POLITICAL RISK: North Korea Reportedly Test Fires Long Range ICBM
Oct-30 23:47
North Korea has reportedly tested fire a long range ICBM (capable of striking the US). AP notes, if confirmed, this would be the first such test of this type of missile since December 2023.
- The missile was fired towards the East Sea on what has been described as a lofty trajectory. Japan stated the missile is likely to have fallen outside the country's EEZ.
- Japan PM Ishiba stated he will convene a National Security meeting (per BBG).
- This move comes ahead of the US election next week and amid reports of North Korean troops arriving in Ukraine to reportedly fight along Russian troops.
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JGBS: Futures Weaker Overnight, Labour Market Data Mixed
Sep-30 23:34
In post-Tokyo trade, JGB futures are weaker, -13 compared to settlement levels.
- August jobless rate and job-to-applicant ratio have printed mixed relative to expectations with 2.5% and 1.23 respectively versus estimates 2.6% and 1.24 and priors 2.7% and 1.24.
- The BoJ Summary of Opinions from the September policy meeting is also due today along with the Q3 Tankan survey. The market expects a slight downtick for large manufacturers' sentiment, but all industry Capex is projected higher at 11.9% (versus 11.1% in Q2).
- ICYMI, the Japan general election will be held on Oct. 27th, incoming PM Ishiba said late yesterday, confirming what the NHK reported earlier in the day.
- Overnight, US tsys reacted to comments from Chairman Powell at the NABE conference. Powell stressed the Fed is not in a hurry to cut rates, emphasising that the overall US economy remains on solid footing.
- The US 2-year rate was up 8bps to 3.64%, while the 10-year was 3bps cheaper at 3.78%. The curve flattened to 14.7 bps.
- US equities ended the session with modest gains, recovering from modest losses throughout the day.
- The DXY firmed but finished off the day's high of 100.924. Oil was slightly higher, while gold fell 1.0% to $2631.98 per ounce.
**MNI JAPAN AUG JOBLESS RATE FALLS TO 2.5% FROM JULY 2.7%
Sep-30 23:31
- MNI JAPAN AUG JOBLESS RATE FALLS TO 2.5% FROM JULY 2.7%
AUSSIE BONDS: Cheaper After The US Tsy Curve Bear-Flattens
Sep-30 23:10
ACGBs (YM -3.0 & XM flat) are cheaper after a bear-flattening by US tsys following Fed Chair Powell’s remarks at the NABE conference.
- The remarks were taken hawkishly by markets with Powell stressing the Fed is not in a hurry to cut rates, emphasising that the overall US economy remains on solid footing.
- The US 2-year rate was up 8bps to 3.64%, while the 10-year was 3bps cheaper at 3.78%. The curve flattened to 14.7 bps.
- US equities ended the session with modest gains, recovering from modest losses throughout the day.
- Oil was slightly higher, while gold fell 1.0% to $2631.98 per ounce.
- Cash ACGBs are 1-6bps cheaper with the belly underperforming. The AU-US 10-year yield differential is 1bp at +22bps.
- Swap rates are flat to 2bps higher with the 3s10s curve flatter.
- The bills strip is cheaper with pricing -2 to -5 across contracts.
- RBA-dated OIS pricing is 1-5bps firmer across 2025 meetings. A cumulative 13bps of easing is priced by year-end.
- Today, the local calendar will see CoreLogic Home Value, Judo Bank PMI Mfg and Building Approvals data.
- Tomorrow, the AOFM plans to sell A$800mn of the 2.75% 21 June 2035 bond.
