US earnings and political issues also in focus

Asia market update: Japan officials move markets; US earnings and political issues also in focus.

General trend

- USD/JPY pared rise amid ‘verbal intervention’; JGB yields drop after dovish Ueda comments.

- Japan Fin Min Kato: Recently seeing one-sided and sharp FX moves; concerned about recent FX moves.

- BOJ Gov Ueda: For next rate hike want "one more notch"; Can't say if we will have enough info by Jan's meeting; Possible to get sense of wage talks before March; Price trend is rising very slowly; The price trend is a reason for gradual rate hikes - post rate decision press conference [comments from Dec 19th].

- USD/JPY: Note: Japan Gotobi day in focus, refers to the 5th day of the month and dates that are multiples of 5; accounts are generally settled on Gotobi days.

- USD/JPY: $3.6B in FX options due to expire on Dec 20th, the strike price is ¥157 - US financial press.

- Equity markets trade mixed.

- US equity FUTs extend declines.

- FedEx rises >8% after earnings.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.13% at 8,157.

- Australia Nov Private Sector Credit M/M: 0.5% v 0.5%e; Y/Y: 6.2% v 6.1% prior.

-Australia sells A$700M v A$700M indicated in 2.25% May 2028 Bonds:Avg Yield: 3.9785%; bid-to-cover 3.93x.

-RBNZ Nov FX Intervention Capacity (NZ$): 24.3B v 24.5B m/m.

-New Zealand Nov Trade Balance (NZD):-437M v -1.5B prior.

- New Zealand Dec ANZ Consumer Confidence: 100.2 v 99.8 prior.

China/Hong Kong

-Hang Seng opens -0.3% at 19,697.

-Shanghai Composite opens -0.2% at 3,364.

-China PBOC monthly loan prime rate setting (LPR); leaves key rates unchanged; as expected.

-China PBOC sets Yuan reference rate 7.1901 v: 7.1911 prior.

-China PBOC Open Market Operation (OMO): Injects CNY101.6B in 7-day reverse repos; Net drains CNY103.5B v injects CNY14.5B prior.

-China Sinograin said to have purchased ~500K metric tons of US soybeans this week for Mar-Apr shipments – financial press.

-China Pres Xi: We should respect differences to protect special administrative regional status, with high degree of autonomy; We must maintain a high level of security and promote high quality development; Regarding Macau, Hong Kong is better to merge with China's development; Macau and Hong Kong deeply connect with national development strategy and accelerate integrally with the overall national development; Macau has promoted healthy development of the gaming industry; Reiterates that Macau should diversify and develop new industries; We should be prepared for danger, take precautions against risks, firmly safeguard national security and assure Macau's stability.

-Alibaba [9988.HK]: Block of 1.05M shares crossed at HK$82.82/share.

Japan

- Nikkei 225 opens +0.4%, 38,950.

- Japan Fin Min Kato: Recently seeing one-sided and sharp FX moves; concerned about recent FX moves.

- Japan Top FX Diplomat: 'Gravely' concerned about FX moves.

- Japan Nov national CPI Y/Y: 2.9% V 2.9%E; CPI ex fresh food (CORE) Y/Y: 2.7% V 2.6%E.

-Bank of Japan (BOJ) announcement related to outright bond buying operations: Inline with prior purchases.

- Japan sells ¥4.3T vs. ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.1255% v 0.1453% prior; bid-to-cover: 2.51x v 2.65x prior.
USD/JPY: Rises to 5-month high of ¥157.90.

- Japan reportedly considers convening parliament session from Jan 24th - press.

Korea

-Kospi opens -0.3% at 2,429.

- South Finance Ministry: To ease cap on the FX forward position of banks by 50% [**Reminder: Mar 18 2020: South Korea: announced new FX forward measures, effective March 19th; to raise the ceiling on foreign exchange forward positions from 200% to 250% of capital for foreign banks in South Korea; to raise the ceiling on foreign exchange forward positions from 40% to 50% of capital for domestic banks; the measure aims to help banks secure more US dollars].

-Korean won reportedly hit level to trigger up to $50B in pension sales, which would be activated if Korean won (KRW) stays below 1,450/$ level for 5 business days - press.

-South Korea: To provide KRW25.5T in support for high-tech industry [timeframe uncertain].

-South Korea Nov PPI Y/Y: 1.4% v 1.0% prior.

North America

- (US) House defeats GOP stopgap and debt limit bill; Next steps are unclear to avoid US Govt shutdown.

- (US) House Speaker Johnson: To 'regroup' and come up with another solution.

- (US) JD Vance to meet with House Freedom Caucus on Friday morning [7:45 AM ET] regarding stopgap – US press.

- (US) Treasury $22B 5-year TIPS reopening draws 2.121%, BTC 2.10x.

- (US) Treasury's $80B 4-week bills draw 4.230% v 4.240% prior, BTC 2.93x v 3.14x prior; $75B 8-week bills draw 4.230% v 4.260% prior, BTC 2.98x v 2.81x prior.

- Boeing [BA]: Said to seek to build 38 of the 737 Max jets per month by May - US financial press [The FAA had previously imposed a production cap of 38 aircraft per month due to safety concerns arising from a manufacturing incident in January 2024. Current reports indicate that Boeing aims to gradually increase production, but ongoing audits and safety measures are delaying this process].

- FedEx [FDX]: Reports Q2 $4.05 v $3.90e, Rev $22.0 v $22.0Be; Cuts FY25 outlook; To Separate FedEx Freight, Creating Two Industry-Leading Public Companies.

- Nike [NKE]: Guides Q3 Rev low double digit decline y/y v -7.3%e, Gross margin -300 to -350 bps y/y - earnings call comments.

- Nvidia [NVDA]: US Commerce Dept recently asked Nvidia to look into smuggling of its advanced chips into China over the last year - TheInformation.

- Starbucks [SBUX]: 98% of union baristas authorizes strike action ahead of final round of negotiations; Will strike if needed, but no date set - press.

-Trump Media & Technology Group [DJT]: Trump transferred all of his DJT shares to revocable trust - form 4 filing; The reporting person transferred 114,750,000 shares of common stock of Trump Media & Technology Group Corp. on December 17, 2024 as a bona fide gift to Donald J. Trump Revocable Trust Dated April 7, 2014 (the "Trust") for no consideration. Following the transaction, the reporting person directly owned 0 shares of Trump Media & Technology Group Corp. and indirectly owned 114,750,000 shares of Trump Media & Technology Group Corp.

Europe

- (UK) Nov Car Manufacturing Output Y/Y: -30.1% to 64.2K units [lowest since 1980].

Levels as of 00:20 ET

- Nikkei 225, +0.1%, ASX 200 -1.2% , Hang Seng flat; Shanghai Composite +0.4% ; Kospi -1.8%.

- S&P500 Futures: -0.3%; Nasdaq100 -0.6%, Dax -0.8%; FTSE100 -0.5%.

- EUR 1.0369-1.0358 ; JPY 157.92-156.83 ; AUD 0.6242-0.6214 ;NZD 0.5635-0.5613.

- Gold +0.2% at $2,612/oz; Crude Oil -0.4% at $68.96/brl; Copper +0.2% at $4.0913/lb.