Asia Breakfast Briefing - 10 Jan 2018 ASIAN PREVIEWThe calendar picks up w

ASIAN PREVIEW

The calendar picks up with the UK docket the highlight

Asia also busy with CN Dec inflation rate, AUS NAB business confidence

Europe to feature FR industrial production, ECB non-monetary policy meeting

UK to release Nov trade balance, construction/mfg/industrial productions

US has import/export prices, wholesale inventories for Q4 GDP

Ader"s Musings - Old News Still Sends Chill to Bond Market

China Dec Inflation rate (surv 1.9%y/y prev 1.7%; 0.4%m/m, prev 0.0%) and Dec PPI (surv 4.8%y/y, prev 5.8%) due Jan 10 2018 Wed 01:30am GMT

China"s CPI slipped to 1.7% in Nov from 1.9% previously as food costs continued to weigh, declining by 1.1%, although a 2.5% rise in non-food costs did serve to partially offset. Looking forward to Dec, food costs is still expected to be a drag, albeit to a lesser extent as the Bloomberg food tracker revealed a marginal uptick to -0.62%.

Early indicators in PMIs, both official and the Caixin, also revealed input price inflation rising as Caixin"s services PMI saw price inflation surge to Mar"s 4y high. Overall robust new orders and business expectations would also support demand and provide tailwinds to inflation. In addition, CPI, which usually lags PPI by 4-5mths, should also be expected to tick higher if going by PPI"s above 6% readings in Q3 17.

For PPI, Nov came in at 5.8% from 6.9% previously, albeit the 15th straight mth of growth. Similar to CPI, Dec PMIs suggest some upside price pressure, although the series also sees high base effects that should weigh on readings going forward. That said, pollution curbs and capacity cuts could potentially boost prices of base metals and commodities.

OVERNIGHT SESSION WRAPS

US FX Close

EUR/USDUSD/JPYGBP/USDAUD/USDUSD/CADDOWDXYOPEN1.1928112.671.35400.78301.2430+102.8092.518HIGH1.1938112.781.35420.78361.2478CLOSED92.640LOW1.1916112.371.35060.78081.2422@92.487CLOSE1.1937112.591.35400.78241.246725385.8092.503

The Yen extended strength incurred overnight after the BoJ surprised markets by reducing purchases of long-dated bonds, causing some to speculate further reductions in asset-purchases might occur over the near-term. Usd/Jpy extended weakness off Monday"s 113.39 reaction high towards the 1.5-month 110.84/112.06 rising trendline at 112.30 before paring losses. Aud/Jpy dropped the most in a month, and Eur/Jpy the most in more than 2.5-months. Chf/Jpy lost the most since July with the Franc relinquishing over 0.5% to the Dollar overnight. The USD Index moved higher vs. each of its G-10 peers, save for the Yen, despite slight misses in NFIB Small Business Optimism and JOLTS Job Openings data. Gbp/Usd notched its first losing streak in 4 weeks after PM Theresa May rearranged Cabinet seats in an attempt to display power, only to have Senior Ministers Hunt and Greening reject orders. Greening went so far as to resign her post. Eur/Usd fell for a third consecutive session with the MACD projecting to cross below the signal line Wednesday. Aud/Usd eased off Friday"s .7875 2.5-month high while the RSI crossed under 70, hinting that near-term periodic weakness might now materialize. Usd/Sek extended gains to fresh 1.5-week highs above the 23.6% retracement of the 8.5322/8.1255 fall at 8.221. Wednesday"s calendar includes Mortgage Applications, Import/Export Prices, and Wholesale Inventories as well as Fed speak from Evans, Kaplan and Bullard.

US Treasury Close

10-YEARMar TENMar BONDMar S&PFeb 0IL2/105/303/10/30HIGH98-00+

123-16151-262759.763.2457.856.513.0LOW97-14+123-01+150-062744.261.8051.651.88.5LAST97-15

123-02150-082757.562.8957.656.112.8CHANGE- 17/32- 13+/32- 1 15/32+10.7+1.16+5.6+3.9+3.9

TREASURIES CLOSE 3:00PM – Treasuries declined overnight on unexpected policy adjustments by the PBOC and BoJ. The complex pared overnight losses following broad EGB gains only to see them accelerate again once NY opened. The long-end led the sell-off with 30-year yields breaking above their 200 DMA to probe December"s 2.883 peak. 10-year yields rose to their highest levels since March 2017 while 7s retested their 2013/14 highs at 2.458. 5-year yields posted new 6.75-year highs, and 3-years extended gains following the break out of a 10-year base prior to a decent auction with the highest stopout since May 2007. 2s barely budged and the curve steepened significantly. 2/30s and 2/10"s steepened the most in the last 14 months, while 5/30s pressured the early January peak. Futures volumes were brisk with 5 and 10-year futures posting new contract lows. Wednesday"s calendar includes Mortgage Applications, Import/Export Prices, and Wholesale Inventories as well as Fed speak from Evans, Kaplan and Bullard and the 10-year note auction. MO

DAY AHEAD

Time (GMT)CtyEventPeriodSurveyPriorRevised09/1/18 23:00SKUnemployment rate SADec3.70%3.70%--09/1/18 - 18/01/18CHForeign Direct Investment YoY CNYDec--90.70%--10/1/18 - 15/01/18INImports YoYDec--19.60%--10/1/18 - 15/01/18PKExports YoYDec--12.40%--10/1/18 - 15/01/18PKImports YoYDec--16.50%--10/1/18 - 25/01/18SLSri Lanka NCPI YoYDec--8.40%--10/1/18 - 15/01/18CHMoney Supply M1 YoYDec12.60%12.70%--10/1/18 - 15/01/18KZIndustrial Production YoYDec--5.00%--10/1/18 - 15/01/18CHMoney Supply M2 YoYDec9.20%9.10%--10/1/18 - 15/01/18CHAggregate Financing CNYDec1500.0b1600.0b1598.2b10/1/18 - 15/01/18CHNew Yuan Loans CNYDec1000.0b1120.0b--10/1/18 - 15/01/18CHMoney Supply M0 YoYDec5.90%5.70%--09/1/18 - 13/01/18VNDomestic Vehicle Sales YoYDec---17.60%--09/1/18 - 17/01/18NZREINZ House Sales YoYDec---8.90%--08/1/18 - 20/01/18SLExports YoYNov--14.10%--08/1/18 - 20/01/18SLImports YoYNov--0.20%--10/1/18 00:30AUJob vacanciesNov--6.00%--10/1/18 01:00PHExports YoYNov9.00%6.60%--10/1/18 01:00PHExportsNov--$5366.5m--10/1/18 01:00PHImports YoYNov9.70%13.10%--10/1/18 01:00PHImportsNov--$8211.2m--10/1/18 01:00PHTrade BalanceNov-$2687m-$2845m--10/1/18 01:30CHPPI YoYDec4.80%5.80%--10/1/18 01:30CHCPI YoYDec1.90%1.70%--10/1/18 03:00SKMoney Supply L SA MoMNov--0.40%--10/1/18 03:00SKMoney Supply M2 SA MoMNov--0.80%--10/1/18 03:00SKBank Lending To Household TotalDec--KR704.6t--10/1/18 07:45FRIndustrial Production MoMNov-0.50%1.90%--10/1/18 07:45FRIndustrial Production YoYNov2.60%5.50%--10/1/18 07:45FRManufacturing Production MoMNov-1.40%2.70%--10/1/18 07:45FRManufacturing Production YoYNov2.90%6.90%--10/1/18 09:30UKIndustrial Production MoMNov0.40%0.00%--10/1/18 09:30UKIndustrial Production YoYNov1.80%3.60%--10/1/18 09:30UKManufacturing Production MoMNov0.30%0.10%--10/1/18 09:30UKManufacturing Production YoYNov2.80%3.90%--10/1/18 09:30UKConstruction Output SA MoMNov0.80%-1.70%--10/1/18 09:30UKConstruction Output SA YoYNov-1.00%-0.20%--10/1/18 09:30UKVisible Trade Balance GBP/MnNov-￡10950-￡10781--10/1/18 09:30UKTrade Balance Non EU GBP/MnNov-￡2600-￡2382--10/1/18 09:30UKTrade BalanceNov-￡1500-￡1405--10/1/18 12:00USMBA Mortgage ApplicationsJan-05--0.70%--10/1/18 13:00UKNIESR GDP EstimateDec0.50%0.50%--10/1/18 13:30USImport Price Index MoMDec0.40%0.70%--10/1/18 13:30USImport Price Index ex Petroleum MoMDec0.10%0.10%--10/1/18 13:30USImport Price Index YoYDec3.10%3.10%--10/1/18 13:30USExport Price Index MoMDec0.30%0.50%--10/1/18 13:30USExport Price Index YoYDec--3.10%--10/1/18 15:00USWholesale Inventories MoMNov F0.70%0.70%--10/1/18 15:00USWholesale Trade Sales MoMNov0.60%0.70%--10/1/18 16:00NZQV House Prices YoYDec--6.40%--10/1/18 21:00NZANZ Job Advertisements MoMDec---0.10%--10/1/18 23:50JNOfficial Reserve AssetsDec--$1261.2b--

Central Bank Watch

Time (GMT)CtyEventVoterBias10/1/18 10:00ITBank of Italy Publishes Monthly Report `Money and Banks"

10/1/18 14:00USFed"s Evans Discusses Economy and Policy OutlookYesDovish10/1/18 14:10USFed"s Kaplan Speaks in in moderated Q&A in DallasYesNeutral10/1/18 18:30USFed"s Bullard Speaks on U.S. Economic Outlook in St. LouisNoDovish

Auctions

Time (GMT)CtyEventPrev Avg/High YieldB/C01/1/18 - 31/01/18MAMalaysia to Sell 5Yr Islamic Bonds Due 2022 (Reopening)

01/1/18 - 31/01/18MAMalaysia to Sell 15Yr Bonds Due 2033 (Reopening)

10/1/18 02:35CHChina Sells CNY26 Bln 1-Yr Upsized Bonds (1724)

10/1/18 02:35CHChina Sells CNY26.07 Bln 10-Yr Upsized Bonds (1725)

10/1/18 03:45JNJapan to Sell 10-Year Bonds0.06%3.704x10/1/18 10:30GEGermany to Sell EUR5 Bln 2028 Bonds (DE0001102440)0.30%1.1x10/1/18 18:00USU.S. to Sell USD20 Bln 10-Year Notes Reopening2.38%2.37xDestinations: