RBA Minutes Rehash Cautious Stance

Spain again rumored to be preparing for aid

Economic Data
(NZ) NEW ZEALAND Q3 CONSUMER PRICES Q/Q: 0.3% V 0.5%E; Y/Y: 0.8% V 1.0%E (lowest level since 1999 and first time below RBNZ 1-3% target range)

(AU) RESERVE BANK OF AUSTRALIA (RBA) OCT MEETING MINUTES: INCREASED LIKELIHOOD ECONOMIC GROWTH COULD BE WEAKER THAN FORECAST IN COMING YEAR

(JP) JAPAN SEPT TOKYO CONDOMINIUM SALES Y/Y: -9.3% V +17.3% PRIOR

Markets Snapshot (as of 04:30GMT)
Nikkei225 +1.2%

S&P/ASX +0.3%

Kospi +0.9%

Shanghai Composite +0.6%

Hang Seng +0.3%

Dec S&P500 +0.2% at 1,437

Dec gold +0.1% at 1,738/oz

Nov Crude Oil +0.1% at $91.91/brl

Notes/Observations
Asian equity markets are in the green across the board, taking cue from strong gains on Wall St where retail sales infused rally saw Dow Industrials finish the day up nearly 100pts and S&P500 rise for the first time in over a week. Nikkei225 is leading the major indices in terms of pct gains, helped by soft yen with USD/JPY pair reaching 4-week high of ¥78.90 late in the day.

EUR/USD was modestly higher, trading up to $1.2970 after FT speculation Spain is close to requesting aid from the ECB, while AUD/USD shrugged the downbeat RBA policy meeting minutes from October 2 rate cut decision. NZD/USD is the only major pair shunning risk-on sentiment after Q3 CPI from New Zealand fell below RBNZ target CPI range of 1-3%, falling nearly 50 pips to session-low $0.8140.

RBA meeting minutes largely reflected on themes outlined in its statement, namely that increased likelihood of economic growth could be weaker than forecast. Board reiterated it was appropriate for the stance of monetary policy to be a "little more accommodative," just as fixed income markets continue to price in high probability of another easing next month. In terms of China picture, RBA saw slowing growth resulting in weaker demand for steel, which in turn prompted a slide in steel and iron prices.

Out of Spain, Financial Times speculated Madrid is preparing to make a rescue request for the ECB to start buying its debt, with the only concern being the impact of the bailout on other countries. The report cited an unnamed ministry of economy official noting the govt may still opt to delay the request as long as borrowing costs continue to fall.

Fixed Income/Currencies/Commodities
JGB: (JP) Japan's MoF sells ¥2.3T in 0.2% 5-year notes; Avg yield: 0.1950% v 0.204% prior; Bid to cover: 5.51x (record demand) v 3.19x prior

(AU) Australia MoF (AOFM) sells A$250M in 1.25% 2022 indexed bonds; avg yield 0.325%; bid-to-cover 3.06x

(AU) According to one survey, 14 out of 15 analysts see RBA cutting rates again at November meeting; Fixed income markets pricing in an 80% chance of a 25bp cut - financial press

NZD/USD: Falls over 20pips below $0.8160 on softer than expected NZ CPI

SLV: iShares Silver Trust ETF daily holdings fall to 9,885 tons from 9,894 tons (lowest level since Sept 19th)

SPDR Gold Trust ETF daily holdings fall by 6.6 tons to 1,333.9 tons (first decline since Sept 26th)

US corn harvested across 18 select states: 79% v 69% last week v 42% y/y

Speakers/Political/In the Papers
(CN) HSBC China chief economist Qu Hongbin: Rapid rise in money supply suggest market liquidity is improving - China Daily

(CN) Jones Lang LaSalle: Cost of prime office space rental in Shanghai expected to increase 20% in 2012 - China Daily

(CN) China Bank of Communications (BoCom) analyst: CPI may stabilize at current levels for some time; Within reach of govt objective to keep it below 4% in 2012 - Shanghai Daily

(CN) According to Shanghai Deovolente Realty Co, Shanghai new home sales last week rose to 253.2K sqm (highest since July); Sold at avg CNY20.1K/sqm (33-week low) - Shanghai Daily

(JP) China Navy vessels seen near the disputed Senkaku islands - Japanese press

(JP) Japan Fin Min Jojima: To do everything to pass deficit finance bill; budget funds will dry up at Nov end

(US) Fed's Williams (voter, dovish): Sees US GDP around 1.75% in 2012, 2.5% in 2013, and 3.25% in 2014

(ES) S&P cuts long-term ratings on 11 banks in Spain in housing keeping move; expects to complete review of wider implications of the sovereign downgrade on Spanish banking sector in Nov

(DE) Investor George Soros reiterates that Germany should leave the euro zone - German Press

Asia Equities
FMG.AU: Reports Q1 iron ore production: 16.1M v 19.2M tons q/q

RIO: Reports Q3 Iron ore attributable output 52.6M tons v 48.6M q/q; Affirms FY12 Iron ore production 250M tons

PDN.AU: Reports Q1 uranium production 1.93M lb, -5.8% q/q; Rev $61M

HIT: Lithuania voters rejected a proposed nuclear power plant project as part of weekend referendum for which Hitachi had previously won the contract - Nikkei News

TM: To idle production lines at JV facility in Tianjin, China for entire next week amid recent tensions around Senkakus - Nikkei News

PC: Received commitments for ¥600B in lines of credit from 4 banks - Nikkei News

NSANY: Looking to reduce the cost of manufacture of 15 main models by about 15% from FY10 levels by FY13 - Nikkei News

Oji Paper 3861.JP: May report H1 pretax profit around ¥18B, down about 20% y/y and below ¥25B company target; Rev also seen missing prior estimate of ¥620B by about ¥10B - Nikkei News

US Equities
PKG: Reports Q3 $0.55 (adj) v $0.56e, R$723.5M v $720Me; -0.9% afterhours

MCHP: Reports prelim lower Q2 Rev $407-408M v $421Me (prior guidance was $412-430M on 8/2); -3.9% afterhours

WDFC: Reports Q4 $0.56 v $0.70e, R$84.9M v $94.4Me; -9.6% afterhours

FXCM: Reports Sept monthly metrics; retail customer trading volume $304B; +12% m/m, -18% y/y

AMZN: To hire 50,000 seasonal workers in the US during holiday period; expects "thousands" of those it hires to stay on full time