Ahead Today
G3: US ISM Manufacturing, ISM Manufacturing Prices Paid, JOLTs Job Openings, FOMC Meeting Minutes
Asia: China Caixin Services PMI, Singapore COE Premiums
Market Highlights
Markets and risk assets were weaker to start the year, with the Dollar strengthening by 0.9% while equities generally declining across major markets including the US and China. US 10-year yields rose to 3.92% as markets trimmed rate cut bets for the Fed. Part of the driver was likely a continuation of the risk-off sentiment following Red Sea shipping disruptions and soft Chinese data heading into the new year. There was some escalation in the Israel Hamas conflict, with an Israeli drone reportedly striking a Hamas office in Lebanon.
On the data front, manufacturing PMIs out of Europe and the US remained weak, with a slight downside surprise in the latter. Meanwhile, China’s Caixin Manufacturing PMIs were slightly stronger than expected at 50.8, which could indicate stronger economic performance in smaller enterprises in coastal provinces. Looking ahead, markets will focus on US ISM Manufacturing, JOLTs jobs opening data points, together with the FOMC Meeting Minutes.
Regional FX
Asian FX were generally weaker against the Dollar to start the year, with USDCNH at 7.14, and the likes of KRW underperforming declining 1.4%. Apart from China’s Manufacturing PMI, we also had PMI numbers out of many Asian economies. There was a continued divergence between strength in domestic oriented economies such as Indonesia, while export oriented ones such as Taiwan, South Korea, and Malaysia remained weak. Overall, these PMI numbers have somewhat overstated weakness in exports and economic activity in recent months across Asia, with some improvement across the likes of Korea, Taiwan and Vietnam. On that note, Vietnam released its 4Q GDP data, which was stronger than expected at 6.7%yoy, helped by better manufacturing and construction activity. Meanwhile Vietnam’s exports for December also surprised on the upside at 13.1%yoy.
