Focus on US Sept PPI, US bank earnings and CN MOF Saturday meeting

Asia market update: Asia quiet ahead of weekend uncertainties; Tesla unveils Cybercab & Robovan, Focus on US Sept PPI, US bank earnings & CN MOF Sat meeting.

General trend

- A quiet session for equities, currencies and bonds ahead of weekend uncertainty with upcoming China fiscal meetings plus trepidation ahead of Iran/Israel escalation.

- In Middle East tensions, the Israeli security cabinet were reported to have met Thursday night to vote on response to Iran’s missile attack last week. WTI oil prices traded tightly around the $75 mark during Asian hours.

- A reminder that China MOF to hold briefing about "intensifying" fiscal policy adjustment and economic development on Sat Oct 12th at 10am local time (02:00 GMT).

- After last night’s post-close earnings releases out of Japan, leading Nikkei component Fast Retailing ADRs +4.6% in NY trading on higher FY25 guidance cf FY24, with Seven & i ADRs -2% upon announcing details of restructuring plans and against the backdrop of a sweetened offer from Couche-Tard. Cash equities saw Fast Retailing +6.0% to a record high while Seven & i down as much as -4%, later paring some losses.

- Elon Musk kicked off the much-anticipated Tesla "We, Robot" Event, where he unveiled the Cybercab (<$30K, production 2026), a Driverless Model Y, the Robovan to hold 20-30 people, and the Optimus robot is expected at $20-$30K. Also expects unsupervised FSD in TX, CA next year.

- South Korea exports continued their healthy trend this year, +33% y/y for first 10 days in October, with chip exports as well as US & China exports again up significantly y/y.

- South Korea Central Bank at last joined the global rate cut trend, cutting by 25bps to 3.25% for its first cut since May, 2020. It comes after yesterday South Korea bonds were confirmed to be included in WGBI index from Nov 2025.

- An uptick in New Zealand’s Sept food prices ahead of next week’s CPI release. Meanwhile, net migration figures slowed as the rate of Kiwis heading overseas picked up further. Finally, Sept saw the highest NZ Manufacturing PMI since May, marking the third m/m increase in a row from historic lows.

- US Fed 25bps cut probability still at >85% for November, following overnight the hotter than expected CPI figures as well as the highest jobless claims in nearly 18 months.

- Yet more promises of 'stepping up support' for companies out of China, with the NFRA (National Financial Regulatory Administration, MIIT [industry Ministry] and SAMR [competition regulator] to hold a briefing this coming Monday (Oct 14th).

- US equity FUTs flat during the Asia session.

Looking ahead (Asian time zone)

- Fri Oct 11th (Fri night US Sept PPI, Michigan Oct prelim Consumer Sentiment).

Holidays in Asia this week

- Mon Oct 7th China.

- Wed Oct 9th South Korea.

- Thu Oct 10th Taiwan.

- Fri Oct 11th Hong Kong.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,216.

- Australia sells A$1.0B vs. A$1.0B indicated in 2.75% Nov 2028 bonds; Avg Yield: 3.7831% v 3.551% prior; bid-to-cover: 3.09x v 4.23x prior.

- New Zealand Sept Food Prices M/M: 0.5% v 0.2% prior.

- New Zealand Aug Net Migration: 1.8K v 3.0K prior.

- New Zealand Sept Manufacturing PMI: 46.9 v 45.8 prior (18th month of contraction).

- LGFA: Due to our high levels of liquidity and less than expected council borrowing in Q1, we have reduced our forecast borrowing programme for the current 2024-25 Fiscal Year by NZ$250M to NZ$5.15B.

China/Hong Kong

- Hang Seng closed for holiday; Shanghai Composite opens -0.4% at 3,287.

- China National Financial Regulatory Administration (NFRA), MIIT [industry Ministry] and SAMR [competition regulator] to hold briefing on Mon [Oct 14th]; the briefing will focus on 'stepping up support' for companies - US financial press.

- China NDRC Chief Zheng Shanjie: China will address market concern in ‘timely manner’ – People's Daily Opinion Piece.

- 'Many' small and medium China banks have cut deposit rates by as much as 110bps - Shanghai Securities News.

- China Premier Li Qiang: Hopes Japan meets China "halfway" and keeps bilateral relations on the 'right track' – press.

- Follow Up: China PBOC swap facility [SFISF] to have one year maturity - PBOC paper.

- China sells 30-year Special Bonds; Avg Yield: 2.2987% v 2.1900% prior.

- China Prelim Sept Retail Passenger Vehicle Sales M/M: +8% v +10.8% prior; Y/Y: +2.0% -1.0% prior – PCA [overnight update].

- China State Planner NDRC presents draft guidelines on private economy promotion law; targets ensuring fair competition for private firms in law – press [overnight update].

- China PBOC sets Yuan reference rate: 7.0731 v 7.0742 prior.

- China PBOC Open Market Operation (OMO): Injects CNY94B in 7-day reverse repos; Net drains CNY184B v net drains CNY142B prior.

Japan

- Nikkei 225 opens +0.7% at 39,636.

- Japan Sept M3 Money Supply Y/Y: 0.8% v 0.8% prior (revised lower); M2 Money Supply Y/Y: 1.3% v 1.3% prior.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: 1-3 Years, 3-5 Years, 5-10 Years and 10-25 Years; Inline with planned amounts.

- Japan sells ¥4.3T vs. ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.0067% v 0.0073% prior; bid- to-cover: 3.39x v 3.42x prior.

- Former BOJ Dep Gov Wakatabe: Grave mistake to change monetary policy based on FX [overnight update].

- Ex-BOJ Official Kazuo Momma: If JPY currency (Yen) weakens towards 150 or 155 level, it would move BOJ hike timing forward [overnight update].

- BOJ's Dep Gov Himino: To adjust policy and raise rates if economic outlook is realized; not on a pre-set course on rate path; In meeting with PM Ishiba, BOJ Gov Ueda said BOJ has enough tune to carefully monitor financial markets and economy, at home and abroad [overnight update].

- Japan Former Top FX Diplomat Kanda: Rising interest rates are growing challenges to fiscal management in Japan [overnight update].

Korea

- Kospi opens +0.5% at 2,612.

- South Korea Oct 1-10 Exports Y/Y: +33.2%; Imports: +3.2%.

- Bank of Korea (BOK) Gov Rhee: Decision to cut was Not unanimous; one dissenter - post rate decision press conference.

- Bank of Korea (BOK) cuts 7-day repo rate by 25BPS TO 3.25%; as expected.

- South Korea Sept Total Bank Lending to Household (KRW): T1,135.7T v 1,130T prior.

Other Asia

- China's Taiwan Affairs Office: Lai's constant provocations have exacerbated tensions across the Taiwan Strait and seriously undermined peace and stability overnight update].

North America

- Tesla "We, Robot" Event unveils Cybercab (<$30K, production 2026), Driverless Model Y, Unveils Robovan for 20-30 people, Optimus robot expected $20-$30K, Unsupervised FSD in TX, CA next year.

- Boeing says filed unfair labor practice with the National Labor Relations Board (NLRB) against IAM.

- (US) USGC: Some Florida ports reopen after Hurricane Milton.

- Peru Central Bank (BCRP) leaves Reference Rate unchanged at 5.25%; not expected.

- (US) BOFA institute: Sept total card spending -0.9% Y/Y V +0.9% Average in Aug (3rd drop in 4 months); Notes consumers may be prioritizing value categories and experiences over big-ticket purchases; Also find evidence that consumers are pulling back on relatively higher-priced durables.

- (US) SEPT CPI M/M: 0.2% V 0.1%E; Y/Y: 2.4% V 2.3%E (lowest annual pace since Feb 2021); (ex-food/energy) M/M: 0.3% v 0.2%e; Y/Y: 3.3% v 3.2%e (highest annual pace since June 2024).

- US Sept CPI Supercore (M/M): +0.404% v +0.327% prior (3rd straight positive print); CPI Supercore Y/Y (Core Services less Shelter) 4.321% v 4.453% prior.

- (US) Initial jobless claims: 258K V 230KE (highest since June 2023); continuing claims: 1.861M V 1.83ME (highest since end-Aug).

- (US) Sept Real Avg Hourly Earning Y/Y: 1.5% v 1.4% prior; Real Avg Weekly Earnings Y/Y: 0.9% v 1.0% prior.

- (US) Fed's Goolsbee (non-voter for 2024; voter for 2025): Inflation came in around expectations with improvement on housing front (reacts to CPI) - CNBC.

- (US) Fed’s Barkin (voter for 2024; non-voter for 2025): Inflation is headed in the right direction; Although down significantly, a victory can't be declared.

- (US) Weekly EIA Natural Gas inventories: +82 BCF VS. +70 BCF TO +72 BCF indicated range.

- (US) Treasury $22B 30-year bond reopening draws 4.389% V 4.015% prior; bid to cover 2.50 V 2.38 prior and 2.40 over last 8 reopenings; (auction stopped through 1.5 bps ).

- (US) Fed's Bostic (hawk, voter for 2024; non-voter for 2025): Open to skipping a rate cut at Nov or Dec meeting; Latest inflation and labor market data gives Fed the 'ability to be patient' - WSJ interview.

Europe

- (IL) Israel security cabinet met Thursday night to vote on response to Iran missile attack from Oct 1st – Washington Post.

- (IE) Ireland Sept CPI M/M: -0.9% v +0.1% prior; Y/Y: 0.7% v 1.7% prior.

- (PL) Poland Central Bank (NBP) Maslowska: May cut rates at start of Q2 2025; Sees total easing of 50-75bps in 2025 - press interview.

- (EU) ECB Sept meeting account (MINUTES): Inflation was on the right trajectory and broadly on track to return to the target of 2% by the end of 2025; Risk of undershooting the 2% target becoming non-negligible.

- (LY) Libya National Oil Company (NOC): Daily production reaches 1.22M bpd, close to normal levels.

- (IR) Gulf states lobbying Washington to stop Israel from attacking Iran's oil fields.

- (UK) Reportedly Chancellor (Fin Min) Reeves considers raising capital gains tax to as high as 39%, "testing" a range of 33-39% - UK press.

- (FR) French Gov presents budget Bill for 2025; Will reduce support for EVs by third in 2025.

Levels as of 01:20 ET

- Nikkei 225 +0.6%, ASX 200 -0.1%, Hang Seng closed; Shanghai Composite -1.3%; Kospi +0.2%.

- Equity S&P500 Futures flat; Nasdaq100 flat; Dax -0.2%; FTSE100 -0.2%.

- EUR 1.0900-1.0955; JPY 148.31-149.57; AUD 0.6701-0.6750; NZD 0.6057-0.6106.

- Gold +1.4% at $2,662/oz; Crude Oil +3.3% at $75.67/brl; Copper +1.1% at $4.4458/lb.