ASIA STOCKS: Panic; Intervention; NKY Below Key Level; National Team Flows

JGB futures are weaker, –0.08 compared to the prior settlement level of 124.25.

• The contract traded to a session high of 124.45 early in the day before reversing lower, reaching a session low of 124.17. The move lower was driven by a combination of stronger-than-expected wages data and reports of a potential second supplementary budget, which weighed on the long end of the curve.
• Nominal cash earnings rose +3.8% y/y, above the median estimate of +3.7%. Regular earnings also rose +3.8% y/y, with basic wages for regular workers up +2.8% y/y and overtime hours up +2.2% y/y.
• "JAPAN PM TAKAICHI: WILL CONSIDER REVIEWING POLICIES, GOVERNMENT INCOME AND OUTGOINGS IF INTEREST RATE MOVES DIFFER FROM EXPECTATIONS - [RTRS]"
• Yesterday, Governor Ueda gave little indication of an imminent October rate hike, reiterating the BOJ's standing policy views.
• The JGB curve exhibited a flattening bias, benchmark yields 2bps higher to 2bps lower.
• The most notable move was at the 30Y tenor, which rallied ~2bps ahead of Thursday's auction. This comes despite the long end facing steepening pressure from fiscal concerns — specifically reports of a second supplementary budget.
• Tomorrow, the local calendar will see Current Account & Trade Balances, Tokyo Office Vacancies and Weekly International Investment Flow data alongside 30-year supply.

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The USD BBDXY index is up in the first part of Wednesday trade, up close to 0.20% (last just above 1222.2). Recent lows in the index sub 1220 have been supported, with market focus shifting to the FOMC Mins out later on Wednesday (US time). USD/JPY has been supported so far today, probing above 158.50 (158.51 highs), before paring the rise, with data and news flows centered on Japan. AUD and NZD are lower, with the A$ slightly outperforming (last near 0.6970/75), while NZD/USD is around 0.5605/10. The Kiwi continues to show greater sensitivity to broader risk trends. 

• Moves across the rest of the G10 have been uniform, with the EUR dip (last off 0.20% to 1.1230/35) evident, EU equity and bond futures re-opening weaker likely in play as focus remains on France's fiscal outlook. Cross asset wise, US equity futures are little changed, while regional equities are mostly lower. Oil futures are tracking higher. UST yields are tracking higher, last 1.0-3.0bps firmer, led by the back end (10yr to 5.305%). Bitcoin has also slumped, down around 1.8% to be around 84k. Gold is down 0.70%.
• On the data front, Japan labor earnings remained firm for Aug, albeit close to market expectations. It should support the wages/inflation outlook, but may not add much to near term BOJ rate hike expectations (Oct OIS odds remain very low). In terms of key headlines, "NEW BOJ BOARD MEMBER SATO SAYS AGREES ON NEED FOR GRADUAL ADJUSTMENT TO INTEREST RATES, KYODO NEWS REPORTS" - RTRS (who dissented the Sep BoJ rate hike, but didn't provide timing guidance). We also saw "*JAPAN MULLS SECOND SUPPLEMENTARY BUDGET, YOMIURI SAYS" - BBG (but this will be designed not to be stimulatory and more for disaster relief).
• We also heard from PM Takaichi, "JAPAN PM TAKAICHI: WILL CONSIDER REVIEWING POLICIES, GOVERNMENT INCOME AND OUTGOINGS IF INTEREST RATE MOVES DIFFER FROM EXPECTATIONS - [RTRS]" before adding: "*TAKAICHI: CONSUMPTION TAX CUT, HANDOUTS ARE BEST OPTION" - BBG
• For USD/JPY the 200-day MA sits just above 158.50, while the late Sep high is at 159.04. We were last near 158.40/45 for the pair.
• Looking ahead, German industrial production and the US NY Fed inflation expectations survey are the data highlights. Fed minutes are also due, at which market focus will shift to how many other governors on the board share NY Fed President Williams' view that only one further rate hike may be needed in 2026.