Source: MNI - Market News/Bloomberg
UK
ECONOMY (BBC): “Prime Minister Sir Keir Starmer, the chancellor and business secretary have written to the UK's main regulators asking them to come up with ideas for reform that could boost economic growth. They contacted watchdogs, including energy regulator Ofgem and water regulator Ofwat, before Christmas asking them to submit proposals by mid-January.”
EU
ITALY (POLITICO): “Italian Prime Minister Giorgia Meloni stuck rigidly to the Brussels script on Saturday with a cost-cutting budget that included just enough largesse to please her base — but did little to satisfy concerns over crumbling infrastructure.”
NATO (BBC): “Nato has said it will enhance its military presence in the Baltic Sea, and Estonia has sent a patrol ship to protect its Estlink1 undersea power cable, after Russia was accused of sabotaging its main power link in the Gulf of Finland.”
GEORGIA (BBC): “Thousands of Georgians protested in the capital Tbilisi as a new president allied with the ruling Georgian Dream party was inaugurated. Georgian Dream won parliamentary elections in October, but the victory was mired in allegations of fraud which have since sparked several street protests. Outgoing president Salome Zourabichvili refused to step down on Sunday, saying she was the "only legitimate president".”
GEORGIA (AP): “The Biden administration has imposed sanctions on the founder of Georgia’s ruling political party, which has steered the country away from a pro-Western stance and towards Russia, U.S. officials said Friday.”
RUSSIA (BBC): “Azerbaijan's President Ilham Aliyev has called on Russia to accept blame for a plane crash on Christmas Day that killed 38 people. The plane is thought to have come under fire from Russian air defence systems as it tried to land in Chechnya before being diverted to Kazakhstan, where it crashed.”
US
POLITICS (BBC): “Jimmy Carter, who has died at the age of 100, swept to power promising never to lie to the American people.”
POLITICS (BBG): “A senior Republican lawmaker urged President-elect Donald Trump’s intervention to avoid a House leadership battle, saying he should reach out to GOP members who haven’t committed to reelecting Mike Johnson as speaker.”
POLITICS (RTRS): “U.S. President-elect Donald Trump said on Sunday the 2023 debt ceiling extension agreed by then House Speaker Kevin McCarthy and President Joe Biden will "go down as one of the dumbest political decisions made in years."”
POLITICS (BBG): “President-elect Donald Trump entered the fray in a debate over immigration policy that’s dividing his supporters, telling the New York Post he favors a visa program for highly skilled workers that Elon Musk has strongly defended.”
CANADA (BBG): “Two senior Canadian cabinet ministers flew to Florida to make the case to US President-elect Donald Trump’s team that the northern border is secure and tariffs won’t be necessary.”
FINANCE (BBG): “The Bitcoin rally sparked by US President-elect Donald Trump’s election victory in early November is stalling as 2024 draws to a close. The digital asset wavered at $93,678 as of 7:53 a.m. on Monday in Singapore, about $15,000 below the record high set in mid-December.”
OTHER
SOUTH KOREA (BBG): “South Korean authorities will closely monitor financial markets 24 hours and do the best to keep financial and FX markets as stable as possible, according to comments made in a joint statement by the govt, Bank of Korea and financial regulators.”
SOUTH KOREA (BBC): “Prosecutors allege that South Korea's suspended president told the military to use guns while attempting to remove lawmakers from parliament as they were voting down his martial law decree.”
SOUTH KOREA (BBG): “South Korean investigators on Monday sought a warrant to arrest President Yoon Suk Yeol after the impeached leader repeatedly declined to appear for questioning over his martial law declaration.”
SOUTH KOREA (BBG): “South Korea’s Acting President Choi Sang-mok called for “strict” investigation into the cause of Jeju Air plane crash in Muan Sunday, speaking at a government meeting Monday.”
CHINA
TRADE (YICAI/BBG): “China has adjusted its tariffs for next year to expand domestic demand and promote high-level opening-up, according to the country's latest tariff plan.”
FX (BBG): “China’s ambitious campaign to revive its flagging stock market has made the yuan an unintended casualty, with record dividend payouts leading to outflows.”
FISCAL (BBG): “China’s central government urged local authorities to offer handouts to people struggling with the cost of living, Xinhua News Agency reported, citing a notice from the Ministry of Civil Affairs.”
GOVERNMENT (BBG): “China‘s government car purchases should, in principle, all be new-energy vehicles if they’re used in fixed routes and mainly in urban areas, the Ministry of Finance says in a notice on its website.”
CHINA MARKETS
MNI: PBOC Net Drains CNY20.5 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY89.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY20.5 billion after offsetting the maturity of CNY109.6 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8002% at 10:07 am local time from the close of 1.8027% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Friday, compared with the close of 44 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1889 Mon; -2.13% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1889 on Monday, compared with 7.1893 set on Friday. The fixing was estimated at 7.2967 by Bloomberg survey today.
MARKET DATA
SOUTH KOREA NOV. INDUSTRIAL OUTPUT +0.1% Y/Y; EST. +0.5%; PRIOR +6.3%
SOUTH KOREA NOV. INDUSTRIAL OUTPUT -0.7% M/M; EST. -0.5%; PRIOR 0.0%
SOUTH KOREA NOV. CYCLICAL LEADING INDEX +0.1 PT M/M; PRIOR 0.0 PT
JAPAN JIBUN BANK NOV. F MFG PMI 49.6; PRE 49.5; NOV. 49.0
MARKETS
US TSYS: Cash Bonds Little Changed, 10YY At Higher Since May
TYH5 is 108-13, -0-01 from NY closing levels.
- Cash US tsys are dealing little changed across benchmarks on a newsflow-light Asia-Pac session.
- The US tsy 10Y yield is hovering around to 4.625% - the highest since late May'24.
- Markets will be closed on Wednesday for the New Year's Day holiday; otherwise, they will have full sessions for the balance of the week. Data includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
JGBS: Slightly Richer On Last Trading Day Of The Year
JGB futures are stronger after reversing early Tokyo session weakness, +4 compared to settlement levels.
- Outside of the previously outlined Jibun Bank/S&P Global Manufacturing PMI, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are slightly richer in today’s Asia-Pac session after Friday’s heavy session.
- US data this week includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
- Bond bears are emboldened as the BOJ will be reducing its monthly debt buying in the first quarter of 2025. Moreover, traders can see that Japanese inflation is proving to be sticky even though the central bank says it wants to see more information before raising interest rates again. The BOJ is also waiting for the next round of wage increases, despite the big hikes which were seen this year. (per BBG)
- Cash JGBs are 1-2bps richer across benchmarks. The benchmark 10-year yield is 1bp lower at 1.115% versus the cycle high of 1.1340% set earlier today.
- Swap rates are ~1bp lower apart from the 30-year (+2bps). Swap spreads are mixed.
- The local market is closed tomorrow for a bank holiday. The next data release will be Jibun Bank PMI Composite & Services on January 6.
AUSSIE BONDS: Heavy Session Despite Empty Local Calendar
ACGBs (YM -7.0 & XM -9.5) are slightly above Sydney session lows but remain sharply weaker on a data-light session.
- Today, the local calendar was empty apart from RBA's Jones-Fireside Chat at Conexus at the Superannuation Chair Forum. The next data releases are CoreLogic Home Value and S&P Global PMI Mfg on January 2.
- While cash US tsys are little changed in today’s Asia-Pac session, Friday’s heavy session continues to weigh on the local market.
- US data this week includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
- Cash ACGBs are 6-9bps cheaper with the AU-US 10-year yield differential at -15bps.
- Swap rates are 3-7bps higher, with the 3s10s curve steeper.
- The bills strip is weaker, with contracts -2 to -4.
- RBA-dated OIS pricing is flat to 4bps firmer across meetings, with August. A 25bps rate cut is more than fully priced by April (124%), with a 58% probability of a February cut.
BONDS: NZGBS: Bear-Steepener As US Tsys Pressure On A Light Data Day
NZGBs closed showing a bear-steepener, with benchmark yields flat to 7bps higher.
- Cash US tsys are little changed in today’s Asia-Pac session after Friday’s heavy session. US data this week includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, Weekly Claims and Construction Spending on Thursday, and ISMs on Friday.
- The NZ-US 10-year yield differential closed 2bps higher at -14bps after hitting -18bps early, its lowest level since late 2020. However, the NZ-AU 10-year did finish 3bps lower at flat.
- The local calendar was empty today and will remain so until the release of CoreLogic Home Values on January 2.
- Swap rates closed 5-6bps higher.
- RBNZ dated OIS pricing closed flat to 3bps firmer across meetings, with late 2025 leading. 54bps of easing is priced for February, with a cumulative 122bps by November 2025.
FOREX: A$ And NZ$ Outperform On Higher Yields
Aussie and kiwi are outperforming against the US dollar during trading so far today. The BBDXY USD index is only slightly lower with US yields little changed. European currencies and the yen are steady.
- AUDUSD has been generally underperforming and technicals continue to signal a bearish downtrend. During today’s APEC trading though it has bounced 0.4% to 0.6239, close to the intraday high, but still 0.15% below last Monday’s close. It has found support from higher ACGB yields, commodity prices including iron ore returning above $100/t.
- NZDUSD is also 0.4% higher at 0.5656 leaving AUDNZD flat at 1.1031. The cross has range traded through the session.
- USDJPY is down 0.1% to 157.78 after a high of 157.99 but has spent the day in a narrow range with little news to give it direction.
- EURUSD is unchanged at 1.0425 and GBPUSD 1.2580.
- US December MNI Chicago & Dallas Fed PMIs and November pending home sales print as well preliminary December Spanish CPI.
FOREX: Baht & Rupiah Strengthen
The BBDXY USD index is only slightly lower and most Asian currencies stronger against USD. In EM Asia, the Korean won has been volatile but the IDR and THB have strengthened significantly against the greenback helped by year-end rebalancing.
- USDKRW fell to 1465.60 on government commitment to financial stability following continued political instability. Equities are higher.
- USDTHB is 0.5% lower at 33.94, close to the intraday low. The pair is now down 1.7% since the December 19 peak following the more hawkish sounding Fed.
- USDIDR is also down 0.5% to 16158 but off today’s trough of 16142.50. It is down 0.8% since the Fed. The rupiah and baht appear to have benefited from year-end trading, which is light. There hasn’t been market talk of possible central bank intervention.
- USDCNH has moved in the opposite direction to most other Asian crosses and is 0.1% higher at 7.3073 following a high of 7.3086.
- US December MNI Chicago & Dallas Fed PMIs and November pending home sales print as well preliminary December Spanish CPI.
EQUITIES: Asian Equities Mixed But Generally Followed US Lower
Equities were generally mixed during light APAC trading today with China’s CSI 300 and KOSPI higher but Hang Seng and Nikkei lower following the US lower from Friday, as Fed higher rates and uncertainty over tariffs weighed. The S&P and NASDAQ e-minis have continued that trend and are down slightly today.
- A commitment by the government and Bank of Korea to financial stability appears to have helped support equities with the KOSPI up 0.4% and KOSDAQ +1.9%, despite a 1.5% drop on the NASDAQ on Friday.
- The Hang Seng is down 0.6% but the CSI 300 is up 0.3%.
- Japan’s Nikkei 225 is down 0.9% likely impacted by year-end portfolio rebalancing. USDJPY has range traded and is down slightly to around 157.80. There has been a lack of a clear signal from the BoJ on the rate outlook adding to uncertainty.
- Australia’s ASX 200 is 0.4% lower but the NZX 50 is 0.5% higher. 10 of Australia’s 11 sectors are down, with utilities and property especially weak.
- ASEAN is also mixed with Jakarta down 0.2% but the Straits Times up 0.4% and SE Thai +0.3%.
- US December MNI Chicago & Dallas Fed PMIs and November pending home sales print as well preliminary December Spanish CPI.
OIL: Crude Steady On Light Holiday Trading
Oil prices are little changed during APAC today with volumes remaining light. WTI is around $70.64/bbl following a high of $70.75 and Brent is $73.83/bbl (March contract) after reaching $73.92. Surplus concerns continue to offset geopolitical developments resulting in range trading. The USD index is slightly lower.
- The possibility that conflict in the Middle East will impact oil supplies continues to worry markets. Israel now appears to be focussing on the Iran-backed Houthi rebels in Yemen.
- The strength of China’s oil demand has worried markets and while there is some optimism that increased stimulus in 2025 may boost it, the lack of details limited the upside to oil. US exports of crude to China fell 46% in 2024, according to Kpler, due to weak demand but also China shifting to other sources such as Iran and Russia.
- Increased US supply was a factor that contributed to OPEC’s decision to delay its output normalisation but the outlook has become clouded with the election of Trump to the US presidency. He is likely to boost US production further while tightening sanctions on Iran.
- US December MNI Chicago & Dallas Fed PMIs and November pending home sales print as well preliminary December Spanish CPI.
GOLD: Small Rebound After Friday’s Decline
Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.5% lower at $2621.40 on Friday.
- Gold’s decline at the end of a subdued holiday-shortened trading week came after mixed US jobless data. The data did little to alter bets on the outlook for Federal Reserve interest-rate cuts. Lower rates are typically positive for gold, which doesn’t pay interest.
- Fed rate cuts into early 2025 gained slightly by Friday’s close vs. morning levels (*) as follows: Jan'25 steady at -2.7bp, Mar'25 -13.3bp (-13.1bp), May'25 -18.5bp (-17.7bp), Jun'25 -26.5bp (-25.7bp).
- According to MNI’s technicals team, the move down undermined the recent bullish theme. A resumption of weakness would signal scope for an extension towards the key support at $2536.9, the Nov 14 low.
- Moving average studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2640.0, the 20-day EMA. A breach of this EMA would be positive for bulls.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 30/12/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 30/12/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 30/12/2024 | 1445/0945 | *** |  US | MNI Chicago PMI |
| 30/12/2024 | 1500/1000 | ** | US | NAR Pending Home Sales |
| 30/12/2024 | 1530/1030 | ** | US | Dallas Fed manufacturing survey |
| 30/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 30/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 30/12/2024 | 1800/1300 | * | US | US Treasury Auction Result for Cash Management Bill |
| 31/12/2024 | 0130/0930 | *** |  CN | CFLP Manufacturing PMI |
| 31/12/2024 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |
| 31/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |