OpenAI plays musical chips, WTI off lows as US blockades VE Oil, JP good data continues

Asia Market Update: OpenAI plays musical chips; WTI off lows as US blockades VE oil; JP good data continues; Asia FX Vol as EQ’s mainly flat.

General trend and developments

- OpenAI reportedly now considering Amazon Trainium AI chips in a rumored $10B deal and commercial partnership. Comes after Amazon on Nov 3rd said to supply Nvidia chip clusters to OpenAI in a $38VB, 7-year deal at the time.

- WTI bounced off of four-year lows overnight (below $55/bbl) as Pres Trump announced a complete blockade of all Venezuelan oil tankers in and out.

- Asian equities started off soft for a third day this week, but turned around during the session to at least be flat. Kospi outperformed as much as +1.4%.

- Japan’s exports and trade surplus for November higher than expected, the fastest export growth in 9 months with shipments to Europe up ~20% and a welcome return to a rise in exports to the US following the completion of the US trade deal. Only exports to China down.

- Japan also saw much stronger Core Machine orders in October, as October Household assets also rose nearly 5% y/y to a record high of around $14.7T (¥2,286T) as the value of equities held by Japanese households rose $2.0T in the year.

- Japanese yield curve flattened with the front-end edging up and especially the belly (10-year JGB yield rising 3bps to 1.98%, highest level since Jun 2007), as long-end 30-years fell and particularly the 40-year JGBs off by -2.9bps.

- Japan govt also considering 20% tax deduction for startup investments as it looks to further stimulate economic growth.

- Japan PM Takaichi then just released a statement prior to sending this Update, "What's necessary for Japan now is to strengthen its capacity with proactive fiscal policy, not excessive fiscal tightening".

- Australian Treasury announced in its mid-year review (MYEFO), seeing a smaller deficit in FY56-26 by >A$5B and a >A$8B improvement over the next four years.

- A meaningful jump up in New Zealand consumer confidence expectations in November, alongside RBNZ reducing common equity requirements for NZ banks by NZ$5B, welcomed by the NZ Fin Min.

- Further hollowing out of foreign companies from China with Apple said to be in talks with India chipmakers to assemble and package iPhone chips for the first time.

- In an op-ed, French Pres Macron says “urgent rebalancing” needed for the EU and China trade relationship.

- China offshore Yuan keeps marching higher, up to 7.03 handle on repeatedly stronger fixes out of the PBOC, back to Oct 9th, 2024 levels.

- Another China AI chipmaker 7-bagger at IPO, with MetaX [688802.CN] to rise by ~600% in its Shanghai debut.

- Korean Won continued to weaken to 8-month lows. (At ~1,480/USD the Won is testing 2024 and 2025 lows that could see the Won fall beyond 1,500 for the first time since the 2008 GFC). Later, BOK warned that 2026 inflation could exceed forecast if Won remains weak and Gov Rhee said not comfortable with current FX levels.

- Meanwhile India Rupee also under early selling pressure towards last week all-time lows of 91.7 as RBI Gov Malhotra said he sees rates staying low 'for a long period', but recovered on heavy selling of USD by the RBI to 90.58.

- Spot silver hit a fresh record high, >$65/oz for the first time.

Note that US Pres Trump to deliver Address to the Nation at 9pm Wed, Dec 17th

- US equity FUTs XXXX during Asian trading.

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

- Wed Dec 17th TH BOT Rate Decision, ID BI Rate Decision, UK CPI.

- Thu Dec 18th NZ Q3 GDP, (Thu eve UK and ECB Rate Decisions, US Nov CPI).

- Fri Dec 19th JP Nov CPI, BOJ Rate Decision (Fri night US Nov Existing Home Sales).

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 8,558.

- Australia Nov Westpac Leading Index M/M: -0.04% v 0.10% prior.

- Australia Treasurer Chalmers on MYFEFO (mid-year financial review): FY27-28 budget deficit seen edging up to A$32.6B.

- Australia sells A$1.0B v A$1.0B indicated in Oct 2036 Bonds; Avg Yield: 4.7727% v 4.3457% prior; bid-to-cover: 3.71x v 3.52x prior.

- Australia Govt sees narrower budget deficit in 2026 of A$36.8B [overnight update].

- New Zealand Westpac Consumer Confidence 96.5 v 90.9 prior.

- New Zealand Q3 Current Account Balance (NZD): -8.4B v -7.7Be.

- RBNZ releases decisions on bank capital review: To ease common equity requirements across system by NZ$5B.

- RBNZ Gov Breman: Will publish monitoring report every two years.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: -4.4% v -4.3% prior.

- New Zealand govt: Carbon Storage (CSS) to earn emissions credits - financial press.

China/Hong Kong

- Hang Seng opens flat at 25,243; Shanghai Composite opens -0.1% at 3,822.

- China ‘AI chipmaker’ MetaX [688802.CN] to rise by ~600% in Shanghai debut.

- (EU) France Pres Macron calls for an urgent rebalancing of EU-China relations; Rebalancing foreign direct investment flows is essential - FT op-ed.

- US posts statement on Dec US-China defense policy talks: US told China its prepared to defend its interest in the Indo-Pacific region.

- China expected to maintain 2026 fiscal deficit ratio at 4.0% or higher - Chinese press.

- Reportedly China threatens to block Blackrock-led deal to buy Panama ports unless state-owned Cosco gets a majority stake; China aims to include Panama Ports in UK China trade negotiations - WSJ.

- China economic growth expected around 5% in 2025; Govt calls for more proactive fiscal policy in 2026 [overnight update].

- China Commerce Ministry (MOFCOM): To charge tariffs of 19.8% on EU pork, effective Dec 17th [overnight update].

- Companies such as Peet's, Costa, GE HealthCare, Häagen-Dazs and Lawson seeking PE partners in China as they explore sale of stakes in their China units amid increasing competition – FT [overnight update].

- China PBOC sets Yuan reference rate: 7.0573 v 7.0602 prior (strongest since Oct 9th, 2024).

- China PBOC Open Market Operation (OMO): Injects CNY47B in 7-day Reverse Repos; Net drains CNY143B v injects CNY18B prior.

Japan

- Nikkei 225 opens +0.1% at 49,413.

- JAPAN NOV TRADE BALANCE: ¥322.3B V ¥72.6BE.

- Japan Oct Core Machine Orders M/M: +7.0% v -1.8%e; Y/Y: 12.5% v 3.6%e.

- BOJ: Japan end Sept Household Assets: ¥2,286T [record high, +4.9% y/y].

- Japan 10-year JGB yield rises to 1.975% [highest level since Jun 2007].

- Japan considering 20% tax deduction for startup investments - Nikkei.

- Japan PM Takaichi: What's necessary for Japan now is to strengthen its capacity with proactive fiscal policy, not excessive fiscal tightening - statement.

- Japan auto union Chairman said to 'fear' BOJ rate hike might hurt wage growth in the coming fiscal year; notes concerns about possible Yen strength, if the BOJ raises rates on Fri - US financial press.

- Japan Govt will reportedly raise EV subsidies beginning Jan - Japanese press.

- Japan Parliament said to have passed the extra budget to fund the economic package [Reminder: on Nov 28th: Japan Cabinet approved the ¥18.3T ($117B) extra budget for package] [overnight update].

Korea

- Kospi opens +0.5% at 4,019

- South Korea Central Bank (BOK): 2026 inflation could exceed forecast if Won remains weak vs USD - Yonhap.

- Bank of Korea (BOK) Nov Minutes: One member: Need to work with govt to stabilize FX market; weaker KRW currency (Won) could increase inflationary pressure [overnight update].

- South Korea Finance Ministry said to 'urge' exporters to increase FX hedging - US financial press [overnight update].

- Bank of Korea (BOK) sells KRW1.0T in 2.46% 3-year bonds: Avg Yield: 3.04%.

Other Asia

- USD/INR (IN) India RBI seen selling dollars "heavily" to support Rupee as it recovers to 90.58 vs USD - traders.

- India Central Bank (RBI) Gov Malhotra: Sees rates staying low 'for a long period' - FT.

- (ID) New rule to see Indonesia provincial minimum wage increase by 5.3-7.3% in 2026 - Employer's Association.

- Singapore Nov Non-Oil Domestic Exports Y/Y: 11.6% v 6.8%e.

- Apple said to be in talks with India chipmakers to assemble and package iPhone chips for the first time - India press, citing sources
[overnight update].

North America

- US Pres Trump to deliver Address to the Nation at 9pm Wed, Dec 17th - press.

- OPENAI.IPO *Reportedly in talks to raise at least $10B from Amazon and use its Trainium AI chips; Also discussed commercial partnership - TheInformation.

- (US) Fed's Goolsbee (hawkish dissenter, non-voter in 2026): Jobs market cooling at a "modest pace" - comments on CNN.

- (VE) US Pres Trump: Ordering A TOTAL AND COMPLETE BLOCKADE OF ALL SANCTIONED OIL TANKERS going into, and out of, Venezuela - Truth Social post.

- (US) Reportedly Trump to sign EO as soon as this week to fast-track reclassification of cannabis - NBC news.

- (US) Treasury Sec Bessent: Guess Supreme Court ruling and Fed Chair announcement in early Jan 2026; Both Warsh and Hassett are 'very very qualified'; Disagree new Fed chair will not be independent.

- (US) ADP Preliminary Employment Change for 4-weeks ending Nov 29th: +16.3K v +2.8K w/w (highest since at least mid-Sept).

- (US) OCT ADVANCE RETAIL SALES M/M: 0.0% V 0.1%E; RETAIL SALES (EX-AUTO) M/M: 0.4% V 0.2%E.

- (US) NOV UNEMPLOYMENT RATE: 4.6% V 4.5%E (over 4-year high); Labor Force Participation: 62.5% v 62.4%e.

- (US) NOV AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.3%E; Y/Y: 3.5% V 3.6%E.

- (US) NOV CHANGE IN NON-FARM PAYROLLS: +64K V +50KE; Oct Non-Farm Payrolls: -105K v -25K; Oct non-Farm Payrolls: -105K v -25Ke v +108K prior.

- (US) White House NEC Dir Hassett: Private sector jobs growth was in line with what we have been seeing on solid upward trajectory - CNBC.

- (US) DEC PRELIMINARY S&P MANUFACTURING PMI: 51.8 V 52.1E (5th month of expansion but lowest since July); Manufacturing new orders fell for the first time in a year: Firms reported passing on the sharpest rise in costs for just over three years.

- (CA) Bank of Canada (BOC) Gov Macklem: Stablecoin must be backed by high-quality liquid assets; Future BOC stablecoin must be pegged at a 1:1 ratio to currency; Economic uncertainty is 'Still very high'.

- (EU) US Trade Rep Greer: Trump Administration plans to retaliate against EU companies over digital tax; If EU and EU member states continue to restrict competitiveness of US digital service providers then the US will use every tool to counter these measures - X post.

- (US) Chris Waller to be interviewed by Trump for Fed Chair post on Wed; Waller still seen as an underdog – WSJ.

Europe

- (PL) Poland Nov CPI Core M/M: -0.1% v -0.1%e; Y/Y: 2.7% v 2.7%e.

- (HU) HUNGARY CENTRAL BANK (MNB) LEAVES BASE RATE UNCHANGED AT 6.50%; AS EXPECTED.

- RUSSIA DEP FOREIGN MIN RYABKOV: CERTAIN UKRAINE WAR RESOLUTION IS NEAR [**Note: 1st Russia officials' reaction to yesterday's US-Ukraine talks].

Levels as of 01:20 ET

- Nikkei 225 flat; ASX 200 -0.2%; Hang Seng +0.1%; Shanghai Composite +0.1%; Kospi +0.8%.

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

- EUR 1.1728.117.53; JPY 154.54-155.15; AUD 0.6615-0.6636; NZD 0.5772-5789.

- Gold +0.8% at $4,364/oz; BTC +0.6% at $86,638; Crude Oil +1.4% at $55.92/bbl; Copper +0.9% at $5.4087/lb.