MNI EUROPEAN OPEN: US TSYS Curve Flattens In Asia

EXECUTIVE SUMMARY

• FED’S DALY SAY NEUTRAL RATE COULD BE HIGHER - MNI BRIEF
• SCOPE FOR CHINA FISCAL, MONETARY STIMULUS SEENS AS LIMITED - MNI
• UK WAGE GROWTH COOLS As JOB CUTS MOUNT AND FIRMS CAP COSTS - BBG
• RBA RATE HIKES ARE COOLING PRICES, THOUGH LAGS REMAIN, KENT SAYS - BBG

Fig. 1: US TSY 2/10s Curve

Source: MNI - Market News/Bloomberg

U.K

BOE: “The Bank of England may need to raise interest rates at least one more time and keep them there through much of next year, according to IMF assumptions, undermining hopes that the central bank may soon start cutting.” (BBG)

WAGES: “UK starting salaries and pay for temporary workers rose at their slowest pace in two and a half years in September, adding to signs that the labor market is cooling as higher interest rates weigh on the economy.” (BBG)

EUROPE

FINLAND: “Finland is on alert as it suspects a gas pipeline leak in the Baltic Sea was caused by a deliberate act of destruction, fueling concerns about the safety of Europe’s energy infrastructure.” (BBG)

U.S.

FED: The neutral rate of interest could be higher than pre-pandemic, San Francisco Fed President Mary Daly said Tuesday, weighing into a lively debate within the Federal Reserve system about what level of interest rates neither stimulates nor slows economic growth. (MNI BRIEF)

US/ISRAEL: “President Joe Biden said the US is speeding military assistance to Israel following Hamas’ surprise assault, and will stand by the Jewish state as it strikes back against the Palestinian militant group.” (BBG)

OTHER

JAPAN: “Japanese people’s views of China were the most negative since 2014 in a survey conducted by think tank Genron NPO in August and September.” (BBG)

SOUTH KOREA: “Samsung Electronics Co. reported its fourth straight quarterly sales decline, reflecting the severity of a sector-wide slump that continues to weigh on the world’s biggest maker of memory chips.” (BBG)

SOUTH KOREA: “Kia Corp's unionised workers in South Korea will go on a partial strike for six working days from Oct. 12 after three months of talks with the company stalled over wage increases and an extension of the retirement age, the company's union said.” (RTRS)

AUSTRALIA: “Australia’s most aggressive monetary policy tightening in about three decades is working to cool inflation, though lags in transmission mean the full effects of interest-rate increases to-date are still to be felt.” (BBG)

AUSTRALIA/CHINA: “China has conveyed its disapproval to Australia over a visit to Taiwan by former Prime Minister Scott Morrison, according to a Beijing diplomat, with the trip threatening to undermine efforts by both countries to improve relations ahead of a state visit later this year.” (BBG)

NEW ZEALAND: “Rabobank releases 3q survey of farmer confidence, in emailed statement. Shows net 72% of farmers expect agricultural economic conditions to deteriorate in the coming 12 months, up from 57% in 2q.” (BBG)

NEW ZEALAND: “New Zealand is seeing a record inflow of migrants, adding to risks that inflation pressures may persist longer than the central bank expects.” (BBG)

CHINA

POLICY: China will continue to face economic headwinds this year as consumption remains soft, the property sector fails to rebound and monetary and fiscal easing remains limited in its scope despite market positioning for further accommodative policies, economists and advisors told MNI. (MNI)

BANKS: “No new refinancing projects of listed banks have passed the final review since the securities regulator announced new rules to control large amounts of refinancing and restrict listed companies which fall on debut or fall below net-asset value to refinance in August.” (Yicai)

CARS: “China’s financial regulator will ease rules for people applying for loans to buy cars and reduce down-payment requirements to boost consumption, 21st Century Business Herald reports, citing a government document.” (BBG)

STOCK MARKET: “More private funds have built long positions in Chinese equities in anticipation that a slump in the market is close to an end, Securities Times reports, citing fund managers.” (SECURITIES TIMES)

CHINA MARKETS

MNI: PBOC Drains Net 315 Bln Via OMO Weds; Rates Unchanged

The People's Bank of China (PBOC) conducted CNY102 billion via 7-day reverse repo on Wednesday, with the rate unchanged at 1.80%. The operation has led to a net drain of CNY315 billion after offsetting the maturity of CNY417 billion reverse repos today, according to Wind Information.

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8505% at 10:16 am local time from the close of 1.8684% on Tuesday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 41 on Tuesday, compared with the close of 49 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

PBOC Yuan Parity Lower At 7.1779 Wednesday Vs 7.1781 Tuesday.

The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1779 on Wednesday, compared with 7.1781 set on Tuesday. The fixing was estimated at 7.2841 by Bloomberg survey today.

MARKET DATA

NEW ZEALAND AUGUST NET MIGRATION SA 9980; PRIOR 6440

SOUTH KOREA AUGUST BOP GOODS BALANCE $5060.9MN; PRIOR $4438.5MN
SOUTH KOREA AUGUST BOP CURRENT ACCOUNT BALANCE $4809.8MN; PRIOR $3737MN
SOUTH KOREA 1-10 OCTOBER EXPORTS Y/Y -1.7%; PRIOR -7.9%
SOUTH KOREA 1-10 OCTOBER IMPORTS Y/Y 8.4%; PRIOR 11.3%
SOUTH KOREA 1-10 OCTOBER TRADE BALANCE -$5.3BN; PRIOR -$1.6BN

AUSTRALIA SEPTEMBER CBA HOUSEHOLD SPENDING Y/Y 1.8%; PRIOR 2.1%

MARKETS