INDIA: India reviews Donald Trump's new trade policy

Equities were generally mixed during light APAC trading today with China’s CSI 300 and KOSPI higher but Hang Seng and Nikkei lower following the US lower from Friday, as Fed higher rates and uncertainty over tariffs weighed. The S&P and NASDAQ e-minis have continued that trend and are down slightly today.

• A commitment by the government and Bank of Korea to financial stability appears to have helped support equities with the KOSPI up 0.4% and KOSDAQ +1.9%, despite a 1.5% drop on the NASDAQ on Friday.
• The Hang Seng is down 0.6% but the CSI 300 is up 0.3%.
• Japan’s Nikkei 225 is down 0.9% likely impacted by year-end portfolio rebalancing. USDJPY has range traded and is down slightly to around 157.80. There has been a lack of a clear signal from the BoJ on the rate outlook adding to uncertainty.
• Australia’s ASX 200 is 0.4% lower but the NZX 50 is 0.5% higher. 10 of Australia’s 11 sectors are down, with utilities and property especially weak.
• ASEAN is also mixed with Jakarta down 0.2% but the Straits Times up 0.4% and SE Thai +0.3%.
• US December MNI Chicago & Dallas Fed PMIs and November pending home sales print as well preliminary December Spanish CPI.  

JGB futures are stronger after reversing early Tokyo session weakness, +4 compared to settlement levels.

• Outside of the previously outlined Jibun Bank/S&P Global Manufacturing PMI, there hasn't been much by way of domestic drivers to flag.
• Cash US tsys are slightly richer in today’s Asia-Pac session after Friday’s heavy session.
• US data this week includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
• Bond bears are emboldened as the BOJ will be reducing its monthly debt buying in the first quarter of 2025. Moreover, traders can see that Japanese inflation is proving to be sticky even though the central bank says it wants to see more information before raising interest rates again. The BOJ is also waiting for the next round of wage increases, despite the big hikes which were seen this year. (per BBG)
• Cash JGBs are 1-2bps richer across benchmarks. The benchmark 10-year yield is 1bp lower at 1.115% versus the cycle high of 1.1340% set earlier today.
• Swap rates are ~1bp lower apart from the 30-year (+2bps). Swap spreads are mixed.
• The local market is closed tomorrow for a bank holiday. The next data release will be Jibun Bank PMI Composite & Services on January 6. 

Aussie and kiwi are outperforming against the US dollar during trading so far today. The BBDXY USD index is only slightly lower with US yields little changed. European currencies and the yen are steady. 

• AUDUSD has been generally underperforming and technicals continue to signal a bearish downtrend. During today’s APEC trading though it has bounced 0.4% to 0.6239, close to the intraday high, but still 0.15% below last Monday’s close. It has found support from higher ACGB yields, commodity prices including iron ore returning above $100/t.
• NZDUSD is also 0.4% higher at 0.5656 leaving AUDNZD flat at 1.1031. The cross has range traded through the session.
• USDJPY is down 0.1% to 157.78 after a high of 157.99 but has spent the day in a narrow range with little news to give it direction.
• EURUSD is unchanged at 1.0425 and GBPUSD 1.2580.
• US December MNI Chicago & Dallas Fed PMIs and November pending home sales print as well preliminary December Spanish CPI.