Stronger JPY on higher wages and 30-year demand

Asia market update: US port strike averted, hits JP shippers; KR equities lead again with chipmakers up on further US export restrictions; CN deflation concerns worsen; Stronger JPY on higher wages and 30-yr demand.

General trend

- Korea’s Kospi led Asia again with Hynix +5%, taking advantage of US Biden Admin planning additional curbs on exports of AI chips from Nvidia and AMD.

- US dockworkers reached a tentative pact for six-year contract to avert strike at East Coast, Gulf Coast Ports; Japanese shipping companies down 5-6%..

- Nikkei under-performed -1.3%, also hurt by a stronger Yen following highest Japan Labor Cash Earnings since Aug, 2024, increasing chance of BOJ rate hikes. JP 30-yr auction also saw highest demand since 2020 and highest market prices for 30-years since Feb 2010.

- Japanese automakers continue to struggle in China, with Honda China sales -31% in 2024.

- Australia trade surplus higher than expected, but AUD hurt by weaker than expected Retail Sales as well as downward revision.

- Despite Beijing’s policy support, China deflation concerns deepen with CPI how hovering just above zero, while PPI stayed mired in a more than 2 year negative rut. For 2024 in all, China 2024 CPI averaged +0.2% and PPI averaged -2.2%.

- China MOFCOM released its conclusion of barrier probe for EU subsidies (after 7 months of study) with little detail other than to reiterate that it believes “the EU investigations constitute trade and investment barriers.”.

- Amid a falling Yuan, China will issue a record CNY60B in six-month bills in Hong Kong on Jan 15th.

- Reminder: Tomorrow is a US ad-hoc national holiday, following the death of Ex-Pres Jimmy Carter.

- US equity FUTs -0.2% during Asian trading.

Looking ahead (Asian time zone)

- Fri Jan 10th JP Nov Household Spending, (Fri night CN New Yuan Loans, US Dec Non-Farm Payrolls, + Jan Michigan Consumer Sentiment).

- Sun Jan 12th CN Dec Trade Balance.

Holidays in Asia this week

- Thu Jan 9th (US time), market holiday for former Pres Carter state funeral.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.2% at 8,329.

- Australia Nov Retail Sales M/M: 0.8% V 1.0%E.

- Australia Nov Trade Balance (A$): 7.1B v 5.5Be.

China/Hong Kong

- Hang Seng opens -0.1% at 19,254; Shanghai Composite opens -0.3% at 3,220.

- China Dec CPI Y/Y: 0.1% V 0.1%E (weakest since Apr, 2024).

- China MOFCOM releases conclusion of trade probe on EU subsidies; "EU subsidies constitute trade and investment barriers" - financial press.

- (HK) HKMA: China PBOC to issue CNY60B in six-month bills in Hong Kong on Jan 15th (reported to be largest on record).

- China reportedly to deepen anti-corruption drive in finance and energy sectors – press [overnight update].

- China Dec Preliminary Retail Passenger Vehicle Sales M/M: +9.0% v +7.1% prior; Y/Y: +11.0% v +16.5% prior [overnight update].

- Saudi crude oil supply to China to fall to 43.5M bbl in Feb, 2025 - financial press, citing sources.

- China PBOC sets Yuan reference rate 7.1886 v 7.1887 prior.

- China PBOC Open Market Operation (OMO): Injects CNY4.1B in 7-day reverse repos; Net drains CNY20.7B v injects CNY1B prior.

Japan

- Nikkei 225 opens -0.2% at 39,888.

- Japan Nov labor cash earnings Y/Y: 3.0% V 2.7%E (highest since Aug, 2024).

- Japan Dec Tokyo Avg Office Vacancies: 4.0% v 4.2% prior (lowest in 4 years, Oct 2020 3.9%).

- Japan 10-yr yields +1bp to 1.185%, highest since May 2011. Japan sells ¥900B VS. ¥900B indicated in 30-year JGB bonds; AVG yield: 2.304% V 2.2870% prior, bid-to-cover: 3.72X V 3.46X PRIOR (highest demand since 2020); Reminder earlier today Japan 30 yr JGB yields +1bp at 2.340%; Highest since Feb 2010.

- Japan releases weekly flows data [period ended Jan 3rd]: Foreign buying of Japan equities: -¥74B v -¥1.02T prior; Japan buying of foreign bonds: -¥331.8B v -¥919.2B prior.

- Japan Chief Cabinet Sec Hayashi: Ruling party LDP and Komeito execs to visit China on Jan 13th - press.

Korea

- Kospi opens +0.2% at 2,526.

- Hyundai Motors 005380.KR To invest KRW24.3T in Korea during 2025, +19% y/y.

- LG Energy (73220.KR) Reports prelim Q4 (KRW) Op -225.5B v 45.8Be (338.2B y/y), Rev 6.45T v 6.86Te v (8.00T y/y).

- Follow up: Suspended Pres Yoon's lawyer says Yoon is in his residence; Not yet decided when Yoon will attend Constitutional Court - Korean press.

- South Korea and US sign MOU on nuclear energy cooperation [overnight update].

Other Asia

- Thailand bond market survey sees Bank of Thailand (BOT) cutting key rate by 50bps in 2025, starting from Q2 - financial press.

North America

- US dockworkers reach tentative pact for six year contract to avert strike at East Coast, Gulf Coast Ports.

- (US) Pres-elect Trump: Whether 1 or 2 bills, "Something will be done" (after meeting with Congressional Republicans) - financial press.

- (US) Trump Attorney General nominee Pam Bondi confirmation hearings set for Jan. 15-16 - US press.

- Pres Biden declares California wildfires to be Major Disaster - financial press.

- Nvida: Biden Admin plans additional curbs on exports of AI chips from Nvidia and AMD in final days of the Administration – press.

- (CL) Chile Dec CPI M/M: -0.2% v 0.0%e; Y/Y: 4.7% v 4.7%e (8th month with annual pace above target).

- (US) More press reports Trump again weighs emergency declaration for new tariff program - CNN (as widely expected).

- (US) Fed's Waller (voter for 2025): Inflation downtrend likely support more cuts; To support cuts in 2025 if outlook as expected.

- (US) Dec ADP employment change: +122K V +139KE (lowest since Aug); Notes more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains.

- (US) Initial jobless claims: 201K V 215KE; continuing claims: 1.867M V 1.860ME.

- (US) Dec Manheim wholesale used vehicle Index: 204.8 v 205.4 prior; -0.8% m/m; +0.4% y/y.

- (US) DOE CRUDE: -1M V -1ME; GASOLINE: +6.3M V +0.5ME; DISTILLATE: +6.1M V +0.5ME.

- (US) Treasury $22b 30-year bond reopening draws 4.913% V 4.535% prior; bid to cover 2.52 V 2.39 prior and 2.41 over last 8 reopenings (highest yield at auction since Aug 2007).

- (US) FOMC Dec minutes: officials saw gradual easing of labor market, no signs of rapid deterioration; some officials saw merit in holding rates steady in December.

- (US) Nov consumer credit: -$7.5B V $10.5BE.

Europe

- (UK) Dec BRC Shop Price Index Y/Y: -1.0% v -0.4%e; [**Note: Oct reading of -0.8% was lowest since Aug 2021].

- ECB’s Cipollone (Italy): Monetary policy should let Euro Zone economy run at potential.

- (FI) Finland PM Orpo: Russian border crossings will remain closed; Threat assessment on the eastern border is unchanged.

Levels as of 00:20 ET

- Nikkei 225 -1.1%, ASX 200 -0.2%, Hang Seng -0.2%; Shanghai Composite -0.2%; Kospi +0.3%.

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

- EUR 1.0305-1.0322; JPY 157.76-158.40; AUD 0.6194-0.6218; NZD 0.5593-0.5611.

- Gold +0.2% at $2,678/oz; Crude Oil -02% at $73.18/brl; Copper +0.6% at $4.2930/lb.