CHINA: DATA Preview:  CPI and PPI Declines Impacted by LNY. 

JGB futures are hovering near session lows, -14 compared to the settlement levels.

• The BoJ will raise its benchmark interest rate if its inflation outlook for price trend to rise toward 2% is realised, according to Kazuhiro Masaki, the head of the policy department at the central bank. (per BBG)
• Inflation-adjusted real wages, a barometer of household purchasing power, posted their second straight monthly rise in December, up 0.6% against November's 0.5%.
• Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest rally. Focus in the US turns to today’s ADP private employment data ahead of Friday's headline NFP data for January, not to mention the US Tsy quarterly refunding announcement, S&P Global US Services PMI and ISM Services data.
• Cash JGBs are flat to 2bps cheaper across benchmarks, with a flattening bias. The benchmark 10-year yield is 1.3bps higher at 1.292% versus the fresh cycle high of 1.301% set earlier today.
• Swap rates are flat to 2bps higher. Swap spreads are mixed.
• Tomorrow, the local calendar will see Weekly International Investment Flow and Tokyo Avg Office Vacancies data alongside 30-year supply. BoJ Board Member Tamura will also give a speech in Nagano.

• Golds stellar start to 2025 continued today, with bullion hitting new all time highs.
• Having hit new highs yesterday, gold opened in Asia this morning at US$2842.71 and traded up for most of the day reaching a high of $2,858.17.
• China’s retaliation in the trade war yesterday came from Beijing yesterday when they announced tariffs on US energy imports, oil, agricultural equipment, announced key US companies were to be place on a blacklist and that Google were to be investigated for anti-trust violations.
• Whilst the tariff news was brushed off by many equity markets, the USD weakened, giving room for gold to rally.
• Gold enjoys ‘safe haven’ status as an asset, and investors typically buy it in volatile times.
• Equally gold performs well in a rate cutting environment or times when the USD weakens, as seen overnight.
• The day ahead for gold will ebb and flow on any new headlines on tariffs.
• Whilst no ‘new news’ came out of China, the surge in gold today can likely be partly to do with traders playing catch up post Lunar New Year holidays. 

Q4 Indonesian GDP was as expected rising 0.5% q/q and 5.0% y/y up from 4.9% in Q3 leaving 2024 up 5% in line with 2023. Bank Indonesia said in January that it expected 2024 growth to be “slightly below the midpoint of the 4.7-5.5% range” and for Q4 to be “slightly” below expectations due to lower domestic demand. It has cut rates 50bp this cycle and continues to support growth with macroprudential policies given its focus on the rupiah which has been weaker. This should continue in 2025 accompanied by more rate cuts.

• 2024 GDP was below the government’s 5.2% target, while new President Prabowo is aiming for growth to reach 8% during his term and has increased fiscal stimulus plans as a result.
• BI revised down its 2025 GDP range slightly in January to 4.7-5.5% from 4.8-5.6% because of weak private investment.
• Domestic demand slowed slightly in Q4 rising 4.9% y/y after 5.0% in Q3 driven by a slowdown in government consumption growth to 4.2% y/y from 4.6% y/y. Private consumption was slightly stronger at 5.0% y/y from 4.9%, the highest since Q3 2023 and in line with growth over the last three years. GFCF grew at 5.0% y/y after 5.1% in Q3.
• Export growth slowed to 7.6% y/y in Q4 after 9.1% but 2024 saw an improvement to 6.6% from 1.3% the previous year.
• USDIDR is off its Monday high of 16471 helped by BI intervention and market stabilisation following deals to delay US tariffs on Mexico and Canada. USDIDR is at 16309, which is slightly lower than January 15, the last BI decision, which should reassure BI.

Indonesia growth y/y%