USD/JPY jumped today after a speech from Bank of Japan Deputy Governor Shinichi Uchida. The details are in the link above, but in brief he once again reiterated the importance of holding monetary policy at easy settings, and added that the BOJ is unlikely to raise interest rates aggressively, even after ending its negative interest rate policy.

He head plenty more to say (see link above).

On the data agenda the focus was on China’s inflation (deflation) data for January. The CPI fell y/y (at -0.8% for a deflation result again) at the fastest pace since the global financial crisis. Not all the data showed deflation, tough. Core inflation (CPI excluding food and energy prices) gained, up 0.4% y/y from +0.6% in December. The m/m headline rose also.

For 2023 as a whole the CPI rose 0.2% y/y, well short of the PBoC 3% target. This is not too unusual, though, its fallen short of target now for 12 consecutive years. I argued in a post above that with Loan Prime Rates (LPRs) sticking at 3.45% for the one-year and 4.20% for the five-year the further deflation today has, in effect, raised real rates in China yet again.

Chinese stocks continued their bounce into the long (Lunar New Year) holiday. Chinese markets are closed on Friday February 9, they will reopen on Monday February 19.

Hong Kong and Singapore markets will have brief closures (see bullets above for details).

China's CSI 300 wrap 08 February 2024 2

The CSI 300 Index tracks the performance of the top 300 stocks listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It's considered a benchmark for the overall performance of the Chinese A-share market.

  • The index includes the largest and most liquid A-share stocks, covering a wide range of sectors.

  • It covers sectors such as financials, industrials, consumer discretionary, technology, and healthcare.

  • Its widely used by fund managers and investors as a benchmark for China's stock market.