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Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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It has been a quiet session as the Christmas break approaches. Markets didn't move much off the BoJ or RBA minutes. The only data of note was a plunge in South Korean consumer sentiment, which follows recent onshore political turmoil.
Yen firmed on fresh FX warnings from the Japan FinMin, but aggregate moves were modest. It was quiet in the bond space.
Regional equities were mostly higher. A raft of headlines crossed around a China fiscal policy meeting, but details remained light.
Coming up we just have US data in terms of the Richmond Fed index and Philly Fed non-manufacturing index due before the Christmas break.
JGB futures are weaker, -14 compared to settlement levels
Outside of the BOJ Minutes for the October MPM, there hasn't been much by way of domestic drivers to flag.
The BOJ minutes revealed that one member noted market rates might be lower than appropriate given the BOJ's economic and price projections and its monetary policy guidance. Another member highlighted the difficulty in confidently projecting medium- to long-term rate hikes due to uncertainties about Japan's neutral rate and the transmission mechanism of monetary policy.
The local calendar will also see later Dept Store Sales alongside an Auction for Enhanced-Liquidity 15.5-39 YR.
Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s heavy session.
Cash JGBs are 1bp higher to 2bps lower across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.5bp higher at 1.08% versus the cycle high of 1.113%.
The swaps curve has twist-flattened, pivoting at the 10-year, with rates 1bp lower to 4bps higher.
Tomorrow, the local calendar will see PPI Services and Coincident/Leading Indices alongside BOJ Rinban Operations covering 3-10-year and 25-year+ JGBs.
The BoJ left rates on hold at the December meeting, which was expected by the economic consensus and what was priced by markets.
The central bank highlighted high uncertainties around the outlook, along with gradual inflation trends, as justification for holding rates steady. BoJ Governor Ueda struck a dovish tone at the press conference, signalling no rush to adjust policy further.
Watch points for the BoJ are wage trends in 2025 and the US economic and policy outlook.
There was one dissent to the BOJ's decision, with board member Tamura in favour of a 25bps hike at the policy meeting.
ACGBs (YM flat & XM -3.5) closed cheaper but off worst levels on a holiday-shortened session.
Australia’s central bank is more confident that inflation is moving sustainably toward target but it’s still too soon to conclude the battle is won given a recent pick-up in consumption and a still-tight labour market, minutes of the December meeting showed.
The Reserve Bank’s board discussed scenarios in which future policy would be eased to boost economic growth or stay at current restrictive levels, according to minutes of the Dec. 9-10 meeting. The board concluded either outcome was conceivable and opted to stand pat at 4.35%, saying recent data hadn’t been sufficient to shift the dial on the policy outlook. (see BBG link)
Cash ACGBs closed 1-4bps cheaper with the 3/10 curve steeper and the AU-US 10-year yield differential at -14bps.
The bills strip closed slightly richer with pricing +2 to +3 across contracts.
RBA-dated OIS pricing closed showing a 25bps rate cut more than fully priced by April (123%). A 59% chance is priced for February.
The local market will resume on the 27th of December after the extended Xmas break.
NZGBs were slightly mixed, with benchmark yields 1bp lower to 1bp higher. Early weakness following the negative lead in from US tsys was reversed, but trading was subdued ahead of a holiday-shortened trading week.
The NZ-US 10-year yield differential is at -11bps, the lowest level since late 2020.
Swap rates are 1-2bps higher, with the 2s10s curve steeper.
RBNZ-dated OIS pricing is showing 54bps of easing for February, with a cumulative 123bps by November 2025.
The USD BBDXY index sits a touch higher in the first part of Tuesday trade, as markets wind down ahead of the Christmas break. The index was last near 1301.3, so holding Monday gains, but still sub recent cycle highs.
USD/JPY sits off earlier highs (157.39), last testing under 157.00 and close to session lows. Yen sentiment has been aided by fresh rhetoric from the FinMin warning around excessive/one-sided FX moves and that the authorities would respond.
The language used echoed comments from last week ("CONCERNED ABOUT RECENT FX MOVES" RTRS) and didn't impact much initially. USD/JPY's move lower has been a steady grind. The comments a likely warning on intervention risks, particularly as lighter liquidity approaches over the holiday period.
We also have BoJ Governor Ueda speaking tomorrow.
AUD and NZD have drifted a little lower, but recent ranges have held. AUD/USD last down around 0.20%, just under the 0.6240 level. The RBA mins were released, which didn't impact sentiment much, the RBA reiterating that it is too soon to be confident of sustaining inflation within the target range. NZD/USD was last near 0.5645.
This afternoon headlines have crossed from a China fiscal work conference in Beijing. Familiar language has been used around supporting growth next year and increasing bond issuance. Details were light otherwise though.
China and Hong Kong equities are higher, but were already firmer prior to these fiscal headlines. Iron ore is still weaker for the session, an AUD headwind.
Coming up we just have US data in terms of the Richmond Fed index and Philly Fed non-manufacturing index due before the Christmas break.
China’s key equity indices have put in a strong day leading into the holiday break. The Hang Seng led the charge up +1.10%, CSI 300 +0.76%, Shanghai +0.67% and Shenzhen +0.42%.
South Korea’s KOSPI had delivered a very strong day yesterday and is trying to hold onto those gains, trading flat all day.
Malaysia’s FTSE Bmk KLCI rose +0.35%, following on from yesterday’s positivity.
Following on from yesterday’s very strong day, Indonesia’s Jakarta Composite is could not follow on and is down -0.10%
Other key movers sees Philippines up 2% and Singapore +0.50%.
India’s NIFTY 50 put in a positive day yesterday and is opening up
Oil had an up and down day initially, falling in the US session only to rally back into the close to finish in line with where it started the day.
Opening at US$69.24, on very low volumes oil inched higher to be at $69.53 in afternoon trading.
Supply issues and the potential excess in 2025 are never far away from traders’ minds as news of Russian oil flows via Belarus came out.
Brent had opened at US$72.63 and on very light volumes edged higher to $72.96.
As investors ponder 2025 it appears that a key indicator for Oil’s fortunes in the context of supply will be the success of the Chinese authorities in stabilizing the growth outlook for the domestic economy.
Today will likely see the Medium-Term Lending Rate and Volume data and whilst no rate cut is expected, the emphasis for the release will be on the volume of uptake as an indicator for activity.
Equally in the US, oil will be watching closely for indicators from monetary policy and its impact on the dollar.
Despite the concerns about supply, Hedge Funds have turned bullish on oil with net long positions the most in 1 year.
As the US averted a shutdown data released shows the US consumer’s confidence has slipped for the first time in three months on concerns that the Trump administration will create uncertainty with their policies.
The Consumer confidence index dipped to 104.7 from 111.7 in the month prior and headline durable good figure of -1.1% MoM was viewed as a miss and despite the data, bonds sold off taking gold with it.
Opening at $2,612.29 in light volumes it drifted up to $2,619.85.
Having had a strong year on the outlook for rate cuts, the next few months for gold will hinge on the ability of the Fed Reserve to deliver rate cuts in 2025 and the subsequent impact on the USD.
The active iron ore contract in Singapore been supported so far sub $100/ton, but has spent the last few weeks tracking lower as we approach 2025. We were last $100.50/ton, down around 0.80% for the session.
A clean break sub $100/ton could see mid Nov lows near $95/ton targeted, while on the topside, recent Dec highs were at $107/ton.
Onshore steel prices are showing a little more resilience so far today. Hot rolled coil and steel rebar are still near recent lows though. Iron ore inventories at China ports sit off cycle highs, but a downtrend is proving elusive at this stage.
Our onshore policy team noted late yesterday that China steel; demand is expected to fall next year, with the housing market still facing headwinds (see this link).
China equities are up today, but the aggregate indices remain within recent ranges. Property sub indices continue to struggle though, the CSI 300 real estate index now back to late Sep levels.
Iron ore weakness is in line with copper softness, with the base metal tracking lower in recent weeks well.
The Korean consumer has given a clear message to the Politicians in the BOK consumer survey.
Consumer confidence has been steadfast above 100 (above means more optimistic) for several months despite the slowing economy.
The December survey has seen a collapse down to 88.4 with all major indicators from the domestic economy collapsing.
The overall survey result for the domestic economy fell from 70 to 52, showing that the Korean consumer is dismayed with the political storm created in recent weeks.
To add to the woes, the consumer now expects inflation to rise in the coming 12 months challenging the idea that the BOK will cut rates at the next meeting in January.
A report in China’s 21st Century Business Herald suggests a heavy focus from the PBOC on bond market activity will result in the first batch of finesse being announced imminently with CNY10 m fines to be levied. (source: MNI – Market News).
Central Bank Drains Liquidity via OMO. (source: MNI – Market News).
Major equity indices are all positive today with Hang Seng +1.08%, CSI 300 +0.75%, Shanghai +0.68% and Shenzhen +0.40%
CNY: Yuan Reference Rate at 7.1876 Per USD; Estimate 7.2993
Bonds: earlier bonds jumped higher in yields on the news story mentioned above only to move quickly back to near flat on the day. 10YR 1.713% (+0.5bp)
A group of Indian lenders has asked the central bank to approve a new benchmark for overnight indexed swaps, according to people familiar with the matter. (source: BBG).
The Indian rupee weakened to a life-time low- closing at 85.12/$ on Monday due to strong dollar demand by corporates to help meet month-end payment obligations, traders said. It previously closed at 85.01/$1. Last week, the rupee had touched a record low of 85.08/$1 on a closing basis. (source: India Economic Times).
Following yesterday’s positive day, India’s NIFTY 50 is opening up +0.25%
INR: the Rupee has hit all time lows and is off -0.07% at the open to be 85.15
Bonds: stability in the bond market continues with the 10YR at 6.78%
UP TODAY (TIMES GMT/LOCAL)
Date
GMT/Local
Impact
Country
Event
24/12/2024
1330/0830
**
US
Philadelphia Fed Nonmanufacturing Index
24/12/2024
1355/0855
**
US
Redbook Retail Sales Index
24/12/2024
1500/1000
**
US
Richmond Fed Survey
24/12/2024
1630/1130
*
US
US Treasury Auction Result for 5 Year Note
24/12/2024
1630/1130
**
US
US Treasury Auction Result for 2 Year Floating Rate Note
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.
Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI (SYDNEY)
It has been a quiet session as the Christmas break approaches. Markets didn't move much off the BoJ or RBA minutes. The only data of note was a plunge in South Korean consumer sentiment, which follows recent onshore political turmoil.
Yen firmed on fresh FX warnings from the Japan FinMin, but aggregate moves were modest. It was quiet in the bond space.
Regional equities were mostly higher. A raft of headlines crossed around a China fiscal policy meeting, but details remained light.
Coming up we just have US data in terms of the Richmond Fed index and Philly Fed non-manufacturing index due before the Christmas break.
JGB futures are weaker, -14 compared to settlement levels
Outside of the BOJ Minutes for the October MPM, there hasn't been much by way of domestic drivers to flag.
The BOJ minutes revealed that one member noted market rates might be lower than appropriate given the BOJ's economic and price projections and its monetary policy guidance. Another member highlighted the difficulty in confidently projecting medium- to long-term rate hikes due to uncertainties about Japan's neutral rate and the transmission mechanism of monetary policy.
The local calendar will also see later Dept Store Sales alongside an Auction for Enhanced-Liquidity 15.5-39 YR.
Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s heavy session.
Cash JGBs are 1bp higher to 2bps lower across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.5bp higher at 1.08% versus the cycle high of 1.113%.
The swaps curve has twist-flattened, pivoting at the 10-year, with rates 1bp lower to 4bps higher.
Tomorrow, the local calendar will see PPI Services and Coincident/Leading Indices alongside BOJ Rinban Operations covering 3-10-year and 25-year+ JGBs.
The BoJ left rates on hold at the December meeting, which was expected by the economic consensus and what was priced by markets.
The central bank highlighted high uncertainties around the outlook, along with gradual inflation trends, as justification for holding rates steady. BoJ Governor Ueda struck a dovish tone at the press conference, signalling no rush to adjust policy further.
Watch points for the BoJ are wage trends in 2025 and the US economic and policy outlook.
There was one dissent to the BOJ's decision, with board member Tamura in favour of a 25bps hike at the policy meeting.
ACGBs (YM flat & XM -3.5) closed cheaper but off worst levels on a holiday-shortened session.
Australia’s central bank is more confident that inflation is moving sustainably toward target but it’s still too soon to conclude the battle is won given a recent pick-up in consumption and a still-tight labour market, minutes of the December meeting showed.
The Reserve Bank’s board discussed scenarios in which future policy would be eased to boost economic growth or stay at current restrictive levels, according to minutes of the Dec. 9-10 meeting. The board concluded either outcome was conceivable and opted to stand pat at 4.35%, saying recent data hadn’t been sufficient to shift the dial on the policy outlook. (see BBG link)
Cash ACGBs closed 1-4bps cheaper with the 3/10 curve steeper and the AU-US 10-year yield differential at -14bps.
The bills strip closed slightly richer with pricing +2 to +3 across contracts.
RBA-dated OIS pricing closed showing a 25bps rate cut more than fully priced by April (123%). A 59% chance is priced for February.
The local market will resume on the 27th of December after the extended Xmas break.
NZGBs were slightly mixed, with benchmark yields 1bp lower to 1bp higher. Early weakness following the negative lead in from US tsys was reversed, but trading was subdued ahead of a holiday-shortened trading week.
The NZ-US 10-year yield differential is at -11bps, the lowest level since late 2020.
Swap rates are 1-2bps higher, with the 2s10s curve steeper.
RBNZ-dated OIS pricing is showing 54bps of easing for February, with a cumulative 123bps by November 2025.
The USD BBDXY index sits a touch higher in the first part of Tuesday trade, as markets wind down ahead of the Christmas break. The index was last near 1301.3, so holding Monday gains, but still sub recent cycle highs.
USD/JPY sits off earlier highs (157.39), last testing under 157.00 and close to session lows. Yen sentiment has been aided by fresh rhetoric from the FinMin warning around excessive/one-sided FX moves and that the authorities would respond.
The language used echoed comments from last week ("CONCERNED ABOUT RECENT FX MOVES" RTRS) and didn't impact much initially. USD/JPY's move lower has been a steady grind. The comments a likely warning on intervention risks, particularly as lighter liquidity approaches over the holiday period.
We also have BoJ Governor Ueda speaking tomorrow.
AUD and NZD have drifted a little lower, but recent ranges have held. AUD/USD last down around 0.20%, just under the 0.6240 level. The RBA mins were released, which didn't impact sentiment much, the RBA reiterating that it is too soon to be confident of sustaining inflation within the target range. NZD/USD was last near 0.5645.
This afternoon headlines have crossed from a China fiscal work conference in Beijing. Familiar language has been used around supporting growth next year and increasing bond issuance. Details were light otherwise though.
China and Hong Kong equities are higher, but were already firmer prior to these fiscal headlines. Iron ore is still weaker for the session, an AUD headwind.
Coming up we just have US data in terms of the Richmond Fed index and Philly Fed non-manufacturing index due before the Christmas break.
China’s key equity indices have put in a strong day leading into the holiday break. The Hang Seng led the charge up +1.10%, CSI 300 +0.76%, Shanghai +0.67% and Shenzhen +0.42%.
South Korea’s KOSPI had delivered a very strong day yesterday and is trying to hold onto those gains, trading flat all day.
Malaysia’s FTSE Bmk KLCI rose +0.35%, following on from yesterday’s positivity.
Following on from yesterday’s very strong day, Indonesia’s Jakarta Composite is could not follow on and is down -0.10%
Other key movers sees Philippines up 2% and Singapore +0.50%.
India’s NIFTY 50 put in a positive day yesterday and is opening up
Oil had an up and down day initially, falling in the US session only to rally back into the close to finish in line with where it started the day.
Opening at US$69.24, on very low volumes oil inched higher to be at $69.53 in afternoon trading.
Supply issues and the potential excess in 2025 are never far away from traders’ minds as news of Russian oil flows via Belarus came out.
Brent had opened at US$72.63 and on very light volumes edged higher to $72.96.
As investors ponder 2025 it appears that a key indicator for Oil’s fortunes in the context of supply will be the success of the Chinese authorities in stabilizing the growth outlook for the domestic economy.
Today will likely see the Medium-Term Lending Rate and Volume data and whilst no rate cut is expected, the emphasis for the release will be on the volume of uptake as an indicator for activity.
Equally in the US, oil will be watching closely for indicators from monetary policy and its impact on the dollar.
Despite the concerns about supply, Hedge Funds have turned bullish on oil with net long positions the most in 1 year.
As the US averted a shutdown data released shows the US consumer’s confidence has slipped for the first time in three months on concerns that the Trump administration will create uncertainty with their policies.
The Consumer confidence index dipped to 104.7 from 111.7 in the month prior and headline durable good figure of -1.1% MoM was viewed as a miss and despite the data, bonds sold off taking gold with it.
Opening at $2,612.29 in light volumes it drifted up to $2,619.85.
Having had a strong year on the outlook for rate cuts, the next few months for gold will hinge on the ability of the Fed Reserve to deliver rate cuts in 2025 and the subsequent impact on the USD.
The active iron ore contract in Singapore been supported so far sub $100/ton, but has spent the last few weeks tracking lower as we approach 2025. We were last $100.50/ton, down around 0.80% for the session.
A clean break sub $100/ton could see mid Nov lows near $95/ton targeted, while on the topside, recent Dec highs were at $107/ton.
Onshore steel prices are showing a little more resilience so far today. Hot rolled coil and steel rebar are still near recent lows though. Iron ore inventories at China ports sit off cycle highs, but a downtrend is proving elusive at this stage.
Our onshore policy team noted late yesterday that China steel; demand is expected to fall next year, with the housing market still facing headwinds (see this link).
China equities are up today, but the aggregate indices remain within recent ranges. Property sub indices continue to struggle though, the CSI 300 real estate index now back to late Sep levels.
Iron ore weakness is in line with copper softness, with the base metal tracking lower in recent weeks well.
The Korean consumer has given a clear message to the Politicians in the BOK consumer survey.
Consumer confidence has been steadfast above 100 (above means more optimistic) for several months despite the slowing economy.
The December survey has seen a collapse down to 88.4 with all major indicators from the domestic economy collapsing.
The overall survey result for the domestic economy fell from 70 to 52, showing that the Korean consumer is dismayed with the political storm created in recent weeks.
To add to the woes, the consumer now expects inflation to rise in the coming 12 months challenging the idea that the BOK will cut rates at the next meeting in January.
A report in China’s 21st Century Business Herald suggests a heavy focus from the PBOC on bond market activity will result in the first batch of finesse being announced imminently with CNY10 m fines to be levied. (source: MNI – Market News).
Central Bank Drains Liquidity via OMO. (source: MNI – Market News).
Major equity indices are all positive today with Hang Seng +1.08%, CSI 300 +0.75%, Shanghai +0.68% and Shenzhen +0.40%
CNY: Yuan Reference Rate at 7.1876 Per USD; Estimate 7.2993
Bonds: earlier bonds jumped higher in yields on the news story mentioned above only to move quickly back to near flat on the day. 10YR 1.713% (+0.5bp)
A group of Indian lenders has asked the central bank to approve a new benchmark for overnight indexed swaps, according to people familiar with the matter. (source: BBG).
The Indian rupee weakened to a life-time low- closing at 85.12/$ on Monday due to strong dollar demand by corporates to help meet month-end payment obligations, traders said. It previously closed at 85.01/$1. Last week, the rupee had touched a record low of 85.08/$1 on a closing basis. (source: India Economic Times).
Following yesterday’s positive day, India’s NIFTY 50 is opening up +0.25%
INR: the Rupee has hit all time lows and is off -0.07% at the open to be 85.15
Bonds: stability in the bond market continues with the 10YR at 6.78%
UP TODAY (TIMES GMT/LOCAL)
Date
GMT/Local
Impact
Country
Event
24/12/2024
1330/0830
**
US
Philadelphia Fed Nonmanufacturing Index
24/12/2024
1355/0855
**
US
Redbook Retail Sales Index
24/12/2024
1500/1000
**
US
Richmond Fed Survey
24/12/2024
1630/1130
*
US
US Treasury Auction Result for 5 Year Note
24/12/2024
1630/1130
**
US
US Treasury Auction Result for 2 Year Floating Rate Note
26/12/2024
0800/0900
**
ES
PPI
26/12/2024
1100/0600
***
TR
Turkey Benchmark Rate
26/12/2024
1330/0830
***
US
Jobless Claims
26/12/2024
1600/1100
**
US
DOE Weekly Crude Oil Stocks
26/12/2024
1800/1300
**
US
US Treasury Auction Result for 7 Year Note
27/12/2024
2330/0830
**
JP
Tokyo CPI
27/12/2024
2330/0830
*
JP
Labor Force Survey
27/12/2024
2350/0850
*
JP
Retail Sales (p)
27/12/2024
2350/0850
**
JP
Industrial Production
27/12/2024
1330/0830
**
US
WASDE Weekly Import/Export
27/12/2024
1330/0830
**
US
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