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"Hawkish"-er Yellen & Japanese Deflation Spark Uncertainty Across AsiaPac

The evening started on a high note when Janet Yellen's survival giving a speech warranted a 100 point rip in Dow futures (and USD strength). Then Japan stepped up with its first deflationary CPI print since April 2013 (which of course was met with stock-buying because moar QQE is overdue but that soon faded). EM FX is tumbling further (with Malaysia leading the charge). Chinese credit risk jumps tro a new 2 year high (as SHIBOR remains entirely manipulated flat) as China halts its 4-day devaluation with a tiny nudge stronger in the Yuan fix.

 

In the words of Flash Gordon, "She's alive..." so BTFYDD because she seemed a tad more hawkish

 

and USD strength...

 

And then Japanese CPI data hit and showed Abenomics imploding as the country dips backinto deflation...

 

Which sparked panic-buying in Japanese stocks (moar QQE?) only to give it al lback as China opened...

 

EM FX not happy at the USD strength and Yellen hawkishness...

  • *RINGGIT HEADS FOR BIGGEST FOUR-DAY DROP SINCE 1998
  • *MALAYSIA'S KEY STOCK INDEX OPENS DOWN 0.6% AT 1,604.15
  • *SINGAPORE'S STRAITS TIMES INDEX FALLS 0.6% TO 2,829.68 AT OPEN
  • *SOUTH KOREA'S KOSPI INDEX FALLS 0.5%

India is closed for a holiday.

Asian FX is sliding once again....

 

In China this worries us... It appears the new target for PBOC stability is funding rates (overnight SHIBOR) which has now been dead for 3 weeks amid massive liquidty adjustments, stocks swing, credit risk surges and CNY devaluations...

That is a new 2 year high for Chinese default risk.

Looks a lot like the tortured manipulation that happened in USDCNY before it imploded a month ago...

Chinese stocks are modestly lower...

  • *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 0.4% TO 3,130.85
  • *CHINA'S CSI 300 INDEX SET TO OPEN DOWN 0.4% TO 3,272.67
  • *HONG KONG'S HANG SENG INDEX FALLS 0.1% IN PREMARKET

As PBOC halts its 4-day devaluation (just)

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3785 AGAINST U.S. DOLLAR

 

Charts: Bloomberg