KR and JP on the hunt for herd-like behavior or one-sided moves

Asia Market Update: KR and JP on the hunt for herd-like behavior or one-sided moves as KR political drama deepens and USD/JPY nears 160 again; Nikkei outperforms, back to >40K.

General trend

- Japan "data dump" initially failed to move markets with flatter bond curve amid BOJ Summary of Dec Opinions. BOJ reiterated from the perspective of risk management it was prudent to maintain the current monetary policy.

- Japan’s Tokyo CPI for December had the highest Core since Aug and the highest Headline figure since Oct 2023. Nevertheless the numbers were mainly inline with expectations.

- Through all of the Japan releases over a 20 minute period (BOJ Summary of Opinions, Tokyo CPI, Industrial Production, Retail Sales and Jobs) USD/JPY remained steady at the levels seen at the Asian open, just shy of the overnight 5-month lows of 158; 10-year JGB yields also little movement ~1.09%. [Later moved +1.3bps to 1.10% for first time since early July]. Meanwhile 2-yr JGB yield +2.5bps at 0.621% as curve flattens.

- However, later the second “Yentervention” comments from a Japanese official this week (from Fin Min Kato) saw JPY/USD claw back 0.3% to 157.50.

- Nikkei outperformed again, +1.8%, pushing back above 40K for first time since Oct 14th. Toyota has gained 14% in three days following the Nikkei reporting of a doubling of ROE target by 2030.

- In Korea, following the largest decline in consumer confidence in 16 years earlier in the week, today Manufacturing and non-Manufacturing Survey also fell steeply.

- Korea Fin Min blames the political situation for financial and economic under-performance, including the opposition party still threatening to impeach the new acting Pres Han.

- USD/KRW +1.0% at 1,485, its lowest level in 16 years since the GFC. (GFC low of ~1494 and all-time-low of ~2,000 during 1997 Asian Financial Crisis). JPY/KRW up >1.6%, with Kospi -1.0% (Kospi later pared losses to -0.3%, with USD/KRW also paring losses back close to yesterday's levels ~1,468).

- China Nov industrial profits continued to fall for the fourth consecutive month, but at a lower rate than the prior three months’ declines. China 10-yrs -3bps back to 1.70%.

- US equity FUTs -0.2% during Asian trading.

Looking ahead (Asian time zone)

- Fri Dec 27th (Fri night) US Nov Retail & Wholesale Inventories.

Holidays in Asia this week

- Wed Dec 25th Australia, Hong Kong, India, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea.

- Thu Dec 26th Australia, Indonesia, New Zealand.

Headlines/economic data

Australia/New Zealand

- ASX 200 re-opens flat at 8,222.

China/Hong Kong

- Hang Seng opens -0.1% at 20,083; Shanghai Composite opens flat at 3,397.

- China Nov Industrial Profits Y/Y: -7.3% v -10.0% prior.

- China Industry Ministry (MIIT): Sees 2024 (Jan-Dec) Industrial Production up ~5.7% y/y; vows to promote steady growth of the industrial economy.

- Russia Ambassador to China: Pres Xi to visit Russia in 2025 - Russian state media.

- China Commerce Ministry (MOFCOM): To maintain tariff on N-Butanol from the US, Malaysia and Taiwan; to continue imposing the anti-dumping duties for a 5 year period from Dec 29th 2024.

- China CSRC tightened scrutiny in 2024 as the regulator has investigated >700 cases related to 'illegal behaviors' - China Securities Times.

- China Stats Bureau on 5th National Economic Census results: revises 2023 GDP to CNY129.4T, up CNY3.4T, or 2.7% from prior est.

- HUAWEI.CN Co's new flagship smartphones use memory chips from South Korea [SK Hynix], not China; cites TechInsights – SCMP [overnight update].

- China PBOC sets Yuan reference rate 7.1893 v 7.1897 prior.

- China PBOC Open Market Operation (OMO): Injects CNY108B in 7-day reverse repos; Net injects CNY6B v injects CNY26B prior.

Japan

- Nikkei 225 opens +0.3% at 39,672.

- Japan Fin Min Kato: Reiterates recently seeing one-sided, sharp moves in FX.

- BANK OF JAPAN (BOJ) SUMMARY OF OPINIONS FOR DEC: Reiterates if outlook for economic activity and prices will be realized, the Bank will adjust the degree of monetary accommodation accordingly.

- *(JP) JAPAN DEC TOKYO CPI Y/Y: 3.0% V 2.9%E; CPI (EX-FRESH FOOD) Y/Y: 2.4% V 2.5%E (highest Headline since Oct 2023 of 3.3% and highest Core since Aug of 2.4%).

- JAPAN NOV PRELIMINARY INDUSTRIAL PRODUCTION M/M: -2.3% V -3.5%E; Y/Y: -2.8% V -3.2%E.

- JAPAN NOV RETAIL SALES M/M: 1.8% V 0.5%E; Y/Y: 2.8% V 1.5%E.

- JAPAN NOV JOBLESS RATE: 2.5% V 2.5%E.

- Japan Nov Annualized Housing Starts: 775K v 775Ke - delayed release.

- Japan 10-year JGB yields +1.3bps to 1.10% for first time since early July.

- Follow up: Japan cabinet approves ¥115.5T budget for FY25/26, as well as >¥1.0T rise in debt sales.

Korea

- Kospi opens -0.4% at 2,419.

- South Korea ruling PPP [party] to boycott if PM Han impeachment requires 151 votes [out of 300 total seats; the vote is expected later on Fri (Dec 27th)].

- South Korea opposition leader Lee: Acting Pres Han is "Helping those responsible for insurrection" - live TV address.

- South Korea govt unveils KRW11.6T support package to "stabilize prices, assist vulnerable households" - Korean press.

- Korea Times: Korean won (KRW) further dips to lowest level in ~16 yrs amid deepening ‘political chaos’.

- South Korea Fin Min Choi: Asks politicians to reconsider PM Han (acting Pres) impeachment vote - financial press.

- South Korea Finance Ministry: To take 'stern steps' in case of herd behavior in FX -financial press.

- Follow up: Former Pres Yoon's lawyers said to attend court hearing today -financial press
South Korea Spy Agency: North Korea soldier was 'captured'; the soldier has been injured [the soldier in custody is 'from the Ukraine war'] – Yonhap.

- South Korea Jan Business Manufacturing Survey: 61 v 66 prior.

Other Asia

- Vietnam Trade Ministry: To impose 97% anti-dumping duty on wind towers imported from China.

- Philippines Central Bank (BSP): Sees Dec annual inflation at 2.3-3.1% [vs target of 2.0-4.0%]; 2024 avg inflation seen at 3.2%.

- (IN) Reportedly India is considering cutting income tax for individuals making up to 1.5 million rupees ($17,590) a year in February's budget - press.

North America

- (US) WSJ Timiraos: The Fed is trying, again, to size up Trump.

- SpendingPulse: US retail sales ex-automotive Nov 1st-Dec 24th +3.8% y/y; Online sales in holiday season +6.7% y/y; In-store sales +2.9% y/y.

- (US) INITIAL JOBLESS CLAIMS: 219K V 223KE; CONTINUING CLAIMS: 1.91M V 1.89ME.

- (US) TREASURY $44B 7-YEAR NOTE AUCTION RESULTS: DRAWS 4.532% V 4.183% PRIOR, BID-TO-COVER RATIO: 2.76 V 2.71 PRIOR AND 2.56 OVER THE LAST 12.

Europe

- (TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE WEEK REPO BY 250BPS TO 47.50%; MORE-THAN-EXPECTED.

- BTC/USD (RU) Russia Fin Min Siluanov: Russian companies using bitcoin and other digital currencies in international payments to avoid western sanctions - Russian press.

Levels as of 00:20 ET

- Nikkei 225 +1.8%, ASX 200 +0.4%, Hang Seng +0.3%; Shanghai Composite +0.3%; Kospi -0.3%.

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

- EUR 1.0406-1.0425; JPY 157.51-158.02; AUD 0.6209-0.6229; NZD 0.5614-0.5634.

- Gold -0.1% at $2,650/oz; Crude Oil -0.1% at $69.65/brl; Copper +0.1% at $4.1405/lb.