EXECUTIVE SUMMARY
- MNI POLITICAL RISK: Republicans Look To Punt Government Funding Into New Year
- MNI JAPAN: PM Ishiba Secures Re-Election, But Minority Admin Leaves Gov't Vulnerable
- MNI GERMANY: Scholz Says No Confidence Vote 13 Nov-Spox
- MNI MIDEAST: Hezbollah & Israel FM Say Negotiatons On Lebanon Ceasefire Underway
- MNI POLITICAL RISK: Scott Slightly Favoured In Race For Senate Leadership
MNI US TSYS: Tsys Hug Lower/Narrow Range, Light Veterans Day Trade
- Treasury futures leaked lower on light volumes Monday, cash markets closed for the Veterans Day holiday. Dec'24 10Y slipped to 109-25.5 low after the open but recovered soon after - holding to a narrow 5-pt range through the rest of the session. TYZ4 trades 109-30.5 (-10.5) on total volume of 695,000 after the bell.
- No economic data or Fed speakers in observance of the Veterans Day holiday, the main focus is on this week's headline inflation dat, CPI and PPI on Wednesday and Thursday respectively. Fed-speak returns up in earnest on Tuesday with Waller, Barkin, Kashkari and Harker making appearance.
- Dec24 not fully pricing another 25bp cut: Projected rate cuts into early 2025 compared to early Monday levels (*): Dec'24 cumulative -16.3bp (-17.1bp), Jan'25 -24.3bp (-25.7bp), Mar'25 -37.6bp (-38.9bp), May'25 -45.0bp (-46.9bp).
- Cross market roundup: crude trades weaker (WTI -2.20 at 68.18, Gold -62.21 at 2,622.56, USD gaining - extending highs vs. EUR, GBP, ZAR, CHF, CNH, CAD, NOK and SEK.
NEWS
MNI POLITICAL RISK: Republicans Look To Punt Government Funding Into New Year
Republican lawmakers are looking to pass a short-term Continuing Resolution to punt government funding negotiations for Fiscal Year 2025 beyond the December 20 deadline and into the new year, when the GOP is expected to control all three branches of government.
MNI POLITICAL RISK: Scott Slightly Favoured In Race For Senate Leadership
Senator Rick Scott (R-FL) is slightly favoured to win the race to replace outgoing Senate Minority leader Senator Mitch McConnell (R-KY) as the top Republican in Senate, according to Polymarket. President-elect Donald Trump has so far declined to endorse a candidate, despite a wave of Trump-aligned media figures calling on Senator to back Scott in Wednesday's secret ballot. A strong relationship with the Senate Majority Leader will be critical to legislating Trump's agenda, but the Washington Post notes: "Some advisers and people who have spoken to him have suggested to Trumpthat he not get involved, questioning if it’s the place to extend political capital, especially if his choice doesn’t win."
MNI JAPAN: PM Ishiba Secures Re-Election, But Minority Admin Leaves Gov't Vulnerable
Prime Minister Shigeru Ishiba secured re-election as Japan's prime minister earlier on 11 November in a special session of the National Diet (the two chambers of Japan's parliament). For the first time in three decades, the vote went to a run-off after no PM candidate received an overall majority in the first round where an overall majority was required. Ishiba beat centre-left Constitutional Democratic Party (CDP) leader Yoshihiko Noda by 221 votes to 160, with 84 votes deemed invalid (due to refusal to back either runoff candidate).
MNI GERMANY: Scholz Says No Confidence Vote 13 Nov-Spox
A gov't spox has confirmed that Chancellor Olaf Scholz has said he will not call a confidence vote in his minority gov't for Wednesday 13 November. An early confidence vote had been demanded by opposition conservative Christian Democratic Union (CDU) leader Friedrich Merz, ahead of the original 15 January 2025 date mooted by Scholz following the collapse of the 'traffic light' coalition.
MNI GERMANY: Habeck To Meet w/Pres As Berlin Election Official Warns Of Early Vote
Vice Chancellor Robert Habeck is set to meet with President Frank-Walter Steinmeier today in order to discuss 'an orderly path' to new elections according to unnamed gov't officials. Chancellor Olaf Scholz's apparent openness to accelerating the process towards snap elections has garnered notable attention in recent days.
MNI US-RUSSIA: Kremlin Denies Putin-Trump Call
Kremlin spox Dmitri Peskov has denied any telephone call took place between Russian President Vladimir Putin and US President-Elect Donald Trump, as was reported in WaPo over the weekend. Peskov: "[Reports of a call are] completely untrue. This is pure fiction. This is simply false information". Peskov went on to say that Putin has no "specific" plans to talk to Trump at present.
MNI MIDEAST: Hezbollah & Israel FM Say Negotiatons On Lebanon Ceasefire Underway
Saudi state-run Al Arabiya reporting that according to Lebanese Hezbollah, negotiations have begun to end the war with Israel. Separately, Reuters reporting on wires that Israel's new Foreign Minister Gideon Saar has said 'there is progress on Lebanon ceasefire talks', adding 'we are working with the Americans on this'. Saar: 'The main challenge will be to enforce what is agreed'. In an effort to temper expectations, Saar reiterates that the war with Hezbollah 'is not over yet' but its capabilities are 'severely reduced' and the majority of its missile capacity is destroyed.
DATA
No data Monday in observance of Veterans Day holiday. Cash FI markets closed but futures are open on Globex; NYSE and Nasdaq are open. Focus is on CPI and PPI inflation data this Wednesday and Thursday respectively.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 285.34 points (0.65%) at 44273.52
S&P E-Mini Future up 1.25 points (0.02%) at 6026.25
Nasdaq down 7.8 points (0%) at 19278.32
US 10-Yr yield is unchanged 0 bps at 4.3043%
US Dec 10-Yr futures are down 10/32 at 109-31
EURUSD down 0.0064 (-0.6%) at 1.0654
USDJPY up 1.06 (0.69%) at 153.71
WTI Crude Oil (front-month) down $2.21 (-3.14%) at $68.17
Gold is down $61.59 (-2.29%) at $2623.13
European bourses closing levels:
EuroStoxx 50 up 51.27 points (1.07%) at 4854.03
FTSE 100 up 52.8 points (0.65%) at 8125.19
German DAX up 233.12 points (1.21%) at 19448.6
French CAC 40 up 88.21 points (1.2%) at 7426.88
US TREASURY FUTURES CLOSE
3M10Y +0, -23.786 (L: -23.786 / H: -23.786)
2Y10Y +0, 4.826 (L: 4.826 / H: 4.826)
2Y30Y +0, 21.353 (L: 21.353 / H: 21.353)
5Y30Y +0, 27.628 (L: 27.628 / H: 27.628)
Current futures levels:
Dec 2-Yr futures down 2.75/32 at 102-21.875 (L: 102-20.75 / H: 102-24.25)
Dec 5-Yr futures down 7.5/32 at 106-24.75 (L: 106-21.5 / H: 106-31.25)
Dec 10-Yr futures down 10/32 at 109-31 (L: 109-25.5 / H: 110-07.5)
Dec 30-Yr futures down 3/32 at 117-24 (L: 117-07 / H: 117-28)
Dec Ultra futures down 7/32 at 125-4 (L: 124-18 / H: 125-16)
MNI US 10YR FUTURE TECHS: (Z4) Trend Needle Points South
- RES 4: 112-22 High Oct 16 and a key short-term resistance
- RES 3: 112-03 50-day EMA
- RES 2: 111-14+ High Oct 25
- RES 1: 111-01 20-day EMA
- PRICE: 109-31 @ 16:41 GMT Nov 11
- SUP 1: 109-07 Low Nov 6 and the bear trigger
- SUP 2: 109-05 76.4% retracement of the Apr - Sep bull cycle (cont)
- SUP 3: 109-00 Round number support
- SUP 4: 108-15 2.0% 10-dma envelope
The trend structure in Treasuries is unchanged and remains bearish. Last week’s move lower reinforces current conditions. Short-term gains are considered corrective. A resumption of the bear leg would open 109-05 next, the 76.4% retracement of the Apr - Sep bull cycle (cont). The 109-00 handle remains exposed too. Initial firm resistance - pierced on Monday - is seen at 111-01, the 20-day EMA.
SOFR FUTURES CLOSE
Dec 24 -0.005 at 95.570
Mar 25 -0.025 at 95.790
Jun 25 -0.045 at 95.955
Sep 25 -0.055 at 96.060
Red Pack (Dec 25-Sep 26) -0.065 to -0.06
Green Pack (Dec 26-Sep 27) -0.065 to -0.055
Blue Pack (Dec 27-Sep 28) -0.055 to -0.05
Gold Pack (Dec 28-Sep 29) -0.05 to -0.045
MNI BONDS: EGBs-GILTS CASH CLOSE: German Short End Rallies Again On Growth Concerns
German yields continued to retreat Monday, with Bunds outperforming Gilts.
- With no major European releases and US cash bonds closed for holiday, the session saw last week's themes largely continued. Firstly, expectations of weaker Eurozone growth in the Trump era have seen ECB cuts increasingly priced in. OIS now sees 63bp of cuts through the next 2 meetings, 3bp more than seen Friday and 8bp more than pre-US election and helping boost the EGB short end/belly.
- Secondly, and related to broader growth considerations, risks are seen to the implementation of the ruling German government's supplementary Budget - though German Chancellor Scholz ruled out a confidence vote on Wednesday.
- Gilts traded without clear direction. The German curve closed bull steeper, with the UK's leaning bull flatter.
- Periphery EGB spreads tightened in spite of the advance in Bunds. Concerns over Spanish flood aid costs appeared to fail to impact SPGBs, though in fairness they failed to keep pace with periphery peers despite Fitch moving Spain's outlook to positive late on Friday.
- Tuesday brings German ZEW survey data while we also get multiple speakers from the ECB (Holzmann, Rehn, Centeno) and BoE (Pill); the main early focus is the UK labour market report - MNI's preview is here.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is down 4.8bps at 2.137%, 5-Yr is down 4.8bps at 2.155%, 10-Yr is down 4bps at 2.327%, and 30-Yr is down 4.4bps at 2.562%.
- UK: The 2-Yr yield is down 1.2bps at 4.415%, 5-Yr is down 0.5bps at 4.316%, 10-Yr is down 1bps at 4.425%, and 30-Yr is down 2.7bps at 4.873%.
- Italian BTP spread down 2.4bps at 126.7bps / Greek down 1.7bps at 88bps
MNI FOREX: Greenback Rally Extends, EURUSD Approaches Yearly Lows
- Renewed demand for ‘Trump trades’ on Friday extended into this week, providing further strength for the greenback during Monday’s session. The Euro has continued to show relative underperformance across G10 in the aftermath of the US election, largely owing to Eurozone growth concerns and an escalating political crisis in Germany.
- Bearish technical conditions dominate for EURUSD, and spot has notably extended below 1.0666 on Monday, a key support for the pair. Lows of 1.0629 were traded today and this narrows the gap to 1.0611, the 38.2% retracement of the Sep ‘22 - Jul ‘23 bull cycle, just ahead of the year’s lows at 1.0601, printed back in April.
- For EURGBP, weakness has extended today, and the cross now cleared the bear trigger at 0.8295, the Oct 18 low. An initial target includes 0.8250, the Apr 14 ’22 low and below here another major support resides at 0.8203, the Mar 7 ‘22 low.
- The Japanese yen is the weakest performer today, with USDJPY rising 0.8% to 153.87, although we remain well off the post-election highs of 154.71. In contrast, USDCHF (+0.53%) has extended its short-term rally and printed above 0.8800 for the first time since late July.
- In emerging markets, the likes of MXN, HUF and PLN all came under substantial pressure, declining the best part of 1.5% against the dollar. In particular the South African Rand fell 2% to a two-month low.
- UK labour market data highlights on Tuesday, alongside German ZEW sentiment figures. Short-term focus will be on US CPI, scheduled on Wednesday.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 12/11/2024 | 0700/0800 | *** |  DE | HICP (f) |
| 12/11/2024 | 0700/0700 | *** |  GB | Labour Market Survey |
| 12/11/2024 | 0900/0900 | GB | BOE's Pill panellist at UBS conference on Reversing tightening | |
| 12/11/2024 | 1000/1100 | *** | DE | ZEW Current Conditions Index |
| 12/11/2024 | 1000/1100 | *** | DE | ZEW Current Expectations Index |
| 12/11/2024 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 12/11/2024 | 1100/0600 | ** |  US | NFIB Small Business Optimism Index |
| 12/11/2024 | 1200/1200 | GB | Asset Purchase Facility Quarterly Report | |
| 12/11/2024 | 1330/0830 | * |  CA | Building Permits |
| 12/11/2024 | 1400/1500 |  EU | ECB's Cipollone chairing policy panel on financial sanctions | |
| 12/11/2024 | 1500/1000 | US | Fed Governor Christopher Waller | |
| 12/11/2024 | 1515/1015 | US | Richmond Fed's Tom Barkin | |
| 12/11/2024 | 1600/1100 | ** | US | NY Fed Survey of Consumer Expectations |
| 12/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 12/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 12/11/2024 | 1800/1300 | * | US | US Treasury Auction Result for Cash Management Bill |
| 12/11/2024 | 1900/1400 | US | Minneapolis Fed's Neel Kashkari | |
| 12/11/2024 | 2130/1630 | US | New York Fed's Roberto Perli | |
| 12/11/2024 | 2200/1700 | US | Philly Fed's Pat Harker | |
| 13/11/2024 | 0030/1130 | *** |  AU | Quarterly wage price index |