Market fixated on TSM, JP FX ‘urgent’ warning CN data dump mixed

General trend

- Nasdaq FUT’s - which yesterday gained 1.0% on bullish Q3 results and guidance out of Taiwan Semi - quickly fell -0.3% and below the overnight open on breaking news that the US is going to probe TSM on its dealings with Huawei. TSM ADRs were up 9.8% overnight to a fresh record high in overnight US trading, but cash trading in Taiwan saw only a 4.8% rise by lunch following the story’s impact.

- The first “urgent” Yen warning from Japan’s new top FX diplomat Mimura since assuming the post on July 31st. Follows USD/JPY piercing 150 overnight following stronger than expected US retail sales and the Yen having gone from 140 to 150 in the past month.

- China monthly ‘data dump’ for September was mixed overall, with Q3 GDP YTD at 4.8% y/y threatening to come in under the CCP’s 5% target for 2024. However, Industrial Production and Retail Sales outperformed for the month. China proxy AUD spiked slightly upon the releases, but soon lost those gains to be hovering at the 67c handle. China 10-year bond yield again moved below 2.10%.

- Overnight, Australia’s curve bear-steepened further, with 10-yr yields +5bps at 4.30% on the back of last yesterday’s hot employment numbers. Rate-sensitive ASX 200 Consumer Discretionary and REIT indices down almost 2%.

- China sold a record amount of US Securities through January-August (TIC data), with a nominal amount of $19.3B for August.

- Japan’s Sept National CPI for Sept slightly exceeded expectations, with all figures above the BOJ’s target 2.0%, including- CPI Ex Fresh Food, Energy (core-core).

- China PBOC confirmed upcoming cuts to the LPR by 20-25bps on Oct 21st. Also announced first batch of new SFISF swap facility launched today, with the first tranche of CNY500B exceeding CNY200B.

- US equity FUTs overall flat during the Asia session.

Looking ahead (Asian time zone)

- Fri Oct 18th (Fri eve US Sept prelim Building Permits).

Holidays in Asia this week

- Mon Oct 14th Japan, Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 8,331.

- Australia sells A$500M vs. A$500M indicated in 4.75% Apr 2027 bonds; Avg Yield: 3.8542% v 3.6623% prior, bid-to-cover: 6.43x v 3.39x prior (Aug 9th, local time).

China/Hong Kong

- Hang Seng opens +0.1% at 20,106; Shanghai Composite opens -0.1% at 3,165.

- HKMA: To cut countercyclical capital buffer (CCyB) ratio to 50bps from 100bps.

- CHINA PBOC LAUNCHES SFISF OPERATION FROM TODAY, launches swap facility for financial firms; first batch of SFISF quotas exceeded CNY200B.

- PBOC GOV: LPR EXPECTED TO DROP BY 20-25BPS ON OCT 21ST.

- China PBOC Gov reiterates may further lower the RRR in 2024, RRR could be cut by a further 25-50bps; to issue document on relending today - Chinese press.

- China NBS Dep Head Sheng Laiyun: Market expectations for China economy improved in Sept; more positive factors driving China's economic recovery - comments after Sept and Q3 data.

- CHINA Q3 GDP Q/Q: 0.9% V 1.1%E; Y/Y: 4.6% V 4.5%E.

- CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 5.4% V 4.6%E.

- CHINA SEPT RETAIL SALES Y/Y: 3.2% V 2.5%E.

- CHINA SEPT YTD FIXED URBAN ASSETS Y/Y: 3.4% V 3.3%E.

- China Sept YTD Property Investment Y/Y: -10.1% v -10.0%e.

- China Sept Surveyed Jobless Rate: 5.1% v 5.3%e.

- China Sept New Home Prices M/M: -0.7% v -0.7% prior.

- China sells -20-year Special Bonds; Avg Yield 2.2986% v 2.1596% prior.

- China PBOC: Necessary to strengthen transmission of interest rate policies and increase credit support for the real economy;

- PBOC held meeting on Oct 16th to implement policies, vows stronger credit support for the economy; to implement 'well swap facility', to implement 'well stock buyback mechanism'.

- Tesla: Yet to receive approval in China for FSD; China to partially support Tesla FSD in certain cities - China Daily.

- Follow Up: ICBC and China Merchants Bank cut fixed yuan-denominated deposit rates by 25bps - financial press.

- China govt economist Liu Shangxi: China stimulus ‘should absolutely surpass’ CNY10T - SCMP.

- IMF Managing Dir Georgieva: Failure to shift economic model toward consumption risks medium-term annual growth falling below 4% - press interview.

- Major China banks to cut Yuan deposit rates from Friday – press [overnight update].

- China Commerce Ministry (MOFCOM): Ready for face-to-face talk with EU on EV tariffs; Invited EU technical team to China [overnight update].

- (US) Treasury Sec Yellen: Reiterates view that China overcapacity is threatening US companies and workers [overnight update].

- China PBOC sets Yuan reference rate: 7.1274 v 7.1220 prior (weakest since Aug 29th).

- China PBOC Open Market Operation (OMO): Injects CNY108B in 7-day reverse repos; Net injects CNY14.2B v net drains CNY17.4B prior.

Japan

- Nikkei opens +0.5% at 39,092.

- Japan Sept National CPI Y/Y: 2.5% v 2.5%e; CPI Ex Fresh Food (Core) Y/Y: 2.4% v 2.3%e.

- Japan releases weekly flows data [period ended Oct 11th]: Foreign buying of Japan equities: ¥968.4B v ¥911.1B prior; Japan buying of foreign bonds: -¥363.1B v +¥669.2B prior.

- Japan top FX diplomat Mimura: Recent Yen moves have are somewhat rapid and have become one-sided; Sense market with high sense of urgency.

Korea

- Kospi opens +0.3% at 2,616.

- Leader Kim Jong Un: Road closure means end of 'evil' relationship with Seoul.

Other Asia

- Tawian Semi Follow up: US said to probe Co's dealings with Huawei - The Information.

North America

- CHILE CENTRAL BANK (BCCH) CUTS OVERNIGHT RATE TARGET BY 25BPS TO 5.25%; AS EXPECTED.

- (US) Treasury Sec Yellen: Reiterates view that China overcapacity is threatening US companies and workers.

- (US) SEPT ADVANCE RETAIL SALES M/M: 0.4% V 0.3%E; RETAIL SALES (EX-AUTO) M/M: 0.5% V 0.1%E; Retail Sales (control group): 0.7% v 0.3%e.

- (US) INITIAL JOBLESS CLAIMS: 241K V 258KE (off ~1.5-yrs high); CONTINUING CLAIMS: 1.867M V 1.865ME.

- (US) OCT PHILADELPHIA FED BUSINESS OUTLOOK: 10.3 V 3.0E; New Orders: +14.2 v -1.5 prior; New Orders: +14.2 v -1.5 prior; Prices Paid: 29.7 v 34.0 prior.

- (US) Mid-Oct Manheim wholesale used vehicle Index: 203.5 v 203.0 prior; -1.7% m/m; -2.8% y/y.

- (US) SEPT INDUSTRIAL PRODUCTION M/M: -0.3% V -0.2%E; CAPACITY UTILIZATION: 77.5% V 77.8%E.

- (US) AUG BUSINESS INVENTORIES: 0.3% V 0.3%E.

- (US) OCT NAHB HOUSING MARKET INDEX: 43 V 42E.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: +76 BCF VS. +76 BCF TO +78 BCF INDICATED RANGE.

- (US) DOE CRUDE: -2.2M V +2ME; GASOLINE: -2.2M V -2ME; DISTILLATE: -3.5M V -2ME.

Europe

- Ukraine Pres Zelenskiy: NATO invitation for Kyiv is the only way to stop Russia's war - FT.

- Russia to test combat readiness of one of its strategic nuclear missile units [timing uncertain]; cites Defense Ministry – RIA.

- -EU) ECB CUTS KEY RATES BY 25BPS; AS EXPECTED; Reiterates language on forward guidance; Inflation to rise in coming months before falling to target "over course" of 2025 (prior was H2).

- (EU) ECB Chief Lagarde: More downside than upside risk to inflation; attentive to oil prices - Q&A.

- (NO) Norway Central Bank (Norges) Gov Bache: Reiterates stance that policy rate needs to be kept at current level for the period ahead; time to easing is approaching - speech text.

- (EU) Reportedly ECB policymakers expect rate cut in Dec unless economic data showed turned around - press.

- (IL) Israeli official confirms that Hamas leader Yahya Sinwar has been killed in Gaza.

Levels as of 01:20 ET

- Nikkei 225 +0.1%, ASX 200 -0.9%, Hang Seng +2.1%; Shanghai Composite +2.4%; Kospi -0.6%.- Equity S&P500 Futures flat; Nasdaq100 flat; Dax -0.1%; FTSE100 flat.

- EUR 1.0825-1.0842; JPY 149.77-150.29; AUD 0.6694-0.6719; NZD 0.6054-0.6072.

- Gold +0.7% at $2,725/oz; Crude Oil +0.5% at $71.00/brl; Copper +0.8% at $4.3682/lb.