- United States CPI data for September was released amid federal government shutdown going on
- Surge in the cost of gasoline was partially offset by a sharp moderation in rents
- But tariffs on imports continued to raise prices for apparel, appliances, furniture and bedding, and sporting goods.
- CPI data was published despite an economic data blackout caused by the U.S. government shutdown in order to help the Social Security Administration calculate its 2026 cost-of-living adjustment for millions of retirees and other benefits recipients, who will get a 2.8% increase
- Standoff over funding between Republicans and Democrats in Congress could dent economic growth in the fourth quarter, but much of the lost output would be recovered when normal operations resume.
- I expect the FED to deliver a 25bp cut next week
- Sep. Inflation data recorded 3.0% which is 10bp up from last month but below the market consensus which was 3.1%
- This gave the FED more room for easing due to cooling on inflation. Also gives the more comfortability to take actions to sluggish labor market
- FOMC will be held next week at Oct.30th, December and next year January.
- BOJ meeting will also be held next week following FOMC. I see a 25bp hike coming. Due to the weak coalition with LDP-Ishin, Dakaichi won't have the luxury to carry out drastic expansionary policies.
- The market doesn't expect a hike this meeting. So we will have to see. Yen is bearish, AGAIN levelling above 150yen.
- BOK kept it's bank rate steady for three consecutive times this week due to market rally in apartment prices. The chair of BOK addressed on KRW weakening, a quarter due to dollar strengthening and three quarters deriving from uncertainty with U.S trade deals. Fortunately, market is expecting a negotiation to be announced at APEC next week.
- I don't see a lower level of USD/KRW in the mid-term. Current KRW rate standing at 1,436won, it will slide a bit around 10-20won after investment pledge and trade deal is announced. But I beleive this government's ultimate goal is to reach KOSPI level of 5,000pts.
- This is what LJM has been talking about before he was elected, and like Trump I feel that he is using KOSPI index as an trohpy for the economics part. Also accounting that housing mortgage limit is super tight, KRW will depreciate to sustain the rally in KOSPI. So, bearish for few more months holding the level of 1,430won.
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USD/KRW exchange rate: 1,438.97원
USD/JPY exchange rate: 152.87엔
USD/CNY exchange rate: 7.1216위안
EUR/USD echange rate: 1.1626달러
CNY/KRW exchange rate: 202.06원
DXY: 98.95
US Treasury 30Y yield: 4.586%
US Treasury 10Y yield: 3.997%
US Treasury 2Y yield: 3.484%
KTB 30Y yield: 2.807%
KTB 10Y yield: 2.910%
KTB 3Y yield: 2.580%