- The USD and yields haven't moved much today. Markets are still on tariff watch. We had a Trump interview on Fox News, but this largely covered domestic issues.
- China unveiled more support for local equities, but local indices are off session highs. Japan's trade balance improved more than forecast, but yen wasn't impacted. South Korean GDP slowed more than forecast.
- Later US jobless claims, January Kansas Fed manufacturing, Canadian November retail sales and preliminary January euro area consumer confidence print.
MARKETS
US TSYS: Tsys Futures Trade In Narrow Ranges, Volumes Well Below Averages
- There has been very little to mention in tsys futures today, ranges have been very tight, while volumes are well below recent averages. TU is +00⅜ at 102-22¾, while TY is -00+ 108-17+. There has been no notable tsys flow trades.
- Looking at technical levels in the TY contract, The medium-term trend remains bearish and the recovery that started Jan 13, appears to be a correction. The contract has traded through the 20-day EMA, at 108-17+. This exposes 109-06, the Dec 31 high, and 109-16+, the 50-day EMA. A clear break of the 50-day EMA is required to strengthen a bullish theme. The bear trigger is unchanged at 107-06, the Jan 13 low.
- Cash tsys curve is slightly steeper today, with yields 0.5bps to 1bps lower. The 2yr is -0.8bps at 4.289%, while 10yr is -0.8bps at 4.603%. The 2s10s curve is unchanged at 31bps, after hitting lows of 28.5bps overnight.
- There was little to note from the Trump interview, with part 2 of the interviewing airing at the same time tomorrow on Fox, which will likely focus on foreign policy.
- Cash tsys curve is slightly steeper today, with yields 0.5bps to 1bps lower. The 2yr is -0.8bps at 4.289%, while TY is -0.6bps at 4.605%. The 2s10s curve is unchanged at 31bps, after hitting lows of 28.5bps overnight.
- Projected rate cuts through mid-2025 running largely steady vs. Wednesday's levels (*) as follows: Jan'25 at -0.1bp, Mar'25 at -6.4bp, May'25 at -11.9bp (-12.4bp), Jun'25 at -22.5bp (-22.7bp), Jul'25 steady at -26.6bp.
- Later today we have Jobless claims & Kansas City Fed Manf. Activity.
BOJ: MNI BoJ Preview - January 2025: Almost Certain To Hike
EXECUTIVE SUMMARY
- The Bank of Japan (BoJ) will announce its latest monetary policy decision this Friday, with expectations that it will move further along its policy normalisation path. Both market consensus and our analysis suggest a 25bps rate hike as the most likely outcome.
- The BoJ raised rates twice in 2024, first in March and again in July. However, it has maintained a hold since then, largely due to market volatility, including significant yen swings after the July hike. Political uncertainty has also played a role.
- Bloomberg consensus indicates that 31 analysts expect a 25bps hike, one predicts 10bps, and 13 expect a hold. Markets are pricing in a 94% chance of a quarter-point increase.
- Looking ahead, the BoJ is expected to maintain a cautious path, with 25bps hikes every six months.
- In the January Outlook Report, we expect the BoJ to maintain its economic growth forecast but slightly raise its inflation outlook.
- Full preview here:
STIR: BOJ Dated OIS Firmer Than Pre-Dec MPM Levels
BoJ-dated OIS pricing has shifted significantly since mid-January, following remarks by Deputy Governor Ryozo Himino on January 14. Himino stated, “At the monetary policy meeting to be held next week, the board will discuss whether to raise the policy rate or not.” He also highlighted the momentum of domestic wage growth and the potential impact of U.S. President-elect Donald Trump’s policies.
- Governor Ueda reinforced this sentiment the following day in a speech to the Regional Banks Association of Japan, further fueling expectations of a policy shift.
- Additionally, comments from Economic Revitalization Minister Ryosei Akazawa on January 14 and Finance Minister Katsunobu Kato the day after signaled support for a potential rate hike. Both ministers indicated they had no intention of opposing a January increase, strengthening the perception that a hike is imminent.
- Policymakers, including Governor Kazuo Ueda and the two deputy governors, will form their final view after monitoring market moves and their background on Friday, MNI believes.
- Current OIS pricing is flat to 8bps firmer than pre-December MPM (Monetary Policy Meeting) levels, with January leading.
- Market expectations currently indicate: a 94% probability of a 25bp hike in January; a cumulative 96% chance by March; and a full 25bp increase by May 2025.
Figure 1: BOJ-Dated OIS – Today Vs. Pre-BOJ MPM (December)
Source: MNI – Market News / Bloomberg
JAPAN DATA: Exports Lag NEA Trends, But Trade Balance Best Since 2021
Japan exports were slightly above forecasts for Dec. Up 2.8%y/y (forecast was 2.4%) but slower than the Nov 3.8% pace. Japan was somewhat lagging other NEA economies in terms of export trends at the end of 2024. Export growth for South Korea through to China was around +6% to +10% y/y (see the chart below, Japan is the red line). On the import side, growth was slightly softer than projections, up 1.8% y/y, (3.2% forecast), but prior was -3.8%.
- The modest downside import surprise helped drive a better trade position. We saw a surplus of ¥130.9bn, versus -¥68.5bn forecast. In seasonally adjustment terms we were still in deficit at -¥33bn, but this was much better than the -¥526bn projection. This is the best trade balance position since 2021.
- On the export side, we dipped in y/y terms for the US (-2.1%) and China (-3.0%), but the EU and exports to Asia more broadly were positive.
Fig 1: Japan Exports Lagged NEA Trends Into End 2024
Source: MNI - Market News/Bloomberg
JGBS: Subdued Session Ahead Of Natl CPI & BoJ Rate Decision Tomorrow
JGB futures are marginally weaker, -6 compared to settlement levels, after a choppy session around flat.
- Outside of the previously outlined trade balance and international investments data, there hasn't been much by way of domestic drivers to flag.
- The BoJ will announce its latest monetary policy decision tomorrow, with expectations that it will move further along its policy normalization path. Both market consensus and our analysis suggest a 25bps rate hike as the most likely outcome.
- National CPI data will be released just hours before the BoJ's rate decision tomorrow. Market consensus anticipates core inflation (excluding fresh food) to rise to 3.0% y/y in December, up from 2.7% in November. A stronger-than-expected increase in national CPI could intensify pressure on the BoJ to hike tomorrow.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest losses.
- Cash JGBs have twist-flattened across benchmarks, pivoting at the 10-year, with yields 1bp higher to 2bps lower. The benchmark 10-year yield is flat at 1.201% versus the cycle high of 1.262%.
- Swap rates are flat to 1bp lower, with the curve flatter.
JAPAN DATA: Early 2025 Local Bias to Buy Offshore Assets Continues
Offshore inflows into Japanese equities were negative in the week ending Jan 17. This only partially reversed the prior week's inflows but continued the see-saw patterns of flows for this segment. Some nervousness ahead of Trump's inauguration might have kept funds on the sidelines. Given the rebound in tech related equities this week, we may see such flows stabilize though. Offshore investors were firm buyers of local bonds, but this marked only the 2nd week out of the last 5 we have seen positive inflows. The BoJ is widely expected to hike rates tomorrow.
- Japan investors continued to buy offshore bonds, marking the second straight week of net firm buying for this segment. The trend through much of late 2024 was net outflows though.
- Local investors also continued to buy overseas stocks, extending the weekly streak to 6 weeks. Early year trends have been for Japan investors to buy both offshore stocks and bonds.
Table 1: Japan Weekly Investment Flows
| Billion Yen | Week ending Jan 17 | Prior Week |
| Foreign Buying Japan Stocks | -66.1 | 259.1 |
| Foreign Buying Japan Bonds | 876.1 | -502.5 |
| Japan Buying Foreign Bonds | 819.3 | 758.7 |
| Japan Buying Foreign Stocks | 489.8 | 588.9 |
Source: MNI - Market News/Bloomberg
AUSSIE BONDS: Flat, Subdued Data-Light Session, Jun-31 Supply Tomorrow
ACGBs (YM flat & XM -0.5) are little changed after a subdued session of trading.
- The local calendar has been empty today.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s modest losses.
- Cash ACGBs are flat to 1bp cheaper with the AU-US 10-year yield differential at -14bps.
- Swap rates are 1bp higher.
- The bills strip is -1 to -2 across contracts.
- Given the very high correlations between NZ and Australian CPIs and their major components, there is information to be gained about the upcoming Q4 Australian data on January 29 from NZ’s Q4 data.
- Given government electricity subsidies, it is difficult to compare the headline measures. However, the NZ data suggest there will be a further moderation in Australia’s trimmed mean inflation but possible upside risks to services, which is a particular focus of the RBA.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is more than fully priced for April (110%), with the probability of a February cut at 71% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar will see S&P Global PMI(P) for January.
- The AOFM plans to sell A$700mn of the 1.50% 21 June 2031 bond tomorrow.
AUSTRALIA: NZ Q4 CPIs Signal Lower Australian Core But Upside Risks To Services
Given the very high correlations between NZ and Australian CPIs and their major components, there is information to be gained about the upcoming Q4 Australian data on January 29 from NZ’s Q4 data. Given government electricity subsidies, it is difficult to compare the headline measures. But the NZ data suggest there will be further moderation in Australia’s trimmed mean inflation but possible upside risks to services, which is a particular focus of the RBA’s.
Australia vs NZ underlying CPI y/y%
- The RBNZ’s factor sector model of core inflation showed a moderation in Q4 to 3.1% y/y from 3.3%. It has a 90% correlation with Australia’s trimmed mean CPI, which was 3.5% in Q3.
- Services inflation in the two economies also has a 90% correlation. This is where the upside risk may lie with NZ services CPI up 4.8% y/y in Q4 from 4.3%. Also, the RBNZ’s core non-tradeables only fell 0.1pp to a still elevated 4.6% y/y and has proven sticky as it is only 1pp below its Q2 2023 peak. Insurance premiums have been a problem in both Australian & NZ.
- A moderation in Australia’s core inflation will be welcomed but given the services CPI has picked up 0.3pp since its Q1 2024 trough of 4.3% y/y and Q3 market services was steady at 4.1% y/y, another sticky read in Q4 would likely concern the RBA. Other OECD countries are finding it difficult to get services inflation significantly below 4%.
- Australia’s goods inflation has been running above NZ’s. In Q3 it was 1.4% y/y compared with 0.7% y/y. NZ’s moderated 0.1pp and core tradeables 0.2pp in Q4 and so there could be further easing in Australia too.
Australia vs NZ services CPI y/y%
AUSTRALIA: Broad-Based Employment Growth In 2024
There has been some concern that the resilience of Australia’s labour market has been driven by the non-market economy, but Q4 was fairly broad-based with 11 of the 19 major sectors posting job gains accounting for 75% of total employment. This shows that the private sector is creating a significant number of new jobs. The continued lack of spare capacity in the labour market could keep the RBA on hold.
- We estimate market sector employment by excluding public administration & safety, education & training and healthcare & social assistance from the total. This measure rose 0.8% q/q in Q4 to be up 2% y/y with 81.6k new jobs created in the quarter to November and 192.2k in the 12 months to November 2024 – a solid result.
- Our proxy for non-market employment also rose 0.8% q/q in Q4 but its growth outperformed the market sector, as it has done since H2 2021, rising 3.3% y/y. As it accounts for around 30% of total employment, the number of new jobs in the 12 months to November 2024 was lower than the private sector at 143.8k but was down from 290.6k the previous year.
- The arts & recreation sector shed jobs in three of the four quarters in 2024 to be down 8.8% y/y and the worst performing sector. Other underperformers in 2024 included manufacturing and wholesale trade.
- Real estate, electricity & gas and accommodation & food services saw strong growth in 2024 with the first two sectors at double digit rates.
Australia employed y/y%
Source: MNI - Market News/ABS
AUSTRALIA: SEEK Data Suggests Wage Inflation Contained
SEEK advertised salary (ASI) growth moderated in Q4 rising 0.7% q/q and 3.6% y/y after +1% q/q and 4.0% y/y in Q3. It is signalling that WPI wage inflation could fall further in Q4 when it is released on February 19, the day after the RBA meeting. Annual growth remains above the series average from 2017 of 2.9% y/y but has moderated significantly from the September 2023 4.9% y/y peak, in line with the RBA’s view that “wage pressures have eased more than expected”.
- In November the RBA forecast the WPI to rise 3.4% y/y in Q4 down from Q3’s 3.5%. December SEEK data showed lower labour demand and solid labour supply, which should keep wage inflation contained. SEEK notes though that there are “still plenty of job opportunities available”.
Australia wages ex bonuses y/y%
- The December SEEK ASI rose 0.3% m/m after two straight quarters at +0.2%. It was up 3.6% y/y after 3.5% in November and 3.8% in September. With some labour market indicators tightening over H2 2024, such as underemployment, and some firms still reporting difficulties in finding skilled labour, SEEK said it is not surprising that December offered salaries ticked up.
- Vacancies continue to normalise though with SEEK job ads falling 3% m/m, the third consecutive drop, to be down 12.2% y/y in December and -5.1% q/q in Q4. The drop was broad-based across all states and only 4 sectors out of 28 increased. The December fall was due to education, hospitality and government. The index remains above the series average though.
- The applicant-per-job ratio fell 0.1% m/m in November but is still 33% higher than a year ago, signalling a significant improvement in labour supply.
Australia SEEK new job ads index 2013=100
Source: MNI - Market News/SEEK
BONDS: NZGBS: Closed At Session Bests After Paring Early Weakness
NZGBs closed at session bests, little changed on the day across benchmarks.
- Outside of the previously outlined Five-Month Budget Deficit and Net Migration, there hasn't been much by way of domestic drivers to flag.
- Today’s NZGB supply saw strong demand metrics, with cover ratios ranging between 2.94x to 3.93x.
- Invest NZ will streamline its process and provide tailored support to foreign investors, Prime Minister Christopher Luxon in his State of the Nation address in Auckland.
- Swap rates closed flat to 1bp higher.
- RBNZ dated OIS pricing is flat to 2bps firmer across meetings today but remains flat to 3bps softer than yesterday’s pre-Q4 CPI levels.
- BNZ believes that the data won’t change the central bank’s view as it also didn’t alter its own view of 50bp of easing in February. It sees a greater chance of 25bp than 75bp. BNZ also believes that the pace of easing will moderate to 25bp from April as inflation surprises to the upside.
- Tomorrow, the local calendar is empty, with the next release being Filled Jobs data on Tuesday.
STIR: RBNZ Dated OIS Marginally Softer Than Pre-Q4 CPI Levels
RBNZ dated OIS pricing is little changed today but remains flat to 3bps softer than yesterday’s pre-Q4 CPI levels.
- The RBNZ’s sector factor model estimate of Q4 core inflation eased 0.2pp to 3.1% y/y, close to the top of the 1-3% target band. Q3 was revised down 0.1pp to 3.3%.
- Given that headline was impacted by volatile components such as airfares, the move lower in underlying inflation is good news and another 50bp rate cut in February remains the base case.
- But underlying non-tradeables inflation is proving sticky and will continue to be watched closely.
- 48bps of easing is priced for February, with a cumulative 111bps by November 2025.
Figure 1: RBNZ Dated OIS Today vs. Pre-CPI (%)
Source: MNI – Market News / Bloomberg
ASIA STOCKS: China & Hong Kong Equities Giving Back Earlier Gains
Chinese and Hong Kong markets opened higher today, driven by optimism over new measures to stabilize the stock market, however those gains are quickly being erased now with the CSI 300 Index up 0.90% now after earlier being up 1.50%, while China Enterprise Index up just 0.35% after earlier being up 1.6%. The gains come after Beijing announced initiatives such as boosting pension fund investments in listed companies and requiring mutual funds to increase onshore stock holdings by 10% annually for three years.
- China’s securities regulator announced a plan to guide more insurance funds into equities and expand the scale of equity funds to boost the stock market. The initiative aims to attract medium- and long-term capital by encouraging large state-owned insurers to increase A-share investments and raising the equity proportion in the National Social Security Fund and corporate annuities. Regulators will also enhance the investment ecosystem by promoting share buybacks and allowing multiple dividend distributions annually.
- China's property de-stocking initiative has gained traction, with December 2024 seeing slight price recoveries in first- and second-tier cities due to favorable policies, active second-hand home markets, and strong land auction results. Analysts emphasize balancing inventory reduction with optimizing new supply, such as repurposing old properties, to ensure market stability. Property benchmarks are under-performing today with Mainland Property Index -0.30%, HS Property Index -0.50%, while the BBG China Property Gauge is +0.10%
- Despite this optimism, concerns persist over China's sluggish economic recovery, the ongoing property slump, and potential tariffs from the U.S. Investors are closely monitoring consumption-related stocks ahead of the Lunar New Year holidays, with hopes that increased spending will support sectors like airlines, hospitality, and entertainment.
ASIA STOCKS: Equities Mostly Higher, Further China Support, BoJ Tomorrow
Asian stocks advanced for the fourth consecutive day, driven by gains in China as government measures to encourage long-term institutional investments supported sentiment. The MSCI Asia Pacific Index is 0.2% higher, marking its longest winning streak since December. Chinese equities outperformed, with the CSI 300 Index rising 0.6% and Hong Kong's Hang Seng China Enterprises Index gaining 0.5%. Easing US-China tensions and optimism around AI investments further lifted market sentiment.
- Japan’s Topix and Nikkei indices rose 0.5% and 0.7%, respectively, with Mitsubishi Heavy Industries gaining on AI-related demand expectations.
- In contrast, South Korea’s Kospi fell 0.6%, dragged by a 4.7% drop in SK Hynix due to underwhelming results, Australia’s ASX 200 Index also fell 0.6%, while New Zealand’s NZX 50 rose 0.2%.
- There was very little to note from the Trump interview on Fox earlier today, the 2nd part of the interview will air tomorrow at the same time which is likely to be more focused on Foreign Policy.
- US equity futures have trading in a narrow range during the Asian session today, giving back just a bit of the overnight gains. The NASDAQ is -0.20%, although was up 1.3% overnight, while S&P 500 Eminis are trading -0.10%.
- Investors are closely monitoring China’s consumer sector ahead of the Lunar New Year and waiting for the Bank of Japan’s rate decision on Friday. Meanwhile, global markets remained calm, with the 10-year US Treasury yield and Bloomberg Dollar Index showing little movement
ASIA STOCKS: Asian Equities See Inflows As Global Tech Stocks Rally
India continues to see heavy outflows, with over $6b leaving the market this year alone.
- South Korea: Saw inflows of +$257m yesterday, contributing to a 5-day total of +$125m. YTD flows are positive at +$41m. The 5-day average is +$25m, better than the 20-day average of +$3m, but worse than the 100-day average of -$153m.
- Taiwan: Recorded inflows of +$537m yesterday, leading to a 5-day total of +$2.26b. YTD flows are negative at -$1.26b. The 5-day average is +$453m, significantly better than the 20-day average of -$71m and the 100-day average of -$111m.
- India: Registered outflows of -$731m Tuesday, resulting in a 5-day total of -$2.59b. YTD flows are deeply negative at -$6.11b. The 5-day average is -$518m, worse than the 20-day average of -$364m and the 100-day average of -$94m.
- Indonesia: Saw inflows of +$18m yesterday, bringing the 5-day total to +$19m. YTD flows are negative at -$189m. The 5-day average is +$4m, better than the 20-day average of -$9m and slightly better than the 100-day average of +$1m.
- Thailand: Recorded inflows of +$50m yesterday, contributing to a 5-day total of -$4m. YTD flows are negative at -$154m. The 5-day average is -$1m, slightly better than the 20-day and 100-day averages, both at -$9m.
- Malaysia: Registered outflows of -$16m yesterday, leading to a 5-day total of -$147m. YTD flows are negative at -$481m. The 5-day average is -$29m, worse than the 20-day average of -$24m and the 100-day average of -$20m.
- Philippines: Saw outflows of -$7m yesterday, bringing the 5-day total to -$32m. YTD flows are negative at -$93m. The 5-day average is -$6m, in line with the 20-day average and slightly worse than the 100-day average of -$2m.
Table 1: EM Asia Equity Flows
FOREX: FX Trends Little Changed, Markets Awaiting Tariff News
Aggregate G10 FX moves have been negligible in the first part of Thursday trade. The USD BBDXY index sits unchanged in latest dealings, holding just under 1304.
- There was focus on a Fox News interview with President Trump, but this was largely focused on domestic issues. Trump defended TikTok during the interview, but broader sentiment didn't shift. part 2 of the interviews late US time on Thursday (so Friday time for Asia Pac markets), where foreign policy and China relations are expected to be in greater focus. For FX markets the tariff issue remains a central watch point.
- US equity futures sit modestly lower, but this follows recent strong cash gains. Most regional Asia Pac markets are higher (except for South Korea). China markets have recovered as further supports were unveiled by policy makers, but we sit off best levels. US yields are down a touch, but losses are not much beyond 1bps at this stage.
- USD/JPY is holding close to 156.55/60 in latest dealings, little changed for the session. Earlier lows were at 156.29. Export growth was slightly better than forecast but still sub other NEA economies. The trade position also improved.
- AUD and NZD are little changed. AUD/USD last 0.6275, NZD/USD around 0.5665/70.
- Looking ahead, we get French manufacturing sentiment, along with EU consumer confidence. Canada retail sales and US initial jobless claims are also out.
Gold Steadies, Watching Tariff Headlines.
- The ever-evolving story of the new US President’s plans for tariffs has given gold a boost, enjoying its safe-haven status amid the uncertainty.
- Having initially indicated that tariffs were not on the immediate agenda for China, Trump performed an about face and to add to the impending tariffs for Mexico and Canada, China and the European Union are now in his sights.
- Tariffs can be inflationary and when paired with the potential tax cuts he has indicated, this has the potential to abruptly alter the course for Fed policy this year.
- Gold hit new highs overnight reaching US$2,763.48 before backing off to open in Asia at $2,756.17 before heading marginally lower to $2,753.04.
- The driving force behind gold’s advance in 2024 was the potential for interest rate cuts whereas going forward this may be overtaken by safe-haven status.
OIL: Crude Continues Trending Lower To Be Down Almost 3% This Week
Oil has continued to trend lower during APAC trading today as the market worries about the impact a trade war would have on demand. There is also likely to be an increase in US output. Brent is down 0.3% to $78.73/bbl, close to the intraday low, and WTI 0.4% lower at $75.17/bbl just above support at $75.05 (Wednesday’s low). The USD index is flat.
- The first part of US President Trump’s Fox interview focused on domestic issues with the second part due to air later today to be about foreign policy.
- Tightened sanctions on Russian crude has increased its shipping costs and boosted demand for oil from other suppliers especially Middle Eastern, thus pushing up prices from that region. As a result, some Asian refineries are looking to reduce output due to narrower margins.
- EIA US inventory data print later. Bloomberg reported earlier that there was a US crude inventory build of 1mn barrels last week, according to people familiar with the API data. Products also continued to rise with gasoline up 3.2mn and distillate 1.9mn. There could be a number of weeks of higher inventories as both Canadian producers and US refiners sharply front load supplies ahead of threatened 25% tariffs from February 1.
- Later US jobless claims, January Kansas Fed manufacturing, Canadian November retail sales and preliminary January euro area consumer confidence print.
SOUTH KOREA: GDP Disappoints Paving Way for February Rate Cut.
- Korea’s fourth quarter GDP YoY print of +1.2% was below expectations of +1.4% and a contraction from Q3 result of +1.5% delivering an annualized return for 2024 of 2.0%.
- The original estimate for 2024 GDP expansion was +2.1%.
- The month on month figure of +0.1% points to the general malaise in the Korean economy (as highlighted by today’s manufacturing survey release).
- 4Q manufacturing MoM +0.1%, services +0.3%.
- The BOK unexpectedly kept rates on hold at their recent meeting, however in the accompanying press release were very clear that they are in a rate cutting cycle.
- The Korean bond market has priced in 15bps of cuts priced in on a 3 month time horizon and 49bps over the next year.
- The BOK next meets on February 25.
SINGAPORE: MNI MAS Preview - Jan 2025: On Hold But A Close Call
- The rough sell-side consensus is for an MAS easing tomorrow, mostly likely via a reduced pace of SGD NEER appreciation. The sharp loss of y/y inflation momentum warrants such a shift.
- However, the firmer growth backdrop in the second half of 2024, coupled with 2025 uncertainties suggests the central bank doesn't have to ease at this meeting, although we accept this is a close call.
- Markets have moved to price in greater easing risks with the SGD NEER comfortably away from the top end of the policy band.
- See the full preview here:
THAILAND: 2024 Customs Trade Deficit Widens
Thailand’s December customs trade deficit narrowed significantly more than expected printing at $11mn following $224mn. Export growth picked up to 8.7% y/y from 8.2% and imports to 14.9% from 0.9%. When smoothed for monthly volatility both are running at 10.5% y/y 3-month moving average.
- The 2024 trade deficit widened to $6.3bn from $3.4bn the previous year. While export growth improved it underperformed imports, signalling reasonable domestic demand in an economy that has been underperforming ASEAN.
- USDTHB has trended higher during today’s APAC trading and took a step up following the trade data. The pair is up 0.4% to 33.95, off the intraday high of 33.99, after trending lower from mid-January when it peaked at 34.83. The JP Morgan THB NEER is 1.8% higher since January 14.
Thailand customs basis exports vs imports y/y% 3-mth ma
CHINA: Country Wrap: China To Attract Long-term Funds For Stock Market
- China will steadily increase the proportion of A-share investment by medium-and long-term funds by setting an investment ratio and extending the assessment period, Wu Qing, chairman of the China Securities Regulatory Commission told reporters on Thursday. (source: MNI – Market News)
- US firms in China are less confident in the country's market growth and more pessimistic on U.S.-China relations this year, an American Chamber of Commerce in China survey showed on Thursday. In total, 68% of firms expected market growth in 2025, down from 76% in last year’s poll, while 27% of companies held pessimistic views on China-U.S. relations, up from 17% last year. . (source: MNI – Market News)
- The news was good for equities with all major bourses up. Hang Seng +0.31%, CSI 300 +0.89%, SHANGHAI +1.17%, SHENZHEN +0.99%.
- CNY: Yuan Reference Rate at 7.1708 Per USD; Estimate 7.2845
- Bonds: a modest softening in CGB 10YR at 1.669% (+0.5bp).
ASIA FX: USD/CNH Steady, No lasting Benefit From Firmer Equities
FX trends in North East Asia have been steady, much like the G10 space. USD/CNH saw a brief dip sub 7.2800, but we were supported. The pair last near 7.2825/30, little changed for the session.
- There was a host of earlier China headlines, largely related to supporting longer term trends of the China equity market, with more insurance funds to be guided into the market. The CSI 300 is up around 0.60%, but off earlier highs. This provided some support for CNH, but follow through was limited. Market focus also rested on the Trump interview with Fox News, but little was mentioned on trade/tariff issues (Trump did defend TikTok during the interview).
- Spot USD/KRW is currently tracking near 1436/37, similar levels to this time yesterday. Earlier Q4 GDP data was weaker than forecast, but didn't impact won sentiment negatively. local equities are down, after SK Hynix results didn't meet lofty expectations. We have seen -$473mn in equity outflows so far today.
- South Korea also issued its first won bond in 21 year, aimed aiding won defence. BBG noted : "Officials sold an initial 800-billion-won tranche of one-year securities on Thursday to top up the country’s foreign exchange stabilization fund, which authorities use to fund interventions to quash volatility in the won."
- USD/TWD is holding in the 32.75/80 region, little changed for the session. Its local equity bourse is outperforming the Kospi, but this isn't translating into TWD outperformance at this stage.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 23/01/2025 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 23/01/2025 | 0900/1000 | *** |  NO | Norges Bank Rate Decision |
| 23/01/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 23/01/2025 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 23/01/2025 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 23/01/2025 | 1330/0830 | ** |  CA | Retail Trade |
| 23/01/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 23/01/2025 | 1330/0830 | ** | CA | Retail Trade |
| 23/01/2025 | 1500/1600 | ** |  EU | Consumer Confidence Indicator (p) |
| 23/01/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 23/01/2025 | 1600/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 23/01/2025 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 23/01/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 23/01/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 23/01/2025 | 1800/1300 | ** | US | US Treasury Auction Result for TIPS 10 Year Note |
| 24/01/2025 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 24/01/2025 | 2330/0830 | *** |  JP | CPI |
| 24/01/2025 | 0001/0001 | ** | GB | Gfk Monthly Consumer Confidence |
| 24/01/2025 | 0030/0930 | ** | JP | Jibun Bank Flash Japan PMI |
| 24/01/2025 | 0300/1200 | *** | JP | BOJ Policy Rate Announcement |
| 24/01/2025 | 0700/0800 | ** |  SE | PPI |
| 24/01/2025 | 0700/0800 | ** | SE | Unemployment |
| 24/01/2025 | 0800/0900 | ** |  ES | PPI |
| 24/01/2025 | 0815/0915 | ** | FR | S&P Global Services PMI (p) |
| 24/01/2025 | 0815/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 24/01/2025 | 0830/0930 | ** |  DE | S&P Global Services PMI (p) |
| 24/01/2025 | 0830/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 24/01/2025 | 0900/1000 | ** | EU | S&P Global Services PMI (p) |
| 24/01/2025 | 0900/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 24/01/2025 | 0900/1000 | ** | EU | S&P Global Composite PMI (p) |
| 24/01/2025 | 0930/0930 | *** | GB | S&P Global Manufacturing PMI flash |
| 24/01/2025 | 0930/0930 | *** | GB | S&P Global Services PMI flash |
| 24/01/2025 | 0930/0930 | *** | GB | S&P Global Composite PMI flash |
| 24/01/2025 | 1000/1100 | EU | ECB's Lagarde in dialogue on the global economic outlook | |
| 24/01/2025 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 24/01/2025 | 1100/1200 | EU | ECB's Cipollone in panel discussion on the effects of CB digital currencies |