JGB yields decline, track drop in UST rates, recent US data weakness in focus

Asia Market Update: JGB yields decline, track drop in UST rates; Recent US data weakness in focus; Ueda spoke; Hang Seng lags on plunge in Alibaba.

General trend

- Equity markets trade mixed.

- Crude Oil FUTS trade generally flat after earlier decline.

- BOJ Gov Ueda: US Fed may at some point cut interest rates, if effect of monetary tightening up until now works its way through the US economy.

Headlines/economic data

Australia/New Zealand

-ASX 200 opens +0.1% at 7,060.

-RBA names Sally Cray as the new Chief Communications Officer; Will commence the new role on 4 Dec.

- Fitch: the first third-quarter rise in Australian mortgage arrears in more than 15 years occurred in 3Q23.

-ASIC opened its consultation on the Australian Banking Association’s (ABA) proposed changes to its Banking Code of Practice.

-ANZ: Does not expect RBNZ to raise cash rate in Feb; Now expects rates to be left at 5.50% until early 2025 [the next RBNZ Monetary Policy Statement and OCR is due on Nov 29th (Wed)].

-New Zealand Q3 PPI Input Q/Q: 1.2% v -0.2% prior; Output Q/Q: 0.8% v 0.2% prior.

-New Zealand Luxon says coalition talks to continue over the weekend - Press.

China/Hong Kong

-Hang Seng opens -1.4% at 17,584.

-Shanghai Composite opens -0.2% at 3,043.

- Alibaba: Reports Q3 (CNY) 15.63 v 12.91 y/y, Rev 224.8B v 224.1Be; Announces 2023 annual dividend of $1.00/ADS (~1.1% yield); Decides to not proceed with a full spin-off of Cloud Intelligence unit, Freshippo IPO also put on hold; Notes new US restrictions may affect its businesses by limiting its ability to upgrade its tech capabilities.

- Alibaba: Founder Jack Ma family trust said to sell ~$871M worth of Alibaba shares next week - press.

-US lawmakers sent letters to Chinese auto/tech firms about concerns over autonomous carmakers collecting data - Press.

-China said to ask certain large banks to cap rates on short-term [interbank] funding; The request was made last week - US financial press.

- US Commerce Dept removes Ministry of Public Security's Institute of Forensic Science of China from the 'entity' list.

-China Commerce Ministry (MOFCOM): Vow to implement agreements from economic talks with the US; EU's probe of Chinese EVs subsidies may violate WTO rules.

-China to allow pilot road tests for smart cars in certain areas; Relates to vehicles with level 3 and 4 automation - US financial press.

-China issues rule to tighten management on drug materials [follows the agreement between the US and China on Fentanyl] - Press.

-Japan PM Kishida: Wants to work with China President Xi for brighter ties.

-Hong Kong Monetary Authority (HKMA) Chief Executive Yue: Reiterates no plan to change HKD-USD peg.

Japan

-Nikkei 225 opens -0.2% at 33,335.

-SMFG plans to sell Yen-denominated AT1 bonds - Press.

-Berkshire Hathaway: Expected to price ¥122B in bonds [multi-tranche offering] - US financial press.

-Bank of Japan (BOJ) Gov Ueda: Reiterates Japan economy has recovered moderately; Japan economy likely to keep recovering moderately.

-Japan Dep Fin Min Akazawa: Reiterates won't intervene just because yen is weakening.

-Japan Fin Min Suzuki: Believes tax support helped wage growth this year.

-China President Xi: China and Japan should manage differences properly.

Korea

-Kospi opens -0.4% to 2,477.

-Samsung Electronics: Prosecutors said to seek 5-year prison term for Chairman Lee - South Korea press.

Other Asia

-PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 6.50%; AS EXPECTED; Stand prepared to resume tightening if needed.

-Singapore Oct Non-oil Domestic Exports M/M: 3.4% v 2.0%e; Y/Y: -3.4% v -6.0%e.

-Taiwan’s opposition parties Kuomintang and Taiwan People’s Party reportedly agreed to run a joint campaign in Jan 2024’s election, raising the chances that a more pro-China govt takes power - Press.

- Taiwan sells NT$25.0B vs.to sell NT$25.0B indicated in 30-year Bonds; Avg Yield: 1.800% v 1.540% prior; bid to cover 1.14x v 2.05x prior.

North America

-*(US) OCT INDUSTRIAL PRODUCTION M/M: -0.6% V -0.4%E; CAPACITY UTILIZATION: 78.9% V 79.4%E (lowest since Oct 2021).

-*(US) INITIAL JOBLESS CLAIMS: 231K V 220KE (highest since Aug); CONTINUING CLAIMS: 1.865M V 1.845ME (matching this year high and highest level since end-2021).

-*(US) NOV NAHB HOUSING MARKET INDEX: 34 V 40E; 36% of builders cut home prices in November, the highest share since Nov 2022.

-*(US) SEPT NET LONG-TERM TIC FLOWS: -$1.7B V $63.5B PRIOR; TOTAL NET TIC FLOWS: -67.4$B V $134.4B PRIOR; Japan Total Holdings of US Treasuries: $1.088T v $1.113T prior; China Total Holdings of US Treasuries: $778B v $822B prior.

-(US) FDIC Board of Directors Issues a Final Rule on Special Assessment Pursuant to Systemic Risk Determination: Under the final rule, the FDIC will collect the special assessment at an annual rate of 13.4 basis points beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024).

-Applied Materials: Reports Q4 $2.12 v $1.98e, Rev $6.72B v $6.52Be; Guides Q1 very wide.

-Applied Materials: Said to be under US criminal investigation for evading export curbs to Chinese chip-maker SMIC - Press.

-Google: Said to delay the release of Gemini AI until Q1 2024 - US press.

-Walmart CEO: In US we may be managing through period of deflation in months to come - conf call.

Levels as of 00:20 ET

- Nikkei 225, +0.3%, ASX 200 -0.1% , Hang Seng -2.1%; Shanghai Composite -0.3% ; Kospi -0.8%.

- Equity S&P500 Futures: +0.1%; Nasdaq100 -0.1%, Dax +0.3%; FTSE100 +0.3%.

- EUR 1.0857-1.0846 ; JPY 150.77-150.42 ; AUD 0.6476-0.6457 ;NZD 0.5980-0.5947.

- Gold flat at $1,987/oz; Crude Oil +0.1% at $72.97/brl; Copper flat at $3.6958/lb.