Overnight Price Action
The Nikkei gapped 1.5% lower at the open and fell as much as 2.2% before recovering slightly to 1.7%, down in response to news that the US government may shut down on Tuesday. The US 10yr Treasury yield is down close to 3bps to 2.594% and S&P futures are off 0.6%, a large move in Asian hours. The HSI is down 1.2%, Kospi is down 0.5%, but the Shanghai composite is up 0.4% despite the HSBC PMI for September being weaker than expected.
The dollar is mixed against the G10 currencies, but stronger against EM Asia. EURUSD has risen to 1.3503 despite news that Silvio Berlusconi has ordered his party members to withdraw from the governing coalition in Italy. AUDUSD is down to .9303, but USDJPY is flat at 97.82 and NZDUSD rallied to 0.8287 in response to better than expected business confidence. Among emerging currencies, the IDR and MYR have underperformed. The IDR onshore spot rate is down about 2% to about 10,600 while the MYR has weakened 0.9% to 3.2583 to the dollar. In contrast, after opening 0.4% weaker, the KRW has recovered to be down only marginally on the day at 1075.24. The USDCNY fix was essentially flat at 6.148.
Despite rallies in US and Australian rates, JGB yields are up slightly across the curve. Most EM Asian rates markets have rallied. Singapore swap rates are down 1 – 5bps, Korean IRS are off 1bp, and Malaysian yields are lower.
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Credit Suisse