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USD/JPY dipped below 150.00, aided by the Tokyo CPI beat. JGB futures have clawed back to a small gain, +3 compared to settlement levels, after reversing the weakness seen following this morning’s local data drop.
US Tsys are around 2-3bps richer, re-opening after yesterday's Thanksgiving holiday. This was has weighed on broader USD sentiment, while a China equity bounce into month end is helping NZD and AUD.
Looking ahead, we have German retail sales, along with French consumer spending and CPI. In Canada GDP prints. US markets will return but with earlier closes.
US10YR Dec24 future opened at 110-23, and traded up at 110-25 where it settled in the afternoon.
Cash Bonds are 1.5bp- 2.5bp lower across the curve with intermediate maturities outperforming.
T4.25 ’26 at 4.217% (-1.5bp), T4.125 ’29 at 4.114% (-2.5bp) and T4.125% ’34 at 4.24% (-2.5bp).
There was little change in Fed Funds implied rates today, showing 16bp of cuts for Dec before a cumulative 22bp for Jan, 35bp for Mar and 52bp for June.
There is no key data out in the US tonight before starting the week with Manufacturing PMI and ISM data.
In the $-bloc, rate expectations through July 2025 softened over the past week, with the exception of New Zealand, which was largely unchanged. Canada softened by 17bps, while Australia and the US softened by 9bps and 8bps respectively.
The standout event was Wednesday’s RBNZ policy decision. The RBNZ cut rates 50bp to 4.25% as was widely expected by economists and the market as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it.
Nevertheless, RBNZ dated OIS pricing currently sits 4-12bps firmer than Wednesday’s pre-RBNZ decision levels.
The other event of note was Australia’s CPI print for October, which printed lower than expected at 2.1% but in line with September. However, the trimmed mean increased to 3.5% from 3.2%, the highest since July.
The RBA is currently focusing on underlying and services measures due to the temporary decline in headline inflation from government electricity rebates. It also prefers the quarterly CPI data with Q4 out on January 29.
Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.99%, -64bps; Canada (BoC): 2.92%, -84bps; Australia (RBA): 3.98%, -34bps; and New Zealand (RBNZ): 3.44, -81bps.
JGB futures have clawed back to a small gain, +3 compared to settlement levels, after reversing the weakness seen following this morning’s local data drop.
Of particular importance was the Tokyo CPI print, a leading indicator of the national average. Today core CPI registered a 2.2% increase in November, up from the 1.8% growth in October, while the core-core CPI rose 1.9% y/y in November, quicker than the 1.8% y/y previously.
For the upcoming December 18-19 meeting, ois pricing has increased by 10bps since late October, reflecting a 54% probability of a 25bp rate hike.
Cash US tsys have opened 2-3bps richer in today’s Asia-Pac session after yesterday’s holiday.
Cash JGBs have twist-flattened, pivoting at the 20-year, with yields 1.5bps higher to 2bps lower. The benchmark 2-year yield is 1.1bps higher at 0.593% after today’s supply.
The 2-year bond auction displayed mixed demand metrics today. The low price surpassed dealer expectations but the cover ratio declined and the auction tail lengthened versus the previous month. This came despite the 2-year yield standing at its highest level since 2008.
The swaps curve has bear-steepened, with rates flat to 3bps higher. Swap spreads are mostly wider.
On Monday, the local calendar will see Capital Spending and Jibun Bank PMI Mfg data.
Tokyo Nov CPI prints were above market expectations in terms of the headline measure. It rose 2.6%y/y, versus 2.2% forecast and 1.8% prior. The core measures were mixed but still showed positive y/y momentum. The ex fresh food measure was up 2.2%y/y (against a 2.0% forecast and 1.8% prior). The measure which also excludes energy prices was 1.9% y/y, same as forecast but still a tick up on Oct's 1.8% outcome. These metrics are in the chart below.
In terms of the detail, for m/m outcomes the headline rose 0.5%, same as Oct, the core ex fresh food was 0.5%, ex energy at 0.3%. Good prices rose 0.8%, while services prices were up 0.2%m/m after a 0.4% gain in Oct.
By sub-category the utilities component rose 3.6%m/m, as reduced energy subsidies impacted. Household goods were -0.5% and entertainment fell -0.1% after a 1.1% rise in Oct. This reduces the hawkishness of the print, albeit at the margins.
In y/y terms, utilities were up 6.5%y/y, from 2.4% prior. Fresh food rose to 10.6% from 2.1%. Still most other sub categories saw firmer y/y momentum compared to Oct.
Going forward, energy subsidies will be reintroduced in Jan, so this will impact headline CPI, albeit with a lag.
Overall, the data should firm the BoJ's confidence in sustainably achieving the 2% inflation target.
Other data showed a slight uptick in the unemployment rate to 2.5% for Oct, but this was forecast (prior was 2.4%). The job to applicant ratio did rise though to 1.25 from 1.24. The number of people employed rose +160k, versus a -90k dip in Sep.
Fig 1: Tokyo CPI Y/Y Momentum Improves, Led By Utilities, Core Measures Also Up
Other data has also crossed in terms of retail sales and industrial production for Oct. The retail sales print was slightly below expectations at 0.1%m/m, versus 0.4% forecast. The Sep dip was revised up slightly. The y/y print came in at 1.6%, also below expectations but above Sep's 0.7% outcome. The trend around retail sales has largely been sideways since March.
IP for Oct (preliminary) was also a little below forecast at 3.0%m/m, versus 4.0% forecast. In y/y terms we were at 1.6% also sub the 2.0% forecast. Again the trends are largely sideways, albeit with a slightly stronger impulse relative to consumer spending trends. METI expects Nov and Dec IP to fall though.
The authorities will again be pushing for strong wage gains in 2025 to aid the real household wage and spending outlook.
ACGBs (YM -3.0 & XM flat) are slightly weaker after dealing in narrow ranges in today’s Sydney session.
(DJ Glynn) RBA Governor, Michele Bullock, remarked this week that after a little over a year in the top job at the central bank, she was surprised to find that a lot of attention had been directed toward her, not just in terms of her policy decisions, but as a person. (See link)
Cash US tsys are 1-2bps richer in today’s Asia-Pac session.
Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at +12bps.
Swap rates are 1bp lower to 1bp higher with the 3s10s curve flatter.
The bills strip is cheaper with pricing -1 to -3.
RBA-dated OIS pricing is flat to 4bps softer. A 25bp rate cut is not fully priced until May.
On Monday, the local calendar is heavy with CoreLogic Home Values, S&P Global PMI Mfg, Melbourne Institute Inflation, ANZ-Indeed Job Advertisements, Building Approvals and Retail Sales alongside Q3 GDP partials: Inventories and Company Profits.
Next week, the AOFM plans to sell A$300mn of the 4.25% 21 June 2034 bond on Monday, A$700mn of the 3.25% 21 April 2029 bond on Wednesday and A$800mn of the 3.75% 21 April 2037 bond on Friday.
NZGBs showed a twist-flattening at the close, with yields 2bps higher to 2bps lower.
Stronger NZ consumer confidence looks to have weighed on short-end pricing, with the long-end taking its lead from US tsys, which are 1-2bps richer in today’s Asia-Pac session after yesterday’s holiday.
NZ-US 10-year yield differential closed 1bp wider at +14bps, while the NZ-AU differential was 1bp tighter at +2bp.
NZ housing and personal consumer lending rose 3.4% on an annual basis in October, following a 3.3% increase in September. Business lending went up 1.1%, lower than the 2% growth rate in September. Agriculture lending rose 1% following a 1.6% increase.
Swap rates closed flat to 2bps higher, with the 2s10s curve flatter.
RBNZ dated OIS pricing is flat to 7bps firmer on the day, October 2025 leading, but 4-12bps firmer than Wednesday’s pre-RBNZ decision levels. 42bps of easing is priced for February, with a cumulative 91bps by November 2025.
On Monday, the local calendar will see Building Permits data.
Yen gains have dominated the first part of Friday G10 FX trade, post the stronger Tokyo CPI print. The yen is up around 1% and USD/JPY is probing sub 150.00 levels. The rest of the G10 is up against the USD, albeit to varying degrees. NZD and AUD are seeing some outperformance (except against yen). The BBDXY USD index was last near 1276.3, off around 0.25% and fresh lows back to Nov 12.
USD/JPY last tracked near 150.00, slightly up from session lows (149.76). Note the Oct 21 low sits back at 149.09 as a potential downside target.
Futures volumes have spiked when we have tested sub 150.00. Also not surprisingly FX options activity has been dominated by USD/JPY. Strike levels have been set below spot and have been a mixture of USD calls and puts.
The Tokyo CPI comfortably beat market expectations and while this partly reflected higher utility costs, underlying momentum still looks positive across services and other sub-categories. This should give the BoJ increased confidence around sustainably achieving its 2% inflation target. Other data in terms of retail sales and IP were slightly below market expectations.
JGB yields are only modestly higher, but with US cash Tsy resuming and seeing modest yield losses, this has kept US-JP momentum to the downside. USD/JPY is catching up with such trends though, see the chart below.
NZD/USD is test resistance at its 20-day EMA, the pair last near 0.5910/15, around 0.40%. Earlier we had a strong bounce in ANZ consumer confidence for NZ.
AUD/USD is also firmer, but lagging NZD slightly, the pair last near 0.6515/20. Aiding sentiment for both currencies is the rebound in China/HK equities. Month end flows may be helping, while the MoF extending some tariff exemptions for the US, was another positive.
Looking ahead, we have German retail sales, along with French consumer spending and CPI. In Canada GDP prints. US markets will be on lighter hours due to Thanksgiving.
Fig 1: USD/JPY Catching Up With Weaker US-JP Yield Spreads
As month end approaches for markets, most of Asia is experiencing a weak finish with China the exception where all major indices are up on a combination of month end rebalancing, news that Beijing may be less willing to take a hard line on US trade tensions than first thought and expectations for tomorrow’s PMI release.
Notably headlines crossed earlier from BBG which quoted the MoF. They stated tariff waivers on some goods would be extended to Feb 28 next year (see this link).
Indonesia’s Jakarta composite is finishing the month with a whimper, down -1.10% to finish around 6% lower in a month where the Central Bank were on hold, 10-year government bond yields were significantly higher and the currency -0.55% weaker.
Malaysia’s FTSE Bursa KLCI index is slowly moving into month end, down -0.10% for the day and is on track to finish -0.35% down in a month where economic data was generally good, bond yields lower and the currency weaker by -1.4%.
South Korea’s KOSPI is the poster child for the equity market weakness today following the BOK’s surprise rate cut yesterday.The reality of the weakening growth dynamic in the country could not be offset by this morning’s stronger than expected y/y industrial production as the MoM figure was flat.The KOSPI is on track to finish -3.5% lower, the worst performance of its regional peers.
The daily volatility for China equities continues to be a key theme into month end, despite efforts made by authorities.The CSI 300 is leading the way today up +2% and on track to finish the month up +0.85%; the Hang Seng is telling a different story whilst +1% today, is on track to finish the month down -2.8%; Shanghai is up +1.5% today and on track to finish +1.4% for the month and Shenzhen is up +2.10%, looking to finish +1.00 for November.
In India, the NIFTY 50 has opened this morning very weak and in early trade is down -1.50%.Despite India’s growth profile remaining robust, recent days have seen some significant outflows across equities and bonds.The NIFTY 50 is on track to post a -1.15% decline.
Outflows continue into month end with South Korea experiencing the largest outflow on Thursday of US$411 to tally -$842m in the last three days, whilst Taiwan’s outflows continued with the last three days tally over $2.4bn as news of Trumps tariff plans emerge.
South Korea: Recorded outflows of -$411m yesterday, bringing the 5-day total to -$704m. YTD flows remain positive at +$4.570b. The 5-day average is -$141m, the 20-day average is -$129m and the 100-day average of -$124m.
Taiwan: Experienced outflows of -$162m yesterday, with total outflows of -$1.928bn over the past 5 days. YTD flows are negative at -$18,252m. The 5-day average is -$386m, the 20-day average of -$369m and the 100-day average of -$214m.
India: Saw outflows of -$124m as of Wednesday, with a total inflow of +$1.753bn over the previous 5 days. YTD inflows stand at +$2.478bn. The 5-day average is +$351m, the 20-day average of -$109m and the 100-day average of -$13m.
Indonesia: Posted outflows of -$53m yesterday, bringing the 5-day total to -$220m. YTD flows remain positive at +$1.586b. The 5-day average is -$44m, the 20-day average is -$48m the 100-day average of +$19m.
Thailand: Recorded outflows of -$25m yesterday, totaling -$90m over the past 5 days. YTD flows are negative at -$3.787b. The 5-day average is -$18m, the 20-day average of -$18m the 100-day average of -$5m.
Malaysia: Experienced outflows of -$162m yesterday, contributing to a 5-day outflow of -$384m. YTD flows stand at -$183m. The 5-day average is -$77m, the 20-day average of -$29m the 100-day average of -$1m.
Philippines: Saw outflows of -$9m yesterday, with net outflows of -$34m over the past 5 days. YTD flows are negative at -$264m. The 5-day average is -$7m, the 20-day average of -$17m the 100-day average of +$3m.
Oil markets were quiet given the holiday in the US with both WTI and Brent trading in tight ranges.
OPEC+ meeting has been delayed and is now set to be held on December 5.
It is expected that the meeting will confirm that any supply increases will be delayed for some time.
WTI opened yesterday at $68.76 trading down to a low of $68.27, before rebounding back to $69.30.It had opened this morning in Asian trading with very light volumes at $68.84, before trading up to $69.19.
WTI is set to finish the month -1.85% lower as tensions in the Middle East cool, US stockpiles rise and OPEC+ meet to decide on whether to increase output.
Brent opened yesterday at US$72.91, trading down for most of the morning session before a mid-afternoon bounce to $73.49 and opened this morning at $73.17, before rising to $73.38.
Brent is to finish the month +0.23% higher.
US crude inventories fell by 1.8m barrels last week, marking the first decline in three weeks.
Gold eked out gains yesterday following on from the US inflation data print.
The probability for a December rate cut improved somewhat as core personal consumption was in line with expectations.
Gold opened marginally stronger in Asian trading at $2,638.73, before climbing to $2,660.90.
For the month, Gold is set to finish 3.00% lower.
Uncertainty from the Middle East and Ukraine are never far away, underpinning the safe haven bid for Gold but as tensions appear to be cooling, the bid has lost some of its lustre.
Beijing may be less willing to take a hard line on US trade tensions than some had thought. (source:BBG)
PMI’s to Show Path to Economic Recovery Slow. (source: MNI – Market News)
Central Bank Drains Liquidity Ahead of Month End. (source: MNI - Market News)
The daily volatility for China equities continues to be a key theme into month end, despite efforts made by authorities. The CSI 300 is leading the way today up +2% and on track to finish the month up +0.85%; the Hang Seng is telling a different story whilst +1% today, is on track to finish the month down -2.8%; Shanghai is up +1.5% today and on track to finish +1.4% for the month and Shenzhen is up +2.10%, looking to finish +1.00 for November.
CNY: Yuan Reference Rate at 7.1877 Per USD; Estimate 7.2409
Bonds:China’s 10-year government bond is approaching the 2% mark at 2.04% and break through that level would be the first time and could predicate intervention from authorities.
Since being included in JPMorgan’s index in the mid part of this year India has enjoyed strong re-balancing inflows into their bond market from foreign investors.
However with USD strength presenting challenges for the Rupee, November is likely to see the first outflow since June.
Global investors via the Fully Accessible Route (“FAR”) are on track to have withdrawn INR77bn (US$900m) from data as of 28th.
Globally, investors have retreated to USD assets, with many major markets outside of the US experiencing outflows for stocks and bonds.
The has been driven by political uncertainty from the incoming new administration and the Federal Reserve now likely to be cutting rates at a much slower pace than first thought.
This has seen the INR under pressure and the RBI forced to use their FX reserves to defend it. a theme this is likely to continue into year end.
Despite the outflows India’s 10-year government bond is on track to finish lower in yield in the period since index inclusion.
South Korea's institutional investment in foreign securities grew for the fourth successive quarter in the July-September period due to stock market booms in major economies, central bank data showed Friday. (source:BBG)
South Korea’s industrial production surprised to the upside for October at +6.3% y/y, significantly above market expectations of +2.2% y/y. (source: MNI - Market News)
South Korea’s KOSPI is the poster child for the equity market weakness today following the BOK’s surprise rate cut yesterday. The reality of the weakening growth dynamic in the country could not be offset by this morning’s stronger than expected y/y industrial production as the MoM figure was flat. The KOSPI is on track to finish -3.5% lower, the worst performance of its regional peers.
The KRW finished the month in a whimper to complete a torrid month for the export reliant economy, down -0.85%
Given the growth downgrade yesterday by the BOK it was no surprise that that bonds rallied into month end down 2-6bps across the curve.KTB 10-year finishes the month at 2.754% down 35bps.
In North Asia FX, in Friday trade to date, USD/CNH sits down close to 0.20%. This is underperforming parts of the G10 complex, particularly the yen, which is up over 1%. The pair was last near 7.2345/50, while onshore spot was close by at 7.2315, up be around the same amount in yuan terms.
Onshore equities are noticeably higher, with month end flows potentially helped, along with anticipation around tomorrow's official PMI prints. The CSI 300 is up +2% at the lunchtime break. The other headline that caught attention was that China Ministry of Finance would extend some tariff exemptions on US products to end Feb next year (they were due to expire tomorrow). See this BBG link.
This would fit with China's playbook around trade tensions with the US in terms of not trying to escalate matters and waiting to see what the returning Trump administration delivers first.
USD/KRW spot has been very steady, last near 1394. We did get to 1397.45, before finding selling interest on broader USD softness. Still the won remains a notable underperformer. Local equities are off over 1.2% amid growth concerns after yesterday's surprise BoK rate cut. Today's Oct IP data didn't suggest any strong near term momentum.
The JPY/KRW cross is got close to 9.31 earlier (fresh highs since Sep), but sits back at 9.2900 in latest dealings. The firmer Tokyo CPI boosted yen. On this cross the RSI (14) is close to overbought territory, last near 67.55.
USD/TWD remains very steady, last in 32.50/55 range.
UP TODAY (TIMES GMT/LOCAL)
Date
GMT/Local
Impact
Country
Event
29/11/2024
0700/0800
**
DE
Retail Sales
29/11/2024
0700/0800
**
DE
Import/Export Prices
29/11/2024
0700/0800
**
SE
Retail Sales
29/11/2024
0700/0800
***
SE
GDP
29/11/2024
0745/0845
***
FR
HICP (p)
29/11/2024
0745/0845
**
FR
Consumer Spending
29/11/2024
0745/0845
***
FR
GDP (f)
29/11/2024
0745/0845
**
FR
PPI
29/11/2024
0800/0900
**
CH
KOF Economic Barometer
29/11/2024
0800/0900
***
CH
GDP
29/11/2024
0855/0955
**
DE
Unemployment
29/11/2024
0900/1000
**
EU
ECB Consumer Expectations Survey
29/11/2024
0930/0930
**
GB
BOE M4
29/11/2024
0930/0930
**
GB
BOE Lending to Individuals
29/11/2024
1000/1100
***
EU
HICP (p)
29/11/2024
1000/1100
***
IT
HICP (p)
29/11/2024
1030/1030
GB
Financial Policy Summary and Record and Financial Stability Report
29/11/2024
1130/1230
EU
ECB's de Guindos speaking at the "Encuentro de Economia" in Barcelona
29/11/2024
1330/0830
***
CA
GDP - Canadian Economic Accounts
29/11/2024
1330/0830
***
CA
Gross Domestic Product by Industry
29/11/2024
1330/0830
***
CA
CA GDP by Industry and GDP Canadian Economic Accounts Combined
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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)
USD/JPY dipped below 150.00, aided by the Tokyo CPI beat. JGB futures have clawed back to a small gain, +3 compared to settlement levels, after reversing the weakness seen following this morning’s local data drop.
US Tsys are around 2-3bps richer, re-opening after yesterday's Thanksgiving holiday. This was has weighed on broader USD sentiment, while a China equity bounce into month end is helping NZD and AUD.
Looking ahead, we have German retail sales, along with French consumer spending and CPI. In Canada GDP prints. US markets will return but with earlier closes.
US10YR Dec24 future opened at 110-23, and traded up at 110-25 where it settled in the afternoon.
Cash Bonds are 1.5bp- 2.5bp lower across the curve with intermediate maturities outperforming.
T4.25 ’26 at 4.217% (-1.5bp), T4.125 ’29 at 4.114% (-2.5bp) and T4.125% ’34 at 4.24% (-2.5bp).
There was little change in Fed Funds implied rates today, showing 16bp of cuts for Dec before a cumulative 22bp for Jan, 35bp for Mar and 52bp for June.
There is no key data out in the US tonight before starting the week with Manufacturing PMI and ISM data.
In the $-bloc, rate expectations through July 2025 softened over the past week, with the exception of New Zealand, which was largely unchanged. Canada softened by 17bps, while Australia and the US softened by 9bps and 8bps respectively.
The standout event was Wednesday’s RBNZ policy decision. The RBNZ cut rates 50bp to 4.25% as was widely expected by economists and the market as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it.
Nevertheless, RBNZ dated OIS pricing currently sits 4-12bps firmer than Wednesday’s pre-RBNZ decision levels.
The other event of note was Australia’s CPI print for October, which printed lower than expected at 2.1% but in line with September. However, the trimmed mean increased to 3.5% from 3.2%, the highest since July.
The RBA is currently focusing on underlying and services measures due to the temporary decline in headline inflation from government electricity rebates. It also prefers the quarterly CPI data with Q4 out on January 29.
Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.99%, -64bps; Canada (BoC): 2.92%, -84bps; Australia (RBA): 3.98%, -34bps; and New Zealand (RBNZ): 3.44, -81bps.
JGB futures have clawed back to a small gain, +3 compared to settlement levels, after reversing the weakness seen following this morning’s local data drop.
Of particular importance was the Tokyo CPI print, a leading indicator of the national average. Today core CPI registered a 2.2% increase in November, up from the 1.8% growth in October, while the core-core CPI rose 1.9% y/y in November, quicker than the 1.8% y/y previously.
For the upcoming December 18-19 meeting, ois pricing has increased by 10bps since late October, reflecting a 54% probability of a 25bp rate hike.
Cash US tsys have opened 2-3bps richer in today’s Asia-Pac session after yesterday’s holiday.
Cash JGBs have twist-flattened, pivoting at the 20-year, with yields 1.5bps higher to 2bps lower. The benchmark 2-year yield is 1.1bps higher at 0.593% after today’s supply.
The 2-year bond auction displayed mixed demand metrics today. The low price surpassed dealer expectations but the cover ratio declined and the auction tail lengthened versus the previous month. This came despite the 2-year yield standing at its highest level since 2008.
The swaps curve has bear-steepened, with rates flat to 3bps higher. Swap spreads are mostly wider.
On Monday, the local calendar will see Capital Spending and Jibun Bank PMI Mfg data.
Tokyo Nov CPI prints were above market expectations in terms of the headline measure. It rose 2.6%y/y, versus 2.2% forecast and 1.8% prior. The core measures were mixed but still showed positive y/y momentum. The ex fresh food measure was up 2.2%y/y (against a 2.0% forecast and 1.8% prior). The measure which also excludes energy prices was 1.9% y/y, same as forecast but still a tick up on Oct's 1.8% outcome. These metrics are in the chart below.
In terms of the detail, for m/m outcomes the headline rose 0.5%, same as Oct, the core ex fresh food was 0.5%, ex energy at 0.3%. Good prices rose 0.8%, while services prices were up 0.2%m/m after a 0.4% gain in Oct.
By sub-category the utilities component rose 3.6%m/m, as reduced energy subsidies impacted. Household goods were -0.5% and entertainment fell -0.1% after a 1.1% rise in Oct. This reduces the hawkishness of the print, albeit at the margins.
In y/y terms, utilities were up 6.5%y/y, from 2.4% prior. Fresh food rose to 10.6% from 2.1%. Still most other sub categories saw firmer y/y momentum compared to Oct.
Going forward, energy subsidies will be reintroduced in Jan, so this will impact headline CPI, albeit with a lag.
Overall, the data should firm the BoJ's confidence in sustainably achieving the 2% inflation target.
Other data showed a slight uptick in the unemployment rate to 2.5% for Oct, but this was forecast (prior was 2.4%). The job to applicant ratio did rise though to 1.25 from 1.24. The number of people employed rose +160k, versus a -90k dip in Sep.
Fig 1: Tokyo CPI Y/Y Momentum Improves, Led By Utilities, Core Measures Also Up
Other data has also crossed in terms of retail sales and industrial production for Oct. The retail sales print was slightly below expectations at 0.1%m/m, versus 0.4% forecast. The Sep dip was revised up slightly. The y/y print came in at 1.6%, also below expectations but above Sep's 0.7% outcome. The trend around retail sales has largely been sideways since March.
IP for Oct (preliminary) was also a little below forecast at 3.0%m/m, versus 4.0% forecast. In y/y terms we were at 1.6% also sub the 2.0% forecast. Again the trends are largely sideways, albeit with a slightly stronger impulse relative to consumer spending trends. METI expects Nov and Dec IP to fall though.
The authorities will again be pushing for strong wage gains in 2025 to aid the real household wage and spending outlook.
ACGBs (YM -3.0 & XM flat) are slightly weaker after dealing in narrow ranges in today’s Sydney session.
(DJ Glynn) RBA Governor, Michele Bullock, remarked this week that after a little over a year in the top job at the central bank, she was surprised to find that a lot of attention had been directed toward her, not just in terms of her policy decisions, but as a person. (See link)
Cash US tsys are 1-2bps richer in today’s Asia-Pac session.
Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at +12bps.
Swap rates are 1bp lower to 1bp higher with the 3s10s curve flatter.
The bills strip is cheaper with pricing -1 to -3.
RBA-dated OIS pricing is flat to 4bps softer. A 25bp rate cut is not fully priced until May.
On Monday, the local calendar is heavy with CoreLogic Home Values, S&P Global PMI Mfg, Melbourne Institute Inflation, ANZ-Indeed Job Advertisements, Building Approvals and Retail Sales alongside Q3 GDP partials: Inventories and Company Profits.
Next week, the AOFM plans to sell A$300mn of the 4.25% 21 June 2034 bond on Monday, A$700mn of the 3.25% 21 April 2029 bond on Wednesday and A$800mn of the 3.75% 21 April 2037 bond on Friday.
NZGBs showed a twist-flattening at the close, with yields 2bps higher to 2bps lower.
Stronger NZ consumer confidence looks to have weighed on short-end pricing, with the long-end taking its lead from US tsys, which are 1-2bps richer in today’s Asia-Pac session after yesterday’s holiday.
NZ-US 10-year yield differential closed 1bp wider at +14bps, while the NZ-AU differential was 1bp tighter at +2bp.
NZ housing and personal consumer lending rose 3.4% on an annual basis in October, following a 3.3% increase in September. Business lending went up 1.1%, lower than the 2% growth rate in September. Agriculture lending rose 1% following a 1.6% increase.
Swap rates closed flat to 2bps higher, with the 2s10s curve flatter.
RBNZ dated OIS pricing is flat to 7bps firmer on the day, October 2025 leading, but 4-12bps firmer than Wednesday’s pre-RBNZ decision levels. 42bps of easing is priced for February, with a cumulative 91bps by November 2025.
On Monday, the local calendar will see Building Permits data.
Yen gains have dominated the first part of Friday G10 FX trade, post the stronger Tokyo CPI print. The yen is up around 1% and USD/JPY is probing sub 150.00 levels. The rest of the G10 is up against the USD, albeit to varying degrees. NZD and AUD are seeing some outperformance (except against yen). The BBDXY USD index was last near 1276.3, off around 0.25% and fresh lows back to Nov 12.
USD/JPY last tracked near 150.00, slightly up from session lows (149.76). Note the Oct 21 low sits back at 149.09 as a potential downside target.
Futures volumes have spiked when we have tested sub 150.00. Also not surprisingly FX options activity has been dominated by USD/JPY. Strike levels have been set below spot and have been a mixture of USD calls and puts.
The Tokyo CPI comfortably beat market expectations and while this partly reflected higher utility costs, underlying momentum still looks positive across services and other sub-categories. This should give the BoJ increased confidence around sustainably achieving its 2% inflation target. Other data in terms of retail sales and IP were slightly below market expectations.
JGB yields are only modestly higher, but with US cash Tsy resuming and seeing modest yield losses, this has kept US-JP momentum to the downside. USD/JPY is catching up with such trends though, see the chart below.
NZD/USD is test resistance at its 20-day EMA, the pair last near 0.5910/15, around 0.40%. Earlier we had a strong bounce in ANZ consumer confidence for NZ.
AUD/USD is also firmer, but lagging NZD slightly, the pair last near 0.6515/20. Aiding sentiment for both currencies is the rebound in China/HK equities. Month end flows may be helping, while the MoF extending some tariff exemptions for the US, was another positive.
Looking ahead, we have German retail sales, along with French consumer spending and CPI. In Canada GDP prints. US markets will be on lighter hours due to Thanksgiving.
Fig 1: USD/JPY Catching Up With Weaker US-JP Yield Spreads
As month end approaches for markets, most of Asia is experiencing a weak finish with China the exception where all major indices are up on a combination of month end rebalancing, news that Beijing may be less willing to take a hard line on US trade tensions than first thought and expectations for tomorrow’s PMI release.
Notably headlines crossed earlier from BBG which quoted the MoF. They stated tariff waivers on some goods would be extended to Feb 28 next year (see this link).
Indonesia’s Jakarta composite is finishing the month with a whimper, down -1.10% to finish around 6% lower in a month where the Central Bank were on hold, 10-year government bond yields were significantly higher and the currency -0.55% weaker.
Malaysia’s FTSE Bursa KLCI index is slowly moving into month end, down -0.10% for the day and is on track to finish -0.35% down in a month where economic data was generally good, bond yields lower and the currency weaker by -1.4%.
South Korea’s KOSPI is the poster child for the equity market weakness today following the BOK’s surprise rate cut yesterday.The reality of the weakening growth dynamic in the country could not be offset by this morning’s stronger than expected y/y industrial production as the MoM figure was flat.The KOSPI is on track to finish -3.5% lower, the worst performance of its regional peers.
The daily volatility for China equities continues to be a key theme into month end, despite efforts made by authorities.The CSI 300 is leading the way today up +2% and on track to finish the month up +0.85%; the Hang Seng is telling a different story whilst +1% today, is on track to finish the month down -2.8%; Shanghai is up +1.5% today and on track to finish +1.4% for the month and Shenzhen is up +2.10%, looking to finish +1.00 for November.
In India, the NIFTY 50 has opened this morning very weak and in early trade is down -1.50%.Despite India’s growth profile remaining robust, recent days have seen some significant outflows across equities and bonds.The NIFTY 50 is on track to post a -1.15% decline.
Outflows continue into month end with South Korea experiencing the largest outflow on Thursday of US$411 to tally -$842m in the last three days, whilst Taiwan’s outflows continued with the last three days tally over $2.4bn as news of Trumps tariff plans emerge.
South Korea: Recorded outflows of -$411m yesterday, bringing the 5-day total to -$704m. YTD flows remain positive at +$4.570b. The 5-day average is -$141m, the 20-day average is -$129m and the 100-day average of -$124m.
Taiwan: Experienced outflows of -$162m yesterday, with total outflows of -$1.928bn over the past 5 days. YTD flows are negative at -$18,252m. The 5-day average is -$386m, the 20-day average of -$369m and the 100-day average of -$214m.
India: Saw outflows of -$124m as of Wednesday, with a total inflow of +$1.753bn over the previous 5 days. YTD inflows stand at +$2.478bn. The 5-day average is +$351m, the 20-day average of -$109m and the 100-day average of -$13m.
Indonesia: Posted outflows of -$53m yesterday, bringing the 5-day total to -$220m. YTD flows remain positive at +$1.586b. The 5-day average is -$44m, the 20-day average is -$48m the 100-day average of +$19m.
Thailand: Recorded outflows of -$25m yesterday, totaling -$90m over the past 5 days. YTD flows are negative at -$3.787b. The 5-day average is -$18m, the 20-day average of -$18m the 100-day average of -$5m.
Malaysia: Experienced outflows of -$162m yesterday, contributing to a 5-day outflow of -$384m. YTD flows stand at -$183m. The 5-day average is -$77m, the 20-day average of -$29m the 100-day average of -$1m.
Philippines: Saw outflows of -$9m yesterday, with net outflows of -$34m over the past 5 days. YTD flows are negative at -$264m. The 5-day average is -$7m, the 20-day average of -$17m the 100-day average of +$3m.
Oil markets were quiet given the holiday in the US with both WTI and Brent trading in tight ranges.
OPEC+ meeting has been delayed and is now set to be held on December 5.
It is expected that the meeting will confirm that any supply increases will be delayed for some time.
WTI opened yesterday at $68.76 trading down to a low of $68.27, before rebounding back to $69.30.It had opened this morning in Asian trading with very light volumes at $68.84, before trading up to $69.19.
WTI is set to finish the month -1.85% lower as tensions in the Middle East cool, US stockpiles rise and OPEC+ meet to decide on whether to increase output.
Brent opened yesterday at US$72.91, trading down for most of the morning session before a mid-afternoon bounce to $73.49 and opened this morning at $73.17, before rising to $73.38.
Brent is to finish the month +0.23% higher.
US crude inventories fell by 1.8m barrels last week, marking the first decline in three weeks.
Gold eked out gains yesterday following on from the US inflation data print.
The probability for a December rate cut improved somewhat as core personal consumption was in line with expectations.
Gold opened marginally stronger in Asian trading at $2,638.73, before climbing to $2,660.90.
For the month, Gold is set to finish 3.00% lower.
Uncertainty from the Middle East and Ukraine are never far away, underpinning the safe haven bid for Gold but as tensions appear to be cooling, the bid has lost some of its lustre.
Beijing may be less willing to take a hard line on US trade tensions than some had thought. (source:BBG)
PMI’s to Show Path to Economic Recovery Slow. (source: MNI – Market News)
Central Bank Drains Liquidity Ahead of Month End. (source: MNI - Market News)
The daily volatility for China equities continues to be a key theme into month end, despite efforts made by authorities. The CSI 300 is leading the way today up +2% and on track to finish the month up +0.85%; the Hang Seng is telling a different story whilst +1% today, is on track to finish the month down -2.8%; Shanghai is up +1.5% today and on track to finish +1.4% for the month and Shenzhen is up +2.10%, looking to finish +1.00 for November.
CNY: Yuan Reference Rate at 7.1877 Per USD; Estimate 7.2409
Bonds:China’s 10-year government bond is approaching the 2% mark at 2.04% and break through that level would be the first time and could predicate intervention from authorities.
Since being included in JPMorgan’s index in the mid part of this year India has enjoyed strong re-balancing inflows into their bond market from foreign investors.
However with USD strength presenting challenges for the Rupee, November is likely to see the first outflow since June.
Global investors via the Fully Accessible Route (“FAR”) are on track to have withdrawn INR77bn (US$900m) from data as of 28th.
Globally, investors have retreated to USD assets, with many major markets outside of the US experiencing outflows for stocks and bonds.
The has been driven by political uncertainty from the incoming new administration and the Federal Reserve now likely to be cutting rates at a much slower pace than first thought.
This has seen the INR under pressure and the RBI forced to use their FX reserves to defend it. a theme this is likely to continue into year end.
Despite the outflows India’s 10-year government bond is on track to finish lower in yield in the period since index inclusion.
South Korea's institutional investment in foreign securities grew for the fourth successive quarter in the July-September period due to stock market booms in major economies, central bank data showed Friday. (source:BBG)
South Korea’s industrial production surprised to the upside for October at +6.3% y/y, significantly above market expectations of +2.2% y/y. (source: MNI - Market News)
South Korea’s KOSPI is the poster child for the equity market weakness today following the BOK’s surprise rate cut yesterday. The reality of the weakening growth dynamic in the country could not be offset by this morning’s stronger than expected y/y industrial production as the MoM figure was flat. The KOSPI is on track to finish -3.5% lower, the worst performance of its regional peers.
The KRW finished the month in a whimper to complete a torrid month for the export reliant economy, down -0.85%
Given the growth downgrade yesterday by the BOK it was no surprise that that bonds rallied into month end down 2-6bps across the curve.KTB 10-year finishes the month at 2.754% down 35bps.
In North Asia FX, in Friday trade to date, USD/CNH sits down close to 0.20%. This is underperforming parts of the G10 complex, particularly the yen, which is up over 1%. The pair was last near 7.2345/50, while onshore spot was close by at 7.2315, up be around the same amount in yuan terms.
Onshore equities are noticeably higher, with month end flows potentially helped, along with anticipation around tomorrow's official PMI prints. The CSI 300 is up +2% at the lunchtime break. The other headline that caught attention was that China Ministry of Finance would extend some tariff exemptions on US products to end Feb next year (they were due to expire tomorrow). See this BBG link.
This would fit with China's playbook around trade tensions with the US in terms of not trying to escalate matters and waiting to see what the returning Trump administration delivers first.
USD/KRW spot has been very steady, last near 1394. We did get to 1397.45, before finding selling interest on broader USD softness. Still the won remains a notable underperformer. Local equities are off over 1.2% amid growth concerns after yesterday's surprise BoK rate cut. Today's Oct IP data didn't suggest any strong near term momentum.
The JPY/KRW cross is got close to 9.31 earlier (fresh highs since Sep), but sits back at 9.2900 in latest dealings. The firmer Tokyo CPI boosted yen. On this cross the RSI (14) is close to overbought territory, last near 67.55.
USD/TWD remains very steady, last in 32.50/55 range.
UP TODAY (TIMES GMT/LOCAL)
Date
GMT/Local
Impact
Country
Event
29/11/2024
0700/0800
**
DE
Retail Sales
29/11/2024
0700/0800
**
DE
Import/Export Prices
29/11/2024
0700/0800
**
SE
Retail Sales
29/11/2024
0700/0800
***
SE
GDP
29/11/2024
0745/0845
***
FR
HICP (p)
29/11/2024
0745/0845
**
FR
Consumer Spending
29/11/2024
0745/0845
***
FR
GDP (f)
29/11/2024
0745/0845
**
FR
PPI
29/11/2024
0800/0900
**
CH
KOF Economic Barometer
29/11/2024
0800/0900
***
CH
GDP
29/11/2024
0855/0955
**
DE
Unemployment
29/11/2024
0900/1000
**
EU
ECB Consumer Expectations Survey
29/11/2024
0930/0930
**
GB
BOE M4
29/11/2024
0930/0930
**
GB
BOE Lending to Individuals
29/11/2024
1000/1100
***
EU
HICP (p)
29/11/2024
1000/1100
***
IT
HICP (p)
29/11/2024
1030/1030
GB
Financial Policy Summary and Record and Financial Stability Report
29/11/2024
1130/1230
EU
ECB's de Guindos speaking at the "Encuentro de Economia" in Barcelona
29/11/2024
1330/0830
***
CA
GDP - Canadian Economic Accounts
29/11/2024
1330/0830
***
CA
Gross Domestic Product by Industry
29/11/2024
1330/0830
***
CA
CA GDP by Industry and GDP Canadian Economic Accounts Combined
29/11/2024
1330/0830
**
US
WASDE Weekly Import/Export
29/11/2024
1330/0830
***
CA
Gross Domestic Product by Industry
29/11/2024
1600/1100
CA
Finance Dept monthly Fiscal Monitor (expected)
30/11/2024
0130/0930
***
CN
CFLP Manufacturing PMI
30/11/2024
0130/0930
**
CN
CFLP Non-Manufacturing PMI
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DE
SE
FR
CH
EU
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IT
CA
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