US: "*DEMOCRATS WIN CONTROL OF THE HOUSE, DDHQ PROJECTS' - BBG

"*KIHARA: JAPAN ALREADY RELEASING OIL RESERVES, NO NEW PLANS" - BBG

"*JAPAN CHIEF CABINET SECRETARY MINORU KIHARA SPEAKS IN TOKYO"

In Tokyo morning trade, JGB futures are stronger, +14 compared to settlement levels.

• (Bloomberg) “Bank of Japan Deputy Governor Shinichi Uchida says AI is a big positive demand shock that has put upward pressure on the economy and prices. AI “could also affect the supply side, perhaps positively by raising productivity and enhancing capital stock accumulations, which might in turn affect r-star,” Uchida said according to the text of speech released by the BOJ.”
• (Bloomberg) “JGB traders will barely have time to catch their breath this week, with two major Japanese debt sales, a speech by BOJ Governor Ueda along with 10- and 30-year Treasury auctions all competing for attention.”
• S&P Global PMIs: Composite index falls to 52.3 from 53.5 in Aug; and Services index falls to 51.3 from 52.5 in Aug.
• Cash US tsys are ~1bp richer in today’s Asia-Pac session after Friday’s post-payrolls bear-flattener.
• The cash JGB curve has twist-steepened, with benchmark yields 2bps lower to 3bps higher.
• The benchmark 10-year yield is 0.2bp lower at 3.095% versus the cycle high of 3.128%, ahead of tomorrow’s sale.

Bloomberg Finance LP

The MI inflation gauge for September held steady at 4.8% y/y rising 0.3% m/m, the equal highest since December 2023 with August. However, both the underlying measures moderated with the trimmed mean 0.2pp lower at 2.2% and ex volatile items 0.4pp to 4.0%. Q3 averages are generally higher though and more data is likely needed to determine the trend. If there are indications inflation won’t “sustainably” return to target” within a “reasonable period”, the RBA reiterated it would hike rates further “if needed” to. 

• While the inflation gauge signals ongoing elevated inflation, the stabilization in the ex volatile items measure is consistent with either unchanged underlying inflation in September or even some improvement.
• With the next CPI report is not until 28 October, other price indices will be watched closely. The next RBA decision is 3 November and is highly data dependent. MI October consumer inflation expectations print Thursday.
• The Q3 MI inflation gauge rose 0.3pp to 4.5% from 4.2% and ex volatile items +0.2pp to 4.2% but the trimmed mean eased 0.1pp to 2.2%. 

Australia inflation y/y%

Source: MNI - Market News/LSEG/ABS