A terrific Friday to you as stocks surge in Asia to xxtend post-CPI rally. In brief (TL:DR) 

• U.S. stocks jumped on Thursday with the Dow Jones Industrial Average (+3.70), the S&P 500 (+5.54%) and the Nasdaq Composite (+7.35%) all up, marked the best first-day reaction to a CPI report in decades.

• Asian stocks extended the rally seen on Wall Street after slower-than-projected US inflation spurred bets the Federal Reserve will moderate its aggressive rate-hike path.

• Benchmark U.S. 10-year Treasury yields fell 28 basis points to 3.81% on Thursday. Trading was closed for a holiday Friday.

• The dollar held most of its 2% slide from Thursday, which was the biggest move since 2009.

• Oil headed for a weekly loss with December 2022 contracts for WTI Crude Oil (Nymex) (+0.37%) at US$86.79 as China’s Covid policies weaken the outlook for demand. 

• Gold was on track for its biggest weekly gain since March with December 2022 contracts for Gold (Comex) (+0.03%) at US$1,754.30.

• Bitcoin (+6.38) recovered to US$17,186 as US inflation and jobs data boosted risk assets.

In today's issue...

1. Asian Real Estate Debt Showing Signs of Distress 

2. Could Twitter Become a Payment Gateway?  

3. Cryptocurrencies Capitulate as No Binance Bailout for FTX

Market Overview

Headline US inflation came in at 7.7%, the lowest since January, before Russia’s war in Ukraine pushed up commodity prices.

More important for the Fed, the core measure that excludes food and energy slowed more than anticipated. 

Still, Thursday’s intense rally only partially claws back steep losses for risk assets hammered this year by the Fed’s tightening. 

The sentiment shift also helped crypto markets stabilize despite the turmoil surrounding crypto exchange FTX.

Asian markets rose on Friday with Tokyo's Nikkei 225 (+2.73%), Sydney’s ASX 200 (+2.68%), Seoul's Kospi Index (+3.04%) and Hong Kong's Hang Seng Index (+5.81%) all up.

1. Asian Real Estate Debt Showing Signs of Distress

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• Asian investors, who prize real estate highly are seeing increasing signs that all is not well and higher interest rates could quite easily become a severe drag on the economy. 

Rising interest rates around the world are exposing risks that have accumulated in property markets, juiced by cheap funding during the pandemic and goosed by low yields. 

Following China, South Korea and Vietnam, the bonds of Indonesian property companies are slumping, adding to signs of debt distress. 

Agung Podomoro’s 2024 dollar bond extended declines this week to $0.67, which would be the worst such fall since July 2021. 

On Wednesday, builder PT Kawasan Industri Jababeka was downgraded further into junk territory by Fitch Ratings as it believed that a recent debt exchange offer was conducted to avoid a default.

S&P Global Ratings also cut its rating on Jababeka this week, with a negative outlook on expectation it could be downgraded further to selective default.

While levels below US$0.70 on the dollar are typically considered distressed, the notes backed by Lippo Karawaci due in 2026 fell by about 0.3 cents to 54 cents on the dollar on Thursday and LMIRT Capital’s 2026 bond extended its losses, down to 55 cents. 

In South Korea, fresh measures were rolled out to help its struggling real estate market on Thursday in the form of additional guarantees to project financing. 

In Vietnam, real estate companies are struggling to access capital and potential home buyers face tightening credit in the wake of a government crackdown on bond sales.

Asian investors, who prize real estate highly are seeing increasing signs that all is not well and higher interest rates could quite easily become a severe drag on the economy. 

2. Could Twitter Become a Payment Gateway? 

• According to filings, Twitter on Friday registered with the U.S. Treasury as a payments processor to become a financial services business.

• The attempts to integrate some payments services into the platform show Musk’s ambition to transform Twitter into an “everything app” modeled after China’s WeChat

During a conversation with advertisers on Twitter Spaces on Monday, Elon Musk outlined his long-term vision for bringing payments to Twitter which could include offering high-yield money market accounts, debit cards and peer-to-peer transactions. 

According to filings, Twitter on Friday registered with the U.S. Treasury as a payments processor to become a financial services business. 

The attempts to integrate some payments services into the platform show Musk’s ambition to transform the social media giant he bought for US$44 billion into an “everything app” modeled after China’s WeChat, which is a one-stop shop for messaging, payments and shopping. 

On Saturday, Twitter launched a subscription service for US$7.99 a month that includes a blue check now given only to verified accounts as Elon Musk overhauls the platform's verification system just ahead of the U.S. midterm elections.

Meanwhile, the Tesla chief executive attempted to reassure advertisers that the platform would remain a safe place for brands warning that any users who use their blue check to impersonate brands or individuals would be suspended.

Musk has a strong history with financial technology when in 1999, he co-founded X.com, one of the first online banks, which later became part of PayPal, the online payment services giant.

3. Cryptocurrencies Capitulate as No Binance Bailout for FTX

• Bankman-Fried told FTX.com investors Wednesday that without a cash injection the company would need to file for bankruptcy. 

• In addition to the financial strains, FTX is drawing attention from U.S. authorities. 

The week’s rout in cryptocurrencies deepened, with Bitcoin tumbling to its lowest level in two years, as Binance walked away from its planned takeover of FTX.com. 

FTT, the utility token of the FTX exchange, collapsed by more than 40%, following a more-than-70% tumble on Tuesday. 

The price of SOL, the native token of the Solana blockchain which is associated with both FTX and FTX.com CEO Sam Bankman-Fried’s trading house Alameda Research, was down as much as 46% on Wednesday, taking losses this year to 90%.

A Binance spokesperson said. 

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”

“Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”

Bankman-Fried told FTX.com investors Wednesday that without a cash injection the company would need to file for bankruptcy. 

The exchange is attempting to raise rescue financing in the form of debt, equity, or a combination of the two, and Bankman-Fried informed investors his crypto exchange faced a shortfall of up to US$8 billion and needed US$4 billion to remain solvent. 

FTX has a prominent list of backers such as Sequoia Capital, BlackRock, Tiger Global Management, SoftBank Group and Singapore’s sovereign wealth fund Temasek Holdings. 

In addition to the financial strains, FTX is drawing attention from U.S. authorities. 

The U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission are thought to be investigating whether the firm properly handled customer funds, as well as its relationship with other parts of Bankman-Fried’s empire, including his trading house Alameda Research, which many have long alleged actively trades against clients.