• APAC stocks traded with cautious gains despite a negative lead from Wall Street, and ahead of the US labour market data
• DXY traded within a tight pre-NFP range just above the 105.00 level after notching a 103.98-105.27 parameter yesterday
• China could ease "three red lines" property rules in a major shift, according to Bloomberg sources
• US House voted to adjourn until noon Friday after failing to elect a House Speaker; a source close to Republican McCarthy confirmed a deal is on the table
• Looking ahead, highlights include German Retail Sales, EZ CPI and Retail Sales, US and Canadian Labour Market Reports, US ISM Services PMI, speeches from Fed's Bostic, Cook, Barkin.

US TRADE

• US stocks closed lower on Thursday after hot US employment data kept the hawkish pressure on the Fed, with eyes now set on the US jobs report.
• SPX -1.17% at 3,808, NDX -1.59% at 10,741, DJIA -1.02% at 32,930, RUT -1.09% at 1,753
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bullard (non-voter) said inflation is likely to moderate in 2023; Fed policy is not yet restrictive but will be soon with more hikes. He added US GDP likely moderating to its potential of around 2%. Bullard said the job market remains "strong". Bullard said inflation is likely to ease slower than markets expect; still expects Fed to be higher for longer to lower inflation. He said it is too soon to say when the Fed will change the balance sheet drawdown, and it is unclear how much tightening impact the Fed gets from balance sheet cuts. Bullard said the US job market can remain resilient in 2023 and the job market is still quite strong, and a strong job market gives the Fed a great opportunity to fight inflation.
• US House voted to adjourn until noon Friday after failing to elect a House Speaker.
• A source close to Republican McCarthy confirmed a deal is on the table. It will not be enough to take him over the line, according to Reuters' Slattery.
• Tesla (TSLA) cut prices in China for Model 3 by 13.5% and Model Y by 10%.
• Atlanta Fed GDPNow Model (Q4): 3.8% (prev. 3.9%)

APAC TRADE

EQUITIES

• APAC stocks traded mostly with cautious gains despite a negative lead from Wall Street, and ahead of the US labour market data.
• ASX 200 saw gains across the Metals, Mining and Resources names, but the upside was capped by the Healthcare and Tech sectors.
• Nikkei 225 briefly topped the 26k level whilst the banking sector underperformed after Thursday’s sectoral outperformance.
• Hang Seng and Shanghai Comp were firmer with the former initially bolstered by property names, with source reports from Bloomberg flagging further housing market easing measures, although the earlier gains faded throughout the session.
• US equity futures edged higher overnight with modest and broad-based gains of 0.2-0.3% seen across the main contracts.
• European equity futures extended on gains overnight with the Euro Stoxx 50 +0.7% after cash closed -0.4% yesterday.

FX

• DXY traded within a tight pre-NFP range for most of the session just above the 105.00 level after notching a 103.98-105.27 parameter yesterday. The index gained impetus towards the end of the session and printed fresh session highs following BoJ sources.
• USD/JPY inched higher and topped resistance near its 21 DMA (133.92) before being nudged above 134.00 by source reports that the BoJ reportedly sees little need to rush to major yield adjustments.
• EUR/USD marginally dipped under the prior day’s 1.0513 low, whilst GBP/USD fell back towards 1.1900 amid the late Dollar strength.
• Yuan saw strength as Bloomberg sources flagged further property market support measures, while the PBoC also opted for a firmer CNY fix despite yesterday's Dollar rebound.
• PBoC set USD/CNY mid-point at 6.8912 vs exp. 6.8914 (prev. 6.8926)

FIXED INCOME

• 10yr UST futures held a flat/downward bias after the curve flattened on Thursday as the hot US ADP and IJC data kept hawkish pressure on the Fed.
• Bund futures found a floor just above 136.00 ahead of the EZ CPI metrics after regional data cooled across the board.
• 10yr JGB futures were firmer with the corresponding cash yield at 0.50% after the BoJ announced an emergency bond-buying operation in the 5yr and 10yr maturities.
• Australian government cuts FY22/23 bond issuance by AUD 10bln vs original plans, according to reports.

COMMODITIES

• Crude futures traded higher overnight intraday after eventually settling higher on Thursday by around USD 0.80/bbl in both contracts.
• Spot gold attempted to recover following Thursday’s Dollar strength, but gains were capped.
• Base metal futures briefly saw support from the Chinese property measures, but traded cautiously.
• Freeport LNG restart likely to be delayed by months, according to Bloomberg citing consultant.
• PHMSA is aware of and is monitoring an estimated 60 bbl leak on the colonial pipeline's line 3 in Danville, Virginia, according to a Reuters source.
• China Energy has reportedly placed an order for Australian coal - among the first deals since the 2020 unofficial ban, according to Reuters sources.

CRYPTO

• Bitcoin traded flat around USD 16,800 and Ethereum was modestly lower around USD 1,250
• Crypto lender Genesis reportedly lays off 30% of staff, according to WSJ. Genesis is working with Moelis to evaluate its options for the future, including a potential Chapter 11 filing, according to WSJ.

NOTABLE ASIA-PAC HEADLINES

• BoJ reportedly sees little need to rush major yield adjustments, according to Bloomberg sources
• BoJ to conduct emergency bond buying for 5yr and 10yr maturities, according to Reuters.
• China could ease "three red lines" property rules in a major shift, according to Bloomberg sources. It will allow some property firms to add more leverage, and it pushes back the grace period for meeting debt targets, whilst deadlines may be extended by at least six months.
• PBoC drained a net CNY 1.6tln for the week via OMO - the largest weekly net cash withdrawal on record, according to Reuters.
• PBoC injected CNY 2bln via 7-day reverse repos with the rate maintained at 2.00%; daily net drain CNY 384bln
• Samsung Electronics (005930 KS) Prelim Q4 (KRW): Revenue 70tln (exp. 71tln), Operating Profit 4.3tln (exp. 5.9tln [BBG exp. 6.65tln]); Memory chip demand fell more than expected in Q4 amid clients' concerns on consumer sentiment. Smartphone sales fell in Q4 due to demand weakness from macro issues. Price of memory chips fell continuously in Q4 due to chipmakers' increased inventory, according to Reuters.

DATA RECAP

• Japanese Real Cash Earnings (Nov) -3.8% vs Exp. -2.8%; fastest Y/Y fall since May 2014
• Japanese Overtime Pay* (Nov) 5.2% (Prev. 7.9%)
• Japanese Services PMI (Dec F) 51.1 (Prelim. 51.7); Composite 49.7 (Prelim. 50.0)

GEOPOLITICS

• US and Germany are to send Ukraine armoured vehicles in a major upgrade, according to Bloomberg.
• US to include about 50 Bradley Fighting Vehicles in weapons package for Ukraine to be unveiled on Friday, according to two US officials cited by Reuters.
• Kremlin spokesman cast doubt on ceasefire rejection by the Ukrainian Presidential aide and said he doubts he speaks for Zelensky, according to Interfax.
• US and Japan to hold security talks in Washington on January 11th, according to Bloomberg.

EU/UK

NOTABLE HEADLINES

• ECB's Villeroy said it would be desirable to reach the terminal rate by summer but is too soon to say at what level. He added the ECB needs to be pragmatic and guided by data without fetishism for too mechanical rate increases, and ECB will remain at the terminal rate for as long as necessary, according to Reuters.