Court decision likely sees Fed’s Cook voting at FOMC

Asia market update: PL / RU border flare-up; Kospi hits all-time high as ORCL +28% a/h; US rhetoric vs IN heats up even as US-IN trade talks to continue; Court decision likely sees Fed’s Cook voting at FOMC; SCOTUS to review Trump tariffs in Nov; Focus on US Aug PPI.

General trend and developments

- Polish aircraft deployed weapons within its own territory against “hostile” drones from Russia, as Russia and Belarus carried out military exercises on its border. First shots fired in anger by the Polish army over its own territory since the end of the Cold War. Poland said it was in constant communication with NATO.

- Korea’s Kospi powered higher +2.1% to break its all-time high (prior high July 2021) on overnight reports that South Korea may scrap its plan on capital gains tax rule.

- Positive day all-round for Asia equities, with Nikkei +0.8% and Hang Seng +1.2%.

- Oracle smashed higher +28% after-hours as it reported RPO contract backlog (contracted future revenues) increased by an incredible +359% to $455B. Capex guidance also much higher, by an additional $10B. Execs described it as ‘an astonishing quarter’.

- China deflation accelerated in August, with CPI -0.4% (largest decline since Feb). Food in particular -4.3%. Producer prices (PPI) also stayed mired in 35th month of decline. Stats agency cited high base effects for severity of the fall.

- Further press reports overnight that Japan’s BOJ likely to hold rates again next week, but not averse to raising rates before the end of the year – despite the uncertain political environment.

- Comes as initial betting markets show a two-horse race between Koizumi and Takaichi for next Japan PM, with Koizumi opening up a gap over Takaichi. Markets also reacted yesterday to the relatively hawkish Kono putting his name into the leadership contest.

- The developments saw the chances of a 25bp BOJ hike in October rise again to 27.5% (vs 21.5% Monday) and December hike back up to 55.5% (vs 48.5% Monday).

- Pres Trump’s promised secondary sanctions against Russia ratcheted up a level as he called on the EU to impose 100% tariffs on China and India as part of the efforts on Pres Putin to end the Ukraine war. Trump said that the US was willing to mirror any EU tariffs.

- At the same time, Pres Trump said that India and US are still continuing to negotiate on trade, later affirmed by India PM Modi who said India is working to conclude talks with the US 'at the earliest';

- Australian lithium stocks down, with Liontown Resources -15% with falls also for Hong Kong lithium shares (Ganfeng Lithium -6%, Tianqi lithium -8%) as giant battery maker CATL’s Yichun Lithium mine reportedly to resume production earlier than expected.

- US BLS jobs revisions were disappointing as expected, suggesting the US lost -911K jobs over the past year (76K fewer jobs per month), even more than the prior year’s heavy downward revision.

- US Supreme Court has decided to fast track to November its review of the Trump Admin’s reciprocal tariff appeal, to determine their validity and ability to continue to be imposed.

- A US judge temporarily blocked President Trump from removing Fed Gov Cook, which means Cook likely to vote at next week’s FOMC meeting, before the Supreme Court can rule on the case.

- US equity FUTs +0.1% to +0.2% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Wed Sept 10th (Wed eve US Aug PPI).

- Thu Sept 11th (Thu eve ECB Rate Decision, US Aug CPI).

- Fri Sept 12th NZ Aug Business PMI, (Fri eve UK July GDP, US Michigan Sept Consumer Sentiment).

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,796.

- Australia Defense Ministry to invest A$1.7B in autonomous undersea vehicles "Ghost Sharks" with Anduril Australia - press.

- Australia sells A$1.0B v A$1.0B indicated in 1.00% Nov 2031 bonds; Avg Yield: 3.8315% v 3.8598% prior; bid-to-cover: 3.89x v 3.52x prior.

- New Zealand July Net Migration: 2.1K v 1.9K prior.

- RBNZ: Consulting on how we conduct Open Market Operations and are seeking input on design considerations for a Committed Liquidity Facility.

China/Hong Kong

- Hang Seng opens +0.4% at 26,042; Shanghai Composite opens flat at 3,806.

- China Aug CPI Y/Y: -0.4% V -0.2%E [largest decline since Feb]; PI Y/Y: -2.9% v -2.9%e (35th month of negative readings).

- US SEC said to target US firms that may be tied to suspected China 'pump-and-dump' schemes - FT.

- China President Xi sends letter to 2025 China International Fair for Trade in Services; affirms China will promote the opening-up of the service sector.

- Two-thirds of US companies surveyed in China expect sales to be impacted this year due to Trump Admin tariffs - annual survey held May/Jun by American Chamber of Commerce in Shanghai.

- Reportedly bipartisan group of US legislators will make trip to China later in Sept – NBC.

- China MOF sells 3-month bills, 5-year bonds, 50-year ultra-long treasury bonds.

- China PBOC sets Yuan reference rate: 7.1062 v 7.1008 prior.

- China PBOC Open Market Operation (OMO): Injects CNY304B in 7-day reverse repos; Net injects CNY75B v drains CNY8.7B prior.

Japan

- Nikkei 225 opens +0.2% at 43,557.

- Polymarket betting market prices 51% chance for Koizumi to become next Japan PM, 38% chance for Takaichi and 5% chance for Hayashi.

- BOJ said to be likely to 'slightly reduce' purchases of super-long JGBs in Oct-Dec quarter; Decision on Sept 30th – source.

- Reportedly BoJ still sees chance of rate hike in 2025 despite politics, but to keep rates steady at Sept 19th's meeting (as expected) – Press.

- Japan BOJ said to not be influenced by political uncertainty, will continue to raise rates gradually; However, could affect the timing of the next hike; BOJ is no rush and has a free hand on the timing, as long as it gets another rate hike done possibly by early 2026 - financial press, citing sources.

- Japan sells ¥2.4t vs. ¥2.4t indicated in 5-year JGB bonds; AVG yield: 1.1190% v 1.0560% prior; bid-to-cover: 3.70x v 2.96x prior.

- Japan's LDP confirms Oct 4th as leadership vote day.

Korea

- Kospi opens +0.4% at 3,272.

- Kospi hits record high (highest since July, 2021).

- South Korea Aug Unemployment Rate: 2.6% v 2.5%e.

- South Korea Aug Bank Lending to Households Total (KRW): 1,168.3T v 1,164.2T prior.

- South Korea may scrap plan on capital gains tax rule revision.

- South Korean trade delegation returning to Korea following trade talks in DC – press.

- South Korea Foreign Min Cho: Discussed visa issues with Korean companies in the US; Called for clear guidelines on US visas.

Other Asia

- (IN) India Central Bank (RBI) reportedly facing calls to intervene to contain spike in bond yields, manage Rupee weakness - financial press.

- Philippines July Unemployment Rate: 5.3% v 3.7% prior.

- (IN) India PM Modi: Working to conclude talks with the US 'at the earliest'; Looking forward to speaking with US President Trump.

- (IN) Pres Trump: I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations - Truth Social Post.

- Taiwan Aug Trade Balance: $16.8B v $13.1Be.

North America

- US judge temporarily blocks President Trump from removing Fed Gov Cook; cites prelim ruling from US District Judge Jia Cobb in Washington D.C. - financial press.

- US) Pres Trump: I am not thrilled about Israel strike on Qatar; Will give full statement tomorrow - press.

- (US) US Pres Trump: Announces crackdown pharma ads on TV, social media; Signs memo requiring pharma ads to disclose all risks.

- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE UNCHANGED AT 4.75%; AS EXPECTED; UNANIMOUS DECISION.

- (US) Bureau of labor statistics (BLS) benchmark preliminary revisions to Payrolls: revises Apr '24 to Mar '25 Payrolls: -911K V -682KE (implies -76K/month).

- (US) Treasury's $58b 3-year note auction results: Draws 3.485% v 3.669% prior; BTC 2.73 v 2.53 prior and 2.60 over the last 8 auctions.

- JPM CEO Dimon: Think the economy is weakening, whether that's on the way to recession or just weakening we don't know; That was a big revision in the BLS benchmark payroll data - CNBC interview.

- US Supreme Court to fast track Trump's appeal in tariff case; Will review judicial ruling that invalidated most tariffs [overnight update].

Europe

- (EU) Exxon said win long-term EU gas deals - FT.

- (PL) Poland defense minister: Polish aircraft have deployed weapons against hostile objects; Territorial defense forces have been activated for ground searches of downed drones - press (PL) Follow up: Warsaw main airport closed due to "unplanned" military activity related to Russian, Belarus joint military exercise 'Zapad (West)' nearly Polish border - press.

- (RU) Trump reportedly calls on EU to impose China and India with 100% tariffs in his continued efforts on pressuring Russia's Putin to end the war; US is also prepared to mirror any EU tariffs on China and India - FT.

- (IE) Ireland Aug Live Register Monthly Change: -0.5K v +0.7K prior.

- (IR) Iran govt agreement with IAEA is likely to occur at talks in Cairo - Iranian state TV.

- (EU) Reportedly ECB push to simplify bank rules prompts fears of capital demand - press.

- (IT) Italy govt said to maintain 2025 GDP growth target 0.6% - press.

- (IL) Israel Army Radio: Israel tried to attack Hamas negotiating team officials in Qatar.

- (IL) Saudi Crown Prince warns of 'Dire consequences' of Israel's 'Persistence in its criminal violations'; Affirms Qatari support to deploy all capabilities following Israel's attack on Doha.

- (FR) France Pres Macron appoints Armed Forces Minister Sebastien Lecornu as new PM.

Levels as of 01:20 ET

- Nikkei 225 +0.8%, ASX 200 +0.3%, Hang Seng +1.2%; Shanghai Composite +0.2%; Kospi +2.1%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.2%; DAX +0.3%; FTSE100 flat.

- EUR 1.1690-1.1717; JPY 147.27-147.57; AUD 0.6585-0.6613; NZD 0.5921-5950.

- Gold flat at $3,680/oz; BTC -0.4% at $111,780; Crude Oil +1.2% at $63.35/bbl; Copper +0.3% at $4.5905/lb.