EM ASIA CREDIT: China Real Estate: New homes prices continue slide

JGBs were a touch softer in the first part of trade, but sit back at 136.32,  only -.01 versus settlement levels in latest dealings. The turn higher in US Tsy futures is likely providing some positive spill over for JGBs. Focus in the cash Tsy yield space will be on whether the 10yr yield can test under 4.00% (latest around 4.015%). 

• For JGBs broader ranges continue to hold, with upside resistance still intact, while Tuesday highs were just above 136.50.
• In the cash JGB space, back end yields are softer for the 10yr through to 40yr. The 10yr last around 1.65%, 20-40yr tenors off 2-4bps. The 30yr leading.
• The front end of the curve is more stable, leaving the 2/30s curve flatter by 5bps to +228bps.
• We have the 20yr auction later.
• The opposition parties will meet at 4pm local time, ""*JAPAN'S TAMAKI: TO HOLD 3-WAY OPPOSITION PARTY TALKS AT 4 P.M.", via BBG. This comes ahead of next week's Diet session on Oct 21, where a new PM is expected to be elected. Uncertainty continues on who this will be, but Polymarket still has odds with LDP leader Takaichi. 

• The deflationary problem facing the Chinese economy was in full view today with the release of the September CPI and PPI.  
• The CPI at -0.3% missed estimates of -0.2% as one of the longest streak of price declines in decades continues.  
• To add to the PPI decline, factory gate prices (PPI) YoY declined -2.3% YoY.  
• What started with a housing market crash post pandemic morphed into over capacity issues by manufacturers leading to price wars and has resulted in the government attempting to intervene to stop the price cuts.  
• The GDP deflator has been in decline also for two years and as the broadest measure of prices; shows that the deflationary pressures are the strongest they have been since data began.  
• Some domestic media outlets suggest that policy adjustments are needed imminently, though the first half of the year saw GDP better than expected.  In the coming days we will get 3Q GDP (forecast is a decline to +4.7% from +5.2%).  
• The next potential for seeing policy adjustment is the 1-Year and 5-Year Loan Prime Rate decisions on October 20.  LPR's were last changed in May with some market commentators suggesting a further cut could be getting closer. Other market observers suggest a further adjustment to the RRR is the likely pathway for policy.  
• The CBG 10-Yr had edged up in yield this morning to 1.84% whilst 10-Yr bond futures are lower by -0.12. 

• CHINA SEP CPI -0.3% Y/Y VS MEDIAN -0.2%; AUG -0.4%: NBS
• CHINA SEP CPI +0.1% M/M VS +0.0% M/M AUG
• CHINA SEP FOOD PRICES -4.4% Y/Y VS -4.3% Y/Y AUG
• CHINA SEP NON-FOOD PRICES +0.7% Y/Y VS +0.5% Y/Y AUG
• CHINA SEP PPI -2.3% Y/Y VS MEDIAN -2.3%; AUG -2.9%: NBS
• CHINA SEP PPI +0.0% M/M VS +0.0% M/M AUG