From Marc Chandler at Bannockburn Global Forex:
Overview: The New Year begins slowly. Japan, mainland China, Australia, New Zealand, and the UK markets remain closed. While Hong Kong shares traded heavily, Taiwan, South Korea, and India moved higher. Led by consumer discretionary and staple sectors, Europe's Stoxx 600 is up about 0.6%. US futures are 0.4%-0.6% higher. European yields have drifted lower, with the periphery doing bettter than the core. The US 10-year yield will begin the local session at 1.51%. The dollar is mostly firmer, after weakening broadly at the end of last year. The Norwegian krone and New Zealand dollar are the most resilient, while the Canadian dollar is off nearly 0.3% to pare the year-end gains, followed by the euro, which is in the middle of its $1.1335-$1.1380 range. The greenback is holding above JPY115.00. Emerging market currencies are mixed but mostly softer. Higher than expected inflation is weighing on the Turkish lira. The South Korean won leads the other softer EM currencies. It is off about 0.25%. The South African rand (~0.7%) and Russian ruble (0.5%) lead the advancers. The JP Morgan Emerging Market Currency Index rose by about 2.5% in the last two weeks of 2021 and is slightly firmer today (~0.2%). Iron ore is higher for the third consecutive session and rallied more than 45% from the middle of November through Xmas, before falling 5.3% last week. Copper has a four-week 4.6% rally in tow but is slightly softer today. Gold is stalling near $1830, the (61.8%) retracement of its sell-off from $1880 mid-November high. Oil rallied for the last two weeks, with February WTI gaining about 6.2%. OPEC+ meets tomorrow and WTI is up a nearly 1.5% to push above $76. US natural gas gained slightly more than 1% in the past two weeks and is hovering around little changed level. Recall that diverted shipments from the US and Asia to Europe saw natural gas prices collapse from above 180 euros on December 21 to 65.5 euros at the end of last week.
Asia Pacific
China's property developers remain in the spotlight. Bloomberg estimates that the sector's debt servicing costs, including deferred wages, and maturing obligations are at $197 bln this month. Evergrande shares were suspended in Hong Kong. When the problems, bubbling below the surface for some time, emerged last September, global risk appetites were shaken, and many observers made comparisons to the Great Financial Crisis. However, so far, the problems seem localized and unlike the US and Europe, new lending has not frozen.
The macro data highlights include China's Caixin PMI after the official one surprised on the upside. The preliminary PMIs for Australia and Japan steal the thunder from the final report. Japan's weekly MOF report on portfolio flows may be noteworthy. Foreign investors have been on a buying spree, buying the most Japanese bonds over the first three weeks of December in at least 20 years....
....MUCH MORE
