Risk appetite worsens on BOJ YCC move, Yen gains

Asia Market Update: Central Banks in focus [BOJ, RBA, PBOC]; Risk appetite worsens on BOJ YCC move, Yen gains; JGB FUTs halted.

General trend

- BOJ steps up fixed-rate JGB buying ops.

- Little news seen in the RBA minutes.

- China reports more COVID deaths.

- Weaker business confidence weighs on NZD, NZD/JPY selling also seen.

- Nikkei 225 killed on BOJ decision; Japanese Financials outperform.

- Chinese property cos. decline [developers continue to raise capital; PBOC left the 5-year LPR unchanged].

- BOJ Gov Kuroda to hold his post rate decision press conference at 01:30 ET (06:30 GMT).

Headlines/economic data

Australia/New Zealand

- ASX 200 opened -0.2%.

- (AU) Australia Foreign Min Wong: Dialogue essential to stabilize relationship with China; To advocate for lifting trade sanctions in next meeting with China officials.

- (NZ) New Zealand Dec ANZ Business Confidence: -70.2 v -57.1 prior [record low].

- (AU) Reserve bank of Australia (RBA) Dec minutes: board wants to be consistent, no clear impetus for 50bps rate hike or a pause.

Japan

- Nikkei 225 opened +0.1%.

- (JP) Japan FY23/24 new JGB issuance seen >¥35.0T, considering issuance of ¥500B of GX bonds in fiscal 2023 - Japanese press.

- (JP) Bank of Japan (BOJ) Leaves interest rate on excess reserves (IOER) unchanged at -0.10%; as expected.

- BOJ widens yield control (YCC) BAND to +/- 50BPS (prior +/- 25bps).

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps [second fixed rate operation on today's session]; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Bank of Japan (BOJ) offers to buy 1-3 year and 3-5 year JGBs under the fixed rate method [Third offer on the session] Opens window to buy unlimited amount of 1-3 year and 3-5year JGBs.

- (JP) Bank of Japan (BOJ) offers to buy 10-25 year JGBs under the fixed rate method [Fourth offer on the session] Opens window to buy unlimited amount of 10-25 year JGBs.

- (JP) Japan Fin Min Suzuki: No decision has been made on revision joint statement with BOJ; Hopes BOJ continues working towards CPI target sustainable and stably.

Korea

- Kospi opened -0.3%.

- (KR) North Korea notes Japan Military buildup is a violation of UN Charter and challenge to international peace, provokes fundamental change in East Asia security environment.

- (KR) South Korea sells 20-year bonds: Avg yield 3.420% v 4.450% prior.

China/Hong Kong

- Hang Seng opened -1.0%; Shanghai Composite opened -0.3%.

- (CN) Chongqing (China) to allow mild COVID cases to go to work – US financial press.

- (CN) China sees 2022 fiscal spending at CNY26.3T, +6.9% y/y; cites Finance Minister Liu Kun – Chinese press.

- (CN) USTR Tai reiterates new tools are needed to counter China – SCMP.

- (CN) China Sec Journal: Reserve Requirement Ratio (RRR) and loan prime rate (LPR) could be cut.

- (CN) China PBOC monthly loan prime rate (LPR) setting: maintains both 1-year and 5-year rates (as expected).

- (CN) China National Health Commission (NHC): Reports 5 mainland COVID deaths on Dec 19th v 2 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY5B in 7-day reverse repos v CNY9.0B prior; Sells CNY141B in 14-day reverse repos v CNY76B prior; Net inject NY144B v net inject CNY83B prior.

- (CN) China PBOC sets Yuan reference rate: 6.9861 v 6.9746 prior.

- (HK) Hong Kong to further ease social distancing measures - press.

- (CN) China PBOC sells CNY5.0B in 6-month bills at 2.20% in Hong Kong (as indicated).

North America

- (US) Title 42 (Remain in Mexico Policy) to remain in effect after Supreme Court decision.

-(US) Dec NAHB housing market index: 31 V 34E (lowest since June 2012 excluding pandemic).

-(US) House Jan 6th Committee final report: Recommends DOJ bring criminal charges against former President Trump for conspiring to make a false statements and conspiring to defraud the government.

-(US) Treasury to issue notice in March with proposed guidance on EV tax credit, critical minerals, and battery component requirements; By Dec 31st, will release info on anticipated direction of the EV tax credits - press.

Europe

-(UK) Dec CBI industrial trends total orders: -6 V -9E.

-(DE) German Bundesbank Monthly Report: Domestic economy is contraction less than forecast.

-(EU) EU countries said to consider new proposal to trigger gas price cap at €180/MWh - press.

-(RU) Russian govt spokesperson Peskov: Russia considering additional proposal for our response to the oil price cap - financial press.

-(IT) Italy Business Min Urso: EU should adopt US-style aid for companies.

-(RU) EU Presidency confirms reached deal on Russia gas price cap at €180.MWh - press.

-(EU) ECB's Nagel (Germany): Will take some time to return to 2% inflation.

-(DE) Germany Econ Min Habeck: Still skeptical on gas price mechanism; We were able to get strong safeguards on the price cap to prevent harm.

Levels as of 00:20 ET

- Nikkei 225, -2.8%, ASX 200 -1.5% , Hang Seng -1.8%; Shanghai Composite -0.9% ; Kospi -0.8%.

- Equity S&P500 Futures: -0.9%; Nasdaq100 -1.1%, Dax -1.3%; FTSE100 -0.8%.

- EUR 1.0651-1.0597 ; JPY 137.47-133.09 ; AUD 0.6744-0.6644 ;NZD 0.6396-0.6314.

- Gold +0.1% at $1,799/oz; Crude Oil +0.2% at $75.56/brl; Copper -0.6% at $3.7380/lb.