MNI ASIA OPEN: OPEC+ Meeting Delayed Amid Group Discontent

NEWS

OIL (MNI): OPEC+ Group Discontent Pushes Meeting to November 30
Discontent within OPEC+ comes as Saudi shoulders much of the efforts to shore up global oil prices alone which seems to be driving the push to move the upcoming meeting from November 26 to November 30 as it aims to align the group. Some highlights of fractures in the group at present below:

• Its voluntary cut partner Russia has proved erratic in trying to meet its own export cut efforts. Firstly, failing to meet them, briefly achieving, winding them in from 500kbd to 300kbd and then including oil products.
• West African nations have shown discontent at their quotas getting cut next year over failure to achieve current targets. Angola’s energy minister was reported by Platts to be boycotting the meeting over his frustrations at OPEC+ policy.
• The UAE has long wanted boosted quotas, some of which would be transferred from other nations to allow it to boost production by 200kbd from next year in expected plans.
• OPEC+ nations exempt from quotas like Iran, Venezuela and Libya have shown crude strength this year – all of which are looking to boost production in the short term and are side swiping OPEC+ market intent at present.
• The OPEC Secretariat, which made the announcement, did not disclose the reason for the postponement but Bloomberg reported discontent by Saudi.

US/CANADA (NY Times): Vehicle Explosion Shuts Down U.S.-Canada Bridge in Niagara Falls
An explosion involving a vehicle at Rainbow Bridge, a border crossing between the United States and Canada in the Niagara Falls region, on Wednesday caused the closure of that bridge as well as the other three border crossings in western New York, according to the authorities. The cause of the blast at the Niagara Falls International Rainbow Bridge and whether there were casualties were unknown. Authorities called the situation “fluid.”

NATO (Reuters): Turkey Tells NATO Sweden Won't Join By Next Week's Meeting
Turkey has informed NATO that ratification of Sweden's membership bid will not be completed in time to allow the country's accession ceremony at a meeting of alliance foreign ministers next week, two sources familiar with the matter said on Wednesday.

CANADA (MNI): BOC Still Prepared To Hike, Wants To Avoid Over-Tightening
Bank of Canada Governor Tiff Macklem said Wednesday he remains prepared to raise interest rates for an 11th time if needed as progress returning inflation to target has been slow and he wants to avoid going too far with the public already angry about the added pinch of high borrowing costs.

CANADA (MNI): BOC To Delay Rate Cuts And Move Slow - Alexander
Canada's central bank will keep interest rates steady through the first half of next year and more importantly will only loosen its stance slowly according to Craig Alexander, a consultant who advises governments on fiscal and monetary policy.

EU (MNI): Europe “Closer To A Deal” On Fiscal Rules – Scholz
The European Union is “closer to a deal than ever before” on new fiscal rules, Germany’s Chancellor Olaf Scholz said on Wednesday in a press conference alongside Italian Prime Minister Giorgia Meloni in Berlin. “We are working intensively,” Scholz said, adding that some progress was made during the last ECOFIN meeting of finance ministers, though issues remain to be agreed.

GERMANY (Deutsche Finanzagentur): Germany To Withdraw Inflation-Linked Bonds From 2024
The Federal government has decided to withdraw from the market for inflation-linked bonds: From 2024, no further inflation-linked Federal securities will be issued, nor will already outstanding securities be reopened.

GERMANY (MNI): Court Ruling Shaves 0.5% From German GDP - Demary
Last week’s Constitutional Court decision to prevent Germany’s government from redirecting EUR60 billion of Covid emergency measures will reduce GDP by around 0.5% next year, a leading economist told MNI.

US (MNI): Trump Maintains Lead In All Key GOP Presidential Primary Metrics
Despite skipping all three Republican presidential debates and pressure from a raft of ongoing and pending civil and criminal cases, former President Donald Trump continues to lead the Republican presidential primary race across all key metrics.

UK (MNI): Chancellor - Employee National Insurance Tax Cut From 12% To 10%
Chancellor Jeremy Hunt delivering the autumn statement. Talking on personal tax cuts, benefit reforms, the minimum wage. On national insurance tax cuts: "On top of income tax at 20%, they pay 12% National Insurance on earnings between £12,570 and £50,270 - that’s a 32% marginal tax rate. [...] I am going to cut the main 12% rate of employee National Insurance.[...] I’m going to go further and cut the main rate of Employee National insurance by 2 percentage points from 12% to 10%."

UK (MNI): Inflation To Hit 2.0% Target In 2025 - OBR
Chancellor of the Exchequer Jeremy Hunt told parliament Wednesday that the official fiscal forecasts show inflation returning to the 2% target in 2025 after factoring in the latest fiscal measures.

UK (MNI): Borrowing, Debt On Downward Path - OBR Forecasts
Chancellor Jeremy Hunt tells parliament debt-to-GDP and budget deficits are both on a declining path in the official forecasts. UK borrowing and debt-to-GDP are both set to decline when fiscal measures announced in the Autumn Statement are factored in, the Office for Budget Responsibility's updated forecast show.

UK (MNI): Increased UK Linker Sales Not Inflation Play
Upgraded plans for 2023/24 index-linked gilt issuance are not an inflation play but a reflection of demand and increased sales across all maturities, a leading UK debt management official said on Wednesday.

NETHERLANDS (BBG): Far-right Leader Geert Wilders Projected To Win Dutch Election In Exit Poll
Dutch far-right anti-immigration populist Geert Wilders is in the clear lead in parliamentary elections, an exit poll has shown. Mr Wilders, an anti-Islam, anti-EU politician, has vowed to stop all immigration to the Netherlands. The Ipsos poll put his Freedom party (PVV) at 35 out of 150 seats, nine seats ahead of the closest rival, Frans Timmermans’ Labour/Green Left combination.

CHINA (BBG): China Puts Country Garden on Draft List of Builders to Support
Country Garden Holdings Co. and Sino-Ocean Group have been included on China’s draft list of 50 developers eligible for a range of financing support, according to people familiar with the matter, signaling a pivot by Beijing to help some of the nation’s most distressed builders. CIFI Holdings Group Co., another builder that has missed debt payments, was also included on the so-called white list, the people said, asking not to be identified because the matter is private.

CHINA (BBG): China May Cut Required Reserve Ratio Before Year End: Sec. News
China may use monetary measures including RRR cut to coordinate with recent fiscal policies in order to strengthen economic recovery, Shanghai Securities News reports on front page, citing unidentified analysts. RRR cut is likely to be made before end of year to cushion liquidity shock under the large government debt supply, including the 1 trillion yuan additional sovereign notes

BRAZIL (BBG): Brazil Raises 2023 Deficit Estimate, Fueling Market Jitters
Brazil raised its estimate for this year’s budget gap to account for rising government spending and declining revenue amid a weakening economy. The primary fiscal deficit, which doesn’t take into account interest payments, will reach 177.4 billion reais ($36.1 billion) this year, compared with a previous forecast of 141.4 billion reais

DATA

US DATA: U.Mich Inflation Expectations Surprisingly Buck Softer NY Fed Expectations

• U.Mich 1Y inflation expectations revised up to 4.5% (cons 4.4, prelim 4.4) after 4.2% in Oct.
• 5-10Y inflation expectations sticks at 3.2% (cons 3.1, prelim 3.2) after 3.0% in Oct, consolidating the surprise push higher in the preliminary print to break above its stable 2.9-3.1% range since 2021 for a highest since 2011.
• It goes against the NY Fed survey of consumer expectations, which whilst for October was released after the U.Mich Nov prelim and saw the 1Y drop almost to its lowest since Apr'21 and the 5Y drop a tenth to 2.7% for its lowest since May.
• Consumer sentiment meanwhile was revised up a little more than expected to 61.3 (cons 61.0) after the preliminary 60.4, leaving a smaller decline from the 63.8 in Oct that first thought. It remains the lowest since May.

• Initial jobless claims were lower than expected at 209k (cons 227k) in the week to Nov 18, covering the payrolls reference period, after a slightly upward revised 233k (initial 231k).
• The four-week average dipped 1k to 220k, consolidating the climb off a recent low of 206k in mid-Oct back to roughly the 2019 average of 218k.
• Comparing with the previous payrolls reference week in October, latest SA claims have closed the gap with 209k vs 200k, although the 4wk average of 220k is still more notably higher than the 206k of October.
• Continuing claims also came in lower than expected at a seasonally adjusted 1.84M (cons 1.875M) in t he week to Nov 11 after a marginally downward revised 1.862M. It sees a relatively modest pull back compared to the scale of the recent increases that in the prior week pushed to a new ytd high and the highest since Nov'21.

US DATA: Lethargic Core Durable Goods In Amongst Noisy Categories

• Durable goods orders saw a large miss in the preliminary October report, with values down -5.4% M/M (cons -3.2) after rising 4.0% (initial 4.4%) in September.
• There were some very large moves within noisy components, with commercial aircraft bookings slumping -50% (partly expected as Boeing had reported 123 orders in Oct vs 224 in Sept) but defense capital goods jumping 24.5%.
• As always, we put more weight on core orders, which also disappointed but more so via revisions - they dipped -0.1% M/M in Oct (cons +0.1%) after a downward revised -0.2% M/M (initial +0.5%).
• Core shipments meanwhile, which feed into GDP calculations, look equally lethargic with 0.0% M/M (cons 0.1) after an upward revised 0.0% (initial -0.1%).

US TSYS: Off Post-Data Cheaps After Rainbow Bridge Explosion, Pre-Thanksgiving Positioning

• Cash Tsys trade unchanged to 3.5bp cheaper, with the day’s cheapening impetus lead by 5s as has been the case through the session.
• They have seen a two-stage paring of earlier losses, more so at the front-end, first coinciding with the Rainbow Bridge explosion headlines before continuing after a brief pause. There could also be pre-Thanksgiving positioning at play after a sizeable sell-off following stronger than expected US data from jobless claims and U.Mich inflation expectations.
• TYZ3 at 108-26+ is back within the day’s range off a post-data low of 108-19. The short-term trend structure remains bullish, and indeed the contract earlier touched resistance at 109-08+ (Nov 17 high) shortly ahead of lower than expected jobless claims, after which lies 109-20 (Sep 19 high). In case of a renewed turn lower, support is seen at 108-05 (50-day EMA).
• Fed Funds implied rates have firmed to a cumulative +3bp for January, whilst cumulative cuts from current levels show the first cut in June (29bp vs 31.5bp yesterday) and 88bp of cuts to end-2024 (from 92bp).
• US Cash Markets are closed Thursday before an early close on Friday. Futures are open until 1300ET Thursday and 1315ET Friday.

FOREX: Greenback Extends Recovery Amid Firmer US Data

• Lower-than-expected US jobless claims data sparked some further relief for the greenback on Wednesday, with the USD index (+0.38%) extending the bounce from yesterday’s lows to just shy of 1%. The USD rally was strengthened by some higher revisions to both UMich sentiment data and more importantly, the inflation expectations component.
• USDJPY continued its impressive bounce, rising 0.85% on the session and reaching a high of 149.75 from yesterday’s low of 147.15. The latest pullback works in favour of the view that recent weakness was likely part of a correction that may be over. Tuesday’s price pattern is a dragonfly doji candle, a reversal signal. If correct, it signals scope for a stronger rally that would expose key resistance at 151.95, the Oct 21 2022 high.
• Despite a rally on the US data, USDCAD then had a continued move lower, driven by a bounce off lows for WTI (trimming losses from -4% to -2.25%) with the pair now ~40 pips below pre-Macklem levels and an earlier high of 1.3765. Macklem’s text opened with a dovish acknowledgement that rates may now be sufficiently restrictive to bring inflation to target, although yesterday’s CPI print was subsequently described as encouraging but only a single month with not yet a clear trend of renewed progress.
• The trend outlook is bullish and short-term weakness - for now - appears to be a correction. Moving average studies highlight an uptrend and a resumption of gains would open the bull trigger at 1.3899, the Nov 1 high.
• AUDUSD is a marginal relative outperformer on Wednesday, reflecting RBA’s Bullock noting that the final stretch of reducing inflation to target will take longer than the initial leg. AUDUSD lows of the day closely match with the previous resistance point around 0.6522, which will be monitored closely.
• With both the US and Japan out on Thursday, focus will be on European PMIs and the Riksbank rate decision.

US STOCKS: ESA Holding Majority Of Its Gains After Earlier Opening Of Key Resistance

• Equities have pared a large part of the recent slip, which had appeared order-related with the largest sell programs on the TICK index since Nov 16 with close to 1,000 names.
• It leaves the S&P e-mini holding +0.3% gains, underperforming a string of other indices with Nasdaq +0.4%, Dow Jones +0.4% and the Russell 2000 +0.5% (all e-minis).
• The earlier high for the S&P e-mini of 4580.5 cleared resistance at 4571 (Nov 20 high) to open a key resistance at 4597.5 (Sep 1 high).
• SPX gains are led by communication services (+0.8%, driven by 1% or greater gains in Meta and Alphabet) and consumer staples (+0.7%). Intra-session gains have also been helped by a paring of earlier losses for Nvidia (-2.1%) following yesterday’s earnings.
• Energy (-0.3%) lags but having pared earlier losses with the sizeable rebound in WTI front futures.

S&P e-miniSource: Bloomberg

COMMODITIES: Crude Futures Bounce After Sharp 5% Decline, Gold Trend Remains Bullish

• Front-month crude futures have recouped the majority of earlier losses after announcements of a delay to the OPEC+ ministerial meeting initially sent prices tumbling by as much as 5% on the session. The conference delay comes amid disagreement on output assessment from African nations.
• Another US crude inventory stock build, also at Cushing weighed on the WTI-Brent spread.
• A bearish theme in WTI futures remains in play and the latest recovery appears to be a correction. The break lower last week marked an extension of the downtrend that started late September and has maintained a price sequence of lower lows and lower highs. Moving average studies are in a bear-mode position, highlighting bearish sentiment. The focus is on $70.96, a Fibonacci retracement. Key resistance is at $79.65, the Nov 14 high.
• The stronger greenback weighed on precious metals at the margin, with spot gold consolidating back below the 2,000/oz mark for now. The trend condition in Gold remains bullish and this week’s gains reinforce this condition. The move higher signals scope for a test of key short-term resistance at $2009.4, the Nov 7 high. Clearance of this hurdle would confirm a resumption of the uptrend and pave the way for a climb towards $2022.2, the May 15 high.
• Some analysts went further, with Fundstrat’s technician setting an intermediate target" for gold to reach $2,500. In follow-up comments to Business Insider via email, the analyst said a breach of resistance at $2,080 would signal a "definite technical breakout," which they expect to happen and quickly drive gold even higher.