Source: MNI - Market News/Bloomberg
UK
POLITICS (BBC): “Sir Keir Starmer's "plan for change" to be revealed later will include half a dozen understandable, digestible promises and a deadline - the next general election.”
EU
EU (MNI): France's commitment to limit future public spending growth to an average 1.1% a year will be the European Commission's key metric for assessing whether any new or amended budget or fiscal plan is in line with EU fiscal rules, Brussels officials told MNI.
ECB (MNI BRIEF): The ECB should adopt a cautious approach to monetary easing, Bundesbank president Joachim Nagel said in a speech Wednesday, with interest rates converging “slowly and at a measured pace towards neutral territory.” (See MNI BRIEF: ECB Should Cut, Remain Gradual, Data Focused-Kazaks)
M&A (BBG): “Amundi SA is interested in acquiring control of Allianz SE’s asset manager Allianz Global Investors as the French company scouts for deals amid industry consolidation, people familiar with the matter said.”
EU (ECONOMIST): “On Thursday Donald Tusk, Poland’s prime minister, hosts Roberta Metsola, president of the European Parliament, in Warsaw. They will discuss Poland taking over the rotating presidency of the Council of the European Union in January.”
EU (POLITICO): “The European Union is ready to compensate financially for the United States' exit from a long-negotiated multilateral deal to provide Ukraine with a $50 billion loan to help support its fight against Russia, a top Polish official said.”
FRANCE (BBC): “The French government has collapsed after Prime Minister Michel Barnier was ousted in a no-confidence vote. It marks the first time the country's government has collapsed in a no-confidence vote since 1962.”
UKRAINE (POLITICO): “Speaker Mike Johnson on Wednesday shot down the Biden administration’s request to include $24 billion in Ukraine-related aid as part of an expected short-term spending bill Congress needs to pass by Dec. 20.”
ROMANIA (BBC): “Authorities in Romania have revealed details of what appears to be a major attempt to interfere in the country’s presidential elections using the social media platform TikTok, and with a series of cyber-attacks. Romania's domestic intelligence service says there are signs the effort was "co-ordinated by a state-sponsored actor".”
ROMANIA (POLITICO): “Four major Romanian political parties formed a coalition on Wednesday night, vowing to keep Romania on a pro-EU and pro-NATO path.”
GEORGIA (BBC): “A Georgian opposition leader has been dragged from his party office by police and others have been physically attacked, after the prime minister vowed that organisers of a week of pro-EU protests, which he called "violent actions", would face justice.”
US
FED (MNI BRIEF): Federal Reserve Chair Jerome Powell said Wednesday the central bank is on a path to bring interest rates back down to a more neutral level over time but because the economy appears stronger than previously thought it can move more cautiously.
FED (MNI BRIEF): The United States is far from the point where the Federal Reserve would ever have to re-think its ability to raise interest rates due to an overwhelming budget, Chair Jerome Powell said Wednesday, noting fiscal policy remains on an unsustainable path.
FED (MNI BRIEF): San Francisco Fed President Mary Daly said Wednesday she is going to wait until she gets to the December meeting before making a decision about further rate cuts, but stressed there is no urgency to continue to ease policy.
FED (MNI BRIEF): U.S. businesses told the Fed last month they expect modest inflation to continue but that tariffs could boost inflation, according to the Federal Reserve's latest survey of current economic conditions published Wednesday.
MNI (INTERVIEW): US Services Activity Cools To Trend-ISM Chief
BITCOIN (BBG): “President-elect Donald Trump’s pick of a crypto proponent to be the next head of the US securities regulator lifted Bitcoin to a record $100,000 as traders warmed to the prospect of relaxed regulations.”
OTHER
JAPAN (MNI BRIEF): Bank of Japan board member Toyoaki Nakamura said on Thursday the BOJ favoured cautious adjustments to its easy policy driven by economic recovery considered against various data, noting the inflation rate will likely not reach 2% in fiscal 2025.
AUSTRALIA (MNI INTERVIEW): A former RBA economist shares his Q4 CPI outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
SOUTH KOREA (BBG): “South Korea’s ruling party is looking to prevent President Yoon Suk Yeol’s impeachment by voting against a motion to initiate proceedings that may take place Saturday.”
CHINA
GROWTH (BBG): "Chinese state media warned against blindly chasing faster growth and signaled more focus on boosting consumption in a flurry of articles setting the stage for a key economic meeting next week."
EU/CHINA (BBG): “ British and German firms in China are having a tougher time doing business and worry about the outlook for next year, according to two new surveys.”
US/CHINA (YICAI): "American financial firms can play a greater role in developing healthy Sino-U.S. relations, He Lifeng, vice premier of the People's Republic of China, told John Waldron, President and COO at Goldman Sachs Group, adding that China will deepen reforms and expand high-level opening to the outside world."
YUAN (SHANGHAI SECURITIES NEWS): "The yuan’s recent sharp decline is unsustainable given improved Q4 growth, additional policies for boosting domestic demand and promoting price recovery and the property sector, Shanghai Securities News reported, citing Wang Qing, analyst at Golden Credit Rating."
CHINA MARKETS
MNI: PBOC Net Drains CNY153 Bln via OMO Thursday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY37.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY153 billion after offsetting the maturity of CNY190.3 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6666% at 09:24 am local time from the close of 1.6096% on Wednesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Wednesday, compared with the close of 53 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1879 Thurs; -1.82% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1879 on Thursday, compared with 7.1934 set on Wednesday. The fixing was estimated at 7.2657 by Bloomberg survey today.
MARKET DATA
AUSTRALIA OCT. HOUSEHOLD SPENDING +0.8% M/M; EST. +0.3%; PRIOR -0.2%
AUSTRALIA OCT. HOUSEHOLD SPENDING +2.8% Y/Y; EST. 2.2%; PRIOR +0.9%
AUSTRALIA OCT. TRADE SURPLUS A$5.95B; EST. +A$4.50B; PRIOR +A$4.53B
AUSTRALIA OCT. EXPORTS +3.6% M/M; PRIOR -4.7%
AUSTRALIA OCT. IMPORTS +0.1% M/M; PRIOR -2.8%
NEW ZEALAND Q3 CONSTRUCTION WORK -3.2% Q/Q; EST. -0.5%; PRIOR -1.9%
NEW ZEALAND CORELOGIC HOME VALUES NOV. -0.4% M/M; PRIOR -0.2%
S. KOREA Q3 GDP +0.1% Q/Q; PRELIM. +0.1%; Q2 -0.2%
S. KOREA Q3 GDP +1.5% Y/Y; PRELIM. +1.5%; Q2 +2.3%
MARKETS
US TSYS: Higher Yields Consolidate Across the Curve.
Bonds latched on to comments from Mary Daley this morning suggesting caution on her decision on rates and sold off during the day today, pushing yields higher.
- Ahead of tonight’s US Initial Jobless Claims and Continuing Claims, both of which are considered a pre-cursor to the NFP, yields have drifted +0.5-1.5bp higher across the curve with intermediates the underperformer.
- US 2YR 4.138% (+0.8bp), US 5YR 4.081% (+1.2bp), US 10YR 4.192% (+1.0bp).
- US10YR Mar 25 future is off -03 to 111-04.
- SOFR and Treasury options flow included decent two-way positioning in calls and puts Wednesday as underlying futures continued to climb higher after this morning's lower than expected ISM services data. Projected rate cuts into early 2025 continued to gain, current levels vs. this morning's (*) as follows: Dec'24 cumulative -19.4bp , Jan'25 -25.2bp, Mar'25 -40.4bp, May'25 -50.9bp.
JGBS: Futures Weaker But Off Worst levels As BOJ Nakamura Leans Dovish
JGB futures are weaker, -5 compared to settlement levels, but off the session’s worst levels.
- BOJ board member Nakamura stated that he is personally not confident about the sustainability of wage growth, while also noting inflation is at risk of missing the 2% target from fiscal 2025 onwards (per RTRS).
- Nakamura also stated that his growth forecast is below the board median due to a chance consumers may hold off spending and capex could be delayed. Further adjustments to easy policy settings should be done gradually, Nakamura stated.
- While it is known that Nakamura leans dovish, the short-end JGBs managed to slightly richen after his remarks.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session. Today's US calendar will see Challenger Job Cuts, Trade Balance and Jobless Claims data. Fed's Barkin will also speak on the economic outlook.
- Cash JGBs are flat to 1bp richer across benchmarks beyond the 1-year and out to the 30-year. The benchmark 30-year yield is 0.2bp higher at 2.292% after today’s auction delivered solid results.
- Swap rates are 1-2bps lower out to the 10-year and 2-5bps higher beyond. Swap spreads are tighter out to the 7-year and wider beyond.
- Tomorrow, the local calendar will see Cash Earnings, Household Spending, and the Coincident and Leading Indices.
AUSSIE BONDS: Richer But Way Off Bests, Focus Turns To US Labour Market Data
ACGBs (YM +2.0 & XM +2.5) are richer but well off the Sydney session’s best levels.
- Outside of the previously outlined household spending and trade balance data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s data-induced rally. The US calendar today will see Challenger Job Cuts, Trade Balance and Jobless Claims data. Fed's Barkin will also speak on the economic outlook.
- Cash ACGBs are 2-3bps richer with the AU-US 10-year yield differential at +5bps.
- Swap rates are 2-3bps lower.
- The bills strip has twist-flattened, with pricing -1 to +3.
- RBA-dated OIS pricing is 1-3bps softer across 2025 meetings. A 25bp rate cut is still not fully priced until May. Notably, market expectations for the May meeting have softened by around 25bps over the past two weeks.
- Tomorrow, the local calendar will see Foreign Reserves data alongside AOFM’s planned sale of A$800mn of the 3.75% 21 April 2037 bond.
BONDS: NZGBS: Short-End Catch-Up While Long-End Underperforms $-Bloc
NZGBs closed with a mixed performance and a steeper curve, as the 2-year yield finished 4bps lower, while the 10-year yield rose by 3bps.
- Despite today’s gains in the 2-year NZGB, the move appears to be more of a timing adjustment rather than a fundamental shift, especially as swap rates closed flat to 3bps higher, with the 2s/10s curve steepening.
- Yesterday, swap rates ended flat to 5bps lower, with a steeper 2s/10s curve and significantly tighter implied swap spreads. The rally in NZ swaps reflected positive spillover from ACGBs, which strengthened following weaker-than-expected Q3 GDP data in Australia.
- In contrast to swaps, the NZGB 2/10 curve exhibited a bear-flattener yesterday, with benchmark yields flat to up 3bps, indicating diverging market dynamics between swaps and government bonds.
- Compared to the $-bloc, the NZGB 10-year underperformed its counterparts today, with the NZ-US and NZ-AU yield differentials closing 6bps and 3bps wider respectively.
- RBNZ dated OIS pricing is flat to 5bps softer across meetings. 44bps of easing is priced for February, with a cumulative 104bps by November 2025.
- Tomorrow, the local calendar is empty, with the next key release being Mfg Activity Volume on Wednesday.
FOREX: USD Ticks Lower, NZD Outperforms, Limited Spillover From Bitcoin Surge
G10 currencies are up against the USD, albeit modestly. The USD BBDXY index is little changed though, just under 1280.5.
- Bitcoin has surged through $100k, last up over 5%, but this hasn't spilled over much elsewhere in terms of USD trends. The surge in Bitcoin follows Trump's pro-crypto pick to head up the SEC (see this BBG link).
- NZD/USD is up around 0.30%, outperforming AUD. NZD/USD was last near 0.5865/70, close to session highs. Local onshore yields are ticking up, despite softer volume of building work data for Q3. We had a debt sale earlier for local bonds (NZ$500mn), which may be helping sentiment in the FX space at the margins. Offshore ownership of local bonds has been climbing in recent months (last 62%, Nov data due Dec 17).
- The AUD/NZD cross is at fresh lows back to early Oct, last near 1.0960/65. The 200- day EMA and MA's are both near 1.0940 in terms of downside targets. AUD/USD is relatively steady at 0.6430/35, with better than expected household spending data not providing a positive impact.
- USD/JPY saw highs of 150.78, but sits back at 150.35/40 now, around 0.15% stronger in yen terms. We heard from BoJ board member Nakamura, who had dovish remarks and cautioned around adjusting policy rates. Still, Nakamura is a known dove, so the remarks didn't have a lasting impact on yen sentiment.
- In the cross asset space, US yields have ticked up, but only reversing a small part of Wednesday's fall. Fed remarks from Daly suggested no urgency to lower rates.
- Looking ahead, the Fed’s Barkin speaks and US November Challenger job cuts, October trade and jobless claims print. Canadian November PMI, German October factory orders and euro area retail sales are also released. BoE’s Greene speaks.
ASIA STOCKS: Stocks Mixed Across the Region as Korea Continues to Fall.
- The KOSPI continued to fall today amidst ongoing political tensions, as the BOK continues to re-assure markets of their provision of liquidity.
- Despite this the KOSPI was down -0.70% to be down over 2% in the last two trading sessions.
- In China the major indexes were mixed with Hang Seng down -1.15%, CSI 300 -0.25% whilst Shanghai up +0.08% and Shenzhen up +0.55%.
- South East Asian indices were down with Jakarta lagging down -0.45% and Malaysia down -0.04%.
- Singapore was a strong performer with the FTSE Straits Times up +0.66%.
- In India, the NIFTY 50 having had three days of positive returns is opening up weaker by -0.26% as traders become more balanced on the possibility of a rate cut from the RBI tomorrow.
OIL: Crude Holds Onto Losses Ahead Of OPEC Announcement
Oil prices are little changed ahead of the OPEC announcement later today. They fell sharply on Wednesday given uncertainty around the decision, but the group is widely expected to delay the reduction in output cuts again. WTI is up 0.1% to $68.60 /bbl during today’s APAC trading, close to the intraday low, and Brent is steady at $72.27/bbl. The USD index is unchanged.
- Originally OPEC+ planned to reduce its previous output cuts by 180kbd from October but given lower prices and concerns over excess supply in 2025 it delayed them twice. The increase in supply is currently scheduled for the start of January but could be pushed back to the end of March now. There has been some disagreement within OPEC as a number of countries have excess capacity they want to use and others are concerned the group will lose market share.
- Rising non-OPEC output is a significant reason for the delay to OPEC’s output normalisation. Bloomberg is reporting that currently the US produces over 13.5mbd compared with Saudi’s 9mbd, and this could rise under the Trump administration. Also, the strength of China’s demand is an ongoing concern.
- Following OPEC’s decision, market attention will turn to US November payrolls, which are forecast to rise 215k with the unemployment rate steady at 4.1%.
- Later the Fed’s Barkin speaks and US November Challenger job cuts, October trade and jobless claims print. Canadian November PMI, German October factory orders and euro area retail sales are also released. BoE’s Greene speaks.
GOLD: Powell’s Caution on Rates Cools Gold’s Rise.
- Having enjoyed a ‘safe haven’ bid yesterday during the South Korean turmoil, Gold took a breather today following Fed Chairman Powell’s Comments.
- Chairman Powell indicated that Fed Officials will ‘move cautiously’ on rates, prior to this week’s non-farm payroll.
- Gold opened the trading day in Asia at US$2,649.90 only to moderate to $2,647.10.
- Tonight, in the US sees Initial Jobless Claims and Continuing Claims, both of which are considered a pre-cursor to the NFP.
- In Europe, the political turmoil currently gripping France could provide support to gold overnight.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 05/12/2024 | 0645/0745 | ** |  CH | Unemployment |
| 05/12/2024 | 0700/0800 | ** |  DE | Manufacturing Orders |
| 05/12/2024 | 0700/0800 |  SE | Flash CPI | |
| 05/12/2024 | 0745/0845 | * |  FR | Industrial Production |
| 05/12/2024 | 0800/0900 | ** |  ES | Industrial Production |
| 05/12/2024 | 0830/0930 | ** |  EU | S&P Global Final Eurozone Construction PMI |
| 05/12/2024 | 0930/0930 | ** |  GB | S&P Global/CIPS Construction PMI |
| 05/12/2024 | 0930/0930 | GB | DMP Data | |
| 05/12/2024 | 1000/1100 | ** | EU | Retail Sales |
| 05/12/2024 | 1330/0830 | *** |  US | Jobless Claims |
| 05/12/2024 | 1330/0830 | ** | US | Trade Balance |
| 05/12/2024 | 1330/0830 | ** |  CA | International Merchandise Trade (Trade Balance) |
| 05/12/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 05/12/2024 | 1500/1000 | * | CA | Ivey PMI |
| 05/12/2024 | 1530/1030 | ** | US | Natural Gas Stocks |
| 05/12/2024 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 05/12/2024 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 05/12/2024 | 1700/1700 | GB | BOE's Greene panellist at the FT Boardroom "global economics: what is the path to sustained growth?" | |
| 05/12/2024 | 1715/1215 | US | Richmond Fed's Tom Barkin | |
| 06/12/2024 | 2330/0830 | ** |  JP | average wages (p) |
| 06/12/2024 | 2330/0830 | ** | JP | Household spending |
| 06/12/2024 | 0700/0800 | ** | DE | Industrial Production |
| 06/12/2024 | 0700/0700 | * | GB | Halifax House Price Index |
| 06/12/2024 | 0745/0845 | * | FR | Foreign Trade |
| 06/12/2024 | 1000/1100 | * | EU | Employment |
| 06/12/2024 | 1000/1100 | * |  IT | Retail Sales |
| 06/12/2024 | 1000/1100 | *** | EU | GDP (final) |
| 06/12/2024 | 1330/0830 | *** | US | Employment Report |
| 06/12/2024 | 1330/0830 | *** | CA | Labour Force Survey |