Risk assets generally up on inline US CPI, AU equities lag on possible implications of stronger jobs report

Asia Market Update: Risk assets generally up on inline US CPI; AU equities lag on possible implications of stronger jobs report; KRW down as Yoon adds to confusion; CN CEWC final day; Eyes on ECB rate decision & US Nov PPI.

General trend

- Risk assets tore upwards overnight following a benign US Nov CPI, with the Nasdaq hitting fresh record highs, Bitcoin well above 100K again with Gold, Copper and Oil higher too. US Fed probabilities of a 25bps cut next week briefly hit 100% during the session. (However, should be noted that the Dow closed down on the day).

-The Nikkei rose above 40K again for the first time since Oct 15th. However, the Kospi lost its early 1% gains as South Korea Pres Yoon only added to confusion in a national address where he asserted that the main opposition party tried to 'pull down people' and had become ‘a monster’. Said he will fight until 'last moment' for the public – even amid latest opinion polls showing 75% of South Koreans want Pres Yoon to either resign or be impeached following the imposition of martial law on Dec 3rd. Ruling party hints there could soon a new Presidential election, as another member said he will join the opposition in voting for impeachment.

- Australia 3-year bond yield rose by up to 11bps on stronger Nov jobs data, helping to stunt AU equities, with lowest unemployment rate since March. Feb RBA rate cut probabilities came into focus, with AUD spiking 0.7%. Stats Agency noted this month marks the first time in six months when hours worked growth did not match employment growth. Later, reports in press that the stronger jobs data implies No RBA cut before May 2025 (follows fully priced cut for Apr 2025 following weaker Q3 GDP last week).

- Japanese markets starting to fade back from an inline BOJ report late yesterday. [Bank of Japan futures overnight priced only ~10% chance for Dec rate hike v <20% earlier and as much as 60% w/w after it was reported that the BOJ sees little cost of waiting (beyond Dec) for the next rate hike - and saw less risk of a weak Yen pushing up inflation. USD/JPY spiked a Big Figure higher to threaten the 153 handle]. However, today 2-yr JGB yield moving back towards 60bps (at 0.595%) and JPY pared losses to be back closer to 152 vs USD.

- China’s offshore Yuan, which had recovered somewhat from more than one-year lows of 7.31 just last week spiked lower again to nearly 7.30 after reports that top policy makers were considering the Yuan weakening to ~7.50 level in 2025 as a counterbalance to Trump’s tariff threats. Today the PBOC set the Yuan stronger by 785 pips, with CNH moving back up to 7.26 on the stronger fix.

- Overnight The Biden Administration imposed new tariffs on Chinese imports of critical materials, including polysilicon, solar wafers and tungsten.

- Tokyo office vacancies fell to a four-year low.

- Looking for any news or guidance out of the final day of China's Central Economic Work Conference (CEWC).

- US equity FUTs -0.1% during the Asia session.

Looking ahead (Asian time zone)

- Thu Dec 12th (Thu eve India CPI, ECB Rate Decision, US Nov PPI).

- Fri Dec 13th NZ Nov Biz PMI, AU Westpac Consumer Confidence, JP Tankan.

- Sat Dec 14th CN Nov New Yuan Loans, FDI.

Holidays in Asia this week

- Tue Dec 10th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,355.

- AUSTRALIA NOV EMPLOYMENT CHANGE: 35.6K V +25.0KE; UNEMPLOYMENT RATE: 3.9% V 4.2%E.

- Financial press reports that strong Australia jobs data implies No RBA cut before May 2025 (follows fully priced cut for Apr 2025 following weaker Q3 GDP last week) - financial press.

- META (AU) Statement on Australian News Code: Current law is flawed and continue to have concerns about charging one industry to subsidise another.

- Australia RBA Asst Gov (Financial) Jones: Speech on the Future of the Payments System (update).

- RBA Dep Gov Hauser: RBA ready to respond "with force" should potential U.S. tariffs hit global trade and threaten growth at home - speech at ABE Annual Dinner, Sydney [overnight update].

- New Zealand Nov Total Card Spending M/M: -0.1% v 0.2% prior (revised lower).

- New Zealand Fin Min Willis: NZ plans 'golden visa' changes to attract wealthy migrants - financial press.

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2028, 2035 and 2054 bonds (update).

China/Hong Kong

- Hang Seng opens +0.3% at 20,213; Shanghai Composite opens flat at 3,432.

- Follow up: US said to plan on capping countries’ semiconductor chip access in order to target Chinese smuggling of chips from other sources - SCMP.

- US Pres-elect Trump said to invite China Pres Xi to Presidential Inauguration (Jan 20th) - financial press.

- (HK) HKMA: China PBOC to issue CNY20B in six-month bills in Hong Kong on Wed, Dec 18th.

- (US) BIDEN ADMINISTRATION TO UNVEIL NEW TARIFFS ON IMPORTS OF CRITICAL MATERIALS FROM CHINA; TO DOUBLE TARIFF ON CHINESE SOLAR WAFERS AND POLYSILICON TO 50% AND ANNOUNCE 25% LEVY ON TUNGSTEN PRODUCTS; TO TAKE EFFECT FROM JAN 1ST - FT [**Note: China is the world's largest producer and exporter of tungsten] [overnight update].

- China PBoC State-back paper: CNY currency (Yuan) exchange rate remains basically stable; Warns against making one-way bets.

- CHINA TOP POLICYMAKERS SAID TO CONSIDER YUAN (CURRENCY CNY) TO WEAKEN IN 2025 AMID TRUMP'S TARIFFS THREAT; PBOC said to have considered the possibility the yuan could drop to 7.50 level to US dollar to counteract any trade shocks [overnight update].

- HUAWEI.CN Reportedly new Mate 70 phone chip shows no major redesign; Shows chip advances are stalling – press [overnight update].

- China PBOC sets Yuan reference rate: 7.1854 v 7.1843 prior.

- China PBOC Open Market Operation (OMO): Injects CNY66B in 7-day reverse repos; Net injects CNY29B v net injects CNY37B prior.

Japan

- Nikkei 225 opens +1.2% at 39,849.

- Japan Nov Tokyo Avg Office Vacancies: 4.2% v 4.5% prior (lowest in 4 years).

- Japan releases weekly flows data [period ended Dec 6th]: Foreign buying of Japan equities: +¥482.3B v -¥607.7B prior; Japan buying of foreign bonds: -¥640.8B v +¥922.4B prior.

- Nearly 3/4 of Japanese companies concerned about potential US tariff hikes as well as US-China relations - financial press survey.

- BOJ REPORTEDLY SEE LITTLE COST TO WAITING FOR NEXT RATE HIKE; SEE LESS RISK OF WEAK YEN CURRENCY PUSHING UP INFLATION – PRESS [overnight update].

- Japan sells ¥650B v ¥650B indicated in 10-yr, 20-yr, and 30-yr JGB's in liquidity enhancement auction: Avg accepted spread +0.005% v -0.015% prior, bid-to-cover: 3.56x v 3.39 prior.

- Japan DPP (opposition party) agrees to support passage of extra budget as ruling coalition reaffirms commitment to raise tax allowance ceiling – press [overnight update].

- Japan Auto Worker's Union reportedly calling for monthly pay increase of >¥12K in annual labor talks next year – press [overnight update].

Korea

- Kospi opens +0.6% at 2,456.

- South Korea President Yoon: Main opposition tried to 'pull down people'; will fight until 'last moment' with the public - address to the nation.

- Another South Korea ruling-party member, Jin Jong-oh, says he will vote to impeach Pres Yoon (necessary target of 200 votes out of 300 total) - financial press.

- South Korea ruling PPP [party] names Kwon ['pro-Yoon' veteran] as the new floor leader who says there could 'soon' be a President election– South Korean press.

- South Korea govt says uncertainties 'still persist' around economy, market - financial press.

Other Asia

- (TW) Certain Taiwan officials said to meet Pres-elect Trump's "circle" in the US (timing and location uncertain) - financial press.

North America

- Canada Fin Min Freeland: Canadian provinces have suggested "robust" response to potential 25% US tariffs via exports of key products to US - financial press.

- (US) MBA Mortgage Applications w/e Dec 6th: 5.4% v 2.8% prior (5th straight weekly rise).

- BRAZIL CENTRAL BANK (BCB) RAISES SELIC TARGET RATE BY 100BPS TO 12.25%; More than expected and decision was unanimous.

- (US) US lawmakers to introduce legislation to break up Pharmacy Benefit Managers (PBMs); If passed, would force the companies that own health insurers or PBMs to divest their pharmacy businesses within three years; If passed, the legislation would be the most far-reaching intervention yet into the operations of PBMs - WSJ.

-(US) NOV CPI M/M: 0.3% V 0.3%E; Y/Y: 2.7% V 2.7%E (highest annual pace since July); (ex-food/energy) M/M: 0.3% v 0.3%e; Y/Y: 3.3% v 3.3%e (annual pace does not decelerate since Sept).

-(US) Nov Real Avg Hourly Earning Y/Y: 1.3% v 1.4% prior; Real Avg Weekly Earnings Y/Y: 1.0% v 1.1% prior.

-(CA) BANK OF CANADA (BOC) CUTS INTEREST RATES BY 50BPS TO 3.25%; AS EXPECTED; DROPS PROMISE OF FURTHER CUTS IF FORECASTS MATERIALIZE.

-(US) NOV MONTHLY BUDGET STATEMENT: -$366.8B V -$351.0BE (record deficit for Nov month).

-(US) FBI Director Wray will resign when Pres-elect Trump takes office.

-(US) TREASURY'S $39B 10-YEAR NOTE REOPENING DRAWS 4.235% V 4.066% PRIOR; BID-TO-COVER RATIO: 2.70 V 2.48 PRIOR AND 2.54 OVER LAST 8 REOPENINGS.

Europe

- (IL) Hamas said to have handed over a list of hostages to be released, including Americans, in sign of potential relenting to Israel's cease-fire demands - WSJ.

- (UK) Nov RICS House Price Balance: 25% v 19%e (highest since Sept 2022).

- OPEC Monthly Oil Report (MOMR): Cuts 2024 global oil demand growth from 1.82M bpd to 1.61M bpd (~12% cut); Cuts 2025 global oil demand growth from 1.54M bpd to 1.45M bpd (~6% cut).

- (DE) German Chancellor Scholz files formal no-confidence vote request to trigger snap election; Plan moves election up to Feb 23rd (as expected).

Levels as of 00:20 ET

- Nikkei 225 +1.2%, ASX 200 -0.3%, Hang Seng +1.2%; Shanghai Composite +0.5%; Kospi +1.2%.

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

- EUR 1.0492-1.0510; JPY 151.95-152.48; AUD 0.6337-0.6419; NZD 0.5784-0.5809.

- Gold -0.3% at $2,748/oz; Crude Oil +0.1% at $70.38/brl; Copper +0.9% at $4.2985/lb.