MNI China Daily Summary: Friday, December 27

MNI BRIEF: BOJ: Rate Hike Chance Nearing; Mull Patiently

MNI: PBOC Net Injects CNY6.2 Bln via OMO Friday

MNI: PBOC Sets Yuan Parity Lower At 7.1893 Fri; -2.12% Y/Y

MNI JAPAN NOV FACTORY OUTPUT DROPS 2.3% M/M; OCT +2.8%

MNI JAPAN NOV JOBLESS RATE AT 2.5%, UNCHANGED FROM OCT

US EIA:NAT GAS STORAGE -93 BCF TO 3,529 BCF DEC 27 WK

MNI: US JOBLESS CLAIMS -1K TO 219K IN DEC 21 WK

MNI: US REDBOOK: DEC STORE SALES +5.0% V YR AGO MO

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

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JGBS: Little Changed After BOJ’s SOO (Dec) & Mixed Local Data Drop

JGBS
BulletAPACFixed Income BulletsJapanMarkets

JGB futures are stronger, +8 compared to the settlement levels, after dealing in a narrow range for most of the session.

  • One BOJ board member said the upside risks to prices doesn’t suggest there’s a pressing need to raise interest rates at this stage and yen carry trade positions haven’t been built up, according to a summary of opinions from the central bank’s latest meeting.
  • The Bank of Japan released for the first time estimates on how future interest rate hikes could affect its earnings, which showed it will briefly suffer red ink of up to $13 billion if short-term borrowing costs were to go up to 2%. The estimates, disclosed on Thursday in a research paper, underscore the BOJ's resolve to keep pushing up short-term interest rates - now at 0.25% - to levels deemed neutral to the economy in coming years. (per RTRS)
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session.
  • Cash JGBs are slightly mixed across benchmarks, with yield swings bounded by +/- 1bp. The benchmark 10-year yield is unchanged at 1.098% versus the cycle high of 1.113%.
  • The swaps curve has twist-steepened, pivoting at the 20-year zone, with rates 1.5bps lower to 3bps higher.
  • On Monday, the local calendar will see Jibun Bank PMI Mfg data. 
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JGB futures are stronger, +8 compared to the settlement levels, after dealing in a narrow range for most of the session.

  • One BOJ board member said the upside risks to prices doesn’t suggest there’s a pressing need to raise interest rates at this stage and yen carry trade positions haven’t been built up, according to a summary of opinions from the central bank’s latest meeting.
  • The Bank of Japan released for the first time estimates on how future interest rate hikes could affect its earnings, which showed it will briefly suffer red ink of up to $13 billion if short-term borrowing costs were to go up to 2%. The estimates, disclosed on Thursday in a research paper, underscore the BOJ's resolve to keep pushing up short-term interest rates - now at 0.25% - to levels deemed neutral to the economy in coming years. (per RTRS)
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session.
  • Cash JGBs are slightly mixed across benchmarks, with yield swings bounded by +/- 1bp. The benchmark 10-year yield is unchanged at 1.098% versus the cycle high of 1.113%.
  • The swaps curve has twist-steepened, pivoting at the 20-year zone, with rates 1.5bps lower to 3bps higher.
  • On Monday, the local calendar will see Jibun Bank PMI Mfg data.