Asian Market Update: Stock indices trade lower after losses on Wall St; JP closed for holidays; US CPI and Central Bank speak for themselves; The USD is generally trading firmer.

General trend

– Asian government bond yields rise after US yields rise

– Overnight Index Swaps (OIS) forecast in the US Fed a rate hike of 125 basis points by July 2022 [follows the release of US Jan CPI data and Fed speak]

– Various central bankers spoke in Asia (Lowe from RBA, Largarde from ECB, Barkin from Fed, Lee from BOK, Central Bank of Malaysia, Bank of Thailand)

– USD fell amid dollar strength and comments from Lagarde

– RBA’s Debelle commented on the balance sheet runoff

– RBNZ released its first quarter inflation expectations survey: longer-term inflation expectations remain more densely located around the RBNZ target range; the the average OCR expectation for the end of the current quarter was 1.05 showing that most respondents expected to see only one rate hike from the current level of 0.75.

– The BOJ will conduct a fixed rate buy operation on Monday, February 14 due to a recent increase in yield; to buy unlimited 10 year JGBs – press

– South Korea’s chip exports slowed in early February

– US equity FUTs extended declines

– Shanghai and Hong Kong markets outperformed [Property and Financial firms rise]

– The S&P ASX 200 traded slightly lower [Financials decline; Resources index supported by higher ore prices in China]

– Companies due to report during the New York morning include AllianceBernstein, Apollo Global, Ares Management, American Axle, Cleveland-Cliffs, Mr. Cooper, Enbridge, Goodyear, Magna International, Newell Brands, Sensient Technologies, Under Armor

Securities/Economic data

Australia/New Zealand

– ASX 200 open flat

– (AU) Reserve Bank of Australia (RBA) Gov Lowe: the board is ready to be patient; Moving too early could jeopardize the employment goal; acceptable to run the risk of the CPI being above 3.0% for a period of time [**Note: The RBA has a 2-3% inflation target]

– (AU) Reserve Bank of Australia (RBA) Deputy Governor Debelle: RBA Balance sheet runoff is likely similar to accumulation

– (AU) Reserve Bank of Australia (RBA) Assist Gov Ellis (Chief Economist): 3.0% high to 4.0% low seems reasonable for full employment

– (AU) Australia sells A$1.0bn vs. A$1.0bn shown in November 2024 0.25% bond; Average return: 1.4898%; bid to cover 4.41x

– (AU) Australia Pandemic measures would be extended until April – Press

– (NZ) New Zealand Q1 Inflation Expectations Survey (2-year outlook): 3.3% vs. 3.0% before (31-year high)

Japan

– Nikkei 225 was closed for vacation

– (JP) BOJ make a fixed rate buy trade on Monday, February 14 due to the recent rise in yield; To buy unlimited 10-year JGBs – tap

– 7267.JP Canada The plant in Ontario was hit by a blockade at the Canada-US border; Suspension of a line at the Allison, Ont., plant on Friday

Korea

– Kospi opened -1.2%

– (KR) South Korea February 1-10 Exports Y/Y: -12.6%; Y/Y imports: -6.6%

– (KR) South Korea Fin Min Hong and BOK Gov Lee to discuss bond market and CPI stabilization steps

– (KR) Bank of Korea Gov Lee: BOK and government seek to rein in inflation expectations and core CPI; BOK to issue currency stabilization bonds (MSB) in due course [follows meeting with Finance Min]

China/Hong Kong

– Hang Seng opened -0.4%; Shanghai Composite opened -0.4%

– (CN) Chinese PBOC sets yuan benchmark rate: 6.3681 vs. 6.3599 previously

– (CN) China PBOC Open Market Operation (OMO): sells 20 billion yuan in 7-day reverse repos against 20 billion yuan previously; CNY180B net drainage v CNY180B front net drainage

– (CN) said that China PBOC may ease policy further next week – Hurry

– (CN) CHINA JAN M2 MONETARY SUPPLY Y/Y: 9.8% V 9.2%E [from Feb 10th]

– (CN) CHINA JAN NEW LOANS IN YUAN (CNY): 3.980TV 3.700TE [from Feb 10th]

– (CN) CHINA JAN GLOBAL FUNDING (CNY): 6.170TV 5.400TE [from Feb 10th]

– (CN) Follow-up: China issues rule to standardize use of goods pre-sale funds – Chinese press

North America

– (US) JAN CPI M/M: 0.6% V 0.4% E; A/A: 7.5% V 7.2% E (highest annual rate since early 1982); IPC (excluding power/energy) M/M: 0.6% v 0.5%ev 0.6% before; Year-on-year: 6.0% vs. 5.9%e

– (US) Fed’s Barkin (non-voting, hawk): economy expected to return to pre-coronavirus past trend this quarter; Must be convinced of “serious need” if a 50bp raise is needed now

– (CA) Canadian Prime Minister Trudeau has called opposition leaders to a meeting on blockades, according to Canadian media; The U.S. Biden administration has urged Canada to use federal powers to resolve the blockade of truckers at the Canada-U.S. border

– (US) Fed’s Bullard (2022 Voter, Hawk): Favors 50bp rate hike in March, but defers to Powell; Should be open to increase between meetings; Favors 100 basis point increases by July 1 (this would be the first 50 basis point increase since 2000)

– (CA) Canadian Prime Minister Trudeau: will continue to work with governments to end the blockade of truckers

– (US) Goldman Sachs expects seven 25 basis point rate hikes in 2022 (would lower rate to 2.0%)

– (CA) Province of Ontario plans to seize tractor-trailers to clear Ambassador Bridge

– (US) Secretary of State Blinken: China has acted more aggressively in recent years

Europe

– (RU) Putin’s Russian aide Kozak: Normandy talks in Berlin did not yield results

– (EU) ECB Chief Lagarde: Situation in US and UK cannot be compared to situation in EU; The ECB will act if necessary, but all measures will be gradual – press interview

Levels from 12:20 a.m. ET

– Nikkei 225, closed, ASX 200 -1%, Hang Seng -0.3%; Shanghai Composite +0.1%; Kospi -0.8%

– S&P500 equity futures: -0.8%; Nasdaq100 -1%, Dax -0.6%; FTSE100 -1%

– €1.1433-1.1374; JPY116.17-115.95; AU$0.7173-0.7111; NZ$0.6680-0.6630

– Gold -0.6% at $1,825/oz; Crude Oil -0.2% to $89.69/brl; Copper -0.8% to $4.5815/lb