US 2s10 Sees Return To (Limited) Inversion
NEWS
MIDDLE EAST (MNI): Final Text Of Israel-Hezbollah Ceasefire Agreement Reached, Kan
The deputy speaker of the Lebanese Parliament Elias Bou Saab has confirmed to Al Jazeera that the final text of an Israel-Hezbollah ceasefire agreement has been reached but Lebanon remains "cautious until they publicly approve it in Israel," because of "[previous] experience with [Israeli Prime Minister Benjamin] Netanyahu" per Roi Kais at Kan reporting on X.
MIDDLE EAST (MNI): Biden And Macron To Announce Lebanon Ceasefire Within 36 Hours, RTRS
Reuters reporting that, according to four Lebanese sources, there is a plan for US President Joe Biden and French President Emmanuel Macron, "to announce Hezbollah-Israel ceasefire deal within 36 hours.
The net effects from protectionism following Donald Trump's election will be negative for the global economy, ECB chief economist Philip Lane said in an interview published on Monday, although he said there were two way risks for the eurozone.
ECB monetary policy decisions follow a broad range of staff analyses on risks and contingencies and comprehensive simulations of monetary policy and stance scenarios, Chief Economist Philip Lane said on Monday.
ECB (MNI): Cuts Should Be Timely But Cautious - Buba's Nagel
The ECB’s Governing Council is increasingly confident inflation will reach the 2% target sustainably “soon and permanently,” and should not wait until the target has been reached before easing interest rates further, Bundesbank President Joachim Nagel said in a speech on Monday.
ECB (MNI): ECB: PMIs Appear To Have Softened Makhlouf's Outlook
The weakness in Friday’s PMIs appear to have softened Central Bank of Ireland’s Makhlouf’s outlook today. He still advocates for some caution but is open-minded on the slope of the downward trajectory in rates vs pushing a “prudent and cautious approach” with no rush to achieve the ECB's target in Nov 18 remarks.
GERMANY (BBG): Thyssenkrupp to Cut 11,000 Jobs at Struggling Steel Unit
Thyssenkrupp AG’s steel unit plans to reduce its labor force by about 40% this decade, a move that would shrink a business that’s lost billions of euros to a global steel glut and rising energy prices.
US STOCKS (BBG): Macy’s Delays Earnings After Worker Hid Millions in Expenses
Macy’s Inc. said it would delay its third-quarter earnings release after an investigation revealed an employee hid more than $100 million of expenses. An employee “intentionally” made erroneous accounting accrual entries to hide about $132 million to $154 million of cumulative delivery expenses stretching over multiple years, the company said Monday.
US STOCKS (WSJ): Starbucks Wrestles with Ransomware Attack on Software Supplier -- WSJ
Starbucks said fallout from a ransomware attack on a software supplier is disrupting the coffee chain's ability to pay baristas and manage their schedules, leaving cafe managers to manually calculate employees' pay.
BITCOIN (BBG): MicroStrategy Accelerates Bitcoin Buying With Record Purchase
MicroStrategy Inc. bought a record $5.4 billion in Bitcoin, the third major purchase announced this month by the crypto hedge fund proxy. Using the proceeds from a $3 billion convertible note issue and common share sales, the Tysons Corner, Virginia-based firm acquired 55,500 tokens from Nov. 18 through Nov. 24, according to an US Securities and Exchange Commission filing. MicroStrategy now owns around $38 billion in Bitcoin, making it the largest publicly traded corporate holder of the digital asset.
US POLITICS (BBG): DOJ Formally Moves to Drop Trump 2020 Obstruction Case in DC
The US Justice Department has moved to drop the 2020 election obstruction case against Donald Trump, asking a judge to dismiss the extraordinary federal prosecution of a former president whose reelection ensured he’d be shielded from charges in the White House.
CANADA (MNI): Less Than Half Canada Firms See Inflation Obstacle
Fewer than half of Canadian business managers saw inflation as an obstacle for the first time in more than two years according to a government survey, in line with the central bank's view of major progress slowing price gains.
CANADA (DJ): Canada's Fall Economic Statement Delivery Delayed by Filibuster, Finance Minister Says
Canadian Finance Minister Chrystia Freeland said an opposition-party-led filibuster in the country's legislature is posing obstacles in her effort to produce a fall economic statement and the publication of final budget numbers of the 2023-24 fiscal year.
DATA
US DATA: Dallas Fed Mfg Future Optimism Hits New Three-Year High
- The penultimate of the five regional Fed manufacturing surveys for November,
the Dallas Fed survey was mildly lower than expected at -2.7 (cons -1.8) to
leave it near unchanged from -3.0 [Dallas in green lines in charts below]. - That 0.3pt nudge higher sees it technically at is highest since Apr 2022
having started 2024 at a heavy -27.4. - The little change on the month belied a sharper deterioration in new orders
(from -3.7 to -11.9, lowest since July), in part offset by a strong
improvement in employment (+10pts to 4.9). - Manufacturing firms remain far more optimistic looking ahead, with the index
for production six months ahead rising further from 42.4 to 44.0, a sixth
consecutive monthly increase for its highest since Nov 2021. - This growing optimism is a trend broadly seen in Empire and Philly surveys.
US TSYS: A Strong Rally On Bessent Pick And Tumbling WTI
- Treasuries have seen strong gains today over three steps. They opened higher in response to Bessent’s pick as Treasury Secretary at the weekend, WTI futures tumbled on Israel-Hezbollah ceasefire prospects and then the strong 2Y auction firmly passed a test of front-end demand to remove a barrier against further Bessent-linked plays.
- Cash yields are 10-14bp lower on the day, with declines led by 30s.
- Declines have been seen in both real yields and inflation breakevens (10Y -8bps real, -5.8bps breakeven). 10Y yields of 4.263% sit almost 24bp below recent highs of 4.501% from mid-Nov.
- 2s10s is at 0.1bps (-2.8bp from Fri) having fluctuated within +/-2ps around zero since the Asia open. It has seen its first inversion since Oct 7.
- TYZ4 trades at 110-15+ (+ 27), holding close to an earlier high of 110-18. It made light work of resistance at 110-04+ (20-day EMA) and opens 111-09 (50-day EMA) as it tests what had been a bearish technical trend.
- Fed Funds implied rates are little changed for the near-term but the broader rally increasingly weighs further out into 2025 (the Dec rate is -0.5bp since Fri vs -4.5bp for the Jun’25). It leaves 13bp of cuts for Dec before a cumulative 19bp for Jan and 52bp for June.
- Tomorrow sees FOMC minutes after a string of hawkish Fedspeak (MNI Preview here) and 5Y supply. It’s followed by GDP/PCE data and 7Y supply on Wed before Thanksgiving closures.
FOREX: Greenback Consolidates Intra-Day Weakness, FOMC Minutes Tuesday
- Currency markets saw the most recent dollar strength moderate to begin the week, with the appointment of Scott Bessent as Treasury Secretary under Trump providing some pushback to the short-term trend. His nomination has pinned back concerns that a tariff regime will go too far, too fast, with his views on gradualism likely meaning a more forceful approach on trade will come step-by-step, rather than an abrupt shift.
- The USD pullback has helped spur short-covering across EUR, which outperforms all others in G10. EURUSD (+0.65%) reached as high as 1.0530, marking a ~200 pip recovery off last week's lows, although spot has slipped back below 1.0500 ahead of the APAC crossover.
- German IFO data painted a poor picture of the German economy, The print mirrored last week's flash PMI release in that the services sector saw a clear decline - however, in the IFO, also manufacturing showed weaker again.
- USDCHF was a notable mover on the session, declining 0.75% as SNB sight deposits data indicated the SNB may not have intervened last week. In contrast, higher beta currencies were unable to take advantage of the softer dollar, with the likes of EURAUD, EURCAD and EURNZD all rising comfortably over 0.5% to start the week and partially revising the steep declines seen late last week.
- The minutes to the November FOMC meeting (released Tuesday at 1400ET) will be viewed in light of the hawkish tilt in Fed officials’ commentary in the 3 weeks since they decided to cut rates by 25bp. Accordingly, MNI’s Hawk-Dove Spectrum has been moved upward (in a more “hawkish” direction”) across the board.
US STOCKS: Broad Gains But With Some Outsized Losses
- The S&P 500 e-mini at 6000 (+0.2%) is holding a 15-20 point bounce off session lows of 5982.75 after an earlier high of 6040.00. It's set for a third daily increase and for a 1.7% cumulative gain since Nov 15.
- The earlier climb didn’t test the bull trigger at 6053.25 (Nov 11 high) although the trend signal nevertheless remains bullish. Next support meanwhile is seen at 5927.19 (20-day EMA).
- Nvidia weighs heavily (-3.6%) after reports a company executive had met with China’s vice commerce minister in Beijing, whilst more broadly energy names are the main losers on the day (-1.7%) owing to the slide in WTI futures on Israel-Hezbollah ceasefire prospects.
- Most sectors still in the green though, led by consumer discretionary (+1.4%), real estate (+1.1%) and materials (+1.0%) where tumbling Treasury yields following Bessent’s pick as Treasury Secretary have added a tailwind.
- Against this backdrop, Nasdaq 100 underperforms (-0.05%) whilst the Russell 2000 (+1.9%) and Dow Jones (+0.9%) outperform.
COMMODITIES: Crude, Precious Metals Fall As Geopolitical Risks Ease
- Oil prices have slid sharply today following reports of a coming Israel-Hezbollah ceasefire within the next 36 hours.
- WTI Jan 25 is down by 3.3% at $68.9/bbl.
- Meanwhile, the market awaits signs of OPEC’s output plans for 2025 after previous attempts to try and bring barrels back to the market during Q4 were delayed.
- For WTI futures, a bearish theme remains intact and attention is on $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support.
- Spot gold has fallen by 3.5% today to $2,622/oz as some of the geopolitical risk premium surrounding the Israel-Lebanon conflict has been removed.
- Gold had already slipped on the back President-elect Trump nominating Scott Bessent for Treasury Secretary, with his policy preferences deemed less inflationary than some of the alternatives.
- In terms of the prevailing technicals, the trend remains bullish for now. However, today’s move has brought gold through initial support at the 50-day EMA at $2,638.9, increasing the bearish threat, with next support at $2,610.5, the Nov 19 low.
- Similarly, silver has declined by 3.3% to $30.3/oz.
- Medium-term bullish conditions in silver remain intact and the bear cycle that started on Oct 23 still appears to be a correction.
- However, price has recently breached the 20- and 50-day EMAs exposing $28.446, a Fibonacci retracement. Initial firm resistance to watch is $31.315, the 20-day EMA.
| Date | GMT/Local | Impact | Country | Event |
| 26/11/2024 | 0001/0001 | * |  GB | BRC Monthly Shop Price Index |
| 26/11/2024 | 0700/0800 | ** |  SE | PPI |
| 26/11/2024 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 26/11/2024 | 1305/0805 |  CA | BOC Deputy Mendes speech in PEI. | |
| 26/11/2024 | 1330/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 26/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 26/11/2024 | 1400/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1500/1000 | *** | US | New Home Sales |
| 26/11/2024 | 1500/1000 | *** | US | Conference Board Consumer Confidence |
| 26/11/2024 | 1500/1000 | ** | US | Richmond Fed Survey |
| 26/11/2024 | 1500/1500 | GB | BOE's Pill at Economic Affairs Committee | |
| 26/11/2024 | 1530/1030 | ** | US | Dallas Fed Services Survey |
| 26/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 26/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 26/11/2024 | 1800/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/11/2024 | 1900/1400 | *** | US | FOMC Minutes |