- It has been a slows session in Asia today, with the only notable move being the bounce in South Korean equities.
- South Korea’s joint probe team halts the execution of arrest warrant for President Yoon Suk Yeol.
- The AUD & NZD have again been the best performing currencies throughout the Asian session today, although there hasn't been any major driver.
MARKETS
US TSYS: Tsys Futures Trade In Narrow Ranges As Cash Trading Closed
- It has been another very slow Asian session for tsys, with Japan out meaning no cash trading again. Tsys futures have traded in narrow ranges, however all currently trade slightly higher for the session, although within Thursday's ranges. TU is +01 at 102-26¾, while TY is +05 at 108-31.
- The trend condition in Treasury futures remains bearish despite the intraday rally into the Monday close. These short-term gains are considered corrective below the 110-03+ 20-day EMA. Last week’s sell-off reinforces the current bear cycle. The contract has traded through key short-term support and the bear trigger at 109-02+, the Nov 15 low. The breach confirms a resumption of the downtrend and opens 108+12+, a Fibonacci projection.
- US bank reserves dropped below $3t to $2.89t, their lowest level since October 2020, due to year-end regulatory adjustments and the Fed's QT program. While the Fed continues QT and adjusts policies to manage liquidity, concerns are rising over potential reserve scarcity reminiscent of the 2019 funding squeeze. Most market participants anticipate QT could conclude by mid-2025, though the reinstated debt ceiling may complicate reserve assessments.
- Friday data: ISM mfg & prices paid at 1000ET. Fed speak: Richmond Fed Barkin, bankers assn address (text, Q&A) at 1100ET. On Saturday: SF Fed Daly & Fed Gov Kugler mon-pol panel event (no text, Q&A) at 1730ET.
AUSSIE BONDS: Richer But A Subdued Session To End Holiday Shortened Week
ACGBs (YM +2.0 & XM +4.0) are holding stronger on another local-data-light session.
- Cash US tsys haven’t dealt in today’s Asia-Pac session with Japan still out for its extended New Year’s break. TYH5 is, however, +0-05 versus NY closing levels at 108-31.
- Cash ACGBs are 3-4bps richer.
- The bills strip has bull-flattened, with pricing +1 to +4.
- RBA-dated OIS pricing is slightly mixed (+/- 1bp) across meetings. A 25bp rate cut is more than fully priced by April (124%), with a February cut at a 59% chance.
- The local calendar heats up next week with the release of November CPI data on Wednesday. The calendar also sees S&P Global Composite & Services PMIs on Monday, Building Approvals and Private Sector Houses on Tuesday and Retail Sales and Trade Balance on Thursday.
- Later today the global calendar will see the Fed’s Barkin and ECB’s Lane speaking. US December manufacturing ISM, German December unemployment and UK November lending data will also be released.
- AOFM Bond issuance is expected to resume in the week beginning 13 January 2025.
NZGBS: Closed Little Changed After Reversing Early Weakness
NZGBs exhibited a mixed performance across various benchmarks on the first trading day of the year. Yields fluctuated between a decrease of 1bp and an increase of 1bp. The 10-year NZGB yield stood at 4.42%.
- This slight variation in yields suggested that the market is stabilising following recent monetary policy adjustments by the RBNZ. In November 2024, the RBNZ reduced the official cash rate by 50bps to 4.25%, signalling the potential for further easing to reach a neutral rate estimated between 2.5% and 3.5% by the end of 2025.
- Cash US tsys didn’t deal in today’s Asia-Pac session with Japan still out for its extended New Year’s break. TYH5 is, however, +0-05 versus NY closing levels at 108-31.
- Swap rates closed flat to 2bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing closed slightly softer across meetings. 55bps of easing is priced for February, with a cumulative 124bps by November 2025.
- The local calendar will be light again next week, with ANZ Commodity Prices as the sole release.
- Later today the global calendar will see the Fed’s Barkin and ECB’s Lane speaking. US December manufacturing ISM, German December unemployment and UK November lending data will also be released.
EQUITIES: Asian Equities Edge Higher, SK Equities Outperform
Asian equities rebounded today, with markets in Hong Kong, South Korea, and Australia gaining despite Wall Street's extended losing streak. The Hang Seng China Enterprises Index climbed 1.6%, supported by China's announcement of ultra-long treasury bonds to boost major projects, while South Korea's Kospi surged nearly 2%, led by chipmakers SK Hynix (+6.4%) and Samsung Electronics (+2.4%).
- The CSI 300 traded within a narrow range after a steep 2.9% decline on Thursday, marking its worst yearly start since 2016. Investor sentiment remains cautious despite regulatory support, with concerns lingering over weak domestic demand and external pressures. China's 10-year government bond yield fell below 1.6% for the first time ever, highlighting broader economic concerns.
- The Kospi surged 2.10%, led by chipmakers SK Hynix (+6%) and Samsung Electronics (+2.4%) as investors sought bargains. Battery stocks such as LG Energy Solution (+4%) and POSCO Future M (+7%) also rallied, while auto stocks traded mixed. The small-cap focused Kosdaq is outperforming today, up 2.50%.
- Australian equities advanced, in line with broader regional gains with key contributors to the rally being resource stocks buoyed by firm commodity prices, the ASX 200 is trading 0.65% higher. New Zealand returned from an extended break today, with the NZX 50 falling 0.60%.
- Overnight, US equities were lower partly due to weak Tesla earnings, weighed on global sentiment. However US equity futures have edged higher throughout the session with Nasdaq 100 futures trading 0.36% higher now.
- Meanwhile, the dollar softened after hitting a two-year high, and the yen gained slightly following three consecutive days of losses. Japan's markets remained closed for a holiday. Despite recent volatility, investors are cautiously rebalancing portfolios for the new year, though sentiment in Chinese markets remains fragile amid ongoing policy and economic uncertainties.
ASIA STOCKS: Taiwan Continues To See Strong Outflows
Taiwan has started the year off with some decent outflows, there wasn't anything else of note on a quiet trading session on Thursday.
- South Korea: Recorded outflows of -$251m yesterday, contributing to a 5-day total of -$225m. YTD flows remain positive at +$2.18b. The 5-day average is -$45m, better than the 20-day average of -$117m and the 100-day average of -$158m.
- Taiwan: Saw significant outflows of -$967m yesterday, with a 5-day total of -$1.55b. YTD flows are deeply negative at -$19.17b. The 5-day average is -$309m, worse than the 20-day average of -$138m and the 100-day average of -$88m.
- India: Registered outflows of -$70m yesterday, contributing to a 5-day total of -$1.03b. YTD flows are slightly negative at -$824m. The 5-day average is -$205m, worse than the 20-day average of -$15m and the 100-day average of -$43m.
- Indonesia: Posted outflows of -$15m Wednesday, but the 5-day total remains positive at +$28m. YTD flows are positive at +$1.14b. The 5-day average is +$6m, better than the 20-day average of -$16m and the 100-day average of +$11m.
- Thailand: Recorded outflows of -$37m yesterday, bringing the 5-day total to -$37m. YTD flows are negative at -$4.17b. The 5-day average is -$7m, in line with the 20-day average of -$17m and worse than the 100-day average of -$8m.
- Malaysia: Saw inflows of +$22m yesterday, resulting in a 5-day total of -$2m. YTD flows are negative at -$942m. The 5-day average is $0m, better than the 20-day average of -$29m but worse than the 100-day average of -$9m.
- Philippines: Registered inflows of +$4m yesterday, bringing the 5-day total to -$6m. YTD flows are negative at -$405m. The 5-day average is -$1m, better than the 20-day average of -$6m and the 100-day average of +$1m.
Table 1: EM Asia Equity Flows
OIL: Crude Moderately Higher As Technicals Continue To Support Prices
After rising close to 2% on Thursday following another US crude drawdown, oil prices today have held onto those gains and risen further buoyed by technical buying. Brent is up 0.25% to $76.12/bbl after briefly falling below $76. WTI is 0.3% higher at $73.38/bbl after a high of $73.48. The USD index is down 0.1% and may also be providing some support.
- WTI and Brent have risen above their 100-day moving averages which have triggered algorithmic purchases, according to Bloomberg. Both benchmarks are higher on the week.
- With excess supply expected in 2025 and persistent worries regarding China’s demand, the uptrend in oil prices in recent weeks looks unlikely to be sustained. The impact of China’s stimulus, global growth, sanction adjustments by the new US administration and its support of the domestic oil sector, the likelihood of OPEC beginning to normalise output and geopolitical developments are all likely to be key factors monitored for now.
- Later the Fed’s Barkin and ECB’s Lane speak and US December manufacturing ISM, German December unemployment and UK November lending data are released.
GOLD: On Track For Largest Weekly Gain Since Nov
Gold is 0.2% higher in today’s Asia-Pac session, after closing 1.3% higher at $2658 on Thursday.
- Bullion is on track for its largest weekly gain since November, as broad risk-off sentiment buoyed demand for haven assets.
- The yellow metal notched up a 27% annual gain in 2024, it largest since 2010, despite traders re-assessing the pace of monetary easing by the Federal Reserve in 2025. Lower rates are typically positive for gold, which doesn’t pay interest.
- In addition to the Fed’s cutting cycle, the gold was buoyed by sustained haven demand and a wave of purchases by central banks.
- According to MNI’s technicals team, gold has now risen above initial pivot resistance at $2,637.5, the 50-day EMA, with sights on $2,664.5 next, the Dec 16 high.
- Silver outperformed yesterday, with the precious metal up by ~2%, bringing the gold-silver ratio down from the 10-month high reached on Dec 31.
- However, silver remains below support at $29.642, the Nov 28 low, opening $28.446, a Fibonacci retracement. Key resistance has been defined at $32.338, the Dec 12 high.
LNG: Norwegian Outage Highlights Risks To European Supplies
European natural gas prices continued to climb on Thursday rising another 1.7% to EUR 49.73 to be up 3.6% this week. It started trading reaching a high of EUR 51.00 before falling to a low of EUR 48.55. An unplanned outage in Norway boosted prices, while the expiry of a deal to allow Russian gas to transit through Ukraine on January 1 at a time of colder weather has also driven them higher.
- The Hammerfest LNG facility in Norway has stopped activity until January 9, which will add to European supply pressures. Bloomberg notes that storage drawdowns in the region are currently at their fastest pace since 2021. But the EU remains unconcerned about the end to Russian flows through Ukraine as it has had a year to prepare. Only the pipeline through Turkey to Hungary is now in operation.
- The market will watch European storage refilling over the spring and summer and is likely to face increased sensitivity to global supply outages as it relies more heavily on LNG imports. LNG shipments from Russia were at a record high in 2024, according to Bloomberg. But LNG is less practical for landlocked central European countries.
- Austria’s dispute with Gazprom in 2024 has seen the central European country source more gas through Germany and Italy, according to Austria Gas Grid Management.
- US natural gas rose 0.5% to $3.66 after an intraday high of $3.80. Forecasts for a cold snap have driven a price rise of over 8% this week. Increased heating demand as well as risks from freezing to Appalachian output are likely to drive inventory drawdowns.
FOREX: G10 Moderately Stronger Against US Dollar
G10 currencies are all higher against the US dollar but moves are moderate in still holiday-affected light trading. The news flow has also been thin. The USD BBDXY index is off its intraday low but still down 0.1%.
- Kiwi has seen the largest move with NZDUSD up 0.2% to 0.5605, close to the intraday high of 0.5608.
- AUDUSD is 0.1% higher at 0.6211 after outperforming the G10 on Thursday, despite weaker iron ore prices. AUDNZD is slightly lower at 1.1083.
- USDJPY has range traded and is currently down 0.1% to 157.37 after a low of 157.18 earlier. Japan was closed again today.
- Europe struggled against the greenback on Thursday but is slightly stronger so far today. GBPUSD is up 0.1% to 1.2394 and EURUSD slightly higher at 1.0269 leaving EURGBP down 0.1% to 0.8285 and EURNOK -0.1% to 11.69.
- APAC equities are mixed with the KOSPI +2.3% but CSI 300 down 0.1%. The S&P e-mini is 0.2% higher. Oil prices are moderately higher with WTI up 0.4% to $73.40. Copper is flat and iron ore down below $99/t.
- Later the Fed’s Barkin and ECB’s Lane speak and US December manufacturing ISM, German December unemployment and UK November lending data are released.
Table of Contents
ASIA FX: Korean Won Recovering As Equities Bounce
Most Asian currencies are weaker against the US dollar during APAC trading today with the greenback itself lower (BBDXY -0.1%). However, the Korean won has strengthened with USDKRW down 0.3% to 1466.55 after a low of 1464.65 helped by commitments to financial stability.
- The 2.1% jump in Korean equities, supported by US export exemptions, and the stronger CNH have supported the won today. In addition, acting president Choi reiterated that authorities would ensure market stability and the BoK said it would be flexible with monetary policy. Unsuccessful attempts were made today to arrest former president Yoon.
- USDCNH is down 0.1% to 7.3352.
- ASEAN FX continues to weaken against the greenback though with PHP underperforming. USDPHP is up 0.5% to 58.19 after falling yesterday. BSP stated that it expects the balance of payments surplus to shrink in 2025.
- Bank Indonesia intervened to support the rupiah on Thursday, as it was pressured by concerns of fiscal sustainability after the president decided to sharply reduce the products facing a 1pp hike in the VAT rate. Today USDIDR is up 0.2% to 16225 but still below Thursday’s peak of 16259.
- USDMYR and USDTHB are up 0.4% today to 4.4967 and 34.43 respectively.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 03/01/2025 | 0700/0200 | * |  TR | Turkey CPI |
| 03/01/2025 | 0855/0955 | ** |  DE | Unemployment |
| 03/01/2025 | 0930/0930 | ** |  GB | BOE M4 |
| 03/01/2025 | 0930/0930 | ** | GB | BOE Lending to Individuals |
| 03/01/2025 | - | *** |  US | Domestic-Made Vehicle Sales |
| 03/01/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 03/01/2025 | 1500/1000 | *** | US | ISM Manufacturing Index |
| 03/01/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 03/01/2025 | 1600/1100 | US | Richmond Fed's Tom Barkin |
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