Initial gains in Asia-Pac bourses petered out tspanoughout the session with newsflow relatively light and ahead of next week’s Chinese holiday

CAD hampered by a more cautious Poloz. RBNZ kept rates unchanged but noted that uncertainties remain

Looking ahead, highlights include German regional & national CPIs, US GDP, PCE figures and a slew of central bank speakers

ASIA

Asia equity markets traded mixed after momentum from US petered out and as China prepares for National Day Golden Week. ASX 200 (+0.2%) and Nikkei 225 (+0.5%) initially took firm impetus from the gains on Wall St, where Trump tax plans and outperformance in financials and tech led the S&P 500 to fresh intraday records. However, Asia-Pac bourses have pulled back from best levels amid a lack of catalysts to fuel the advances and as China clouded the tone with Hang Seng (-0.4%) and Shanghai Comp. (-0.2%) both subdued as investors took risk off the table ahead of the mainland’s week-long closure for National Day holidays. 10yr JGBs were lower amid a positive risk tone in Japan and after Japanese yields rose across the curve to mirror their US counterparts, while today’s 2yr auction also failed to provide support with its b/c and lowest accepted price weaker than prior.

PBoC injected CNY 50bln via 14-day reverse repos and CNY 20bln via 28-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6285 (Prev. 6.6192)

Japan's lower house of parliament was dissolved as expected ahead of snap elections. (Newswires)

EUROPE/UK

UK YouGov/CEBR Consumer Confidence (Sep) 108.6 (Prev. 107.8); 6-month high. (Newswires)

BoE's Haldane said an increase in the cost of borrowing is seen as a good news story and that signs on pay are more encouraging than had previously been for a little while. Haldane also commented that he was among those in MPC that think the stimulus reduction may be warranted in approaching months. (Newswires)

The EU are reportedly in discussions with bringing forward talks about the Brexit transition period, according to sources. (Newswires)

FX

Price action in FX markets during Asia trade remained quiet with participants seemingly side-lined ahead of tomorrow’s data deluge. This helped the greenback extend on gains against major counterparts and EM currencies alike, with CAD reeling after PBoC Governor Poloz comments which suggested a cautious approach, while AUD/USD was pressured after tripping tspanough stops at yesterday’s lows and amid pressure in CNY after the PBoC continued to weaken its reference rate. NZD/USD also conformed to the losses amongst its commodity-linked peers and broke below the 0.7200 handle, after the RBNZ kept rates unchanged and noted that uncertainties remain.

BoC Governor Poloz said appropriate path for rates is very difficult to know because of a number of unknowns around inflation outlook, while he added that the Bank could still be surprised in either direction, and will continue to feel cautiously as "we get closer to home". (Newswires)

RBNZ Interest Rate Decision 1.75% vs. Exp. 1.75% (Prev. 1.75%). (Newswires)

RBNZ stated that lower NZD would help the economy and that monetary policy will stay accommodative for a considerable time, although it also commented that numerous uncertainties remain and policy may need to adjust accordingly.

COMMODITIES

Commodities were subdued overnight in which WTI failed to hold above USD 52/bbl and gold (-0.1%) mildly extended on yesterday’s losses as the greenback firmed, while copper was also lacklustre amid an indecisive risk tone and as its largest consumer nears a week-long closure.

GEOPOLITICAL

South Korea is said to believe North Korea could conduct action between October 10th-18th which coincides with North Korea's Communist Party Founding and China's Communist Party Congress, according to sources. (Twitter)

US

Treasuries declined tspanoughout Wednesday with much of the price action occurring during Asian and European trading hours. Yields were higher across the curve with Informa noting some rate lock selling tied to the USD 12.5bln Saudi Arabian issuance. The 5y auction went off without a hitch as the yield stopped on the screws and the cover was a slightly above average 2.52. Dec’17 10y T-note futures settled at 125.14, down 18 ticks.

Fed's Bullard (Non-Voter, Soft Dove) said the current Fed funds rate is appropriate given slow growth and low inflation, while he added inflation expectations are uncomfortably low and that Fed forecasts lack market credibility. (Newswires)

Fed's Rosengren (Non-Voter, Soft Hawk) said he supports regular and gradual Fed rate increases and that the economy risks overheating amid increasing inflation and asset prices. Rosengren further added that low inflation provides the Fed scope to move rates slowly. (Newswires)

US President Trump’s tax plan included 3 individual tax brackets of 12%, 25% and 35%, while corporation tax is planned at 20% which Trump stated he is not willing to negotiate on. Trump also commented that the healthcare overhaul is to come in January or February. (Newswires)