MNI EUROPEAN MARKETS ANALYSIS: Yen Testing 153, US CPI Later

• The USD is drifting up, with yen weakness remaining in focus. USD/JPY is testing above 153.00, with earlier remarks from Japan officials (who refrained to comment on FX), along with higher USD/CAD levels (as Trump ended trade negotiations with Canada), aiding moves.
• The risk of fresh JGB issuance to fund an economic package isn't impacting JGBs, the curve continues to flatten. PM Takaichi is aiming for responsible, but pro-active, fiscal policy.
• China equities are higher as details from the Fourth Plenum filter out, with a strong emphasis on tech.  
• Outside of the US CPI later, we also get the preliminary PMIs for Oct for the UK, EU and US. 

US TSYS: USTs Steady in Asia, Await Key CPI Tonight

US Bond futures finished marginally up in a low volume trading day in Asia.  The 10-Yr TYZ5 is up 01 at 113-14+, virtually flat on the week.  A mid week rally on what appeared growth concerns (given US lockdown) saw a peak in TYZ5 of 113-25+ which was eroded overnight as oil rallied.  

Cash has had a mini rally  in the afternoon with most maturities lower by -0.5 - 1.0bps.  

• The US 2-Yr  is down at 3.48%, yet remains higher by +3bps for the week.
• The US 5-Yr is at 3.60% but +1bp for the week, holding to the 3.55% - 3.65% range for now.  
• The US 10-Yr closed briefly back above 4.00% but has edged below again in the Asia trading day to be 3.99%, -2bps for the week.
• The 30-Yr is flat today at 4.58% but remains the best performer for the week, down -2bps. 

The bond rally in mid-week posed risks for bond traders ahead of tonight's CPI should the release be higher than expected. The move higher in yields overnight given Oil's gains sees those risks moderating, though could suggest the market could be skewed to lower yields and likely to overreact to higher inflation.  The forecast for CPI YoY is +3.1% (from +2.9% August) and MoM flat at +0.4%.  September release was originally due mid month but was delayed due to the government shut down.  The FED meets next week on October 30 with a strong consensus building among investors for another cut.  Even a moderately stronger than expected inflation print could see investors views challenged.  

JGBS: Flatter Curve Trend Continues, Despite Possible Fresh JGB Issuance

JGB futures have drifted a little higher post the lunchtime break, last 136.12, +.02 versus settlement levels. As has been the case recently, dips under 136.00 have been supported. Further fresh sharp downside in US Tsy futures has been absent, with some support likely coming from lower oil prices. JGB futures have also taken in their stride comments from the new FinMin, who did not rule out further JGB issuance to fund the upcoming economic assistance package. 

• There were a host of comments from new FinMin Satsuki Katayama earlier. On extra JGB issuance via BBG: "“We usually draw from higher-than-expected tax revenues and unspent funds from previous budgets to fund extra budgets,” Katayama said in an interview with a group of reporters Friday. “But if that’s not enough, we’ll have to issue more government bonds — it can’t be helped if it comes to that,” she said."
• Still, there were also references to fiscal prudence, with the FinMin stating that the cabinet has not abandoned the government's target of achieving a budget surplus.
• On the BoJ the FinMin said that central bank and the government need to be in unison on basic policy objectives and given that the central bank maintains an accommodative stance she doesn't need to talk further about the matter.
• JGB back end yields are looking through any fresh issuance concerns and continue to track lower, the 20-40yr tenors down a further 2.5bps. The 30yr (last just under 3.07%) is challenging 100-day EMA support in yield terms. The 2/30s curve remains in a flattening trend, last +213bps (-2bps). The 10yr outright yield is down slightly to 1.655%.
• Earlier data showed Sep nationwide CPI close to forecasts, headline and core ex fresh food ticking up to 2.9%y/y, while the measure which excludes fresh food and energy eased to 3.0%y/y from 3.3%. Services y/y inflation eased to 1.4% (from 1.5%) reinforcing a likely wait and see approach from the BOJ next week (decision Thursday the 30th of Oct).  

JAPAN DATA: Sep CPI Near Forecasts, Lower Services CPI To Reinforce Steady BOJ

The Sep Nationwide CPI printed close to market forecasts, while services y/y momentum moderated a touch (to 1.4%y/y, from 1.5%). It's unlikely to change near term BoJ thinking, with next week's policy outcome seen firmly on hold by the sell-side consensus and market pricing. Some BoJ board members continue to argue for a hike but this isn't the core board viewpoint at this stage. 

•  We were 2.9%y/y for headline and core, which was the consensus estimate. The core measure which excludes fresh food and energy printed at 3.0% (against a 3.1% forecast, with 3.3% prior for this print).
• On m/m terms we were +0.1%, same as Aug, while core m/m outcomes were around flat. Goods prices rose 0.1%m/m, while services were flat. In non-seasonally adjusted terms all headline and core measures were down in m/m terms, the ex food and energy measure off 0.3%.
• By sub-sector, inflation points were evident for fresh food, up 3.2%m/m (after the Aug 3.3% rise), while clothing, footwear surged 2.9%m/m. Negatives were evident though for utilities (-1.3%m/m), entertainment (-2.1%m/m, after a 1.8% gain in Aug), household goods (-0.7%m/m) and transport (-0.2%m/m).
• In y/y terms, only food (+6.7%y/y), transport (+3.0%y/y) and clothing (+2.5%y/y) are above the 2% y/y rate.
• Services prices, which BOJ officials are monitoring closely to assess the strength of the virtuous cycle between wages and prices, rose 1.4% y/y in September after a 1.5% increase in August, per the Tokyo MNI policy team. This reinforces the BoJ's wait and see approach.  

Fig 1: Japan CPI - Y/Y, Converging Trends Close to 3% 

Source: Bloomberg Finance L.P./MNI 

JAPAN DATA: Weaker PMI Points To Downside IP Growth Risks

Earlier the Oct preliminary S&P PMIs printed for Japan. They were all softer than the Sep outcomes. Manufacturing eased further into contraction territory at 48.3 (prior 48.5). The chart below plots this index against Japan IP growth. IP has already softened (the last print is for Aug) but the Oct PMI is suggesting further downside risks. This will remain a watch point for the authorities as they look to gauge economic momentum into year end (with tariff/external demand fallout in focus). The recent export data showed a Sep rise in y/y terms. In terms of the detail of the manufacturing PMI, output rose to 48.1 from 47.4 prior, but new orders were down on the Sep read. 

• Other PMI prints saw services ease back to 52.4, from 53.3, while the composite fell back to 50.9 from 51.3. 

Fig 1: Japan Manufacturing PMI & IP Growth 

Source: Bloomberg Finance L.P.MNI 

AUSSIE BONDS: 10yr Futures 95.90 High Intact, Q3 CPI/RBA Fireside Chat Next Week

Aussie bond futures hold weaker, but away from session lows. 10yr (XM were last 95.845, -2bps (session lows were at 95.815), while 3yr (YM) are off by 1.5bps to 96.62 (session lows at 96.585). This fits with broader regional/US trends, where further downside in futures has proven limited so far. A softer tone to oil prices (albeit only off 0.60%), along with proximity to the US CPI print later, are likely drivers of market sentiment. Important support for Aussie futures (96.28 for 3yr and 95.51 (Sep 3 low) remain some distance away.  

• Any fresh upside in US Tsy futures, could bring resistance at 95.90 into focus for the Aussie 10yr.
• AU-US 10yr government bond yield differentials remain off recent highs, last +15bps.
• Outright ACGB yields are are round 1-2bps firmer, with the back end outperforming in yield terms. The 3yr was last around 3.365%, while the 10yr is just under 4.14%.
• Earlier RBA Governor Bullock spoke on the payments system, with the monetary policy outlook not covered. We had Oct preliminary PMIs out earlier too, with manufacturing slumping to 49.7 from 51.4, although this is not a tier one release.
• Of greater focus will be on next week's Q3 CPI print due Wednesday. Headline is expected to rebound to 3.0% y/y (from 2.1%), but trimmed mean is expected to hold steady at 2.7%y/y.
• Before this, Monday evening 7:15PM AEDT we have Bullock giving a Fireside chat at the ABE dinner. Focus will obviously be on the outlook ahead of the Nov policy meeting, and whether the recent rise in the unemployment rate has shifted the central bank bias/outlook. 

BONDS: NZGBS: 10yr Back Offs 4.00% Upside Test, ANZ Surveys In Focus Next Week

NZGB yields are holding higher, but are away from session best levels. The 10yr yield couldn't sustain earlier highs above 4.00% and sits back at 3.985%R in latest dealings. The 2yr has held steady at 2.52% for much of the session. Oil prices have edged lower so far today, while US cash Tsy yields are also down a touch, likely help drag NZGB yields off earlier highs. As we noted earlier NZGB 2 and 10yr yields remain sub all key EMAs, although further upside can't be ruled out in the near term. Focus for today will rest firmly with the US CPI print later. For 10yr the 10yr the 20-day EMA is near 4.08%, for the 2yr around 2.62%. 

• The NZ 2/10s curve is slightly steeper, but at +146bps remains sub recent highs around +154bps. The NZ-US 10yr government bond yield differential is around flat, up from the -3-4bps region, but still struggling for meaningful upside. Our fair estimate, last around +6bps, could shift depending on how tonight's US CPI unfolds.
• Looking ahead to next week, we have jobs filled data out on Tuesday, while ANZ business and activity figures print Thursday, then ANZ consumer confidence is out on Friday. The Q3 jobs data though, due Nov 5 is likely the next major focus point from an RBNZ standpoint (next meeting on 26th of Nov).

FOREX: USD/JPY Eyeing Upside 153 Test, USD/CAD Above 1.4000 On Trump Headlines

The USD BBDXY index remains close to this week's highs, last 1213.90, up around 0.1% so far today. The clear focus later will be on the US CPI print. Yen weakness remains a dominant trend, with the edge up in the USD/CNY fix, coupled with muted comments on FX from Japan government officials, driving an earlier run up towards 153.00 (highs were 152.92). The 153.27 level, the Oct 10 high and bull trigger, isn't too far away. Yen is now off this week by 1.5%, the weakest performer in the G10 space. Elsewhere, USD/CAD has pushed up above 1.4000, as US President Trump stated all trade negotiations with Canada would cease. AUD/USD is back to 0.6500, but NZD is outperforming marginally, holding close to 0.5750. Both currencies remain with recent ranges. 

• Earlier remarks from Japan's Economic and Fiscal Policy Minister Minoru Kiuchi suggested little concern around weaker FX trends (at least at face value). He stated that FX rates are determined by various factors, but refrained from broader comments on FX, which appears to reflect less concern around FX weakness than previous ministers under the Ishiba regime (previous FinMin Kato recently stated that it was important that the yen moved stably and in line with fundamentals and that they were seeing rapid FX moves in the weak yen direction).
• Earlier data from Japan showed a slight softening in the services CPI for Sep, which should reinforce the BoJ's wait and see approach at next week's policy meeting (Thursday), while the Oct preliminary Oct PMI fell further into contraction, implying downside risks for IP growth.
• USD/CAD spiked from 1.3990 to highs of 1.4028, but we sit back at 1.4010/15 in latest dealings, as Trump headlines crossed. We were close to 1.3990 before the headlines crossed (we remain above all key EMAs, the 20-day EMA is near 1.3980/85, while recent highs rest at 1.4080). US President Trump posted via Truth Social that all trade negotiations with Canada are now terminated. He stated Canada falsely used an ad featuring former President Ronald Reagan speaking negatively about tariffs.
• Outside of the US CPI later, we also get the preliminary PMIs for Oct for the UK, EU and US. 

OIL: WTI Bounces on Key Technical, Set for Strongest Week Since June

• Oil gave back some of last night's gains, yet remains set for it's strongest week since June.  
• Up over +6.6% for the week, WTI has declined -0.65% to USD$61.39 bbl in the Asia trading day unable to break through the 50-day EMA of $61.91  
• Brent is down -0.61% at US$65.59, yet remains up +7% week to date.  
• Overnight was oil's biggest one day jump since June, oil gaining on the announcement of US sanctions on Russia's biggest oil companies Rosneft and Lukoil, in efforts to cut off revenue to Russia and limit its ability to continue the war in Ukraine.  
• The sanctions come at a time when Ukraine attacks on Russian oil infrastructure has escalated increasing the possibility that global oil supply could be impacted by reduced Russian supply.  
• Indian refiners have indicated that the latest sanctions will severely impact their ability to continue to buy Russian oil (as per BBG).
• The EU followed the US with new sanctions including targeting the Russian shadow fleet, a crack down on Russian crypto financing and a ban on LNG imports into Europe from 2027.  
• Chinese state-owned companies including Sinopec canceled some purchases of seaborne Russian crude after the US blacklisted Rosneft PJSC and Lukoil PJSC, adding to signs of disruption in the oil market.  The Chinese majors have begun to assess the impact of the US curbs, as well as similar moves by the European Union, according to people with knowledge of the situation, asking not to be identified discussing sensitive issues. The companies have paused purchases of some spot cargoes, mostly ESPO, a grade that ships from Russia’s Far East, (as per BBG)

Gold Set for First Weekly Decline Since August

• In a 9-week run of gains, gold has risen almost 25% over that period but falls in recent days could result in its first weekly fall since mid-August.  
• The majority of falls this week occurred on Tuesday, with one of the biggest one day falls of the year and bullion has been unable to recover since.
• The catalyst appears profit taking as yet another new record was achieved Monday, closing at US$4,356.30.  Year to date gold is up +57%.
• The two days of losses came as ETF outflows reached their highest in several months.
• "The fundamentals supporting gold's rise remain in place, according to the Global Commodities Team at J.P. Morgan. Foreign managers of U.S. assets have diversified from dollars to gold this year, causing demand to rise. If their U.S. exposure drops to 43% from around 45% today, and half a percentage point is redirected to gold, prices could rise to $6,000 per ounce by 2028, the team predicted."  as per BBG
• Gold has remained overbought since early September according to the 14-day Relative Strength Index and the move puts bullion back closer to fair value.  
• That in itself is likely to see buyers return as the USD diversification story continues and Central Bank buying of gold continues to grow. 

ASIA STOCKS: Strong Week for Region as Tech Leads; HSI Nears Key Technical

China stocks had suffered earlier this week as the Trump administration threatened to curb China's access to key software.  As the four day conclave of the Communist Party's Central Committee concluded Thursday, new goals emerged in the next 5-Year plan of China's plan for self-reliance and strength in science and technology.  This came as news that a US - China summit has been agreed.  Tech stocks in general are strong today with key stocks like Samsung up +2.5% to reach new highs and  the Hang Seng Tech Index up over 1%.  Major bourses have delivered strong gains this week, with some hitting new all time highs.  

• The Jakarta Composite has posted the biggest 5-day gains, up just on 5% in a week where the Central Bank surprised markets by remaining on hold.  Since the lows of late March, the JCI is up just on 40% as the Prabowo Government undertakes a pro-growth policy approach.    
• The KOSPI's 5-day gains are over 4.5% given the Tech story, and hit yet another new high as the Korea Economic Daily reported that President Lee is considering cutting the top rate on dividends (as per BBG).
• As the political happenings in Japan led to a new leader, the NIKKEI has gained strongly on hopes that inflation fighting packages are to be announced.  The NIKKEI closed at new highs Tuesday before profit takers took over.  For the week, the NIKKEI remains up over 3% with the Tech sector contributing strongly to gains.  
• China's major bourses have all enjoyed solid gains this week as the momentum in the Tech sector globally, drove local prices alongside expectations for the new 5-Year plan.  All major bourses are up with the outperformer the Shenzhen Composite, up +3.5%.  The HSI in Hong Kong delivered gains of +3.4% for the week and is near the 20-day EMA, attempting to finish above it for the first time in a fortnight.  

ASIA STOCKS: Offshore Investors Trim Risk In Tech Sensitive Mkts

The past week has seen generally outflow trends in terms of offshore investor flows for tech sensitive markets in South Korea and Taiwan. This comes despite positive trends in underlying onshore indices, although this is arguably more evident for the Kospi than Taiex. The Kospi remains firmly supported on dips and is tracking above 3900 in early Friday dealings. Even today though, per the NBUY function on BBG, offshore investors have sold a modest amount of South Korean stocks. The Taiex couldn't get to fresh highs above 28000 earlier this week, but is sill up firmly for Oct to date. 

• Trimming back risk in these markets may be in play, as broader nervousness grows around the sustainability of global tech equity gains. The SOX index is the US can't test above 7000, but dips back to 6500 are supported. The MSCI IT index is seeing a similar backdrop unfold. We also have key US-China meetings next week.
• In India, trends up until the start of the week were positive and any US-India trade deal that results in lower tariffs could see a further recovery in inflows. A watch point will be oil prices and whether this slows positive onshore equity momentum.
• In SEA, flows yesterday were mostly positive, with Malaysia ending a period of outflows (which stretched back to the start of Oct). Indonesian inflows have been stronger the past 5 trading days, consistent with the JCI testing recent highs. 

Table 1: Asian Markets Net Equity Flows 

Source: Bloomberg Finance L.P./MNI 

ASIA FX: Yen Weakness Drags Majors Lower Over Week

• All major regional currencies finished with losses for the week, as the KRW continues to underperform peers.  Jawboning from the Finance Ministry has given the Won a boost today, yet it remains one of the worst regional performers over the last month, weaker by 2% as Yonhap reported "The finance ministry said Thursday it sold US$1.7 billion worth of foreign exchange stabilization bonds. The ministry has issued $1 billion worth of dollar-denominated bonds with a maturity of five years and $700 million worth of yen-denominated bonds with a maturity ranging from two to 10 years. Currency stabilization bonds are designed to raise the money needed by the government to keep foreign exchange rates stable."  The plight of USDJPY didn't help the Won as the Yen lost ground by -1.5%, dragging the Won, Peso and TWD with it.
• The Rupiah continues to struggle despite the surprise Central Bank hold on rates this week.  In what appeared an attempt to support the Rupiah in their endeavour to reach their target of 16,300 the hold hasn't followed through to FX markets as the Rupiah finishes the week weaker by -0.30% at 16,634 as some forecasters suggest that 17,000 is a real possibility now.  
• The Peso fell to it's weakest level versus the USD since February with declines of -0.75% this week. We have broken above 58.60 and are holding there for now.
• FX markets will be paying close attention to US CPI tonight.  With next week's cut priced in, an upside surprise could have material impacts on the USD and expectations for monetary policy for the remainder of 2025.  
• USD/CNH has edged a little higher but remains sub 7.1300 and is outperforming broader USD gains. Key US-China meetings next week, headlined by the the Trump-XI meeting on Thursday in Seoul (on the sidelines of APEC) are coming into focus. USD/CNH implied vol levels are very low though. Trump remarks this week have continued to express confidence in a deal with China. 

SINGAPORE: Industrial Production Jumps in September

• Industrial production in September rose +16.1% YoY outstripping estimates of +0.5%, versus prior of -9% in August.  
• The monthly figure of +26.3% MoM smashed estimates of +8.7%, recovering from the -11% decline in August.  
• The BioMedical Sector and the Electronics sector saw the largest advances.  
• This was the fastest pace in more than one year and as arguably the most open of all SE Asian economies, is monitored closely as a bellwether for economic activity in the region.  

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
24/10/2025	0600/0800	**	SE	PPI
24/10/2025	0600/0700	***	GB	Retail Sales
24/10/2025	0645/0845	**	FR	Consumer Sentiment
24/10/2025	0700/0900	**	ES	PPI
24/10/2025	0700/0900	*	ES	Labour Market Survey
24/10/2025	0715/0915	**	FR	S&P Global Services PMI (p)
24/10/2025	0715/0915	**	FR	S&P Global Manufacturing PMI (p)
24/10/2025	0730/0930	**	DE	S&P Global Services PMI (p)
24/10/2025	0730/0930	**	DE	S&P Global Manufacturing PMI (p)
24/10/2025	0800/1000	**	EU	S&P Global Services PMI (p)
24/10/2025	0800/1000	**	EU	S&P Global Manufacturing PMI (p)
24/10/2025	0800/1000	**	EU	S&P Global Composite PMI (p)
24/10/2025	0800/1000		EU	ECB Cipollone Fireside Chat on International Finance
24/10/2025	0830/0930	***	GB	S&P Global Manufacturing PMI flash
24/10/2025	0830/0930	***	GB	S&P Global Services PMI flash
24/10/2025	0830/0930	***	GB	S&P Global Composite PMI flash
24/10/2025	1200/0800	**	BR	Brazil Preliminary CPI
24/10/2025	1230/0830	***	US	CPI
24/10/2025	1230/0830	***	US	CPI
24/10/2025	1230/0830	***	US	CPI
24/10/2025	1300/1500	**	BE	BNB Business Confidence
24/10/2025	1345/0945	***	US	S&P Global Manufacturing Index (Flash)
24/10/2025	1345/0945	***	US	S&P Global Services Index (flash)