Currencies and equities take breather after week of volatility – Except Nikkei post-holiday

Asia market update: Currencies and equities take breather after week of volatility - except Nikkei post-holiday; Focus on US Dec PPI.

General trend

- Currencies and equities were stable after a week of volatility through last night, other than the Nikkei (-2.1% following holiday yesterday when other markets were heavily down).

- An unverified news report said that Pres Elect Trump's team was studying “month by month” tariff hikes of 2-5%, with the implied gradual approach providing encouragement to the markets. However, Trump himself has yet to say anything personally on the rumor.

- Currencies especially commodity currencies led by Kiwi rebounded on the news. Bitcoin also recovered to $95K after plunging to $89K overnight.

- Oil failed to press on beyond the $77K mark reached yesterday, pausing at its highest levels since Aug, 2024.

- Hang Seng and Shanghai outperformed, with HK index rebounding from a 4-month low as the CSRC securities regulator vowed to stabilize the market.

- Japan 10-year JGB yields rose to the highest since Apr 2011, +4.5bps to 1.24%, [playing catch up with Japan markets closed on Mon], with 20-years hitting 2.0% for first time since 2011.

- BOJ Dep Gov Himino in a long-telegraphed policy speech was overall interpreted by the market as slightly dovish through his non-commitment to rate hikes. However, Himino explicitly said that the BOJ does not like to tip its hand in advance regarding likely decisions (thereby implying next week’s BOJ meeting on Jan 24th will be indeed ‘live’).

- China was rumored to be discussing sale of TikTok (US operations) to Elon Musk as a potential option, a claim that parent Bytedance later strongly denied.

- Reports out of Nikkei that China’s increasing scrutiny of exports by Apple and other US tech companies were slowing their supply chains, particularly to India and Vietnam.

- CN 1-yr propelled back above 1% again (1.1600% v 0.6612% in late Dec); CN 10-years +2bps to 1.665%.

- In geopolitics, US Pres-elect Trump said very close' to getting Israeli hostage deal done, could be done by 'end of the week'.

- US equity FUTs +0.3% to +0.5% during Asian trading.

Looking ahead (Asian time zone)

Note: This will be the final week for US Fed speakers before the communications blackout is imposed ahead of the Jan 29th decision.

- Tue Jan 14th (Tue night US Dec PPI).

- Wed Jan 15th ID Rate Decision, (Wed eve UK Dec CPI, DE 2025 GDP, Wed night US Dec CPI).

- Thu Jan 16th AU Dec jobs, KR Rate Decision, (Thu eve UK Nov GDP, Thu night US Dec Retail Sales).

- Fri Jan 17th NZ Dec Business PMI, CN Dec GDP, Industrial Prod, Retail Sales (Fri night US Dec Building Permits).

Holidays in Asia this week

- Mon Jan 13th Japan

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,207.

- Australia Jan Westpac Consumer Confidence: 92.1 v 92.8 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 87.1 v 87.5 prior – update.

- Some Australian ports may see shipment delays due to industrial action at some QUBE-managed ports; May see disruption to grains and other merchandise - financial press (update).

- New Zealand NZIER Economists Quarterly Survey: Business confidence improved in Q4 to +16% v -1% q/q.

- ANZ: Bets on another ‘large’ [50bps] RBNZ rate cut have been pared; notes the Q4 NZIER business confidence data – US financial press.

China/Hong Kong

- Hang Seng opens +0.2% at 18,901; Shanghai Composite opens +0.1% at 3,165.

- Apple: China said to be increasing scrutiny of exports by Co and other US tech companies - financial press.

- BYTEDANCE.IPO China said to be discussing sale of TikTok (US operations) to Elon Musk as a potential option; US Pres-elect Trump reiterates: "I am not opposed to TikTok".

- Jeffrey Kessler said to be considered by Pres-elect Trump for key China role as head of Commerce's Bureau of Industry and Security - financial press.

- China Spring Festival [chunyun] travel rush starts today (Tues, Jan 15th); A record ~9B trips expected through Feb 22nd (40-days in total) - financial press.

- China's Tianjin province (Northern China) targets 2025 GDP growth ~5% - financial press.

- China MOF sells 1-year and 30-year bonds.

- (MX) Mexico Pres Sheinbaum: Plans to reduce Chinese imports and boost local production [overnight update].

- China Commerce Ministry (MOFCOM): China will take necessary measures to safeguard 'it's legitimate rights and interests' on AI tech [overnight update].

- China Securities Regulator (CSRC) to strengthen market stabilization mechanisms – press [overnight update].

- China PBOC sets Yuan reference rate 7.1878 v 7.1885 prior.

- China PBOC Open Market Operation (OMO): Injects CNY55B in 7-day reverse repos; Net injects CNY48B v injects CNY11B prior.

Japan

- Nikkei 225 reopens -0.5% at 39,010.

- Japan Nov Current Account: ¥3.353T v ¥2.653Te.

- Japan Dec Bank Lending Y/Y: 3.1% v 2.9% prior.

- Japan Economy Min Akazawa: The BOJ considering a rate hike and the government's aim to exit deflation are not 'contradictory'.

- Japan Former Top FX Diplomat Kanda: Desirable for FX to move in line with fundamentals - press.

- Japan sells ¥2.3T VS. ¥2.3T indicated in 5-year JGB bonds; AVG yield: 0.8760% V 0.7340% prior; bid-to-cover: 3.82X V 4.42X prior.

Korea

- Kospi opens +0.5% at 2,501.

- South Korea Nov M2 Money Supply M/M: 0.8% v 1.0% prior.

- South Korea Industry Min said recent Won (KRW)‘plunge’ only has ‘limited’ impact on exports – Yonhap.

- Follow up: Constitutional Court rejects suspended Pres Yoon's complaint on judge - Korean press.

Other Asia

- Thailand Dec Consumer Confidence: 57.9 v 56.9 prior (3rd month of rises).

- USD/INR (IN) India Central Bank (RBI) seen "heavily" selling dollars to limit depreciation of Rupee prior to local spot market open (INR) - traders.

- (IN) India Dec CPI Y/Y: 5.2% V 5.3%E (2nd straight month within target) [overnight update].

North America

- (US) Reportedly Pres Elect Trump's team studying month by month tariff hikes of 2-5% - press.

- (US) Cleveland Fed’s Inflation Nowcast sees Jan US CPI Y/Y (to be out next month) to decelerate to 2.8% from 2.9%, which is its estimate for Dec US CPI Y/Y (to be out on Jan 15th); Truflation proxy of US aggregated Inflation Index at 3.0% v 2.9% w/w, near highs of autumn 2023.

- (US) Dec NY Fed 1-Year Inflation Expectations: 3.0% v 2.97% prior.

- (US) Reportedly US White House is planning a new list of drugs for price discussions.

- (US) Pharmaceutical companies plan to ask Trump to pause price negotiations - press.

- *(US) White House confirms global curbs on exports of AI chips by Nvidia and its peers; No restrictions apply to chip sales to 18 key allies and partners; Trump administration to decide how and whether to implement curbs [**Note: earlier, press reported 3-tier system of US trade curbs on AI chips could be announced; The result would be an expansion of chip trade curbs to most of the world; Also the new rules to limit the export of closed AI model weights].

- (US) Trump's nominated chair of Council of Economic Advisers Miran: US could be better off with average tariffs of around 20% and as high as 50%, compared with the current 2% - WSJ.

Europe

- (IL) US Pres-elect Trump says 'very close' to getting Israeli hostage deal done; Could be done by 'end of the week' - financial press.

- (EU) EU said to "reassess" probes into Apple, Google and Meta - FT.

- (UK) PM Starmer: Govt will 'absolutely' stick to fiscal rules; Confident in my team.

- (RU) At least 65 tankers have reportedly dropped anchor in Asia, Russia and the Middle East have new US sanctions went into effect on Jan 10th.

- (RU) 10 EU countries said to call for sanctions on Russian natural gas and LNG - press.

- (FR) Bank of France (BdF): Maintains Q4 GDP growth forecast at zero.

- (EU) ECB's Villeroy (France): French economic growth could pick up in 2026 or 2027.

- *(IL) Reportedly "breakthrough" reached in Hamas-israel talks; final draft of Gaza ceasefire and hostage release has been sent for Israel and Hamas approval - Press.

Levels as of 00:20 ET

- Nikkei 225 -2.1%, ASX 200 +0.5%, Hang Seng +0.5%; Shanghai Composite +2.0%; Kospi +0.2%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.5%; Dax +0.5%; FTSE100 flat.

- EUR 1.0233-1.0278; JPY 157.12-158.02; AUD 0.6171-0.6203; NZD 0.5581-0.5617.

- Gold +0.5% at $2,688/oz; Crude Oil -0.5% at $76.91/brl; Copper +0.5% at $4.3460/lb.