By Areena FxAsia Market Update: Weak data out of Asian economies with JP prelim GDP showing recession while KR announces bigger business stimulus plan than COVID stimulus; Sovereign yields down across G-10; Focus on UK prelim Q4 GDP and US Retail Sales.
General trend
– Poor economic data out of Asia with Singapore GDP coming in below estimates and Australia reporting its highest unemployment rate for 2 years. (Australia did however later report higher than estimated household spending figures).
– The worst data was out of Japan with prelim GDP data showing that Japan entered a technical recession for the first time since COVID, with Q4 GDP coming in negative for both the quarter and on an annualized basis.
– Japanese final industrial production figures for December also came in worse than the prelim numbers.
– At the same time Japan slipped to be only the world’s fourth-largest economy (behind Germany).
– Yields down throughout Asia and G-10. JP 10-yr yields -4bps with AU 10-yr yields -12bps.
– Meanwhile over in Korea the FSC said it was preparing what would be a larger business stimulus package than what was provided for during COVID in 2020.
– Further, in Hong Kong yesterday the traditionally strong Lunar New Year holiday showed top housing estates in Hong Kong had zero transactions according to realty data [first time since records started in 2010]. This is significant as the LNY is usually one of the most auspicious and popular times for Chinese to buy and sell property.
– Continuation of sorts in Indonesian politics, with the new President confirmed as former general Prabowo Subianto, with outgoing two-term President Jokowi’s son serving as his Vice-President.
– An interesting side note ahead of tomorrow: NZD/USD overnight volatility has jumped prior to RBNZ Gov Orr’s speech on Friday. FX options implied volatility jumped to 14% after having previously been below 10%. Gov Orr speaks tomorrow at 07:40am local time Friday [Thursday 13:40 EST]. NZ 2-yr yield -14bps (4.917%). Note that significantly stronger demand was seen at NZ’s bond auction today. [Note also that the RBNZ mandate is up for legislative review by the new Govt, with the Reserve Bank Act to be amended to focus monetary policy on price stability only – dropping employment from the RBNZ’s mandate].
– Focus tonight on UK GDP Q4 prelim and US Retail Sales.
– US equity FUTs fractionally down during Asian trading;
Looking ahead (Asian time zone)
– Thu Feb 15th (Thu evening) UK prelim Q4 GDP, (Thu night) US Retail Sales
– Fri Feb 16th RBNZ Gov Orr speech on 2% inflation and monetary policy, NZ Biz PMI,
(Fri evening) UK Retail Sales, (Fri night) US Jan Building Permits, Jan PPI, Feb Consumer Sentiment.
Holidays in Asia this week
– Thu Feb 15th China.
– Fri Feb 16th China.
Headlines/economic data
Australia/New Zealand
– ASX 200 opens -0.1% at 7,545.
– AUSTRALIA JAN EMPLOYMENT CHANGE: +0.5K V +25.0KE; UNEMPLOYMENT RATE: 4.1% V 4.0%E (first time since Jan 2022 employment above 4%).
– Australia Feb Consumer Inflation Expectation Survey: 4.5% v 4.5% prior.
– Australia Jan Household Spending M/M: 3.1% v -3.9% prior; Y/Y: 3.6% v 3.1% prior.
– Australia RBA Gov Bullock: Service price persistence slowing the return to CPI target.
– (Aussie software co) Altium (ALU.AU) To be acquired by Renesas with a cash price of A$68.50 per share, ~$9.1B in total.
– New Zealand Dec Net Migration: 7.3K v 2.7K prior.
– New Zealand 6-month budget deficit narrows NZ$1.24B than forecast – Treasury statement.
– New Zealand sells total NZ$500M vs. NZ$500M indicated in 2027, 2033 and 2051 bonds.
China/Hong Kong
– Hang Seng opens -0.4% at 15,824.
– Shanghai Composite closed for Lunar New Year holiday.
– (CN) International Institute for Strategic Studies analyst: China starting to prepare for protracted war in the Indo-Pacific, learning from Russia’s invasion of Ukraine; Cites China’s legal changes that will help integrate military and civilian mobilization – Nikkei (overnight update).
– Hotel sales at major Chinese e-commerce platforms during the Spring Festival from Feb 10th up >60% y/y – Chinese TV (overnight update).
Japan
– Nikkei 225 opens +0.8% at 38,017.
– JAPAN Q4 PRELIMINARY GDP Q/Q: -0.1% V 0.2%E; ANNUALIZED Q/Q: -0.4% V 1.1%E (enters technical recession).
– Japan Dec Final Industrial Production M/M: 1.4% v 1.8% prelim; Y/Y: -1.0% v -0.7% prelim.
– Japan Econ Min Shindo: Consumer spending lacks strength, Capex taking time to realize – Japan press.
– Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1~3 Years; 3~5 Years; 10~25 Years and > 25 Years maturities.
– Japan Chief Cabinet Sec Hayashi: Reiterates govt stance of watching FX moves with high sense of urgency (overnight update).
South Korea
– Kospi opens +0.9% at 2,643.
– South Korea FSC said to prepare $57B (KRW75.9T) financial support for struggling small businesses and companies in key sectors (time period unspecified) – Korea press.
– Taeyoung E&C creditors are said to consider KRW400B in new aid – South Korea press.
Other Asia
– Singapore Q4 Final GDP Q/Q: 1.2% v 1.4%e; Y/Y: 2.2% v 2.4%e.
– Singapore Central Bank (MAS): Monetary Policy is appropriate and next policy statements scheduled for Apr 24th.
– (ID) Prabowo Adviser: As Indonesia’s new President Prabowo will fine-tune energy subsidies; To be inclusive of other parties in building cabinet – financial press.
– Indonesia Jan Trade Balance: $2.0B v $2.8Be; Exports Y/Y: -8.1% v -3.2%e.
– Thailand PM Srettha: VAT collection needed for online Chinese goods to prevent price dumping – Thailand press.
– Philippine Foreign Min: Tensions in the South China Sea should ‘not’ be characterized mainly as a function of US-China strategic rivalry – press.
North America
– (US) MBA Mortgage Applications w/e Feb 9th: -2.3% v 3.7% prior.
– (US) Reportedly Fed Chair Powell told House Democrats that a stablecoin bill may be needed – press.
– (US) US BLS revised Dec PPI M/M lower from -0.1% to -0.2%.
– (CA) Canada Jan Existing Home Sales M/M: 3.7% v 8.7% prior.
– US) DOE CRUDE: +12M V +2.5ME; GASOLINE: -3.7M V -1ME; DISTILLATE: -1.9M V -1.5ME.
– (US) Fed’s Goolsbee (non-voter for 2024); Lets not get too flipped out about yesterday’s inflation data.
– (US) Fed’s Waller (voter, hawk): Forward guidance should be more flexible.
– (US) House Speaker Mike Johnson: There’s no need for public alarm on national security threat.
Europe
– (IL) Israeli fighter jets said to attack Lebanon in what is described as the heaviest attack in years – financial press.
– Maersk Exec: US businesses are concerned about delivery timing; We don’t see any change in the Red Sea happening anytime soon, last potentially ‘through Q3’; Customers will need to make sure they have the longer overall transit time built into their supply chain – CNBC [**Note: prior Maersk mentioned ‘few months or longer’ to resume Red Sea transits].
– (EU) ECB’s Makhlouf (Ireland): We’re confident in sustainably reaching 2% goal.
– (UK) BOE Gov Bailey: The latest inflation figures are good news; Downward pressure on inflation is broad-based.
– (EU) ECB’s De Guindos: ECB will be data dependent in our decisions.
– (EU) ECB’s Nagel (Germany): There is a lot to do on German economy.
Levels as of 00:20 ET
– Nikkei 225 +1.0% ; ASX 200 +0.8% ; Hang Seng +0.3% ; Shanghai Composite closed ; Kospi -0.2%.
– Equity S&P500 Futures flat; Nasdaq100 flat, Dax flat; FTSE100 +0.3%.
– EUR 1.0724-1.0736; JPY 150.09 -150.60; AUD 0.6478-0.6504; NZD 0.6051-0.6095.
– Gold flat at $2,003/oz; Crude Oil -0.4% at $76.31/brl; Copper +0.1% at $3.7062lb.