Source: MNI - Market News/Bloomberg
EU
FRANCE (BBG): “French Prime Minister Francois Bayrou said he aimed to reach an agreement with parliament on a 2025 budget that would reduce the country’s deficit to close to 5%, near the level his predecessor unsuccessfully tried to reach.”
FRANCE (BBG): “President Emmanuel Macron appointed Eric Lombard as France’s finance minister, tapping an experienced finance professional as part of a new cabinet that also returned two former prime ministers to government.”
US
FED (BBG): “The US Federal Reserve will overhaul its stress tests of big US banks to smooth out changes in required capital levels from year to year under a proposal outlined by the central bank on Monday.”
STEEL (BBG): “A US national security panel has deadlocked on its review of the sale of United States Steel Corp. to Nippon Steel Corp., a procedural development that opens the door for President Joe Biden to block the transaction.”
US/CHINA (BBG): “President Joe Biden’s administration is launching an investigation that will offer President-elect Donald Trump a choice about whether to enact new tariffs on Chinese-made semiconductor chips.”
OTHER
JAPAN (RTRS): “Japan Finance Minister Katsunobu Kato reiterated Tokyo's discomfort over excessive foreign exchange moves and put speculators on notice that authorities are ready to act to stabilise a faltering yen.”
JAPAN (RTRS): “Bank of Japan policymakers agreed in October to keep raising interest rates if the economy moves in line with their forecast, but some stressed the need for caution on uncertainty over U.S. economic policy, minutes of the meeting showed on Tuesday.”
SOUTH KOREA (BBG): “ South Korea’s main opposition party said it will start impeachment proceedings against Prime Minister and Acting President Han Duck-soo, according to Yonhap News.”
SOUTH KOREA (RTRS): “South Korea's consumer sentiment dropped sharply this month to hit the weakest level in more than two years on growing worries about political uncertainty following parliament's impeachment of President Yoon Suk Yeol.”
AUSTRALIA (BBG): “Australia’s central bank is more confident that inflation is moving sustainably toward target but it’s still too soon to conclude the battle is won given a recent pick-up in consumption and a still-tight labor market, minutes of the December meeting showed.”
CHINA
EQUITY MARKETS (CSJ): "Some 228 companies listed in China and their big shareholders have received 49.8b yuan in loans supported by a PBOC relending program that encourages buybacks, China Securities Journal says in a report Tuesday that cites Wind data."
HOUSING (CCN): “ An annual national meeting on housing and constructions in the urban and rural areas started at 9am Tuesday in Beijing, the Housing Ministry-backed China Construction News reports.”
CHINA MARKETS
MNI: PBOC Net Drains CNY291.3 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY64.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY291.3 billion after offsetting the maturity of CNY355.4 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4868% at 09:51 am local time from the close of 1.5395% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 46 on Monday, compared with the close of 43 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1876 Tues; -2.11% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1876 on Tuesday, compared with 7.1870 set on Monday. The fixing was estimated at 7.2993 by Bloomberg survey today.
MARKET DATA
SOUTH KOREA DEC CONSUMER CONFIDENCE 88.4; PRIOR 100.7
MARKETS
US TSYS: Cash Bonds Slightly Richer Ahead Of Holiday
TYH5 is 108-18, +0-03 from NY closing levels.
- Cash bonds are flat to 1bp richer in today’s Asia-Pac session after yesterday’s heavy session.
- Benchmark yields finished yesterday 3-7bps higher, with the 7-year leading.
- Today will see Philadelphia Fed Non-Manufacturing Activity and Richmond Fed Manufacturing Index alongside Tsy $28B 2Y FRN & $70B 5Y Note auctions.
JGBS: Subdued Session, Limited Reaction To BOJ Minutes (Oct)
JGB futures are weaker, -14 compared to settlement levels
- Outside of the BOJ Minutes for the October MPM, there hasn't been much by way of domestic drivers to flag.
- The BOJ minutes revealed that one member noted market rates might be lower than appropriate given the BOJ's economic and price projections and its monetary policy guidance. Another member highlighted the difficulty in confidently projecting medium- to long-term rate hikes due to uncertainties about Japan's neutral rate and the transmission mechanism of monetary policy.
- The local calendar will also see later Dept Store Sales alongside an Auction for Enhanced-Liquidity 15.5-39 YR.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s heavy session.
- Cash JGBs are 1bp higher to 2bps lower across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.5bp higher at 1.08% versus the cycle high of 1.113%.
- The swaps curve has twist-flattened, pivoting at the 10-year, with rates 1bp lower to 4bps higher.
- Tomorrow, the local calendar will see PPI Services and Coincident/Leading Indices alongside BOJ Rinban Operations covering 3-10-year and 25-year+ JGBs.
AUSSIE BONDS: Subdued Session Ahead Of Xmas Break, No Reaction To RBA Minutes
ACGBs (YM flat & XM -3.5) closed cheaper but off worst levels on a holiday-shortened session.
- Australia’s central bank is more confident that inflation is moving sustainably toward target but it’s still too soon to conclude the battle is won given a recent pick-up in consumption and a still-tight labour market, minutes of the December meeting showed.
- The Reserve Bank’s board discussed scenarios in which future policy would be eased to boost economic growth or stay at current restrictive levels, according to minutes of the Dec. 9-10 meeting. The board concluded either outcome was conceivable and opted to stand pat at 4.35%, saying recent data hadn’t been sufficient to shift the dial on the policy outlook. (see BBG link)
- Cash ACGBs closed 1-4bps cheaper with the 3/10 curve steeper and the AU-US 10-year yield differential at -14bps.
- The bills strip closed slightly richer with pricing +2 to +3 across contracts.
- RBA-dated OIS pricing closed showing a 25bps rate cut more than fully priced by April (123%). A 59% chance is priced for February.
- The local market will resume on the 27th of December after the extended Xmas break.
BONDS: NZGBS: Little Changed, NZ-US 10Y Diff Tightest Since Late 2020
NZGBs were slightly mixed, with benchmark yields 1bp lower to 1bp higher. Early weakness following the negative lead in from US tsys was reversed, but trading was subdued ahead of a holiday-shortened trading week.
- The NZ-US 10-year yield differential is at -11bps, the lowest level since late 2020.
- Swap rates are 1-2bps higher, with the 2s10s curve steeper.
- RBNZ-dated OIS pricing is showing 54bps of easing for February, with a cumulative 123bps by November 2025.
- Trading will resume on the 27th of December.
FOREX: Yen Supported By FinMin FX Warning, A$ Down Modestly
The USD BBDXY index sits a touch higher in the first part of Tuesday trade, as markets wind down ahead of the Christmas break. The index was last near 1301.3, so holding Monday gains, but still sub recent cycle highs.
- USD/JPY sits off earlier highs (157.39), last testing under 157.00 and close to session lows. Yen sentiment has been aided by fresh rhetoric from the FinMin warning around excessive/one-sided FX moves and that the authorities would respond.
- The language used echoed comments from last week ("CONCERNED ABOUT RECENT FX MOVES" RTRS) and didn't impact much initially. USD/JPY's move lower has been a steady grind. The comments a likely warning on intervention risks, particularly as lighter liquidity approaches over the holiday period.
- We also have BoJ Governor Ueda speaking tomorrow.
- AUD and NZD have drifted a little lower, but recent ranges have held. AUD/USD last down around 0.20%, just under the 0.6240 level. The RBA mins were released, which didn't impact sentiment much, the RBA reiterating that it is too soon to be confident of sustaining inflation within the target range. NZD/USD was last near 0.5645.
- This afternoon headlines have crossed from a China fiscal work conference in Beijing. Familiar language has been used around supporting growth next year and increasing bond issuance. Details were light otherwise though.
- China and Hong Kong equities are higher, but were already firmer prior to these fiscal headlines. Iron ore is still weaker for the session, an AUD headwind.
- Coming up we just have US data in terms of the Richmond Fed index and Philly Fed non-manufacturing index due before the Christmas break.
ASIA STOCKS: China Equities Lead the Way into Holiday Period.
- China’s key equity indices have put in a strong day leading into the holiday break. The Hang Seng led the charge up +1.10%, CSI 300 +0.76%, Shanghai +0.67% and Shenzhen +0.42%.
- South Korea’s KOSPI had delivered a very strong day yesterday and is trying to hold onto those gains, trading flat all day.
- Malaysia’s FTSE Bmk KLCI rose +0.35%, following on from yesterday’s positivity.
- Following on from yesterday’s very strong day, Indonesia’s Jakarta Composite is could not follow on and is down -0.10%
- Other key movers sees Philippines up 2% and Singapore +0.50%.
- India’s NIFTY 50 put in a positive day yesterday and is opening up
Oil Drifts Higher into the Holidays.
- Oil had an up and down day initially, falling in the US session only to rally back into the close to finish in line with where it started the day.
- Opening at US$69.24, on very low volumes oil inched higher to be at $69.53 in afternoon trading.
- Supply issues and the potential excess in 2025 are never far away from traders’ minds as news of Russian oil flows via Belarus came out.
- Brent had opened at US$72.63 and on very light volumes edged higher to $72.96.
- As investors ponder 2025 it appears that a key indicator for Oil’s fortunes in the context of supply will be the success of the Chinese authorities in stabilizing the growth outlook for the domestic economy.
- Today will likely see the Medium-Term Lending Rate and Volume data and whilst no rate cut is expected, the emphasis for the release will be on the volume of uptake as an indicator for activity.
- Equally in the US, oil will be watching closely for indicators from monetary policy and its impact on the dollar.
- Despite the concerns about supply, Hedge Funds have turned bullish on oil with net long positions the most in 1 year.
Gold Edges Higher on Light Volumes.
- As the US averted a shutdown data released shows the US consumer’s confidence has slipped for the first time in three months on concerns that the Trump administration will create uncertainty with their policies.
- The Consumer confidence index dipped to 104.7 from 111.7 in the month prior and headline durable good figure of -1.1% MoM was viewed as a miss and despite the data, bonds sold off taking gold with it.
- Opening at $2,612.29 in light volumes it drifted up to $2,619.85.
- Having had a strong year on the outlook for rate cuts, the next few months for gold will hinge on the ability of the Fed Reserve to deliver rate cuts in 2025 and the subsequent impact on the USD.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 24/12/2024 | 1330/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 24/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 24/12/2024 | 1500/1000 | ** | US | Richmond Fed Survey |
| 24/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 5 Year Note |
| 24/12/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/12/2024 | 0800/0900 | ** |  ES | PPI |
| 26/12/2024 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 26/12/2024 | 1330/0830 | *** | US | Jobless Claims |
| 26/12/2024 | 1600/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 26/12/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/12/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 27/12/2024 | 2330/0830 | * | JP | Labor Force Survey |
| 27/12/2024 | 2350/0850 | * | JP | Retail Sales (p) |
| 27/12/2024 | 2350/0850 | ** | JP | Industrial Production |
| 27/12/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 27/12/2024 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |