Asia Breakfast Briefing - 11 Jan 2018 ASIAN PREVIEWSome notable releases i

ASIAN PREVIEW

Some notable releases in the calendar on Thursday

Asia sees AUS retail sales, Dec business confidence

Europe to feature Germany"s full year GDP, ECB mins

US has PPI readings for early insights to Fri"s CPI releases

US monthly budget statement also of some interest as well as the usual weekly claims

Australia Nov Retail Sales due Thursday Jan 11; f/c 0.3% m/m, last 0.5% m/m

The Australia economy clocked a 0.5% retail sales growth for the month of Oct and on a month-on-month and seasonally adjusted basis. Key lifts stemmed from Cafes, Restaurants & Takeaway Food Services (m/m 1.7%) and Clothing, Footwear & Personal Accessory Retailing (m/m 1.0%) while Household Goods Retailing (m/m 0.1%), Food Retailing (m/m 0.3%, this is the heaviest weighted category at about 41%) and Other Retailing (m/m 0.3%) were laggards. On a trend basis, Australia"s Oct retail sales shrank with a -0.1% m/m growth following 3 consecutive months of 0% growth from July 2017 to September 2017. BBG consensus estimates currently prime for Nov"s m/m SA retail sales print to moderate to 0.3%.

Regardless, given the still-very-low rates of wage growth and household income-to-savings ratios amid sky high household debt-to-income ratios, it remains highly unlikely that the Australian retail sales space will see a material pickup anytime soon unless the above mentioned chronic inhibitions towards consumer spending significantly abate.

MALAYSIA NOV INDUSTRIAL PRODUCTION due Thursday Jan 11; last 3.4% y/y

On a year-on-year and volume basis, Malaysia"s industrial production climbed for the month of Oct, with the print coming in at 3.4%, down from the previous month"s y/y reading of 4.7% and registering as the 2nd consecutive month of declined y/y growth. Key lifts stemmed from Electricity (y/y 4.7%) and Manufacturing (y/y 4.2%) while Mining (y/y 0.8%) dragged.

Strong seasonal trends suggest that the Malaysia"s Nov industrial production will likely report a decline from Oct"s reading on a nominal basis but the broader worry now lies in Malaysia"s manufacturing sector showing yet another moderated y/y growth reading for Nov (y/y manufacturing sector growth has eased since Jul 2017"s high of 8.0%) while the economy"s Mining sector struggles to clock a sizable trajectory of growth.

OVERNIGHT SESSION WRAPS

US FX Close

EUR/USDUSD/JPYGBP/USDAUD/USDUSD/CADDOWDXYOPEN1.2010111.351.35550.78551.2440-16.6791.948HIGH1.2018111.651.35590.78601.2583CLOSED92.420LOW1.1941111.271.35050.78291.2435@91.922CLOSE1.1956111.401.35120.78381.254525369.1392.296

The Dollar pared early morning losses incurred after it was learned Chinese officials reviewing foreign-exchange holdings recommended slowing or halting US Treasury purchases. The USD Index initially dipped under the 76.4% retracement of the recent 91.751/92.640 rise at 91.961 on the news, before bouncing to recoup more than half the day"s losses. The Yen extended strength incurred Tuesday after the BoJ surprised markets by reducing purchases of long-dated bonds. Usd/Jpy fell the most in 7 weeks to levels not seen since November. Gbp/Jpy declined to test the 4.5-month 139.31/146.94 rising trendline at 150.48 while Cad/Jpy dropped the most since May. Aud/Jpy fell for the 3rd straight session, its worst losing streak in nearly 2 months. Eur/Jpy declined for a fourth consecutive day to probe the 127.56/131.17 bull trendline at 133.19, and Chf/Jpy sank towards the December 113.30 lows. Usd/Cad corrected higher off Friday"s 1.2356 3.5-month low while rising at one point the most in 2.5 months in a late-session rally sparked after Canadian government officials suggested Trump is likely to pull the US out of Nafta soon. Usd/Sek snapped a 3-day winning streak after December Minutes showed policy normalization was discussed, and Riksbank Governor Stefan Ingves stated the SNB should be able to raise rates before the ECB. December Norway Inflation came in higher than expected and at the best level since June, sending Usd/Nok to its worst performance since the first trading day of the year. Gbp/Usd fell for a third straight session despite UK Manufacturing posting its 7th consecutive month of expansion. Thursday"s calendar includes PPI, Initial Jobless/Continuing Claims and Monthly Budget Statement data along with Fedspeak from NY Fed President William Dudley.

US Treasury Close

10-YEARMar TENMar BONDMar S&PFeb 0IL2/105/303/10/30HIGH97-15

123-03150-052751.063.6762.359.514.7LOW97-00+122-22+149-032736.863.0957.455.710.2LAST97-13+

123-00150-032746.063.4557.556.411.3CHANGE+ 1+/32- 1+/32- 4/32-6.3+0.49-0.6+0.1-1.3

TREASURIES CLOSE 3:00PM – News that Chinese officials reviewing their country"s FX holdings recommended that slowing or halting the purchase of US Treasuries triggered selling overnight amidst heavy futures volume. Bond, ten and five-year futures posted new contract lows. Yields were higher by 1.5-4.5 bps, and the curve steepened with 2/30s threatening its 50 DMA and 2/10s steepening through. Treasuries remained near these levels through mixed US data: December Import/Export prices were generally softer than consensus, and Wholesale Inventories rose to 0.8% vs.0.7% f/c. Fed speakers were also a wash with Chicago Fed"s Evans, a non-voter, saying he wanted to delay rate hikes to mid-2018, but then Dallas Fed"s Kaplan touting 3 rate hikes as still a good base case. It wasn"t until the 10-year reopening that things started to take a turn. The auction was well received with the highest bid to cover since June 2016 and the highest indirect purchases since August 2016. It was also the first 10-year reopening to stop through since March 2017, and Treasuries to rallied across the curve to trade around the unchanged mark into the close. The long end led the recovery, and the curve came off its steepest levels of the session. Thursday"s calendar is rather full with Final PPI, Jobless Claims, Revisions to the Philly Fed Manufacturing Index and the Monthly Budget Statement as well as Fed speak from Dudley, the Bill Supply Announcement, the 10-year TIPS auction and the 30-year auction. MO

DAY AHEAD

Time (GMT)CtyEventPeriodSurveyPriorRevised10/1/18 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--10/1/18 - 18/01/18CHForeign Direct Investment YoY CNYDec--90.70%--10/1/18 - 15/01/18PKExports YoYDec--12.40%--10/1/18 - 15/01/18PKImports YoYDec--16.50%--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%--10/1/18 - 18/01/18NZREINZ House Sales YoYDec---8.90%--10/1/18 - 20/01/18SLExports YoYNov--14.10%--10/1/18 - 20/01/18SLImports YoYNov--0.20%--11/1/18 00:30AURetail Sales MoMNov0.40%0.50%--11/1/18 02:00JNTokyo Avg Office VacanciesDec--3.03--11/1/18 04:00MAIndustrial Production YoYNov4.60%3.40%--11/1/18 04:00MAManufacturing Sales Value YoYNov--11.00%--11/1/18 05:00JNLeading Index CINov P108.6106.5--11/1/18 05:00JNCoincident IndexNov P117.9116.4--11/1/18 06:00SLBloomberg Jan. Sri Lanka Economic Survey

11/1/18 07:30FRBank of France Ind. SentimentDec107106--11/1/18 08:00SPIndustrial Output NSA YoYNov--6.90%--11/1/18 08:00SPIndustrial Output SA YoYNov3.30%4.10%--11/1/18 08:00SPIndustrial Production MoMNov0.20%0.60%--11/1/18 08:00SPHouse transactions YoYNov--25.70%--11/1/18 09:00GEBudget Maastricht % of GDP20171.10%0.60%0.80%11/1/18 09:00GEGDP NSA YoY20172.40%1.90%--11/1/18 09:00ITRetail Sales MoMNov1.00%-1.00%--11/1/18 09:00ITRetail Sales YoYNov1.00%-2.10%--11/1/18 09:30UKBank of England Credit Conditions & Bank Liabilities Surveys

11/1/18 10:00ECIndustrial Production SA MoMNov0.80%0.20%--11/1/18 10:00ECIndustrial Production WDA YoYNov3.10%3.70%--11/1/18 12:30ECECB Publishes Account of December Monetary Policy Meeting

11/1/18 13:30USPPI Final Demand MoMDec0.20%0.40%--11/1/18 13:30USPPI Ex Food and Energy MoMDec0.20%0.30%--11/1/18 13:30USPPI Ex Food, Energy, Trade MoMDec0.20%0.40%--11/1/18 13:30USPPI Final Demand YoYDec3.00%3.10%--11/1/18 13:30USPPI Ex Food and Energy YoYDec2.50%2.40%--11/1/18 13:30USPPI Ex Food, Energy, Trade YoYDec--2.40%--11/1/18 13:30USInitial Jobless ClaimsJan-06245k250k--11/1/18 13:30USContinuing ClaimsDec-301920k1914k--11/1/18 13:30USRevisions: Philadelphia Fed Manufacturing Index

11/1/18 13:45USBloomberg Jan. United States Economic Survey

11/1/18 14:45USBloomberg Consumer ComfortJan-07--51.8--11/1/18 19:00USMonthly Budget StatementDec-$26.5b-$138.5b--11/1/18 21:45NZBuilding Permits MoMNov---9.60%--11/1/18 23:50JNBoP Current Account BalanceNov￥1836.1b￥2176.4b--11/1/18 23:50JNBoP Current Account AdjustedNov￥2168.9b￥2441.5b--11/1/18 23:50JNTrade Balance BoP BasisNov￥310.6b￥430.2b--11/1/18 23:50JNJapan Buying Foreign BondsJan-05------11/1/18 23:50JNJapan Buying Foreign StocksJan-05------11/1/18 23:50JNForeign Buying Japan BondsJan-05------11/1/18 23:50JNForeign Buying Japan StocksJan-05------11/1/18 23:50JNBank Lending Incl Trusts YoYDec--2.70%--11/1/18 23:50JNBank Lending Ex-Trusts YoYDec--2.70%--

Central Bank Watch

Time (GMT)CtyEventVoterBias11/1/18 01:10JNBOJ Outright Bond Purchase 1~3 Years

11/1/18 01:10JNBOJ Outright Bond Purchase 3~5 Years

11/1/18 01:10JNBOJ Outright Bond Purchase 5~10 Years

11/1/18 12:30ECECB Publishes Account of December Monetary Policy Meeting

11/1/18 20:30USFed"s Dudley Speaks on the U.S. Economic OutlookYesDovish

Auctions

Time (GMT)CtyEventPrev Avg YieldB/C01/1/18 - 31/01/18MAMalaysia to Sell 15Yr Bonds Due 2033 (Reopening)

11/1/18 10:00ITItaly to Sell Up to EUR3 Bln 0.2% 2020 Bonds-0.02%1.79x11/1/18 10:00ITItaly to Sell Up to EUR3 Bln 1.45% 2024 Bonds1.21%1.44x11/1/18 10:30UKU.K. to Sell GBP2.25 Bln 1.75% 2037 Bonds1.94%1.85x11/1/18 18:00USU.S. to Sell USD12 Bln 30-Year Bonds Reopening2.80%2.48xDestinations: