EM ASIA CREDIT: Korea Electric Power: New USD 5Y Priced

Japan household spending for August was stronger than forecast (+2.3%y/y, versus 1.2% forecast, 1.4% prior). We are below earlier 2025 highs from a y/y momentum standpoint, but the trend has steadily improved from late 2024 lows. It should add, albeit at the margins, to the case for a further BoJ rate hike, although little is priced for the Oct meeting (implied rate of 0.52%, versus a current effective rate of 0.477%). On the political side, ahead of Takaichi's first formal actions in government, one of her primary policy advisers Honda stated that Takaichi wants the Bank of Japan to proceed "cautiously" on interest rates, and that an October rate hike is "difficult". While the comments appeared to pressure the Bank away from tightening policy, the view that a December hike is not a problem was notable

• In m/m terms spending was up 0.6%. The strongest sub categories in y/y terms were transport, education and culture, recreation, which all recorded rises above 10%y/y.
• The chart below plots this real household spending measure against real labour earnings, both in y/y terms. Note the Aug update for earnings will be out tomorrow.
• The market expects real earnings to dip -0.5%y/y for August, against a -0.2% prior. Recall the July estimate was revised down from +0.5%y/y originally reported.
• If this is how the print evolved it would re-open the wedge between earnings and spending, although not as large as it was earlier in the year. From yesterday, via our Tokyo policy team: Regional firms expressed differing views on wage and price policies. A transportation company plans to maintain high wage levels in fiscal 2026, similar to this year, while a food and beverage firm in the same area intends to limit pay increases amid falling profits (from the BoJ's Regional Economic Report).  

Fig 1: Japan Real Household Spending & Real Labour Earnings Y/Y 

Source: Bloomberg Finance L.P./MNI 

US President Trump has posted via Truth Social, laying blame for the US government shutdown on the Democrats. This post came shortly after the Senate failed to pass a funding bill, leaving the government in shut down. Trump notes that he is willing to work/negotiate with the Democrats around healthcare policies, but first the Democrat's must re-open the government. Earlier remarks from Democrats House Minority Leader Jefferies indicated that the White House had been radio silent since last Monday, indicating little progress in ending the shutdown. Still, earlier remarks from the US President and Democrats Senate Leader Schumer pointed to a willingness to talk/negotiate (via the WSJ). 

• Trump Post via Truth Social: "Democrats have SHUT DOWN the United States Government right in the midst of one of the most successful Economies, including a Record Stock Market, that our Country has ever had. This has sadly affected so many programs, services, and other elements of Society that Americans rely on — And it should not have happened. I am happy to work with the Democrats on their Failed Healthcare Policies, or anything else, but first they must allow our Government to re-open. In fact, they should open our Government tonight!"
• "We have a negotiation going on right now with the Democrats that could lead to very good things," Trump told reporters in the Oval Office on Monday. Senate Minority Leader Chuck Schumer (D., N.Y.) said formal talks hadn't commenced. "Trump's claim isn't true. But if he's finally ready to work with Democrats, we'll be at the table," he said in a statement. (via the WSJ). 

• RES 3: 140.08 High Jun 13  
• RES 2: 139.05 High Aug 4 
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 135.69 @ 16:25 BST Oct 06
• SUP 1: 135.67 - Low Sep 26 
• SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)
• SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)  

A bear threat in JGB futures remains present despite the intraday spike Monday. The contract pulled well off the intraday high, keeping the bias negative for now. The latest sell-off has also resulted in a break of support at 136.19, the Sep 4 low and a bear trigger. Clearance of this level confirms a resumption of the downtrend and opens 135.39 next, a Fibonacci projection. Key short-term resistance has been defined at 137.30, the Sep 8 high.