Source: MNI - Market News/Bloomberg
UK
UK (BBG): “UK Chancellor Rachel Reeves will relax some changes to the tax regime for wealthy foreigners, known as "non-doms", amid concerns the policies are pushing millionaires to leave the country. The government plans to introduce an amendment to the Finance Bill to soften the impact of the non-dom plans, making it easier for some individuals to access the temporary repatriation facility.”
EU
EU BANKING: (BBG) : “Italian lender Banca Monte dei Paschi di Siena SpA is exploring a potential deal for Mediobanca SpA, people with knowledge of the matter said. Monte Paschi is considering a move to acquire full or partial control of Mediobanca, the people said, asking not to be identified because the information is private. An announcement may come as soon as Friday, according to the people. Shares of Monte Paschi have more than doubled over the past 12 months, giving it a market capitalization of roughly €8.8 billion ($9.2 billion). Shares of Mediobanca have risen 28% over the same period, for a market value of about €12.7 billion. “
FRANCE (BBG): "The French government expects a planned levy to counter tax optimization by the richest individuals to raise €2 billion ($2.1 billion) this year, according to Finance Ministry officials."
US
US/OIL : (BBG) : “US President Donald Trump said he would ask Saudi Arabia and other OPEC nations to “bring down the cost of oil,” casting the push for more crude output as a way to heighten pressure on Russia and help end the nearly three-year war in Ukraine. “If the price came down, the Russia-Ukraine war would end immediately,” Trump told world leaders gathered in Davos, Switzerland, on Thursday. “Right now, the price is high enough that the war will continue.”
US/CRYPTO (BBG) : “President Trump signed executive actions related to cryptocurrency and artificial intelligence. The crypto order creates a working group to advise the White House on digital asset policies and will submit a report to the president within six months.”
US/CHINA (BBG): “President Donald Trump expressed a reluctance to impose tariffs on China during a television interview, suggesting a trade war between the world’s largest economies could be avoided. “We have one very big power over China, and that’s tariffs, and they don’t want them,” the US leader told Fox News in an interview that aired Thursday in the US. “And I’d rather not have to use it. But it’s a tremendous power over China”
OTHER
JAPAN (MNI BRIEF): The Bank of Japan raised the unsecured overnight call loan rate 25 basis points to 0.50% on Friday, the first hike since July 2024 and the highest level since October 2008. “Japan’s economic activity and prices have been developing generally in line with the outlook presented in the previous Outlook Report released in October,” according to a statement released by the BOJ.
JAPAN (MNI BRIEF): The year-on-year rise of Japan's annual core consumer inflation rate accelerated to 3.0% in December as expected from November’s 2.7% due to higher prices of energy and foods excluding perishables, data released by the Ministry of Internal Affairs and Communications showed on Friday. December’s index stayed above the Bank of Japan’s 2% target for the 33rd consecutive month. The index was boosted by higher prices of energy (+10.1% vs. +6.0%) and food excluding perishables (4.4% vs. 4.2%).”
JAPAN (MNI BRIEF): The Bank of Japan on Friday revised its median forecast for the core consumer price index in fiscal 2026 to +2.0% from October’s 1.9% but left its core-core CPI view for fiscal 2026 unchanged at 2.1%.
CHINA
CHINA STIMULUS (MNI): A Chinese advisor shares his fiscal policy outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
CHINA GROWTH (BBG): “China’s biggest provinces economically, accounting for over 60% of national GDP, have been outlining their 2025 growth strategies at recent provincial legislative sessions, with a focus on stability and high-quality development. Eight of the 11 regions, including Guangdong, Jiangsu, Zhejiang, Shangdong, Hubei, have maintained their GDP growth rate targets for 2025 at 5%-6%, while Sichuan, Anhui, and Hunan have lowered their targets”
PORK PRICES (MNI): A Chinese meat industry expert assesses the outlook for pork prices in 2025, a key CPI component. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
AUTOS (MNI): A leading China auto industry expert shares his 2025 sales and export outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
CHINA MARKETS
MNI: PBOC Drains CNY795bn via MLF, Net Injects CNY139.5 Bln via OMO Thursday.
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY284 billion via 14-day reverse repos, with the rate unchanged at 1.65%. The operation led to a net injection of CNY179 billion after offsetting the maturity of CNY105 billion today, according to Wind Information.
The PBOC also conducted CNY200 billion one-year medium-term lending facility, with the rate unchanged at 2.00%, to help offset the maturity of CNY995 billion MLF today, resulting in a net drain of CNY795 billion.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.0518% at 09:52 am local time from the close of 2.1213% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 58 on Thursday, compared with the close of 68 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1705 Fri; -1.62% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1705 on Friday, compared with 7.1708 set on Thursday. The fixing was estimated at 7.2804 by Bloomberg survey today.
MARKET DATA
AUSTRALIA S&P GLOBAL AUSTRALIA PMI COMPOSITE 50.3; PRIOR 50.2
AUSTRALIA S&P GLOBAL AUSTRALIA PMI MFG 49.8; PRIOR 47.8
AUSTRALIA S&P GLOBAL AUSTRALIA PMI SERVICES 50.4; PRIOR 50.8
CHINA 1-YR MEDIUM-TERM LENDING FACILITITIES VOLUME CNY200BN; PRIOR CNY300BN.
CHINA 1-YR MEDIUM-TERM LENDING FACILITITIES RATE 2.00%; PRIOR 2.00%
JAPAN NATIONAL CPY YOY 3.6%; PRIOR 2.9%
JAPAN NATIONAL CPI EX FOOD , ENERGY YOY 2.4%; PRIOR 2.4%
JIBUN BANK JAPAN PMI COMPOSITE 51.1; PRIOR 50.5
JIBUN BANK JAPAN PMI MFG 48.8; PRIOR 49.6
JIBUN BANK JAPAN PMI SERVICES 52.7; PRIOR 50.9
BOJ TARGET RATE 0.50%; PRIOR 0.25%
BOJ GDP CURRENT FORECAST 0.5%; PRIOR 0.6%
BOJ CORE CPI CURRENT FORECAST 2.7%; PRIOR 2.5%
BOJ CORE CPI EX-ENERGY CURRENT 2.2%; PRIOR 2.0%
MARKETS
US TSYS: Tsys Yields Lower Following Trump Comments, Curve Steepens
- Tsys futures are trading near session highs, with the short-end outperforming. TU is trading above yesterday's highs, last +01¼ at 102-24+, just off session highs of 102-25. TY is +03 at 108-15, however the trend remains bearish, the contract did trade through the 20-day EMA, at 108-17+ during the week which does expose 109-06, the Dec 31 high, and 109-15, the 50-day EMA, with a clear break of the 50-day average needed to strengthen a bullish theme. The bear trigger is unchanged at 107-06, the Jan 13 low.
- Tsys rallied as the second part of the Trump interview on Fox aired, with particular focus on comments he made around not wanting to have to impose tariffs on China, and that Trump & Xi had good discussions.
- Cash tsys yields are just off session lows, with curves bull-steepening. The 2yr is -3bps at 4.259%, while the 10yr is -1.6bps at 4.268%. The 2s10s curve is +1.5bps at 36.380, after rising 5bps on Thursday.
- Overnight in tsys options, demand emerged during US afternoon for bullish plays targeting a 10yr yield move back toward 4% within a couple of months, while in SOFR options early flows included upside position in the Dec25 tenor, targeting an additional 100bp of rate cuts on top of current market pricing for Fed policy this year.
- Today we have S&P Global US Manufacturing PMI, U. of Mich. Sentiment & Existing Home Sales.
JGBS: Cheapen After BoJ Hike To 0.50%
JGB futures have weakened to fresh session lows after the BoJ delivered the much anticipated 25bp rate hike to 0.50% with a vote of 8-1. Board member Nakamura voted against the rate hike. JBH5 is currently trading at 140.77, -16 compared to settlement levels versus the session low of 140.67.
- The BoJ projects the fiscal year 2025 core CPI at 2.4%, up from the previous estimate of 1.9%. It also views price risks for fiscal 2025 as leaning to the upside. For fiscal year 2026, the BoJ forecasts core CPI at 2.0%, slightly higher than the prior projection of 1.9%. The forecast for fiscal year 2024 core CPI is now at 2.7%, compared to the earlier estimate of 2.5%.
- The BoJ notes that Japan's real interest rate remains at a significantly low level and indicates it will continue raising interest rates if the economic outlook materializes as expected.
- Cash JGBs are flat to 3bps cheaper across benchmarks. The benchmark 10-year yield is 2.7bp cheaper at 1.236% versus pre-lunch level of 1.216%.
- Swap rates are 1-2bps higher after being little changed ahead of the decision.
- In contrast, cash US tsys are 1-3bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-steepener.
AUSSIE BONDS: Slightly Mixed On A Data-Light Day, Cash Us Tsys Richer
ACGBs (YM +2.0 & XM -0.5) are slightly mixed on a subdued data-light Sydney session.
- Outside of the previously outlined S+P Global PMIs, there have been few domestic drivers to flag.
- Offshore, the BoJ raised rates by 25bps, as widely expected, taking the policy rate to 0.50%. The board voted 8-1 in favour of the move (1 vote against a hike).
- Cash ACGBs are flat to 2bps richer with the 3/10 curve steeper. The AU-US 10-year yield differential is at -15bps.
- Cash US tsys are 1-3bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-steepener.
- Swap rates are 1-2bps lower, with the 3s10s curve steeper.
- The bills strip +1 to +3 across contracts.
- RBA-dated OIS pricing is flat to 3bps softer across meetings today. A 25bp rate cut is more than fully priced for April (113%), with the probability of a February cut at 73% (based on an effective cash rate of 4.34%).
- The local market is closed on Monday for the Australia Day holiday.
- Next week, the AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond on Tuesday. The AOFM also plans to sell A$800mn of the 2.50% 21 May 2030 bond on Friday.
BONDS: NZGBS: Modest Bull-Flattener, Outperforms $-Bloc
NZGBs closed showing a bull-flattener on a data-light day, with benchmark yields flat to 2bps lower.
- Domestic credit card spending on all cards rises 1% m/m (-1.4% y/y), according to the RBNZ.
- NZGBs outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials 4bps and 3bps tighter respectively.
- Cash US tsys are 1-3bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-steepener.
- Swap rates closed 1-2bps lower.
- RBNZ dated OIS pricing closed slightly firmer across meetings. 47bps of easing is priced for February, with a cumulative 109bps by November 2025. Relative to pre-CPI levels, pricing is slightly mixed, with meetings out to July 2-3bps softer and meetings beyond ~2bps firmer.
- The local calendar is empty until the release of Filled Jobs data on Tuesday.
FOREX: USD Index To Fresh 2025 Lows After Trump Tariff Comments
The USD BBDXY index has hit fresh lows for 2025, last close to 1298, down around 0.30% for the session so far. The first move came as headlines crossed from US President Trump around not wanting to use tariffs on China, while yen has rallied post the BOJ's 25bps rate hike, which had some hawkish undertones.
- The remarks made by Trump around tariffs (as part of the second leg of his Fox News Interview) don't suggest tariff hikes are off the table for China, but will be welcomed by the market in the sense there is potential for negotiations between the two side and an imminent tariff hike may not be on the cards.
- Higher beta plays like AUD and NZD moved quickly firmer, outperforming other parts of the G10 space, although this is now less apparent, particularly with yen playing catch up.
- AUD/USD was last 0.6310/15, against session highs of 0.6324. The 50-day EMA resistance, close to 0.6330, is nearby. NZD/USD is up to 0.5700/05. Session highs rest at 0.5711.
- USD/JPY was initially volatile through the BoJ announcement. We saw highs of 156.41 before a sharp pull back to 155.01, close to recent lows and important support points.
- The BoJ hiked 25bps as expected, but the combination of expressing confidence in realizing the outlook, which would prompt further rate rises, along with higher inflation forecasts, has left hawkish impressions on the market.
- Downside focus will rest on the high 154/low 155.00 region. the 50-day EMA is just above 155.00, while 154.64, is a trendline drawn from the Sep 16 ‘24 high. A break sub these levels is likely to signify a deeper correction in the pair.
- In the cross asset space, US yields are lower (post Trump comments), which has helped push US-JP yield differentials down, another yen positive. US equity futures are down slightly. Regional equities are mixed, with China/HK markets outperforming (again related to the Trump comments).
- Looking ahead, the main focus will be on preliminary PMI reads for the UK, EU and US. We also have some ECB speak, headlined by Lagarde.
ASIA STOCKS: China Equities Rally Following Trump Comments
Chinese equities are rallying, supported by a softer tone from President Donald Trump on tariffs. The Hang Seng China Enterprises Index climbed over 2%, while the yuan strengthened to its highest level in six weeks in both onshore and offshore trading. This follows Trump’s remarks indicating a preference to avoid significant tariffs on China, easing market fears of aggressive trade actions.
- Investors remain cautious, however, as Chinese assets are under pressure from concerns about economic slowdown and limited stimulus measures from Beijing. Despite recent gains, volatility is expected to persist due to the unpredictable nature of U.S.-China trade relations and broader economic uncertainties.
- China's recent measures could inject at least 1t yuan ($138b) into its struggling stock market in 2025, with JPMorgan's most bullish estimate predicting up to 13t yuan over three years. The initiatives require state-owned insurers to allocate 30% of new premiums to onshore stocks annually starting in 2025, and mutual funds to increase holdings by at least 10% annually.
- Analysts estimate flows from these policies to range widely: Citi projects over 1t yuan in 2025, UBS predicts 1.7t yuan, and Huajin forecasts 860b to 1.35t yuan. These injections aim to counteract pressure on Chinese equities, which have suffered from fears of economic slowdown and external risks. Investors remain skeptical about the efficacy of recent stimulus measures introduced by Beijing.
ASIA STOCKS: Asian Equities Edge Higher Following Trump Comments
Asian equities climbed to a one-month high, with the MSCI Asia Pacific Index gaining 0.8%, driven by optimism following U.S. President Donald Trump's softened stance on tariffs against China. The Hang Seng China Enterprises Index led gains, rising 2.2%, while the CSI 300 Index added 1%. Technology stocks like Tencent and Alibaba were top contributors. Japan's Topix and Nikkei saw choppy trade now trading just 0.10% higher for the session after the BoJ raised its key policy rate by 25bps, the largest hike in 18 years, strengthening the yen and pressuring exporters.
- South Korea’s Kospi Index rose 0.8%, buoyed by foreign fund inflows into tech stocks, while Australia’s ASX 200 edged up 0.4%. In contrast, New Zealand’s NZX 50 fell 0.2%, and several Southeast Asian markets, including Malaysia and the Philippines, declined.
- Investors remain cautious amid mixed signals from central bank policies and economic uncertainties, with traders awaiting further clarity from BOJ Governor Kazuo Ueda’s upcoming comments.
- US equity futures are trading slightly lower on the day, with NASDAQ futures down 0.15%, while S%P 500 futures are -0.10%.
- Next week will be heavily interrupted by Chinese New years with many markets closing throughout the week.
Gold Set for New Record as Trump Softens on China Tariffs.
- President Trump told Fox News on Thursday night that he’d ‘rather not use’ levies against China, causing the dollar to drop, giving Gold a late boost.
- For much of the week gold prices appeared supported by their safe-haven status but the week’s rally showed signs of softening before Trump addressed Davos in comments that drove volatility.
- Trump had already levelled comments at Mexico, Canada, China and the EU warning them during the week of the potential for tariffs.
- Opening the day at US2,754.87 gold traded as high as $2,777.37 before backing off to $2,770.98.
- At these prices, gold is setting new records for all time prices and some analysts believe could go higher in 2025.
Oil Down for First Weekly Loss this Year Thanks to Trump.
- During his first term in office, President Trump employed a line of attack on Saudi Arabia and OPEC+ aimed at driving down the price of oil.
- Yesterday he restarted that approach stating clearly “I am going to ask Saudi Arabia and OPEC+ to bring down the cost of oil,” whilst addressing the gathering of world leaders at Davos.
- OPEC+ has been holding back on supply to support prices as new sources of oil hit markets globally that are outside OPEC+ control.
- It is estimated that there is 1 million plus spare daily capacity available that could be released.
- The comments naturally had the immediate effect on prices with WTI falling from an intra-day high of US$76 bbl to open the trading day in Asia at $74.26 where it pared back some of those losses to reach $74.55.
- For the week, WTI is on track to finish over 4% lower.
- Brent followed a similar pattern having peaked at US$79.60 bbl it opened the Asian trading day at $77.86 rising marginally to $78.23.
- For the week Brent is on track to finish over 3% lower.
- This week Trump’s comments on potential tariffs have impacted most markets in different ways and with Canada in his sights for some of the first tariffs, there is evidence that exporters are trying to get ahead of that.
- US imports of Canadian oil are running at a record with the possibility of tariffs seeing more oil being pumped to US refineries.
- Crude inventories however declined for the ninth week straight and are now at their lowest level since early 2022.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 24/01/2025 | 0700/0800 | ** |  SE | PPI |
| 24/01/2025 | 0700/0800 | ** | SE | Unemployment |
| 24/01/2025 | 0800/0900 | ** |  ES | PPI |
| 24/01/2025 | 0815/0915 | ** |  FR | S&P Global Services PMI (p) |
| 24/01/2025 | 0815/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 24/01/2025 | 0830/0930 | ** |  DE | S&P Global Services PMI (p) |
| 24/01/2025 | 0830/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 24/01/2025 | 0900/1000 | ** |  EU | S&P Global Services PMI (p) |
| 24/01/2025 | 0900/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 24/01/2025 | 0900/1000 | ** | EU | S&P Global Composite PMI (p) |
| 24/01/2025 | 0930/0930 | *** |  GB | S&P Global Manufacturing PMI flash |
| 24/01/2025 | 0930/0930 | *** | GB | S&P Global Services PMI flash |
| 24/01/2025 | 0930/0930 | *** | GB | S&P Global Composite PMI flash |
| 24/01/2025 | 1000/1100 | EU | ECB's Lagarde in dialogue on the global economic outlook | |
| 24/01/2025 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 24/01/2025 | 1100/1200 | EU | ECB's Cipollone in panel discussion on the effects of CB digital currencies | |
| 24/01/2025 | 1330/0830 | ** |  US | WASDE Weekly Import/Export |
| 24/01/2025 | 1330/0830 |  CA | StatsCan Labour Force Survey: Revisions, 1987 to 2024 | |
| 24/01/2025 | 1445/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 24/01/2025 | 1445/0945 | *** | US | S&P Global Services Index (flash) |
| 24/01/2025 | 1500/1000 | *** | US | NAR existing home sales |
| 24/01/2025 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 24/01/2025 | 1800/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |