EM ASIA CREDIT: China Vanke: Results poor, liquidity risks rising

In Tokyo morning trade, JGB futures are little changed, +2 compared to settlement levels.

• The Q3 Tankan survey printed in line with expectations and Q2 but FY25 capex intentions increased 1pp to 12.5%. Large company business conditions have been moving sideways at a solid level since the start of last year, especially for the non-manufacturing sector.
• The large manufacturers’ index rose 1 point to 14 in Q3 while the outlook for Q4 is forecast to deteriorate 2 points. The series has not been affected by new US tariffs and the 2025 average is slightly higher than 2024’s.
• Non-manufacturers’ conditions were steady at 34, well above the series average of +7.3, with the outlook at 28.
• Small non-manufacturers are also outperforming manufacturers with the index at 14 (down 1 point) compared to +1 (stable). The outlook for both sectors improved 1 point.
• The September BoJ summary of opinions showed a bias towards a resumption of tightening.
• Cash US tsys are slightly cheaper in today’s Asia-Pac session after yesterday’s modest twist-steepener.
• Cash JGBs are little changed across benchmarks out to the 10-year, and 1-2bps cheaper beyond.
• Swap rates are flat to 2bps higher, with a steepening bias. Swap spreads are mixed.

The AOFM sells A$1200mn of the 3.50% 21 December 2034 bond, issue #TB168:

• Average Yield (%): 4.2868 (prev. 4.0895)
• High Yield (%): 4.2875 (prev. 4.0925)
• Bid/Cover: 2.1033x (prev. 3.1708x)
• Allotted at Highest Accepted Yld as % of Bid at that Yld (%): 92.1 (prev. 12.2)
• Bidders: 30 (prev. 35), 11 (prev. 18) successful, 3 (prev. 11) allocated in full

US equities continued to grind back towards its all-time highs brushing off concerns of an imminent US shutdown overnight. This morning US futures have opened lower on our open as the shutdown begins to be executed, E-minis(S&P) -0.35%, NQZ5 -0.45%. The JPY outperformed across the board in the crosses, NZD remains the standout to be long JPY against.

• EUR/JPY - Overnight range 173.39 - 174.05, Asia is trading around 173.80. The pair topped out around 175.00 and has pulled back as upward momentum stalled. First support back toward the 173.00/173.50 area saw demand return overnight but the move is starting to look stretched.
• GBP/JPY - Overnight 198.59 - 199.31, Asia trades around 199.05. This pair has failed again to move above the 200.00 area. Buyers need to reassert the momentum higher again soon or the probability of a deeper pullback increases. In the middle of its recent 198.00-201.00 range, first support is seen back towards the 198.00 area.
• NZD/JPY - Overnight range 85.66 - 85.97, Asia is currently dealing 85.75. The pair continues to grind lower but is approaching some support. I continue to have a bias lower and would look for bounces to fade. A sustained break back below 85.00/85.50 is needed to see the move begin to grow momentum.
• CNH/JPY - Overnight range 20.7008 - 20.7906, Asia is currently trading around 20.7500.  The pair topped out toward the upper boundary of its recent 20.40-21.00 range, a sustained break back above the pivotal 21.00 area is needed to signal the start of the next leg higher targeting the 21.50 area.

Fig 1 : NZD/JPY Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P