Asia Morning Bites - 10.02.2023

Macro and market outlook

• Global Markets: For the first time this week, we have seen some consistency from markets, as US stocks closed down for a second consecutive day after their roller-coaster ride earlier this week. There were some further Fed comments yesterday from Barkin along the lines of the Fed needing to “stay the course” on rates. But by now, such comments have to be viewed as part of the financial wallpaper and not contributing much to daily volatility. Bond yields reversed yesterday’s decline in yields. The 2Y US Treasury yield rose 6.1bp and the yield on the 10Y bond rose about the same to take it to 3.658%. EURUSD is fractionally higher than this time yesterday at 1.0737, though it briefly pushed through 1.0780 before retreating. The AUD followed a very similar path as did the GBP, though sterling did manage to hang on to more of its earlier gains. The JPY is also roughly unchanged from a day ago, after dropping to 130.345 at one stage, it is now 131.48. There is not too much to take away from the other Asian FX movements yesterday either. The PHP stands out as having done much better than the rest of the pack, rising 0.65%. The MYR stands at the other end of the spectrum, down 0.42%, but most of the rest are little changed on balance over the last 24 hours.
• G-7 Macro: 4Q22 Preliminary GDP in the UK is forecast to come in flat from the previous quarter. Canada releases labour market data, and from the US, we get the University of Michigan consumer sentiment and inflation expectations figures. Otherwise, it’s a quiet day.
• China: CPI inflation for January should continue to remain very moderate at around 2%YoY despite a rebound in service sector activity in January. PPI should still register a contraction on a yearly basis even though there was some pick up in steel prices recently as prices last year were even higher. The economy needs more industrial activity and infrastructure construction to push PPI high enough that the PBoC will need to increase interest rates, and that is very unlikely in 1H23, and also quite unlikely until 4Q23 or later.
• Australia: Adding some detail to the comments following their recent rate decision, the Reserve Bank of Australia (RBA) releases its “Statement on Monetary Policy” this morning. The main points to watch out for are justifications for the anticipated exceptionally slow decline in inflation back to the RBA’s target.  

Read next: Credit Suisse Reported Its Biggest Annual Loss Since The 2008, Ukrainian President Is Asking For Help And More Weapons In Brussels| FXMAG.COM

What to look out for: US University of Michigan sentiment

• Japan PPI inflation (10 February)

• China CPI inflation (10 February)

• Malaysia GDP (10 February)

• US University of Michigan sentiment (10 February)

• Fed’s Waller and Harker speak (10 February)