BoJ rate decision anticipation builds on Ueda comments

Asia market update: Markets tentative while waiting for US Dec CPI & US mega-banks' earnings; BOJ rate decision anticipation builds on Ueda comments.

General trend

- Tentative and tepid markets ahead of key US CPI data tonight. However, BOJ Gov Ueda breathed some life into the session while reiterating Dep Gov Himino's comments yesterday that next week's policy meeting [Jan 24th] will be live. JPY/USD +0.5%. The BOJ decision will come shortly after Japan's CPI release for Dec. Even before the comments, OIS markets had priced a 60% chance of a rate increase, jumping from 39.5% last Fri. Japan 2-year JGB yield rises to the highest since Oct 2008 after Ueda comments, above 0.70%. Earlier 30-yrs reached highest since 2009.

- In today’s OMO operations for 7-day reverse repos China PBOC injected the second-highest amount ever, and the highest since Nov last year, saying it was necessary to offset impact of MLF expiration, peak tax season as well cash demand before the Lunar New Year (officially starts two week from now, but the travel rush for the 40-day period started yesterday).

- Follow up: Suspended Pres Yoon has been arrested on the second attempt by South Korea CIO anti-corruption investigators. Korean markets unmoved, as per the previous arrest attempt.

- TikTok said to be preparing for immediate shutdown in the US on Sunday, 19th Jan, with the US ban likely to go into effect on that day.

- Indonesia's rupiah hits over 5-month low ahead of rate decision tonight.

- During the US equities session later today JPMorgan, Wells Fargo, Goldman Sachs will report quarterly earnings.

- US equity FUTs flat to slightly up during Asian trading.

Looking ahead (Asian time zone)

Note: This will be the final week for US Fed speakers before the communications blackout is imposed ahead of the Jan 29th decision.

- Wed Jan 15th ID Rate Decision, (Wed eve UK Dec CPI, DE 2025 GDP, Wed night US Dec CPI).

- Thu Jan 16th AU Dec jobs, KR Rate Decision, (Thu eve UK Nov GDP, Thu night US Dec Retail Sales).

- Fri Jan 17th NZ Dec Business PMI, CN Dec GDP, Industrial Prod, Retail Sales (Fri night US Dec Building Permits).

Holidays in Asia this week

- Mon Jan 13th Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,240.

- Australia sells A$800M vs. A$800M indicated in 3.50% Dec 2034 bonds; Avg Yield: 4.6378% v 4.4329% prior; bid-to-cover: 2.89x v 2.84x prior.

- Australia Dec Port Hedland Iron Ore Exports: 47.6Mts v 48.8Mts m/m; Port Hedland Iron Ore Exports to China: 41.8Mts v 40.0Mts m/m.

China/Hong Kong

- Hang Seng opens -0.4% at 19,149; Shanghai Composite opens -0.2% at 3,234.

- A-share listed firms in China plan to payout record amount of special dividends, these companies are expected to issue CNY343.2B in special dividend payouts before the Lunar New Year holidays; cites the CSRC - Chinese media.

- HKMA: China PBOC issues CNY60B in six-month bills in Hong Kong at 3.4% (as earlier announced; largest on record).

- Shanghai targeting 2025 GDP growth ~5% (inline); Guangdong [largest contributor to China's overall GDP] targets 2025 GDP growth at ~5.0%.

- China NDRC: Publishes implementation plan to improve data circulation security governance.

- Follow Up: China to stabilize the stock market by using various tools; authorities will take multiple measures to jointly build a mechanism for stabilizing the equity market; cites strategists - China Securities Journal.

- EU finds clear evidence of China limiting access of EU medical devices producers to its govt contracts – press [overnight update].

- China places 7 US firms on 'unreliable' list due to arms sales to Taiwan [overnight update].

- 2007.HK Co says expects to reach debt plan agreement during H1; Sets up internal team to coordinate with govt – financial press.

- Country Garden 2007.HK Reports FY23** (CNY) Net -201.0B v -2.96B y/y, Rev 401.0B v 430.4B y/y; Confident of having sufficient operating funds in the coming year; Trading remain suspended [overnight update].

- 2007.HK Reports H1** (CNY) Net -15.1B v -51.5B y/y, Rev 102.1B v 226.3B y/y [overnight update].

- China Dec YTD new Yuan loans (CNY): 18.09T V 17.846TE [overnight update].

- China Dec M2 money supply Y/Y: 7.3% V 7.3%E [overnight update].

- China Dec YTD aggregate financing (CNY): 32.26T V 31.560TE [overnight update].

- China said to slash pay of staff at top three financial regulators, including PBOC, by half, effective from this month – press [overnight update].

- China PBoC Dep Gov Xuan: Will optimize policy adjustments based on economy and market - comments from joint SAFE - press conference [overnight update].

- China Dec Banks sold net FX in Dec $75.1B [overnight update].

- China PBOC sets Yuan reference rate 7.1883 v 7.1878 prior.

- *China PBOC open market operation (OMO): Injects CNY960B in 7-day reverse repos; net injects CNY959B V injects CNY48B PRIOR (second-highest injection ever, highest since Nov 2024).

Japan

- Nikkei 225 opens +0.6% at 38,721.

- Japan Dec M3 Money Supply Y/Y: 0.8% v 0.7% prior.

- BOJ Gov Ueda: Reiterates will raise rates if economic and price improvements continue; Will make decision over whether to raise rates at next week's policy meeting [Jan 24th] (inline) - financial press.

- Former senior Japan Finance Ministry official Tatsuo Yamasaki: Trump and Tokyo can cooperate to normalize Dollar/Yen rate.

- Japan Chief Cabinet Sec Hayashi: Continuing efforts toward fiscal consolidation; Separately, unnamed sources say that Japan "Likely to miss primary budget surplus target for FY25".

- Bank of Japan (BOJ) announcement related to outright bond buying operations: 1-3 Years; 3-5 Years, 5-10 Years, >25 Years (Reduced purchase amounts inline with Dec guidance).

Korea

- Kospi opens +0.5% at 2,511.

- South Korea Dec Import Price Index M/M: 2.4% v 1.1% prior; Y/Y: 7.0% v 3.0% prior; Prior Import Price Index MoM revised lower from 1.1% to 0.9%.

- South Korea Dec Total Bank Lending To Household (KRW): 1,141.0T v 1,141.4T prior.

- Follow up: CIO (anti-corruption investigators) confirm suspended Pres Yoon now arrested over Dec 3rd martial law episode - financial press.

- Follow up: Suspended Pres Yoon reportedly arrested, However, following reports quickly denied this; Earlier Korea CIO anti-corruption investigators said to have passed through third blockage protecting suspended Pres Yoon.

Other Asia

- Thailand Fin Min Pichai: Reiterates hopes for 2025 GDP growth of >3.0%; Adds goal of 4-5% for 2026.

North America

- BYTEDANCE.IPO TikTok said to be preparing for immediate shutdown in the US on Sunday, 19th Jan - The Information.

- (US) Dec NFIB Small Business Optimism: 105.1 v 101.5e (highest reading since October 2018 and biggest 2-month jump in history since emergence of the series in 1985)

- (US) Pres Biden finalizes executive order to open up federal land for construction of large-scale data centers and new clean power facilities – press.

- (US) Pres Elect Trump: Will create an 'External Revenue Service' to collect our tariffs, and all revenue that come from foreign sources - Truth Social.

- (US) Dec PPI final demand M/M: 0.2% V 0.4%E; Y/Y: 3.3% V 3.5%E (highest since Feb 2023); (ex-food/energy) M/M: 0.0% v 0.3%e (lowest since July 2024); Y/Y: 3.5% v 3.8%e.

- US FDA Proposes Requiring At-a-Glance Nutrition Information on the Front of Packaged Foods.

- (AR) Argentina will slow the crawling ARS peg to $ devaluation mechanism to 1% m/m from 2% prior by Feb 1st.

- (US) Fed's Williams (voter): Doesn't comment on monetary policy; Housing challenges hold back NY Fed district - speech text.

- (US) Dec monthly budget statement: -$86.7B V -$80BE.

- (US) Fed Discount Minutes: Directors reported stable economic activity, with many noting continued strong consumer spending and a solid start to the holiday shopping season.

Europe

- ECB Chief Economist Lane: Essentially still in economic recovery mode; euro zone GDP grew 1.1% in 2024.

- (FR) France PM Bayrou: France has too much debt; We must find stability again for our country; proposes targeting 5.4% deficit of GDP in 2025.

- (IL) Reportedly Israel and Hamas have agreed in principle to a draft deal on hostages and ceasefire - press.

- (FR) France Socialist party leader Faure: If party doesn't get clear response from PM Bayrou to the Socialists' demands on pension reform, then party will vote in favor of no-confidence motion against govt.

Levels as of 00:20 ET

- Nikkei 225 -0.2%, ASX 200 -0.2%, Hang Seng flat; Shanghai Composite -0.4%; Kospi +0.3%.

- Equity S&P500 Futures flat; Nasdaq100 +0.1%; Dax flat; FTSE100 +0.2%.

- EUR 1.0295-1.0309; JPY 157.40-158.08; AUD 0.6181-0.6198; NZD 0.5597-0.5607.

- Gold +0.3% at $2,690/oz; Crude Oil +0.3% at $76.57/brl; Copper -0.3% at $4.3332/lb.