Vol returns as US, JP yields spike during Asia session

Asia Market Update: Vol returns as US, JP yields spike during Asia session, stocks follow bonds’ lead down; FOMC Minutes tonight.

General trend

- US Treasuries yield curve steepest since 2022, supply weighing on the long-end following a poor 3-year auction in the US session, with benchmark 10-years surging 21bps to 4.503% (highest since late Feb) on top of the 70bps rise on Mon and Tue, and US 30-years surging 25bps to 5.010% (highest since mid-Jan). Moves came even as Japan Fin Min said that Japan will NOT sell US Treasury holdings.

- Japan a similar story with 30-year JGB yield rising by >21bps to 2.747% and 20-year JGB yield rises by 23bps to 2.335%. BOJ Gov Ueda: simply reiterated BOJ policy “aims to achieve price target”.

- Asian stocks fell further at the open today. Nikkei under-performed, losing nearly all of its 5% gains from yesterday. Japan electronics stocks hit hard: Hitachi -6.8%, TDK -6.3%. A widespread risk assets recovery mid-session on no particular news turned out to be a head-fake as global yields kept rising relentlessly, with stocks eventually responding. Vietnam and Taiwan indices down another 5-6% on top of yesterday’s similar sized losses.

- The "higher" US reciprocal tariffs (above 10% floor and includes additional 50% tariff on China) went into effect at midnight, April 8th [00:01 ET April 9th / 04:01 GMT]. So far, no counter-measures announced by China.

- WTI Crude FUTs fell a further 4% to the lowest level since Mar 2021 at $56.71bbl.

- After a plethora of China buybacks yesterday, few such offerings today, while Taiwan’s Stock Exchange encouraged companies to engage in stock buybacks and Taiwan’s MOF activated liquidity measures for stocks to little avail, Taiex -5%.

- RBNZ cut by further 25bps as expected, for fifth straight cut, the first central bank decision since Apr 2nd “Liberation Day” tariffs. Committee said as extent of tariffs become clear committee has scope to lower OCR further. India RBI kept Cash Reserves on hold while cutting Repurchase rate by 25bps, as expected.

- Currencies continued being roiled; with Korean Won falling to lowest level against greenback since Mar, 2009 and NZ dollar hitting five year low at $0.5485 with a severe curve steeping prior to the RBNZ decision, as NZ 2 yr yield -7bps even as 10-years +19bps. Asia Currency Index it a record low amid the risk aversion.

- China PBOC set the Yuan reference rate weaker than 7.20 for the second day in a row amid a streak of five straight days of weaker fixes, CNH however did strengthen off record lows of 1.43 back to 1.38, amid reports of certain Yuan spot trades said to be blocked in China amid the Yuan weakness.

- Note prior to this report being sent that Bitcoin hit a $74K double bottom on the hourly chart today, and has not looked back thus far, despite the rising rates, striding back to $76K amid the market volatility. Spot Gold also holding gains back above $3K.

- US equity FUTs -2.5% during Asian trading.

Looking ahead (Asian-weighted news, on Asian time zone)

- Wed Apr 9th, (Wed night FOMC Minutes).

- Thu Apr 10th CN Mar CPI, (Thu night US Mar CPI).

- Fri Apr 11th NZ Mar Biz PMI, (Fri night CN Mar New Yuan Loans, US Mar PPI, US Apr Michigan Consumer Sentiment).

- Sat Apr 13th CN Trade Balance.

Holidays in Asia this week

- Mon Apr 7th Indonesia, Thailand, Vietnam.

- Wed Apr 9th Philippines.

- Thu Apr 10th India.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.5% at 7,473.

- Australia Treasurer calls emergency meeting related to the Trump tariffs - Press.

- Australia sells A$1.0B vs. A$1.0B indicated in 2.75% Nov 2028 bonds; Avg Yield: 3.2952% v 4.1189% prior; bid-to-cover: 4.55x v 4.12x prior.

- USTR Greer: We should be running up the score on trade with Australia, which bans US beef and pork [overnight update].

- NEW ZEALAND CENTRAL BANK (RBNZ) CUTS OFFICIAL CASH RATE (OCR) BY 25BPS TO 3.50%; AS EXPECTED.

China/Hong Kong

- Hang Seng opens -3.1% at 19,494; Shanghai Composite opens -1.1% at 3,110.

- Certain Yuan spot trades said to be blocked in China amid Yuan weakness - Press.

- SCMP: China signals determination to defend currency (CNY).

- NATO Sec Gen Rutte: China is watching war in Ukraine, and if Putin is allowed to use force to achieve his aims, it will not go unnoticed - financial press, comments in Tokyo.

- US has posted the guidance related to tariff goods from China, effective Apr 9th.

- US Pres Trump said to consider changes to China port fee plan following push back from businesses – press [overnight update].

- USTR Greer: China hasn't indicated that it wants to work towards reciprocity; Distinct difference between China and other countries that want to negotiate [overnight update].

- US Customs and Border Protection: Uniquely positioned to implement US tariffs; To collect 10% tariff and individual reciprocal tariffs.

- Brokers in China are watching margin risk more closely amid volatility - Chinese press.

- Follow Up: China firms pledge dividends in investor confidence push - China Securities Daily.

- Citi analyst cuts China 2025 GDP growth to 4.2% [overnight update].

- China Foreign Ministry: Reiterates if US insists on waging a trade war, China will fight to the end and take necessary measures [overnight update].

- (UR) Pres Zelenskiy: Ukraine forces fought six Chinese soldiers in Donetsk (eastern Ukraine) and captured two of them; One more country has joined Russia's war [overnight update].

- China NDRC: Meets with local companies [including Didi] to hear views on US tariffs; vows to drive economic recovery and help companies [overnight update].

- Follow Up: China State Asset regulator [SASAC] supports stock buybacks – Xinhua [overnight update]
CHINA PBOC SETS YUAN REFERENCE RATE: 7.2066 V 7.2038 PRIOR (weakest fix since Sept 11th, 2023).

-China PBOC Open Market Operation (OMO): Injects CNY119B in 7-day reverse repos; Net drains CNY111B v injects CNY103B prior.

Japan

- Nikkei 225 opens -1.5% at 32,529.

- Japan Mar Consumer Confidence: 34.1 v 34.8e.

- Japan Fin Min Kato: Japan will NOT sell US Treasury holdings, just from standpoint of US-Japan relation.

- Bank of Japan (BOJ) Gov Ueda: Reiterates BOJ policy aims to achieve price target - parliamentary testimony.

- 30-year JGB yield rises by 25bps to 2.75%; 20-year JGB yield rises by 23bps to 2.335%.

- Japan PM Ishiba: Reportedly to order additional release of rice reserves - Japanese press.

- Bank of Japan (BOJ) announcement related to outright bond buying operations for 1~3 Years; 5~10 Years and 10~25 Years: Unchanged.

- Follow Up: Japan said to have sent 2 senior government officials to the US to lay the 'groundwork' for the upcoming tariff talks - Press.

- USTR Greer: Have had several conversations with Japanese officials in past week; Reiterates that higher reciprocal tariffs will go into effect tomorrow - comments to Senate Finance committee [overnight update].

- Japan DPP Head Tamaki (opposition party): BOJ should consider rate cut if tariffs hurt economy [overnight update].

- Former Japan FX Diplomat Shinohara said Trump will not get ‘Plaza Accord’ type US dollar deal – financial press [overnight update].

- Japan sells ¥3.5T vs. ¥3.5T indicated in 6-Month Bills; Avg Yield: 0.4137% v 0.4373% prior, bid-to-cover: 3.34x v 3.00x prior.

Korea

- Kospi opens -0.2% at 2,329.

- South Korea Mar Unemployment Rate: 2.9% v 2.8%e.

- South Korea Mar Total Bank Lending to Household (KRW): 1,145.0T v 1,143.7T prior.

- Korean Won falls to lowest level against greenback since Mar, 2009.

- Follow up: FTSE Russell has delayed adding South Korean bonds to WGBI - press.

- South Korea plans further KRW2.0T (~$1.3B) of emergency liquidity support for auto industry; takes total support for this year from KRW13T to KRW15T.

- South Korea Acting Pres Han: South Korea will not band together with China and Japan to counter US tariffs – CNN [overnight update].

- US Pres Trump confirms speaking with South Korea's acting Pres Han; Referring to South Korea and China, "we have the confines and probability of a great DEAL for both countries" [overnight update].

- North Korea: Status as a nuclear weapons state can never be reversed – press.

Other Asia

- INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.00%; AS EXPECTED; changes stance to accommodative from neutral.

- Vietnam PM: Vietnam to upgrade ties with Spain to Comprehensive Strategic Partnership 'at earliest opportunity - financial press.

- Vietnam Dep PM Phoc to meet US Treas Sec Bessent, various CEOs in US on Wed – press.

- USTR Greer: Vietnam understands that it's a major target of Trump tariff action.

- Taiwan MOF activates NT$500B fund to stabilize equity markets - financial press.

- Taiwan Stock Exchange encourages companies to engage in stock buybacks - financial press.

- (SG) US govt: US and Singapore discussed economic growth in both countries.

- Indonesia President Prabowo said to have told Cabinet to ease import quotas for key goods.

- Thailand Fin Min Pichai: To lower tariffs and reduce non-tariff barriers; Will increase Thai investment in US [overnight update].

- Taiwan Mar CPI Y/Y: 2.3% v 2.2%e [overnight update].

North America

- US "higher" reciprocal tariffs (above 10% floor and includes additional 50% tariff on China) go into effect at midnight, April 8th [00:01 ET April 9th/04:01 GMT].

- (US) 10-year Treasury yield rises by 10.5bps to 4.414% (highest since early Feb).

- (US) Doubleline's Gundlach: Nonsensical to think that private markets are a 'harbour in a storm' - post on X.

- (US) President Trump: We have a lot of countries wanting to make a deal; we are 'making a fortune' with tariffs, $2.0B per day; affirms China is paying a 104% tariff.

- (US) Pres Trump said to have considered "even bigger" tariffs after being pushed by White House Trade Advisor Navarro [timeframe uncertain] - financial press.

- US Pres Trump: Reiterates pledge for major spending cuts; Cuts hopefully in excess of $1T, all of which go into "the one, big, beautiful bill" - Truth post.

- *(US) US Pres Trump: We need more than double the electricity in the US; Signs four EOs related to coal power.

- (US) White House Press Sec confirms China has not removed its retaliatory tariffs so the 104% tariffs on China will start to be collected tomorrow, April 9th - press.

- (US) Treasury Sec Bessent: We have been discussing which countries to prioritize in negotiations; If countries can come to table with solid proposals I think we can reach good trade deals – CNBC.

- (US) Reportedly hackers were able to access emails of 100 bank regulators at OCC for over a year - press.

- (US) Fed's Goolsbee (voter): Tariffs are much more than what we had been modeling; Businesses are reporting uncertainty and anxiety on tariffs; Not obvious how Fed would react to a negative supply shock - radio interview.

- (US) TREASURY'S $58B 3-YEAR NOTE AUCTION RESULTS: DRAWS 3.784% V 3.908% PRIOR; BTC 2.47 V 2.70 PRIOR AND 2.60 OVER THE LAST 8 AUCTIONS (tailed 2.4bps).

- (BR) Brazil Fin Min Haddad: US tariff policy will shake global economy; Hard to measure the impact of US tariffs; The worse thing that Brazil could do is not be prudent.

Europe

- (UK) Chancellor of the Exchequer (Fin Min) Reeves: Markets are functioning effectively; All our decisions will be underpinned by our fiscal rules; Nothing is off the table on tariffs - comments to House of Commons.

- China Premier Li: Following phone call with Commission Pres Von der Leyen: Willing to solve each other's concerns via dialogue and consultation - China state media

- (EU) ECB's Nagel (Germany): Well on track to reach inflation target this year; Global growth prospects have deteriorated massively.

- (EU) European Union Spokesperson: Expect to present plan early next week for tariff response; All instruments are on the table, including LNG.

- (TR) Turkey Fin Min Simsek: Recent market turmoil wont have permanent impact; TRY weakness to have limited inflation impact; Mentions success in Turkish disinflation.

- (EU) ECB's Holzmann (Austria, dissenter): See no reason to deviate from previous view on rates (after) tariff announcement.

- (IT) Italy PM Meloni said to plan to go to US next week to negotiate tariffs directly with US Pres Trump - press.

- (DE) Germany parties CDU/CSU and SPD said to reach agreement on coalition - German press.

- (EU) EU considers effectively banning carbon fiber use in cars – Nikkei [overnight update].

Levels as of 00:20 ET

- Nikkei 225 -4.2%, ASX 200 -1.9%, Hang Seng -2.0%; Shanghai Composite +0.1%; Kospi -1.7%.

- Equity S&P500 Futures -2.2%; Nasdaq100 -2.3%; DAX -3.9%; FTSE100 -3.2%.

- EUR 1.0951-1.1069; JPY 144.58-146.39; AUD 0.5915-0.6003; NZD 0.5486-0.5561.

- Gold +1.6% at $3,035/oz; Crude Oil -4.2% at $57.08/bbl; Copper +0.2% at $4.1240/lb.