Overnight Price Action
The 0.9% fall in the S&P overnight led most Asia equity markets to open weaker, but they rapidly reversed to trade up on the day. The Nikkei is up 0.3%, the HSI has rallied 0.9%, Shanghai is up 0.5% in its first day of trading after China’s Golden Week holiday, but the Kospi is down 0.2%. S&P futures are down a bit less than 0.1%.
The dollar has been better bid against most pairs. EURUSD has dipped to 1.3560, USDJPY has bounced to 96.96, and AUDUSD is flat at 0.9430, helped by a better than expected NAB business confidence survey. Most EM Asia currencies are softer. The KRW and MYR are 0.3% weaker vs. the dollar at 1074.45 and 3.1985 respectively. In contrast USDCNY fixed 65pips down to 6.1415, a new low. USDINR gapped lower at the open to 61.68 in response to yesterday’s unexpected 50bps cut in the MSF rate to 9%, but has traded back up to 61.80.
The US 10yr yield is a touch lower at 2.6229. JGB yields are about 1.2bps higher in the back end with the 10yr at 0.651% and 30s at 1.654%. In EM Asia, Indian yields have stolen the show, dropping 17 – 29bps across the curve in response to the surprise easing overnight. Most other markets are essentially flat. China’s 7-day rate is up 20bps to 4.4%.
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Credit Suisse