Source: MNI - Market News/Bloomberg
UK
JOBS (BBG): "BP Plc is eliminating 4,700 positions internally, about 5% of its workforce, and more than 3,000 contractor jobs, Chief Executive Officer Murray Auchincloss told staff on Thursday, as the London-based energy giant seeks to reduce costs."
EU
GERMANY (BBG): “ Germany’s agriculture industry faces sales losses of about €1 billion ($1.03 billion) due to an outbreak of foot-and-mouth disease that has led to export restrictions, farm cooperatives group DRV said.”
FRANCE (RTRS): "French Prime Minister Francois Bayrou passed the first test of his new minority government on Thursday as he survived a vote of no-confidence called by the hard left after the centre-left Socialist Party did not back the motion."
FINLAND (RTRS): "Planned Russian military reforms that would increase Moscow's troop numbers by 30% are a threat to NATO and should be met with vigilance, the chief of Finland's military intelligence service Pekka Turunen said on Thursday."
US
FED (MNI BRIEF): U.S. inflation could get back to target sooner than some expect, and the Federal Reserve could lower interest rates again in the next few months and cut as many as four times this year, Fed Governor Chris Waller said Thursday. Traders are currently pricing in one quarter-point cut by July and two by year-end.
INFLATION (MNI BRIEF): U.S. Treasury nominee Scott Bessent told his confirmation hearing Thursday that President-elect Donald Trump's policies will leave inflation on an easing path toward the Federal Reserve's 2% goal.
US/CHINA (BBG): " TikTok is poised to win a reprieve from a law that would ban the popular social media app thanks to a holiday weekend and a pledge from President-elect Donald Trump’s incoming administration to give its Chinese owner more time to divest."
OTHER
MIDDLE EAST (BBG): “Israel’s Prime Minister Benjamin Netanyahu said an agreement with Hamas to pause the war in Gaza has been finalized, suggesting it’s on track to begin on Sunday.”
CANADA (MNI): Mark Carney said Thursday he’s joining the contest to become the next Liberal Leader, with the former BOE and BOC chief pledging an economic reset to overcome a massive lag in the polls and fend off Conservatives in an election due by October.
CANADA (MNI): The Bank of Canada plans to announce it's ending QT in the first half of the year and becoming the first major central bank to do so, though it will take until the end of this decade until the balance sheet mix returns to normal, Deputy Governor Toni Gravelle said Thursday.
COMMODITIES (BBG): “Rio Tinto Group and Glencore Plc have been discussing combining their businesses, which if successful would rank as the largest-ever mining deal and create a behemoth to rival longstanding leader BHP Group.”
JAPAN (BBG): “ Almost three quarters of Bank of Japan watchers predict an interest rate hike next week according to the latest Bloomberg survey, reflecting a jump in expectations after Governor Kazuo Ueda said his board will be discussing the move.”
CHINA
GDP (MNI BRIEF): The Chinese economy grew by 5.4% in Q4, rising 0.8 percentage points from Q3 and driving 2024's growth to the government's 5% annual target, beating market expectations of 5.0% and 4.9%, data released by the National Bureau of Statistics on Friday showed.
LPR (MNI PBOC WATCH): China's Loan Prime Rate is likely to hold Monday as the central bank prioritizes the yuan's stability while curbing any rapid drop in treasury yields, which are expected to restrain its easing pace.
YUAN (SECURITIES TIMES): “Over 73% of 60 economists surveyed by Securities Times expect the yuan to mostly trade within 7.3-7.5 against the U.S. dollar in the first half of 2025, while 18% expect a range of 7.1-7.3, the newspaper reported.”
YUAN (MNI): Advisors share their yuan outlook ahead of Donald Trump's inauguration. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
CHINA/US (MOFA): “President Xi Jinping’s special representative, Vice President Han Zheng, will attend the inauguration ceremony of President-elect Donald Trump on Jan 20 in Washington, following the U.S.'s invitation, according to a statement on the Ministry of Foreign Affairs website.”
POPULATION (RTRS): "China's population fell for a third consecutive year in 2024, with the number of deaths outpacing a slight increase in births, and experts cautioning that the trend will accelerate in the coming years."
CHINA MARKETS
MNI: PBOC Net Injects CNY100.5 Bln via OMO Friday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY105 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY100.5 billion after offsetting the maturity of CNY4.5 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.0139% at 10:18 am local time from the close of 2.3391% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Thursday, compared with the close of 81 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1881 Fri; -2.02% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1889 on Friday, compared with 7.1881 set on Thursday. The fixing was estimated at 7.3314 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND DEC BUSINESSNZ MANUFACTURING PMI 45.9; PRIOR 45.2
CHINA DEC NEW HOME PRICES M/M -0.08%; PRIOR -0.20%
CHINA DEC USED HOME PRICES M/M -0.31%; PRIOR -0.35%
CHINA Q4 GDP Q/Q 1.6%; MEDIAN 1.7%; PRIOR 1.3%
CHINA Q4 GDP Y/Y 5.4%; MEDIAN 5.0%; PRIOR 4.6%
CHINA DEC IP Y/Y 6.2%; MEDIAN 5.4%; PRIOR 5.4%
CHINA DEC RETAIL SALES Y/Y 3.7%; MEDIAN 3.6%; PRIOR 3.0%
CHINA DEC FIXED ASSET INVESTMENT YTD Y/Y 3.2%; MEDIAN 3.3%; PRIOR 3.3%
CHINA DEC PROPERTY INVESTMENT YTD Y/Y -10.6%; MEDIAN -10.4%: PRIOR -10.4%
CHINA DEC RESIDENTIAL PROPERTY SALES YTD Y/Y -17.6%; PRIOR -20.0%
CHINA DEC SURVEYED JOBLESS RATE 5.1%; MEDIAN 5.0%; PRIOR 5.0%
MARKETS
US TSYS: Tsys Curve Flattens Slightly, Nomura Sees 10yr Potentially Reaching 6%
- Tsys are little changed today, futures are trading within Thursday's ranges TU is unchanged at 102-25¾, while TY is -00+ 108-19 holding above the 20-day EMA. Cash tsys curves have flattened throughout the session with the 2yr +0.4bps at 4.232%, while the 10yr is -0.4bps.
- In tsys flows today, the stand out was a large TY call buyer, 20,000 TYG5 108.75 for '18, there was also a smaller TY call buyer of TYG5 109.5 for '06
- The 2s10s hit its highest levels since mid 2022 on Tuesday, we now trade about 5bps off those highs at 37.204. While the 2s5s30s Fly has seen it's largest 2-day move in a year, last -29.5bps
- Nomura economists project 10yr yields could reach 6% this year, citing their relatively low levels compared to inflation and the fiscal deficit. The US faces its worst cyclically adjusted deficit-inflation combination since 1960, compounded by Trump's nationalistic policies, which may exploit the dollar's reserve currency status. With limited scope to reduce the deficit and significant refinancing needs, gross Treasury issuance could hit 17% of GDP.
- Projected rate cuts through mid-2025 have regained traction after cooling this morning, current lvls vs. Thursday Morning* as follows: Jan'25 steady at -0.7bp, Mar'25 at -8.3bp (-6.3bp), May'25 -14bp (-11.8bp), Jun'25 -24.8bp (-20.4bp), Jul'25 at -28.7bp (-23.7bp).
- Fed-dated OIS is now pricing in 41.8bp of combined easing for the year vs. 38bp priced Thursday morning.
- Later today we have Housing Starts, Building Permits, Industrial Production, while the Fed enters their self imposed media Blackout at midnight Friday through January 30
JGBS: Cash Bonds Hold Their Bull-Flattener On Data-Light Session
JGB futures are little changed after giving up overnight strength, currently flat compared to settlement levels, on a data-light session.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s extension of the post-CPI rally.
- The BoJ board will consider hiking the policy rate to 0.5% when it meets next week due to strong wage growth momentum, but it sees no issue holding the rate steady should market volatility increase following President-elect Donald Trump’s inauguration on Jan 20, MNI understands.
- OIS market expectations indicate: an 88% probability of a 25bp hike in January; a cumulative 92% chance by March; and a full 25bp increase fully priced in by May 2025 (105%).
- Cash JGBs are 1-4bps richer across benchmarks beyond the 1-year. The benchmark 10-year yield is 0.9bps lower at 1.198% versus the cycle high of 1.262%, set this week.
- Swap rates are flat to 2bps lower. Swap spreads are wider.
- On Monday, the local calendar will see Core Machine Orders, Industrial Production, Capacity Utilization and the Tertiary Industry Index.
AUSSIE BONDS: Subdue Session, Light Local Calendar Next Week
ACGBs (YM flat & XM -0.5) are little changed after dealing in narrow ranges in today’s data-light Sydney session.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s extension of the post-CPI rally.
- Cash ACGBs are unchanged with the AU-US 10-year yield differential at -11bps.
- Swap rates are flat to 1bp higher with the 3s10s curve flatter.
- The bills strip is cheaper, with pricing beyond the first contract -2 to -3.
- The Australian job market remains tight but at levels that are in line with inflation returning to the RBA's 2% to 3% target band, ANZ Research. (MTN)
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is fully priced for April (105%), with the probability of a February cut at 67% (based on an effective cash rate of 4.34%).
- The local calendar is light next week, with the highlights being the Westpac Leading Index on Wednesday and S&P Global PMIs (P) on Friday.
- Next week, the AOFM plans to sell A$300mn of the 4.25% 21 June 2034 bond on Monday, A$800mn of the 2.75% 21 June 2035 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday.
BONDS: NZGBS: Finished Slightly Mixed, Underperformance To $-Bloc Continued
NZGBs ended the session slightly mixed, with the 2-year yield rising by 2bps, while the 10-year yield declined by 1bp.
- The underperformance of the NZGB 10-year relative to its $-bloc counterparts persisted, as the NZ-US and NZ-AU yield differentials widened by 4bps and 2bps, respectively. Over the past week, the NZ-US differential has expanded by 20bps, recovering from its lowest level since late 2020. Similarly, the NZ-AU differential has widened by 16bps during the same period.
- This occurred despite NZ’s manufacturing activity remaining subdued in December, marking 22 consecutive months of contraction—the longest streak since the global financial crisis, excluding the pandemic. The BusinessNZ PMI for December registered at 45.9, a slight improvement from 45.2 in November, but still well below the 50-point threshold indicating expansion.
- Swap rates closed unchanged, 3-4bps higher than the session’s lows.
- RBNZ dated OIS pricing closed little changed. 46bps of easing is priced for February, with a cumulative 109bps by November 2025. With respect to end-2025 rate expectations, NZ has been the $-blocs worst performer, with the expected OCR some 25bps firmer than last Friday’s close.
FOREX: USD Ticking Higher, Yen Outperformer On The Week
The first part of Friday trade has seen a modestly positive USD bias, but moves haven't been large. The USD BBDXY index sits near 1313.2 in latest dealings, little changed versus end NY levels from Thursday.
- There has been some JPY vol, as markets price in strong odds of a rate hike at next week's policy meeting (announced on Friday the 24th). We saw lows of 154.98, but the pair quickly recovered. This was just ahead of the 50-day EMA (154.90). We last tracked near 155.40/45, close to session highs (155.50).
- Yen is close to 0.15% weaker for the session, but still up around 1.50% for the week, the best G10 performer. The shift in BoJ pricing, coupled with lower core yields, have been clear yen positives over this period.
- AUD/USD saw a modest uptick on better China activity data (GDP, IP and retail sales), but upside momentum proved fleeting. The pair was last near 0.6200, off around 0.20%. NZD/USD is back under 0.5600 , off around 0.20% as well. The Dec PMI ticked up, but remains comfortably in contraction territory. Next week we get NZ Q4 CPI. In Australia, the data calendar remains light.
- In the cross asset space, US equity futures are up around 0.20%, while US yields are little changed. Regional equities are mixed. China and HK markets are up at the break, but gains are less than 0.50%. The aforementioned China data may be helping equity sentiment. Japan is lower, along with Australia.
- Looking ahead, it is a reasonably quiet end to the week data wise, with UK retail sales on tap, final Dec CPI for the EU, while in the US housing starts and IP are due.
ASIA STOCKS: China Equities Edge Higher Following Positive Data
The Chinese market is stabilizing after initial losses, with the CSI 300 index is 0.45% higher following a 0.5% drop earlier. Telecom and consumer discretionary stocks led declines, while consumer staples, materials & Tech stocks have shown resilience. China's economy met its 2024 growth target of 5% after a strong Q4, supported by a stimulus push and export strength ahead of potential U.S. tariffs. However, risks remain, as Donald Trump’s impending return to the White House raises fears of tariff hikes, which could significantly impact trade—a key growth driver.
- Despite positive GDP data, challenges persist. Industrial production grew 6.2% in December, driven by export front-loading, but domestic demand remains weak, with retail sales underperforming at 3.7% growth and unemployment rising to 5.1%. The property sector continues to drag on the economy, with investment contracting 10.6% in 2024—its worst performance since records began. Efforts to stabilize the housing market have yielded marginal improvements in home prices, but concerns remain high, particularly as state-backed developer China Vanke faces mounting debt and falling investor confidence.
- Although the property related data showed further contraction, prices fell at slower pace, China property indices are trading higher today, with the BBG China Property Index up 1.05%, although China Vanke is drag, trading 6.20% lower following headlines that the CEO has been detained by police. Other major benchmarks are higher with Mainland Property Index up 1.60%, while HS Property Index trades 1.65% higher.
- The Hang Seng is so far holding onto gains made over the past week, trading 4.30% off Jan 13 lows, although still 2.76% lower in Jan.
- Beijing’s fiscal policy is expected to take center stage in 2025, with measures to stimulate growth while navigating deflationary pressures and potential capital outflows. Analysts note that sustaining momentum will require balancing external risks and further domestic reforms.
ASIA STOCKS: Asian Equities Mostly Lower, Outflows In EM Asia Continue
- South Korea's Kospi declined 0.2% as investors balanced optimism over returning foreign funds with lingering political uncertainty, South Korea equities are the only market in Asia to report net inflows this year. A Bloomberg Fear/Greed indicator suggests a shift toward bullish sentiment, with the Kospi up 5% year-to-date after six months of declines, however there index is tied closely to the performance of Samsung which is down 40% from August 2024 highs.
- Taiwan's Taiex is up 0.20% today and has outperformed the MSCI Asia Pacific Index over the past few days, driven by TSMC’s strong earnings report, which exceeded forecasts for 2025 sales and capital expenditure. TSMC benefits from the AI spending boom despite uncertainties from the US-China tech conflict. Momentum is somewhat tied to Nvidia with the company's upcoming earnings in six weeks to be very closely watched, as any disappointment could ripple through the global tech sector, impacting sentiment. TSMC's US shares rose 3.9% on Thursday and trade flat today.
- Japanese equities have struggled today with the Topix falling 1.2% as expectations of a BoJ rate hike strengthened the yen, hitting exporters and chip stocks, the index has since recovered somewhat to trade down 0.70%, while the Nikkei is 0.70% lower. Nintendo dropped 7.2% after announcing a delayed release of its Switch 2 console, disappointing investors. Investors look to be positioning ahead of major events, including the BOJ meeting and US presidential inauguration which has added to the cautious tone.
- Australia's ASX 200 is 0.25% lower with mixed performance in the commodities sector. Rio Tinto declined following reports of early-stage merger talks with Glencore. Broader market sentiment reflected a lack of catalysts despite steady bond yields. New Zealand's NZX 50 closed 1% higher.
- Elsewhere across EM Asia, foreign investors have continued selling local equities, in particular Indian equities with that market seeing $4b of outflows so far this year, the Nifty 50 is 0.50% lower today and down 2% for Jan. Malaysia & Philippines have also seen heavy outflows with the Malay KLCI down 3.55% over the past week, while Philippines PSEi is 4.30% lower to be the worst performing market over the past week
Oil Delivers a Fourth Weekly Gain on Russian Sanction Risk.
- Oil came off near term highs overnight as speculation that the potential drop in supply from further Russian sanctions could see the release of up to 1.2m b/d of supply from OPEC+.
- As markets adjust to the news of Russian sanctions and seek to understand the new administration’s stance on them, what is clear is the incoming President’s focus on Canada and that raises the potential for tariffs on Canadian oil.
- News of a potential ceasefire between Israel and Hamas appears to be lacking support by key ministers in Israel yet at this stage is set to begin this coming Sunday.
- Oil’s ascent on Russian sanctions took a breather in overnight price action with WTI coming off the highs yesterday of US$80.77 to fall throughout the session to close at $78.77 before steadying at $79.09 during Asian trading day.
- For the week, WTI has gained +3.3%, marking a stellar run for the commodity in 2025.
- Brent saw highs yesterday of US$82.63 and fell gradually throughout the day to at $81.35 into the close, before steadying at $81.60.
- For the week, Brent too is up for the fourth successive week, by 2.2%.
- BP PLC announced that it will shed about 5% of its workforce and that it has stopped or paused up to 30 new projects to focus on existing ones that provide the most value add as its share price flounders relative to peers.
- Incoming nominee for Treasury secretary Scott Bessent said he would support the increased sanctions against Russia in a bid to end the Ukraine conflict.
- The increase in sanctions announced this week has seen evidence of a shift in demand dynamics with Saudi Aramaco receiving inquiries from Indian and Chinese buyers for their product whereas South Korean buyers are turning to the US.
Gold’s Love for Rate Cuts Sees Prices Rise.
- Gold prices rose to the highest levels since early December overnight.
- Back in December following the FED’s rate cut, uncertainty reigned in terms of the potential pathway for rate cuts as FED officials seemingly watered down the possibility for 2025.
- This week’s softer US inflation has stoked the rate cut fire again with bond yields gapping lower and taking the USD with it, giving a boost to gold which rose to a high yesterday of US$2,724.76 before closing at $2,714.31.
- Holdings in ETF’s backed by physical bullion have seen a resurgence in demand in January with total investment value up 0.5% YTD.
- Key Central Bank’s resumed purchases of gold late last year possibly on an interest rate view and expectations from traders is that this could continue.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 17/01/2025 | 0700/0700 | *** |  GB | Retail Sales |
| 17/01/2025 | 0900/1000 | ** |  EU | EZ Current Account |
| 17/01/2025 | 1000/1100 | *** | EU | HICP (f) |
| 17/01/2025 | 1100/1200 | EU | ECB's Cipollone lecture at Crypto Asset Lab conference | |
| 17/01/2025 | 1330/0830 | * |  CA | International Canadian Transaction in Securities |
| 17/01/2025 | 1330/0830 | *** |  US | Housing Starts |
| 17/01/2025 | 1415/0915 | *** | US | Industrial Production |
| 17/01/2025 | 1600/1100 | CA | BOC releases review of pandemic policy actions. | |
| 17/01/2025 | 2100/1600 | ** | US | TICS |
| 17/01/2025 | 2100/2100 | GB | BOE's Bailey Remarks at the Bretton Woods Institutions |