RBA dovish-hold, further CN stimulus promised for 2025, while CN Ex/Im gap widens, KR stabilizes

Asia Market Update: RBA dovish-hold; Further CN stimulus promised for 2025, while CN Ex/Im gap widens; KR stabilizes; JPY weak ahead of BOJ next week; AU confidence falls.

General trend

- Aussie dollar plunged -0.8% with 3-yr yields -9bps after the RBA left rates on hold as expected, but changed the language in the Statement to take out the prior "not ruling anything in or out", seen as dovish by the market. Board noted recent data had been softer than expected. Board did, however, reiterate that underlying inflation remains too high. Gov Bullock at the presser said the wording change was deliberate. Also said the Board did NOT discuss a rate cut or rate hike.

- Ahead of tomorrow’s Central Economic Work Conference (CEWC) on Dec 11-12th China Politburo late yesterday said that next year it will shift its monetary policy from 'prudent' to 'moderately loose' for the first time since 2011. It appears that China is both trying to kick-start the economy with more aggressive fiscal spending and rate cuts in 2025, as well as prepare for a second trade war when Trump returns to the White House in January. Hang Seng and Shanghai both opened up ~3%, but later pared gains by 50-70%.

- The recent plunge in Chinese yields (perhaps now explained by the above) extended further, with CN 10-yr yields reaching down as low as 1.89%.

- China Nov trade balance and exports continued in rude health, but worryingly imports continued to compress, -3.9% being the largest drop in USD-denominated imports since -6.2% in Sept 2023. In Yuan terms the relative fall was even larger at -4.7%.

- Korean equities (+2.0%) and currency (+0.3%) recovered some losses of the past week with the opposition leader confirming they would help pass a budget today and Finance Ministry saying they would add further stabilizing measures. South Korea ruling-party reported to be discussing Pres Yoon's exit in Feb or Mar of next year.

- Ahead of next week’s BOJ decision, the Yen fell to its lowest vs USD since Nov 29th, reaching well into the 151 handle. Demand for today’s 5-year JGB auction was highest since 2023. (Strong JGB auction may reflect declining BOJ rate hike probs for Dec 2024).

- After reaching two-year highs just last week Australian Consumer Confidence slumped nearly 3 points this past week, later joined by surprisingly negative Business Confidence and much lower Business Conditions.

- US equity FUTs -0.1% during the Asia session.

Looking ahead (Asian time zone)

- Wed Dec 11th CN CEWF starts (Wed night US Nov CPI, BOC Rate Decision).

- Thu Dec 12th AU Nov jobs, IN Nov CPI, (Thu eve ECB Rate Decision, US Nov PPI).

- Fri Dec 13th NZ Nov Biz PMI, AU Westpac Consumer Confidence, JP Tankan.

- Sat Dec 14th CN Nov New Yuan Loans, FDI.

Holidays in Asia this week

- Tue Dec 10th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,439.

- RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 4.35%; AS EXPECTED.

- RBA Gov Bullock: Need to think carefully on policy - post-rate decision press conference.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 85.5 v 88.4 prior (update).

- Australia Treasurer Chalmers: To consult with Shadow Treasurer on the composition of the new RBA board.

- RBNZ: The Digital Cash proposal is a multi-year exploration and there will be further opportunities for public input.

China/Hong Kong

- Hang Seng opens +3.2% at 21,070; Shanghai Composite opens +2.6% at 3,490.

- CHINA NOV TRADE BALANCE (CNY-DENOMINATED): 692.8B V 679.1B PRIOR;

- CHINA NOV TRADE BALANCE: $97.4B V $93.7BE.

- China Politburo holding study session; Comments from Pres Xi - China state media.

- China government bond yields could decline further to near 1.80% in 2025; Notes expectation of monetary easing; cites Chinese analysts - Shanghai Securities News.

- NVDA *CHINA MARKET REGULATOR OPENS PROBE AFTER CO. SUSPECTED OF VIOLATING ANTI-MONOPOLY LAWS IN CHINA RELATED TO MELLANOX ACQUISITION IN 2020 - LOCAL PRESS [**Note: China accounts for ~15% of Nvidia's data center revenue, implying ~$4.5B in Q3 and ~13% of total Q3 Rev].

- China Premier Li: China will introduce more unilateral policies for opening up - Chinese press.

- China Securities Regulator (CSRC) reportedly told banks to expedite offshore listings - press.

- China Pres Xi: Vow efforts to achieve 2025's economic goals; Conditions and trends for economic improvement are unchanged.

- CHINA SHIFTS MONETARY POLICY STANCE FOR THE FIRST TIME SINCE 2011; Changes from 'prudent' to 'moderately loose' next year - press [**TTN Insight: last time China changed monetary policy stance to "moderately loose" was during 2008-2010 with GFS prompting the change; It held "prudent stance" during 1998-2007 and 2011-2024 periods].

- China Politburo: Monetary policy to be moderately loose with fiscal policy being more proactive; To step up "unconventional" counter-cyclical adjustments; To boost consumption forcefully and "in all directions" [**Note: China to hold Central Economic Work Conference (CEWC) on Dec 11-12th].

- China PBOC sets Yuan reference rate: 7.1896 v 7.1870 prior.

- China PBOC Open Market Operation (OMO): Injects CNY142B in 7-day reverse repos; Net injects CNY90B v net injects CNY14B prior.

Japan

- Nikkei 225 opens +0.6% at 39,375.

- Japan Nov M3 Money Supply Y/Y: 0.7% v 0.7% prior; M2 Money Supply Y/Y: 1.2% v 1.2% prior.

- JAPAN SELLS ¥2.3T VS. ¥2.3T INDICATED IN 5-YEAR JGB BONDS; AVG YIELD: 0.7340% V 0.7060% PRIOR; BID-TO-COVER: 4.42X V 3.81X PRIOR (highest B-T-C since 2023).

- Prof Yoshikawa: The BOJ had better move early while it can - financial press.

- Japan PM Ishiba: Reiterates BOJ policy does not target FX rate.

Korea

- Kospi opens +1.0% at 2,384.

- South Korea ruling-party (PPP) reported to be discussing Pres Yoon's exit in Feb or Mar, 2025 - Korea press.

- South Korea opposition leader Lee: Will pass budget on Tuesday (today) - financial press.

- South Korea Finance Ministry: Recent market volatility is a bit 'excessive'.

- South Korea discussing early exit plan for Pres Yoon on Tuesday.

- South Korea opposition leader Lee: Will pass budget on Tuesday (today) - financial press.

Other Asia

- India appoints Sanjay Malhotra as RBI governor for three-year term; effective Wed, Dec 11th (to replace Das).

North America

- (US) Lara Trump: Would consider a Senate posting if (Florida Gov) Ron DeSantis asks - Fox News.

- (US) USNDA commends 'Countering Chinese Drones' provisions in FY25 NDAA; Calls for Expanded Commitment from Congress Towards Rapidly and Responsibly Advancing the American Drone Industrial Base.

- (MX) Mexico Nov CPI M/M: 0.4% v 0.5%e; Y/Y: 4.6% v 4.6%e.

- (US) OCT FINAL WHOLESALE INVENTORIES M/M: 0.2% V 0.2%E.

- (US) Kansas City's Fed: Consumer credit market shows little sign of financial stress as of September 2024. While credit card delinquency rates have increased among subprime borrowers, internal bank assessments suggest that subprime default risks remain historically low.

- (US) Nov NY Fed 1-Year Inflation Expectations: 2.97% v 2.87% prior.

- (CA) Canada PM Trudeau: Canada would retaliate in the event of 25% US tariff; Still looking at appropriate way to respond.

Europe

- (UK) BOE to increase reserves available in ILTR operations to at least £30B - press.

- (UK) BOE's Ramsden: Must continue to be vigilant on light of increasing uncertainty around the outlook; A lot of markets are priced for perfection.

- (DE) Germany Fin Min Kukies: Mercosur's impact on German economy will be very positive; Markets are reacting calmly to France, we aren't worried.

- (UK) Chancellor Reeves: In our national interest to have more normal trade with EU - comments from Brussels.

- (UK) PM Starmer: Pledges to increase UK's engagement in the Middle East to support long-term stability.

Levels as of 00:20 ET

- Nikkei 225 +0.5%, ASX 200 -0.3%, Hang Seng +0.9%; Shanghai Composite +1.4%; Kospi +2.0%.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; Dax -0.2%; FTSE100 -0.2%.

- EUR 1.0545-1.0562; JPY 150.95-151.55; AUD 0.6381-0.6443; NZD 0.5823-0.5868.

- Gold +0.3% at $2,692/oz; Crude Oil -0.6% at $67.98/brl; Copper -0.3% at $4.2488/lb.