Jan 20 (Reuters) - A look at the day ahead in Asian

markets.

Signs of life being breathed back into China's economy and a

strong rally on Wall Street on Friday bode well for Asian

markets on Monday, although nervousness around President-elect

Donald Trump's inauguration could temper the optimism.

U.S. markets will be closed for Martin Luther King Jr. Day,

so global liquidity will be lighter than usual, and U.S. debt

ceiling jitters are back in sharp focus. Further reason,

perhaps, for investors in Asia to tread lightly.

Investors have broadly welcomed the 'market-friendly' parts

of Trump's expected agenda like tax cuts and deregulation. But

other parts, like tariffs and mass deportations, could rekindle

inflation and slow the pace of Fed rate cuts.

Furthermore, higher-for-longer rates could damage growth and

stoke 'stagflation' concerns, making the Fed's job even more

difficult. His inauguration speech could be laden with

market-moving policy pledges, directives and executive orders.

In that context, the saga surrounding TikTok is being

closely watched for clues on Trump's policymaking and approach

to China. His latest position is he will revive the China-owned

social media app's access in the U.S. by executive order after

he is sworn in, but wants it to be at least half owned by U.S.

investors.

Back in the markets, the dollar and Treasury yields eased

off Monday's historic highs and ended last week lower, providing

a welcome easing of financial conditions for Asian and emerging

markets.

The 10-year yield clocked a 16-month high of 4.80% but fell

17 basis points on the week and the dollar index hit a 27-month

high to register only its second weekly loss in 16 weeks.

The catalyst seems to have been relatively tame U.S.

inflation data and dovish remarks from Fed Governor Christopher

Waller, who floated the idea of three or four quarter-point rate

cuts this year.

The S&P 500 rose 3% last week - its best week in 10 - the

Nasdaq climbed 2.4% and the MSCI World rose 1.7%. Asian stocks

underperformed though - the MSCI Asia ex-Japan index rose 0.8%,

Chinese stocks edged up only 0.3%, while Japan's Nikkei 225

fell.

China's 'data dump' last week was more encouraging than

analysts had expected. Overall growth in the fourth quarter was

5.4%, meaning Beijing met its annual GDP growth goal of around

5%.

The People's Bank of China sets interest rates on Monday. It

is expected to ease policy slowly and cautiously in the first

quarter of this year, but not necessarily starting on Monday.

Investors in Japan, meanwhile, are gearing up for a possible

rate hike from the Bank of Japan on Friday. The latest signals

from BOJ officials are pointing firmly in that direction, and

markets have reacted accordingly - the yen has rallied, and

Japanese stocks have fallen.

Here are key developments that could provide more direction

to markets on Monday:

- China interest rate decision

- Japan machinery orders (November)

- Malaysia trade (December)