MIDDLE EAST (BBG): Biden Says Israel and Hezbollah Reach Cease-Fire Agreement
President Joe Biden said Israel reached a cease-fire deal with the Lebanese militant group Hezbollah after weeks of talks mediated by the US, and he hailed the agreement as a major step to ending a conflict that’s killed thousands of people. Biden, who spoke after talking with the leaders of Israel and Lebanon, said at White House Tuesday that all sides had agreed to a 60-day cease-fire that would “end the devastating conflict between Israel and Hezbollah.”
MIDDLE EAS (MNI): Ceasefire Duration Contingent On Hezbollah Compliance, Netanyahu
Israeli Prime Minister Benjamin Netanyahu has delivered a press conference announcing that he has approved a ceasefire deal to end fighting with Hezbollah in Lebanon. Netanyahu stresses that the ceasefire is contingent on complete compliance from Hezbollah and Israel reserves the right to resume the war under the terms of the ceasefire deal in the event of an infraction. The deal is now expected to be rubber-stamped by the full Israeli cabinet.
US President-elect Donald Trump’s team is discussing pursuing direct talks with North Korean leader Kim Jong Un, Reuters reports, citing two unidentified people familiar with the matter.
The Federal Reserve is nearing a slowdown in its pace of interest rate easing, with likely only one or two cuts in 2025, former Dallas Fed President Robert Kaplan told MNI, adding that a rate cut in December is a close call. "We've got a resilient economy," he said in an interview. "Unless I see clear improvement I think you would probably see from the Fed, and - I think you should see - a pace that is slower, more deliberate."
Federal Reserve officials agree they have room to continue reducing interest rates but should do so gradually given uncertainty surrounding the neural rate, minutes from the central bank's November meeting showed Tuesday. "Participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2% and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time," the minutes said.
TARIFFS (BBG): Trump Tariff Shock Sparks All-Hands Response in Trudeau War Room
Canadian Finance Minister Chrystia Freeland was wrapping up a meeting of a special cabinet group on US relations on Monday evening in Ottawa when a fresh crisis emerged: Donald Trump made a tariff threat on social media. Soon after, Justin Trudeau was on the phone with Trump. The Canadian dollar was sinking — it hit a four-year low — in response to Trump’s post that he would impose 25% tariffs on all goods coming from Canada and Mexico unless those countries curb the flow of fentanyl and migrants into the US.
TARIFFS (WPT): Mexico Vows to Retaliate If Trump Imposes 25 Percent Tariffs
Mexico's president responded angrily Tuesday to President-elect Donald Trump's pledge to impose a 25 percent tariff on its products if the country didn't curb the flow of irregular migrants and fentanyl, warning that the penalties would only wind up causing inflation and unemployment in the United States.
US POLITICS (BBG): Trump Said to Name Hassett National Economic Council Chief
President-elect Donald Trump is said to have selected Kevin Hassett to lead the National Economic Council, a role spearheading the new administration’s tax, trade and spending agenda, according to people familiar with the matter. A fixture of conservative economic circles for two decades, Hassett previously served as a senior adviser to Trump and the chair of the Council of Economic Advisers during the president-elect’s first administration, and he vigorously defended the Republican’s signature tax policies. He also backs the Republican’s slate of tariff proposals.
BOC (MNI): BOC Sees More Rate Cuts If Economy Evolves As Expected
Bank of Canada Deputy Governor Rhys Mendes on Tuesday affirmed more interest-rate cuts can be expected if the economy advances in line with forecasts, and while the latest headline inflation reading met that condition there are important GDP and jobs data due ahead of the Dec 11 decision.
Bank of Canada Deputy Governor Rhys Mendes said Tuesday there are two-sided risks to inflation stemming from geopolitical risks such as U.S. President-elect Donald Trump's threatened 25% tariffs and slack in the domestic economy. Economic projections won't incorporate new geopolitical risks until specific policies are enacted, Mendes said in response to audience questions about tariffs after a speech. He also noted the size of bilateral Canada-U.S. trade means both economies would see an impact.
Europe
FRANCE (BBG): French Premier Warns of Market ‘Storm’ If Budget Voted Down
French Prime Minister Michel Barnier said the country faces a “storm” in financial markets if an “unlikely but possible” alliance of lawmakers across the political spectrum rejects his government’s budget proposals and votes it out of power. The premier’s political survival hangs on whether French far-right leader Marine Le Pen’s will back a potential no-confidence vote when he presents final versions of the 2025 government and social-security budget bills in coming days and weeks.
BOE (MNI): MNI BRIEF: Signs Inactivity Due Sickness Overstated - BOE Pill
Bank of England Chief Economist Huw Pill told the Lords Economic Affairs Committee Tuesday that alternative data sources suggest that employment is higher and economic inactivity due to sickness lower than the headline Labour Force Survey has shown.
US TSYS: FOMC Minutes Help Front-End To Belly Pare Losses
- Treasuries have extended the intraday bull steepening seen since the FOMC minutes, with 2s leading a paring of losses with yields 3.3bps lower post-minutes for only +0.6bp on the day.
- 5Y yields have also declined 2.9bps since the minutes for +1.6bp on the day.
- The lack of a more overtly hawkish message to the minutes potentially allowing bullish plays that were held back after a reasonable 5Y auction earlier, and another step slower for WTI futures on Israel’s security cabinet ceasefire approval geopolitical factors will also help.
- 2s10s has lifted to 5bps (+4.2bps) after Monday’s dip back into inversion for the first time in over a month following the Bessent pick as Treasury Secretary.
- TYZ4 has lifted to 110-11 (-06) for back towards the middle of the day’s relatively narrow range, off an earlier low of 110-05+.
- Yesterday’s high of 110-18 is deemed corrective with the technical trend bearish. Support is seen at 109-14+ (Nov 20/21 high).
- Tomorrow sees a particularly heavy docket including GDP revisions for Q3, monthly PCE for October and initial jobless claims, all broad forward ahead of Thanksgiving, before 7Y supply.
BONDS: EGBs-GILTS CASH CLOSE: Highest OAT/Bund Spread Since 2012
Today’s EGB focus came later in the session with a sharp widening in the 10-year OAT/Bund spread, rising 5bps to 86bps for its highest since 2012 according to Bloomberg.
- Much of the OAT underperformance started from ~15:30GMT, along with a notable pick up in OAT future volumes vs below average Bund future volumes.
- Earlier today, the EC approved France’s 2025 draft budgetary plan, as had been reported by Bloomberg last week. The EC did however note that “the risks to achieving the fiscal objectives for 2025 set out in the Draft Budgetary Plan are tilted to the downside, and mainly relate to the favourable macroeconomic assumptions underpinning the budgetary targets set in the Draft Budgetary Plan”.
- Further, some desks noted the potential impact of this story from Le Parisien "The government will fall": Macron expects Barnier to fall. On the sidelines of the decoration ceremony for Élisabeth Borne this Monday at the Élysée, the president made a few confidences. If in front of the camera, he has always refused to comment on the government's choices, in private, he predicts the censorship of the Prime Minister by Marine Le Pen."
- PM Barnier has since appeared on local TV, reiterating on TF1 at 8pm CET the aim to cut the budget deficit to about 5% GDP whilst seeing a financial market ‘storm’ if the budget isn’t passed per Bloomberg headlines from the appearance.
- The 10-year BTP/Bund spread also widened ~3.5bps in the afternoon to leave it 1.5bps wider on the day at 127.6bps for its highest since Nov 13.
- Gilts weren’t immune from the widening, with the 10-year spread to Bund widening 3.3bps to 216.4bps.
FOREX: USDMXN Rises Over 2.5% to Fresh Post-Election Highs, USDCAD Stabilises
- There has been a mixed performance across G10 currencies on Tuesday, as tariff related headlines and geopolitical risks continue to dominate broader market sentiment. The USD index stands 0.25% higher on the session, with higher beta currencies such as AUD and CAD underperforming, while the Japanese Yen has notably firmed.
- USDJPY built downside momentum below the weekly lows around 1.5355 and briefly printed 152.99. It is also worth noting we have broken below the 20-day exponential moving average which had helped to underpin the price action in recent weeks. A daily close below the average could signal scope for a deeper correction towards both the 50-day EMA and the November lows, situated between 151.35/55.
- AUDJPY and CADJPY have both declined more than 1.2% on the session, signalling a sense of waning risk sentiment, despite US equity markets remaining buoyant and US yields being higher on the session across the curve.
- USDCAD (+0.66%), which has an outsized move during the APAC session rising to a cycle high of 1.4178, has since moderated and trades roughly 100 pips from those highs at typing.
- However, USDMXN (+2.35%) has continued to grind higher, eclipsing the post-election high at 20.8072 in the process, a multi-year high for the pair. Clearance of this level resumes the primary uptrend that's dictated price action across H2 this year, and above here, 21.0233 marks the 50% retracement of the post-COVID range.
- EURUSD briefly rose to a recovery high of 1.0545, but has since resumed its weakening bias to trade at 1.0465 ahead of the FOMC minutes. On Wednesday, Australian CPI and the RBNZ decision are highlights on the docket ahead of the US Thanksgiving holiday.
US STOCKS: ESA Close To Recent Highs As Broader Gains Offset Tariff Disruption
- E-mini S&P 500 at 6034.5 (+0.45%) sits just below session highs, with limited net reaction to the FOMC minutes. It’s close to recent highs of 6040.00 from yesterday and the bull trigger at 6053.25 (Nov 11 high).
- The technical trend needle points north although there is some way lower until support at 5934.75 (20-day EMA).
- It’s the fourth consecutive daily increase and leaves the index up 2.3% since Nov 15.
- Gains are led by utilities (+1.2%) followed by communication services (+0.85%, with Google +1.1% and Meta +1.2%) and consumer discretionary (+0.7%, with Amazon +2.7%).
- There are clear tariffs impact from Trump’s proposed 25% on Canada and Mexico plus an additional 10% on China: materials lag (-0.7%) whilst industrials (+0.1%) hides -1.1% for transportation. For single names, GM one of the largest losers at -8.1% with exposure to Canada trade disruption.
- The S&P 500 outperforms today, with Nasdaq 100 (+0.3%), Dow Jones (+0.2%) and a reversal of yesterday’s outperformance for the Russell 2000 at -0.7%.
COMMODITIES: Crude Falls on Ceasefire Approval
- WTI is heading for close trading lower after Israel Prime Minister Netanyahu announced his approval of a ceasefire deal to end fighting with Hezbollah in Lebanon.
- WTI Jan 25 is down by 0.5% at $68.6/bbl.
- A bearish theme in WTI futures remains intact, with attention on $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support.
- Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high.
- Meanwhile, spot gold is little changed today, with the yellow metal just 0.1% higher at $2,627/oz, despite a brief spike higher earlier in the session on headlines of a possible further escalation in tensions between Russia and Kyiv.
- From a technical perspective, yesterday’s sharp pullback is considered corrective, for now, and the long-term trend condition remains bullish.
- Resistance to watch is $2,721.4, yesterday’s high. Clearance of this level would be a bullish development. Key support is $2,536.9, the Nov 14 low.
- Silver is outperforming slightly, up 0.6% on the day at $30.5/oz, with the gold-silver ratio at 86.2, around 1% below yesterday’s 2½-month high.
- Medium-term bullish conditions in silver remain intact, although the corrective cycle that started on Oct 23 is still in play, exposing $28.446, a Fibonacci retracement. Initial firm resistance to watch is $31.287, the 50-day EMA.
| Date | GMT/Local | Impact | Country | Event |
| 27/11/2024 | - |  NZ | Reserve Bank of New Zealand Meeting | |
| 27/11/2024 | 0030/1130 | *** |  AU | Quarterly construction work done |
| 27/11/2024 | 0030/1130 | *** | AU | CPI Inflation Monthly |
| 27/11/2024 | 0100/1400 | *** | NZ | RBNZ official cash rate decision |
| 27/11/2024 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 27/11/2024 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 27/11/2024 | 0930/1030 | * |  DE | GFK Consumer Climate |
| 27/11/2024 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 27/11/2024 | 1330/0830 | *** | US | GDP |
| 27/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 27/11/2024 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/11/2024 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/11/2024 | 1445/0945 | *** | US | MNI Chicago PMI |
| 27/11/2024 | 1500/1000 | *** | US | Personal Income and Consumption |
| 27/11/2024 | 1500/1000 | ** | US | NAR Pending Home Sales |
| 27/11/2024 | 1500/1000 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/11/2024 | 1500/1000 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/11/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 27/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/11/2024 | 1700/1200 | ** | US | Natural Gas Stocks |
| 27/11/2024 | 1800/1900 |  EU | ECB's Lane dinner remarks at conference on "Macroeconomic modelling frontiers for research and policy" |