The PBOC’s new relending mechanism aimed at boosting share buybacks added momentum. Retail sales grew 3.2% in September, beating estimates, though concerns remain over property prices, with new-home prices falling 0.71% m/m in September. Investors are also concerned about the longer-term economic outlook, especially in the property sector.
While in HK the HSI is 0.75% higher, bolstered by gains in tech shares, HSTech Index +1.05%.
Taiwan’s Taiex surged 2%, driven by a strong performance from TSMC +5.30%, which hit a record high following robust earnings and raised its sales forecast.
South Korean equities are lower today, with SK Hynix falling 4.60%, while Samsung is trading 0.70% lower. Foreign investors have again been selling local tech stocks, with a net outflow for the KOSPI of $280m, the KOSPI is trading 0.70% lower.
Japanese equities are little changed today, there was early support for exporters as the yen initially weakened above 150, however comments from Japan’s currency chief Mimura warned against one-sided moves which then saw some support for the currency. Earlier, Japan’s Headline National CPI for September printed in line with expectations at +2.5% y/y versus +3.0% prior. However, the Core and Core-Core measures printed above expectations at +2.4% y/y and +2.1% y/y respectively versus estimates of +2.3% and +2.0% and priors +2.8% and +2.0%.
Australia's ASX 200 is 0.90% lower today, giving back some of the week's gains. Mining stocks were the biggest drag, with iron ore futures falling sharply, pulling down major miners like BHP (-2.3%), Rio Tinto (-1.4%), and Fortescue (-3.1%). Gold miners, however, gained as gold extended its rally above $2,700 per ounce. New Zealand's NZX 50 closed 0.43% higher.
Flows were mixed on Thursday, Taiwan saw inflows likely linked to TSMC's earnings beat, while all other regions saw mixed flows.
South Korea: Recorded outflows of -$292m yesterday, bringing the 5-day total to -$1.05b. YT) flows remain positive at +9.14b. The 5-day average is -$210m, worse than the 20-day average of -$194m and the 100-day average of -$60m.
Taiwan: Saw inflows of +$135m yesterday and +$769m over the past 5 days. However, YTD flows remain deeply negative at -12.47b. The 5-day average is +$154m, better than the 20-day average of +$108m, and above the 100-day average of -$166m.
India: Experienced outflows of -$305m yesterday, with the past 5 days totaling -$1.95b. YTD inflows stand at +$3.42b. The 5-day average is -$391m, worse than both the 20-day average of -$259m and the 100-day average of +$65m.
Indonesia: Posted inflows of +$79m yesterday, bringing the 5-day total to +5$4m. YTD flows remain positive at +$2.90b. The 5-day average is +$11m, better than the 20-day average of -$37m but lower than the 100-day average of +$30m.
Thailand: Recorded outflows of -$77m yesterday, and -$104m over the past 5 days. YTD flows are negative at -$3.12b. The 5-day average is -$21m, worse than both the 20-day average of -$26m and the 100-day average of -$12m.
Malaysia: Saw inflows of +$53m yesterday, contributing to a 5-day inflow of +$16m. YTD flows stand at +$626m. The 5-day average is +$3m, better than the 20-day average of -$18m and in line with the 100-day average of +$5m.
Philippines: Reported minor outflows of -$1m yesterday, but net inflows of +$15m over the past 5 days. YTD flows are +$94m. The 5-day average is +$3m, better than the 100-day average of +$4m, but below the 20-day average of +$14m.
Oil Prices arrested their decline to move higher in the Asia morning session.
Oil prices reacted to data on inventory levels in the US as the API reported US crude inventories decreased 1.6 million bbl last week.
Stockpiles in independent storage fell in Europe's Amsterdam-Rotterdam-Antwerp oil-trading hub also, according to Insights Global.
WTI dipped initially, breaching a key technical level of US$70 to reach $69.44 before rebounding back in the Asia aternoon session at $70.85.
The rebound wasn’t enough to see WTI down over 6% for the week.
Brent too dipped on the news to US$73.26 before recovering into the afternoon to $74.65.
Brent declined for the week losing 5.5%.
Middle East tensions remain in focus with news Israel soldiers killed Hamas leader Yahya Sinwar, considered the architect of the October 7 attack.
The news likely will increase US pressure on Israel to cease military activities in the Gaza strip, a move so far ignored by the Prime Minister Netanyahu.
Israel had claimed earlier in the week that any potential attacks against Iran would not be targeting Oil infrastructure, rather the focus being on military targets.
JPMorgan released a research note suggesting that the global economy is no where near peak demand for oil and their research suggests consumption will increase, though the demand curve is flattening.
Gold is trading just below its all-time high of $2,711.99, up 0.6% in today’s Asia-Pacific session, following a 0.7% gain yesterday—its third consecutive daily rise.
Geopolitical tensions remain high amid reports of Hamas leader Sinwar being killed in Gaza.
Safe-haven demand outweighed the impact of stronger-than-expected US economic data, which continues to reflect a resilient economy. US Treasury yields jumped higher, with the 2-year yield up 3bps to 3.97% and the 10-year up 8bps to 4.10%. Lower rates are typically positive for gold, which doesn’t pay interest.
US retail sales were stronger than expected across the board and with upward revisions, with the headline index up 0.4% m/m and the core figure and control group measures, up an even stronger 0.7% m/m. Control-group sales rose at an annualised pace of 6.4% in Q3, suggesting a strong pick-up in spending, and contributing to the Atlanta Fed’s GDPnow estimate rising to 3.4%.
Meanwhile, initial jobless claims (241k) were elevated by 2024 standards but below the 259k expected.
According to MNI’s technicals team, the next resistance is seen at $2,720.5.
In September, China's home prices fell 0.71% m/m, slightly better than the 0.73% decline in August, according to data from the National Bureau of Statistics. New home prices dropped 6.09% y/y, worsening from a 5.69% fall in August.
New home prices rose in 3 cities m/m, up from 2 in August, while only 2 cities saw y/y gains (unchanged from August).
Used home prices decreased by 0.93% m/m and 9.02% y/y, slightly worse than the previous month’s figures.
No city reported a rise in used home prices either monthly or yearly.
China property stocks have saw little reaction to the data, Mainland Property Index trades +0.10% last, while BBG China Property Developer Gauge is +0.36%.
China’s third quarter GDP came in at +4.6%, marginally ahead of expectations.
Declining from +4.7% in Q2, today’s print is below the government’s stated target of achieving 5% in 2024.
A raft of policies has been announced over the quarter and it was not expected that today’s GDP release would show any impact yet from the new initiatives.
Going forward, the various stimulus measures aimed at arresting the decline in the property sector particularly should likely start to show up in the data.
USD/CNH sits near 7.1300 in latest dealings, modestly firmer in CNH terms, but tracking recent ranges. We got to lows of 7.1225 amid a more positive onshore equity mood, as PBoC Governor Pan unveiled details of the swap facility take up to support local equities.
Equity markets are in positive territory at the break but off session highs (CSI 300 +0.78%). Governor Pan also spoke about further policy support via a potential RRR cut before year end and that the LPRs will be cut by 20-25bps this coming Monday. He also mentioned lower 7-day repo rates and MLF, although it appears this referred to Sep moves, rather than fresh cuts.
Q3 GDP was softer in q/q terms but firmer in y/y terms, albeit at 4.6% still sub the government's 5% target. IP and retail sales were firmer than forecast, but property measures mostly remain in negative territory by more than double digits. The authorities hope for improving trends through Oct and Q4 and still have optimism around hitting the growth target.
USD/KRW spot is little changed, last near 1371, slightly off earlier highs close to 1374. Local equities are down by around 0.75% at this stage, with the Kospi under 2600. Offshore investors have sold a further $300mn of local stocks today.
USD/TWD spot is slightly lower, but at 32.16 remains close to recent highs. Better sentiment following TSMC's better earnings yesterday hasn't done much for TWD.
Most South East Asia currencies are firmer against the USD in the first part of Friday trade. This is in line with the slightly stronger tone of the G10 against the USD, although aggregate moves are modest. Equity sentiment is mostly positive in SEA markets, but again overall moves are modest.
USD/THB is down around 0.25%, the pair last near 33.10/15. The baht is tracking a little over 0.60% firmer for the week. The earlier BoT cut has done little to disturb baht sentiment. The government is planning on more fiscal stimulus before year end to tourism areas impacted by floods (per RTRS) and is hoping for growth of 3% this year and +3% next year. Levels wise for USD/THB 33.00 is likely to be targeted on the downside, we are sub the 20-day EMA near 33.24.
USD/MYR is only down a touch and holding above 4.3060 in latest dealings. Data earlier showed that export growth in Sep fell into negative territory, the first such fall since March of this year. It is in line with generally softer trends in export growth throughout the region.
USD/IDR is softer, the pair back under 15470, up around 0.35% in IDR terms. The rupiah is the best performing EM Asia currency over the past week. Equity inflows have improved, while bond flows have not been negative, despite a resilient USD/Yield backdrop. Policy continuity from the local government may be aiding sentiment. USD/IDR could target 15400 on the downside.
USD/PHP is back to 57.65, having met some resistance above 57.90 in the past week.
Exports declined -0.30%, with market expecting a 8.0% expansion.
Imports expanded +10.90% following +26.2% expansion in August.
The trade surplus expanded to MYR13.19bn.
Malaysian PM Ibrahim will announce his third budget on Friday, following a good 2024 for the Southeast Asian economy. The country's economy is growing faster than expected, investors are flocking to its stock market, and companies like Microsoft and Google are pledging billion-dollar projects (source: BBG).
Equity markets shook off the weaker than expected trade date with the FTSE Malay KLCI rising +0.35%.
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