Asia Market Update: USD generally stronger; No need for Plaza Accord?; GBP declines, CNH hits record low despite CCF news; Apple news weighs on Nasdaq FUTs.
– Yellen to be replaced?
– Analysts debate how low the Yuan might go.
– Quiet session seen for USD/JPY [remains below ¥145].
– BHP announced early redemption of GBP-denominated hybrid notes.
– Equity markets extend declines.
– Hang Seng Mainland Properties Index drops >4% [debt concerns remain in focus amid USD strength].
– UK concerns continue to weigh on HSBC and Standard Chartered.
– Thailand Central Bank is expected to hike rates [will decision be impacted by currency weakness?].
– Various US Fed speakers due.
– Australia’s Monthly CPI indicator is due on Sept 29th (Thurs).
– ASX 200 opened +0.2%.
– (AU) Australia sells A$800M v A$800M indicated in 3.00% Nov 2033 Bonds; Avg Yield: 4.122%; bid-to-cover 3.81x.
– (AU) Australia Aug Retail Sales M/M: 0.6% v 0.4%e.
– Nikkei 225 opened -0.6%.
– (JP) Bank of Japan (BOJ) July Minutes (two decisions ago): Reiterates closely monitorin gimpact of covid on economy, won't hesitate to add easing if necessary.
– (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].
– (JP) Former Bank of Japan (BOJ) Dep Gov Nakaso: Fragmentation challenge for global economy; Too much pressure put on Monetary Policy with Abenomics.
– Kospi opened -0.8%.
– (KR) Bank of Korea (BOK) to conduct direct bond purchases.
– (KR) South Korea Vice Fin Min: Will conduct KRW2.0T in Korean bond buybacks.
– (KR) South Korea Aug Retail Sales M/M: 0.6% v 0.4%e; Y/Y: 15.4% v 9.7% prior.
– (KR) South Korea Aug Department Store Sales Y/Y: 24.8% v 0.2% prior; Discount Store Sales Y/Y: 9.9% v 31.6% prior.
– Hang Seng opened -0.9%; Shanghai Composite opened -0.2%.
– (CN) Chinese banks reportedly plan to restart counter-cyclical factor in CNY midpoint fixing formula – press.
– (CN) Weaker demand for China goods means end of shipping boom – Caixin.
– (CN) On Tuesday China President Xi said to have made first public appearance following ‘coup’ rumors; cites China state media – press [update].
– (CN) China PBOC sets Yuan reference rate: 7.1107 v 7.0722 prior (weakest since early June 2020); CNH weakens to a record low after fixing.
– (CN) China PBOC Open Market Operation (OMO): Sells CNY133B in 7-day reverse repos v CNY113B prior; Sells CNY67B in 14-day reverse repos v CNY62B prior; Net inject CNYB v Net inject CNY173B prior.
– (CN) China YTD (Aug) Transportation Fixed asset investments CNY2.3T.
– (CN) China said to have pressed charges on former CCP member in the Security Ministry – Press.
– (CN) Shanghai announces subsidies to consumers and industries that were impacted by coronavirus; To provide subidies to purchase green home appliances – Press.
– (SG) Singapore Central Bank (MAS) Official Menon: Slowdown needed to relieve demand pressure; Monetary policy can't do much about labor supply.
– (US) Senate votes to advance stopgap govt spending bill; the final vote was 72 to 23 – press.
– (US) White House Econ Advisor Deese: Sees resilience in the US economy; No desire for escalation of conflict with China, support $15/hr minimum wage.
– (US) White House said to be considering Treasury Sec Yellen exit after Nov midterm elections – Press.
– (US) White House Econ Advisor Deese: Does not anticipate headed toward plaza type accord [to adjust FX values].
– (US) Fed's Daly (non-voter): Wants to bring inflation down, but not unnecessarily tip economy into recession; Important to navigate through high inflation environment as carefully as possible.
– (UK) Chancellor of the Exchequer (Fin Min) Kwarteng said to plan meeting with Wall Street bankers on Weds – press.
– (UK) Sept BRC Shop Price Index Y/Y: 5.7% v 5.1% prior.
– Nikkei 225, -2.2%, ASX 200 -0.9% , Hang Seng -2.7%; Shanghai Composite -1.4% ; Kospi -3.2%.
– Equity S&P500 Futures: -0.7%; Nasdaq100 -1%, Dax -1.5%; FTSE100 -0.8%.
– EUR 0.9600-0.9542 ; JPY 144.87-144.38 ; AUD 0.6444-0.6380 ;NZD 0.5705-0.5565.
– Gold -0.4% at $1.630/oz; Crude Oil -1.4% at $77.39/brl; Copper -1.4% at $3.2482/lb.
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The AUD/USD pair trades around 0.6520, as the better tone of equities and profit-taking due to extreme overbought conditions took its toll on the greenback. Positive momentum is set to continue, at least in the near term.
The EUR/USD pair soared in the latest American session after reaching a fresh 22-year low of 0.9535. The greenback entered a selling spiral after Wall Street changed course while government bond yields sunk.
XAUUSD bounced from a fresh two-year low of $1,614.81 a troy ounce as dip buyers appeared on the dollar’s extreme overbought conditions. The bright metal peaked at $1,661.57, its highest for the week, holding above the $1,650 mid-US afternoon.
Statistically, October and November are usually bullish months for crypto. There is nothing wrong with casting a rod in treacherous water, but risk management should be applied. Don't become the bait when fishing for gains.
With inflation high and volatile, and with uncertainty about how quickly inflation might return to pre-Covid levels, should investors consider Treasury Inflation Protected Securities (“TIPS”) as part of a conservative portfolio allocation or for portfolio diversification? To answer the question, it is helpful to understand what TIPS are and how they work in practice.
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