Japan Currency Chief Verbally Intervenes

General Trend:

• Equities markets opened mixed with Australia, New Zealand and Hong Kong still closed. S&P futures fell 0.8% in the first hour of trade following their re-open. Currencies were mixed.
• BoJ Oct meeting minutes show a divide over the effects of easing, while the minutes from the bond market group showed they want to see BOJ accelerate JGB purchase reduction
• Chinese press processed information that came out of latest official meetings including support for private sector, equalizing regulation for domestic and foreign companies and shortening Market Access Negative List significantly
• China PBoC adviser Sheng Songcheng: China will not resort to large scale monetary stimulus in 2019, doing so would risk re-heating the property market; room to further cut the reserve requirement ratios (RRR) but not likely to lower the benchmark interest rates – 21st Century Business Herald
• Japan officials released Nissan board member Greg Kelly—a key lieutenant of former chairman Carlos Ghosn—on bail five weeks after he was arrested with Ghosn on allegations of financial impropriety
• Hong Kong wine dealer, Madison Holdings (trades on GEM board), acquires 67.2% stake in Japan regulated cryptocurrency platform BitOcean from independent 3rd parties for ¥1.68B and ~¥1.68B in additional fees – SCMP
• President Donald Trump dug in and said lawmakers must approve funding for his border wall if they hope to end the government shutdown, a sign the impasse may not be quickly resolved when Congress returns to session after the holidays
• US stock market experienced sharp losses the day before Christmas after investors reacted negatively to Treasury secretary Steven Mnuchin’s unusual effort to reassure the market about Wall Street banks’ liquidity

Headlines/Economic Data

Japan

• Nikkei 225 opened +0.8%
• (JP) Bank of Japan (BOJ) Gov Kuroda: Must seek most appropriate policy while balancing benefits and costs of policy; affirms BOJ to do upmost to reach price target
• 8698.JP Issues statement to explain cryptocurrency exchange business investors are concerned about
• 6753.JP Said to be planning to spin off chip unit in Spring – Nikkei (later denied being source of report)
• (JP) Bank of Japan (BOJ) Oct 30-31st Meeting Minutes: Most members shared view momentum toward achieving 2% inflation is being maintained
• (JP) Japan Currency Head Asakawa: FX turbulence has been rising; Govt is ready to curb yen volatility; will closely watch to see if speculative activity is behind volatility – US press
• 7201.JP Updates corporate governance code, considering selling stake in Renault
• (JP) Bank of Japan (BOJ) meeting minutes from Dec 5-7th bond market group meeting: Want BOJ to speed up JGB purchase reduction
• (JP) Japan PM Abe: No change in stance of treating economy as top priority; economic policies created situation that is not deflation
• (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% 2-yr JGBs, avg yield: -0.127% v -0.134% prior, bid to cover 5.36x v 4.66x prior

Korea

• Kospi opened -1.0%
• (KR) South Korea Financial Services Commission (FSC): small business owners to have easier access and lower rates on loans in 2019, total loans to small business expected at KRW1.8T – Yonhap
• (KR) President Trump: Christmas Eve briefing with my team working on North Korea – Progress being made. Looking forward to my next summit with Chairman Kim! – tweet
• (KR) North Korea leader Kim expected to reaffirm his denuclearization commitment and call for the sincere implementation of June’s summit agreement with US President Trump in his New Year’s address – Yonhap
• (KR) South Korea Fin Min Hong: To make efforts to reduce impact from minimum wage hike; planning to extend grace period for shorter working hour system – press
• (KR) Bank of Korea (BOK): Global market instability rose sharply and authorities will take stabilizing action if needed
• 005930.KR Have not discussed cutting production in China – email statement
• (KR) South Korea Finance Ministry reiterates to stake stern measures in case of market instability, closely monitoring financial and FX markets
• (KR) Bank of Korea (BOK) keeps open ended inflation (CPI) target unchanged at 2% for 2019 and 2020; to review every 2-yrs; to keep accomodative monetary stance to prop up the economic recovery – annual monetary report
• (KR) Bank of Korea (BOK Deputy Gov Chung: We’ve been resetting the inflation target rate every three years for a decade; now the inflation has moved steadily for the 10-yr period like advanced countries, will not change 2% inflation target rate unless there is a particular reason – press conference after annual report

China/Hong Kong

• Hang Seng closed, Shanghai Composite -0.2%
• (CN) China PBoC adviser Sheng Songcheng: China will not resort to large scale monetary stimulus in 2019, doing so would risk re-heating the property market; room to further cut the reserve requirement ratios (RRR) but not likely to lower the benchmark interest rates – 21st Century Business Herald
• (CN) China National Development and Reform Commission and the Ministry of Commerce announces shortened Market Access Negative List as part of further move to standardize regulations in a transparent way and help level the playing field for foreign enterprises and private firms – China Daily
• (CN) China State Council reiterates will support private sector in 2019: Will make greater efforts to reduce taxes, fees, and financing costs, accelerate IPOs
• (CN) China PBoC sets yuan reference rate: 6.8845 v 6.8919 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY30B in 7-day and 14-day reverse repos v CNY50B injected in 14-day reverse repos prior; Net: CNY10B drain v CNY90B drain prior
• 600221.CN To use up to CNY1.55B in unused funds to replenish working capital within the next 12-months after board approval
• (CN) China Association of Automobile Manufacturers official: China will cut electric vehicle (EV) subsidy by 30% in 2019 – China Securities Times

Australia/New Zealand

• ASX 200 closed
• (AU) Australia shopping on Boxing day expected to reach A$2.49B, a fresh record – AFR
• (AU) Hailstorm in Sydney last Thursday likely to be the most expensive weather event in 2018, expected to cost hundreds of millions – AFR

Other Asia

• (ID) Bank Indonesia standing ready to intervene in bond market if needed; continues to intervene in spot currency market
• (SG) Singapore Nov Industrial Production M/M: 2.8% v 0.7%e; Y/Y: 7.6% v 4.2%e

North America

• (US) President Trump said to be getting increasingly frustrated with Treasury Sec Mnuchin, while still publicly supporting him – US press

Europe

• (RU) Russia Fin Min Siluanov: Planning to issue euro bonds and maybe yuan bonds in 2019

Levels as of 12:50ET

• Hang Seng closed; Shanghai Composite -0.4%; Kospi -1.6%; Nikkei225 -0.4%; ASX 200 closed
• Equity Futures: S&P500 +0.5%; Nasdaq100 -0.7%, Dax closed; FTSE100 closed
• EUR 1.1420-1.1382; JPY 110.67-110.14 ; AUD 0.7054-0.7033;NZD 0.6738-0.6721
• Feb Gold +0.3% at $1,276/oz; Feb Crude Oil +0.2% at $42.62/brl; Mar Copper -0.4% at $2.65/lb