Focus on CB rate decisions this week amid light seasonal liquidity

Asia market update: Focus on CB rate decisions this week amid light seasonal liquidity; Listless start to week's trading.

General trend and developments

- Potential volatility this week amid US Fed’s FOMC day (Wed), with any moves potentially amplified by light liquidity heading into year-end.

- Australia RBA kicks off CB rate decisions off on Tues, Dec 9th amid a raft of rate decisions this week. Also to follow are Canada, Brazil, Philippines, Switzerland, Turkey, Ukraine and Peru. (Bank of Japan rate decision to follow next week).

- Ahead of the RBA tomorrow, AU 10-year bonds hit a fresh two-year high, on the back of recent hot data and hawkish comments from RBA officials.

- Little direction or news flow to start the week. Equities opened a little up, then lost ground, then back again. Hang Seng underperformed -1.3%.

- USD/JPY opened a gap lower, then closed the gap with on slightly weaker Japan data than expected, only to be followed by JPY strengthening back beyond the opening gap with USD giving back about half of Friday’s gains.

- Japan yield curve steepened again at the long-end after spending most of last week retracing last Monday’s outsized gains post-Ueda hawkish comments at the time.

- Japan’s final Q3 GDP figures came in a touch weaker than expected, with Business Spending unexpectedly contracting in the quarter.

- BOJ’s closely-watched labor earnings data saw Cash Earnings strong at 2.6%, and Real Cash Earnings not as bad as expected (although still a negative figure).

- Bank of Japan OIS chances of a 25bp rate hike next week stayed unchanged at 91.5% (as at close of business Friday), while chances for a January hike edged higher to 97.0%.

- China’s Nov trade surplus hit a fresh record high in dollar-terms at >$111B as exports continued to surprise to the upside in spite of the US trade constraints. Dollar-denominated exports +5.9% vs the -1.1% fall last month (and even higher than the expected 4.0% rebound). China’s trade surplus to the US slightly narrowed to $23.7B while implied exports to the US fell -28.5%, bigger than October’s fall.

- Note that at ~1,475/USD the Korean won is testing 2024 and 2025 lows that could see the Won fall beyond 1,500 for the first time since the 2008 GFC. (All time low was ~2,000 during 1997/98 Asian Financial Crisis). Comes amid continued warnings from South Korea officials about the need to ‘stabilize’ the Won.

- Pres Trump threw some shade at Netflix’ $83B bid for Warner Brothers, with Trump saying that the deal has to be looked at, which he will take part in personally, due to the deal ‘creating a lot of market share’.

- Still no confirmation of a rare earths agreement between the US and China, despite US Treasury Sec Bessent expecting such an agreement to be completed “by Thanksgiving”. Bessent merely said that a weekend call with his China trade counterpart Vice Premier He Lifeng “affirmed the US commitment to continued engagement with China” and that the arrangement ‘is going well”.

- US equity FUTs +0.2% to 0.3% during Asian trading.

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

- Tue Dec 9th AU Nov NAB Business Confidence, AU RBA Rate Decision, (Tue eve DE Oct Trade Balance, US Sept/Oct JOLTS).

- Wed Dec 10th KR Unemployment, CN Nov CPI/PPI, CA BOC Rate Decision, JP Nov PPI, (Wed night FOMC Rate Decision).

- Thu Dec 11th AU jobs, PH BSP Rate Decision, (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 -0.4% at 8,603.

- Australia Treasurer Chalmers: Next week's Mid-year review [MYFEFO] will not be a mini-budget, will include savings.

- Australia sells A$300M v A$300M indicated in 4.75% Jun 2054 Bonds; Avg Yield: 5.2512% v 5.0603% prior; bid-to-cover: 3.43x v 2.85x prior.

China/Hong Kong

- Hang Seng opens flat at 26,067; Shanghai Composite opens +0.2% at 3,909.

- China Nov trade balance: $111.7B V $103.1BE (monthly record high).

- China Nov trade balance (CNY): 792.6B V 640.0B PRIOR.

- China Jan-Nov: Trade Surplus CNY7.71T; Exports +6.2% y/y; Imports +0.2% y/y.

- Hong Kong election participation edges up over 2021 lows as pre-selected candidates voted into office - financial press (update).

- China Nov Foreign Reserves: $3.346T v $3.358Te (update).

- US Treasury Sec Bessent: Discussed Busan arrangement on call with China Vice Premier He Lifeng and USTR Greer, arrangement is going well, affirmed US commitment to engage with China - X post [weekend update].

- China PBOC sets Yuan reference rate: 7.0764 v 7.0749 prior.

- China PBOC Open Market Operation (OMO): Injects CNY122.3B in 7-day Reverse Repos; Net injects CNY14.7B v drains CNY162B prior.

Japan

- Nikkei 225 opens +0.3% at 50,643.

- Japan Q3 final GDP Q/Q: -0.6% V -0.5%E; GDP annualized Q/Q: -2.3% V -2.0%E.

- Japan Oct labor cash earnings Y/Y: 2.6% V 2.2%E; Real Cash Earnings Y/Y: -0.7% v -1.2%e.

- Japan Oct current account balance: ¥2.834T v ¥3.130T.

- Japan Nov Eco watchers current survey: 48.7 v 49.4e.

- Japan Nov Bank Lending Y/Y: 4.2% v 4.1% prior.

- Japan MOF releases Nov flows data: Foreigners purchased net ¥978.6B in Japan equities.

- Japan Chief Cabinet Sec Kihara: Declines to comment on use of hotline with China - press.

- Japan Defense Min: Chinese jets directed radar at Japanese fighters twice near Okinawa [weekend update].

- Japan Econ Min Kiuchi: Inflationary impact of stimulus package is likely limited [weekend update].

Korea

- Kospi opens +0.2% at 4,109.

- South Korea may ease regulations on holding companies - Korea press.

- South Korea sells 3-year Bonds: Avg Yield: 2.970%.

Other Asia

- Indonesia to require export-related earnings be left at state banks - local press.

- Vietnam Nov Industrial Production Y/Y: 10.8% v 10.8% prior [weekend update].

- Vietnam Nov Retail Sales Y/Y: 7.1% v 7.2% prior [weekend update].

- Vietnam Nov Trade Balance: $1.1B v $1.4Be [weekend update].

North America

- (US) Follow up: Pres Trump reportedly to announce $12.0B farm aid package on Monday - financial press.

- Pres Trump reportedly has organized policy meetings on how to lower beef prices - WSJ, citing sources.

- WBD: Pres Trump: Netflix-Warner Brothers deal 'has to go through a process" - press comments at Kennedy Center.

- Boeing defense unit CEO Steve Parker: Pres Trump's plan to take govt equity stakes in strategic industries does not include major defense firms - press.

- (US) Trump: signed a Presidential Memorandum directing the Department of Health and Human Services to “FAST TRACK” a comprehensive evaluation of Vaccine Schedules from other Countries around the World, and better align the U.S. Vaccine Schedule - Truth Social [weekend update].

- (CA) Canada PM Carney's office: PM agreed with Trump and Shienbaum to keep working together on the USMCA trade agreement [weekend update].

- (US) Pres Trump: Have meeting set up with leaders of Canada and Mexico to discuss trade (after FIFA event); Getting along well with Canada and Mexico [weekend update].

Europe

- UK Ministry of Defense: Unveils 'undersea warfare technology' to counter Russian threats - financial press.

- (UR) Ukraine military claims strike on Russia's Ryazan oil refinery (capacity: 309K bpd) [weekend update].

Levels as of 01:20 ET

- Nikkei 225 +0.1%; ASX 200 -0.1%; Hang Seng -1.0%; Shanghai Composite +0.7%; Kospi +0.9%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; DAX -0.1%; FTSE100 -0.1%.

- EUR 1.1638.116.56; JPY 154.90-155.38; AUD 0.6631-0.6648; NZD 0.5769-5792.

- Gold -0.1% at $4,237/oz; BTC +1.8% at $91,249; Crude Oil +0.2% at $60.21/bbl; Copper -0.4% at $5.4420/lb.