Articles

Summary:

• China CPI rose 0.8% y/y, fastest since Feb 2023

• Monthly CPI beat expectations at +0.2%

• PPI fell 1.9% y/y, easing but still deflationary

• Core inflation steady at 1.2%

• Weak demand and property stress remain key drags

China’s consumer inflation accelerated in December to its fastest pace in nearly three years, while factory-gate prices remained in deflation, underscoring the persistent imbalance between improving headline prices and still-weak underlying demand.

Data from the National Bureau of Statistics showed consumer prices rose 0.8% year-on-year, the strongest increase since February 2023 and slightly faster than November’s 0.7% gain. The result matched market expectations. On a month-on-month basis, CPI rose 0.2%, beating forecasts for a 0.1% increase and marking a clear rebound from November’s monthly decline.

Core inflation, which strips out food and energy, rose 1.2% year-on-year, unchanged from the prior month, suggesting that underlying price pressures remain modest despite the pickup in headline inflation. Food prices rose 1.1% from a year earlier, while non-food prices increased 0.8%.

By contrast, producer prices fell 1.9% year-on-year, slightly better than the expected 2.0% decline and easing from November’s 2.2% fall. The data extend China’s factory-gate deflationary streak beyond three years, highlighting continued excess capacity and weak pricing power across the industrial sector.

More via CNBC round up:

Economists say the data point to fragile domestic demand, even as growth remains broadly on track. Macquarie expects China’s consumer inflation to remain flat through 2025, while producer-price deflation is forecast to deepen, potentially marking the longest deflationary stretch on record. The bank warns that additional policy easing, including lower mortgage rates and relaxed home-purchase rules, may still fall short of reversing the property downturn.

Meanwhile, Bank of America Global Research estimates China’s GDP growth softened to around 4.5% in the fourth quarter, from 4.8% previously, with fixed-asset investment contracting further even as industrial production benefited from a year-end manufacturing pickup.

Despite a recent rebound in factory activity, policymakers face mounting pressure to support consumption and stabilise the property sector, as falling corporate profits and renewed price competition continue to weigh on confidence.

This article was written by Eamonn Sheridan at investinglive.com.

Summary:

• China restricts rare-earth and magnet exports to Japan

• Move linked to Japan PM’s Taiwan-related remarks

• Restrictions extend beyond defence sector

• Nomura estimates $17bn potential annual impact

• Japan raises issue with G7, Washington meetings planned

Flagged this earlier in the weeK

• China escalated tensions with Japan, bans exports of goods with potential military uses

Updating now.

China tightens rare-earth exports to Japan

China has begun restricting exports of rare earths and rare-earth magnets to Japan, escalating a diplomatic and economic dispute and again demonstrating its willingness to use critical minerals as geopolitical leverage, according to reporting by the Wall Street Journal (gated).

The measures are expected to weigh on Japanese firms supplying components to global chipmakers, automakers and defence contractors. The restrictions target so-called “heavy” rare earths and the high-performance magnets that contain them — materials that are scarce, costly and difficult to substitute.

The Journal reported that the move is retaliation for remarks made late last year by Japanese Prime Minister Sanae Takaichi, who suggested Japan could become involved in a potential conflict over Taiwan. Beijing has repeatedly pledged to bring Taiwan under its control, by force if necessary.

According to people familiar with the matter, China has effectively halted the review of export licence applications to Japan, with the restrictions extending across multiple industries rather than being limited to defence-related firms. Earlier this week, Beijing also announced a broader ban on exports of “dual-use” goods with potential military applications to Japan.

If maintained, the rare-earth curbs could inflict around $17 billion in economic losses over a year, according to estimates from the Nomura Research Institute. The action follows a similar move against US companies last year, underscoring China’s dominance in critical minerals and its readiness to weaponise supply chains in response to geopolitical disputes.

Japan responds, seeks coordination

Japanese officials responded by urging China to ensure smooth trade flows and signalling that the issue will be raised with international partners. Finance Minister Minoru Katayama said Tokyo is “very concerned” about China’s export controls and plans to explain Japan’s position during meetings in Washington next week.

Katayama said G7 finance ministers have been sharing strong concerns about China’s practices around rare earths and confirmed he will discuss supply-chain resilience with counterparts during talks scheduled for January 11–14. He declined to comment on the full details of the meetings, noting the host has yet to announce participating countries.

This article was written by Eamonn Sheridan at investinglive.com.

Just a post noting this data release.

I’ll be back with detail in a separate post.

China December 2025:

CPI 0.8% y/y

• expected 0.9%, prior 0.7%
• +0.2% m/m vs. expected 0%, prior -0.1%

PPI -1.9% y/y

• expected -2.0%, prior -2.2%
• +0.2% m/m vs. expected +0.1%

This article was written by Eamonn Sheridan at investinglive.com.

Just a post noting this data release.

Japanese Household Spending +6.2% m/m

• expected +2.7%, prior -3.5%

I’ll be back with detail in a separate post.

This article was written by Eamonn Sheridan at investinglive.com.

• US posts smallest trade deficit since 2009
• Atlanta Fed Q4 GDPNow 5.4% vs 2.7% prior
• New York Fed survey sees rising one-year consumer inflation expectations, jobs angst
• US October wholesale inventories +0.2% vs +0.2% expected
• US initial jobless claims 208K versus 210K estimate.
• Preview: December non-farm payrolls by the numbers. Finally past the shutdown fog

Markets:

• Gold up $20 to $4473
• US 10-year yields up 3 bps to 4.17%
• WTI crude oil up $2.64 to $58.63
• S&P 500 flat
• CAD leads, AUD lags

Oil was the spot to watch as the market zeros in on Iran and protests there. The market picked up when there were reports of a cutoff in phones and the internet in an effort to quell protests. That’s something of a tell that they’re getting beyond what the government can control. It resulting in oil wiping out two prior days of declines.

The US dollar was broadly stronger, trailing only the loonie. The very strong trade balance report led to a big pickup in GDP forecasts as we work through the post-shutdown data mess. That was October data so it’s stale but it will be a spot to watch.

Speaking of watching, Friday is a big day with US and Canadian jobs reports. Eyes will be on the Supreme Court at 10 am ET as well for the possibility of a tariff decision.

This article was written by Adam Button at investinglive.com.

Summary:

• Trump says he has ordered $200 bn in MBS purchases to lower mortgage rates

• Plan aims to compress mortgage spreads and reduce monthly payments

• Purchases would be linked to Fannie Mae and Freddie Mac resources

• Proposal revives state-led intervention in housing finance markets

• Markets may view comments as political pressure on long-term rates

Donald Trump said, in a ‘tweet’ (‘truth’) on his own social media app, he has instructed government representatives to purchase $200 billion of mortgage-backed securities (MBS), framing the move as a direct intervention aimed at lowering mortgage rates and restoring housing affordability in the United States.

In a statement posted on social media, Trump said housing affordability has deteriorated sharply as mortgage rates surged, placing home ownership further out of reach for many Americans.

Trump said the planned MBS purchases would be funded through Fannie Mae and Freddie Mac, government-sponsored enterprises that he noted were not sold during his first term, a decision he described as contrary to expert advice at the time. According to Trump, those entities are now worth “many times” their prior valuations and collectively hold roughly $200 billion in cash, which he argues can be deployed to support the housing market.

The president said large-scale MBS buying would narrow mortgage spreads, push borrowing costs lower, and reduce monthly mortgage payments. He described the move as part of a broader strategy to reverse what he characterised as damage inflicted on housing affordability over the past several years.

While Trump did not specify which agencies or officials would execute the purchases, the proposal effectively revives the concept of state-directed demand for mortgage securities, a tool historically associated with crisis-era monetary policy. Markets may interpret the comments as signalling political pressure to use government balance sheets to directly influence long-term interest rates, particularly in housing finance.

The announcement comes amid ongoing debate over the appropriate role of government-backed institutions in stabilising housing markets and managing mortgage costs, especially as affordability metrics remain stretched despite easing inflation elsewhere in the economy.

This article was written by Eamonn Sheridan at investinglive.com.

The market focus for the data agenda ahead here in Asia – Pacific today, Friday, January 9, 2026, is the December inflation data due from China:

• due at 0130 GMT, which is 2030 US Eastern time

The December inflation data will be closely watched for signs of whether the modest recovery in prices seen late last year has continued into year-end.

A firm tipping a lower than consensus forecast, Zhe Shang Securities at 0.7% y/y, seeing no change from the November result. Zhe Shang expect 0% m/m, i.e. no change. You’ll note in the scrfeenshot below there is no consensus forecast for the m/m.

• The firm’s PPI forecast has it remaining in negative territory at around -1.9% y/y, ‘up’ from November but still deeply negative.

The backdrop entering today’s release is one of persistently low inflation but slight upward momentum in consumer prices. November’s CPI logged a 0.7% y/y rise, its fastest pace in nearly two years, driven largely by rebounding food prices (especially fresh produce) and modest gains in other categories, while core inflation held around 1.2%. Meanwhile, PPI has remained deeply negative, reflecting ongoing factory-gate deflation as industrial prices continue to lag, although some stabilization was seen on a m/m basis late in 2025.

Market participants will parse today’s figures for evidence that domestic demand is firming and whether price pressures are broadening beyond volatile food items. The data will also feed into assessments of China’s growth trajectory and implications for global reflation narratives in early 2026.

Earlier this week the PBoC hinted at rate cuts ahead this year:

• China flags rate and RRR cuts in 2026 as PBoC leans dovish

Check out that post, specifically the screenshot attached of USD/CNY and my ‘read between the lines’ comment. They are a tricky bunch at the PBoC!

This snapshot from the investingLive economic data calendar.

• 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 investinglive.com.

If the Supreme Court limits the President’s use of IEEPA in the Learning Resources case, the administration will certainly pivot to other legislative tools, as Bessent references here. But if those tools were as good as the IEEPA, they would have used them already. While IEEPA offers the broadest authority, the executive branch has several other levers to pull, though they come with more red tape and procedural delays.

Section 232 of the Trade Expansion Act of 1962
You likely remember this from the steel and aluminum tariffs in 2018 and then again when Trump returned. It allows the President to adjust imports if the Department of Commerce determines they threaten national security. The main constraint here is time. The Secretary of Commerce has to conduct an investigation that can take up to 270 days. To use this effectively as a replacement for IEEPA, the administration would need to aggressively speed up these investigations or broaden the definition of “national security” to cover general consumer goods, which opens them up to further legal challenges.

Section 301 of the Trade Act of 1974
This is the primary tool used during the trade war with China. It is designed to address unfair trade practices, such as intellectual property theft or non-tariff barriers. Unlike the blanket authority of IEEPA, Section 301 is more surgical and requires the U.S. Trade Representative to establish a factual basis for the tariffs. While it is generally more targeted, the administration has shown they can cast a very wide net with this statute if they frame the “unfair practice” broadly enough. My guess is this one is most likely to survive court challenges but it will take awhile to implement.

Section 338 of the Tariff Act of 1930
This is the “sleeper” option that gets very little attention. It allows the President to impose new duties of up to 50% if a country is found to discriminate against U.S. commerce. The administration could theoretically argue that foreign Value Added Tax (VAT) systems—which rebate exports while taxing imports—constitute discrimination. Dusting off this statute would be a massive escalation and would likely be viewed as a direct challenge to the World Trade Organization system. This is an antiquated one but the administration might argue that VAT taxes qualify as discrimination and courts might challenge this on “Major Questions” so text around that in the upcoming decision will be telling.

Section 122 of the Trade Act of 1974
This section is specifically designed to handle balance-of-payments deficits. It allows for a temporary import surcharge of up to 15% to protect the dollar or reduce a serious trade deficit. The catch is that it is a temporary fix. The surcharge is capped at 150 days unless Congress steps in to extend it, making it less useful for a long-term trade strategy. The US might try to bridge other investigative timelines by using this first but it limits tariffs to 15%.

All these different statutes will make the reasoning of any Supreme Court decision as important as the decision itself. On the kneejerk, the strongest possible repudiation would be if the Supreme Court tells the administration to refund the tariffs, but that’s not something legal watchers think is likely.

This article was written by Adam Button at investinglive.com.

What’s expected:

• Consensus estimate +60K (range +19K to +155K)
• November +64K
• Private consensus estimate +64K
• Unemployment rate consensus estimate: 4.5% vs 4.6% prior
• Participation rate consensus 62.5% prior
• Prior underemployment U6 prior 8.7%
• Avg hourly earnings y/y exp +3.6% y/y vs +3.5% prior
• Avg hourly earnings m/m exp +0.3% vs +0.1% prior
• Avg weekly hours exp 34.3 vs 34.3 prior

December jobs so far:

• ADP report +41K vs +50K expected and -29K
• ISM services employment 52.0 vs 49.0 prior — 10 month high
• ISM manufacturing employment 44.9 vs 44.0 prior
• Challenger Job Cuts 35,553 y/y vs 71,321 — 17 month low
• Philly employment +12.9 vs +6.0 prior
• Empire employment 7.3 vs 6.6 prior
• Initial jobless claims survey week 224K vs 225K expected

Looking through these numbers, there are plenty of reasons to see upsides to +60K and potentially in a big way. A reading close to 100 would end the slim hopes of a January cut and deeply slash the 43% chance of a March cut that’s currently priced in.

Seasonally, there is a minuscule drag on non-farm payrolls in December, according to BMO with the report missing 52% of the time and beating 48% of the time.

In general, the US dollar outperforms on strong data and slides on weak data, with USD/JPY generally the cleanest trade on that theme. In contrast, the stock market generally dislikes a strong jobs report as it diminishes the chance of a rate cuts from the Federal Reserve.

On the unemployment rate, note that the unrounded figure in November was 4.564%, which is very close to being rounded down to 4.5%. The market increasingly watches those margins so be wary of a slight change looking like a whole tick.

This article was written by Adam Button at investinglive.com.

From the Atlanta Fed:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2025 is 5.4 percent
on January 8, up from 2.7 percent on January 5. After recent releases
from the US Bureau of Economic Analysis, the US Census Bureau, and the
Institute for Supply Management, the nowcast of fourth-quarter real
personal consumption expenditures growth increased from 2.4 percent to
3.0 percent, while the nowcast of the contribution of net exports to
fourth-quarter real GDP growth increased from -0.30 percentage points to
1.97 percentage points.

This is something I flagged after the trade balance report but it’s likely to get more attention now, at least on the political side of things. Note that we’re very early in the Q4 reporting cycle because of the US government shutdown. We have Oct trade but still need November and December, along wit ha host of other data.

This article was written by Adam Button at investinglive.com.

• One year inflation expectations +3.4% vs +3.2%
• Three-year inflation unchanged at 3.0%
• Five year inflation unchanged at 3.0%
• Job-finding expectations hit record low
• Expectations of home price growth unchanged at 3%
• Perception of credit access fell
• Expectations of losing a job rose
• Median one-year-ahead earnings growth expectations remained unchanged at 2.6% in November
• The mean perceived probability that U.S. stock prices will be higher 12
  months from now increased by 0.1 percentage point to 38.0%.

From the survey:

Perceptions about
households’ current financial situations deteriorated notably, with a
larger share of respondents reporting that their households were worse
off compared to a year ago and a smaller share reporting they were
better off. Expectations about year-ahead financial situations also
deteriorated slightly, with a smaller share of respondents reporting
that their households are expecting to be better off a year from now.

Mean unemployment
expectations—or the mean probability that the U.S. unemployment rate
will be higher one year from now—improved slightly, decreasing by
0.4 percentage point to 42.1 percent.

The mean perceived probability of losing one’s job in the next 12
months increased by 1.4 percentage points to 15.2%. The reading is
above the series’ 12-month trailing average of 14.3%. The increase was
broad-based across age and education groups. The mean probability of
leaving one’s job voluntarily, or the expected quit rate, in the next
12 months decreased by 0.2 percentage point to 17.5%.

That last one is the most worrisome but it should speak to lower wage demand as well, something that should allow the Fed to cut rates more deeply. Along those lines, “Median one-year-ahead earnings growth expectations decreased by 0.1
percentage point to 2.5% in December, remaining below its 12-month
trailing average of 2.7%. The series has been moving within the 2.4% to
3.0% range since May 2021.”

This article was written by Adam Button at investinglive.com.

• Prior was +0.5%
• Wholesale trade sales -0.4% vs -0.2% exp

It’s not clear whether we will get the Atlanta Fed GDPNow tracker but there should be a big rise in the Q4 data due to strong trade numbers earlier. This reading will be a small drag but it was mostly priced in.

The US wholesale inventories report is a monthly economic indicator published by the US Census Bureau that measures the dollar value of goods held by merchant wholesalers at the end of each month. These firms operate between manufacturers and retailers, selling goods to businesses, institutions, and other wholesalers. The data are drawn from the Monthly Wholesale Trade Survey and include inventory levels, monthly sales, and the inventories-to-sales ratio.

Wholesale inventories are closely watched because they provide insight into supply-chain conditions and demand expectations. Rising inventories can reflect confidence in future sales and intentional stock-building, but they can also signal slowing demand if goods are accumulating unsold. Falling inventories may indicate strong sales, cautious ordering, or deliberate destocking. As a result, the report is often interpreted alongside retail sales and manufacturing data to gauge broader economic momentum.

The report plays a direct role in GDP through the change in private inventories component. GDP measures production, not final sales, so goods that are produced but placed into inventory add to GDP in the period they are made. Conversely, inventory drawdowns subtract from GDP even if end demand is strong. Wholesale inventories therefore can meaningfully boost or drag quarterly GDP growth, sometimes obscuring the underlying demand trend.

Markets also focus on the inventories-to-sales ratio, which helps assess whether inventory levels are sustainable or likely to lead to future production adjustments.

This article was written by Adam Button at investinglive.com.