From Marc to Market:
Overview: The new week does not mean new forces. The dollar is recouping some of what it lost ahead of the weekend after the disappointing US jobs growth, but yields continue to rise and many risk assets, equities and crypto continue to struggle. Asia Pacific equities were mixed. With Tokyo closed, Hong Kong, China, Taiwan, and India advanced. Last week the MSCI regional benchmark fell almost 0.5%. Europe's Stoxx 600 is off for a third session. Only energy and financials are advancing. US futures are slipping lower. Meanwhile, the US 10-year yield is firmer near 1.78%. European yields are easing after starting higher. Australian and New Zealand bonds played catch-up and rose six basis points. The US dollar is mixed but mostly firmer. The euro and Swedish krona are the heaviest as the pre-weekend gains are pared. The Australian and Canadian dollars and Norwegian krone are the most resilient. Russia and Turkey lead some emerging market currencies higher, while the euro seems to be a drag on central European currencies. Still, the JP Morgan Emerging Market Currency Index, which rose by 0.2% last week is slightly firmer today. Gold is knocking on resistance near $1800. Oil is little changed with the February WTI around $79. Iron ore fell 1.6% to pare last week's 5.4% advance. Copper is higher for the second session. It snapped a four-week advance last week, falling 1.2%. US natural gas gapped higher after jumping more than 2% before the weekend as a cold wave hit the northern part of the country and parts of Canada. Europe's natural gas prices jumped 28% last week and are tacking on another 5% today.
Asia Pacific
Japanese markets were closed for Coming-of-Age Day. There are two highlights this week. In terms, of data, the November current account stands out. The November balance has deteriorated compared with October for the past 14 years. With the current account comes the monthly portfolio flows. We already know from the weekly MOF data that Japanese investors were small buyers of foreign bonds and larger sellers of foreign equities. For their part, foreigners bought Japanese bonds for the first time in three months. On the other hand, they were small sellers of Japanese stocks after having stepped up their purchases in October. The monthly data, unlike the weekly data, provides a country breakdown. The second highlight of the week is the Economic Watchers survey (December) ahead of next week's BOJ meeting. The BOJ may downgrade is growth assessment while tweaking higher its inflation outlook.China may report its lending figures and trade figures, but the highlight will be December CPI and PPI first thing Wednesday morning in Beijing. The CPI is expected to soften slightly, as may PPI. If true, it may boost ideas that the PBOC will ease policy before the end of the month and the start of the week-long Lunar New Year celebration beginning January 31. Chinese aggregate financing slowed in 2021 from a monthly average of a little more than CNY3 trillion in the first 11 months of 2020 to about CNY2.64 trillion last year. Chinese officials have urged the state-owned banks to continue to lend to the distressed property market. Also, local governments reportedly began tapping this year's borrowing quotas at the end of last year. Recall too that on December 15, the PBOC cut the reserve requirements, ostensibly freeing up CNY1.2 trillion into the banking system. Did it lead to new lending? The PBOC could cut reserve requirements again and/or it may cut the one-year medium-term lending facility from the 2.95% since April 2020. China's trade surplus is expected to have grown in dollar terms, after falling in November ($74.5 bln vs. $71.7 bln). However, in yuan terms, it may have eased for the second consecutive month....
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