Equity markets trade mixed as various indices returned from extended holidays

General trend

- JGB yields remain elevated after last week’s BOJ YCC widening move.

- BOJ again stepped up bond buying, multiple fixed-rate operations announced.

- Japan 20-year JGB yield rises to 1.27%, highest since late Oct [Reminder: Dec 20th Bank of Japan (BOJ) offered to buy 10-25 year JGBs under the fixed rate method].

- USD/JPY Trades at the highest since Dec 20th [Reminder Dec 20th BOJ stated it would review its yield curve control policy and widened the trading band for the 10-year. government bond yield from +/-25bps to +/-50bps].

- Aussie yields surged after extended holiday.

- S&P ASX 200 declines slightly after holidays.

- Hang Seng plays catchup after extended holiday, rose above 20K during morning trading [highest since Aug].

- Japanese equities trade modestly lower.

- Kospi underperformance attributed to ex-dividend impact, >550 cos. are trading ex-dividend.

- TSMC declines [Reportedly TSMC Q1 Rev to be down 15% q/q when fab capacity utilization rates fall substantially – Digitimes].

Headlines/economic data

Australia/New Zealand

- ASX 200 opened flat.

Japan

- Nikkei 225 opened -0.5%.

- (JP) Japan Dep Chief Cabinet Sec Kihara: Govt to increase focus on wage growth in 2023, especially with rising inflation.

- (JP) Japan reportedly considering lowering of COVID-19 classification in the Spring - Nikkei.

- (JP) Japanese Banks MUFG and SMBC expected to increase mortgage rates in Jan - Press.

- (JP) Japan nov preliminary industrial production M/M: -0.1% V -0.2%E [3rd straight decline]; Y/Y: -1.3% V -1.5%E.

- (JP) Bank of Japan (BOJ) Summary of Opinions: Should continue with monetary easing with YCC; Signs virtuous cycle has started to be seen.

- (JP) Japan PM Kishida said he will call poll before defense-related tax increase – Japanese media.

- (JP) Bank of Japan Offers to buy 1-3 yr, 3-5 yr, and 5-10 yr JGBs in unscheduled bond buying operation.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected]; Also announces fixed-rate operations for 1-3 year and 3-5 year JGBs [unscheduled].

Korea

- Kospi opened -1.6% (~550 companies trade ex dividend).

- (KR) South Korea Jan Business Manufacturing Survey: 68 v 69 prior.

China/Hong Kong

- Hang Seng opened +1.0%; Shanghai Composite opened -0.2%.

- (CN) China Lawmakers expected to review draft law on financial stability.

- (CN) China CDC: Reports 3 COVID deaths on Tues (Dec 27th).

- (CN) US said to consider COVID-prevention measures for travelers from China - US financial press.

- (CN) China Economic Daily [affiliated with the State Council]: China has room for more economic supportive policies; China needs to take more powerful measures to support the property industry.

- (CN) China Banking and Insurance Regulatory Commission (CBIRC) announces new risk rating system for foreign bank operations, effective immediately - financial press.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY189B in 7-day reverse repos v CNY194B prior; Sells CNY13B in 14-day reverse repos v CNY173B prior; Net inject CNY183B v net inject CNY203B prior.

- (CN) China PBOC sets Yuan reference rate: 6.9681 v 6.9546 prior.

North America

- (US) Nov preliminary wholesale inventories M/M: 1.0% V 0.4%E.

- (US) Nov advance goods trade balance: -$83.3B V -$96.3BE.

- (US) Oct FHFA house price index M/M: 0.0% V -0.8%E.

- (US) Oct S&P/case-shiller house price index (20-CITY) M/M: -0.52% V -1.20%E; Y/Y: 8.64% V -8.00%E.

- (US) Dec dallas fed manufacturing activity: -18.8 V -15.0E; New orders: -9.2 v -20.9 prior.

- (US) Transport Sec Buttigieg: Airlines should cap fares on routes to help travellers; Several airlines have already commited to the fare cap.

Europe

- (IE) Ireland Dec Economic Pulse: 70.7 v 67.2 prior.

Levels as of 00:20 ET

- Nikkei 225, -0.6%, ASX 200 -0.3% , Hang Seng +1.5%; Shanghai Composite -0.3% ; Kospi -2.1%.

- Equity S&P500 Futures: +0.1%; Nasdaq100 +0.1%, Dax flat; FTSE100 +0.3%.

- EUR 1.0645-1.0624 ; JPY 134.40-133.35 ; AUD 0.6750-0.6719 ;NZD 0.6306-0.6257.

- Gold -0.3% at $1,818/oz; Crude Oil +0.1% at $79.60/brl; Copper +0.4% at $3.8635/lb.