Asia-Pacific Week Ahead

     JAPAN

     The focus this week will be how the minutes of the Bank of Japan's October

board meeting and summary of opinions of their December board meeting to see how

members projected the look for wages and prices as well as how they assessed the

risks of leaving interest rates low for an extended period.

     Key indicators are expected to show that the pickup in consumer inflation

remains slow while economic activity was firm in November.

     Bank of Japan

     Tuesday, 8:50 am JST (2350 GMT Monday): The BOJ releases the minutes of its

Oct. 30-31 policy meeting, at which the board decided in an 8-to-1 vote to

maintain its current monetary easing stance under the yield curve control

framework. The board lowered the inflation forecast in fiscal 2017 and 2018 but

it stuck to its timeframe that it can achieve the 2% inflation target "around

fiscal 2019" ending in March 2020. Board member Goushi Kataoka, who joined the

board in July, dissented for the second straight meeting, although he didn't

propose any specific policy action. Kataoka argued that in order to lower

longer-term interest rates, it was appropriate to buy JGBs so that the 15-year

bond yield would remain below 0.2% from around 0.3%.

     Tuesday, 1:15 pm JST (0415 GMT): BOJ Governor Haruhiko Kuroda speaks at a

meeting of the Keidanren business lobby in Tokyo. 

     Thursday, 8:50 am JST (2350 GMT Wednesday): The BOJ releases the summary of

opinions presented at its Dec. 20-21 policy meeting. The board decided in an

8-to-1 vote to maintain its current yield curve control target, which Governor

Kuroda said was at an appropriate level that would not require an immediate

change. Board member Kataoka opposed to the policy target, citing downside

risks, saying the BOJ should try to hit its 2% inflation target in fiscal 2018,

a year earlier than the bank's current timeframe. To this effect, he argued the

bank should target yields on JGBs with maturities of 10 years and longer. He

didn't say how low the target for those yields should be.

     Friday, 5 pm JST (0800 GMT): The BOJ will release its purchase plan for

Japanese government bonds in January. The BOJ is likely to leave the frequency

of its JGB purchases unchanged from December, indicating there is no need to

guide any particular bond yields higher or lower. The BOJ will also leave

unchanged its purchase plans for each JGB maturity zone.

     Data

     Tuesday, 8:30 am JST (2330 GMT Monday): The Ministry of Internal Affairs

and Communications releases the November national, December Tokyo CPI, November

household spending and November unemployment. The MNI survey median forecasts:

November core CPI (excluding fresh food) +0.8% on year, which would be the 11th

straight y/y rise vs. +0.8% in October; December central Tokyo core CPI +0.6% on

year, which would be the sixth straight y/y rise following +0.6% in November;

seasonally adjusted unemployment rate 2.8%, unchanged from the previous five

months; real average household spending +0.5% on year vs. unchanged in October.

     Tuesday, 8:50 am JST (2350 GMT Monday): The BOJ releases the November

service producer price index (SPPI). In October, the SPPI rose 0.8% on year vs.

+0.9% in September and gained 0.2% on month vs. +0.1% in September.

     Thursday, 8:50 am JST (2350 GMT Wednesday): The METI releases preliminary

November industrial production and its outlook for December and January output

as well as November retail sales. The MNI median forecasts: industrial output

+0.5% on month, which would be the second straight m/m rise vs. +0.5% in

October; retail sales +1.3% on year, which would be the first rise in two months

after -0.2% in October, which was the first drop in 12 months due to bad

weather.

     Japanese Government Bonds

     Upward pressure on Japanese government bond yields may emerge temporarily

due to profit-taking ahead of the end of the year. But a sharp rise in JGB

yields is unlikely in the face of investor bargain-hunting. The 10-year bond

yield rose to 0.065% Thursday, the highest level since Nov. 1. The 10-year JGB

yield is expected to move between 0.040% and 0.075% this week against the bank's

target of around zero.

     Monday: BOJ outright purchase operations for JGBs with remaining life of

5-10, 10-25 and more than 25 years expected.

     Tuesday: The Ministry of Finance to auction Y2.2 trillion of 2-year bonds.

     Wednesday: BOJ outright purchase operations for JGBs with remaining life of

1-3 and 3-5 years expected.

     Thursday: BOJ outright purchase operations for JGBs with remaining life of

5-10, 10-25 and more than 25 years expected.

     CHINA

     The highlight of a light week will be official PMI data, which will give

clues about business sentiment at the end of the year.

     Data

     Wednesday, 9:30 am CST (0130 GMT): Data on Chinese industrial profits in

November will be released by the National Bureau of Statistics (NBS). Profits

rose 25.1% year-on-year in October, the second-strongest monthly gain this year

behind the 27.7% y/y growth rate seen in September, which was the strongest

growth since data on industrial profits became available in February 2012.

     Sunday, 9:00 am CST (0100 GMT): The official China manufacturing and

service PMIs for December, jointly released by the China Federation of Logistics

and Purchasing and the NBS, will be released. The manufacturing index rose

unexpectedly to 51.8 in November, the second highest level this year after the

52.4 reading in September. The CFLP services PMI also rose, to 54.8 from

October's 54.3 reading.

     AUSTRALIA/NEW ZEALAND

     Markets will be closed on Monday and Tuesday to mark the Christmas holiday.

In a very quiet week, the lone event of any kind will be a data release Friday

in Australia.

     Data

     Friday, 11:30 am AEDT (0030 GMT): The Reserve Bank of Australia will

release private sector credit data for November. The expectation is for a rise

of 0.4% m/m, the same pace as in October.