- The US dollar has continued to strengthen during APAC trading with the BBDXY USD up 0.2% and close to its intraday high. Thus the G10 has seen broad-based weakness against the greenback except for the yen.
- Korean equities fell sharply and the won depreciated further after the impeachment of President Yoon failed on the weekend and authorities said that he could be arrested.
- President-elect Trump said that he wouldn't replace Fed Chair Powell.
- Syria's Assad has fled to Russia as rebels have taken control of the country increasing uncertainty in the region.
TYH5 is trading at 111-13, +0-02+ from NY closing levels.
- According to MNI’s technical team, a bull cycle in TY remains in play and Friday’s gains reinforced current bullish conditions. The contract has traded through resistance at the 50-day EMA, at 111-12. A clear break of this average would strengthen a bullish theme and signal scope for a stronger recovery. Sights are on 111-24 next, a Fibonacci retracement. For bears, a reversal lower would highlight the end of the bull cycle and open the key support at 109-02+, the Nov 15 low.
- Cash bonds are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains.
- The focus is this week's CPI and PPI inflation data on Wednesday and Thursday respectively.
- As a reminder, the Federal Reserve entered its self-imposed blackout at midnight Friday through December 19.
JGBS: Richer But Off Bests, 5Y Supply Tomorrow
JGB futures are stronger but off session highs, +15 compared to the settlement levels.
- Outside of the previously outlined GDP, Trade Balance and Bank Lending data, there hasn't been much by way of domestic drivers to flag.
- BOJ Governor Kazuo Ueda is expected to closely examine economic data including its Tankan survey on Dec. 13 before the central bank’s Dec. 19 policy decision. Most economists surveyed last month foresaw an interest rate hike by January, while Ueda said in a recent interview with the Nikkei newspaper that the timing for a hike is “nearing,” fueling speculation that the bank may increase rates this month. (per BBG)
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. The focus is this week's CPI and PPI inflation data on Wednesday and Thursday respectively. As a reminder, the Federal Reserve entered its self-imposed blackout at midnight Friday through December 19.
- Cash JGBs are 1-2bps richer across benchmarks, with the futures linked 7-year leading. The benchmark 10-year yield is 1.3bps lower at 1.047% versus the cycle high of 1.108%.
- Swap rates are 1-3bps lower out to the 10-year and 2bps higher in the 20-30-year zone. Swap spreads are mixed.
- Tomorrow, the local calendar will see M2 & M3 Money Stock and Machine Tool Orders data alongside 5-year supply.
AUSSIE BONDS: Slightly Richer Ahead Of RBA Policy Decision Tomorrow
ACGBs (YM +2.0 & XM +0.5) are holding stronger after dealing in narrow ranges on a data-light Sydney session.
- The domestic focus of this week will be tomorrow’s RBA decision and Thursday’s November jobs data after October disappointed. The cash rate is unanimously forecast to remain at 4.35% and so the guidance will be monitored closely for any changes. The RBA meeting will be followed by Governor Bullock’s press conference.
- Bloomberg consensus is again forecasting a 25k increase in employment in November with the unemployment rate rising 0.1pp to 4.2%. The RBA is projecting it to rise to 4.3% in Q4 2024.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. The focus is this week's CPI and PPI inflation data on Wednesday and Thursday respectively.
- Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +6bps.
- Swap rates are 1-2bps lower.
- The bills strip has twist-flattened, with pricing -2 to +3.
- RBA-dated OIS pricing is flat to 3bps softer across 2025 meetings. A 25bps rate cut is still not fully anticipated until May. The probability of a rate cut at tomorrow's meeting remains low, with markets assigning only a 9% chance.
BONDS: NZGBS: Bull-Flattener To Start The Week
NZGBs closed flat to 4bps richer, with a flatter 2/10 curve, after a data-light local session. The next key release is Mfg Activity Volume on Wednesday. Across the ditch, the RBA will deliver its policy decision tomorrow.
- New Zealand government is pushing ahead with moves to increase banking competition by boosting Kiwibank and taking steps to ensure the Reserve Bank places greater importance on competition in the sector, Finance Minister Nicola Willis says. (per BBG)
- “New Zealand is often seen as the little brother against the Aussies. We’re trying to give that little brother a little bit more muscle to get a fairer deal for Kiwis”: Willis
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. As a reminder, the Federal Reserve entered its self-imposed blackout at midnight Friday through December 19.
- Swap rates closed 2-4bps lower.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. 44bps of easing is priced for February, with a cumulative 105bps by November 2025.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$225mn of the 4.50% May-35 bond and NZ$25mn of the 2.75% Apr-37 bond.
FOREX: US Dollar Stronger Again, Yen Outperforming G10
The US dollar has continued to strengthen during APAC trading with the BBDXY USD up 0.2% and close to its intraday high. Thus the G10 has seen broad-based weakness against the greenback except for the yen, as was the case on Friday. NZD, NOK and EUR have depreciated the most.
- NZDUSD is down 0.3% to 0.5813, close to the intraday low. The government announced that it would go ahead with a capital injection into Kiwibank of around NZ$500bn. It wants to increase competition in the banking sector.
- Ahead of Tuesday’s RBA decision, AUDNZD is 0.2% higher at 1.0983. The RBA is unanimously expected to leave rates at 4.35%, whereas the RBNZ has eased 125bp this year to 4.25%. AUDUSD is down 0.1% to 0.6384, close to the intraday trough.
- USDJPY has range traded between 149.70 and 150.10. The pair is currently little changed at 149.95. AUDJPY is down 0.1% to 95.74.
- EURUSD is down 0.3% to 1.0537, close to the intraday low. NOK and SEK are also lower leaving the crosses against the euro little changed. EURCHF is down 0.1% to 0.9274 and EURGBP -0.1% to 0.8282.
- Equities are generally lower with the Hang Seng down 0.6%, ASX -0.2% but Nikkei up 0.2% and S&P e-mini flat. Oil prices are moderately higher with WTI +0.4% to $67.46/bbl. Copper is slightly lower and iron ore is steady around $104/t.
- Later November NY Fed 1-year inflation expectations print and ECB’s Cipollone and BoE’s Ramsden speak. The Fed is in its pre-meeting blackout period.
ASIA FX: Won Weakens Further as Korean Uncertainty Continues.
- The weekend has shed limited clarity on the immediate fix for Korean politics as Yoon escapes impeachment but the pressure for him to steps down grows stronger.
- The Korean Won again is the underperformer versus the USD, down -0.875% in this morning’s trade, to be over 2% down in the last five trading sessions.
- The USD/CNY fix printed at 7.1870, versus a Bloomberg consensus of 7.2614 as November CPI came in weaker than expected and the November PPI remains firmly in negative territory.
- Indonesia’s rupiah has had a very quiet start to the week opening at 15,851 in line with where it closed on Friday, touching the 20-day EMA.
- The Ringgit too has had a quiet start to the week opening in line with Friday’s close at 4.4230. Having been weak in recent months, the last week has seen a somewhat more stable MYR which will be welcomed by the Central Bank.
- In India, the ongoing support of the Rupee by the Central Bank resulted in a fairly stable week last week ahead of the decision on monetary policy on Friday where the RBI kept rates steady, but reduced the cash deposit ratio for banks.
- The Thai Baht and Philippines Peso have been one of the stronger stories for currencies in the region over the last month, standing resolute in front of the USD strength to put in a +1.7% and +0.9% positive return.
- The Baht is opening stronger today up +0.36%, but the Peso is down -0.52%.
ASIA STOCKS: China Down Again as Stimulus Hopes Fade.
- Last week’s strong finish for China’s major indices faded today as hopes about more stimulus recede.
- Having finished Friday up very strongly, delivering a positive week, the CSI 300 declined -0.50%, Hang Seng -0.54%, Shanghai -0.40% and Shenzhen -0.80%.
- The ongoing uncertainty in Korea continued to weigh heavy on the KOSPI , again making it the worst performer in the region, down -2.50% in today’s trading, following last week’s decline.
- Malaysia’s FTSE KLCI took lead from the other major markets too today and in the absence of any key news, the path of least resistance was to fall and was down -0.30%.
- The Jakarta Composite was one of the few positive stories today rising +0.36% as news breaks on potential VAT changes coming.
- India’s has been a shining star amongst it’s Asia peers in terms of inflows, having turned what was a torrid period of outflows into the last week of strong inflows. The NIFTY 50 had a very good week last week up +2.2% and is starting off the week post no change from the RBI flat as the market digests the implications of the change in the cash deposit rate for banks.
OIL: Crude Moderately Higher Following Syrian Turmoil
Oil prices are moderately higher during APAC trading today after falling sharply on Friday. Brent is up 0.3% to $71.34/bbl after a high of $71.49, and WTI is 0.5% higher at $67.50 after rising to $67.59. The USD index is up around 0.1%.
- The outlook for both Brent and WTI is bearish. Initial support is at $69.95 and $66.32 respectively. Bear triggers are at $67.89 and $63.90.
- OPEC pushed out the planned start of its output normalisation to April at its meeting last week. Now Saudi Arabia has cut prices for shipments to Asia with the premium falling to its lowest in four years, more than expected, according to Bloomberg. It also reduced prices for Europe but not to North America. Expected excess supply in 2025 continues to weigh on prices.
- Geopolitics in the Middle East remain in focus with the Iranian- and Russian-backed Assad regime in Syria being toppled by Turkish-supported rebel groups on the weekend. The spread of instability in the region to major oil-producer Iran remains the market’s key concern. Today’s restrained rise in oil prices implies that crude is not yet too worried about the developments.
- Later November NY Fed 1-year inflation expectations print and ECB’s Cipollone and BoE’s Ramsden speak. The Fed is in its pre-meeting blackout period.
GOLD: China Resumes Purchases Spurring Prices.
- Gold prices rose as the PBOC included gold bullion to its reserves for the first time in six months.
- Gold reserves with the PBOC rose 160,000 ounces in November according to data released over the weekend.
- In a move suggesting possible measures are being implemented to ward off currency depreciation, the resumption occurs at a time when prices are expensive levels.
- The PBOC had added to its reserves until April, before a pause.
- Prices got a bump today from the news up +0.19% to US$2,638.31.
- Stocks of Gold miners rallied throughout the region on the news.
STIR: RBA Dated OIS Easing Expectations Strengthen But Not For Tomorrow
RBA-dated OIS pricing has eased by 1–3bps across 2025 meetings ahead of tomorrow’s RBA policy decision.
- A 25bps rate cut is now nearly fully priced for April, with the probability rising to 95%. However, a full rate cut is not anticipated until May.
- Market expectations for the September meeting have softened by approximately 40bps since mid-November, driven by concerns over weakening domestic economic growth. Notably, in mid-November, a full 25bps cut wasn’t expected until August, marking a significant shift toward earlier rate cuts.
- Despite the broader repricing, the probability of a rate cut at the December meeting remains low, with markets assigning only a 9% chance.
Figure 1: RBA-Dated OIS – Today Vs. Mid-November
Source: MNI – Market News / Bloomberg
CHINA: CPI Below Estimates for November.
- China’s November CPI printed at +0.2% y/y versus estimates of +0.4% y/y and October’s result of +0.3% y/y.
- China’s November PPI printed at -2.5% y/y versus estimates of -2.8% y/y and October’s result of -2.9% y/y.
- The month-on-month CPI result was even worse, down -0.6%.
- There is growing calls for further stimulus to support China’s ailing economy with equity markets rallying last week in anticipation of further news this week from the Central Economic Work Conference.
- News over the weekend suggests that possible announcements could revolve around increases in the fiscal deficit cap.
SOUTH KOREA: Country Wrap: Impeachment Vote Down but Pressure on Yoon is Up.
- An impeachment motion failed to pass the parliament on Saturday, following Yoon’s apology and indication of a possible early resignation.
- Joint statements by the Prime Minister and Conservative Partly Leadership confirm they are preparing for transitional arrangements with the underlying message of wanting him to step aside quietly.
- The ongoing uncertainty in Korea continued to weigh heavy on the KOSPI , again making it the worst performer in the region, down -2.50% in today’s trading, following last week’s decline.
- KRW – the Won was the worst performing currency in the region today again down -0.88%, following last week’s decline of 2%.
- Bonds: Korea’s 5YR government bond was a touch better today, down -0.7bp in yield at 2.643%.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 09/12/2024 | 1300/1300 |  GB | BOE's Ramsden speech at OMFIF "Financial stability and the Bank of England's toolkit" | |
| 09/12/2024 | - |  JP | Economy Watchers Survey | |
| 09/12/2024 | - |  EU | ECB's Cipollone in Eurogroup meeting | |
| 09/12/2024 | 1500/1000 | ** |  US | Wholesale Trade |
| 09/12/2024 | 1600/1100 | ** | US | NY Fed Survey of Consumer Expectations |
| 09/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 09/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 10/12/2024 | 0330/1430 | *** |  AU | RBA Rate Decision |
| 10/12/2024 | 0700/0800 | *** |  DE | HICP (f) |
| 10/12/2024 | 0700/0800 | *** |  NO | CPI Norway |
| 10/12/2024 | 0700/0800 | ** |  SE | Private Sector Production m/m |
| 10/12/2024 | 0900/1000 | * |  IT | Industrial Production |
| 10/12/2024 | 1000/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 10/12/2024 | 1100/0600 | ** | US | NFIB Small Business Optimism Index |
| 10/12/2024 | - | *** |  CN | Trade |
| 10/12/2024 | - | *** | CN | Money Supply |
| 10/12/2024 | - | *** | CN | New Loans |
| 10/12/2024 | - | *** | CN | Social Financing |
| 10/12/2024 | - | EU | ECB's De Guindos in ECOFIN meeting | |
| 10/12/2024 | 1330/0830 | ** | US | Non-Farm Productivity (f) |
| 10/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
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