Key Highlights

• The PBoC launches a package of easing measures to support the economy.
• Japan’s leading opposition parties agree to unite to challenge the ruling LDP.
• U.S. ambassador to Belgium notes U.S.-EU relations are strong despite “fundamental differences” over Greenland.

Chart of the Day

Latin American equities see volume surge at turn of the year

^{Source: BNY}

The dominant role of equity activity in global sentiment deserves special attention at present, and our new iFlow equity volumes figures indicate material differences between FX and equity activity.

Crucially, there isn’t the same seasonal surge around IMM dates that is so prevalent in FX, and the trends on a monthly basis align better with quarterly smoothed flows. The main point of seasonal adjustment is during holiday periods, with the beginning of the year and summer months tending to generate material declines in volumes. 

This year, there is a general sense that markets have been quick out of the gates due to event risk and there are some initial signs in place. Although the dip in volumes around the turn is present, current global equity volume scores on a smoothed basis are not far off levels seen in Q3 last year, and well above the same period in 2025. Geopolitics have probably forced the markets’ hand to begin the year on a strong note in activity terms, but performance levels have probably led to investors being forced to allocate early, in a self-fulfilling “TINA” (There Is No Alternative) market.

Latin America is also a very active market, as geopolitics and mining have featured prominently in recent weeks. The region ended 2025 on a very strong note and relative to other markets, hitting the highest volume scores since early 2024. On a quarterly smoothed basis historical highs were also attained. The starting point was so high that EM Americas equities’ dip in activity at the beginning of the year – while significant in absolute terms – still helped maintain a high relatively quarterly flow average at around 2.4 – significantly higher than other regions. Given the current focus on real yields and commodity dynamics, on top of a relatively low positioning base, we expect activity levels to remain solid.

What's Changed?

Risk sentiment has turned positive after a mixed APAC session, led by softer tones on Iran from President Trump, better growth in Germany and the U.K., and a 25bp rate cut by the PBoC. By contrast, the Bank of Korea kept rates on hold and sounded a hawkish note, sending 10y yields in South Korea sharply higher. Meanwhile, political party shifts in Japan added to uncertainty, leading to equity selling there. For USD, momentum is stalling even as oil and metal prices reverse.

• AI revival. The rotation trade from technology to small caps in the U.S. stalled overnight. Markets focused on TSMC earnings and on plans for OpenAI and Anthropic IPOs. OpenAI also forged a new computing partnership with Cerebras, adding to future revenue and adoption expectations.
• Iranian pledges. President Trump has walked back on threats to attack Tehran over killing protestors, after officials there pledged not to carry out hangings. Oil fell 3% and is back below $60/barrel WTI.
• China cut rates, while South Korea stood pat. The PBoC announced a 25bp cut in the 1y relending rate to 1.25%. In contrast, the BoK removed the easing bias from its statement, shifting to neutral policy and citing FX concerns. Nevertheless, CNY remains bid, while KRW is still under pressure.
• Germany grew for the first time since 2022. The fiscal spending and stabilization in household spending lifted the German economy back to growth in 2025. Hits from energy and industrial exports are still a concern, however. The EU natural gas price rose 4% today to reach a 14-week high after President Trump blamed Volodymyr Zelenskyy not Vladimir Putin for holding up peace deals.

Bottom line: The shift back to bid for equities has left fixed income important again. The locked ranges in U.S. yields can’t hold forever. The focus for the day will be on more big bank earnings, with MS, GS and Blackrock leading. The host of Fed speakers and the ongoing pressure on Fed Chair Jerome Powell will be another factor, as President Trump stated yesterday it’s “too soon” to name his replacement. Then we have the ongoing economic data flow, with jobless claims and the Philadelphia Fed business outlook. A bounce-back in growth, stable prices and steady jobs are the expectation, so anything that breaks this view will have implications for bonds and USD. Hopes for the day are high, as in 2025 Thursday was always a boom not a bust for risk. Despite softer tones, however, markets cannot live in the past; they must trade for the future.

What You Need to Know

The People’s Bank of China has launched a large program of stimulus efforts to support the economy. The central bank will cut all structural monetary policy tool rates by 25bp, lowering the one-year relending rate to 1.25%, and expanding the quota for technology innovation and equipment upgrade loans from CNY 800bn to CNY 1.2trn, extending eligibility to innovative private SMEs. New corporate and mortgage loan rates were both around 3.1% in December. Outstanding total social financing rose 8.3% y/y, and M2 money supply increased by 8.5% y/y. Authorities will also raise agriculture and SME relending quotas by CNY 500bn, boost private SME support, expand liquidity provision and cut minimum downpayments on commercial property loans to 30%. CSI 300 +0.2% to 4751.43, USDCNY +0.062% to 6.9686, 10y CGB 0bp to 1.849%.

South Korea’s central bank held its benchmark interest rate steady at 2.5% for the fifth consecutive meeting, signaling a shift to a neutral monetary policy stance. The BoK removed references to potential rate cuts, focusing instead on financial stability amid a weakening won and housing market risks. Inflation remains near target, supporting this cautious approach. The BoK has kept its 2026 growth forecast at 1.8%, citing strong exports and recovering private consumption. U.S. Treasury Secretary Scott Bessent’s pointed remarks on KRW weakness this week will likely add to the pressure to steady the exchange rate, but this would require measures beyond simple monetary adjustments. KOSPI +1.576% to 4797.55, USDKRW -0.236% to 1467.3, 10y KTB +0.3bp to 3.42%.

Japan’s main opposition parties, the Constitutional Democratic Party of Japan and Komeito, have agreed to form a new party, aiming to unite centrist forces against the ruling camp and changing the country’s political landscape. The move follows Komeito’s decision to end its 26-year coalition with the Liberal Democratic Party shortly after Prime Minister Sanae Takaichi won the LDP leadership in October, with speculation of a February election accelerating talks. Initially, only lower house lawmakers will join the new party, while upper house and local lawmakers will remain in their original parties. Komeito plans to withdraw candidates in single-seat districts to back CDPJ nominees, potentially mobilizing its Soka Gakkai support base against the ruling coalition, which holds a narrow lower house majority. Nikkei -0.425% to 54110.5, USDJPY +0.013% to 158.67, 10y JGB -2.5bp to 2.163%.

President Trump has signed a proclamation under Section 232 of the Trade Expansion Act of 1962 to address national security risks from imports of semiconductors, semiconductor manufacturing equipment and derivatives. He directed the U.S. Secretary of Commerce and Trade Representative to negotiate or continue agreements to mitigate these risks. A 25% tariff was imposed on certain advanced computing chips, including NVIDIA H200 and AMD MI325X, exempting those supporting U.S. technology supply chain development. Broader tariffs and a tariff offset program to boost domestic semiconductor manufacturing may be introduced soon. The same directive also permitted the U.S. secretary of commerce and trade representative to negotiate agreements with trading partners to address national security risks from imports of processed critical minerals and their derivative products (PCMDPs). The administration aims to establish price floors for PCMDP trade with allies. The secretary of commerce will report any need for further action, and the president may take additional measures if agreements are not reached or enforced within 180 days. S&P Mini +0.327% to 6989, DXY +0.121% to 99.174, 10y UST +1bp to 4.142%.

What We're Watching

U.S. January Empire Manufacturing Survey forecast higher at 1 from -3.9 in December.

U.S. January Philadelphia Fed business outlook expected to improve to -1.0 from -8.8.

U.S weekly jobless claims are expected at 215k, from 208k the week prior.

U.S. November import price index and export price index are expected at -0.1% m/m (September: 0% m/m) and 0% m/m (September: 0% m/m), respectively.

Central bank speakers: The Fed’s Raphael Bostic shares brief remarks at the Metro Atlanta Chamber’s board of directors meeting; Fed Governor Michael Barr participates in a panel discussion on stablecoins at the Wharton Future of Finance Forum; Richmond Fed President Tom Barkin speaks at the Virginia Bankers Association Financial Forecast 2026; Kansas City Fed President Jeff Schmid speaks on his economic outlook and monetary policy at the Economic Club of Kansas City.

U.S. Treasury sells $95bn in 4-week bills and $90bn in 8-week bills.

What iFlow is Showing Us

Mood: iFlow Mood was unchanged following the recent downtrend, helped by the stabilization in equity selling momentum. Core sovereign bond flow dynamics remain on the sell side. iFlow Mood is at 0.130.

FX: Mixed flows across the iFlow universe. Notable flows were SGD inflows vs. CZK and BRL outflows. USD scored holdings widened further into the underheld zone.

FI: Australian, Peruvian and Polish government bonds were significantly bought, followed by Colombian and Indonesian government bonds. Israeli, South African and South Korean government bonds were most sold.

Equities: Peruvian, Swedish, Turkish and Indonesian equities were significantly bought, against large-scale selling in the U.S., Chile, South Africa and South Korea. Within EM APAC, the materials sector was strongly bought, against large-scale selling in the financial sector. Note the lessening selling pressure in the information technology sector. 

Quotes of the Day

“We often refuse to accept an idea merely because the tone of the voice in which it has been expressed is unsympathetic to us.” – Friedrich Nietzsche

“Nothing is softer or more flexible than water, yet nothing can resist it.” – Lao Tzu

Economic Details

The euro area’s international trade in goods in November recorded a surplus of €9.9bn, down from €15.4bn a year earlier, as exports fell 3.4% y/y to €240.2bn while imports declined 1.3% y/y to €230.3bn. The narrower surplus reflected weaker balances across manufactured goods, partly offset by an improvement in energy, where the deficit narrowed to €-17.6bn from €-24.3bn. Over January-November, the euro area posted a cumulative surplus of €152.7bn, slightly below the €156.8bn recorded a year earlier, with exports up 2.3% y/y and imports up 2.6% y/y. The EU also posted a November surplus of €8.1bn, down from €11.8bn y/y. Euro Stoxx 50 +0.465% to 6032.99, EURUSD -0.069% to 1.1636, BBG AGG Euro Government High Grade EUR +0.7bp to 2.968%.

Euro area industrial production in November rose by 0.7% m/m, while EU output increased by 0.2% m/m, according to Eurostat, following identical growth rates in October. On a y/y basis, industrial production expanded by 2.5% in the euro area and by 2.2% in the EU. Within the euro area, capital goods led the m/m increase at 2.8%, while intermediate goods rose 0.3%, energy fell 2.2%, durable consumer goods declined 1.3% and non-durable consumer goods dropped 0.6%. On an annual basis, euro area capital goods increased 3.6%, non-durable consumer goods rose 3.4% and intermediate goods grew 1.1%, while durable consumer goods fell 2.1%. At country level, Ireland, Cyprus and Croatia recorded the strongest y/y gains.

Germany’s 2025 real GDP rose 0.2% y/y, or 0.3% on a calendar-adjusted basis, marking a return to modest growth after two years of recession. This was driven by higher private and government consumption. Gross value added fell 0.1% y/y, with manufacturing down 1.3% and construction down 3.6%, while services were mixed, led by gains in trade, transport and public services. Private consumption increased 1.4% y/y and government consumption 1.5% y/y, while gross fixed investment declined 0.5% y/y, including a 2.3% fall in equipment. Exports slipped 0.3% y/y as goods exports fell, while imports rose 3.6% y/y. Employment was broadly flat at 46.0 million. The fiscal deficit narrowed to 2.4% of GDP. DAX -0.111% to 25258.28, EURUSD -0.069% to 1.1636, 10y Bund +1bp to 2.824%.

Germany’s December wholesale prices rose 1.2% y/y, easing from 1.5% in November, while falling 0.2% m/m. The annual increase was driven mainly by non-ferrous ores, metals and semi-finished products, which surged 34.6% y/y and rose 4.9% m/m. Wholesale prices for food, beverages and tobacco were up 2.4% y/y, led by sugar, confectionery and bakery products (+12.8% y/y), coffee, tea and spices (+7.4% y/y), and meat (+5.0% y/y). Offsetting pressures came from lower prices for grains and animal feed (-7.3% y/y), dairy products and oils (-3.3% y/y), and mineral oil products (-3.1% y/y; -2.7% m/m). On an annual average basis, wholesale prices in 2025 increased 1.0% compared with 2024.

France’s December CPI rose 0.1% m/m after a 0.2% decline in November, while inflation eased to 0.8% y/y from 0.9%. The m/m increase was driven by services prices, up 0.4%, reflecting a seasonal rebound in transport costs, alongside a modest rise in food prices. These were partly offset by a 1.6% fall in energy prices, led by cheaper petroleum products, and a further decline in manufactured goods prices. On a y/y basis, inflation softened as energy prices fell more sharply at -6.8%, while services inflation slowed slightly, despite firmer food prices. On an annual average basis, CPI inflation slowed to 0.9% in 2025 from 2.0% in 2024, with lower energy prices the main driver. CAC 40 -0.247% to 8310.42, EURUSD -0.069% to 1.1636, 10y OAT +0.7bp to 3.497%.

France’s rent reference index (IRL) in the fourth quarter of 2025 rose 0.79% y/y, easing from a 0.87% increase in the previous quarter. The IRL level stood at 145.78, marking a continued deceleration from earlier peaks seen in 2022–23, when annual growth was capped by government measures. The slowdown reflects moderating inflation dynamics feeding into the index, which is mechanically linked to the twelve-month average of CPI excluding tobacco and rents. In overseas regions governed by Article 73 of the Constitution, the IRL also rose 0.79% y/y to 142.98, while in Corsica it increased 0.79% y/y to 141.59. The next IRL release is scheduled for April.

Italy’s industrial production in November rose by 1.5% m/m, with output up 1.1% compared with the previous three-month period, according to seasonally adjusted data. Italy’s industrial production in November increased by 1.4% y/y on a calendar-adjusted basis. All main industrial groupings recorded m/m gains, led by energy at 3.9%, capital goods at 2.1%, consumer goods at 1.1% and intermediate goods at 0.1%. On a y/y basis, capital goods rose by 3.3%, energy by 2.0% and intermediate goods by 1.0%, while consumer goods declined by 0.8%. By sector, pharmaceuticals increased by 8.7%, electronics by 5.8% and electrical equipment by 5.1%, while coke and refined petroleum fell by 4.4%. FTSE MIB +0.535% to 45891.74, EURUSD -0.069% to 1.1636, 10y BTP +0.3bp to 3.453%.

Italy’s financial accounts in the third quarter showed households acquiring financial assets worth €17.9bn, according to Banca d’Italia data. This was driven by purchases of managed savings instruments (€22.2bn) and higher deposits (€9.7bn), which more than offset net sales of shares and other equity (€-15.8bn). Over the same period, household financial liabilities increased by €4.7bn, mainly reflecting a €3.7bn rise in medium- and long-term bank loans. Non-financial corporations recorded net financial asset acquisitions of €22.0bn, supported by higher deposits (€6.9bn), equity purchases (€7.3bn), managed savings (€2.7bn) and debt securities (€2.5bn). Their liabilities rose by €3.4bn, as reduced borrowing (€-4.5bn) was outweighed by equity issuance (€4.2bn) and bond issuance (€1.7bn).

Spain’s December CPI inflation slowed to 2.9% y/y, down from 3.0% in November, while prices were up 0.3% m/m. The moderation in headline inflation was driven mainly by transport, where inflation eased to 1.8% y/y due to lower fuel prices compared with a year earlier, and by leisure and culture, which slowed to 0.5% y/y as package holiday price increases were smaller than last December. Offsetting this, food and non-alcoholic beverages inflation accelerated to 3.0% y/y, reflecting higher prices for vegetables, pulses, oils and fats. Core inflation was unchanged at 2.6% y/y. The harmonized CPI eased to 3.0% y/y from 3.2%, while also rising 0.3% m/m. In other figures, the quarterly housing lease benchmark index increased by 2.32% y/y for Q4 2025. IBEX 35 -0.083% to 17709, EURUSD -0.069% to 1.1636, 10y Bono +0.1bp to 3.216%.

The Netherlands December 2025 unemployment rate remained steady at 4.0% of the labor force (aged 15-74), with 410,000 people out of work, unchanged from the previous three months. The employed labor force held at 9.8 million, and the total labor force was 10.3 million. Youth unemployment (ages 15-25) accounted for 165,000. The number of unemployment benefits recorded by UWV decreased by 1.4% m/m to 191,000 but rose 9.5% y/y. Sectoral increases in benefits were noted in the public sector (+25.6% y/y), manufacturing (+23.5%) and agriculture (+23.4%). Labor market flows showed balanced inflows and outflows between employment and unemployment. AEX +1.071% to 1007.43, EURUSD -0.069% to 1.1636, 10y NGB +0.9bp to 2.902%.

U.K. GDP in the three months to November 2025 grew by 0.1% compared with the three months to August, following flat growth in the three months to October and 0.1% growth in the three months to September. Services output rose 0.2%, after a 0.1% increase previously, while production output fell 0.1%, reflecting weaker motor vehicle manufacturing and matching the prior three-month decline. Construction output dropped 1.1%, after a 0.3% fall, marking the weakest three-monthly reading since March 2023. In November, GDP rose 0.3% m/m, reversing a 0.1% m/m fall in October. Services expanded 0.3% m/m, production increased 1.1% m/m, and construction contracted 1.3% m/m. FTSE 100 +0.287% to 10213.6, GBPUSD +0.008% to 1.3444, 10y gilt +1bp to 4.35%.

The U.K.’s industrial production in the three months to November 2025 fell 0.1% compared with the three months to August, driven primarily by a 0.3% decline in manufacturing and a 1.0% fall in mining and quarrying, partly offset by gains in electricity and gas (+1.1%) and water supply and sewerage (+0.4%). Within manufacturing, seven out of 13 subsectors contracted, led by transport equipment (-9.4%), reflecting a sharp 18.9% drop in motor vehicle output. This followed a 29.5% fall in September linked to a cyber incident, although partial recovery was evident in October and November. On a m/m basis, production rose 1.1% in November, entirely due to manufacturing strength (+2.1%), with transport equipment up 10.7%.

The U.K.’s services output in the three months to November 2025 rose by 0.2% compared with the three months to August. Eight of the 14 services sectors recorded growth, led by real estate activities (+0.4%) and administrative and support service activities (+0.8%), while five sectors declined, with professional, scientific and technical activities the main drag (-0.8%). On a m/m basis, services output increased by 0.3% in November, rebounding from a 0.3% m/m fall in October and following a 0.4% rise in September. Seven sectors expanded m/m, with the largest positive contribution from professional, scientific and technical activities (+1.7%), driven by accounting and tax consultancy (+4.6%) and scientific research and development (+4.5%), while real estate activities (-0.4%) was the largest monthly detractor.

The U.K.’s trade position in November showed mixed monthly movements alongside a wider three-month deterioration. Goods imports fell by £0.6bn m/m (1.1%), reflecting a £0.9bn (3.6%) decline in imports from non-EU countries, partly offset by a £0.3bn (1.1%) rise in imports from the EU. Goods exports increased by £0.6bn m/m (1.9%), driven by higher shipments to both the EU (£0.4bn, 2.8%) and non-EU markets (£0.2bn, 1.1%). Exports of goods to the U.S., including precious metals, declined by £0.5bn (10.4%), while imports from the U.S. fell by £0.9bn (12.3%). Over the three months to November, the total goods and services trade deficit widened by £2.7bn to £6.1bn, as the goods deficit expanded to £58.9bn despite a larger services surplus of £52.8bn.

The U.K.’s construction output in the three months to November 2025 fell by 1.1% compared with the three months to August, marking the largest three-monthly decline since March 2023. Both components weakened over the period, with new work down 1.0% and repair and maintenance down 1.1%. At sector level, four of nine sectors contracted, led by private housing repair and maintenance, which fell by 3.7%. On a m/m basis, construction output declined by 1.3% in November, following a revised 1.2% fall in October and a 0.3% rise in September. The November decline reflected falls in both new work (-1.9% m/m) and repair and maintenance (-0.4% m/m), with reported delays and subdued spending conditions.

The U.K. residential property market remained subdued in December but showed clear signs of improving sentiment, according to the RICS Residential Market Survey. Buyer demand and agreed sales stayed negative at -24% and -19% respectively, though both improved slightly m/m. Forward-looking indicators strengthened sharply, with three-month sales expectations rising to +22%, the strongest since October 2024, and twelve-month expectations climbing to +34%. New vendor instructions stabilized at a net balance of 0%, while national house prices continued to fall at a softer pace (-14%), with weakness concentrated in London and the South East. In contrast, the lettings market remained strained, as tenant demand (-27%) continued to outstrip new supply (-39%), pointing to further rental price increases over the coming year.

Sweden’s December CPI inflation was unchanged at 0.3% y/y, matching November, while prices were flat m/m at 0.0%. The CPIF inflation rate eased to 2.1% y/y from 2.3%, and CPIF excluding energy moderated to 2.3% y/y from 2.4%. On a monthly basis, higher prices for package holidays (+17% m/m), car rentals (+24% m/m) and international air travel were offset by declines in electricity, fuels and furniture, leaving overall CPI flat m/m. On an annual basis, food and non-alcoholic beverages rose 3.7% y/y, while fuel prices were 11% lower y/y. Falling mortgage interest costs continued to exert a significant dampening effect on CPI inflation. OMX +1.333% to 3023.673, EURSEK -0.213% to 10.6886, 10y Swedish GB -0.8bp to 2.871%.

According to Sweden’s Public Employment Service, 6.8% of the labor force was registered as unemployed in December, totaling 359,568 people, down from 7.1% and 376,517 a year earlier. During the month, 32,940 individuals were newly registered as jobseekers, compared with 34,759 in the same period last year, while 22,189 people found employment, up from 19,369 previously. Among young people aged 18–24, the unemployment rate stood at 7.5%, corresponding to 40,339 individuals, lower than 8.3% and 44,872 a year earlier. New registrations in this age group totaled 6,926, down from 7,110, while 3,337 young people secured jobs, broadly unchanged y/y.

Norway’s manufacturing sector recorded a moderate decline in the fourth quarter of 2025, according to the business tendency survey, with total production and new orders from both domestic and export markets weakening q/q. Engineering industries, including machinery, ships and oil platforms, saw a clear production decline, reflecting a moderation in oil and gas investment after peaking in Q2, while traditional export industries reported modest growth and consumer goods output was broadly flat. Total order books fell across all goods categories, most sharply for capital and consumer goods. Employment was broadly unchanged, ending several years of growth. Despite rising input costs outpacing selling prices and weighing on profitability, manufacturers’ expectations for the first quarter of 2026 turned positive, with higher production, orders and order stocks anticipated. OSE -0.217% to 1725.47, EURNOK +0.087% to 11.7192, 10y NGB -0.2bp to 4.197%.

Norway’s 2025 goods trade balance narrowed to its lowest level in four years, as exports fell 1.8% y/y to NOK 1.775tn, while imports rose 2.2% y/y to NOK 1.112tn, leaving a trade surplus of NOK 663bn (-7.9%). Lower oil prices weighed on export values, with crude oil export value falling 16.6% y/y despite a 1.6% rise in volumes, while natural gas export value increased 2.5% y/y on higher prices early in the year despite lower volumes. Mainland exports rose 7.7% y/y, supported by a record year for fisheries exports and strong growth in electrical machinery linked to offshore wind projects. On the import side, car imports rose sharply, contributing to higher total imports.

Poland’s consumer prices in 2025 increased by 3.6% y/y, with the average annual index of consumer goods and services at 103.6 relative to 2024. Poland’s services production in October rose by 5.6% y/y, accelerating slightly from the 5.4% increase recorded a year earlier, and increased by 1.4% m/m compared with September. The final December print was also confirmed at 2.4%y/y. Meanwhile, prices of durable non-food goods declined in the fourth quarter, with the price index at 99.0, indicating a 1.0% q/q decrease versus the third quarter. Overall, the data point to easing price pressures in goods segments alongside resilient momentum in services activity, while headline consumer inflation remained moderate on an annual average basis. WIG +0.286% to 121669.2, EURPLN -0.122% to 4.2061, 10y PGB +1.5bp to 5.109%.

Türkiye’s December central government budget recorded expenditures of TRY 1.79tn and revenues of TRY 1.26tn, resulting in a budget deficit of TRY 528.1bn. Interest-excluding expenditures amounted to TRY 1.68tn, implying a primary deficit of TRY 411.5bn for the month. For full-year2025, total central government expenditures reached TRY 14.63tn, while revenues totaled TRY 12.84tn, generating a cumulative budget deficit of TRY 1.80tn. Over the same period, interest-excluding expenditures stood at TRY 12.58tn, and the budget recorded a primary surplus of TRY 255.3bn, indicating that interest costs were the main driver of the overall annual deficit. BI 100 +0.002% to 12370.1, USDTRY +0.032% to 43.1947, 10y TGB 0bp to 29.95%.

Japan’s producer price index (PPI) slowed to 0.1% m/m, 2.4% y/y from 0.3% m/m, 2.7% y/y in November, with key contributors including non-ferrous metals (+0.22%) and agriculture (+0.04%), while petroleum and coal products declined (-0.31%). The export price index increased 1.0% m/m, led by electric/electronic products (+0.73%) and metals (+0.30%). The import price index rose 0.6% m/m, supported by metals (+0.45%) and electric/electronic products (+0.35%), despite a decline in petroleum, coal, and natural gas (-0.24%). Yearly changes show moderate inflation pressures in producer prices. Nikkei -0.425% to 54110.5, USDJPY +0.013% to 158.67, 10y JGB -2.5bp to 2.163%.

Australia’s expected inflation rate (30% trimmed mean measure) fell by 0.1 percentage points in January to 4.6% y/y from 4.7% y/y, based on the latest Melbourne Institute Inflation Expectations survey. Following a short period of rising expectations, inflation expectations have been relatively stable in recent months. Notwithstanding this stability, expectations remain above their levels at this time last year. In contrast, wage expectations are below their levels observed 12 months ago. ASX +0.12% to 5490.57, AUDUSD +0.15% to 0.6695, 10y ACGB -3.4bp to 4.683%.

China December aggregate financing (AF) grew 8.3% y/y. The m/m increase was CNY 2.21tn, bringing full-year AF expansion to CNY 35.6tn. The acceleration was largely driven by government bond issuance (outstanding +17.1% y/y; net financing CNY 13.84tn for the year). Outstanding CNY loans by financial institutions rose 6.4% y/y, with new lending of CNY 16.27tn in 2025. Household credit remained weak: short-term loans continued to contract, while medium- to long-term household borrowing, a proxy for mortgage loans, recovered only modestly, rising by CNY 14bn in December after CNY 10bn in November. Corporate lending strengthened, increasing by CNY 1.07tn (vs. CNY 615bn in November), with outstanding corporate loans up 9.1% y/y. Monetary conditions remained accommodative. M2 accelerated to 8.5% y/y from 8.0%. Household deposits rose CNY 2.58tn in December to CNY 165tn, +9.7% y/y, underscoring persistent precautionary saving. Foreign currency deposits hit a new high of $1.07tn, up $10bn m/m. CSI 300 +0.2% to 4751.43, USDCNY +0.062% to 6.9686, 10y CGB 0bp to 1.849%.

India’s merchandise trade deficit narrowed slightly to $25.04bn in December, below economists’ expectations of $27bn and marginally higher than November’s $24.53bn, based on Reuters calculations from government data. Exports rose modestly month on month to $38.51bn, while imports increased to $63.55bn. Services trade provided a significant offset, with December services exports estimated at $35.50bn and imports at $17.38 bn, generating a surplus of about $18.12bn. Commerce Secretary Rajesh Agrawal said total exports could exceed $850bn in the current fiscal year. Efforts to diversify export markets toward China, Russia and the Middle East, alongside proposed trade pacts including with the EU, have helped cushion shipments despite higher U.S. tariffs, as India and the U.S. resume talks on a bilateral trade deal. SENSEX -0.293% to 83382.71, USDINR +0.125% to 90.3, 10y INGB +2.2bp to 6.65%.

Indonesia’s external debt decreased to $423.8bn from $424.9bn in October 2025, with annual growth moderating to 0.2% y/y from 0.5% y/y. Government external debt fell to $209.8bn (3.3% y/y growth vs. 4.7% in October), mainly due to securities rebalancing amid global market uncertainty. Key sectors funded include health (22.2%), public administration (19.7%), education (16.4%), construction (11.7%) and transportation (8.6%). Private external debt declined to $191.2bn, contracting by 1.3% y/y. The external debt-to-GDP ratio slightly improved to 29.3%, with 86.1% long-term debt, reflecting prudent management and ongoing coordination between Bank Indonesia and the government. JCI +0.474% to 9075.406, USDIDR -0.149% to 16885, 10y IDGB +0.6bp to 6.245%.

Overseas Filipino cash remittances totaled $2.91bn in November, bringing cumulative inflows to $32.11bn in January-November, up 3.2% y/y from $31.11bn in the year-earlier period. The U.S. remained the largest source of remittances over the first 11 months of the year, followed by Singapore and Saudi Arabia. Including both cash sent through banks and informal channels as well as remittances in kind, personal remittances reached $3.23bn in November. On a YTD basis, personal remittances rose 3.2% y/y to $35.73bn in January-November, compared with $34.61bn a year earlier, underscoring the continued resilience of remittance inflows. PSEi +1.529% to 6487.53, USDPHP -0.042% to 59.47, 10y PHGB +0.8bp to 5.911%.