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South Korean inflation data for December 2024

Headline CPI +1.9% y/y, the most rapid rise in 4 months but below the central bank’s 2% target

• expected +1.7%, prior +1.5%

Headline CPI +0.4% m/m

• expected +0.2%, prior -0.3%

Core +1.8% y/y

• prior +1.9%

For the year 2024 inflation came in at +2.3% y/y

• 2023 was +3.6%

***

Overall, South Korea has experienced a general decline in inflation over the past six months, with rates consistently below the central bank’s target. This trend has influenced monetary policy decisions, including interest rate adjustments, to support economic stability.

Brief summary of inflation developments in H2 of 2024:

July 2024: Inflation slightly increased to 2.55%, indicating a modest rise in consumer prices.

August 2024: The rate declined to 2.01%, reflecting a significant slowdown in price increases.

September 2024: Inflation further decreased to 1.6%, marking the weakest annual increase since February 2021. This decline was below the central bank’s 2% target and economist forecasts, raising expectations for potential interest rate cuts.

October 2024: The rate continued to fall, reaching 1.3%, the lowest since January 2021. This marked the fourth consecutive month of slowing inflation and the seventh month below 3%.

November 2024: Inflation slightly rose to 1.54% year-over-year, up from 1.26% in October. However, there was a month-over-month deflation of 0.25% from October to November

This article was written by Eamonn Sheridan at www.forexlive.com.

Today’s we’ll get the official, National Bureau of Statistics (NBS), PMIs for December from China. Preview here:

• Economic calendar in Asia Tuesday, December 31, 2024 – China official December PMIs due

On Thursday (January 2) we’ll get the other manufacturing PMI, from Caixin/ S&P Global:

The two PMIs are quite different. If you are unfamiliar with this, the following will set you up for next year!

The PMIs (Purchasing Managers’ Indexes) from China’s National Bureau of Statistics (NBS) and Caixin/S&P Global differ primarily in survey scope, methodology, and focus. Here’s a breakdown of the key differences:

1. Provider and Affiliation

• NBS PMI:

  • Compiled by the National Bureau of Statistics of China, a government agency.
  • Seen as the official PMI, closely aligned with government policies and priorities.

• Caixin/S&P Global PMI:

  • Compiled by Caixin Media in collaboration with S&P Global.
  • A private-sector index, often considered more market-driven.

2. Survey Scope

• NBS PMI:

  • Focuses on large and state-owned enterprises.
  • Covers a broader range of industries, including manufacturing and non-manufacturing sectors (e.g., construction and services).
  • Reflects conditions in sectors heavily influenced by government policies and infrastructure spending.

• Caixin PMI:

  • Focuses on small to medium-sized enterprises (SMEs), particularly in the private sector.
  • Captures the performance of companies that are more exposed to market-driven forces and less influenced by state interventions.

3. Sample Size and Composition

• NBS PMI:

  • Larger sample size, with about 3,000 enterprises surveyed for the manufacturing PMI.
  • Emphasizes state-owned enterprises and larger companies, which tend to dominate traditional industries.

• Caixin PMI:

  • Smaller sample size, surveying around 500 enterprises, with a stronger focus on export-oriented and technology-driven firms.
  • Provides insights into the private sector and its responsiveness to global economic conditions.

4. Release Dates

• NBS PMI:

  • Released monthly, typically on the last day of the month.
  • Provides separate PMIs for manufacturing and non-manufacturing sectors.

• Caixin PMI:

  • Released a few days later, usually on the first business day of the following month.
  • Includes only the manufacturing PMI and services PMI, with no equivalent for non-manufacturing activities like construction.

5. Interpretation and Use

• NBS PMI:

  • Reflects the overall economic landscape, especially trends in industries influenced by government policy.
  • Analysts use it to gauge the impact of fiscal and monetary policies on the broader economy.

• Caixin PMI:

  • Viewed as a better indicator of the health of the private sector and market-driven segments of the economy.
  • Considered more sensitive to external shocks (e.g., global trade conditions).

6. Key Insights and Differences in Results

• The NBS PMI often reflects policy-driven stability, showing less volatility because it covers sectors cushioned by government support.
• The Caixin PMI can be more volatile, as SMEs are more sensitive to real-time changes in market demand, supply chain disruptions, and global economic shifts.

Why Both Matter:

• NBS PMI offers a macroeconomic view of China’s state-influenced economy.
• Caixin PMI provides a microeconomic perspective of the more market-driven and globally competitive sectors.

By analyzing both, investors and policymakers can obtain a more comprehensive picture of China’s economic health and its underlying dynamics.

This article was written by Eamonn Sheridan at www.forexlive.com.

The official PMIs from China’s National Bureau of Statistics (NBS) will be published today. I’ve referred to ‘green shoots’ beginning, tentatively, to show for the Chinese economy. PMIs have been key to this. In H2 of 2024 manufacturing has improved, slowly, while services have held in expansion.

Manufacturing PMI:

• July 2024: 49.4, indicating contraction in manufacturing activity. Production expanded slightly (50.1), but new orders fell (49.3).
• August 2024: Remained at 49.4, continuing contraction as challenges persisted in the sector.
• September 2024: Rose to 49.8, showing a slower pace of contraction. Output grew the most in five months.
• October 2024: Increased to 50.1, crossing into expansion territory for the first time in six months, reflecting initial impacts of fiscal stimulus.
• November 2024: Improved further to 50.3, showing modest expansion with strengthening domestic demand.

Non-Manufacturing (Services) PMI:

• July 2024: 51.5, indicating expansion in services, though at a slower pace.
• August 2024: Declined to 51.0, still expanding but with reduced momentum.
• September 2024: Decreased to 50.0, marking stagnation in the sector.
• October 2024: Edged up slightly to 50.2, suggesting mild recovery.
• November 2024: Held steady at 50.0, showing stable but subdued performance.

Both manufacturing and services are expected to hold in expansion in today’s data. While not shown on the calendar, the Composite PMI is also expected to hold in expansion. It was 50.8 in November.

***

Also not shown on the calendar are the December data expectations and priors for Australian Financial Aggregates, AKA Private Sector Credit data.

The Reserve Bank of Australia (RBA) typically releases its Financial Aggregates data on the last business day of each month at 11:30 am Australian Eastern Standard Time (AEST). Thus, the December 2024 figures should be published today Tuesday, 31 December 2024.

However, due to the holiday period, there may be adjustments to the publication schedule. For instance, the November 2024 Financial Aggregates were released earlier than usual on Friday, 20 December 2024. As of now, I’ve found no indication of a change for the December release. So, I am expecting the December 2024 Financial Aggregates to be published on 31 December 2024 at 11:30 am AEST.

• 0030 GMT, 1930 US Eastern time

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

This article was written by Eamonn Sheridan at www.forexlive.com.

It’s another patchy week of holidays, official and unofficial. The best trade idea might be to chill out and recharge, but different people have different ideas.

Liquidity and interest is going to remain thin. It’ll pick up a little from January 2 and 3 but will approach normal from the 6th.

This article was written by Eamonn Sheridan at www.forexlive.com.

A dark day is looming.

Some time in the coming week, US President Joe Biden will reject a $14.9 billion takeover of US Steel by Nippon Steel on unconscionably shaky grounds.

It will mark the end of the era of American free-market capitalism that has brought so much prosperity to the United States and the world. It’s a decision that only makes sense through the lens of crony-capitalism at best and corruption at worst. It’s a hint at what’s to come (and how to invest) in the coming era.

To recap: US Steel has been on life support for decades. It was once a great American company but is now a $7 billion market cap minnow that’s likely worth half of that once the M&A premium falls apart.

In a miraculous bit of deal-making, US Steel has been able to sell itself for nearly $15 billion and wrangled all kinds of promises to maintain employment and invest $2.7 billion in rebuilding aging and uncompetitive US Steel factories in the heart of the rust belt.

This would be a huge win for the workers at the plants set to be modernized — removing the threat of closure in 2026 — and a win for the US as its steel-making capacity is rebuilt by a company that’s been able to thrive despite Chinese steel dumping globally.

The justification for killing the deal is utter non-sense. It follows some kind of bizarre logic that Japan is an enemy state or will somehow sabotage US operations despite paying a massive premium to acquire them along with enormous investments.

There is one person who wants the deal to fail: Cleveland-Cliffs CEO Lourenco Goncalves. Why? He wants a virtual monopoly on blast-furnace steel made in the USA. He doesn’t want to have to compete with an operator like Nippon Steel.

In the US in the 2020s, when you can’t win, you cheat.

As the Pittsburgh Post-Gazette writes:

It’s really simple: Cleveland-Cliffs doesn’t want to have to compete with Nippon Steel.

His sentiment is understandable. Given the choice, Westinghouse would have never allowed in foreign televisions in the US in the 1980s but that was a time when American believed in capitalism. The result was one of the great industrial triumphs of all time — Americans can get 75-inch televisions for $400.

Now I get the sentiment around keeping Chinese industrial goods out of the US. You don’t want someone flooding goods into your country that destroys your industrial capacity and leaves you as a client state.

But this is just the opposite: Nippon is building capacity in the US. That’s exactly the kind of thing that Donald Trump has said he wants foreign companies to do: If you want to sell in the US, build your factory in the US.

The US wants that so badly that it’s paying a company from South Korea (Samsung) and one from Taiwan (TSMC) to build chip-making plants in the US. Yet a company from Japan that’s using its own money can’t due to national security? It’s absurd.

The Washington Post has a hint on what’s really going on:

“In several telephone calls with investors this year, Lourenco Goncalves, Cleveland-Cliffs’s CEO, “repeatedly asserted that the CFIUS process would be a sham used by the President as cover to kill the transactions. Lourenco Goncalves repeatedly has asserted that he and David McCall have been assured of this by senior Administration officials with whom they have spoken directly,” the letter said.”

Everyone who has taken a hard look at this deal is unequivocal: It should get done under the law and because it’s in the US national interest and benefits workers. Bloomberg, the NYT, the WSJ, the Pittsburgh press and 20 mayors in US Steel country have all urged approval of this deal. There is also evidence that the vast majority of steel workers support it even if United Steelworkers (and former Cleveland-Cliffs employee) McCall curiously doesn’t.

Still, the market is pricing in around a 10% chance Biden approves it.

This is the landscape America is operating in now. Tesla shares rallied 70% after the US election and it’s not because the new administration will have E-friendly policies (just the opposite) but because Elon and Trump have become fast friends and the market knows that legislation and political favors in the US are for sale. That’s exactly how it works in India, where the companies of those friendly with the government soar on election results.

There was hope this deal would pass after all the election rhetoric died down because there was faith that America still believed in the ideals the enriched it. But cronyism and corruption are undefeated in world history and that the Shining City on a Hill is no longer reserved for the best, but for the best-connected.

This article was written by Adam Button at www.forexlive.com.

One of the global secular trends unfolding right now is an anti-immigration streak in politics. It’s winning elections and that looks set to continue in Germany and Canada in 2025, among elsewhere.

For the US, Goldman Sachs notes that net US immigration has already fallen from 3 million in 2023 to a 1.75 million pace this year. They expect it to fall further to 750K per year, moderate below the pre-pandemic average of 1 million.

These are small numbers in a country of 335 million but what’s less clear is how many illegal immigrants are in the country and how many might be deported under Trump.

h/t @Mike Zaccardi

This article was written by Adam Button at www.forexlive.com.

The New York Stock Exchange and Nasdaq will close on January 9 to observe the national day of morning for former US President Jimmy Carter, who died yesterday.

This follows the normal tradition of stock markets closing for the funerals of former Presidents. It came as something of a surprise that the bond market will remain open until 2 pm ET but that might be due to a 1 pm ET bond auction.

In any case, it should be a quieter day in markets.

This article was written by Adam Button at www.forexlive.com.

US equities have had a decent bounce off the lows but are still deeply in negative territory. The S&P 500 is down 57 points to 5913 after falling as low as 5869. If the index falls 1% it would be the first time since 1952 that it’s had two 1% (or more) declines in the period between Christmas and New Years. Traditionally, that’s one of the strongest times of the year.

Meanwhile, European stocks meandered to moderate declines:

• Stoxx 600 -0.5%
• German DAX -0.4%
• France CAC -0.6%
• UK FTSE 100 -0.3%
• Spain IBEX +0.1%
• Italy’s FTSE MIB flat

This article was written by Adam Button at www.forexlive.com.

• Prior was -2.7
• Production +3.9 vs -0.9 prior
• New orders -0.9 vs -11.9 prior
• Capex +11.2 vs +7.8 prior
• Employment +0.3 vs +4.9 prior
• Outlook +8.0 vs +5.8 prior

This article was written by Adam Button at www.forexlive.com.

In the past, SIFMA has recommended a full closure on the day of the funerals of former Presidents — including for George H.W. Bush in 2018 and Ronald Reagan in 2004. For Carter, they’re only recommending an early close on January 9 at 2 pm ET.

This could be because there is a scheduled 30-year bond auction that day.

As for stocks, we will have to see what the NYSE does.

See: Jimmy Carter’s funeral to be held January 9

This article was written by Adam Button at www.forexlive.com.

• Prior month +2.0% (revised to +1.8%)

Details

• Home sales index 79.0 versus 77.4 last month (revised to 77.3)
• Sales 6.9% vs 5.4% year on year prior

This is the fourth-consecutive month of increases and buyers give up waiting for lower rates. In December though, US 30-year fixed rates rose above 7% and that’s been a big problem in the past.

“Consumers appeared to have recalibrated expectations regarding mortgage
rates and are taking advantage of more available inventory,” said NAR
Chief Economist Lawrence Yun. “Mortgage rates have averaged above 6% for
the past 24 months. Buyers are no longer waiting for or expecting
mortgage rates to fall substantially.”

This article was written by Adam Button at www.forexlive.com.

Former US President Jimmy Carter died yesterday.

The funeral has now been announced for January 9. Historically, US markets close for a national day of mourning on the day of a former President’s funeral and I expect that will be the case this time around.

Federal non-essential employees are also given the day off and that could impact economic data scheduled to be released that day including:

• Initial jobless claims
• Trade balance
• Wholesale inventories
• A scheduled speech from Harker
• A 30-year bond auction

This article was written by Adam Button at www.forexlive.com.