World continues to second-guess Trump presidency

Asia market update: China inline stimulus disappoints without consumption boost, as CN CPI/PPI down again; World continues to second-guess Trump presidency.

General trend

- Equities in Asia mostly down as countries and companies around the world work to try and stay in Pres-elect Trump's good books as trade wars, tariffs and restrictions threaten. One such example that has been picked up by global media is Australian appliance-maker Breville, announcing it will move all 120v appliance production out of China.

- China’s NPC Standing Committee announced its much anticipated stimulus package late on Friday, confirming a CNY6T local govt debt swap plan with central govt spread out over 3 years, with CNY10T available in total for local govt debt disposal. The markets were disappointed, as they also expected between CNY1-2T for fresh fiscal stimulus, particularly for consumers. Fin Min Fo’an said there will be more policy measures with ‘large room to increase borrowing’. Later, China’s PBOC Q3 policy report said that further rate cuts face dual constraints of thin bank Net Interest Margins and FX rates (pertaining to the strength of the Yuan).

- Meanwhile, China’s inflation rate continued to disappoint, with Oct CPI at 0.3% m/m and less than the 0.4% expected y/y. Monthly PPI continued to worsen (now negative for over two years), with factory gate prices -2.9% lower than the year previously. Only consistent increases in food prices are keeping China’s CPI from plunging even further, and is hurting China's huge middle and lower economic classes disproportionately.

- A US report on Friday suggested House Republicans are considering revoking China's PNTR trade relation status which grants US trade partners the same advantages offered to WTO members.

- Today, 11/11, is ‘Single’s Day’ in China, in recent years a barometer for the health of consumer spending. Figures should become available for the day later in the week from companies such as Alibaba and JD.com.

- Japan Summary of Opinions warned that FX and markets in general could see large fluctuations with the BOJ and Fed moving in opposite directions.

- South Korea Nov 1-10 exports and imports fell markedly, against recent trends, with exports to both China and US falling, and a decidedly lower amount of chip exports.

- US MOVE bond volatility index collapsed through last week after having peaked at 136 on Monday, Nov 3rd, the day before the US election, to be down at 99 by Friday close. US 10-yr yields themselves peaked at 4.47% in the hours following the Trump election win, but finished by falling back down to 4.31% by week’s end, the level they held prior to the US election results.

- Even as Pres Trump releases multiple policy intentions ahead of Jan 20th Inauguration, the ability to pass legislation based on the Trump agenda potentially narrows as the Democrat party keeps closing the gap with the Republicans in Congress, 204 (D) to 213 (R) with 218 required for a majority, and a several-seat buffer preferred.

- Bitcoin rose to fresh highs, >$80,000 for the first time.

- US equity FUTs +0.2% to 0.3% during the Asia session.

Looking ahead (Asian time zone)

- Tue Nov 12th AU Biz & Consumer Confidence, (Tue eve DE ZEW Econ Sentiment).

- Wed Nov 13th (Wed night US Oct CPI).

- Thu Nov 14th AU jobs, (Thu night US Oct PPI).

- Fri Nov 15th JP Q3 GDP, CN Oct ‘data dump’ (Fri eve UK Q3 prelim GDP, Fri night US Oct Retail Sales + Industrial Production).

Holidays in Asia this week

- Fri Nov 15th India.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 8,274.

- Australia Treasurer Chalmers: Australian economy "not immune from escalating trade tensions" following US Donald Trump victory; To deliver a speech on Monday - Australian press.

- New Zealand Q4 RBNZ Business Inflation Expectations Survey (2-year): 2.1% v 2.0% prior.

China/Hong Kong

- Hang Seng opens -0.2% at 20,258; Shanghai opens -0.6% at 3,432.

- China PBOC to adopt 'expanded and targeted' monetary policies, the PBOC needs to provide more liquidity amid rise in government bond supply; no sources cited - China Securities Journal.

- China Oct CPI Y/Y: 0.3% V 0.4%E [weekend update].

- China MOFCOM: EU and China to continue technical talks on EV tariffs next week; Made progress on tariffs.

- US House Republicans said to examine China's trade relation status, looking to end its PNTR legal status that grants US trade partners the same advantages offered to WTO members - pre.

- China PBoC Q3 Monetary Policy Report: Further rate cuts face dual constraints of NIM and FX rate; To resolutely insist on an accommodative monetary policy stance; Reiterates stance that policy will be flexible and targeted.

- (RU) Head of Russia Security Council and former Defense Min Shoigu to visit China Nov 11-14th - Russia state media (update).

- China Fin Min Lan Fo'an: China will roll-out new policy measures; to implement more forceful fiscal policy in 2025; confirm to issue ultra-long special treasury bonds.

- (CN) China holds fiscal policy press conference providing details; China top lawmakers approves CNY6T local govt debt swap plan; adds CNY10T in total for local govt debt disposal as China NPC standing committee (NPCs) meeting concluded [**Note: there was speculation China may announce stronger than CNY10T package if Trump wins].

- China PBOC sets Yuan reference rate: 7.1786 v 7.1433 prior [weakest since Nov 3, 2023].

- China PBOC Open Market Operation (OMO): Injects CNY134B in 7-day reverse repos; Net injects CNY116B v net drains CNY5B prior.

Japan

- Nikkei 225 opens -0.2% at 39,417.

- BoJ summary of opinions for Oct: FX and markets in general could see large fluctuations with BOJ and Fed moving in opposite directions.

- Japan Aug Current Account: ¥1.717T v ¥3.343Te.

- Japan Oct Bank Lending Y/Y: 2.7% v 2.7% prior; Bank Lending (ex-trusts) Y/Y: 3.0% v 3.0% prior.

- Japan MOF: Foreigners purchased net ¥2.70T in Japan stocks in Oct.

- Japan sells ¥250B in 10-year inflation-linked JGB Bonds; Yield at lowest accepted price: -0.3620% v -0.5450% prior, bid-to-cover: 3.54x v 4.27x prior.

- Japan DPP Head Tamaki (opposition): To cooperate with ruling LDP party in area of national security - financial press.

- Japan Fin Min Kato: Currently discussing content of Japan's economic package.

- Japan MOF said to have intervened in FX markets twice during the last quarter totaling ¥5.54T - financial press.

Korea

- Kospi opens flat at 2,562.

- South Korea Nov 1-10 Exports Y/Y: -17.8%; Imports: -21.0%.

- South Korea Oct Total Bank Lending to Household (KRW): 1,139.5T v 1,135.7T prior.

Other Asia

- Taiwan said to be considering large US defense purchases as 'overture' to Pres-elect Trump - FT.

North America

- (US) Trump said to have offered Elise Stefanik the job as US Ambassador to the UN – US financial press.

- (US) Fed's Kashkari (non-voter for 2024 and 2025): If growth and productivity remain strong the Fed may not cut as much - Fox News interview.

- (US) Nov preliminary university of Michigan confidence: 73.0 V 71.0E.

- (US) Reportedly advisers close to Pres-elect Trump have been in discussions with House Ways and Means Chair Jason Smith (R-Mo.) on a broad tax package that is partially paid for by tariffs approved by Congress - Politico [**Note: Congress has not raised tariffs through legislation in almost 100 years — through the Smoot-Hawley Tariff Act of 1930].

Europe

- (RU) Pres-elect Trump reportedly talked to Russian Pres Putin, told him not to escalate war in Ukraine - Washington Post (update).

- (IE) Ireland Oct Construction PMI: 49.4 v 49.0 prior (second month of contraction).

- (DE) German Chancellor Scholz: Plans to be SPD's top candidate in German vote; May raise vote of confidence in his govt before Dec 25th - press interview.

- (IL) Reportedly Trump told Palestinian Pres Abbas that he will work for ending the Gaza war - press.

- (RU) Russia Foreign Ministry: Trump's promise to quickly resolve the crisis in Ukraine is nothing more than rhetoric.

Levels as of 01:20 ET

- Nikkei 225 +0.1%, ASX 200 -0.4%, Hang Seng -1.8%; Shanghai Composite flat; Kospi -1.3%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; Dax +0.4%; FTSE100 flat.

- EUR 1.0708-1.0728; JPY 152.65 -153.66; AUD 0.6575-0.6599; NZD 0.5948-0.5978.

- Gold -0.7% at $2,675/oz; Crude Oil -0.4% at $70.09/brl; Copper +0.3% at $4.3220/lb.