Source: MNI - Market News/Bloomberg
EU
ECB (MNI ECB WATCH): The European Central Bank cut interest rates by 25 basis points for a second consecutive meeting on Thursday, saying the disinflationary process was “well on track” and sticking to its meeting-by-meeting approach.
PORTUGAL (BBG): “Portugal’s biggest opposition party said it plans to let the 2025 budget proposal pass in parliament, a key step for the survival of the country’s minority government.”
HUNGARY (BBG): “Hungarian Prime Minister Viktor Orban once again blocked European Union efforts to tweak its Russia sanctions regime, a step needed to unlock significant US participation in a $50 billion loan to Ukraine.”
US
FED (MNI BRIEF): The first estimates of a new tool from the New York Fed indicate that reserves in the banking system remain abundant, suggesting the U.S. central bank's 2-year-old quantitative tightening program has room to run.
OTHER
MIDEAST (BBG): “Israeli soldiers killed Hamas leader Yahya Sinwar, the architect of the Oct. 7 attack, in a death that leaves a huge hole at the top of the militant group and spurred fresh US pressure for Prime Minister Benjamin Netanyahu to end the war in the Gaza Strip.”
FISCAL (MNI): International Monetary Fund chief Kristalina Georgieva said governments face a "frightening" loss of fiscal space following pandemic deficits and should work hard to reduce debt loads before the next global shock.
JAPAN (MNI BRIEF): The year-on-year rise of Japan's annual core consumer inflation rate slowed to 2.4% in September from August’s 2.8% due to lower energy and household durable goods prices, although foods excluding perishables rose, data released by the Ministry of Internal Affairs and Communications showed on Friday.
JAPAN (BBG): "Japan’s top currency official helped lift the yen a touch on Friday after he warned he was keeping a close eye on market movements following the yen’s slide into the 150 range against the dollar overnight."
AUSTRALIA (MNI): Hot Labour Market Pushes Back Easing-Ex RBA Economists
CANADA (MNI BRIEF): Canada's parliamentary budget office on Thursday projected a federal deficit of CAD46.4 billion for the current fiscal year, which would come in higher than Finance Minister Chrystia Freeland's fiscal anchor of limiting the shortfall to CAD40 billion.
CHINA
POLICY (MNI PBOC WATCH): China's Loan Prime Rate will be reduced by 20-25 basis points next Monday following the People’s Bank of China’s 20bp cut to its key 7-day reverse repo rate last month, which will help guide down mortgage rates and reduce borrowing costs to shore up domestic demand.
GDP (MNI BRIEF): China's economy grew by 4.6% y/y in Q3, 10 basis points lower than the market estimate, and slowing from Q2's 4.7%, while consumption and production rebounded more than expected amid restored sentiment, data released by the National Bureau of Statistics on Friday showed.
HOUSING (XINHUA): “The Housing Ministry’s latest plan to renovate one million urban-village houses by offering resettlement subsidies for residents is expected to drive home sales of about 100 million square meters, Xinhua Finance reported citing estimates by China Real Estate Information Corp.”
POLICY (XINHUA): “Authorities should step up efforts to implement existing policies and launch additional measures, push for sustained economic rebound and strive to complete the annual targets, Xinhua News Agency reported citing Vice Premier Ding Xuexiang.”
CHINA MARKETS
MNI: PBOC Net Injects CNY14.2 Bln via OMO Friday
The People's Bank of China (PBOC) conducted CNY108.4 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY14.2 billion after offsetting the maturity of CNY94.2 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5195% at 09:26 am local time from the close of 1.6093% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Thursday, compared with the close of 46 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1274 Fri; +2.67% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1274 on Friday, compared with 7.1220 set on Thursday. The fixing was estimated at 7.1266 by Bloomberg survey today.
MARKET DATA
**MNI JAPAN SEPT CORE CPI +2.4% Y/Y; AUG +2.8%
JAPAN SEPT CORE-CORE CPI +2.1% Y/Y; AUG +2.0%
JAPAN SEPT SERVICES PRICES +1.3% Y/Y; AUG +1.4%
**CHINA Q3 2024 REAL GDP +4.6% Y/Y VS MEDIAN +4.6% Y/Y: NBS
**CHINA Q3 2024 REAL GDP +0.9% Q/Q VS MEDIAN +0.9% Q/Q: NBS
CHINA JAN-SEP RETAIL SALES +3.3% Y/Y VS JAN-AUG +3.4% Y/Y
**CHINA SEP INDUSTRIAL OUTPUT +5.4% Y/Y VS MEDIAN +4.6% Y/Y: NBS
**CHINA YTD FIXED-ASSET INVESTMENT +3.4% Y/Y VS MEDIAN +3.3% Y/Y
**CHINA SEP UNEMPLOYMENT RATE +5.1% VS AUG +5.3%
CHINA YTD PROPERTY INVESTMENT -10.1% Y/Y VS JAN-AUG -10.2% Y/Y
MARKETS
US TSYS: Tsys Futures Steady, Curve Steepens Slightly Ahead Of Fed Speak
- 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.
JGBS: Holding A Bear-Flattener After Today’s Core CPI Data
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.
AUSSIE BONDS: Heavy Session But Narrow Ranges
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: Cheaper But Outperforms The $-Bloc
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.
- Swap rates closed 3-6bps higher, with implied swap spreads 2-3bps wider.
- 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.
FOREX: USD Off A Touch, Japan Watching FX Moves
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.
ASIA STOCKS: Asian Equities Mixed, China Data Exceeds Expectations
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
OIL: Prices Edge Higher on Middle East Tensions.
- 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: Haven Demand Pushes To Record
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.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 18/10/2024 | 0600/0800 | ** |  SE | Unemployment |
| 18/10/2024 | 0600/0700 | *** |  GB | Retail Sales |
| 18/10/2024 | 0800/1000 | ** |  EU | EZ Current Account |
| 18/10/2024 | 0900/1100 | ** | EU | Construction Production |
| 18/10/2024 | 1230/0830 | ** |  US | WASDE Weekly Import/Export |
| 18/10/2024 | 1230/0830 | *** | US | Housing Starts |
| 18/10/2024 | 1330/0930 | US | Atlanta Fed's Raphael Bostic | |
| 18/10/2024 | 1400/1000 | US | Minneapolis Fed's Neel Kashkari | |
| 18/10/2024 | 1610/1210 | US | Fed Governor Christopher Waller | |
| 18/10/2024 | 1630/1230 | US | Atlanta Fed's Raphael Bostic | |
| 18/10/2024 | 1800/1400 | ** | US | Treasury Budget |
| 21/10/2024 | 0600/0800 | ** |  DE | PPI |
| 21/10/2024 | - | EU | ECB's Lagarde and Cipollone participate in IMF/World Bank Meetings | |
| 21/10/2024 | 1255/0855 | US | Dallas Fed's Lorie Logan |