The first full trading week of 2025 kicks off with significant movements in Asian markets. This week features a combination of economic data releases, political developments, and policy changes shaping investor sentiment.

Market Highlights

China’s Economic Indicators: Yuan and Bond Yields

• The Chinese yuan faces depreciation, while bond yields are under pressure, following indications from Beijing regarding increased liquidity provisions this year.
• The two-year bond yield is close to plummeting below the 1.00% level, marking a significant psychological milestone, having dipped 50 basis points in two months and 100 bps since March 2024.

Emerging Market Evaluations Amid Strong Dollar

• Emerging market currencies struggle against a firm U.S. dollar, which has appreciated nearly 10% in the last quarter.
• Despite a notable 100 bps cut by the Federal Reserve since September 2024, U.S. Treasury yields hold steady, affecting global market assessments.

Key Economic Data Releases

• Purchasing Managers’ Index (PMI) data for December 2024 is anticipated, with a particular focus on China’s PMI due to its implications for global trade and economic performance.

Investor Guidance

• Key considerations for investors include:
  • China’s monetary policies, as further easing may open doors for opportunities in various asset classes.
  • Global currency shifts, particularly movements in the U.S. dollar and its effects on emerging economies.
  • PMI statistics, which play a crucial role in setting the growth expectations for Asia.

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