Asia EQ and BTC soft post-Fed & Oracle, strong JP-20 yr auction as JP govt explores fiscal options

Asia Market Update: Asia EQ & BTC soft post-Fed & Oracle; Strong JP-20 yr auction as JP govt explores fiscal options & fmr BOJ exec sees 'multiple hikes' going forward.

General trend and developments

- US equity FUTs soft in Asia by as much as -1% in Asian trading after rises in the US cash trading session post-US Fed. Asia saw soft equities in concert with the US (Nikkei under-performing -0.9%). Hang Seng up +1% early but later pared gains.

- US Fed cautiously "data dependent" going forward but did shore up some further liquidity with extra short-term bill issuance and in his presser Chair Powell said that if jobs weaken that could create conditions for further cuts.

- Oracle down -11% after hours following earnings. EPS and Rev at low end of estimates but the $15B increase in Capex noted for 2026 only adds to investor nervousness about the sustainability of the company’s CDS’s at elevated pricing levels. (5-years highest since 2009).

- Bitcoin threatened $95K for the first time in weeks shortly after the Fed, but pulled back consistently during Asian trading to below $90K again.

- Australia saw a sizable drop in Nov full-time employment (headline jobs number was the largest fall in 9 months), the opposite of the growth expected and running against the recent hawkish tone out of the RBA.

- AUD fell -0.6% alongside 3-year yields -8bps and the ASX 200 index extended initial gains on bets that the likelihood of 2026 rate hikes may be stayed somewhat.

- Japanese yields fell in concert with USTs earlier but accelerated falls following the strongest bid-to-cover (>4x) for the 20-year JGB auction since May 2020, during the pandemic. Tail of only 3bps also narrowest since Jan 2023. Belly of the curve 20-year JGBs -4bps and 10-year JGBs down a similar amount to 1.92% after touching multi-decade highs of 1.98% earlier in the week.

- Japan govt under Takaichi beginning to explore fiscal options through both spurring Capex investment via a 7% corporate tax credit on some investments, to significantly lowering the threshold of income tax for the super-rich.

- Meanwhile former Bank of Japan exec Hayakawa said the BOJ is likely to conduct multiple rate hikes ahead, noting concern about the BOJ falling behind the curve.

- In trade, Mexico bit the bullet and approved up to 50% tariffs on China and other Asian countries, China MOFCOM asked Mexico to 'reconsider its wrong-doing'.

- Overnight reports China govt holding emergency meetings with Alibaba, Bytedance and Tencent to discuss whether to, or else how many, Nvidia chips to purchase, including the newly authorized-for-export H200.

- With offshore Yuan threatening to strengthen into the 7.04 handle, the PBOC set the strongest fix since Oct 9th, 2024.

- South Korean exports for first 10 days of Dec saw chip exports continuing to power ahead, but autos fell and ships fell heavily after recent strong rises. US exports fell -3% y/y while China exports rose 13% on the year.

- Vietnam said to amend law to ban exports of rare earth minerals.

- US equity FUTs -0.8% to -1.1% during Asian trading.

JP Looking ahead (Asian-weighted focus, using Asian time zone)

- Thu Dec 11th (Thu night US Sept Trade Balance, US Oct/Nov PPI).

- Fri Dec 12th NZ Nov Business PMI, (UK Oct GDP, IN Nov CPI),

Holidays in Asia this week

- Mon Dec 8th Philippines.

- Wed Dec 10th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.6% at 8,634.

- AUSTRALIA NOV EMPLOYMENT CHANGE: -21.3K V +20.0KE; UNEMPLOYMENT RATE: 4.3% V 4.4%E (Headline jobs number largest fall in 9 months).

- Australia sells A$150M of indexed Aug 2035 bonds; Avg Yield: 2.4067% v 2.0184% prior; bid to cover 4.05x v 3.32x prior.

- Australia said to be planning to open new areas for offshore gas exploration - financial press.

- New Zealand Q3 Manufacturing Activity Q/Q: +2.7% v -3.0% prior\.

- New Zealand sells total NZ$450M vs NZ$450M indicated in 2030, 2033 and 2054 bonds.

China/Hong Kong

- Hang Seng opens +0.7% at 25,710; Shanghai Composite opens +0.1% at 3,903.

- China MOFCOM: Monitoring Mexico tariffs, any trade agreements should not harm China's interests.

- (MX) Follow up: Mexico Senate approves up to 50% tariffs on China and other Asian countries - financial press.

- World Bank raises China 2026 GDP growth to 4.4% (prior 4.2%).

- China drug regulator: To expedite approval of desperately needed foreign drugs - China state press.

- Ford suppliers have received China's new rare earth licenses - press cites Ford statement.

- HKMA cuts base rate by 25bps to 4.00%, tracking the US Fed.

- China reportedly considers Nvidia chip purchases in emergency meeting with tech companies; China has reportedly called emergency meetings with Alibaba, ByteDance and Tencent to discuss Nvidia chips supplies - The Information [overnight update].

- Reportedly DeepSeek using "thousands" of banned Nvidia Blackwell chips in effort to build its next model - TheInformation.

- IMF raises 2025 China growth forecast from 4.8% to 5.0% - Article IV mission review [overnight update].

- CHINA PBOC SETS YUAN REFERENCE RATE: 7.0686 V 7.0753 PRIOR (strongest since Oct 9th, 2024).

- China PBOC Open Market Operation (OMO): Injects CNY119B in 7-day Reverse Repos; Net drains CNY62B v injects CNY111B prior.

Japan

- Nikkei 225 opens +0.4% at 50,818.

- JAPAN Q4 BSI LARGE ALL INDUSTRY Q/Q: 4.9 V 4.7 PRIOR.

- JAPAN SELLS ¥800B VS. ¥800B INDICATED IN 20-YEAR JGB BONDS; AVG YIELD: 2.9160% V 2.8090% PRIOR; BID-TO-COVER: 4.10X V 3.28X (strongest since May 2020); Tail: 3bps v 31bps prior (lowest tail since Jan 2023).

- Japan Nov Tokyo Avg Office Vacancies: 2.4% v 2.6% prior (fresh multi-year low).

- Japan releases weekly flows data [period ended Dec 5th]: Foreign buying of Japan equities: ¥96.8B v ¥656B prior; Japan buying of foreign bonds: +¥452.9B v -¥771.3B prior.

- Former BOJ Executive Hayakawa said the central bank is likely to conduct multiple rate hikes ahead, notes concern about falling behind the curve - US financial press [update].

- Japan Chief Cabinet Sec Kihara: Monitoring effect of US Fed rate cut on Japan's economy - financial press.

- JGB default insurance costs hit 2-year high - Nikkei [update].

- Japan, US held joint military exercises over Sea of Japan on Wed (Dec 10th) - financial press.

- Japan govt said to offer 7% corporate tax credit on some investments – Nikkei[overnight update].

- Reportedly Japan’s government and ruling parties are making arrangements to expand the scope of taxation for the super-rich; Plan to widen the relevant tax bracket from annual income of ¥3B and above to ¥600M and above – press [overnight update].

Korea

- Kospi opens +0.7% at 4,163.

- South Korea Dec 1-10th Exports Y/Y: 17.3% v 6.4% prior; Imports Y/Y: 8.0% v 8.2% prior.

- South Korea NPS reportedly seeks to pull all IGIS asset-committed funds – press- South Korea Finance Ministry: to strengthen market monitoring as KTB [South Korea Treasury Bond] yields rise; Follows meeting with BOK, FSS, FSC.

Other Asia

- Vietnam said to amend law to ban exports of rare earth minerals - financial press.

- Indonesia Finance Ministry issues rules on gold export duties, effective from Dec 23rd 2025 [overnight update].

North America

- (MX) Follow up: Mexico reported to have approved up to 50% tariffs on China - financial press.

- (US) BOFA INSTITUTE: NOV TOTAL CARD SPENDING +1.3% Y/Y V +2.4% ON AVERAGE IN OCT; BAC card spending growth around Cyber Monday showed modest improvement vs. Thanksgiving week; in the two weeks ending Dec 4 (the Thursday after Cyber Monday), total card spending, retail ex-autos and holiday items was stronger than 2023 but weaker than last year.

- (CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 2.25%; AS EXPECTED.

- (US) MBA Mortgage Applications w/e Dec 5th: +4.8% v -1.4% prior.

- (BR) Brazil end-Nov IBGE Inflation IPCA M/M: 0.2% v 0.2%e; Y/Y: 4.5% v 4.5%e.

- (US) Q3 EMPLOYMENT COST INDEX (ECI): 0.8% V 0.9%E

- (US) DOE CRUDE: -1.8M V -1.5ME; GASOLINE: +6.4M V +2ME; DISTILLATE: +2.5M V +1ME..

- (US) FOMC CUTS TARGET RANGE BY 25BPS TO 3.50-3.75%; AS EXPECTED; VOTE WAS 9-3; Adds 'extent and timing' to describe FOMC approach to additional adjustments to policy rate; To buy $40B in T-bills in next 30 days.

- (US) FOMC SUMMARY OF ECONOMIC PROJECTIONS (SEP) FOR DEC: MAINTAINS 25 BPS OF RATE CUTS IN 2026 (PRIOR 25 BPS).

- (US) Fed Chair Powell: Adjustments bring our target range within broad estimates of neutral; Fed well-positioned to wait and see how economy evolves; Don't think rate hike is anyone's base case at this point; We see -20K per month decline in payrolls - Q&A responses.

- Oracle: Reports Q2 $2.26 v $1.63e, Rev $16.1B v $16.1Be; Remaining Performance Obligations $523B, +438%l Raises FY26 Capex ~$50B (prior: $35B); Guides Q3 Adj EPS $1.70-1.74 v $1.70e, Rev growth +19-21% v 19.1%e, Cloud Rev growth +40-44% - earnings call comments.

Europe

- (UK) Nov RICS House Price Balance: -16% v -21%e.

- (EU) ECB Chief Lagarde: Could upgrade projections again at Dec meeting.

- (EU) ECB's Kazaks (Latvia): Inflation near target, but momentum picked up recently; Price expectations are broadly stable and well-anchored.

Levels as of 01:20 ET

- Nikkei 225 -0.9%; ASX 200 +0.2%; Hang Seng -0.1%; Shanghai Composite -0.6%; Kospi -0.6%.

- Equity S&P500 Futures -0.8%; Nasdaq100 -1.1%; DAX -0.4%; FTSE100 -0.4%.

- EUR 1.1686.117.07; JPY 155.50-156.04; AUD 0.6630-0.6679; NZD 0.5792-5821.

- Gold +0.4% at $4,240/oz; BTC -2.5% at $90,280; Crude Oil -0.1% at $58.43/bbl; Copper -0.6% at $5.3735/lb.