Source: MNI - Market News/Bloomberg
UK
JOBS (RTRS): “Around one in six British companies cut hiring late last year, the highest share since early 2021, according to a survey that showed firms felt pressure to raise prices due to tax increases that will come into force in April.”
EU
ECB (BBG): “European Central Bank Governing Council member Olli Rehn expects euro-zone interest rates to reach a level that no longer restricts economic activity by mid-2025.”
EU (MNI BRIEF): EU leaders will brainstorm on options to boost the bloc's defence capacity and defence industrial and technology base at a Feb 3 summit near Brussels, European Council President Antonio Costa said on Monday.
US
TARIFFS (BBG): “Members of President-elect Donald Trump’s incoming economic team are discussing slowly ramping up tariffs month by month, a gradual approach aimed at boosting negotiating leverage while helping avoid a spike in inflation, according to people familiar with the matter.”
INFLATION (MNI BRIEF): U.S. consumers median inflation expectations rose to 3.0% from 2.6% at the three-year horizon and fell to 2.7% from 2.9% at the five-year horizon in December, according to a New York Fed monthly survey. Inflation expectations were unchanged at 3.0% at the one-year horizon.
GREENLAND (RTRS): “President-elect Donald Trump's Republican allies in the U.S. House of Representatives are trying to build support for a bill on authorizing talks for the purchase of Greenland, according to a copy of the bill circulated for co-sponsors on Monday.”
OTHER
MIDDLE EAST (RTRS): “Negotiators will meet in Doha on Tuesday seeking to finalise details of a plan to end the war in Gaza, after U.S. President Joe Biden said a ceasefire and hostage release deal he has championed was on "the brink" of coming to fruition.”
MIDDLE EAST (BBG): “President-elect Donald Trump said he believed negotiators could conclude a ceasefire deal that would see Hamas turn over Israeli hostages before his inauguration next Monday, in the latest signal that an agreement could be near.”
JAPAN (MNI): Bank of Japan Deputy Governor Ryozo Himino said on Tuesday the BOJ will raise the policy interest rate and adjust the degree of monetary easing as it did in March and July last year, if the economy continues to evolve as expected.
NORTH KOREA (RTRS): “North Korea fired multiple short-range ballistic missiles off its east coast on Tuesday, South Korea's military said, marking Pyongyang's latest show of force just days ahead of U.S. President-elect Donald Trump's return to office.”
AUSTRALIA (RTRS): “ Australian consumer sentiment dipped for a second month in January as financial stress dominated at the start of the new year, a survey showed on Tuesday, suggesting spending will remain subdued in the near term.”
NEW ZEALAND (BBG): “New Zealand businesses are more upbeat about the economic outlook even as profits slowed and trading remained weak in the final quarter of 2024, according to the New Zealand Institute of Economic Research.”
CHINA
MARKETS (CSRC): “China’s top securities watchdog will make every effort to stabilise and boost the capital market in 2025 by leveraging the central bank's two structural monetary tools, and responding to market concerns promptly, according to a statement on the China Securities Regulatory Commission website.”
CHINA/US (BBG): “Chinese officials are evaluating a potential option that involves Elon Musk acquiring the US operations of TikTok if the company fails to fend off a controversial ban on the short-video app, according to people familiar with the matter.”
METALS (21ST CENTURY BUSINESS HERALD): “China’s expansion of new infrastructure and energy industries in 2025 will drive growth in demand and prices for non-ferrous metal, noted Wang Hongying, dean at the China Financial Derivatives Investment Research Institute.”
CHINA MARKETS
MNI: PBOC Net Injects CNY47.9 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY55.0 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY47.9 billion after offsetting the maturity of CNY7.1 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8994% at 09:24 am local time from the close of 2.0223% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 61 on Monday, compared with the close of 66 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1878 Tues; -2.35% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1878 on Tuesday, compared with 7.1885 set on Monday. The fixing was estimated at 7.3202 by Bloomberg survey today.
MARKET DATA
AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE INDEX 92.1; PRIOR 92.8
AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE M/M -0.7%; PRIOR -2.0%
JAPAN NOV BOP CURRENT ACCOUNT ADJUSTED ¥3033.4bn; MEDIAN ¥2578.1bn; PRIOR ¥2408.8bn
JAPAN NOV TRADE BALANCE BOP BASIS ¥97.9bn; MEDIAN -¥34.6bn; PRIOR -¥155.7bn
JAPAN DEC BANK LENDING INCL TRUSTS Y/Y 3.1%; PRIOR 2.9%
JAPAN DEC ECO WATCHERS SURVEY CURRENT 49.9; MEDIAN 49.5; PRIOR 49.4
JAPAN DEC ECO WATCHERS SURVEY OUTLOOK 48.8; MEDIAN 49.9; PRIOR 49.4
SOUTH KOREA MONEY SUPPLY M2 M/M 0.8%; PRIOR 1.0%
MARKETS
US TSYS: Tsys Futures Edge Higher, 10yr Yield At 4.766%
- Tsys futures are trading slightly higher today, although ranges are narrow. Long-end contracts are outperforming, however all the gains were made on the opened, and we have since been slowly pairing those gains are the session has progressed. TU is +01⅛ at 102-17¼, while TY is trading +06 at 107-13+
- The trend in Treasury futures is unchanged and remains bearish. Yesterday’s bearish start to the week, has once again, confirmed a resumption of the downtrend. Sights are on 107-04 next, a Fibonacci projection. Note too that moving average studies remain in a bear-mode position highlighting a dominant downtrend. Key short-term resistance is seen at 108-26, the 20-day EMA.
- Cash tsys yields are slightly lower today, although still remain near Friday's highs. The 2yr is -0.2bps at 4.377%, while the 10yr is -1.2bps at 4.766%. The 2s10s is 1bp lower at 38.408.
- Trump's economic team is considering a gradual rollout of tariffs, increasing 2-5% monthly, to enhance negotiating leverage while minimizing inflation risks.
- Projected rate cuts through mid-2025 continued to retreat on Monday, we have given back about 1bp of that move through to June, however firmed 2bps for July vs. late Friday levels ()*: Jan'25 steady at -0.7bp, Mar'25 -5.4bp (-6.3bp), May'25 -9.5bp (-10.5bp), Jun'25 -17.3bp (-18.2bp), Jul'25 -20.2bp (20.2bp).
- Later today we have PPI & Federal Budget Balance, focus will then turn to Wednesday’s US CPI.
JGBS: BoJ Dep. Gov Flags Hike Discussion At January MPM
JGB futures are weaker, -52 compared to settlement levels, after yesterday’s holiday.
- Outside of the previously outlined Current Account Balance, Trade Balance, and Bank Lending data, the market had a speech by BOJ Deputy Governor Himino to digest.
- "In conducting monetary policy, it is difficult but essential to judge the right timing," Deputy Gov. Ryozo Himino said in a speech to business leaders in Kanagawa prefecture, near Tokyo. He said the bank will discuss whether to raise the policy rate or not at the meeting on Jan. 23-24, based on the latest outlook for the economy and prices. Although the deputy governor didn't strongly signal a hike next week, he said the economy and prices are on track toward the bank's goal. (per BBG)
- Cash US tsys are 1-2bps richer in today’s Asia-Pac session. US PPI data will be released later today, ahead of CPI data tomorrow.
- Cash JGBs are 3-6bps cheaper across benchmarks. The benchmark 5-year yield is 4.1bps higher at 0.870% after today’s mixed auction demand metrics.
- Swap rates are flat to 4bps higher, with a steepening bias. Swap spreads are mixed.
- Tomorrow, the local calendar will see M2 & M3 Money Stock and Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs.
AUSSIE BONDS: Slightly Richer Ahead Of US PPI Data
ACGBs (YM +1.0 & XM +1.5) are slightly stronger on a data-light session.
- Outside of the previously outlined Westpac consumer confidence, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest sell-off. US PPI data will be released later today, ahead of CPI data tomorrow.
- Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at -15bps.
- Swap rates are 1-2bps lower.
- The bills strip is little changed.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is fully priced for April (102%), with the probability of a February cut at 68% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar is empty.
- AOFM Bond issuance will resume this week, with A$800mn of the 3.50% 21 December 2034 bond to be sold tomorrow and A$700mn of the 2.75% 21 November 2027 bond to be sold on Friday.
BONDS: NZGBS: Sharply Cheaper Outright & Relatively After Encouraging QSBO
NZGBs are significantly cheaper on both an outright and a relative basis. Benchmark yields have risen by 10–11bps, with the NZ-US and NZ-AU 10-year yield differentials widening by 9bps and 12bps, respectively.
- In contrast, cash US Treasuries and ACGBs are ~1bp richer during today’s Asia-Pacific session. The local market's underperformance appears to be driven by the positive signals from the Q4 NZIER Business Opinion Survey and its influence on OIS pricing, which is tempering expectations for RBNZ easing.
- To sum up, the survey showed that a net 16% of businesses expect the economy to improve, vs 1% expecting it to get worse in Q3. This was the first positive outlook since Q2 2021. After seasonal adjustment, a net 9% of businesses expect the economy to improve, vs a revised 4% expecting deterioration in Q3.
- Swap rates are 8-13bps higher, with the 2s10s curve flatter.
- RBNZ dated OIS pricing is 3-18bps firmer across meetings, with late 2025 leading. 45bps of easing is priced for February, with a cumulative 108bps by November 2025. The expected official rate for November has firmed 30bps since Friday’s close.
- Tomorrow, the local calendar is empty.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond, NZ$175mn of the 3.50% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.
FOREX: NZD Outperforms On OIS Re-Pricing, Steady Trends Elsewhere
The USD was under pressure at the NY/Asia Pac cross over, as headlines crossed from Bloomberg that Trump economic advisers were considering/studying a gradual tariff hike approach. This reportedly hasn't been present to incoming President Trump yet. The BBDXY opened at lows near 1314, not too far off pre NFP levels from last Friday, but we found some support and last track near 1317.1 (still off a little over 0.20%).
- NZD/USD has been an outperformer, rising over 0.40%, to put the pair back above 0.5605. We are still short of the 20-day EMA resistance level, which comes in around 0.5640.
- Outside of the above BBG article, which weighed on broad USD sentiment, NZD was aided by the more positive Q4 NZIER Business Opinion Survey. Whilst the survey warned of on-going recession risks, the outlook for 2025 is on the improve. RBNZ dated OIS pricing closed 3-18bps firmer across meetings, with late 2025 leading. The expected official rate for November has firmed 30bps since Friday’s close. This has aided NZ-US yield differentials.
- AUD/USD has risen, but lagged NZD moves, last near 0.6185, up around 0.15%.
- Yen has lagged NZD shifts and modest AUD gains, although GBP & EUR have given up earlier gains as well. USD/JPY spiked towards 158.00 as BoJ Deputy Governor Himino spoke. However, as Himino noted that a rate would be discussed at the upcoming meeting, along with noting real yields shouldn't stay negative when deflationary forces end, USD/JPY moved off highs. The pair was last near 157.50, little changed for the session.
- In the cross asset space, US equity futures are higher, regional equities are mostly firmer as well, led by China/HK. Japan has lagged as onshore markets return from yesterday's long weekend. US yield are down a touch.
- Looking ahead, we have US PPI in focus, along with some central bank speak.
ASIA STOCKS: China & Hong Kong Equities Surge On Hope Of Gradual Tariff Hikes
Chinese stocks surged as the US considered gradual tariff hikes, boosting sentiment alongside pledges from Chinese authorities to stabilize markets. The CSI 300 has gained 2%, ending a four-day losing streak, while the Shenzhen Composite and Shanghai Composite are 2.7% and 1.9%, respectively. Major gainers included Beijing Kingsoft Office Software (+8.7%) and Hithink RoyalFlush Information Network (+8.8%). A gauge of Chinese stocks in Hong Kong climbed 1.6%, with the Hang Seng Index benefiting from oversold conditions, last up 1.70%. Investors anticipate positive measures from a regulatory briefing on financial support for economic development later today.
- Trump's economic team is considering a gradual rollout of tariffs, increasing 2-5% monthly, to enhance negotiating leverage while minimizing inflation risks. However uncertainty remains around trade policies is fueling global economic headwinds and driving up long-term borrowing costs, as per BBG.
- Chinese travel-related stocks, such as China Eastern Airlines and TongCheng Travel, gained after the government announced plans to boost tourism through the use of vouchers and expansion of its visa-free policy.
- Chinese pharmaceutical stocks rise after China vows to continuously adjust the country’s catalog of medicines covered by insurance to include qualified innovative drugs.
- GS is expecting the Chinese government to deploy extra monetary and fiscal easing and support for the home market.
- The HSI is likely benefitting from extreme oversold conditions as the HSI put/call ratio nears lows.
- Across the market, small-cap equities are outperforming large-cap today, with the CSI 1000 & 2000 up 3.55% & 4.10% respectively, while Tech stocks are the top performing sector in the CSI 300, financials & Property lagging. While in Hong Kong, the HS Tech Index is trading 3.65% higher while the Mainland Property Index is up just 1.15%.
- Some point through the session there will be a briefing from Chinese regulators, this could lead to positive headlines which could support Greater Chinese stocks.
ASIA STOCKS: Asian Equities Mixed As Japanese Equities Struggle
Asian markets traded mixed on Tuesday as global economic concerns and US policy developments influenced sentiment. Japan's Nikkei fell 1.5%, marking a fourth day of losses, with chip-related stocks like Advantest and Lasertec sliding after new US export restrictions on semiconductors. Chinese and Hong Kong equities led regional gains, buoyed by optimism over gradual US tariff rollouts and potential policy support for China's economy. The Australian market advanced, supported by energy stocks as oil prices hovered near a five-month high, South Korean shares initially dipped however the KOSPI now trades 0.40% higher while Taiwan’s Taiex rose 0.9%, driven by gains in semiconductor stocks, including a 1% jump from TSMC.
- US Economic Data has been a main contributor of softer equity prices following stronger-than-expected US jobs data increased expectations that the Federal Reserve will delay rate cuts, weighing on growth stocks across the region, with the market now closly watching tonight PPI numbers.
- There is growing optimism Over Gradual US Tariff Rollouts after reports that the incoming US administration considering a measured increase in tariffs this provided a boost to Chinese and Hong Kong equities, easing inflation and growth concerns.
- Oil Prices and Energy Stocks have benefitted from oil prices hovering near a five-month high following tougher US sanctions on Russian oil producers.
- India’s Nifty 50 is nearing oversold territory, with its 14-day RSI approaching 30, a level that has previously signaled potential reversals but can persist below it for extended periods. The broader selloff, driven by rising oil prices and a weak rupee, has also pushed the Nifty Smallcap 250 index to its most oversold level since June 2022, marking its worst day since August.
- US Equity futures are edging higher throughout the session, with Dow eminis +0.15%, S&P 500 eminis +0.30% and NASDAQ 100 eminis +0.46%
COMMODITIES: Oil Consolidates, Gold & Metals Higher
Oil benchmarks sit a touch off recent highs, although more so for Brent than WTI. Brent was last around $80.75/bbl, off around 0.30% for the session so far. WTI was close to $78.70/bbl. Both benchmarks remain within striking distance of recent highs, which came post fresh US sanctions on Russia at the end of last week. Elsewhere, gold continues to trade with a positive bias, up nearly 0.30%. Metals are mostly positive as well, with copper and iron ore up.
- For WTI, upside focus is on $79.59, the Jul 5 ‘24 high, followed by $80.14, the Apr 12 ’24 high and a key medium-term resistance. Tanker rates have reportedly risen in response to US actions, while other measures of supply, like prompt spreads are also giving bullish signals for oil.
- Gold maintains its support on dips backdrop, last near $2670, up modestly in Tuesday trade to date. Recent resistance around $2700 remains intact. The softer USD backdrop is lending support to hold today, although better equity trends is likely aiding risk appetite (which can be a gold headwind).
- Copper has been aided by USD softness and the earlier reports of a gradual ramp up in tariffs by the returning Trump administration. CMX coper was last up 0.80% near $436.
- Iron ore has recaptured the $100/ton handle. A better China equity backdrop, amid multiple supports, is a positive, while since Q4 last year, Iron ore has been supported sub $100/ton. Yesterday's bumper iron ore import number for China for Dec is another positive.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 14/01/2025 | 0735/0835 |  EU | ECB's Lane speech on Europe, Asia and the Changing Globe | |
| 14/01/2025 | 0830/0830 |  GB | BOE's Breeden speech on Financial Stability | |
| 14/01/2025 | 0900/1000 | * |  IT | Industrial Production |
| 14/01/2025 | 1000/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 14/01/2025 | 1000/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 14/01/2025 | 1100/0600 | ** |  US | NFIB Small Business Optimism Index |
| 14/01/2025 | - | *** |  CN | Money Supply |
| 14/01/2025 | - | *** | CN | Social Financing |
| 14/01/2025 | - | *** | CN | New Loans |
| 14/01/2025 | 1330/0830 | *** | US | PPI |
| 14/01/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 14/01/2025 | 1500/1000 | US | Fed's Schmid | |
| 14/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 15/01/2025 | 0315/0415 | EU | ECB's Lane in fireside chat at GS global macro conference | |
| 15/01/2025 | 0700/0700 | *** | GB | Consumer inflation report |
| 15/01/2025 | 0700/0700 | *** | GB | Producer Prices |
| 15/01/2025 | 0700/0800 | *** |  SE | Inflation Report |
| 15/01/2025 | 0745/0845 | *** |  FR | HICP (f) |
| 15/01/2025 | 0800/0900 | *** |  ES | HICP (f) |
| 15/01/2025 | 0800/0900 | EU | ECB's De Guindos at 15th Spain Investors Day | |
| 15/01/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 15/01/2025 | 1000/1100 | ** | EU | Industrial Production |
| 15/01/2025 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 15/01/2025 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 15/01/2025 | 1330/0830 | ** | CA | Wholesale Trade |
| 15/01/2025 | 1330/0830 | *** | US | CPI |
| 15/01/2025 | 1330/0830 | ** | US | Empire State Manufacturing Survey |