MNI EUROPEAN OPEN: Tokyo Upside CPI Surprise Keeps BoJ Outlook In Focus

EXECUTIVE SUMMARY

• REPUBLICANS TOY WITH EXTENDING DEBT LIMIT TO END OF SEPTEMBER (BBG)
• ECB SEEN DELIVERING TWO HALF-POINT HIKES ON WAY TO MAY PEAK (BBG)
• CONSUMER INFLATION IN JAPAN’S CAPITAL HITS NEAR 42-YR HIGH, KEEPS BOJ UNDER PRESSURE (RTRS)
• JAPAN PM SAYS CAN’T RULE OUT RETURN OF DEFLATION DESPITE PRICE SPIKE (RTRS)
• JAPAN, NETHERLANDS TO JOIN US IN CHIP EXPORT CONTROLS ON CHINA (BBG)

Fig. 1: Tokyo Headline & Core CPI, Y/Y

Source: MNI - Market News/Bloomberg

EUROPE

ECB: Back-to-back interest-rate increases of 50 basis points are approaching from the European Central Bank, whose battle with persistent inflation will see it hike borrowing costs until May, according to a survey of economists. (BBG)

U.S.

EQUITIES: Intel Corp. gave one of the gloomiest quarterly forecasts in its history after a personal-computer slump ravaged the chipmaker’s business, sending shares tumbling and further setting back turnaround efforts. The company predicted a surprise loss in the current period and a sales range that missed analysts’ estimates by billions of dollars. At the low end of Intel’s projections, revenue would be the smallest quarterly total since 2010. (BBG)

DEBT: House Republican leaders are considering proposing a short-term extension of the federal debt ceiling to delay the risk of a default until Sept. 30, according a person familiar with their deliberations, a step that would allow more time to resolve an impasse with Democrats.The strategy is merely an option under consideration, and it isn’t clear whether the Democratic-controlled Senate or White House would agree to briefly putting off a reckoning on the debt ceiling, said the person, who asked not to be identified. (BBG)

OTHER

JAPAN: Japanese PM Fumio Kishida said on Friday that a return to deflation in the world’s third largest economy cannot be ruled out, because domestic data remains weak. (RTRS)

JAPAN: The Japanese government plans to leave the decision of whether to wear masks indoors up to the individual as it finalizes plans to lower the disease classification of Covid-19 in May, public broadcaster NHK reported. (BBG)

JAPAN: Core consumer prices in Japan's capital, a leading indicator of nationwide trends, rose 4.3% in January from a year earlier, marking the fastest annual gain in nearly 42 years and keeping the central bank under pressure to phase out economic stimulus. (RTRS)

JAPAN: Japan and the Netherlands are poised to join the US in limiting China’s access to advanced semiconductor machinery, forging a powerful alliance that will undercut Beijing’s ambitions to build its own domestic chip capabilities, according to people familiar with the negotiations. (BBG)

JAPAN: China is “100% sure” to retaliate over Japanese backing for Biden administration restrictions on semiconductor exports, and firms facing the fallout should look for markets elsewhere, a ruling Liberal Democratic Party lawmaker said. (BBG)

JAPAN: Goldman Sachs Group Inc. raised its forecasts for Japan’s upcoming spring wage negotiations, expecting the highest base pay hike in three decades as inflation continues to surprise on the upside. The brokerage now sees a base wage increase of 1.2% in the annual negotiations between labor unions and companies, up from its previous forecast of 0.9%. When combined with scheduled, seniority-based raises, Goldman expects an increase of 2.8% as a result of the wage negotiations, up from its former view of 2.5%. (BBG)

JAPAN: The Bank of Japan will conduct funds-supplying operations against pooled collateral on Jan. 31 with the duration of loans being 5 years. Interest to be determined by variable-rate method and amount to be determined on the day of the operation. (BBG)

AUSTRALIA: ACCC’s latest gas inquiry report forecasts a supply shortfall of 30 petajoules in Australia’s east coast gas market this year if the LNG producers were to export all their uncontracted gas. However, the LNG producers have enough uncontracted gas to prevent a domestic shortfall, Australian Competition & Consumer Commission says in a statement (BBG)

AUSTRALIA: The A$14.7 billion shortfall compares with the 2022-23 October Budget profile deficit of A$26.2 billion. Receipts were A$8.8 billion higher than the 2022-23 October Budget profile; payments were A$2.8 billion lower (BBG)

IRON ORE: Iron ore is expected to moderate after a ~30% surge driven by China’s reopening, according to Citigroup Inc., which pared its price target. “It’s time to step off the China reopening trade in iron ore,” the bank said in a Jan. 27 note by analyst Ephrem Ravi. The three-month forecast was downgraded to $120/t given an uncertain short-term outlook for the steelmaking ingredient. (BBG)

SOUTH KOREA: South Korean manufacturers' business sentiment for February weakened to the worst level in over two years, a central bank survey showed on Friday, hurt by heightened uncertainty over the economic outlook. (RTRS)

SOUTH KOREA: South Korea will extend restriction on short-term visa issuance for China to Feb. 28, health ministry says in statement. To resume visa issuance before end of Feb. if coronavirus situation in China improves (BBG)

OVERNIGHT DATA

SOUTH KOREA FEB MANUFACTURING CONFIDENCE 65; JAN 68
SOUTH KOREA FEB NON-MANUFACTURING CONFIDENCE 70; JAN 68

JAPAN TOKYO JAN CPI 4.4% Y/Y; MEDIAN 4.0%; Dec 3.9%
JAPAN TOKYO JAN CPI EX FRESH FOOD 4.3% Y/Y; MEDIAN 4.2%; DEC 3.9%
JAPAN TOKYO JAN CPI EX FRESH FOOD, ENERGY 3.0%; MEDIAN 2.9%; DEC 2.7%

NZ JAN ANZ BUSINESS CONFIDENCE -52.0; DEC -70.2
NZ JAN ANZ BUSINESS ACTIVITY OUTLOOK -15.8; Dec 25.6

AUSTRALIA Q4 PPI 0.7% Q/Q; Q3 1.9%
AUSTRALIA Q4 PPI 5.8% Y/T; Q3 6.4%
AUSTRALIA Q4 EXPORT PRICE INDEX -0.9%; MEDIAN -1.3%; Q3 -3.6%
AUSTRALIA Q4 IMPORT PRICE INDEX 1.8%; MEDIAN 1.3%; Q3 3.0%

MARKETS