Morning wrap (25.09.2025)

Asia-Pacific indices are posting slight gains in the range of 0.15–0.70%. Chinese indices are up between 0.50–0.70%, Australia’s AU200.cash gains 0.45%, Japan’s JP225 adds 0.17%, and Singapore’s SG20cash is higher by 0.15%.

Mary Daly from the Fed backed further rate cuts but refused to specify a timeline, stressing a data-dependent path. She noted that growth and hiring have slowed, with inflation concentrated mainly in tariff-affected areas. Last week’s cut was framed as “insurance,” with recession risk seen as low.

Today we received details from the BoJ’s July meeting minutes. Members agreed rates should continue to rise if activity and prices track forecasts.

Some policymakers urged timely hikes and a shift toward more “neutral” assets. Firms are better at passing on costs, but wage-driven service inflation remains subdued; tariff effects on Japan were judged as limited.

Former BoJ board member Makoto Sakurai said the BoJ could raise rates as early as October, depending on clarity around tariff impacts. He sees up to 100 bps of tightening over 2.5 years, with rates peaking near 1.5% by 2028.

BoJ’s services PPI for August slowed to +2.7% y/y (vs. 2.9% expected/previous).

Today we’ll also hear from as many as seven Fed officials, including Williams, Goolsbee, Bowman, Barr, Logan, Daly, and Schmid. The market will parse their comments for clues on the upcoming October and December meetings.

The deputy governor of China’s central bank emphasized the desire to internationalize yuan-denominated bonds. The onshore bond market, valued at 192 trillion CNY (the world’s second largest), currently has only a 2% share of foreign investors. The goal is to expand this via measures such as allowing CNY bonds as collateral in HK/global markets, raising Swap Connect limits, enabling repo access, and preparing futures contracts on Chinese government bonds in HK.