Volatility seen in Asia amid multiple weekend risks, CN/US talks at the top of the radar

General trend and developments -Stocks initially rose on positive comments from USTR Greer on China trade, including Trump saying that Visa may get access to China and possible “200 large jet” Boeing orders; (No mention of any Nvidia chip purchases, with USTR saying that would be left as a "sovereign decision" by China). -However, equities then fell sharply, along with Silver and Gold as JGB yields spiked in Japan along with Treasuries in the US as Japanese officials continued to downplay rumors of an extra budget in Japan. The markets appeared not to believe Fin Min Katayama saying Japan is Not in situation where extra budget is needed, with ¥1.0T in reserve funds in FY26 budget. [Japan 10-year JGB yield rises >10bps to 2.73%, to early 1997 levels]. - South Korea 10-year treasury bond yield also +10bps to 4.182% (highest since November 2023), 3-yr yield +9bps; -Kospi index under-performed -5%, led by Samsung (-7%) strike concerns, although its union said it was willing to push talks with Co back to Jun 7th. -USTR Greer said that rare-earth related talks with China were of “passing grade” and expects increased “ double-digit billions” agricultural purchases plus energy buys from China. China's CSI Semiconductor Index rose >8% to a fresh record high. -In terms of the Middle East Trump said that China’s Pres Xi offered to help on Iran conflict and that Xi wants to see the Strait of Hormuz open, echoed later by Xi himself. -Perhaps not so coincidentally, various tracking reports indicate that up to 30 vessels have passed through the Strait of Hormuz over the past 24 hours; Well up from the single-digits of recent weeks, but still only 20-25% of the pre-war daily average of 130-140. Primary drivers are Iran officially prioritizing transits for commercial ships that “cooperate with our naval forces” (i.e. the Iranian Strait Management Protocol), particularly Chinese-owned vessels and the Iran-linked ‘ghost fleet’, leading to a relative surge of stranded vessels attempting to exit the Persian Gulf. -Each side (US-China), however, have their own interpretation on Taiwan issue , with US Sec of State Rubio saying that China's preference is probably to get Taiwan willingly. -Japan BOJ Dep Gov Himino to speak (unusually) on Saturday and Katayama to attend G7 Fin Min meeting in France this weekend, adding to weekend risk. Risk heightened by a BOJ official who saw prices for a wide range of goods rising due to the Middle East conflict. April year-on-year rise in wholesale Japan PPI prices was biggest since May 2023 , while Chemical goods prices +9.2% y/y , the fastest rise since Sept 2022 and Naphtha prices +83.2% m/m and +79.4% y/y. -Post UAE-exit, OPEC+ said to persist with ‘symbolic’ monthly hikes. -Australia Resources Minister said won't implement gas market export controls. -NZ food prices recovered to flat, New Zealand Apr Manufacturing PMI only just hanging onto expansion. -Big drop month-to-month in South Korea Apr Export Price Index (M/M): 7.1% v 17.0% prior and Import Price Index M/M: -2.3% v 18.0% prior. -China year-to-date Aggregate Financing again lower than expected. -Alphabet priced its ¥576.5B in multi-tranche bonds for the biggest Yen-denominated bond on record by foreign issuer. - Note that FOMC Fed Chair Jay Powell’s second four-year term as Federal Reserve chair ends today (Fri, 14th May). - US equity FUTs -0.9% to -0.5% during Asia trading. Looking ahead (Asian-weighted focus, using Asian time zone) -Fri May 15th: (Fri night, US Apr Industrial Production). Holidays in Asia this week -Thu May 14th: Indonesia . -Fri May 15th: Indonesi. Headlines/economic data Australia/New Zealand -(AU) ASX 200 opens +0.2% at 8,660. -(AU) Australia secures 900K barrels of diesel in new shipments via three tankers - financial press. -(AU) Australia Resources Min: won't implement gas market export controls; If Australia’s outlook changes, the Government will not hesitate to take further action. -(AU) Australia Union: Some workers at Co's Karratha gas plant and Pluto LNG facilities to begin industrial action from Wednesday. -(NZ) New Zealand Apr Manufacturing PMI: 50.5 v 52.8 prior (7th month of expansion). -(NZ) New Zealand Apr Food Prices M/M: 0.0% v -0.6% prior. -(NZ) RBNZ: Q2 Nowcast GDP est at 0.1%. China/Hong Kong -(CN) Shanghai Composite opens -0.1% at 4,174; (HK) Hang Seng opens flat at 26,391. - (CN) US USTR Greer: We expect agreement for double-digit billions of dollars of agriculture sales to China coming out of the Summit; Certainly seen rare earths come back to 'better levels' - comments from Trump-Xi Summit in Beijing. -(CN) US Pres Trump: Confirms China wants to buy oil from US; Going to start sending Chinese ships to Texas, Louisiana, Alaska; China going to be buying a lot of farm product - Fox News Interview. -(CN) US Sec of State Rubio: China and US agreed that Hormuz should not be militarized; Weapons sales to Taiwan were not primary focus with Xi [US Market Close]. -(CN) Chinese Foreign Ministry: Trump, Xi reached a "series of new consensuses". -(CN) China's CSI Semiconductor Index rises >8% (fresh record high). -(CN) China PBOC sets the yuan mid-point at 6.8415 v 6.8401 prior. -(CN) China PBOC Open Market Operation (OMO): Sells CNY500M in 7-day Reverse Repos; Net CNY0B v drains CNY27B prior. Japan -(JP) Nikkei 225 opens +0.5% at 62,936. -(JP) Japan 10-year JGB yield rises 7bps to 2.7%; BOJ outright operation results due later today. -(JP) Japan 20-year JGB yield rises 3.5bps to 3.58%. -(JP) Japan PM Takaichi to hold phone call with US Pres Trump as early as Friday 15th May, 2026 [reason not disclosed] - Nikkei. -(JP) Japan said to support international mission to free navigation in Strait of Hormuz; Joint statement does not mean participation in the Mission - financial press. -(JP) Japan Apr PPI Services M/M: 2.3% v 0.8%e; Y/Y: 4.9% v 3.0%e. -(JP) BOJ Official: Prices saw for wide range of goods centering on oil, chemical products due to uncertainty surrounding Middle East conflict, effective closure of Strait of Hormuz - comments on Apr PPI data. -(JP) Japan's Trade/Industry Min Akazawa, Can 'tap' FY26 budget reserves if Middle East impact lasts [comments in reference to yesterday media speculation of extra budget]. -(JP) Japan Fin Min Katayama: Not in situation where extra budget is needed; Have ¥1.0T in reserve funds in FY26 budget. -(JP) Japan PM Takaichi to visit Andong, South Korea from May 19-20th; To meet with Pres Lee May 19th. (JP) Japan Defence Ministry said to be considering exporting "Type-88" surface-to-ship missiles to the Philippines - NHK. -(JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years and 10~25 Years; (Inline with planned amounts for Q2, 2026). -(JP) Bank of Japan (BOJ) Results related to today's outright bond buying operations: Korea -(KR) Kospi opens -0.4% at 7,952. -(KR) South Korea 10-year treasury bond yield rises 10bps to 4.182% (highest since November 2023), 3-yr yield +9bps; Kospi index -4%, led by Samsung strike concerns. -(KR) South Korea Apr Export Price Index M/M: 7.1% v 17.0% prior; Y/Y: 40.8% v 29.5% prior. -(KR) South Korea to release H2 economic Outlook and Strategy at end-June - financial press. -(KR) South Korea Fin Min Koo: South Korea to closely monitor, manage property market - Government Meeting. -(KR) South Korea sells 50-year treasury bonds: Avg yield: 3.915% v 3.485% prior [from Mar 12th]. -(KR) South Korea April foreign net investment in local bonds +$0.55B v -$6.77B m/m - Central Bank. Other Asia -(MY) Malaysia Q1 Final GDP Q/Q: 0.0% v 0.3%e; Y/Y: 5.4% v 5.3%e. -(MY) Malaysia Q1 Current Account Balance (MYR): 15.2B v 16.7Be. -(MY) Kuala Lumpur Fire Department: Minor fire at Malaysia Central Bank (BNM) building now extinguished. -(IN) India hikes petrol and diesel prices by INR3/litre - CNBCTV18. -(IN) India 10-year bond yield rises +3bps to 7.05% following fuel price hike. -(PH) Philippines Central Bank: March cash remittances at $2.9B, +2.3% y/y; March overseas cash remittances $2.87B. -(PH) ADB says ready to provide up to $1.75B in financing to Philippines - financial press. -(SG) Singapore MAS to enhance distribution safeguards for complex products - financial press. North America -(US) Initial Jobless Claims: 211K v 205Ke; Continuing Claims: 1.82M v 1.780Me [US Market Close]. -(US) Apr Advance Retail Sales M/M: 0.5% v 0.5%e; Retail Sales (Ex-auto) M/M: 0.7% v 0.7%e [US Market Close]. -(US) Early NASDAQ indications suggest opening levels above $400/shr (priced at $185) - press [US Market Close]. -(US) US Sec of State Rubio: China's preference is probably to get Taiwan willingly - NBC Interview. - (US) US Pres Trump: Maybe Visa ban to come off in China - Fox News interview. -(US) Weekly EIA Natural Gas Inventories: +85 BCF vs. +84 BCF to +86 BCF indicated range [US Market Close]. -(US) Atlanta Fed GDP Now: Raises Q2 GDP estimate from 3.7% to 4.0% [US Market Close]. -(US) Fed's Schmid (hawk; non-voter in 2026): US economy has shown remarkable resilience and is less vulnerable to global oil disruptions in the past, but high oil prices are draining household spending power and raising business costs; Inflation is the most pressing risk to the US economy [US Market Close]. -(US) Apr Import Price Index M/M: 1.9% v 1.0%e; Y/Y: 4.2% v 3.1%e [US Market Close]. -(US) JV agreement among AT&T, T-Mobile, Verizon to help end U.S. wireless dead zones; plan uses pooled spectrum plus satellite D2D connectivity [US Market Close]. -(US) Pres. Trump: Made "fantastic trade deals" - Pool Report [at garden with Xi]. -(US) Pres. Trump: When President Xi very elegantly referred to the United States as perhaps being a declining nation, ... - post on Truth Social. -(US) US 30-year UST yield at 10-month highs of 5.056%. -(US) Trump ethics filing shows thousands of trades tied to U.S. stocks, including MSFT, META, ORCL, AVGO, BAC, GS during Q1 of 2026 - NBC News. -(US) Pres. Trump arrives at Beijing's Zhongnanhai for photo op and lunch with China Pres Xi; To hold talks in restricted session - CCTV. -(US) Fed's Williams (moderate, voter): Context matters for inflation given persistence above target - speaks in New York. -(US) Fed's Barr (voter): Reducing liquidity rules to shrink fed balance sheet not a good idea - Prepared Text. -(CA) Canada PM Carney: Announces electricity strategy; Aims to double electricity grid capacity by 2050; Aims to link East-West-North grids with transmission lines [US Market Close]. -(PE) Peru Central Bank (BCRP) leaves Reference Rate unchanged at 4.25%; as expected. -(MX) Mexico Pres Sheinbaum announces resignation of Pemex CEO Victor Rodriguez; Appoints Juan Carlos Carpio as new CEO. -(CU) Follow Up: Cuba: Calls on US to lift blockade – SCMP. Europe -(DE) SIE.DE raises mid-term Rev growth 6-9% (prior 5-7%); Targets mid-term EPS single-digit % growth - slides [US Market Close]. -(UK) UK Health Sec Streeting confirms to resign - X post [US Market Close]. -(UK) MP Josh Simons to step down to allow former MP Andy Burnham to run [and ultimately challenge for the PM post] - press [US Market Close]. -(IE) Ireland Apr CPI M/M: 0.5% v 1.6% prior; Y/Y: 3.7% v 3.6% prior [US Market Close]. -(UK) UK Foreign Min to visit China in 'early June' - US financial press. -(UK) BOE allots £110.8B in 7-day short-term repo operation (STR) vs. £108.6B prior (fresh record high). -(FI) Finland warns of suspected drone activity in capital region; Shuts down Helsinki airport. -(FI) Finland's Interior Ministry: Drone risk ends. -(CZ) Czech Central Bank Gov Michl: Next decision will be about whether rates stay stable or rise. Middle East -(IR) US Pres Trump: China's Pres Xi offered to help on Iran conflict and pledged not to provide Iran with military equipment; Xi wants to see the Strait of Hormuz open - Fox taped interview [US Market Close]. -(IR) Iran's Fars News agency: According to an informed source, with the decision of Iran, the passage of a number of Chinese ships through the Strait of Hormuz has been made possible by adhering to the Iranian Strait Management Protocol. [US Market Close] -(SA) OPEC+ said to persist with symbolic monthly hikes - press [US Market Close]. -(SA) Reportedly Saudi Arabia proposes Middle East non-aggression pact with Iran - FT [US Market Close]. -(IR) Bahrain completes maintenance of Gulf petrochemical facility - statement. -(IL) US State Dept: Israel and Lebanon officials had a full day of productive and positive talks. -(AE) Abu Dhabi signs $13B US gas plant deal as Middle East supplies 'falter' - FT. Levels as of 01:20 ET Nikkei 225 -1.9%; ASX 200 -0.2%; Hang Seng -1.3%; Shanghai Composite -0.3%; Kospi -5.3% ; Equity S&P500 Futures -0.5%; Nasdaq100 -0.9%; DAX -1.4%; FTSE100 -0.7%. EUR 1.1721-1.1643; JPY 158.59-158.27; AUD 0.7225-0.7167; NZD 0.5931-0.5864. Gold -1.4% at $4,586/oz; BTC +1.3% at $80,820, Crude Oil +1.4% at $102.63/bbl ; Copper -2.8% at $6.3990/lbs.