Headlines/Economic Data
General Trend:
Japanese officials comment after recent gains in the Yen
PBoC raises rate on 63-day open market operation (OMO) by 5bps to 2.95% (in line with prior 5bps increases on 7, 14 and 28-day reverse repos)
Japan
Nikkei 225 opened flat; closed +1%
TOPIX Iron & Steel Index -1.5%
Softbank +1.9% (gained 3.2% prior session on speculation related to listing of mobile phone unit)
Fast Retailing +2.5% (reported better than expected Q1 results on Jan 11th)
(JP) JAPAN DEC PPI (CGPI) M/M: 0.2% V 0.4%E; Y/Y: 3.1% V 3.2%E
(JP) Japan Fin Min Aso: No comment on FX levels, do not see a big deal with dollar at ~¥110.80
(JP) Japan Econ Min Motegi: Want to closely monitor impact that FX, financial market moves have on economy
(JP) Japan Nov Tertiary Industry Index m/m: 1.1% v 0.3%e
Japan MoF sells ¥1.79T v ¥2.2T indicated in 0.10% (prior 0.1%) 5-yr bonds; avg yield -0.084% v -0.107% prior; bid to cover 5.24x v 4.19x prior
Korea
Kospi opened flat
Chipmakers gain: Samsung Electronics +1%, Hynix +1%
General weakness in financial sector: Industrial Bank of Korea -2.4%, Hana Financial -1.7%, Woori Bank -2.2%, KB Financial -1.2%
(KR) South Korea Fin Min Kim: Irrational speculation in cryptocurrency; tax and regulation needed on crypto – Korean press
(KR) South Korea has 147K people that have been jobless for six months or longer last year, the highest since record keeping began in 2000 – Korean press
China/Hong Kong
Hang Seng opened +0.3%, Shanghai Composite -0.2%
Info Technology +2%, Services +1.1% (supported by strength in gaming sector), Energy +1.4%, Materials +1.5%, Financials +1.3%, Property/Construction +1%
(CN) China is unlikely to loosen property controls – CSJ
(CN) Ratio of treasuries in China FX reserves is not likely to fall – Chinese press
(CN) China debt yield may stay high and continue to rise – CSJ
(CN) China PBOC Official Ruan Jianhong: To keep prudent and neutral monetary policy; Low M2 growth may become new normal – China Daily
(CN) China President Xi: China and US should properly settle trade issue – Xinhua
(CN) China PBoC OMO: Injects CNY320B in 7, 14 and 63-day reverse repos v CNY150B injected in 7 and 14-day prior: Net injects CNY270B v CNY50B drained prior; Raises 63-day reverse repo rate to 2.95% from 2.90% prior
USD/CNY (CN) PBoC sets yuan reference rate at 6.4372 v 6.4574 prior (Strongest setting since Dec 11th 2015)
Australia/New Zealand
ASX 200 opened +0.1%; closed -0.5%
Rio Tinto: Opened higher but has since pared gains after Q4 production update and guidance
Energy -1%, Telecom -1%, Utilities -1%, Resources -0.5%, Financials -0.3%
(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 123.5 v 122.0 prior
(AU) Australia AOFM announces new benchmark 2.75% 2029 bond
(AU) Australia Dec Motor Vehicle Sales m/m: 4.5% v 0.1% prior; y/y: 6.7% v 2.1% prior
(NZ) New Zealand Dec Non-Resident Bond Holdings: 61.1% v 60.4% prior
(NZ) ANZ’s NZ Market Focus report: productivity will need to rise if recent GDP growth is to be maintained
Baby formula firm Bellamy’s (BAL.AU) Announces Conditional Acquisition of Camperdown; Raises FY18 Rev +30-35% y/y (prior 15-20% y/y); EBITDA Margin 20-23% (prior 17-20%); +22%
Fonterra (FCG.NZ) Reports Dec collections Total New Zealand 176.1M v 186.3M y/y; Fonterra Australia 16.1M v 12.6M y/y
Rio Tinto (RIO.AU) Reports Q4 Pilbara iron ore shipments 90.0Mt v 89.7Mte v 87.7Mt y/y; Pilbara iron ore production 87.9Mt, +3% y/y
Other Asia
(IN) India 10-year bond yield has risen by over 9bps on session: Reserve Bank of India (RBI) Acharya said banks shouldn’t be repeatedly surprised with higher yields, Interest rate risks of banks can’t be managed by regulator.
(PH) Philippines Central Bank (BSP) Chief Espenilla: CPI could trend higher than anticipated; faces primary challenges managing risks to CPI view
(TW) Taiwan said to consider allowing foreign banks to issue Taiwan Dollar (TWD) denominated bonds – local media
North America
(US) GOP leaders said to be weighing spending deal to Feb 16th
Looking Ahead: Corporate earnings are expected from companies including Citi, CSX and UnitedHealth
Europe
(UK) EU draft documents shows revised directives for EU chief negotiator Michel Barnier with more stringent conditions for a post-Brexit transition deal – FT
(UK) Chancellor of Exchequer Hammond (Fin Min): Britons want to keep European economic model – UK press
(UK) PM May planning speech to outline Brexit policy in February – UK press
(UK) PM May’s EU Withdrawal Bill expected to move to the House of Lords this week and pass – financial press
(UK) BOE’s Tenreyro: UK productivity growth could beat expectations; faster UK wage growth alone would not necessarily point to rate hike, productivity is important too; Expected to vote for "a couple more" quarter-point rises in the next three years if the economy performs in line with the BOE’s expectations. – speaking at Queen Mary University of London
(DE) Germany SPD Schulz: SPD leadership is united behind exploratory result; optimistic majority will vote for talks with Merkel; Notes ‘successful’ exploratory talks with Germany Chancellor Merkel.
(FR) Bank of France said it already held some of currency reserves in yuan (CNY); vast majority of reserves remain invested in US dollar denominated assets
(GR) Greece parliament approves austerity measures
(EE) ECB’s Hansson (Estonia): Appropriate to end asset purchases after September if growth and inflation continue to evolve in-line with the central bank’s expectations – German press
(EU) Moody’s: Forecast policy rates to approach 1% for the ECB and 2% for the BoE and 3% for the US Fed by 2021.
Fiat: CEO Marchionne: Have no intention of breaking up the company or selling individual brands to China or other parties
BMW: Expects slight global sales growth in 2018 on new models – US financial press; Cites CFO at Detroit Auto Show.
Continental: Said to hire JPMorgan as adviser regarding possible break-up – financial press
Schaeffer: CEO: Guided Q4 Rev ~€3.5B, +8.5% y/y; 2017 Rev €14.0B, +5.9% y/y
Looking Ahead: UK Dec CPI due for release
Levels as of 01:00ET
Nikkei225 +1%, Hang Seng +1.0%; Shanghai Composite +0.2%; ASX200 -0.5%, Kospi +0.8%
Equity Futures: S&P500 +0.3%; Nasdaq100 +0.2%, Dax +0.2%; FTSE100 +0.1%
EUR 1.2279-1.2248; JPY 110.98-110.48; AUD 0.7975-0.7949;NZD 0.7307-0.7281
Feb Gold +0.4% at $1,340/oz; Feb Crude Oil +0.4% at $64.53/brl; Mar Copper -0.4% at $3.25/lb
