China is preparing economic sanctions against Japan and may ban exports of rare earths, if the Japanese government does not reverse its purchase of the Diaoyu Islands, citing sources. (H.K. Economic Journal)
The escalation of tensions between China and Japan was the dominant theme in overnight trade, weighing particularly on Japanese retailers and car makers.
JGBs fell overnight, but moved off lowest levels in the closing stages of the session on the back of dip-buying from regional investors, as well as pension funds. Bargain hunting was seen in 10s and 30s. At 0620BST, JGBs were trading down 19 ticks at 143.68. (RANsquawk)
ECB's Coene said policy easing options for ECB include rate cut, negative deposit rate and more LTROs. (Newswires) Coene also said the ECB doesn't seek preferential treatment for OMT bonds, and it is unlikely ECB will ever engage in outright bond purchases.
German Chancellor Merkel backs the ECB's bond buying program but walks a fine line between backing Draghi and alienating the Bundesbank. (WSJ)
Overnight AUD/USD saw a brief fall of 24 pips in reaction to the Reserve Bank of Australia's September minutes which said that it saw scope to cut rates should the outlook worsen significantly, however, this move was quickly pared on the back of talk of a US bank buying off the lows and with other RBA comments suggesting earlier rate cuts are still working there way through the economy. Meanwhile, EUR/USD has lacked any firm direction with no new European news overnight and GBP/USD remained flat ahead of the release of the UK CPI data for August due at 0930BST/0330CDT. (RANsquawk)
USD/JPY trended lower overnight, with Japanese exporters seen selling, as well as spec accounts taking profits. Bids seen ahead into 78.35/40. EUR/USD retreated from a 4-month high overnight, with bids seen at 1.3050/60, while stops are noted below 1.3040. (RANsquawk)
With just over 30 minutes until the NYMEX pit close yesterday, a large spike lower was seen in crude futures, with WTI dropping USD 4 before bouncing. This move lower was attributed to several factors, with suggestion of unwinding of positions, taking advantage of thin volumes and following the surge in prices after last week's QE announcement from the Fed. Other commodities also suffered volatility, with Soybeans halted limited down in earlier trade, and big liquidation in grains yesterday. Large orders were seen going through in the spike lower, with 20k contracts in WTI in 3mins and 10k in 1min (vs. 152 the minute before) in Brent futures. (RANsquawk) A White House official said last night there is no change in oil reserves but all options are on the table. After the high volatility late in the US session, WTI crude futures traded relatively rangebound in the Asian session, last seen at USD 96.49, down USD 0.13.
Australia cut its revenue forecast for iron ore by a fifth, a fresh sign the country's mining industry is losing steam as a slowdown in top customer China drives down prices. The Bureau of Resources and Energy Economists forecast revenues from iron ore at AUD 53.2bln in this fiscal year, down from a June forecast of AUD 67bln and around AUD 63bln last year. (Newswires)
T-notes finished yesterday in positive territory, after a relatively quiet trading session given the Jewish holiday. The US 10yr did benefit from a weak reading out of the Empire Manufacturing Index and talk of selling from real money & macro accounts in the short end on touted profit taking following the FOMC last week, to buy the long-end of 10s and 30s. At the pit close the US 10-yr settled at 132.010 up 4+ ticks. T-notes have traded marginally higher in the Asian session, as Japanese participants return to their desks and pick up cheaper securities. Much of the demand was seen in the 5s and longer, flattening the curve overnight. T-notes are last seen trading at 132.06+, up 5+ ticks. (RANsquawk)
You can now follow real-time news headlines on the move with the new RANsquawk app available to download for free at ransquawk.com/mobile_app for Apple iPhone, Blackberry and Android users.
View All Market Commentary
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.