New Zealand Dollar and Bond Yields Rise on CPI

Asian Market Update: Stocks follow gains on Wall St.; BOE said to delay quantitative tightening; New Zealand Dollar and Bond Yields Rise on CPI; China key data delayed.

General trend

– The New Zealand swap market is pricing >80% chance of a 75bps RBNZ rate hike at the November 23rd meeting, following warmer Q3 CPI data.

– Japan Fin Min Suzuki said: Watching market moves today with a high sense of urgency.

– US Stock FUTs prolong gains.

– Companies due to report during the New York morning include J&J, Goldman Sachs, State Street.

– The 20th Communist Party Congress started on Sunday, October 16 and will last until October 24.

Securities/economic data

Australia/New Zealand

The ASX 200 opened +0.3%.

RIO.AU announces iron ore production in Q3 at Pilbara of 84.3 Mt against 83.3 Mt y/y; Iron ore shipments 82.9 Mt vs. 83.4 Mt y/y; Narrows FY22 Pilbara Iron Ore low end shipments of 320-335Mt.

(NZ) New Zealand Q3 CPI Q/Q: 2.2% V 1.5%E; Y/Y 7.2% V 6.5% E.

BXB.AU reports Q1 Rev $1.35 billion vs $1.29 billion y/y.

– (AU) Reserve Bank of Australia (RBA) Dep Gov Bullock: 25 bp increase justified in October given the data; Reiterate will do what is necessary to bring the CPI back to target; Policy rate trajectory steeper than that of peers if necessary.

(AU) Reserve Bank of Australia (RBA) October Minutes: 25bp and 50bp arguments finally balanced; A lower rate hike is warranted as interest rates have risen sharply, the impact of past rate hikes is still to come.

– (NZ) RBNZ Q3 Y/Y sector factor model inflation index: 5.4% vs. 4.8% previously.

Japan

Nikkei 225 opened +1.5%.

– (JP) Japanese MoF sells ¥1.2T vs. ¥1.2T quoted in 20-year JGBs at 0.800%, average yield: 1.1230% vs. 0.8940% before, bid-to-cover: 3.26xv 2.51x front.

(JP) Japan Industry Min (METI): will support exports, domestic investment and the restart of nuclear power plants; Will help mitigate the impact of the falling JPY.

(JP) Japan Fin Min Suzuki: Watch FX movements with great interest, cannot tolerate speculative and excessive movements; take appropriate measures against speculative movements; No comment on any intervention has been made since September 22.

– (JP) The Bank of Japan (BOJ) plans to raise its CPI for fiscal year 22/23 (current fiscal year) by 2.3% to the upper end of the 2% zone (yesterday after the close ).

– (JP) Japan Chief of staff Matsuno: will impose additional sanctions on North Korea.

– (JP) Japanese Prime Minister Kishida: specificities of monetary policy up to the BOJ; FX moves on various factors (asked about the US/Japan interest rate differential due to JPY weakness).

(JP) Bank of Japan (BOJ) Gov Kuroda: Few people I met in Washington expected the USD to continue to rise against other currencies, as it is currently; Rate differences are not parallel to the longer-term JPY.

Korea

Kospi opened +1.3%.

– (KR) South Korea has announced that it will potentially ban short selling if the KS11 drops below 2000 – Korean Press.

China/Hong Kong

Hang Seng opened +1.5%; Shanghai Composite opened +0.3%.

– (CN) The Chinese PBOC sets the reference rate for the yuan: 7.1086 against 7.1095 previously.

– (CN) Shanghai Securities News: it is unlikely that the RRR will be reduced in October, a reduction could occur in November; notes the recent turnover of MLF funds.

– (CN) China Nanjin [est population >8.5M] halted some indoor venues due to rising coronavirus cases.

– (HK) The Hong Kong government’s policy speech on October 19 is expected to announce more measures to support the property market, including easing visa rules and property purchase taxes, which will also attract talent for business – press.

– (HK) The Hong Kong Monetary Authority (HKMA) bought HK$785 million to defend the currency peg.

Reminder: The Bureau of Statistics of China has postponed the release of third quarter economic indicators, including GDP data scheduled for Tuesday, October 18, as well as other economic releases scheduled for October 2022.

– (CN) China Securities Times: More cities cut mortgage rates

No new data release date has been disclosed.

North America

– The (US) Presidential Administration has announced that it expects an oil reserve release announcement in the week leading up to the November elections; to release an additional 10 to 15 million barrels.

Europe

(UK) Chancellor of the Exchequer (end min) Hunt: will roll back nearly all fiscal measures announced in 23 September growth plan (“mini-budget”); the energy price guarantee will not change until April 2023.

– (UK) PM Truss: Household energy bills are most vulnerable and will be protected until next winter, looking at exactly how this can be done.

(UK) Bank of England (BOE) says it will delay QT until gilt markets calm down – FT.

– (FR) Villeroy (France) of the ECB: the ECB will increase at a slower pace after the deposit rate reaches 2.0%; UK crisis shows risk of vicious loop – FT.

Levels from 1:20 a.m. ET

– Nikkei 225, +1.5%, ASX 200 +1.7%, Hang Seng +1.4%; Shanghai Composite +0.2%; Kospi +1%.

– S&P500 equity futures: +1.7%; Nasdaq100 +1.9%, Dax +1.1%; FTSE100 +0.8%.

– €0.9866-0.9823; JPY149.04-148.67; AU$0.6330-0.6277; NZ$0.5705-0.5612.

– Gold +0.1% to $1,665/oz; Crude Oil +0.8% to $85.22/brl; Copper +0.6% to $3.4305/lb.

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