The three main points of interest from the Asia-Pacific timezone today were:

  1. the latest Japanese CPI data, for December 2022
  2. a speech and subsequent Q&A from Federal Reserve Bank of New York President John Williams
  3. and the People’s Bank of China monthly setting of one- and five-year rates

Japan’s headline and core (CPI excluding food) inflation both hit 4.0% y/y. For core inflation that was its fastest rise in over four decades. Japan’s core-core (CPI excluding food and energy; this is the Japan measure closest to the US measure of core CPI) inflation hit 3%, reaching a high last seen in July 2014. On Wednesday this week we had the result of the latest Bank of Japan monetary policy meeting, with no incremental change to the JGB ceiling as was expected by some in the markets. The next BOJ meeting is not until March 9 and 10, by which time we'll have had January CPI data results also. Thus today’s CPI was of interest, but not a great deal. The yen did weaken. USD/JPY has risen to above 128.80 and is just under there as I post. (And, as I proofread the post its getting another leg up to 128.90, making a liar out me ...)

Other major FX has been relatively subdued, thus yen crosses are higher on the session also.

The NY Fed’s Williams spoke. There are three separate posts above covering his speech and his two rounds of Q&A! Despite extensive remarks, and unlike many, many other Federal Reserve officials we’ve heard from, Williams did not give much of an indication at all of his view on whether he supported a +25 or +50bp rate hike at the next Federal Open Market Committee (FOMC) meeting coming on January 31/February 1.

From China we had the regular monthly PBOC setting of one- and five-year Loan Prime Rates. Given the MLF back on Monday was at an unchanged rate:

there was little expectation of any change to the LPRs. And thus, the rates indeed remained unchanged:

  • 3.65% for the one year
  • 4.30% for the five year

Asian equity markets:

  • Japan’s Nikkei 225 +0.2%

  • China’s Shanghai Composite +0.5%

  • Hong Kong’s Hang Seng +0.95%

  • South Korea’s KOSPI +0.24%

  • Australia’s S&P/ASX 200 +0.15%


Note that the media 'blackout' period for Federal Reserve officials speaking publicly begins tomorrow, on Saturday, January 21.

  • The 'blackout' policy from the Federal Reserve limits the extent to which Federal Open Market Committee participants and staff can speak publicly or grant interviews.
  • The period begins the two Saturday's preceding a Federal Open Market Committee (FOMC) meeting and ends the Thursday following.

Ahead of that are two Fed speakers later today - Harker and Waller.

Also note that China will be out on holiday all next week for Lunar New Year celebrations, welcoming in The Year of the Rabbit. To all of those taking a break for this - enjoy!

usdyen wrap 20 January 2023