Asia

· Japan Inflation Slows And Output Slips, Keep BOJ Under Pressure. Japanese annual core consumer inflation slowed for a fourth straight month in November due largely to sliding oil prices, highlighting the challenges the central bank faces in achieving its 2% inflation target. Factory output unexpectedly fell and real wages marked the steepest drop in five years, underscoring the fragility of the recovery and dealing a blow to premier Shinzo Abe's stimulus policies aimed at pulling the economy out of stagnation. The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 2.7% in November from a year earlier, matching a median market forecast, government data showed on Friday. Stripping out the effects of a sales tax hike in April, core consumer inflation was 0.7%, slowing from 0.9% in October and far below the Bank of Japan's 2% target. (Reuters)

· Japan’s Savings Rate Turns Negative In Challenge For Abe. Japanese drew down savings for the first time on record while wages adjusted for inflation dropped the most in almost five years, highlighting challenges for Prime Minister Shinzo Abe as he tries to revive the world’s third-largest economy. The savings rate in the year through March was minus 1.3%, the first negative reading in data back to 1955, the Cabinet Office said. Real earnings fell 4.3% in November from a year earlier, a 17th straight decline and the steepest tumble since December 2009, the labor ministry said today. (Bloomberg)

· China’s Industrial Profits Drop Most In Two Years Amid Slowdown. China’s industrial profits fell the most in two years last month, the latest data to show a deepening slowdown in the world’s second-biggest economy as pressure grows on the nation’s central bank to ease monetary conditions. Total profits of China’s industrial enterprises in November dropped 4.2% from a year earlier, the National Bureau of Statistics said today in Beijing. That followed October’s 2.1% decline and a 0.4% increase in September. It’s the biggest slide since August 2012, when profits slumped 6.2%. (Bloomberg)

· Vietnam’s 4Q14 Growth Quickens On Exports, Beating Target. Vietnam’s economic growth accelerated in the fourth quarter as banks increased lending and rising foreign investment boosted exports. Gross domestic product rose 6.96% in the fourth quarter from a year earlier, quickening from a revised 6.07% gain in the three months through September, according to data released by the General Statistics Office in Hanoi today. For the full year, the economy grew 5.98%, beating the government’s 5.8% target and compared with a median estimate of 5.7% in a Bloomberg survey. (Bloomberg)

· Singapore’s Manufacturing Output Down 2.8% In Nov. Singapore’s manufacturing output on a year-on-year (yoy) basis contracted 2.8% in November 2014, said the Singapore Economic Development Board (EDB). In its Monthly Manufacturing Performance released today, EDB said excluding biomedical manufacturing, output declined 3.1%. On a three-month moving average basis, manufacturing output fell 1.3% in November 2014 compared with a year ago. On a seasonally adjusted month-on-month basis, manufacturing output fell 1.4% in November 2014, while excluding biomedical manufacturing, output increased 1.6%. (Bernama)

· Saudi 2015 budget based on oil price around $60. Saudi Arabia's 2015 state budget assumes an oil price close to current levels of around $60/barrel for Brent crude, a shift from past budgets which were based on prices well below market levels, analysts say. The kingdom doesn't reveal the oil prices which it uses to calculate its annual budgets. So analysts estimate them, making assumptions about several other variables such as planned oil exports and production for the following year. For the 2015 budget, announced on Thursday, four analysts' oil price estimates are in a range of $55 to $63. That does not mean Saudi Arabia necessarily expects such prices next year -- Finance Minister Ibrahim Alassaf said on Thursday there was a great difference of opinion over when prices would start rebounding, with some people predicting the second half of next year and others 2016. Instead, the budgeted oil price is an accounting assumption which the government uses to set a baseline for next year's revenues. If Brent crude averages more than $60 next year, Saudi oil revenues will probably be larger than projected; if Brent is below $60, revenues will be smaller. Oil prices have plunged almost 50 percent since June. (Reuters)

America

· U.S. Fed Awards $41.49b Reverse Repos Friday. The U.S. Federal Reserve on Friday awarded $41.49b of three-day, fixed-rate reverse repurchase agreements to 33 bidders at an interest rate of 0.05%, the New York Federal Reserve said on its website. This was the smallest amount in about 1-1/2 weeks, according to Fed data. On Wednesday, the U.S. central bank allotted $53.24b in two-day reverse repos to 48 bidders, including Wall Street dealers, money market mutual funds and mortgage finance agencies at an interest rate of 0.05%. (Reuters)

· U.S. Fed Buys $6b Of Mortgage Bonds, Sells None. The Federal Reserve bought $6.046b of agency mortgage-backed securities in the week from Dec. 18 to Dec. 24, compared with $5.752b purchased the previous week, the New York Federal Reserve Bank said on Friday. In a move to help the housing market begun in October 2011, the U.S. central bank has been using funds from principal payments on the agency debt and agency mortgage-backed securities, or MBS, it holds to reinvest in agency MBS. The New York Fed said on its website the Fed sold no mortgage securities guaranteed by Fannie Mae, Freddie Mac or the Government National Mortgage Association, or Ginnie Mae, in the latest week. It sold none the prior week. (Reuters)               

Europe

· Brazil's Christmas Shoppers Pull Back In Weak Economy. Brazilians cut down on Christmas spending this year as the weak economy depressed consumer confidence, data released on Friday showed. In the week of Dec. 18-24, retail sales dropped 1.7% from the same period a year earlier, research firm Serasa Experian said. Data from Brazil's shopping mall retailer's association Alshop confirmed that trend, showing no growth in existing-store sales from the 2013 holiday season. (Reuters)

· Russia's Finance Minister Sees Economy Shrinking 4% In 2015. Finance Minister Anton Siluanov said on Friday that the Russian economy could contract by 4% next year and that the budget could have a deficit of more than 3% of gross domestic product if oil prices average $60 a barrel. Siluanov also told journalists that his ministry had recalculated its budget forecasts to take into account oil prices at $60 a barrel and that he expected the ruble's average exchange rate to be around 51 rubles per dollar in 2015. (Reuters)

Currencies

· Dollar Notches Small Gains Against Euro, Yen. The dollar edged up a notch against the yen and the euro Friday, but trading was expected to remain light in this post-Christmas session. European banks remained closed for the Christmas break, and several markets in Asia also were closed. Meanwhile, the U.S. data calendar was bare. The dollar was at ¥120.39, from ¥120.15 late Thursday in North America. The euro eased to $1.21.78 from $1.2222. The WSJ Dollar Index a measure of the dollar against a basket of major currencies, was up 0.3% at 82.74. (Marketwatch)

Commodities

· Brent Crude Prices Steady Above $60 In Thin Christmas Trading. Brent crude oil futures traded steadily above $60 on Friday as a building supply glut and weak Japanese import data weighed on the market while strong U.S. economic data published over Christmas provided support. On the supply side, data suggested an increasing glut as a U.S. report showed crude inventories unexpectedly rose by 7.3 million barrels last week to their highest December level on record. Analysts had expected a seasonal draw. Front-month Brent crude prices were trading at $60.68 at 0812 GMT, up 44 cents, while U.S. WTI's front-month contract was up 47 cents at $56.30 a barrel in thin trading as many countries were still on Christmas holiday. Brent is down 1.8% for the week, while U.S. crude was heading for a 1% drop. (Reuters)

· Gold Rises 2% On Possibility Of Looser China Lending. Gold rose the most in 2-1/2 weeks on Friday in thin post-Christmas trading, boosted by short-covering after China's central bank was reported to be considering a loosening of liquidity requirements at the country's banks. Under the current rules, Chinese banks are allowed to lend up to 75% of their deposits. Spot gold gained 2.1% to a session high of $1,199.00 an ounce, supported by an increase in crude oil prices. The gain eased slightly as oil prices turned negative and the U.S. dollar rose against a basket of currencies. Gold was up 1.9% at $1,195.11 an ounce as of 2:27 p.m. EST [1927 GMT], poised for its biggest one-day rise since Dec. 9. The metal was on track to end the week nearly flat, down just $1, and on pace for a slight yearly decline. Among other precious metals, silver rose 2.7% to $16.09 an ounce and platinum gained 2.2% to $1,212.74 an ounce. Both were headed for annual declines. Palladium, up 1.3% at $813.80, was heading for a third straight yearly increase. (Reuters)