Morning Update – 01/10/15 – 08:26:32

Morning all.. A wild and crazy session on Wall St as month/quarter-end distortions saw stocks end up closing up 1.9% in the S&P and currencies had a wild ride.. Asia has taken up the baton with stocks all higher but HK and China closed. Nikkei closed up 2.25%. S&P futures are up another 20 points in Asia! The US 10y yield rose 2bps to 2.060%, while the US 2y yield climbed 2bps to 0.645% after falling overnight. China’s official NBS manufacturing PMI improved to 49.8 in September, against consensus for a flat reading at 49.7. The PMI for large-scale enterprises jumped by 1.2pp to 51.1, its highest level since March 2015. This is likely driven by an improvement in sentiment from larger SOEs, which are more responsive to government’s increased fiscal spending. The PMI for small size companies, in contrast, fell to 46.8 from 48.1. The new orders index returned above the 50-benchmark for the first time in three months, after increasing by 0.5pp to 50.2. The new export orders index also improved, but by only by 0.2pp to 47.9. Such a combination suggests that domestic demand is the main driver behind the improvement in overall demand. Meanwhile, official NBS non-manufacturing PMI was unchanged at 53.4 in September. Overall, the improvement in the official PMI, while modest, is consistent with our call for some sequential improvements in China’s data into 4Q. Separately, Caixin flash manufacturing PMI was revised higher to 47.2 from 47.0. Caixin services PMI fell to 50.5 from 51.5, driving further deterioration in its composite PMI to 48.0 from 48.8. Overall the data still rather weak. Japanese Tankan weakened. Overall corporate sentiment improved marginally in 3Q 2015, with the all firm all industry business conditions diffusion index (DI) edging up by 1pt to +8. However, the 3-month ahead expectations DI came in at +5, a 3pp decline from the current conditions DI. Large manufacturing DI outlook deteriorated to 10 from 12 current conditions, while large non-manufacturing outlook fell to 19, both in line with expectations. Large industry capex rose 10.9% in 3Q, stronger than the 8.7% expected. Overall, the result tends to suggest that real GDP hardly grew in 3Q 2015, while implying that real GDP could contract in 4Q 2015. USDJPY rallied as Nikkei rallied and the Dollar stayed firm against EUR and GBP..This morning we get EU PMI data through the morning..Good luck..