Markets soothed by Uchida (yesterday), better US data and Tokyo Electron

Asia Market Update: Markets soothed by Uchida (yesterday), better US data and Tokyo Electron; TSMC July Rev on tap as this update is released.

General trend

- Better market sentiment in Asia yesterday - including a positive outlook for chip-maker Tokyo Electron - helped set up better pricing for the overnight NY session, with US equities then taking off after improved US jobs data and some positive US corporate earnings / sales from Lilly, Costco and others. The renewed positivity followed through again today in Asia, with indices well up everywhere and yields continuing to push back higher (with the exception of China) after having plunged during the extreme volatility of a few days ago.
However, Tokyo Electron lost all of its 9-13% overnight gains soon after the Tokyo open and as the afternoon session wore on the Nikkei 225 pared its earlier 2.0% gains down to +0.4%
** STOP PRESS, as this update was prepared to be sent, the Nikkei lost all of its earlier gains during the past hour or so and was down -0.7% at time of writing. Other Asian indices were stable during this time period.

- Probability of a Fed rate cut in September continued to fall after the strong stock rally overnight, now down to 56.5%.

- China CPI improved more than expected. However, PPI recorded its 22nd straight negative read as the country continues to struggle out of deflationary mode. China 10-yr yields fell 3bps to 2.15%, and today’s 50 Year ultra-long Special Bonds delivered a record low yield.

- US equity FUTs +0.1% to +0.3% during Asian trading.

Looking ahead (Asian time zone)

- Fri Aug 9th CN July CPI.

Holidays in Asia this week

- Fri Aug 9th Singapore.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.3% at 7,701.

- Australia sells A$700M vs. A$700M indicated in 4.75% Apr 2027 bonds; Avg Yield: 3.6623% v 3.6738% prior, bid-to-cover: 3.39x v 3.84x prior (Apr 10th, local time).

- New Zealand Fin Min Willis: Prepared to ask RBNZ to ease capital rules - NZ press.

China/Hong Kong

- Hang Seng opens +1.2% at 17,097; Shanghai Composite opens +0.4% at 2,879.

- China July CPI Y/Y: 0.5% V 0.3%E; PPI Y/Y: -0.8% v -0.9%e (22nd straight negative reading).

- China sells 50 Year Bonds (ultra-long Special); Avg Yield: 2.3685% v 2.53% prior; bid-to-cover: x v 5.38x prior (record low yield).

- Bank of China [not the PBOC] trader noted PBOC bond intervention stabilizes markets, has prevented declines in the domestic yield curve; cites opinion piece - US financial press.

- Reportedly first Russia-China barter trade involving agriculture may come this autumn which can circumvent payments, limit currency risk – press [overnight update].

- China PBOC sets Yuan reference rate: 7.1449 v 7.1460 prior.

- China PBOC Open Market Operation (OMO): Sells CNY13B in 7-day reverse repos; Net injects CNY12B v net drains CNY3B prior.

Japan

- Nikkei 225 opens 1.3% at 35,272.

- Japan July M3 Money Supply Y/Y: 0.9% v 1.0% prior; M2 Money Supply Y/Y: 1.4% v 1.5% prior.

- Follow up: Japan PM Kishida confirms canceling his visit to Kazakhstan, Uzbekistan and Mongolia due to Kyushu earthquake; (Was to have been from Aug 9-12) - Japanese press.

- Japan sells ¥4.9T vs. ¥4.9T indicated in 3-Month Bills; Avg Yield: 0.0859% v 0.1210% prior; bid- to-cover: 3.01x v 3.65x prior.

- BOJ futures price 30% chance for 25bps hike by BOJ by Dec v 60% on Monday **Note: on Aug 7th, BOJ Dep Gov Uchida stated ‘will not raises rates while markets are unstable’ [overnight. update]

South Korea

- Kospi opens +1.8% at 2,603.

- Former Bank of Korea member said to downplay chance of Oct rate cut – US financial press.

Other Asia

- Malaysia Jun Industrial Production Y/Y: 5.0% v 4.2%e.

North America

- (US) Fed's Schmid (non-voter; hawk): Fed is "Close, but still not quite there" on reaching 2% inflation goal.

- (US) Initial jobless claims: 233K V 240KE (off 1-year highs); continuing claims: 1,875M V 1.871ME.

- (US) Weekly EIA Natural Gas inventories: +21 BCF VS. +26 BCF TO +27 BCF indicated range.

- (MX) Mexico central bank (BANXICO) cuts overnight rate by 25BPS to 10.75%; as expected; Decision was Not unanimous.

- (US) Former Pres Trump says he has agreed to debate Harris on Fox on Sept 4th, ABC on Sept 10th, and NBC on Sept 25th; Has agreed to terms with the networks but Harris side still has to agree - press conf.

- (US) Treasury $25B 30-year bond auction draws 4.314% V 4.635% prior; bid to cover 2.31 V 2.41 prior and 2.37 over the last four auctions; 3bps tail.

- (US) Fed’s Barkin (voter): Job growth has settled down but still adding jobs; Wages are declining, suggesting normalization in the labor market - comments from NABE webinar.

Europe

- (IE) Ireland July CPI M/M: 0.2% v 0.4% prior; Y/Y: 2.2% v 2.2% prior.

Levels as of 01:20 ET

- Nikkei 225 -0.7%; ASX 200 +1.10; Hang Seng +1.4%; Shanghai Composite +0.1%; Kospi +1.2%.

- Equity S&P500 FUTs -0.1%; Nasdaq100 FUTs -0.1%, Dax -0.4%; FTSE100 -0.3%.

- EUR 1.0911-1.0925: JPY 146.94-147.82; AUD 0.6581-0.6604; NZD 0.6002-0.6036.

- Gold flat at $2,462/oz; Crude Oil +0.2% at $76.33/brl; Copper +1.1% at $4.0255/lb.