JPY: USD/JPY - Consolidates Above 157.00

ACGBs (YM -0.5 & XM +1.0) are slightly mixed.

• Cash ACGBs are little changed with the AU-US 10-year yield differential at +15bps.
• The bills strip is -1 to -2 across contracts.
• A 25bp rate cut in November is assigned a 64% probability, with a cumulative 23bps of easing priced by year-end.
• Compared with previous instances in this easing cycle, the market appears less confident than usual about a November 4 cut.
• This caution aligns with the RBA’s pattern over the past year of easing less than what six-month forward expectations had implied. Those expectations currently sit around 3.20%, compared with the cash rate of 3.60%.  (see chart)
• The local data calendar remains fairly quiet throughout the week.
• Today’s auction of the Jun-35 showed solid pricing for ACGBs, with the weighted average yield coming in 0.43bps below prevailing mid-yield. However, the cover ratio nudged lower to 2.9056x from 3.2958x at the previous auction. 
• The AOFM plans to sell A$800mn of the 2.75% 21 November 2029 bond on Friday.
• QTC has priced a A$2 billion increase to its 4.50% August 22, 2035 A$ fixed rate benchmark bond, according to BofA Securities. - BBG

Figure 1: RBA Cash Rate Vs. OIS 6M1M (6M Ago)

Source: Bloomberg Finance LP / MNI

Bellwether tech stocks declined over 1% today in Asia as a lackluster forecast from Texas Instruments saw it's stock fall, and others follow.   After many of the key tech stocks in Asia hitting new highs recently, it is unsurprising to see falls as profit takers step in.  Demand remains robust and export data from countries like Korea and Taiwan show that export growth remains strong, suggesting that whilst the outlook remains strong, a re-rating in expectations can occur.  

• Major Asian bourses have hit new highs over the last week and have followed each other lower today, with the NIKKEI leading the falls.  The NIKKEI is down -0.60% after hitting new highs yesterday as investors seek to understand the outcome of political negotiations to form a new government.  
• China's major bourses are down also with the Hang Seng falling -1.3% and back below the 50-day EMA it trended above only yesterday.   Other onshore bourses are down with the CSI 300 has pulled back -0.705 and near to the 20-day EMA again, whilst Shanghai and Shenzhen are down -0.45% and -0.55% respectively.
• The KOSPI is an outlier today, reaching yet another new high of 3,835 to be up +0.29%.  
• Ahead of the BI decision later, the JCI is down -0.6% as markets await what appears to be an imminent rate cut.  
• Headlines have crossed from Indian news source Mint, that a US-India trade deal will soon see tariff rates fall sharply. Some key quotes are outlined below, but notably the article states tariff rates may come down form 50% to 15-16%. Market optimism around a trade deal has been growing, given recent Trump remarks that India would curb Russian oil imports.  The NIFTY 50 has reached a new high of 25,866, up +0.10% in morning trade. 

Profit taking in gold and silver begun on Tuesday continued early in Wednesday’s APAC trading but the declines have been more than unwound and both are now slightly higher on the day. The moderate decline in the US dollar, unchanged US yields and weaker equities appear to have driven the recovery. Traders have been long, with the extent unclear due to the lack of CFTC positioning data because of the US government shutdown, and Tuesday’s sell off appears to have been driven by repositioning as both metals are in overbought territory.

• Gold reached a low of $4004.26, below the 20-day EMA at $4021.6, but has recovered to be 0.2% higher at $4131.2, just below support at $4140.8 and off today’s peak at $4143.28. It remains overbought.
• Silver fell to $47.550 earlier but is now up 0.5% to $48.94, still below the 20-day EMA at $49.089. The 50-day EMA at $44.996 is a level to watch.
• Equities are generally weaker with the Hang Seng down 1.3%, Nikkei -0.5% but S&P e-mini close to flat. Oil prices are stronger with WTI +1.7% to $58.20/bbl. Copper is down 0.1%.
• Later UK September CPI data print and ECB President Lagarde and Board members Buch and de Guindos speak.