Source: MNI - Market News/Bloomberg
UK
ENERGY (BBG): “The UK’s grid operator issued a power-market warning saying there is an insufficient buffer between predicted supply and demand on Wednesday as wind output falls at the same time as temperatures plunge.”
EU
DEFENCE (BBG): “President-elect Donald Trump said NATO nations should spend the equivalent of 5% of their economic output on defense, escalating his demands on European allies to more than double the current target.”
DEFENCE (POLITICO): “French Armed Forces Minister Sébastien Lecornu on Tuesday said that France "won't budge" on ensuring a European Union effort to boost local defense companies favors European arms producers. Otherwise, he added, it might be better to simply scrap the European Defence Industry Programme — which aims to spend €1.5 billion to foster the bloc's weapons-makers.”
NATO (POLITICO): “NATO will send around 10 ships to guard important underwater infrastructure in the Baltic Sea by the end of the week, Finnish newspaper Yle reported on Tuesday.”
POLITICS (BBC): “Although some of Europe's leaders, notably Italy's Giorgia Meloni, have found favour with Musk, others are finding it hard to ignore him, as he ventures into their domestic politics ahead of a new role an adviser to the incoming US President Donald Trump. In the space of 24 hours, four European governments have objected to Musk's posts.”
BELGIUM (POLITICO): “Flemish nationalist Bart De Wever is under pressure to wrap up Belgian government talks by the end of January — or the country could be set for new elections. Belgian King Philippe on Tuesday once again extended De Wever’s job of forming a Belgian government after last June’s elections, in what is set to be the final extension.”
HUNGARY (POLITICO): “The United States Treasury Department has sanctioned the head of Hungarian Prime Minister Viktor Orbán’s Cabinet office, Antal Rogán, for his alleged involvement in corruption.”
US.
FED (MNI BRIEF): Federal Reserve Bank of Atlanta President Raphael Bostic sees "very gradual" disinflation in 2025 and said bumpiness in the data "will call for our policy approach to be more cautious," according to a podcast recorded Dec. 9 released Tuesday.
SERVICES (MNI INTERVIEW): US Services Cost Pressures Rising -ISM's Miller
GEOPOLITICS (RTRS): “U.S. President-elect Donald Trump refused on Tuesday to rule out using military or economic action to pursue acquisition of the Panama Canal and Greenland, part of a broader expansionist agenda he has promoted since winning the Nov. 5 election.”
JOBS (BBG): “Microsoft is planning job cuts soon and the company is taking a harder look at underperforming employees as part of the reductions, according to two people familiar with the plans.”
BUSINESS (BBC): “US safety regulators have opened an investigation of a Tesla feature that allows drivers to summon parked cars without being in the vehicle after numerous accidents were reported linked to the technology.”
OTHER
AUSTRALIA (MNI BRIEF): Australian monthly trimmed mean inflation fell 20 basis points over November to 3.2% y/y, while headline CPI grew 2.3% y/y, up from October’s 2.1%, data from the Australian Bureau of Statistics showed Wednesday.
SOUTH KOREA (BBG): “ Samsung Electronics Co.’s quarterly profit missed estimates, reflecting a costly effort to claw back market share in the pivotal AI chip and smartphone arenas.”
JAPAN (MNI BRIEF): Japan's consumer confidence index fell in December to 36.2, down from November's 36.4, as two out of four components dropped from the previous month but the government left its assessment, data released by the Cabinet Office on Wednesday showed.
CHINA
CONSUMER (BBG): "China will subsidize more consumer products and boost funding for industrial equipment upgrades, ramping up a program aimed at bolstering domestic consumption in the face of growing headwinds for exports."
RRR (SHANGHAI SECURITIES DAILY): “The People’s Bank of China may cut the reserve requirement ratio as Beijing ramps up government bond issuance, as the expected expansion of the deficit ratio and increased supply of special treasuries and local government bonds will lead to funding fluctuations, Shanghai Securities Daily reported citing Ming Ming, chief economist of CITIC Securities.”
FX RESERVES ( SECURITIES DAILY): “China’s foreign exchange reserves stood at USD3.2 trillion at the end of December, down USD63.5 billion from November, a decrease of 1.94%, Securities Daily reported citing data by State Administration of Foreign Exchange.”
BONDS (SECURITIES TIMES): "China’s bond market is expected to see more fluctuations in 2025 even though it will remain overall “positive,” Securities Times reports, citing analysts."
CHINA MARKETS
MNI: PBOC Net Injects CNY1.1 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY1.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY1.1 billion as no reverse repos matures today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5577% at 09:34 am local time from the close of 1.5592% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 49 on Tuesday, compared with the close of 42 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1887 Weds; -2.33% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1887 on Wednesday, compared with 7.1879 set on Tuesday. The fixing was estimated at 7.3415 by Bloomberg survey today.
MARKET DATA
AUSTRALIA NOV. CONSUMER PRICES +2.3% Y/Y; EST. +2.2%; PRIOR +2.1%
AUSTRALIA NOV. TRIMMED MEAN CPI +3.2% Y/Y; PRIOR +3.5%
AUSTRALIA 3-MTHS. TO NOV. JOB VACANCIES +4.2% Q/Q; PRIOR -5.2%
NEW ZEALAND ANZ COMMODITY PRICES DEC. +0.2% M/M; PRIOR +2.9%
JAPAN DEC CONSUMER CONFIDENCE 36.2; MEDIAN 36.6; PRIOR 36.4
SOUTH KOREA NOV. CURRENT ACCOUNT SURPLUS $9.299B; PRIOR $9.784B
SOUTH KOREA NOV. GOODS TRADE SURPLUS $9.752B; PRIOR $8.119B
MARKETS
US TSYS: Cash Bonds Little Changed Ahead Of FOMC Minutes
TYH5 is 108-05+, flat from NY closing levels.
- Cash bonds are little changed in today’s Asia-Pac session after finishing 2-7bps cheaper yesterday, with a steeper curve, following stronger than expected ISM services and JOLTS data.
- MNI's preview of the Minutes includes what to watch for upon release; MNI's FOMC Hawk-Dove Spectrum; key highlights of FOMC participant commentary since the December meeting; and sell-side analyst expectations. See here
- Reminder, much of Thursday's data has been moved to Wednesday (Wholesale Sales, Weekly Jobless Claims) as well as the 30Y Bond auction re-open to avoid conflicts with Thursday's Federal Holiday/day of Mourning for former President Carter.
- The CME Group FI trade closes at 1315ET on Thursday. Thursday still includes Challenger Job cuts at 0730ET, Tsy 4- & 8W bill auctions at 1130ET, and several scheduled Fed speakers throughout the day.
JGBS: Cash Yields Hovering Around Highest Levels Since 2011
JGB futures are sharply weaker, -32 compared to the settlement levels, but off session cheaps.
- With local calendar light the focus has been on US tsys after yesterday's bear-steepener following stronger-than-expected ISM services and JOLTS data. Currently, cash US tsys are little changed in today’s Asia-Pac session.
- MNI's preview of tonight’s release of the FOMC’s Minutes includes what to watch for upon release; MNI's FOMC Hawk-Dove Spectrum; key highlights of FOMC participant commentary since the December meeting; and sell-side analyst expectations. See here
- Japanese yields are running at the highest since July 2011, with cash JGBs 1-3bps cheaper across benchmarks. The benchmark 10-year yield is 2.5bps higher at 1.160% after setting a fresh cycle high of 1.183% today.
- Swaps are mostly cheaper, with rates 1bp richer to 4bps higher. Swap spreads are mixed.
- BoJ-dated OIS pricing is marginally mixed versus pre-Dec MPM levels, with meetings out to June 2025 1-3bps softer but meetings beyond 1bp firmer.
- Tomorrow, the local calendar will see Real and Labor Cash Earnings, Weekly International Investment Flows and Tokyo Avg Office Vacancies data alongside 30-year supply.
AUSSIE BONDS: Holding Richer After CPI Data But Off Bests
ACGBs (YM flat & XM -4.0) are mixed but 2-4bps stronger versus pre-CPI Monthly levels.
- While November headline inflation picked up 0.2pp to 2.3% y/y, the focus was on trimmed mean today given current state & federal electricity rebates. This underlying measure eased 0.3pp to 3.2% to where it was in September.
- However, the RBA continues to focus on quarterly CPI data and it wants to be confident that inflation will return sustainably to the band. It is too early to tell if monthly inflation is trending lower again, thus attention will be firmly on Q4 CPI on January 29.
- Cash ACGBs are flat to 4bps cheaper, with a steeper curve. The AU-US 10-year yield differential is at -17bps.
- The swaps curve has bear-steepened, with rates flat to 4bps higher.
- The bills strip is slightly mixed, but 1-3bps richer after the data.
- RBA-dated OIS pricing is 1-4bps softer across meetings after the data, with July leading. A 25bp rate cut is back to being more than fully priced by April (117%), with the probability of a February cut standing at 64%.
- Before the data, the likelihood of a 25bp cut in April had slipped to 98%.
- The local calendar shows retail sales and trade balances tomorrow.
BONDS: NZGBS: Bear-Steepener As ACGB Spillover Fades
NZGBs closed showing a bear-steepener, with benchmark yields 6-7bps higher.
- NZ commodity export prices rose 0.2% m/m in December versus +2.9% in November, according to ANZ Bank.
- NZGBs rallied initially with ACGBs on the back of a drop in Australian Trimmed Mean CPI in November, but this proved fleeting. By the close, there was close to no net change in NZGB yields versus pre-data levels despite ACGBs holding 3-5bps richer. The NZ-AU 10-year differential widened by 3bps on the day.
- Cash US tsys are flat in today’s Asia-Pac session after yesterday’s bear-steepener. The NZ-US 10-year yield differential is unchanged on the day.
- Reminder, much of Thursday's US data has been moved to Wednesday (Wholesale Sales, Weekly Jobless Claims) as well as the 30Y Bond auction re-open to avoid conflicts with Thursday's Federal Holiday/day of Mourning for former President Carter.
- Swap rates closed 1-7bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing closed flat to 2bps firmer. 51bps of easing is priced for February, with a cumulative 125bps by November 2025.
- The local calendar is empty for the rest of the week. The next release of data is Monday, with Building Permits and Filled Jobs on tap.
ASIA STOCKS: China Markets Weaker Despite Consumer Support, Aust Mkt Up On CPI
Markets in North East Asia are negative, with the exception of South Korean stocks. At this stage, China and Hong Kong markets are off the most, around 1.5-1.6% weaker for the aggregate headline CSI 300 and HSI indices. The onshore briefing around the expanded consumer trade in program for appliances and motor vehicles not shifting the sentiment needle positively.
- Consumer related sub indices for the CSI 300 are weaker, while the property sub index is also softer, down 2.2% at this stage. In HK the tech sub index is down 2.2% as well. Broader tech headlines from Tuesday US trade, as Nvidia pulled back, aren't helping sentiment in this space. In Taiwan, the Taiex is off around 0.80%.
- In contrast, South Korea markets have bucked the softer trends, with the Kospi rebounding from opening weakness, last up over 1.1%. We had disappointment earning results from both Samsung and LG, but dips have been bought. All the bad news is priced in has been cited as a positive for Samsung.
- In Australia, the ASX 200 is up close to 1%. Sentiment has been supported by the Nov CPI print, which showed the trimmed mean moderated further in y/y terms, supporting local bonds and RBA rate cut prospects.
- For SEA markets, trends are mixed, Singapore stocks higher, but a mostly negative bias elsewhere.
FOREX: A$ Supported Despite Higher RBA Easing Odds, Steady Trends Elsewhere
Aggregate FX moves are very muted in the first part of Wednesday trade. The USD BBDXY index is little changed versus end Tuesday levels in NY, last near 1307.
- AUD/USD moved from above 0.6240 to 0.6212 post Nov CPI data. The data showed headline CPI pressures ticking up in y/y terms, but the RBA's preferred inflation measure, the trimmed mean, eased back to 3.2% y/y from 3.5% (closer to the top end of the RBA's target band). An RBA cut is more than fully priced for the April meeting and 64% for the February meeting.
- Follow through downside for the A$ hasn't materialized though, we sit back in the 0.6230/35 region now, little changed for the session. NZD/USD saw some negative spill over from the A$ dip, but likewise has been supported, the pair last near 0.5635.
- China and Hong Kong equities are down at the lunch time break, off 1.5-1.6%, with sentiment not boosted by details around the expanded consumer trade in appliance/motor vehicle program.
- US equity futures are up a little over 0.20%, which is perhaps providing some offset. In the US yield space, we have seen little net movement after Tuesday's yield bounce following better than expected data outcomes.
- USD/JPY has tracked recent ranges, with Tuesday's high above 158.40 holding, while dips sub 158.00 have been supported. EUR/USD is a touch higher, last near 1.0350.
- Later the Fed’s Waller speaks on the economic outlook and the December FOMC minutes are published. US jobless claims, December ADP employment and November consumer credit as well as November German orders & retail sales and December euro area European Commission survey print.
Oil Higher On Softer Supply Expectations & Colder Weather
Oil prices have continued to rise during APAC trading today, but are off their intraday highs, driven by a large reported US inventory drawdown and a cold snap in Europe & the US (heating oil is a distillate). Brent is up 0.4% to $77.32/bbl after reaching $77.47, while WTI is up 0.5% to $74.60/bbl following a high of $74.78. The USD index is up 0.1%.
- There are increasing signs that sanctions are reducing consumption of Iranian and Russian crude with Middle Eastern producers increasing prices to Asia in the face of higher demand, reduced Russian exports and China’s eastern ports requested not to allow US-sanctioned vessels to dock. A tightening of sanctions against Iran by the new US administration is also expected. If the trend persists, then the forecasted excess supply in 2025 may narrow dependent on non-OPEC output and whether OPEC begins to normalise its own production.
- Bloomberg reported that there was a US crude stock drawdown of 4.0mn barrels, more than expected, according to people familiar with the API data. Product inventories continued to rise though with gasoline up 7.3mn and distillate +3.2mn. The official EIA data is published later today.
- Later the Fed’s Waller speaks on the economic outlook and the December FOMC minutes are published. US jobless claims, December ADP employment and November consumer credit as well as November German orders & retail sales and December euro area European Commission survey print.
GOLD: Largely Holding Tuesday's Gains, China Added To Gold FX Reserves in Dec
Gold prices have tracked mostly sideways in the first part of Wednesday trade. We were last near $2647, little changed versus end Tuesday levels in the US. Tuesday's 0.46% gain was aided by the pull back in equity sentiment, with a firmer USD/yields not enough to offset in term's of aggregate performance. Intra-session highs from Tuesday were around $2664.3. Better US data outcomes did help take off this level in Tuesday trade. We remain above the simple 100-day MA, which has been a support point in recent months.
- Outside of traditional macro drivers, China's FX reserves data for Dec showed the central bank continued to add to gold reserves in the month. It resumed such purchases in Nov, after no change in the prior 6 months.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 08/01/2025 | 0700/0800 |  SE | Flash CPI | |
| 08/01/2025 | 0700/0800 | ** |  DE | Retail Sales |
| 08/01/2025 | 0700/0800 | ** | DE | Manufacturing Orders |
| 08/01/2025 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 08/01/2025 | 0745/0845 | * | FR | Foreign Trade |
| 08/01/2025 | 1000/1100 | ** |  EU | EZ Economic Sentiment Indicator |
| 08/01/2025 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 08/01/2025 | 1000/1100 | ** | EU | PPI |
| 08/01/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 08/01/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 08/01/2025 | 1005/1005 | GB | BOE's Woods Financial Services Regulation hearing | |
| 08/01/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 08/01/2025 | 1300/0800 | US | Fed Gov Waller | |
| 08/01/2025 | 1315/0815 | *** | US | ADP Employment Report |
| 08/01/2025 | 1330/0830 | *** | US | Jobless Claims |
| 08/01/2025 | 1500/1000 | ** | US | Wholesale Trade |
| 08/01/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 08/01/2025 | 1700/1200 | ** | US | Natural Gas Stocks |
| 08/01/2025 | 1800/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
| 08/01/2025 | 1900/1400 | *** | US | FOMC Minutes |
| 08/01/2025 | 2000/1500 | * | US | Consumer Credit |
| 09/01/2025 | 2330/0830 | ** |  JP | average wages (p) |
| 09/01/2025 | 0001/0001 | ** | GB | KPMG/REC Jobs Report |
| 09/01/2025 | 0001/0001 | * | GB | BRC Monthly Shop Price Index |
| 09/01/2025 | 0030/1130 | ** |  AU | Retail Trade |
| 09/01/2025 | 0030/1130 | ** | AU | Trade Balance |
| 09/01/2025 | 0130/0930 | *** |  CN | CPI |
| 09/01/2025 | 0130/0930 | *** | CN | Producer Price Index |
| 09/01/2025 | 0700/0800 | ** | DE | Trade Balance |
| 09/01/2025 | 0700/0800 | ** | DE | Industrial Production |
| 09/01/2025 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 09/01/2025 | 0930/0930 | GB | Decision Maker Panel data | |
| 09/01/2025 | 1000/1100 | ** | EU | Retail Sales |