Asian markets are bouncing modestly off a weak US session, buoyed by more unbelievable propaganda from Japan. Abe's proclamations that "deflationary mindset" has been shrugged off was met with calls for more stimulus, more debt monetization, and an admission by Etsuro Honda (Abe's closest adviser) that Japan "is not growing positively" and more QE is required despite trillions of Yen in money-printing having failed miserably, warning that raising taxes to pay for extra budget "would be suicidal." Japanese data was a disaster with factory output unexpectedly dropping 0.5% and retail trade missing. Markets are relatively stable at the open as China margin debt drop sto a 9-month low. PBOC strengthened the Yuan fix for the 3rd day in a row to its strongest in 3 weeks.
Following on from a weak Europe and US session (despite late-day heroics in China last night), Fed confusion and commodity-complex counterparty-risk-concerns have sparked further turmoil across AsiaPac in the early going. Noble Group (asia's Glencore) is crashing, down 6.7% at the open. FX markets are seeing outflows send CNH below CNY for the first time since July and crush Thai Baht to its weakest since Jan 2007. Equity markets are in trouble with Aussie stocks hammered (driven by a plunge in Miners) and Nikkei 225 down 1000 points from Friday's highs. Asia credit markets have spiked to 2-year wides. China injected another CNY40bn and strengthened the fix (by the most since 9/2) for 2nd day in a row.
Yellen's reaffirmation of a likely rate before year-end helped lift the dollar. Look for some consolidation ahead of the US jobs data.
US Futures Surge Nearly 30 Points To Overnight Highs After Tumbling On Worst Chinese Data In 6 YearsSubmitted by Tyler Durden on 09/23/2015 06:55 -0400
In many ways, the overnight market has so far been a reversal of yesterday, when a stable Asia session (with China stocks rising) gave way to a European tumble which in turn dragged the US lower.
The divergence meme that is the center of the dollar bull narrative was never predicated on precise timing of Fed's lift-off. To go from no hike in September to Fed will never raise interest rates, or QE4 is next, is a needless exaggeration.
Chinese equity markets are holding modest 'bounce' gains after two days of carnage. After 3 days of stronger fixes PBOC devalued the Yuan but the Ministry of Finance made it clear that "devaluation is not aimed at boosting exports," which makes us wonder, is it aimed at selling Treasuries? No additional direct liquidity injections but anxiety grows as China National Erzhong Group Co. may miss an interest payment later this month after one of its creditors filed a restructuring request, putting it at risk of becoming the second state-owned company to default in the nation’s onshore bond market.
Given the recent admission by the Australian Central Bank that property prices "have gone crazy," it appears new Chinese 'regulations' may just kill Australia's golden goose of 'weath creation' as Aussie's largest trade partner sees its economy collapse. While the Aussies themselves proclaimed a "war on cash," it appears, as AFR reports, that Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing's move to tighten capital controls. With Chinese banks now limiting any overseas transfer to USD50,000 - in an effort to control capital outflows - and with China dominating the Aussie housing market, one agent exclaimed, "it has affected 70 to 80 per cent of current transactions and some have already been suspended."
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With China closed today, the usual overnight market manipulation fireworks out of Beijing were absent but that does not meant asset levitation could not take place, and instead of the daily kick start out of China today it has been all about the ECB which as we previewed two days ago, is expected - at least by some such as ABN Amro - to outright boost its QE, while virtually everyone else expects Draghi to not only cut the ECB's inflation forecast, which reminds us of the chart which in March we dubbed the biggest hockeystick ever (we knew it wouldn't last) but to verbally jawbone the Euro as low as possible (i.e., the Dax as high as it will get) even if the former Goldmanite does not explicitly commit to more QE.
It rose out of the tropical Pacific in late 1997, bearing more energy than a million Hiroshima bombs.
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China Stocks Crash, More Than Half Of Market Halted Limit Down; PBOC Loss Of Control Spooks Global AssetsSubmitted by Tyler Durden on 08/18/2015 08:09 -0400
Just hours after the PBOC announced a modestly "revalued" fixing in the CNY, which curiously led to weaker trading in the onshore Yuan for most of the day before a forceful last minute intervention by the central bank pushed it back down to 6.39 it was the local stock market spinning plate - which had been relatively stable during the entire FX devaluation process - that China lost control over, and after 7 days of margin debt increases the Shanghai Composite plunged by 6.2% in late trade, tumbling 245 points to 3748, just 240 points above its recent trough on July 8, a closing level some 27% off its June peak.