EXECUTIVE SUMMARY
- MNI BRIEF: Inflation Expectations Tick Higher - NY Fed
- MNI US: Strong Voter Support For ACA Prompts Trump Strategy Reset On Health Care
- MNI US: Pentagon Bill Up For Vote This Week, Details Of Govt Funding CR Pending
- MNI CANADA: Politics Week: Trudeau Grapples With Trump Tariffs And Fiscal Update
- MNI US DATA: NY Fed Consumer Inflation Expectations Firm A Touch
US
MNI BRIEF: Inflation Expectations Tick Higher - NY Fed
All three of the New York Fed's median measures of consumer inflation expectations ticked up a tenth in November, according to the bank's Survey of Consumer Expectations, with households expressing more optimism about their finances. One-year-ahead inflation expectations increased to 2.97%, three-year-ahead inflation expectations increased to 2.57%, and five-year-ahead inflation expectations increased to 2.86%, the survey said.
MNI US: Strong Voter Support For ACA Prompts Trump Strategy Reset On Health Care
A new survey from Gallup has found that a majority of Americans approve of the Affordable Care Act, a sign that US President-elect Donald Trump’s evolving position on healthcare is a response to increased support for government health provisions.Semafor notes on the survey: “The public is divided on whether a government-run healthcare system or a private system is better, but the share of Republicans who favor a government-run system — 21% — is the highest on record.”
NEWS
MNI SECURITY: Sullivan To Travel To Israel For Gaza Ceasefire Talks This Week
US President Joe Biden's National Security Advisor, Jake Sullivan, will travel to Israel this week for talks on a Gaza ceasefire-for-hostage deal. The White House notes that Sullivan will also discuss developments in Syria, Lebanon, and Iran. The trip comes amid increased optimism that a Gaza ceasefire deal can be struck before US President-elect Donald Trump takes office on January 20.
MNI US: Pentagon Bill Up For Vote This Week, Details Of Govt Funding CR Pending
Congressional leaders released the final 1813-page draft textof the must-pass annual Pentagon funding bill – the National Defense Authorization Act – teeing up a vote in the House this week. The final NDAA text fails to include a package of China-related bills that “would have essentially codified a Biden administration executive order restricting US investment in certain high-tech sectors in China," per Semafor.
MNI CANADA: Politics Week: Trudeau Grapples With Trump Tariffs And Fiscal Update
PM Justin Trudeau continues to see if he can convince Donald Trump to water down or cancel a 25% tariff, while struggling to win a unified position from provincial and opposition leaders on how to proceed. Conservatives poised to bring non-confidence motions this week against Trudeau's Liberals, asking the NDP to agree to a statement that reflects its past criticism of the government. Motions are unlikely to pass because NDP says it won't play Conservative political "games."
MNI SECURITY: Zelensky To Hold Meeting Of Allies In Dec, Talk Of Ceasefire Increases
Reuters reporting that Ukraine, “aims to hold a meeting of key European allies in December,” according to Ukrainian President Volodymyr Zelenskyy’s spokesperson. The spokesperson noted that the meeting is needed, “to coordinate joint position and ensure Ukraine is strong for talks and on battlefield.”
MNI SPAIN: Catalan Party Head-PM Should Submit To Confidence Vote
El Pais reporting comments from Carles Puigdemont, leader-in-exile of the pro-Catalan independents Junts per Catalynua, saying that PM Pedro Sanchez should submit to a vote of no confidence in the Congress of Deputies. Junts sits as an uneasy partner propping up Sanchez's left-leaning minority gov't. Speaking in Brussels, Puigdemont said “Things are not going well,” and that "I want Congress to say whether he has a majority that keeps his confidence intact,”.
MNI ISRAEL: Reports-Names Exchanged In Possible Sign Of Progress On Gaza Ceasefire
Qatari outlet Al Araby Al Jadeed reports that according to its sources, indirect negotiations between Israel and Hamas on a Gaza ceasefire-for-hostages deal have reached the stage of exchanging names of hostages and prisoners via mediators. Hamas is said to have passed to Egypt a list of ill or elderly Israeli hostages that would be released as part of a first phase in the agreement.
MNI US TSYS: Tsys Hold Narrow Weaker Band, Waiting for CPI, PPI Data
- Treasuries gradually extended session lows by midday, have held to a narrow range through the second half, curves bear steepening: 2s10s +1.983 at 6.673, 5s30s +1.770 at 31.624.
- The Fed in blackout and limited data to kick off the week: Wholesale trade sales lower than expected (-0.1% vs. 0.2% est) while the prior was uprevised to 0.5% from 0.3%. NY Fed consumer inflation expectations all increased a tenth in November, albeit with the 3Y metric exaggerated by rounding.
- The main data focus is on on CPI & PPI inflation data on Wednesday & Thursday respectively.
- Meanwhile, projected rate cuts into early 2025 have receded slightly from late Friday (*) as follows: Dec'24 cumulative -21.5bp (-22.2bp), Jan'25 -27.9bp (-29.7bp), Mar'25 -44.8bp (-46.6bp), May'25 -54.6bp (-56.4bp).
OVERNIGHT DATA
MNI US DATA: NY Fed Consumer Inflation Expectations Firm A Touch
NY Fed consumer inflation expectations all increased a tenth in November, albeit with the 3Y metric exaggerated by rounding. The longer-term measures lag the recent increase seen in the U.Mich consumer survey where the 5-10Y dipped to 3.1% in preliminary December data after a rare push above its range to 3.2% in November.
- 1Y: 2.97% after 2.87%, extending a broad stabilization having averaged 2.97% for the latest six months.
- 3Y: 2.57% after 2.54%, towards the middle of the ytd range but close to the 2.6% averaged in 2019.
- 5Y: 2.9% after 2.8%, having been either 2.8% or 2.9% since June.
MNI DATA:US OCT WHOLESALE INV 0.2%; SALES -0.1%
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 196.55 points (-0.44%) at 44446.95
S&P E-Mini Future down 35.75 points (-0.59%) at 6063.25
Nasdaq down 141.1 points (-0.7%) at 19718.53
US 10-Yr yield is up 4.4 bps at 4.1973%
US Mar 10-Yr futures are down 9/32 at 111-5.5
EURUSD down 0.002 (-0.19%) at 1.0548
USDJPY up 1.27 (0.85%) at 151.27
WTI Crude Oil (front-month) up $1.02 (1.52%) at $68.22
Gold is up $24.04 (0.91%) at $2657.39
European bourses closing levels:
EuroStoxx 50 up 7.68 points (0.15%) at 4985.46
FTSE 100 up 43.47 points (0.52%) at 8352.08
German DAX down 38.65 points (-0.19%) at 20345.96
French CAC 40 up 53.26 points (0.72%) at 7480.14
US TREASURY FUTURES CLOSE
3M10Y +4.491, -21.027 (L: -28.817 / H: -21.027)
2Y10Y +2.177, 6.867 (L: 2.979 / H: 7.089)
2Y30Y +2.916, 25.902 (L: 21.542 / H: 26.225)
5Y30Y +1.863, 31.717 (L: 29.355 / H: 31.974)
Current futures levels:
Mar 2-Yr futures down 1.875/32 at 103-4.375 (L: 103-04 / H: 103-06.625)
Mar 5-Yr futures down 5/32 at 107-20 (L: 107-19.5 / H: 107-26.75)
Mar 10-Yr futures down 9/32 at 111-5.5 (L: 111-05 / H: 111-18.5)
Mar 30-Yr futures down 25/32 at 119-12 (L: 119-10 / H: 120-10)
Mar Ultra futures down 40/32 at 126-29 (L: 126-27 / H: 128-13)
MNI US 10YR FUTURE TECHS: (H5) Bull Cycle Remains In Play
- RES 4: 112-18 50.0% retracement of the Sep 11 - Nov 15 bear leg
- RES 3: 112-02 Low Oct 14
- RES 2: 111-24 38.2% retracement of the Sep 11 - Nov 15 bear leg
- RES 1: 111-20+ High Dec 6
- PRICE: 111-08 @ 1350 ET Dec 9
- SUP 1: 110-18 Low Dec 4
- SUP 2: 110-01/109-20 Low Nov 25 / Low Nov 20/21
- SUP 3: 109-02+ Low Nov 15 and the bear trigger
- SUP 4: 108-28 1.236 proj of the Oct 1 - 14 - 16 price swing
A bull cycle in Treasuries remains in play and last week’s gains reinforce current bullish conditions. The contract has traded through the 50-day EMA, at 111-12. A clear break of this average would strengthen a bullish theme and signal scope for a stronger recovery. Sights are on 111-24 next, a Fibonacci retracement. For bears, a reversal lower would highlight the end of the bull cycle and open the key support at 109-02+, the Nov 15 low.
SOFR FUTURES CLOSE
Dec 24 -0.013 at 95.623
Mar 25 -0.020 at 95.880
Jun 25 -0.015 at 96.080
Sep 25 -0.030 at 96.185
Red Pack (Dec 25-Sep 26) -0.04 to -0.03
Green Pack (Dec 26-Sep 27) -0.04 to -0.035
Blue Pack (Dec 27-Sep 28) -0.04 to -0.035
Gold Pack (Dec 28-Sep 29) -0.045 to -0.035
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.02535 to 4.45195 (-0.05505 total last wk)
- 3M -0.03050 to 4.39622 (-0.04653 total last wk)
- 6M -0.04035 to 4.28907 (-0.05417 total last wk)
- 12M -0.05184 to 4.12895 (-0.07310 total last wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.60% (+0.01), volume: $2.277T
- Broad General Collateral Rate (BGCR): 4.58% (+0.01), volume: $838B
- Tri-Party General Collateral Rate (TGCR): 4.58% (+0.01), volume: $809B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.58% (+0.00), volume: $107B
- Daily Overnight Bank Funding Rate: 4.58% (+0.00), volume: $270B
FED Reverse Repo Operation
RRP usage slips rebounds to $153.029B this afternoon from Friday's multi-year low of $130.014B (last seen at May 3 2021: $129.724B). The number of counterparties up to 52 from 50 prior.
MNI PIPELINE: $2.75B ANZ 4Pt Debt Issuance Launched, TD Guidance Updated
- Date $MM Issuer (Priced *, Launch #)
- 12/09 $2.75B #ANZ $650M 2Y +30, $350M 2y SOFR+47, $850M 5Y +55, $900M 5Y SOFR+85
- 12/09 $Benchmark Toronto-Dominion 2Y +45, 2Y SOFR+62, 5Y +72, 5Y SOFR+103
- 12/09 $500M *Bank of Montreal 2NC1 +47, 2NC1 SOFR
- 12/09 $750M Barnes Group 7NC3
- 12/09 $750M #VICI Properties 7Y +107
- 12/09 $Benchmark Arthur J Gallagher investor calls
- 12/09 $Benchmark M&T Bank investor calls
- Expected Tuesday $2B Saks Global 5NC2
MNI BONDS: EGBs-GILTS CASH CLOSE: Twist Steepening With ECB Coming Into View
European yields were little changed Monday, with the ECB's final decision of the year coming into view.
- Core FI futures softened to start the week's trade, pressured by a risk-positive cross-asset move following a dovish monetary policy stance tweak in China.
- Bunds and Gilts regained ground over the course of the late morning and early afternoon, as European equity and crude oil futures retraced from session highs, but the weakness resumed in the last couple of hours of cash trade with yields closing near the session highs.
- There was no discernable market reaction to an appearance by BoE’s Ramsden, who did not discuss policy rates; he said he wants QT to be "gradual and predictable".
- The German and UK curves each twist steepened, with Bunds modestly underperforming Gilts.
- Periphery/semi-core EGB trade largely mirrored the moves in core markets, with spreads compressing on the day but finishing off tightest levels amid a bit of weakness toward the cash close.
- The week's focus is Thursday's ECB decision (pricing was unchanged Monday, at 27bp of cuts implied), but Wednesday's US CPI release and Friday's UK economic activity data will also bear watching.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.3bps at 1.998%, 5-Yr is up 0.9bps at 1.978%, 10-Yr is up 1.3bps at 2.121%, and 30-Yr is up 3.2bps at 2.348%.
- UK: The 2-Yr yield is down 1.4bps at 4.247%, 5-Yr is down 1.4bps at 4.119%, 10-Yr is down 0.5bps at 4.27%, and 30-Yr is up 1.6bps at 4.824%.
- Italian BTP spread down 0.8bps at 107.7bps / French OAT down 1.4bps at 75.4bps
MNI FOREX: AUDJPY Soars 1.85% Pre-RBA as China Signals More Stimulus
- Headlines from China on Monday hinted at looser monetary policy ahead, and the news has provided a boost to risk sentiment across currency markets, with the Australian dollar leading the G10 charge. We noted the monetary policy stance tweak and fiscal language used today reduces the odds of a meaningful move lower in the country's GDP growth target for '25.
- In contrast to the firm rally for antipodean FX, the Japanese Yen is the weakest major currency, prompting a near 2% advance for AUDJPY.
- Despite AUDUSD’s 1%advance, trend conditions remain bearish and resistance is at 0.6497, the 20-day EMA. This average has capped gains well in recent weeks.
- Notably, Friday had the first daily close below the 0.6400 mark since November 2023, and leaves key support at 0.6350.
- For USDJPY, today’s rally extends the most recent recovery to around 1.8% and spot is almost at identical levels to before the US election. Price action narrows the gap to initial firm resistance at 151.75, the 20-day EMA. However, the trend direction remains south, for now.
- Fresh pressure on EURGBP saw the cross touch a low of 0.8269 to again trouble the twice-tested support from last week. We have noted across the past few weeks a clear area of demand in the cross, layered between 0.8260-87 that coincides with the range-defining support around the 0.8300 handle.
- Analysts are expecting an unchanged RBA rate decision at 4.35%, before the focus turns swiftly to US CPI and the Bank of Canada Wednesday.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 10/12/2024 | 0700/0800 | *** |  DE | HICP (f) |
| 10/12/2024 | 0700/0800 | *** |  NO | CPI Norway |
| 10/12/2024 | 0700/0800 | ** |  SE | Private Sector Production m/m |
| 10/12/2024 | 0900/1000 | * |  IT | Industrial Production |
| 10/12/2024 | 1000/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 10/12/2024 | 1100/0600 | ** |  US | NFIB Small Business Optimism Index |
| 10/12/2024 | - | *** |  CN | Trade |
| 10/12/2024 | - | *** | CN | Money Supply |
| 10/12/2024 | - | *** | CN | New Loans |
| 10/12/2024 | - | *** | CN | Social Financing |
| 10/12/2024 | - |  EU | ECB's De Guindos in ECOFIN meeting | |
| 10/12/2024 | 1330/0830 | ** | US | Non-Farm Productivity (f) |
| 10/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 10/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 10/12/2024 | 1700/1200 | *** | US | USDA Crop Estimates - WASDE |
| 10/12/2024 | 1800/1300 | *** | US | US Note 03 Year Treasury Auction Result |