JAPAN DATA: CPI Close To Expectations, Softer Detail Outside Of Utility Spike
Dec-19 23:55
Japan National CPI for Nov was fairly close to market expectations. The headline rose 2.9%y/y, in line, and against a prior 2.3%. The core ex fresh food measure was slightly above market forecast at 2.7% y/y (2.6% expected and 2.3% prior). The ex fresh food and energy measure was 2.4%, in line and against a prior 2.3% outcome.
- The chart below plots these three measures and the trend is reasonably positive as we approach end 2024, relative to the BoJ's 2% inflation goal. Base effects are likely to support headline and the ex fresh food measure as we progress into early 2025 as well.
- In terms of the detail, headline rose 0.6%m/m, while the core measures were also positive in m/m terms. Good prices rose 0.9%m/m, while services gained 0.2%, although these are typically revised back to flat.
- By segment, outside of a 3.0%m/m rise in utilities, the detail was a little softer. Household goods fell -06%m/m, entertainment down -0.1%. Other categories mostly saw softer outcomes relative to Oct as well.
- Note with PM Ishiba reinstating energy subsidies from Jan to Mar next year, the rise in utility inflation is likely to be tempered.
- The data is unlikely to shift BoJ thinking, particularly after yesterday's BoJ outcome, with Ueda waiting for further information in the new year around wages/international developments before deciding on the timing of the next policy shift.
Fig 1: Japan National CPI Y/Y Trends
Source: MNI - Market News/Bloomberg
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**MNI: JAPAN OCT EXPORTS +3.1% Y/Y; SEPT -1.7%
Nov-19 23:51
- MNI: JAPAN OCT EXPORTS +3.1% Y/Y; SEPT -1.7%
- JAPAN OCT EXPORTS POST 1ST Y/Y RISE IN 2 MONTHS
- JAPAN POSTS JPY461.2 BLN TRADE DEFICIT IN OCT
CHINA: Prime Rates Unlikely to Change Today.
Nov-19 23:47
- China will announce 1- and 5-year Loan Prime Rates (LPR) at today’s fixing.
- Having cut by 25bps in October and given there have been some signs of stabilization in economic data, it seems unlikely that there will be a further cut today.
- The 1-year is the reference rate for corporate loans at 3.10% is at recent lows.
- Equally the 5-year (reference rate for mortgages) at 3.60% is at recent lows.
- Authorities have provided significant stimulus since September to the economy with the key objective to stabilize.
- Uncertainties exist as to the looming trade war from President Trump in the White House, and it would seem logical that Chinese authorities prefer to keep some flexibility in their policy tools ahead of what could be a challenging 2025.
JGBS: Futures Stronger Overnight As Geopol Tensions Increase
Nov-19 23:36
In post-Tokyo trade, JGB futures are stronger, +16 compared to settlement levels, after US tsys finished the NY session with a bull flattener.
- Heightened geopolitical tensions lent to an early bid in EGBs, Treasuries in tow after Ukraine launched US-made long-range missiles into Russia. The Kremlin has formally approved a further tweak to its nuclear doctrine, allowing for the use of nuclear weaponry in the case of long-range missiles used to strike inside Russian territory.
- Risk-off support moderated as the session wore on, US State Department Spokesperson Matthew Miller told reporters that the US has "seen no reason" to adjust its nuclear posture following Russian President Vladimir Putin's move to revise Russia's nuclear doctrine.
- Short-end rates were pushed higher in the second half of the session, as projected rate cut pricing into early 2025 was tempered. KC Fed Schmid said, "While now is the time to begin dialling back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle."
- US equities mostly recovered from an opening Ukraine-Russia war swoon (-1.25%). Shares in Nvidia closed 4.9% higher, ahead of its quarterly results tomorrow.
- Today, the local calendar will see Trade Balance, Machine Tool Orders and Tokyo Condominiums for Sale data.
