Key Highlights

• President Trump to meet Chinese counterpart Xi Jinping at the APEC Summit in South Korea.
• Hong Kong airport will shut for 36 hours due to Typhoon Ragasa, leading to stockpiling of goods; some focus on month-end funding.
• President Trump imposes $100,000 fee for H-1B visas, hitting the outlook for India’s remittances and INR; the move is seen as a $14bn cost to U.S. business.

Chart of the Day

CEE currencies strongly bought heading into key central bank week

^{Source: BNY}

Central bank decisions in Hungary and Czechia loom this week and will be an important test for the region to assess whether a recent strong run of form can be maintained. As our flow data indicate, the CEE region has been intensively bought over the last two and a half months. We have detected only a handful of net selling days, and those were of very limited flow magnitude. The flows since the beginning of September have been exceptionally strong. Last week finally indicated some easing after the Fed decision, as flow interest dropped. However, given the current policy backdrop, especially with real rates being well-anchored and with nominal and real rates falling elsewhere, CEE could continue to perform very strongly. All other currency groupings are largely flat on the month, even EM commodity FX, which should be doing better given the interest in “real” asset protection. As highlighted recently, despite weak nominal levels, commodity-linked assets are gaining ground in flow and holdings, especially in equities. CEE has no such exposures but has still managed to outperform the entire group, which underscores flow strength in the region. We would not equate real rates with real protection, but the line may prove increased blurred given fears over excessively low dollar and other real rates in the developed world.

What's Changed?

The weekend delivered less news and more time for investors to think through the week ahead. Three stories dominated the headlines, leaving price action across markets subdued. The first of these, the race to become the next LDP leader and Japanese prime minister, highlights the split over taxes and deficit spending; JGB yields and JPY are higher, but so too are stocks. JPY’s status as a safe haven currency diverging from CHF over the month may be shifting again, with BoJ rate hike risks in October. Second, gold’s rally to new record highs sets $3,800 as the next key target, and its divergence from Bitcoin provides insights as to what is driving the fiat currency alternatives. The inflation focus in the U.S. will be key for week, which includes the core PCE release and Fedspeakers clarifying their views on risks ahead. Third, the risk of a U.S. government shutdown rose on Friday with the Senate’s vote, but over the weekend Democrat minority leaders pushed for a meeting with President Trump to avert this. The way in which the U.S. markets absorb over $500bn of bills and notes being sold by the government this week will be important in measuring the risks as we head toward the month-end deadline. The takeaways are that markets remain nervous despite last week’s Fed rate cut and that the focus remains on sustainable growth. For the U.S. markets today, the focus will be on the Fedspeakers as they clarify the speed and pace of rate cuts ahead, best measured by bond yields and USD. 

What You Need to Know

INR is under pressure, as President Trump’s raising of H-1B visa application fees to $100,000 threatens to reduce remittance inflows from the U.S. These currently account for nearly 28% of India’s total remittances, or about $35bn annually. A decline in these inflows would pile further pressure on the currency, which has already weakened to 88.20 to the dollar, making it one of Asia’s worst-performing currencies. The fee hike also risks disrupting India’s $280bn IT services industry, which depends heavily on H-1B workers deployed overseas and contributes over 7% of GDP, while employing nearly six million people. The combined effect could slow growth momentum, strain external balances and further weigh on India’s currency and economic outlook. SENSEX -0.276% to 82398.28, USDINR +0.145% to 88.23, 10y INGB +0.4bp to 6.492%.

Australia’s central bank Governor Michele Bullock said economic data have been in line with or slightly above expectations since the August meeting. She highlighted during parliamentary testimony that inflation has fallen sharply from its 2022 peak and is now inside the 2-3% band, but stressed the need to keep it there sustainably. Bullock said the labor market remains strong with unemployment at 4.2% and participation near record highs, though risks around growth, productivity and global uncertainty persist. She emphasized the importance of maintaining low and stable inflation for households and businesses, improving payments regulation, ensuring resilient cash distribution and enhancing RBA transparency and governance under the new Board structures. ASX +0.094% to 4991.03, AUDUSD -0.061% to 0.6589, 10y ACGB +2.8bp to 4.268%.

The leaders of the People’s Bank of China, State Administration of Foreign Exchange, National Financial Regulatory Administration and China Securities Regulatory Commission held a joint press conference as part of a series of briefings by government ministries and agencies entitled “High-Quality Completion of the 14th Five-Year Plan.” Although the session was not aimed at addressing short-term policy, PBoC Governor Pan Gongsheng stressed that China’s monetary policy follows a principle of independence while considering external conditions, with the current stance being supportive and moderately accommodative. Pan added that going forward, the PBoC will continue to make adjustments based on macroeconomic developments and changing conditions, making comprehensive use of multiple policy tools, a methodology consistent with many central banks internationally. CSI 300 +0.46% to 4522.61, USDCNY -0.051% to 7.1146, 10y CGB -0.9bp to 1.789%.

China has left its benchmark lending rates unchanged, as expected. The 1y and 5y loan prime rates remain at 3.0% and 3.5%, respectively. Stability in the central bank’s 7-day reverse repo rate since early September had strongly pointed to no change in the LPRs this month. However, given the need for and indications of additional stimulus, there remains scope for cuts to both policy rates and LPR before year-end to stimulate demand, ease financing costs and support the property market. The PBoC shifted its 14-day reverse repo operations to rate-based tenders, reflecting greater marketization of longer-term tools. With inflation subdued and the Federal Reserve having resumed rate cuts, conditions were seen as supportive for possible domestic easing in Q4.

What We're Watching

U.S. August Chicago Federal National Activity Index is expected to improve slightly to -0.16 from -0.19.

Fedspeakers: The Fed’s John Williams speaks in a “high-level policy” panel organized by the European Money and Finance Forum. The Fed’s Alberto Musalem speaks on the outlook for the U.S. economy and monetary policy. The Fed’s Beth Hammack speaks on reserve banks and the economy. Richmond Fed President Tom Barkin speaks at the Howard County Chamber of Commerce in Maryland. Fed Governor Stephen Miran speaks at a luncheon and webinar at the Economic Club of New York.

U.S. Treasury sells $82bn in 13-week bills and $73bn in 26-week bills.

What iFlow is Showing Us

Mood: iFlow Mood shifted into positive territory, with demand for equities outpacing core sovereign bond demand. iFlow Mood at +0.015.

FX: SEK, ILS and PHP posted the most outflows, while IDR, KRW, CLP and HUF were significantly bought, followed by JPY. Elsewhere, USD and GBP were lightly sold, while EUR was bought. JPY is overheld, and scored holdings of +2.5 are close to previous highs seen in April.

FI: Strong buying in Mexico, Colombia, Eurozone and Hungary government bonds and U.K. gilts, with moderate outflows for Japanese and Malaysian government bonds. Elsewhere, cross-border selling of U.S. Treasurys continued.

Equities: The trend of asset allocation shifting from developed market to emerging market equities continues. U.S. and Swiss equities were most sold, against good demand for Brazilian, South African, Malaysian and Taiwanese equities.

Quotes of the Day

“Becoming fearless isn’t the point. That’s impossible. It’s learning how to control your fear, and how to be free from it.” – Veronica Roth

“There is no doubt that creativity is the most important human resource of all. Without creativity, there would be no progress, and we would be forever repeating the same patterns.” – Edward de Bono

Economic Details

In Switzerland’s annual building and housing statistics report, the country recorded 1.8 million residential buildings and 4.84 million dwellings in 2024, with the average dwelling size at 102 sqm and per capita living space at 46.6 sqm, stable since 2021. More than half of single-family homes were occupied by one or two people, while new constructions over the past decade averaged 230 sqm in floor area. Heating patterns showed 52% of buildings relied on fossil fuels (35% oil, 17% gas), though their share has steadily declined, while heat pump installations rose to 23% of buildings and were present in 28% of single-family homes. At household level, 60% used fossil fuels, while 20% of households live in homes with heat pumps, highlighting a gradual energy shift. In other figures, the SNB announced that August M3 growth softened to 4.6% y/y. SMI +0.282% to 12143.8, EURCHF +0.022% to 0.93448, 10y Swiss GB -0.1bp to 0.217%.

Dutch September consumer confidence was unchanged at -32. Willingness to buy improved slightly, while opinions regarding the economic climate deteriorated slightly. With a headline figure of -32, the consumer confidence indicator for September is well below its long-term average for the previous 20 years (-10). The indicator reached its all-time high (36) in January 2000, while the all-time low (-59) was set in September and October 2022. Elsewhere, the average price of an owner-occupied dwelling (excluding newbuild homes) was up 7.9% y/y in August 2025. Prices in August rose by 0.5% m/m. The total number of housing transactions recorded in August was 19,459, which was nearly 9% more than one year previously. In the first eight months of this year, a total of 149,534 homes changed owners – a year-on-year increase of 16%. AEX 0.453% to 934.15, EURUSD +0.171% to 1.1766, 10y NGB 0bp to 2.914%.

Türkiye’s September consumer confidence index fell 0.4% from August to 83.9, with households reporting weaker views on their current financial situation, though expectations for the next 12 months and durable goods spending showed small improvements. In August, the non-domestic producer price index (ND-PPI) rose 1.32% m/m and 28.01% y/y, with manufacturing up 28.03% and mining and quarrying up 27.06%. Among industrial groups, durable and non-durable consumer goods rose 32.41% and 32.80%, respectively, while energy increased 13.73%. Meanwhile, the July agricultural input price index (Agricultural-IPI) climbed 3.68% m/m and 34.22% y/y, driven by a 34.33% rise in goods and services consumed in agriculture and a 33.57% increase in investment-related inputs. Veterinary expenses rose 63.52% y/y, the highest subgroup increase. BI 100 +2.083% to 11529.73, USDTRY -0.035% to 41.3698, 10y TGB -19bp to 31.41%.

Poland’s August retail sales at constant prices rose 3.1% y/y, accelerating from 2.6% a year earlier, though sales fell 0.4% m/m. In January-August, sales increased by 3.6% y/y, compared with 3.7% in the same period of 2024. Seasonally adjusted figures showed a stronger 4.7% y/y rise and a 0.7% m/m gain. By category, textiles, clothing and footwear surged 18.9% y/y, while furniture, radio, TV and household appliances rose by 13.9% and motor vehicles by 9.4%. Fuel sales climbed 6.1% and pharmaceuticals 3.3%. In contrast, food, beverages and tobacco fell 3.4%, newspapers and books dropped 2.0% and “others” slipped 3.7%. Online sales rose 4.9% y/y, raising their share of total sales from 8.0% to 8.1%. WIG -0.514% to 104839.7, EURPLN +0.022% to 4.2636, 10y PGB -0.5bp to 5.501%.

Poland’s September business climate indicators showed mixed sentiment across sectors. Manufacturing deteriorated to -6.5 from -5.6 in August, while construction fell to -5.3 from -3.9. Wholesale trade edged down to -0.1 after +0.9, and retail weakened to -2.4 from -2.1. In contrast, transportation and storage improved to +1.0 from -0.4, accommodation and food services softened to +5.0 from +8.4, and information and communication eased slightly to +9.9 from +10.3. Financial and insurance activities remained strongest, at +24.9 versus +26.1. Labor market responses showed most firms intend to keep employment stable, with company financial situations and inflation-related wage adjustments cited as the main factors affecting pay decisions in the next three months.

South Korea September 1-20 exports were up 13.5% y/y to $40.12bn, on more working days and solid demand for semiconductors. Imports increased 9.9% to $38.22bn over the same period, resulting in a trade surplus of $1.9bn. By item, exports of semiconductors surged 27% from a year earlier to $9.49bn. Chip exports accounted for 23.7% of the country’s total exports over the cited period, up 2.5 percentage points y/y. Automobile exports advanced 14.9% to $3.42bn, while shipments of vessels soared 46.1% to $1.51bn. Steel exports went up 7.1% to $2.53bn, while those of chemical products fell 4.5% to $2.68bn. By destination, exports to China, South Korea’s top trading partner, climbed 1.6% to $7.77bn. Shipments to the U.S. rose 6.1% to $6.55bn as the new tariff scheme came into effect. KOSPI +0.679% to 3468.65, USDKRW -0.412% to 1391.45, 10y KTB +6.1bp to 2.812%.

Hong Kong’s August Composite CPI rose 1.1% y/y, up from 1.0% in July, with the underlying rate also at 1.1%. On a seasonally adjusted basis, the Composite CPI increased 0.3% in the three months to August, compared with 0.2% in the three months to July. By category, prices rose for transport (+2.5%), alcoholic drinks and tobacco (+1.8%), housing (+1.7%), services (+1.5%), meals out and takeaway food (+1.3%), utilities (+0.6%) and miscellaneous goods (+0.1%). Declines were recorded for durable goods (-3.1%), clothing and footwear (-2.8%) and basic food (-0.1%). For January-August, the Composite CPI rose 1.5% y/y, while the 12-month average increase to August was also 1.5%, reflecting contained price pressures. Hang Seng -0.757% to 26344.14, USDHKD -0.058% to 7.7702, 10y HKGB -1.2bp to 1.417%.

Taiwan’s August unemployment rate was 3.45%, up 0.05 percentage points m/m, with the seasonally adjusted rate at 3.35% (+0.02 percentage points). The number of unemployed people reached 415,000, an increase of 6,000 or 1.52% from July, while employment stood at 11.641 million, rising by 3,000 or 0.03%. The non-labor force population fell by 16,000 to 8.179 million, taking labor force participation to 59.58%, up 0.07 points. Labor underutilization also edged higher, with 418,000 jobless over the past four weeks, 121,000 underemployed and 138,000 in the potential labor force. TAIEX 1.182% to 25880.6, USDTWD +0.083% to 30.239, 10y TGB +4.2bp to 1.362%.