- Early market moves were dominated by the late Friday news from the US that incoming President Trump would nominate hedge fund manager Scott Bessent to the Treasury Secretary position.
- The USD and US yields fell at the open, as Bessent is viewed as taking a more phased approach on tariffs and attempting to rein in the budget deficit. US equity futures are also higher.
- Follow through to these moves was limited, with the USD up from earlier lows. General macro momentum remains with the US at this stage. China and Hong Kong equities continued to struggle.
- Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.
MARKETS
US TSYS: Tsys Futures Hold Onto Gains, Curve Bull-Flattens On Bessent Nom
- Tsys futures rallied this morning following Scott Bessent being announced as the Treasury Secretary nomination, the market views him as taking a more phased approach on tariffs and attempting to rein in the budget deficit. TU is 01⅝ at 102-18+, while TY is +11+ at 110-00 both near session's best levels.
- The 10y futures contract is still trading below initial resistance of 110-06 (20-day EMA), and remains in the bear trend for now, support holds at 108-30 (Nov 15 lows).
- There has been little else driving the markets today, Gold is lower following a strong rally late last week, while equity futures are slightly higher, however have traded in narrow ranges post the open.
- Cash tsys are trading 3-5.5bps richer this morning, the 2yr is trading -3.2bps at 4.341% while the 10yr is -5.3bps at 4.347%. Curves have bull-flattened with the 2s30s 1.5bps lower at 19.25, this follows a 4bps flattening move on Friday. The 2s10s briefly inverted earlier hitting -0.186, but is now back at 0.632
- In the week to Nov. 19, hedge funds unwound $15.6m/DV01 in short positions across 2-, 5-, and 10-year Treasury notes and $5.2m/DV01 in ultra-long bonds, while asset managers reduced $4.9m/DV01 in long-bond positions but increased $3.3m/DV01 in ultra 10-year note futures. In SOFR futures, hedge funds cut $5m/DV01 in net longs to their lowest since July, as asset managers made minor additions to net long positions.
- Later today we have Chicago Fed Nat Activity Index & Dallas Fed Manf. Activity
JGBS: Subdued Dealings In A Data-Light Session
JGB futures are holding stronger and near the mid-point of today’s Tokyo session range, +9 compared to settlement levels.
- Coincident & Leading Indices have just printed at 115.3 and 109.1 respectively.
- Today, the local calendar will also see Nationwide Dept Sales alongside an Enhanced Liquidity Auction covering 1-5-year JGBs.
- Cash US tsys are 3-5bps richer in today’s Asia-Pac session after Trump announced Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with consensus thinking he will be positive overall for the economy and markets.
- The swap markets gives a better-than-even chance of the BOJ lifting its benchmark interest rate next month.
- “Interest rates strategists are concerned about a potential spike in yields because they judge that a move by the BOJ at its Dec. 18-19 meeting would bring another increase into view as soon as April, and investors have not positioned for this yet.” (per BBG)
- Cash JGBs are flat to 1bp richer across benchmarks beyond the 1-year.
- Swap rates are flat to 1bp lower out to the 10-year but 4bps higher for the 20-30-year zone. Swap spreads are little changed apart from the 4bps widening in the 20-30-year zone.
- Tomorrow, the local calendar will see PPI Services data.
AUSSIE BONDS: Richer, This Week’s Focus Is On CPI & RBA Gov. Bullock Speech
ACGBs (YM +4.0 & XM +6.0) are richer but sitting mid-range on a data-light Sydney session.
- The local calendar is empty until October’s CPI on Wednesday and RBA Governor Bullock’s speech at 1955 AEDT on Thursday at the CEDA Conference.
- October headline CPI is projected to pick up to 2.3% y/y from 2.1%. It is the first month of the quarter and so there won’t be updates for most services.
- Cash US tsys are 4-6bps richer in today’s Asia-Pac session after Trump announced Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with consensus thinking he will be positive overall for the economy and markets.
- Cash ACGBs are 5-7bps richer with the AU-US 10-year yield differential at 13bps.
- Swap rates are 3-5bps lower with the 3s10s curve flatter and EFPs wider.
- The bills strip has twist-flattened with pricing -1 to +3.
- RBA-dated OIS pricing is 1-4bps softer across 2025 meetings, with no easing priced by year-end. A 25bps rate cut is not fully priced until July.
- This week, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday.
NZGBS: Very Strong Session, Focus On Wednesday’s RBNZ Policy Decision
NZGBs closed 10-11bps richer, with the 10-year outperforming its $-bloc counterparts.
- This move came despite Q3 retail sales volumes falling less than expected and less than in Q2, which saw a sharp fall of 1.2% q/q. Q3 was down 0.1% q/q and 2.7% y/y.
- However, ten of the fifteen retail sectors contracted in the quarter, signalling that household spending remains very weak as monetary policy is still restrictive and the 75bp of easing to date will take time to feed through to consumers.
- NZGB’s strength today was also aided by cash US tsys, which are 4-6bps richer in today’s Asia-Pac session, following Trump’s announcement of Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with the market of consensus he will be positive overall for the economy and markets.
- Swap rates closed 9bps lower.
- RBNZ dated OIS pricing closed 1-5bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps for this Wednesday.
- Tomorrow, the local calendar is empty ahead of the RBNZ policy decision on Wednesday.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.0% Apr-29 bond, NZ$175mn of the 3.5% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.
NEW ZEALAND: Q3 Retail Volumes Close To Flat Driven By A Few Sectors
Q3 retail sales volumes fell less than expected and less than in Q2, which saw a sharp fall of 1.2% q/q. Q3 was down 0.1% q/q and 2.7% y/y. Statistics NZ reported that ten of the fifteen retail sectors contracted on the quarter, signalling that household spending remains very weak as monetary policy is still restrictive and the 75bp of easing to date will take time to feed through to consumers. With growth overall remaining weak and inflation in the target band, we expect another 50bp RBNZ rate cut on November 27.
- Real private consumption in the national accounts also includes services spending. It rose 0.4% q/q in Q2 and it may post another rise in Q3 given the improvement in retail sales volumes. Q3 GDP is out on December 19. Q3 nominal card transactions fell slightly on the quarter.
- Food & beverage services were the weakest retail sector in Q3 falling 2.1% q/q and supermarkets & grocery stores -1.3% q/q. Motor vehicles & parts and electrical goods were the strongest sectors.
NZ retail sales volumes y/y%
GOLD: Weaker Today After Beast Week Since March 2023
Gold prices rose by 1.7% on Friday, closing at $2,716.19, marking a fifth consecutive day of gains. This rally brought the week's total increase to approximately 6%, the largest weekly rise since March of last year, according to Bloomberg.
- However, in today's Asia-Pacific session, bullion has dipped 0.7%, as US equities and Treasury yields climb. The shift follows news that Donald Trump has selected Scott Bessent as Treasury Secretary. Bessent is seen as a measured and stabilizing choice, potentially boosting confidence in the US economy and financial markets.
- With gold’s reversal higher extending, the yellow metal has pierced $2,710.4, the Nov 11 high on Friday, opening $2,730.4, a Fibonacci retracement, according to MNI’s technicals team.
OIL: Crude Down Moderately After Rising Strongly Last Week
Oil prices are down moderately during APAC trading today after rising around 6% last week driven by geopolitical developments. Profit-taking seems to be driving today’s move. Brent is down 0.4% to $74.89/bbl after a low of $74.79, and WTI is also 0.4% lower at $70.94/bbl following a drop to $70.83. The softer greenback hasn’t been able to support dollar-denominated crude (USD index -0.5%).
- A crude surplus is widely expected in 2025 and markets will likely focus on that again if geopolitics move to the background. OPEC has already delayed the start of its output normalisation twice and currently the gradual increase in supply is due to start at the end of December. The group meets on December 1 and many are expecting the reduction in output cuts to be pushed out into 2025.
- Iran declared that it will increase its nuclear fuel-making capability after being reproached by the International Atomic Energy Agency. Talks with Europe are scheduled to begin later this week. Stricter sanctions against Iran, including more diligent enforcement of current ones, under the Trump administration are expected which could reduce global supply by around 1mbd.
- The conflict between Russia and Ukraine also risks Russian oil infrastructure.
- Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.
ASIA STOCKS: Asian Equities Edges Higher Following Bessent Nomination
Asian equity markets are broadly higher today, driven by optimism over US economic resilience and favorable policy expectations under the incoming Trump administration. Japanese stocks gained as exporters and domestic demand-related sectors, such as rail operators, advanced on strong U.S. business activity data and activist fund interest. In China, modest gains reflect relief over a measured Treasury Secretary nomination, though concerns linger over the need for stronger stimulus to sustain momentum after a tech-driven selloff last week. Australian shares hit a record high, led by property and mining sectors. South Korea's KOSPI climbed, supported by institutional buying and gains in tech heavyweights like Samsung Electronics. Meanwhile, renewable energy stocks across Asia rose after COP29 agreements on increased climate funding.
- Hong Kong listed equities are slightly outperforming mainland China equities with the HSI +0.25%, while the CSI 300 trades just +0.10%. Chinese tech stocks are still struggling somewhat with the CSI 300 Tech Index -1.70%, while the HSTech Index trades flat.
- Asia semiconductor stocks have jumped higher with the BBG Asia Semiconductor Index up 1%, led by a 3.80% jump from Tokyo Electron and a 2.50% move higher from Samsung.
- Foreign investors were better buyers of South Korean stocks on Friday and have continued to buy although only smalls this morning, however the region has seen outflows of $2b over the past two weeks.
- US equity futures are trading higher today, with gains coming on the back of the nomination of Scott Bessent as Treasury Secretary. Dow futures +0.57%, S&P 500 +0.45% while NASDAQ 100 futures are +0.53%
EQUITIES: China & HK Equities Struggle, Investors Hope For Further Stimulus
The continued underperformance of Chinese and Hong Kong equities, following last week's sharp sell-offs, underscores the market's need for stronger policy support to regain investor confidence. Weak earnings from Tencent and Alibaba have dampened sentiment, adding pressure for additional stimulus measures to attract buyers. Last week’s high trading volumes suggest that investors who returned following the first round of stimulus measures were announced may now be taking profits and exiting, further weighing on momentum.
- Hong Kong & China equities are trading in very ranges today, major benchmarks and now trading at session lows, after earlier opening slightly higher as global risk markets edged higher following the Nomination of Scott Bessent to US Treasury Secretary. The CSI300 is -0.60%, while the HSI is 0.50% lower.
- The likelihood of a RRR cut by the PBOC is rising as year-end approaches, according to a China Securities Journal report. Analysts suggest the central bank will continue deploying various monetary tools to ensure sufficient market liquidity. Last month, PBOC Governor Pan Gongsheng indicated a potential RRR reduction of 25-50bps by year-end, contingent on liquidity conditions.
- A new round of consumption vouchers has been issued across the country to stimulate domestic demand and boost confidence with major cities such as Shanghai, Beijing, Chengdu, Hangzhou, Zhengzhou and Wuhan all participating per the Economic Information Daily.
ASIA STOCKS: Asian Equity Flows Mixed, Tech Names See Inflows
Smalls inflows into the tech focused South Korean & Taiwan markets on Friday, while most other markets continued to see outflows post the US election.
- South Korea: Recorded inflows of +$148m Friday, with a 5-day total of -$581m. YTD flows remain positive at +$5.42b. The 5-day average is -$116m, slightly better than the 20-day average of -$130m but worse than the 100-day average of -$113m.
- Taiwan: Experienced inflows of +$263m Friday, though the 5-day total shows outflows of -$1.28b. YTD flows remain deeply negative at -$16.06b. The 5-day average is -$255m, better than the 20-day average of -$269m and the 100-day average of -$207m.
- India: Posted inflows of +$157m Thursday, with a 5-day total of -$648m. YTD flows are negative at -$2.54b. The 5-day average is -$130m, better than the 20-day average of -$288m but worse than the 100-day average of -$13m.
- Indonesia: Recorded outflows of -$22m Friday, with a 5-day total of -$230m. YTD flows remain positive at +$1.71b. The 5-day average is -$46m, slightly better than the 20-day average of -$49m but worse than the 100-day average of +$20m.
- Thailand: Posted outflows of -$3m Friday, bringing the 5-day total to +$26m. YTD flows are negative at -$3.70b. The 5-day average is +$5m, better than the 20-day average of -$24m and the 100-day average of -$5m.
- Malaysia: Experienced outflows of -$9m Friday, with a 5-day total of -$37m. YTD flows remain positive at +$192m. The 5-day average is -$7m, better than the 20-day average of -$22m but worse than the 100-day average of +$4m.
- Philippines: Posted outflows of -$10m Friday, with a 5-day total of -$50m. YTD flows remain negative at -$240m. The 5-day average is -$10m, better than the 20-day average of -$17m but worse than the 100-day average of +$3m.
Table 1: EM Asia Equity Flows
FOREX: Dollar Dips On Bessent Nomination But Downside Follow Through Limited
The USD is holding lower, with the dollar indices off between 0.50-0.55%. We gapped lower at the open, but have largely been range bound since then. The BBDXY was last near 1285, slightly up from session lows near 1283.54.
- Sentiment in the FX space has been dictated by the nomination of Scott Bessent, the former hedge fund manager, to the US Treasury Secretary position.
- Bessent's public comments around looking to curb the deficit, and that incoming President Trump can use tariffs as a negotiating tool has weighed on broader USD sentiment (as they are seen as less reflationary). Still, headlines have crossed the afternoon from the WSJ that Bessent sees delivering Trump tax cuts and keeping the USD as the world's reserve currency as a priority.
- This has helped stabilize USD sentiment at the margins. USD/JPY got close to the 20-day EMA support (near 153.50), but now sits back at 154.00, around 0.50% stronger in yen terms. EUR/USD got as high as 1.0501, but is back to 1.0480. AUD and NZD sit off earlier highs as well. AUD/USD last near 0.6525/30, NZD/USD around 0.5855. Earlier data showed NZ real retail sales for Q3 fall less than forecast.
- As we noted earlier even with a potentially market friendly appointment like Bessent, the near term macro backdrop is still USD positive, particularly from a data momentum standpoint.
- In the cross asset space, US yields sit lower, down 3-5.5bps, but much like the USD, had an initial gap lower, but there hasn't been follow through. US equity futures are up 0.45-0.55%, led by the tech side.
- Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.
USD Down On Bessent Nomination But Relative Macro Momentum Still Positive
The USD is off around 0.50% in terms of the major indices (DXY and BBDXY). This follows the late Friday announcement that Scott Bessent would be nominated for the US Treasury position by incoming President Trump.
- A more conservative fiscal backdrop, coupled with using tariffs as a negotiating tool and a pro-market mindset, have been associated with Bessent. This is less reflationary at face value and hence the USD is suffering as a result.
- Cross-asset moves have seen a sharp move lower in US Tsy yields, around 4-6bps weaker across the benchmarks. The US equity futures backdrop is also positive, up 0.40-0.50% for Eminis and Nasdaq futures. Such trends are also USD negative.
- Still, it's important to note that the short term macro backdrop has been in favor of the USD. The chart below plots the BBDXY index against the US Citi economic surprise index less the average Citi surprise index for the EU, Japan and China.
- Positive data surprises are strongly in favor of the USD, with the current average at +49ppts, fresh highs back to late 2023. Relative data surprises led the move higher in the USD through Sep/Oct.
- The EU data surprise has turned sharply lower recently, back to -20 per the Citi index.
- A more concerted USD turn lower may require a roll over in US data momentum relative to these other major economies (or a sharp pick up in data momentum outside the US).
- In terms of levels to be mindful of: 20-day EMA support and resistance points are outlined below (based off Friday closing levels).
- BBDXY - 1275 .15 (current level 1285)
- EUR/USD - 1.0678 (current spot 1.0480)
- USD/JPY - 153.52 (current spot 154.00)
- AUD/USD - 0.6559 (current spot 0.6545)
- USD/CNH - 7.2042 (current spot 7.2430)
Fig 1: BBDXY Index Versus US-EU, Japan & China Citi Surprise Indices
Source: Citi/MNI - Market News/Bloomberg
FOREX: Sharp Move Against EUR Per CFTC Positioning Update
The main theme from Friday's CFTC positioning update was a sharp move against the EUR by both leveraged players and asset managers. The table below updates the positioning change for the week ending the 19th of Nov and the current positioning level by currency and investor type.
- Leveraged players added to EUR shorts. Indeed outside of CAD shorts, this is the most heavy short by currency measured by CFTC against the USD. Other leveraged trends were more modest last week. Yen shorts were curtailed modestly. For the A$ we saw modest net buying, which pushed this segment back into a small long.
- On the asset manager side though, the continued bias was in favor of the USD.
- GBP shorts were added to by this segment, only outpaced by a trimming of EUR longs.
Table 1: CFTC Positioning By Type & Currency
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | 3276 | -26367 | 2935 | -47816 |
| EUR | -10798 | -39811 | -33043 | 183153 |
| GBP | 2174 | 50711 | -24810 | -43180 |
| AUD | 3228 | 2913 | -5884 | -18925 |
| NZD | -2886 | 2145 | -4300 | -25355 |
| CAD | 4936 | -85703 | 434 | -142818 |
| CHF | -1300 | -11695 | -2825 | -24538 |
| MXN | -3076 | -2751 | -1459 | 7527 |
Source: MNI - Market News/CFTC/Bloomberg
CHINA: Survey Forecasts 2025 GDP at 4.5%.
- BBG surveyed 63 economists on their forecasts for China CPI and GDP with the results that the China economy will expand 4.8% in 2024, 4.5% in 2025 and 4.1% in 2026 ( Source: Bloomberg News).
- China: Liquidity Injections Continue Following Friday’s Withdrawal (source: MNI – Market News)
- Equity markets opening heavy this week with CSI 300 down -0.60%, Shanghai Comp -0.36%, Hang Seng -0.51%, Shenzhen -0.16%.
- CNY: Yuan Reference Rate at 7.1918 Per USD; Estimate 7.2422
- Bonds: China’s 10-year government bond 2.065%.
SOUTH KOREA: SK and Malaysia Forge Strategic Relationship.
- S. Korea, Malaysia forge strategic partnership to expand cooperation (source: Yonhap).
- South Korean travel and airline stocks advance after China said it will extend the visa-free stay for its nationals to 30 days from the current 15 days. (source: BBG)
- Following on from last week’s strength, the KOSPI has started the week strongly up +1.30%.
- KRW: the USD weakened on news of the Trump Treasury secretary pick giving the Won a strong start to the week up +0.54%.
- Bonds rallied today with yields lower across the curve: 10-year KTB 2.929% (-5bp)
ASIA FX: North Asia FX Firmer Against The USD But Away From Best Levels
In North East Asia, the USD is weaker but away from worst levels. USD/CNH had a brief dip sub 7.2400, but now sits back close to 7.2500. We are around 0.15% stronger in CNH terms. This is underperforming the 0.50-0.55% fall in the USD indices. Broader USD sentiment faltered from the open as hedge fund manager Scott Bessent was picked by incoming President Trump as his Treasury nomination. Bessent is seen as market friendly and looking to curb fiscal deficits (which would be less reflationary). On tariffs he argued that they can used as a negotiating tool.
- The USD/CNY fixing saw the error term stay beyond -500pips and comfortably sub 7.1900. Not helping CNH sentiment is the further losses in onshore equities. The CSI 300 index is down a further 0.60%, following Friday's more than 3% loss. This puts the index back to mid Oct levels. Hong Kong equities are also tracking weaker. Tech earning concerns are a headwind.
- Spot USD/KRW got to lows of 1395.7, but sits back up at 1399/1400 in latest dealings, around 0.45% stronger in won terms. Local equities have rallied, up over 1%, but sit away from best levels. Offshore investors have been modest buyers of local equities so far today.
- Spot USD/TWD is back under 32.50, around 0.40% stronger in TWD terms. We remain above recent lows though. (32.39 from last week).
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 25/11/2024 | 0800/0900 | ** |  ES | PPI |
| 25/11/2024 | 0900/1000 | *** |  DE | IFO Business Climate Index |
| 25/11/2024 | 0900/0900 |  GB | BOE's Lombardelli At Watchers' Conference | |
| 25/11/2024 | 1030/1030 |  GB | BOE's Dhingra At Watchers' Conference | |
| 25/11/2024 | 1330/0830 | * |  CA | Quarterly financial statistics for enterprises |
| 25/11/2024 | 1400/1500 | ** |  BE | BNB Business Sentiment |
| 25/11/2024 | 1530/1030 | ** |  US | Dallas Fed manufacturing survey |
| 25/11/2024 | 1630/1730 |  EU | ECB's Lane at BoE Watchers' Conference | |
| 25/11/2024 | 1630/1130 | * |  US | US Treasury Auction Result for 13 Week Bill |
| 25/11/2024 | 1630/1130 | * |  US | US Treasury Auction Result for 26 Week Bill |
| 25/11/2024 | 1800/1300 | * |  US | US Treasury Auction Result for Cash Management Bill |
| 25/11/2024 | 1800/1300 | * |  US | US Treasury Auction Result for 2 Year Note |
| 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 |