PBOC adviser publicly questions sustainability of US fiscal trajectoryGoldman raises gold forecast to $5,400 (up $500) as private and central-bank demand buildsNikkei set to snap long losing streak as JGBs rally and tariff fears easeHere we go again ... WSJ: US seeks Cuba regime change after Venezuela precedentChina silver exports hit 16-year high in 2025 despite control fearsBridgewater stays bullish on China after 45% onshore fund gainPBOC sets USD/ CNY reference rate for today at 7.0019 (vs. estimate at 6.9697)Australia jobs surge in December, lifting AUD and RBA rate hike expectationsJapan trade data recap - exports rise again in December, but US demand dragsAustralian December 2025 unemployment rate 4.1% (expected 4.4%, prior 4.3%)Retired jet engines spark debate over power source for AI data centresJapan data: December trade surplus smaller than expected (import jump, export growth slow)South Korea economy contracts in Q4 as growth sharply misses forecastsJapan bond market rattled as Takaichi tax cut pledge tests fiscal trustIEA lifts oil demand forecast but warns surplus will persist in 2026New Zealand core retail sales fell in December both m/m and y/yOil: Private survey of inventory shows a headline crude oil build greater than expectedinvestingLive Americas market news wrap: Trump says no tariffs over GreenlandAt a glance:South Korea’s Q4 GDP unexpectedly contracted, highlighting macro weakness, though equities surged to record highs on improved global risk sentiment.Japan’s exports rose for a fourth month but missed forecasts, while USD/JPY remained volatile ahead of the Bank of Japan meeting.Australia’s jobs data smashed expectations, lifting the AUD and pulling forward RBA rate-hike pricing.Regional FX moves were driven by shifting rates expectations and easing tariff rhetoric.Gold traded sideways, consolidating near recent highs.South Korea’s economy contracted 0.3% q/q in Q4, sharply missing expectations for modest growth. Investment, construction and exports all weighed on activity, while full-year GDP slowed to 1.0%, marking the weakest annual expansion since 2020 and reinforcing concerns about underlying momentum.However, the growth disappointment was largely ignored by equity markets. South Korea’s stock benchmark surged past 5,000 points for the first time, powered by strong gains in chipmakers. The index is now up around 19% for the month, buoyed by improved global risk sentiment. Donald Trump backed away from fresh tariff threats against European nations, helping ease broader market weakness.In Japan, exports rose 5.1% y/y in December, extending the recent run of gains but falling short of forecasts as shipments to the US dropped sharply. Imports beat expectations, narrowing the trade surplus. The yen was choppy: USD/JPY initially climbed toward 158.50, slipped back to around 158.20, and then weakened again, pushing above 158.60 as the session progressed. Japanese government bond yields continued to calm following their sharp surge earlier in the week. The Bank of Japan meets today and tomorrow, with an on-hold decision widely expected ahead of further policy normalisation later in the year.Australia delivered the standout data. Employment jumped 65.2k in December, far exceeding forecasts, while the unemployment rate fell to 4.1%. The strength of the report lifted the Australian dollar and pushed markets to price roughly a 50% chance of a February rate hike from the Reserve Bank of Australia. The AUD surged to a 15-month high on the release and has since extended gains, with the NZD rising in sympathy, though to a lesser degree.Gold was little changed, trading sideways around US$4,800 as markets consolidated after recent strong gains. Asia-Pac stocks: Japan (Nikkei 225) +2%, breaking its run of 5 days of consecutive lossesHong Kong (Hang Seng) -0.1% Shanghai Composite -0.15%Australia (S&P/ASX 200) +0.7% This article was written by Eamonn Sheridan at investinglive.com.

A senior China central bank adviser warned that the rising US debt burden looks unsustainable, as concerns mount over America’s fiscal outlook. Summary:SCMP reports China adviser flags US debt concernsHuang Yiping questions sustainability of US debt pathFiscal discipline seen as unlikely near termJason Furman echoes deficit worriesUS debt hits US$38.4 trillion in 2025According to reporting by the South China Morning Post (may be gated), a senior adviser to China’s central bank has publicly raised doubts about the sustainability of the United States’ rapidly expanding public debt, adding to growing international unease over Washington’s fiscal trajectory and the potential for global spillovers.Speaking at an academic forum this week, Huang Yiping, an adviser to the People’s Bank of China and a member of its monetary policy committee, said the steady rise in US debt relative to GDP appeared increasingly difficult to sustain. Huang warned that the current political and institutional environment in the United States makes a return to fiscal discipline unlikely in the near term.“I’ve heard so many people telling me that [debt] as a share of GDP has been rising and probably will continue to rise. That’s probably not sustainable,” Huang said, according to the SCMP. He added that the style of presidential policymaking and the broader institutional framework in the US reduce the likelihood that meaningful deficit control will be implemented anytime soon.Huang made the remarks during a discussion with Jason Furman, a Harvard professor and former senior US economic policymaker, at a forum on Chinese and American economic relations organised by the East Asian Institute at the National University of Singapore.Furman broadly echoed Huang’s concerns, describing the US fiscal outlook as troubling and the deficit as “clearly too large.” He warned that the debt trajectory is on an increasingly unsustainable path, adding that any meaningful reduction in the US budget deficit would likely have significant external consequences. Furman suggested that roughly half of any fiscal adjustment could flow through to the current account, while alternative adjustment paths — such as higher savings or reduced import consumption — would likely require weaker economic activity.The comments come as US government debt climbed to US$38.4 trillion by the end of 2025, up roughly US$2.23 trillion from a year earlier, according to data from the US Congress Joint Economic Committee. The scale of the debt increase has intensified scrutiny from global policymakers, particularly in economies that hold large volumes of US assets. h/t to Martin Whetton, who leads the Westpac financial markets strategy team This article was written by Eamonn Sheridan at investinglive.com.

Goldman lifted its end-2026 gold target to $5,400/oz, from $4,900, arguing private allocations are building and central banks will keep adding to reserves.Summary:Goldman raises Dec 2026 gold forecast to $5,400/ozBank cites stronger private investor diversificationCentral-bank buying seen averaging 60 tonnes in 2026EM reserve diversification viewed as structuralCall implies stronger medium-term demand underpinningGoldman Sachs has raised its December 2026 gold price forecast by $500 to $5,400/oz, arguing that the next leg of the move is being reinforced by a combination of stronger private-sector allocation and ongoing, structurally driven central-bank demand.In its latest update, Goldman said private sector diversification into gold to increase, signalling that investor positioning may be shifting from tentative interest to more sustained allocation. The bank’s message is that gold is increasingly being treated less as a tactical trade and more as a strategic portfolio holding, particularly in an environment where investors are reassessing correlation risks, geopolitical uncertainty and the durability of the global disinflation story.Alongside this, Goldman expects official-sector demand to remain a powerful anchor. It forecasts central-bank purchases averaging 60 tonnes in 2026, driven largely by emerging market central banks continuing what it describes as structural diversification of reserves into gold. That framing matters: it suggests demand is not purely price-sensitive or cyclical, but tied to longer-run reserve management preferences and a desire to reduce reliance on traditional reserve currencies.The forecast upgrade also implies Goldman sees a tighter balance between mine supply, recycling flows and incremental demand than previously assumed, with official buying and improving investor participation helping absorb supply even if speculative froth comes and goes. Put simply, Goldman is leaning into a “stickier demand” narrative: central banks continue to buy, and private investors are now joining more meaningfully, creating a more supportive backdrop for prices.For markets, the revised target reinforces the idea that gold’s upside is being driven by more than just day-to-day moves in yields or the dollar. While near-term swings will still be shaped by rates, inflation surprises and risk sentiment, Goldman’s call highlights a longer-horizon bid that could keep dips shallower than in prior cycles — so long as central-bank accumulation and private diversification remain intact. This article was written by Eamonn Sheridan at investinglive.com.

Japan’s Nikkei is rebounding as JGBs extend gains and global risk sentiment improved after Trump softened tariff and Greenland rhetoric.Summary:Nikkei rebounds after five straight declinesTopix also higher as sentiment improvesJGB rally extends after super-long routFiscal jitters remain ahead of electionTrump comments ease tariff risksJapan’s equity market looked set to snap a five-session losing streak on Thursday, with the Nikkei 225 jumping more than 1% as government bonds extended their recovery and offshore risk sentiment improved after fresh signals from US President Donald Trump eased immediate tariff and geopolitical concerns.The Nikkei rose 1.6% to 53,667.72 by early afternoon in Asia, putting it on track to end its longest run of daily declines in about a year. The broader Topix advanced 0.9% to 3,623.72, supported by a calmer tone in rates and a firmer lead from Wall Street overnight.This month’s sharp swings have been tightly linked to politics and the bond market. Japanese stocks rallied last week on expectations that Prime Minister Sanae Takaichi would pursue looser fiscal settings, only to reverse this week as investors grew uneasy after she pledged to suspend the 8% food levy for two years, a move that revived questions about Japan’s fiscal trajectory. Takaichi is due to dissolve parliament on Friday, triggering a snap election, keeping politics front and centre for markets.Those fiscal concerns hit JGBs hard earlier in the week, particularly in the super-long sector, where yields surged to record highs and rattled equity sentiment. In Thursday’s session, however, bonds extended their rebound: the 30-year JGB yield fell for a second day, easing as much as 4 basis points to 3.68%, after spiking to a record 3.880% on Tuesday. With yields moving inversely to prices, the bond rally helped soothe fears that a disorderly sell-off in Japan’s rates market was becoming systemic.Equities also benefited from improved global risk appetite after Trump dropped tariff threats against European allies and ruled out seizing Greenland by force, removing a near-term tail risk that had been weighing on sentiment. Trump in Davos This article was written by Eamonn Sheridan at investinglive.com.

The Trump administration is quietly pressing for regime change in Cuba, betting economic fragility and internal pressure can succeed where decades of US coercion failed.Summary:WSJ reports US seeking Cuba regime change by year-endStrategy follows Venezuela leadership removalFocus on economic pressure and internal defectionsOil supply and medical missions targetedTransition risks seen as higher than VenezuelaAccording to reporting by the Wall Street Journal (gated), the Trump administration is actively seeking to engineer regime change in Cuba by the end of the year, emboldened by its recent operation to remove Venezuelan leader Nicolás Maduro and convinced that Havana is now more economically vulnerable than at any point in decades.US officials cited by the Journal believe Cuba’s economy is nearing collapse, largely due to the loss of subsidised Venezuelan oil that has underpinned the island’s energy supply since the early 2000s. With that support fading, Washington is attempting to identify insiders within the Cuban government who might be willing to negotiate an off-ramp from Communist rule, which has dominated the island for nearly 70 years.The administration does not yet have a detailed blueprint for political transition, but senior officials see the Venezuela operation as both a template and a warning. The January 3 raid that led to Maduro’s capture was reportedly aided by a defector from within his inner circle, a precedent US officials hope could be replicated in Cuba. While there has been no public threat of military action against Havana, officials privately describe the Venezuela raid as an implicit signal of US capability and intent.President Donald Trump has publicly urged Cuban leaders to strike a deal “before it’s too late,” warning that no further oil or financial support would be allowed to reach the island. Behind the scenes, officials have also targeted Cuba’s overseas medical missions, a critical source of hard currency, through visa bans and sanctions aimed at those accused of facilitating the program.US intelligence assessments reportedly paint a bleak picture of Cuba’s economy, citing chronic shortages of fuel, food and medicine, alongside frequent power outages. Officials believe cutting off remaining Venezuelan oil flows could bring the economy to a standstill within weeks.However, the Journal notes that Cuba presents a more complex challenge than Venezuela. Unlike Caracas, Havana lacks a legal opposition movement, regular elections or a broad-based civil society, raising questions over how a transition could be managed and who might replace the current leadership. Even some Trump allies privately acknowledge the risk that regime collapse could trigger instability and humanitarian strain — outcomes the administration sought to avoid in Venezuela. This article was written by Eamonn Sheridan at investinglive.com.

China’s silver exports hit a 16-year high in 2025, casting doubt on fears that tighter export controls are constraining global supply. Summary:China silver exports reach 16-year highVolumes rise despite export-control fearsNo major disruption reported by exportersProcessing trade rules underpin shipmentsRefining capacity expansion key driverChina’s silver exports climbed to a 16-year high in 2025, challenging market concerns that Beijing is moving to tighten controls on overseas shipments and raising questions over whether recent price fears were overstated.According to industry estimates, China exported roughly 5,100 tonnes of silver last year, the highest annual volume since the late 2000s. The surge comes despite heightened investor anxiety around China’s export licensing regime, with speculation over potential restrictions helping to fuel a sharp rally in silver prices to record highs earlier this year.Market participants had become increasingly nervous after China routinely extended its export licensing requirements for certain metals, with some interpreting the move as a signal that supply could be constrained. Those concerns were amplified by online speculation and rumours, particularly in India, where fears of restricted access to Chinese silver gained traction among traders and fabricators.However, feedback from major exporters suggests there has been no material disruption to shipments. Analysts note that the bulk of China’s silver exports continue to operate under established processing trade rules, which allow refined material to be exported without significant additional regulatory hurdles. As a result, the licensing extension appears to have had little practical impact on flows.Instead, the record export volumes are largely attributed to expanded domestic refining capacity, which has lifted China’s ability to process and ship silver to global markets. The increase in refined output has allowed exporters to meet strong international demand, even as prices surged and market narratives turned more defensive.The data highlight a disconnect between policy-related fears and physical market realities. While China’s export framework remains closely watched — particularly amid broader concerns about strategic metals and supply chains — current evidence suggests that silver has not been subject to the kind of tightening seen in other commodities.For the silver market, the surge in exports underscores the role of supply-side fundamentals in tempering price risks. With Chinese shipments running at multi-year highs, analysts caution that fears of an imminent supply squeeze may have been exaggerated, at least for now, even as demand from industrial users and investors remains robust. This article was written by Eamonn Sheridan at investinglive.com.

Bridgewater said Chinese equities remain attractive after a strong rally helped its onshore fund deliver its best performance in at least five years. Summary:Bridgewater remains constructive on China equitiesOnshore fund gains about 45% in 2025Performance far outpaces CSI 300Policy support and sentiment key driversModest increase in China exposure plannedBridgewater Associates has reaffirmed its constructive stance on Chinese equities, pointing to improving profit expectations and supportive policy signals after its onshore hedge fund delivered a standout performance in 2025.In a December letter to investors, Bridgewater’s Shanghai-based private fund management arm said Chinese stocks “remain attractive to some extent” and described its outlook as “moderately optimistic,” both in absolute terms and relative to other asset classes. The firm cautioned that its assessment reflected conditions at the end of last year and remains subject to change as macro and policy dynamics evolve.The comments follow a strong year for Bridgewater’s onshore All Weather Plus fund, which allocates across equities, bonds and commodities. The fund gained 9.1% in the fourth quarter, lifting its full-year return to about 44.5% before fees, comfortably outperforming the CSI 300 Index, which rose around 18% over the same period.Bridgewater attributed the performance to a combination of supportive domestic policy messaging, easing external headwinds and improved market sentiment, including optimism linked to the success of Chinese AI firm DeepSeek. While persistent pressures such as trade tensions caused bouts of volatility during the year, the firm said its diversified, balanced strategy helped dampen drawdowns and capture opportunities across asset classes.The strong result capped a record year for Bridgewater globally and reinforced its position in China’s fast-growing onshore hedge fund market, estimated at around 7 trillion yuan. Assets under management in China climbed to roughly 60 billion yuan in 2025, the highest among foreign hedge fund managers, and performance compared favourably with the roughly 22% average return for Chinese multi-asset hedge funds tracked by PaiPaiWang.Looking ahead, Bridgewater said it expects China’s broadly supportive policy stance to remain in place. The firm added that policymakers retain both the willingness and tools to stabilise growth when needed, prompting it to maintain a modest increase in its exposure to China-related risk assets. This article was written by Eamonn Sheridan at investinglive.com.

The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a +/- 2% range, around a central reference rate, or "midpoint."Previous close 6.9640 PBoC injects 210.2bn yuan through 7-day reverse repos at 1.40% This article was written by Eamonn Sheridan at investinglive.com.

A sharp rebound in Australian employment sent the jobless rate lower and pushed markets to price a growing chance of an RBA hike as soon as February. Data post earlier:Australian December 2025 unemployment rate 4.1% (expected 4.4%, prior 4.3%)Summary:December jobs surge far exceeds expectationsFull-time employment drives reboundUnemployment rate drops to 4.1%AUD jumps (hit a 15 month high) as rate hike odds riseCPI now key for February RBA call Australia’s labour market delivered a decisive upside surprise in December, with a sharp rebound in employment and a notable fall in the unemployment rate reinforcing expectations that the Reserve Bank of Australia may move closer to tightening policy.Net employment jumped 65,200 in December, the strongest gain in eight months and a significant turnaround from November’s revised 28,700 decline. The outcome was well above market expectations for a gain of around 30,000 and points to a clear payback after several softer monthly results. Much of the strength came from full-time employment, which rose 54,800 after a sharp fall in November, signalling a more durable improvement in labour demand rather than a reliance on part-time roles.The unemployment rate fell sharply to 4.1%, a seven-month low, from 4.3% previously. Markets had been braced for a rise toward 4.4%, making the decline all the more striking. The participation rate edged up to 66.7% from 66.6%, but was not sufficient to absorb the surge in job creation, allowing the jobless rate to fall. Hours worked also rose 0.4%, reinforcing the picture of strengthening labour utilisation.While the monthly labour force series remains volatile, the December quarter outcome adds weight to the argument that labour market slack is not building as quickly as policymakers had anticipated. The unemployment rate averaged 4.2% across the December quarter, below the RBA’s forecast of 4.4%, suggesting underlying conditions remain tighter than expected.Markets responded swiftly. The Australian dollar jumped following the release, while interest-rate expectations shifted meaningfully. Pricing is at roughly a 50% chance of a February 3 rate hike, with May fully priced for the first increase. The strength of the labour data heightens the focus on next week’s quarterly CPI report (January 28 11.30am Sydney time), which is likely to be pivotal in determining whether the RBA moves sooner rather than later. This article was written by Eamonn Sheridan at investinglive.com.

Japan’s exports extended their recent run in December, but a sharp fall in US-bound shipments and stronger imports narrowed the trade surplus. The data is here:Japan data: December trade surplus smaller than expected (import jump, export growth slow)Adding more now. Summary:Japan exports rise for fourth straight monthDecember growth misses forecasts at 5.1% y/yUS-bound shipments fall sharplyImports jump, narrowing trade surplusBOJ remains alert to inflation risksJapan’s exports rose for a fourth consecutive month in December, supported by a weaker yen and solid demand outside the United States, though the headline gain fell short of market expectations and masked a sharp drop in US-bound shipments.Government data showed export values increased 5.1% year-on-year in December, easing from a 6.1% rise in November and undershooting the median forecast for a 6.1% gain. The latest figures nonetheless extend a run of monthly increases, highlighting the continued support provided by currency depreciation and resilient overseas demand.The regional breakdown was mixed. Exports to the United States fell 11.1% y/y, reflecting softer US demand and the lagged effects of trade policy uncertainty. In contrast, shipments to China rose 5.6% y/y, helping to offset weakness elsewhere and reinforcing signs of stabilisation in regional trade flows. Officials also pointed to the weaker yen as a key factor boosting export values, improving price competitiveness for Japanese manufacturers.Imports grew 5.3% y/y, comfortably exceeding expectations for a 3.6% rise, signalling firmer domestic demand and higher input costs. As a result, Japan recorded a trade surplus of ¥105.7 billion, significantly smaller than forecasts for a surplus of around ¥356.6 billion.Overall export performance in recent months has been underpinned by a combination of yen depreciation, a still-firm US economy earlier in the quarter, and the September trade agreement with Washington that established a baseline 15% tariff on most goods. While US-bound exports weakened in December, the broader impact from US tariffs has so far proven milder than initially feared.Reflecting easing trade concerns and improved momentum, the government recently revised up its economic growth forecast for the fiscal year ending in March to 1.1%, from 0.7%. Against this backdrop, the Bank of Japan raised its policy rate to 0.75% in December, the highest level in three decades, and is widely expected to reaffirm its readiness for further tightening as yen weakness and wage dynamics keep inflation risks in focus. This article was written by Eamonn Sheridan at investinglive.com.

Posting this very solid jobs data, I'll be back with more on this separately. More:Australia jobs surge in December, lifting AUD and RBA rate hike expectationsFor background, preview is here:Economic and event calendar in Asia: Australian jobs report, unemployment expected to riseFrom a now unemployed graphic artiste ;-) This article was written by Eamonn Sheridan at investinglive.com.

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

A theoretical estimate of jet-engine power capacity has revived interest in the US aircraft “Boneyard,” though real-world hurdles remain formidable. Summary:Retired US military aircraft engines flagged as power sourceTheoretical capacity estimated near 40,000 MWTurbofan engines offer most potentialConversion costs and logistics remain prohibitiveConcept highlights data-centre power constraintsThe vast “Boneyard” of retired US military aircraft in the Arizona desert has long been seen as a graveyard for ageing hardware. Now, amid a global scramble for fast-deployable power, it is being floated as a potential, if highly theoretical, source of electricity generation.Located at Davis-Monthan Air Force Base, the Boneyard houses roughly 4,000 retired military aircraft. With data-centre operators increasingly turning to modified jet engines as temporary or back-up power sources, the question has emerged: could the engines from these aircraft be repurposed to generate electricity at scale?On paper, the numbers are eye-catching. A rough estimate suggests the engines once used by aircraft in storage could theoretically deliver up to 40,000 megawatts (MW) of capacity, around 10% more than Arizona’s current total generating capacity. But this headline figure comes with heavy caveats. The estimate reflects theoretical output, not deployable power, and assumes engines remain intact, serviceable, and available after an average of more than a decade in storage.The largest potential contribution would come from turbofan engines, which could account for around 32,000 MW of capacity. Aeroderivative power turbines already exist, using aircraft engine cores adapted for electricity generation. For example, GE Vernova’s LM6000 turbine is derived from the CF6 aircraft engine family, and refurbished CF6 units are already commercially available. Even so, purpose-built power turbines are typically more efficient and optimised than retrofitted aviation engines, raising questions over cost and performance.Other engine types offer far less promise. Turboshaft engines from retired helicopters may collectively amount to around 1,600 MW, but their small size, removal complexity and inferior efficiency compared with modern diesel generators make large-scale deployment questionable. Turboprop engines, including those from aircraft such as the C-130 Hercules, could theoretically add another 7,300 MW, though conversion costs would again be substantial.In practice, the idea looks more like an illustration of energy scarcity than a near-term solution. While repurposing some engines may be feasible for niche applications, the Boneyard is unlikely to become a meaningful power source without costs and logistical hurdles overwhelming the benefits. US Energy Administration (EIA) the source for this ... and its not even April 1 ;-) This article was written by Eamonn Sheridan at investinglive.com.

Both exports and imports solid in the month, although exports did miss expectations. More on the data here:Japan trade data recap - exports rise again in December, but US demand dragsExports to:EU +2.6% y/yAsia +10.2% y/yUS -11.1% y/yChina +5.6% y/y This article was written by Eamonn Sheridan at investinglive.com.

South Korea’s economy unexpectedly shrank in Q4 as weak investment and exports overwhelmed modest gains in consumption. Summary:South Korea GDP contracts 0.3% q/q in Q4Biggest quarterly contraction since late 2022Investment and exports drag heavily on growthConsumption offers only modest supportFull-year growth slows to 1.0% in 2025South Korea’s economy unexpectedly contracted in the final quarter of 2025, delivering its sharpest quarterly downturn in three years and underscoring growing headwinds from weak investment, soft trade flows and fragile domestic demand.Advance estimates from the Bank of Korea showed gross domestic product shrank 0.3% quarter-on-quarter on a seasonally adjusted basis in the October–December period, sharply missing market expectations for a 0.1% expansion. The contraction followed a strong 1.3% rebound in the third quarter, highlighting increased volatility in growth momentum toward year-end.On an annual basis, GDP grew 1.5% year-on-year, slowing from 1.8% in the previous quarter and undershooting forecasts for a 1.9% rise. The Q4 outcome marked the weakest quarterly performance since late 2022 and capped a year of slowing expansion for Asia’s fourth-largest economy.The breakdown of activity pointed to broad-based weakness. Facility investment fell 1.8% q/q, reflecting subdued corporate spending amid elevated borrowing costs and lingering uncertainty over global demand. Construction investment dropped 3.9% q/q, extending a prolonged downturn in the property and infrastructure sectors. External demand also weighed heavily, with exports declining 2.1% q/q and imports down 1.7% q/q, signalling both softer global trade conditions and weaker domestic absorption.Private consumption offered only limited support, rising a modest 0.3% q/q, suggesting households remain cautious despite easing inflation pressures. Analysts noted that the consumption lift was insufficient to offset sharp declines in investment and trade.For 2025 as a whole, South Korea’s economy expanded 1.0%, down from 2.0% growth in 2024 and marking the slowest annual growth rate since 2020. The weaker trajectory adds to challenges facing policymakers as they balance growth support against financial stability risks, particularly with global demand uneven and domestic investment yet to show sustained recovery. This article was written by Eamonn Sheridan at investinglive.com.

Japan’s bond market is testing the credibility of fiscal policy as election-driven tax promises collide with rising yields. Reuters have a good piece up I've summarised here. In brief:Takaichi’s food tax pledge has shaken Japan’s bond marketInvestors fear erosion of long-standing fiscal disciplineJGB yields surged to multi-decade highsDebt servicing and ageing costs amplify risksPolicy tools offer limited, short-term reliefJapan’s bond market turmoil sparked by Prime Minister Sanae Takaichi’s pledge to suspend the consumption tax on food may prove difficult to contain, as investors question whether the government is undermining long-standing fiscal discipline at a sensitive moment for the market.Takaichi’s promise to halt the 8% food levy for two years, a policy once considered politically untouchable, has revived concerns about Japan’s ability to manage the world’s heaviest public debt burden. Even her mentor, former prime minister Shinzo Abe, avoided cutting the consumption tax during the height of “Abenomics,” ultimately opting instead to push through a politically costly tax increase in 2019.Market anxiety has surfaced quickly. The yield on the 10-year Japanese government bond surged nearly 20 basis points over two sessions earlier this week to a 27-year high, while super-long maturities recorded record sell-offs reminiscent of the UK’s 2022 “Truss shock,” when unfunded tax cuts triggered a collapse in confidence. Although Japan’s situation differs structurally, with limited pension leverage and a more cautious central bank, investors are increasingly uneasy about fiscal slippage at a time when the Bank of Japan is stepping back from years of aggressive bond buying.Japan’s vulnerabilities are acute. Roughly a quarter of the national budget is already devoted to debt servicing, while ageing demographics are driving relentless growth in social welfare spending. Consumption tax receipts account for more than one-fifth of total revenue, making the proposed suspension — estimated to cost around ¥5 trillion annually — particularly destabilising. Critics argue that once lowered, consumption taxes are politically difficult to restore.While the government retains technical options to slow the sell-off, including bond buybacks, trimming issuance, or BOJ emergency purchases, analysts warn these tools offer only temporary relief. With elections looming and political parties competing over tax cuts and spending promises, markets fear that fiscal prudence is being sacrificed for electoral gain.Unless the government outlines a credible funding framework after the election, investors warn bond market volatility may persist, raising the risk that Japan’s fiscal credibility faces a more lasting test. This article was written by Eamonn Sheridan at investinglive.com.

The IEA lifted its oil demand outlook but warned supply growth continues to overwhelm consumption, keeping surplus risks firmly in place. Summary:IEA raises 2026 oil demand growth forecast to 930k bpdSupply growth still far exceeds demand at 2.5mbpdDecember output fell, but surplus remains intactRefinery maintenance risks renewed oversupply in 1QInventories remain elevated, including oil held at seaThe International Energy Agency has raised its forecast for global oil demand growth this year, citing a firmer economic outlook and lower crude prices, but cautioned that supply is still expected to exceed consumption, leaving the market structurally oversupplied.In its latest monthly report, the IEA said global oil demand is now projected to rise by around 930,000 barrels per day (bpd), up from a previous estimate of 860,000 bpd. The upgrade reflects improved macro conditions and some price-led support for consumption, following demand growth of roughly 850,000 bpd last year.However, the agency simultaneously lifted its supply growth forecast to 2.5 million bpd, reinforcing expectations that production will continue to outpace demand in 2026. While global supply fell by about 350,000 bpd in December, the IEA said this only modestly reduced the surplus that has built up since the start of the year.Production from the OPEC+ group edged lower in December, slipping by around 20,000 bpd as output declined across several Middle Eastern producers, partially offset by stronger Russian flows. Non-OPEC+ supply also fell by roughly 250,000 bpd, largely due to seasonal declines in biofuel output.Despite these declines, the agency warned that the near-term balance remains fragile. With seasonal refinery maintenance approaching, crude demand is set to soften further, increasing the risk that a sizeable surplus re-emerges unless producers implement additional supply restraint.The IEA estimates the overhang in global crude and condensate markets averaged around 1.1 million bpd last year, driving a sharp rise in inventories. Total crude stocks increased by more than 400 million barrels, with a large share held at sea, including volumes linked to sanctioned producers such as Russia, Iran and Venezuela.While geopolitical risks remain elevated, the agency said it is still too early to judge whether recent developments in Iran and Venezuela will materially tighten supply. For now, the IEA argues the market remains well supplied, with surplus risks skewed to the downside. This article was written by Eamonn Sheridan at investinglive.com.

New Zealand electronic retail card spending data covers about 68% of core retail sales in the country. It's the main measure of monthly retail activity.NZD/USD is barely changed on the data. This article was written by Eamonn Sheridan at investinglive.com.

Via oilprice.com:---Expectations I had seen centred on:Headline crude +1.7 mn barrelsDistillates -0.15 mn bblsGasoline +2.5 mnThis data point is from a privately-conducted survey by the American Petroleum Institute (API).It's a survey of oil storage facilities and companiesThe official report is due Wednesday morning US time.The two reports are quite different.The official government data comes from the US Energy Information Administration (EIA)Its based on data from the Department of Energy and other government agenciesWhereas information on total crude oil storage levels and variations from the previous week's levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.the EIA report is held to be more accurate and comprehensive than the survey from the API ---Crude prices ended little changed Wednesday (Europe/US time) after a volatile session, with trade dominated more by political headlines than by fundamental supply-demand signals. Prices initially softened in overnight dealings before edging higher through the European morning, despite the absence of a clear catalyst. Market participants instead remained focused on US President Donald Trump’s high-profile appearances in Davos, which helped drive intraday swings across broader risk assets.Geopolitical rhetoric may have offered limited underlying support. US media outlet NewsNation reported comments from Trump warning that Iran would be “wiped off the face of the Earth” should it attempt an assassination against him, a remark that likely added a modest geopolitical risk premium. That support faded later in the session, however, as crude came under mild pressure following reports that India’s Reliance Industries is set to resume purchases of Russian oil in February after a one-month pause, easing concerns around near-term supply availability.Energy markets showed little immediate reaction during Trump’s formal address in Davos. Instead, sentiment shifted more clearly toward a risk-on tone after Trump said he would not use force against NATO in discussions around a potential Greenland acquisition. Risk appetite improved further after he cancelled planned February 1 tariffs on European nations following what he described as a constructive meeting with NATO Secretary General Mark Rutte. This article was written by Eamonn Sheridan at investinglive.com.

Australia’s December labour force report is expected to show a rebound in employment after a surprisingly weak November, but the broader picture remains one of a labour market that is gradually cooling rather than sharply deteriorating.Economists at Westpac note that employment fell by 21.3k in November, extending a run of softer outcomes in recent months. On a three-month average basis, employment growth is now tracking at around 1.4% year-on-year, a pace that is clearly below Australia’s long-run average and consistent with a slowing labour market. That said, Westpac cautions against over-interpreting a single month’s result, particularly given increasingly volatile data since the pandemic as changes in leave-taking behaviour continue to complicate seasonal adjustment.Importantly, November’s employment decline was not accompanied by a rise in unemployment. Instead, the unemployment level fell modestly, as the participation rate dropped to 66.7%. This fall in participation effectively cushioned the unemployment rate, which held steady at 4.3%. However, Westpac highlights that on a three-month average basis the unemployment rate is clearly trending higher, now sitting around 4.4% compared with 4.1% six months earlier.Looking ahead to December, Westpac expects a modest bounceback, forecasting employment growth of around 40k. With participation expected to recover slightly to 66.8%, this would see the unemployment rate round up to 4.4%, marking roughly a 0.4 percentage point increase over the past year and reinforcing the narrative of gradual softening rather than abrupt weakness.A similar rebound story underpins the outlook from Commonwealth Bank of Australia, although with a slightly more optimistic tone. CBA also points to November’s choppy result, which saw employment fall by 27.5k and participation decline by 0.2 percentage points. Drawing on historical patterns, the bank notes that when both employment and participation fall materially in the same month, there is a high probability of a rebound in the following survey. On that basis, CBA forecasts employment to rise by around 35k in December, with participation lifting to 66.8% and the unemployment rate remaining unchanged at 4.3% to end 2025.Beyond the near-term volatility, CBA remains constructive on the labour market outlook. The bank points to internal indicators suggesting more consistent monthly employment gains ahead, alongside improving economic growth and rising utilisation measures. Together, these signals are seen as supportive of sustained employment growth through 2026, even as the pace of expansion remains more moderate than in the post-pandemic boom.**In markets, a broadly in-line or modestly stronger December labour force outcome would be unlikely to generate a major reaction, but the balance of risks still leans toward a slightly firmer AUD if employment rebounds as expected. A solid headline jobs gain and a recovery in participation would reinforce the view that the labour market is cooling only gradually, keeping the Reserve Bank of Australia cautious. That backdrop would tend to support the Australian dollar at the margin, particularly against low-yielding peers, though any upside is likely to be capped by the steady rise in the unemployment trend and the absence of renewed wage pressure. For equities, the ASX would likely take a resilient labour print in stride: stronger employment supports the domestic growth outlook and consumer confidence, but also nudges, at the margin, closer to rate hikes (not in prospect at the moment though). As a result, gains in cyclical and consumer-linked stocks could be offset by relative underperformance in rate-sensitive sectors such as real estate and utilities, leaving the broader index range-bound rather than directionally driven by the data. This article was written by Eamonn Sheridan at investinglive.com.