Rise and shine everyone.

As we approach the end of the year, portfolio managers are starting to consider how to manage allocations. Bitcoin remained a standout performer, up 130% YTD, followed by U.S. equities, with the Nasdaq 100 gaining 30%. In contrast, Europe and Australasia lagged, with the CAC40 down 3%, the euro off 6%, and the Aussie and Kiwi dollars losing 9% and 11%, respectively.

Japan’s data releases, including the BOJ’s Summary of Opinions, Tokyo CPI, industrial production, retail sales, and jobs figures, had limited initial market impact. The BOJ reiterated its cautious stance on maintaining current monetary policy, while Tokyo CPI showed the highest core reading since August and the highest headline since October 2023, largely meeting expectations. USD/JPY held steady near five-month lows of 158, with 10-year JGB yields unchanged at 1.09%, later inching up to 1.10% for the first time since July. A second round of “Yentervention” comments from Finance Minister Kato helped JPY claw back 0.3% to 157.50. The Nikkei outperformed, rising 1.8% to surpass 40,000 for the first time since October 14th, fueled by Toyota’s 14% surge over three days following reports of a doubled ROE target by 2030.

In South Korea, sentiment remained weak after a steep drop in consumer confidence earlier in the week, with manufacturing and non-manufacturing surveys showing sharp declines. Finance Minister Han attributed underperformance to political tensions, including impeachment threats against the acting president. USD/KRW rose 1.0% to 1,485, its lowest level in 16 years, before paring losses back to 1,468 as the Kospi trimmed declines from -1.0% to -0.3%. JPY/KRW jumped over 1.6%.

China reported a fourth consecutive monthly decline in industrial profits for November, though at a slower pace than previous months. Chinese 10-year bond yields eased 3bps to 1.70%.

In Europe, markets reopened for the first time since December 23rd, but trading was subdued ahead of the New Year, with light liquidity and thin participation. US Equity Futures also seem subdued and its likely that liquidity will be very thin.

Chart of the Day

Year-to-date Sector Performance. Surprisingly, Financials have actually caught up quite well.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)