Jan 9 (Reuters) - A look at the day ahead in Asian

markets.

China's latest inflation figures are out on Thursday, and they

could not be coming at a more fascinating - some might say

alarming - time for global bond markets.

Long-term yields around the world are shooting higher as

investors bet that sticky inflation will force the U.S. Federal

Reserve and other central banks to dial down or even halt their

rate-cutting cycles.

The 30-year UK gilt yield is the highest since 1998, the 30-year

U.S. Treasury yield is a whisker from 5%, and the U.S. 'term

premium' - the risk premium investors demand for lending long to

Uncle Sam rather than rolling over shorter-term debt - is the

highest in a decade.

If this is a reflection of investors' fears that the

inflation genie has not been put back in the bottle and central

banks are losing control over the long end of the bond curve,

policymakers should be worried.

Fed Governor Christopher Waller seems relatively relaxed though,

saying on Wednesday he still thinks inflation will fall toward

the Fed's 2% target, allowing for further rate cuts. But minutes

of the Fed's policy meeting last month showed policymakers are

wary, particularly around the impact of policies expected from

the incoming Trump administration.

Money markets are pricing in only 40 basis points of Fed

easing this year, and year-on-year oil price rise is the highest

in six months. Investors' inflation fears are bubbling up.

The global outlier is China, where policymakers are fighting

deflation. As Jim Bianco at Bianco Research points out, it is

the only major bond market in the world where yields are

falling.

Annual producer inflation has been negative every month

since October 2022, indicating that price pressures across the

economy remain deflationary. Annual consumer inflation is close

to zero, and hasn't been above 1% for nearly two years.

China's producer and consumer price inflation figures for

December will be released on Thursday. According to the

consensus forecasts in Reuters polls, economists expect annual

PPI inflation shifted slightly to -2.4% from -2.5% in November,

while annual CPI inflation cooled to just 0.1% from 0.2%.

This is the context in which Chinese bond yields are tumbling to

their lowest-ever levels. The 30-year yield is already below the

30-year Japanese Government Bond yield, and the 10-year yield is

now less than 50 basis points away from going below its 10-year

JGB equivalent.

HSBC analysts on Wednesday slashed their year-end 10-year

Chinese yield forecast to 1.2% from 1.8%.

The yuan remains under heavy selling pressure and on Wednesday

slipped to a fresh 16-month low. It is now poised to break the

September 2023 low of 7.35 per dollar, a move that will take it

to levels last seen in 2007.

Here are key developments that could provide more direction

to markets on Thursday:

- China PPI, CPI inflation (December)

- Australia retail sales (November)

- Taiwan, Australia, Philippines trade (December)