Asia week ahead: US tax vote, BoJ

A week dominated by central bank meetings may find more of which in Asia next week, coupled with a slew of US data to guide market movements.

Chair Janet Yellen
Source: Bloomberg

As we close in on Christmas, one of the key items for the market to follow would also be the upcoming US tax vote.

Market recap

Markets reacted largely to central bank meetings in the week, with the Federal Open Market Committee’s meeting conclusion being a key component. Hopes for a more aggressive interest rate hike path in 2018 were dashed, leading to a corresponding decline in the US dollar and financial stocks. We have also seen the uncertainty over lawmakers’ support for the tax vote brewing into the end of the week, setting next week’s votes as significant event risks for market. No rest ahead of Christmas.

Taxing times

Post the Fed FOMC meeting, items from the US continue to play a huge part in affecting global markets in the coming week. Congress Republicans were seen piecing together a bill this week, expected to be unveiled on Friday. The move cumulates to votes from both US House and Senate next week and could affect markets in a huge manner. A significant amount of positive sentiment had been baked into markets in hope of a ‘giant tax cut for Christmas’ as promised by President Donald Trump, pumping up the importance of the votes next week. While the clarity in terms of voting sessions had yet to be made, the expectation that it would happen coupled with a certain degree of uncertainty, sets us up to see significant moves in reaction to the results.

Separately, a slew of US indicators will also rush to arrive before the Christmas holidays. These include November’s personal income and spending numbers, durable goods and housing updates. The third and final reading for US’ Q3 GDP will also be released ahead of November’s core PCE update, where a moderation in month-on-month core PCE growth had been penned in. Ones to keep on the radar alongside the tax votes.

Asia items

Following the set of central bank meetings in advanced economies, Asia would see a couple of our own on the calendar. Central banks in Japan, Taiwan and Thailand are expected to convene, though no changes in monetary policy are expected from either. The latest tweak in message from the Bank of Japan had been further affirmation that the central bank is unlikely to shift their stance in the near term.

Additionally, China’s Central Economic Work Conference will also be in the spotlight as the three-day meeting’s conclusion will be parsed for insights into China’s 2018 economic agenda. While this may be broad level items, the focus for Asia’s largest economy would still be watched at the first since the 19th National Party Congress.

Meanwhile for the local Singapore market, November’s non-oil domestic exports (NODX) will be released on Monday with a significant moderation expected, one to keep on the radar. 

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