BoJ tepidly hawkish – Ceiling seen for CNH?

Asia market update: Wild SLV trading; BOJ tepidly hawkish; Ceiling seen for CNH?; CN/TW tensions spike; US/UR negs hopeful; Crypto signs of life?

General trend and developments

- Silver FUTs saw wild swings from the Monday opening on COMEX. Initially spiking higher another 6% to fresh record highs of ~$83/oz, amid COMEX raising margin requirements from $22K to $25K per contract. Silver then collapsed up to 10% back to 75 handle before settling around $80/oz. Gold, Platinum and Palladium also fell around 5% in early trading before recovering somewhat back nearer earlier highs. LBMA and COMEX copper back up near record high levels.

- The BOJ Summary of Opinions from Dec 19th rate hike saw a concern of some members that to avoid falling behind the curve it is desirable to steadily raise rates. JPY initially gained +0.5% some time after the release of the Minutes, but later pared back half of those gains.

- Japan yield curve quiet, with a slight steepening as the session progressed. [Note that Japan 2-year JGBs closed Friday at 1.156%, a full 3bps lower than the intraday high on Fri (highest since 1996), then today stayed stalled in the 1.15 handle in Tokyo trading.].

- USD/CNH put in a very big green bar on the hourly chart in early trading to turnaround USD's steady mounting of losses in recent months (paring gains by ~50% later). With the offshore Yuan at 15-month highs around the 7.00 handle, a China newspaper said to warn against "one-way" Yuan currency appreciation, signaling a potential ceiling in the CNH price appreciation.

- Tensions suddenly rising again around Taiwan as the Chinese PLA announces “planned drills’ to “surround” Taiwan tomorrow (Dec 30th), and indeed already beginning live firing drills today. Taiwan Defense Ministry said it will be on 'high alert' and deploy appropriate forces to 'respond' to the Chinese drills. [A long-held fear is that China blockades Taiwan without firing a shot, leaving Taiwan and allies such as the US and Japan in a potential quandary as to how to respond with potential disruptions to air and sea traffic.].

- China industrial profits collapsed -13% in November, after a relative bounce seen in Sept/Oct.

- Korean Won at 1,433 stronger again, heading back to last week’s highs.

- Kospi outperformed +2.2%, with continued strong showing from tech. Samsung and Hynix looking at +20% rises on the month.

- Pres Trump and Pres Zelanskiy struck a hopeful tone in their meeting at Mar-a-Lago, FL, but nothing concrete announced, with further meetings to take place in January. Both leaders said to be “about 95% there” (towards a Urkaine peace agreement with Russia).

- BTC and ETH rose strongly above 90K and $3K respectively. {Note that crypto coins have been trading in very tight and compressed trading ranges the past couple of weeks, forming a bull pennant, which today’s price hikes threaten to break out of out of}. Comes after much recent focus on metals and away from crypto in general}.

- US equity FUTs -0.1% during Asian trading

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

- Mon Dec 29th (Mon night, Israel PM Netanyahu to meet US Pres Trump to discuss Gaza, Iran).

- Tue Dec 30th KR Dec Business Confidence, (Tue night US FOMC Minutes).

- Wed Dec 31st KR Dec CPI, China Dec NBS Manufacturing PMI, China Dec RatingDog Manufacturing PMI.

- Thu Jan 1st KR Dec Exports.

- Fri Jan 2nd S&P Dec Global PMIs, ID Dec CPI.

Holidays in Asia this week

- Tue Dec 30th Philippines- Wed Dec 31st Australia, Hong Kong, Japan, New Zealand, Philippines, South Korea, Thailand, UK.

- Thu Jan 1st Australia, China, Hong Kong, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, UK.

- Fri Jan 2nd China, Japan, New Zealand, Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 reopens +0.1% at 8,772- Australia Retirement Trust sees RBA hiking rates late-2026 due to global 'sticky inflation' - Australia press.

China/Hong Kong

- Hang Seng opens +0.4% at 25,928; Shanghai Composite opens flat at 3,964.

- China military releases notice on 'planned drills' to "surround" Taiwan from Dec 30th, 8am to 6pm; Drills characterized as 'just a Mission' - China state media.

- Hong Kong private home prices +0.9% m/m in Nov [6th straight rise].

- China newspaper said to warn against "one-way" Yuan currency appreciation - China press.

- China car association head expects Chinese demand for lithium batteries to 'slump' in early 2026; cites factors including decline in domestic EV sales and slowing battery exports - Press [update].

- China ETFs reported to have surpassed CNY6T amid policy push [time frame unspecified] - China press.

- China PBOC to issue "Digital Yuan Management Action Plan", effective from Jan 1st, 2026 – statement.

- China Ministry of Finance (MOF) readout confirmed pledge to increase fiscal spending in 2026 - Press [update].

- China's top legislature NPC Standing Committee (NPCSC): To deliberate draft environment code, 2 other draft laws - China state media [weekend update].

- Zhipu and MiniMax said to 'race' to go public ahead of OpenAI and Anthropic – Nikkei.

- China has released draft rules aimed at regulating human-like AI systems - Press [update].

- 9880.HK (CN) UBTech’s Walker S2 robots set to begin border patrol duties on China-Vietnam border - US press (weekend update)- China Nov

Industrial Profits Y/Y: -13.1% v -5.5% prior (largest in over a year) [late Fri update].

- China's annual NPC (National People's Congress) session will start Mar 5th, 2026 - China state media [weekend update].

- China Foreign Ministry announces sanctions on US defense companies and executives over arm sales to Taiwan [late Fri update].

- China PBoC 2025 Financial Stability Report: To keep liquidity ample; keep CNY currency exchange rate flexible and prevent overshooting [late Fri update].

- China PBOC sets Yuan reference rate: 7.0331 v 7.0358 prior (strongest since Sept 30th, 2024).

- China PBOC Open Market Operation (OMO): Injects CNY482B in 7-day Reverse Repos; Net injects CNY415B v injects CNY37B prior.

Japan

- Nikkei 225 opens -0.1% at 50,662.

- Bank of Japan (BOJ) Dec summary of opinions: In order to avoid falling behind the curve, it is desirable for the Bank to steadily raise the policy interest rate.

- Japan foreign residents purchase more farmland – Nikkei.

- Reportedly Japan to earmark $46B to support US investment; the funding amount relates to low-interest loans and guarantees through the Japan Bank for International Cooperation – Nikkei [weekend update].

- Japan PM Takaichi: Sees first primary balance surplus in FY26 [would be the first surplus in 28 yrs] [late Fri update].

- Bank of Japan (BOJ) confirmed JGB bond purchases will decrease to ¥2.9T per month in the January-March period 2026, down from ¥3.3T in Q4, 2025.

- Japan's FSA said to increase watch of regional bank property lending [late Fri update].

Korea

- Kospi opens +0.4% at 4,146.

- (KR) Egg prices in South Korea >KRW7.0K; cites ending of discount program which has led to new concerns about food price inflation – Press.

- South Korea charges 10 over alleged chip technology leak to China CXMT - Press [update].

- South Korea Finance Ministry on Jan issuance: To sell KRW16T in bonds during month [weekend update].

- Coupang CEO issues first public apology over data breach; Again declines to attend parliamentary hearing on Dec 30-31st, 2025 (update).

Other Asia

- Thailand Nov ISIC Manufacturing Production Index Y/Y: -4.2% v +0.5%e.

- Indonesia Central Bank (BI) is expected to revamp its benchmark rates; the move is aimed at aligning with global standards - US financial press [update].

- (TW) Taiwan Aviation Authorities: Currently studying alternative air routes (in response to China drills) - statement.

- (TW) China Military [PLA] confirms (to have already) conducted live-fire drills at sea on Mon "around" Taiwan - China state media.

- Taiwan Coast Guard: 4 China coast guard boats approached 'close' to waters off Taiwan's North and East on Mon morning; China drill zones to have 'great impact' on maritime safety and Taiwan's fishing rights.

- (TW) Taiwan Defense Ministry: On 'high alert'; Taiwan to deploy appropriate forces to 'respond' to the Chinese drills [comments on China military drills] - statement.

- Philippines Central Bank (BSP): Inflation this month (Dec) likely 1.2-2.0% (would be 9th month below 2-4% target).

- (US) Pres. Trump: I am pleased to announce that the breakout fighting between Thailand and Cambodia will stop momentarily - Truth Social post [overnight update].

North America

-(US) DOJ said to be using novel interpretation of fraud law to target companies on DEI; Includes Google and Verizon to be investigated - WSJ.

- US Sec of State Rubio plans to meet with Israel Netanyahu on Mon at 10 AM ET; Trump and Netanyahu to also meet at 1 PM ET.

- (US) Pres. Trump: I am pleased to announce that the breakout fighting between Thailand and Cambodia will stop momentarily - Truth Social post.

- XAG/USD TTN Research Alert: Silver prices through end-2025 and first few days of Jan, 2026: Up or down, "it’s complicated".

Europe

- NWG.UK (UK) Tories said to press Labour on Jeffrey Epstein's role in RBS commodities deal - UK Times [update].

- (UR) Ukraine President Zelenskiy comments after meeting with Trump: Meeting reached 'significant' results - post on X.

- (UR) France Pres Macron: Took part in exchange tonight with US Pres Trump and Ukraine Pres Zelenskiy; Then spoke (again) with Pres Zelenskiy - financial press.

Levels as of 01:20 ET

- Nikkei 225 -0.4%; ASX 200 -0.4%; Hang Seng -0.1%; Shanghai Composite +0.1%; Kospi +2.3%.

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

- EUR 1.1757.117.87; JPY 156.06-156.58; AUD 0.6701-0.6728; NZD 0.5721-5834.

- Gold -0.3% at $4,537/oz; BTC +2.8% at $90,211; Crude Oil +1.0% at $57.31/bbl; Copper +1.0% at $5.8930/lb.