NEWS
Asia
RBNZ (MNI): MNI INTERVIEW: RBNZ Will Cut Harder If Needed - Conway
The Reserve Bank of New Zealand will make more aggressive cuts to the 4.25% Official Cash Rate track than recently outlined in its forecasts should GDP growth underperform Chief Economist Paul Conway told MNI, though he pushed back against any suggestion that this Wednesday's meeting should have delivered a 75-basis-point reduction.
RBNZ (DJ): New Zealand's Central Bank on Track to Deliver More Outsized Rate Cuts
The Reserve Bank of New Zealand appears set to continue delivering outsized interest-rate cuts in 2025 as inflation appears well-contained while the outlook for the world economy edges toward a period of elevated uncertainty.
Americas
CANADA (BBG): Canada Premiers Urge Trudeau to Strengthen Border Security
Canada’s premiers are urging Prime Minister Justin Trudeau to step up border security and defense spending to assuage US President-elect Donald Trump’s concerns, with the leader of the largest province calling the federal government “slow to react” and “stuck on its back foot.” Ontario’s Doug Ford said after a meeting of the premiers and prime minister on Wednesday that he has been pushing Trudeau’s government for months to show that Canada cares about US economic and security worries. He said it simply hasn’t moved quickly enough.
Europe
FRANCE FISCAL (MNI): RN Leader Outlines More Red Lines After PM's Budget Concession
In a statement on social media, far-right Rassemblement National (RN) leader Jordan Bardella hails the U-turn from the gov't of PM Michel Barnier on the removal of electricity tax caps from the budget, and claims that his party has "won a victory" but will seek further concessions from the gov't before it
withdraws the threat of supporting a censure motion.
FRANCE FISCAL (MNI): Barnier Committed To Bringing 2025 Deficit To "About" 5% GDP
Latest headlines from French PM Barnier, speaking to Le Figaro. "*FRENCH PM: WILL DO EVERYTHING TO BRING 2025 DEFICIT TO ABOUT 5%" - bbg. The use of "about" from Barnier is key here. A reminder that budget minister Saint-Martin said on Monday that the "aim for next year's deficit is still to come as close to 5% as possible but one should not be too strict about it to allow for room for reaching political agreements".
GERMANY (BBG): German Government Plans About €2 Billion in New Chip Subsidies
The German government is preparing billions of euros of new investments into the nation’s semiconductor industry, two months after Intel Corp. shelved plans to build a €30 billion ($32 billion) chip factory in Magdeburg.
ECB (MNI): Inflation No Longer A Problem For ECB - Centeno
High inflation is no longer a problem in the euro area and the European Central Bank should avoid allowing to return to low levels, Bank of Portugal Governor Mario Centeno said on Thursday, adding that he is convinced that inflation will converge to the 2% target.
Other
OIL (RTRS): OPEC+ Shifts Meeting To Dec. 5, Could Delay Output Hike
OPEC+ is discussing postponing its oil output hike due to start in January for the first quarter of 2025, OPEC+ sources told Reuters on Thursday, and will hold further talks on this and other options ahead of its delayed policy meeting on Dec. 5. Issues that need to be addressed include an output hike for the United Arab Emirates agreed in June this year that's scheduled to start in January 2025, two of the sources said, declining to be identified.
DATA
GERMANY INFLATION: Inflation Below Consensus - But In Line With MNI Tracking
HICP 2 tenths below consensus for both Y/Y (at 2.4%Y/Y - the same as in October), M/M also 2 tenths below consensus.
- National CPI (non-HICP) 2.2Y/Y (in line with MNI tracking based on state level data), M/M at -0.2% (the higher end of MNI tracking -0.2 to -0.3%).
- Core CPI (non-HICP) 3.0%Y/Y (the upper end of our 2.9-3.0% tracking estimate).
- Services CPI a tenth higher than our tracking estimate at 4.0%Y/Y (tracking 3.9%Y/Y).
GERMANY INFLATION: BUBA Estimates Softer M/M German Core & Services CPI
The Bundesbank’s estimate of seasonally-adjusted German CPI suggests sequential core inflation momentum decelerated in November, driven by lower services.
- Buba calculations show core inflation eased to 0.17% M/M SA (matching MNI's estimate) after 0.43% in Oct, with services inflation at 0.09% M/M (vs 0.22% MNI estimate) after 0.35% in Oct.
- Manufactured goods ex-energy meanwhile also decreased, to 0.26% M/M after accelerating two consecutive times before (vs 0.43% in Oct, no MNI estimate).
- 3M/3M measures were mixed: core 0.75% vs 0.70% prior, services 0.79% vs 0.88% prior for its lowest rate since February, and manufactured goods ex-energy 0.71% vs 0.43% prior.
- Conclusions are twofold:
- Services momentum was quite soft this month. It remains bumpy but some moderating trend can be observed, opening the possibility for a declining yearly rate at the beginning of 2025.
- The recent trend higher in core goods momentum stalled at least for this month.
CANADA DATA: Soft Payrolls And Normalized Vacancies vs Strong Wage Growth
- Payroll employment slid -57k back in September, its largest decline since Nov’23, after +17k in Aug (which StatCan defines as “little changed”) and +40k in Aug.
- The three-month sum of -1k is in firm contrast to the 66k from the more timely labour force data which has since seen a 15k increase in October.
- Declines were seen in 9 sectors and were little changed in the remaining 11 (where many fell but by a non-statistically significant amount). Retail trade saw the heaviest decline at -13.2k in September.
- More notably from the SEPH release, the vacancy rate inched a tenth higher to 3.0% in Sept after the 2.9% in Aug was the lowest since late 2017. This still marks a full normalisation to pre-pandemic trends though, having averaged in 3.2% 2019 and 3.0% in 2017-18 [bottom left chart].
- Whilst jobs growth and vacancies provide dovish reads, payrolled wage growth does however mostly consolidate August’s strong acceleration. Hourly earnings growth only eased from 5.0% to 4.7% Y/Y whilst the fixed weight index that controls for composition changes was 5.2% after 6.0% Y/Y. The SEPH wage data had until recently been much weaker than those from the LFS [bottom right chart].
CANADA DATA: Surprisingly Healthy Current Account, Aided By Large Revisions
- Building from what our policy team wrote, the current account surprised positively for Q3, with a deficit of C$3.2bn (cons C$8.7bn) after a downward revised C$4.7bn (initial C$8.5bn) in Q2.
- Those large revisions extend further back as part of annual revisions back to 2021 but are largest from 2H23 onwards: “Starting with the 2022 reference year, new data sources and methodologies have been introduced to better capture the compensation and expenditures of temporary foreign workers in Canada. Compensation to temporary foreign workers is recorded as a payment abroad in the Balance of Payments framework, while expenditures of temporary foreign workers in Canada are classified as business travel exports.”
- The latest profile sees a current account deficit at an estimated 0.4% GDP in Q3 after 0.6% GDP in Q2 and 0.2% GDP in Q1. That average deficit of 0.4% GDP through 1H24 previously was estimated to have been 0.9% GDP.
- Those sizeable revisions aside, latest quarterly developments saw a smaller services surplus (0.1% GDP after 0.3%) more than offset by a larger investment income surplus (0.6% GDP after 0.2%). The latter was driven by the joint largest direct investment-related surplus as a % GDP since 2Q20 rather than portfolio investment where the deficit remained at cycle highs of 1.6% GDP (last seen larger in 2003).
- It leaves a current account deficit on a far healthier standing than pre-pandemic deficits in the region of 2-3% GDP.
MARKETS
US TSY FUTURES: Wednesday Rally Consolidated
- TYH5 closed at 110-29 (unch) just a touch off earlier highs of 110-30 having lifted from session lows of 110-23.
- Yesterday’s high of 111-01, seen after an extended move following the strong 7Y auction, marks initial resistance after which lies 111-14 (50-day EMA).
- Gains are considered corrective though, with support seen at 109-20 (Nov 20/21 lows).
- Tomorrow sees cash markets back open again ahead of a 1400ET close whilst Tsy futures see at an early close at 1315ET.
- Unsurprisingly little change in Fed Funds implied rates today, showing 16bp of cuts for Dec before a cumulative 22bp for Jan, 35bp for Mar and 52bp for June.
- SOFR futures echo the little change in the whites before up to 2.5 ticks lower in the reds.
BONDS: EGBs/GILTS: OATs Lead Tightening In Spreads
EGBS saw sizeable tightening in spreads to Bunds today, led by OATs as they continue to oscillate on French fiscal developments.
- The Oat-Bund spread tightened 4bps on the day to 81.6bps, with the bulk of the move coming early in the session when it tightened up to 5bps intraday after FM Armand hinted at potential concessions around electricity taxes in the 2025 budget.
- Barnier is having to risk some of his government's fiscal credibility to try and promote political stability within the republic by placating his major political rivals.
- There was a swift 1.5bp widening later in the session when the National Rally Bardella looked for further concessions but Barnier subsequently saying he will do everything to bring the 2025 deficit to around 5% GDP helped limit the move to maintain the day’s further shift away from Wednesday’s early high of 88.3bps.
- Related to this, the BTP-Bund spread tightened 3bps today to 121.8bps for its lowest close since Nov 19.
- Gilts meanwhile saw a session of two trends, selling off through most of the London morning before fully paring losses to close at 95.74. An earlier high of 95.78 has cleared resistance at 95.73 (1.764 proj of Nov 18-19-20 price swing), potentially exposing 96.03 (2.00 projection of the same move) and pose deeper threat to the bearish trend.
FOREX: G10 FX Ranges Contained Amid Thanksgiving Holiday, USDBRL Record High
- The Ice Dollar Index consolidated very moderate gains on Thursday, and major G10 pairs have operated in narrow ranges owing to the US Thanksgiving holiday. USDJPY remains an outperformer despite pulling back to 151.50, up 0.29% following its steep declines on Wednesday.
- Overall, this week’s move lower in USDJPY marks an extension of the current corrective cycle. The pair has traded through both the 20- and 50-day EMAs. Attention continues to be on a clear break of the 50-day average which would signal scope for a deeper retracement, towards 150.19 next, a Fibonacci retracement. On the topside, the bull trigger is now much higher at 156.75, the Nov 15 high and clearance of this level would be needed to confirm a resumption of the technical uptrend.
- GBPUSD is hovering towards the upper end of the week’s range just below 1.2700, however, EURUSD operates in mid-range at 1.0550.
- The most notable moves in currency markets have been in Latin America, with significant appreciation for the Mexican peso countering record weakness for the Brazilian real.
- For USDMXN, despite a 1% bounce off the lows, spot is consolidating a 1% decline on the session, trading at 20.40 ahead of the APAC crossover. Overnight news of positive discussions between President-Elect Trump and President Sheinbaum have provided the renewed peso optimism, in contrast with the aggressive reaction to tariff rhetoric earlier in the week.
- In Brazil, markets were unimpressed by the Government’s long-awaited fiscal announcement and USDBRL traded to a record high above 6.00 in its aftermath. 6.0257 and 6.1000 are the next resistance levels, both Fibonacci projections.
- Eurozone inflation data and Canada GDP are the highlights on Friday’s economic calendar.
US STOCKS: E-mini S&P Pares Pre-Thanksgiving Losses
- ESZ4 has mostly eked out gains in holiday trade today, at 6029.75 at the early close (+0.25%).
- It recoups some of yesterday’s -0.4% losses that at the time were seen as Nvidia led a broader “Magnificent Seven” drag on equity indices.
- The bull trigger remains exposed at 6053.25 (Nov 11 high) whilst support is seen at 5951.31 (20-day EMA).
- E-minis show Nasdaq 100 modestly outperforming (+0.4%), the Dow Jones on par with the S&P 500 (+0.27%) and a second day of sizeable outperformance for the Russell 2000 (+0.8%).
- Market operating hours over Thanksgiving:
- Cash equities: Thursday Nov 28: Closed, Friday Nov 29: early close at 13:00 NY/12:00 Chicago
- Equity futures: Thursday Nov 28: goes into pre-open (early close, no settlement) at 13:00 NY/12:00 Chicago, Friday Nov 29: Early close at 13:15 NY/12:15 Chicago
COMMODITIES: Crude Regains Ground, Henry Hub Climbs, Gold Consolidates
- WTI has regained ground after a Reuters report that OPEC+ is discussing output return delays for Q1 2025. It would mark the third delay by the group but represent a longer delay than the prior one-month extensions.
- WTI Jan 25 is up by 0.3% at $68.9/bbl.
- Meanwhile, the IDF has confirmed that it struck a Hezbollah-affiliated compound in Southern Lebanon, which appears to violate the terms of the Israel-Hezbollah ceasefire agreed this week.
- For WTI futures, support is seen at $65.74, the Oct 1 low. Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high.
- Henry Hub has edged higher on thin volume due to the US Thanksgiving holiday. It is rebounding some of the steeper losses from yesterday after a small US gas storage draw, as expected, in EIA data.
- US Natgas Jan 25 is up 2.9% at $3.30/mmbtu.
- Spot gold continues to consolidate after the sharp pullback on Monday, with the yellow metal 0.1% higher at $2,638/oz.
- Resistance to watch remains at $2,721.4, Monday’s high, while key support is at $2,536.9, the Nov 14 low.
- Silver is outperforming slightly, currently 0.5% higher at $30.2/oz.
- Initial firm resistance to watch is $31.202, the 50-day EMA.
| Date | GMT/Local | Impact | Country | Event |
| 29/11/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 29/11/2024 | 2330/0830 | * | JP | Labor Force Survey |
| 29/11/2024 | 2350/0850 | * | JP | Retail Sales (p) |
| 29/11/2024 | 2350/0850 | ** | JP | Industrial Production |
| 29/11/2024 | 0700/0800 | ** |  DE | Retail Sales |
| 29/11/2024 | 0700/0800 | ** | DE | Import/Export Prices |
| 29/11/2024 | 0700/0800 | ** |  SE | Retail Sales |
| 29/11/2024 | 0700/0800 | *** | SE | GDP |
| 29/11/2024 | 0745/0845 | *** |  FR | HICP (p) |
| 29/11/2024 | 0745/0845 | ** | FR | Consumer Spending |
| 29/11/2024 | 0745/0845 | *** | FR | GDP (f) |
| 29/11/2024 | 0745/0845 | ** | FR | PPI |
| 29/11/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 29/11/2024 | 0800/0900 | *** | CH | GDP |
| 29/11/2024 | 0855/0955 | ** | DE | Unemployment |
| 29/11/2024 | 0900/1000 | ** |  EU | ECB Consumer Expectations Survey |
| 29/11/2024 | 0930/0930 | ** |  GB | BOE M4 |
| 29/11/2024 | 0930/0930 | ** | GB | BOE Lending to Individuals |
| 29/11/2024 | 1000/1100 | *** | EU | HICP (p) |
| 29/11/2024 | 1000/1100 | *** |  IT | HICP (p) |
| 29/11/2024 | 1030/1030 | GB | Financial Policy Summary and Record and Financial Stability Report | |
| 29/11/2024 | 1130/1230 | EU | ECB's de Guindos speaking at the "Encuentro de Economia" in Barcelona | |
| 29/11/2024 | 1330/0830 | *** |  CA | GDP - Canadian Economic Accounts |
| 29/11/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 29/11/2024 | 1330/0830 | *** | CA | CA GDP by Industry and GDP Canadian Economic Accounts Combined |
| 29/11/2024 | 1330/0830 | ** |  US | WASDE Weekly Import/Export |
| 29/11/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 29/11/2024 | 1600/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) |