Source: MNI - Market News/Bloomberg
UK
FISCAL (BBC): “Chancellor Rachel Reeves has told businesses she is "not coming back with more borrowing or more taxes" as she defended the tax rises on businesses announced in the Budget. Reeves told the Confederation of British Industry (CBI) conference that despite "a lot of feedback" on her tax and spending plans, she had not heard many alternatives.”
PRICES (BBG): UK Nov. BRC Shop Price Index -0.6% Y/y vs Oct. -0.8% Y/y
EU
EU/CHINA (BBG): “The European Union is proposing to sanction several Chinese firms that it claims helped Russian companies develop attack drones that were deployed against Ukraine.”
ECB (MNI BRIEF): ECB monetary policy decisions follow a broad range of staff analyses on risks and contingencies and comprehensive simulations of monetary policy and stance scenarios, Chief Economist Philip Lane said on Monday.
ECB (MNI BRIEF): The ECB’s Governing Council is increasingly confident inflation will reach the 2% target sustainably “soon and permanently,” and should not wait until the target has been reached before easing interest rates further, Bundesbank President Joachim Nagel said in a speech on Monday.
ECONOMY (POLITICO): “The European Commission will radically simplify EU green regulations in a bid to jumpstart Europe’s struggling industry and compete with faster-growing economies in Asia and America.”
NATO (POLITICO): “"Regardless of the [defense] budget rise to 2, 2.5 or 3 percent, we need to close the capabilities gaps, this is the most important thing," Germany's Boris Pistorius told reporters after hosting his counterparts from France, Italy, Poland and the United Kingdom in Berlin.”
UKRAINE (ECONOMIST): “Ambassadors from NATO countries will meet Ukrainian diplomats in Brussels on Tuesday. Ukraine requested the emergency meeting after Russia fired an experimental intermediate-range ballistic missile at the city of Dnipro on Thursday.”
FRANCE (FRANCE24): “French far-right figurehead Marine Le Pen was on Monday holding talks with Prime Minister Michel Barnier as her party intensified warnings it was prepared to topple his government in a move that would fling France into political crisis.”
ROMANIA (POLITICO): “Reformist presidential hopeful Elena Lasconi told Romanians on Monday they faced an “existential fight” for their democracy and needed to rally to defeat a far-right candidate who would push the country back toward Russia and the dark days of dictatorship.”
US
TARIFFS (BBG): “President-elect Donald Trump vowed additional tariffs on China as well as US neighbors Canada and Mexico, roiling markets with his first specific threat to curb global trade flows since his election win.”
OTHER
MIDDLE EAST (RTRS): “U.S. President Joe Biden and French President Emmanuel Macron are expected to announce a ceasefire in Lebanon between armed group Hezbollah and Israel imminently, four senior Lebanese sources said on Monday.”
JAPAN (MNI BRIEF): Japan’s services producer price index rose 2.9% y/y in October, accelerating from September’s revised 2.8%, showing that corporate pass-through of cost increases remained solid in addition to price revisions, preliminary data released by the Bank of Japan on Tuesday showed.
JAPAN (MNI INTERVIEW): Former BoJ official on the pace of rate hikes.
JAPAN (MNI INTERVIEW): For BoJ official on bond buying by the central bank.
CANADA (MNI BRIEF): Fewer than half of Canadian business managers saw inflation as an obstacle for the first time in more than two years according to a government survey, in line with the central bank's view of major progress slowing price gains.
CHINA
RRR (SECURITIES DAILY): “The People’s Bank of China is likely to cut the reserve requirement ratio by 0.25-0.5 percentage points soon to ease funding pressure following increased local government bond sales in the first half of December and offset the maturity of CNY1.45 trillion of medium-term lending facilities next month, Securities Daily reported citing analysts.”
PBOC (PBOC): “The PBOC will tilt policies toward private and small and medium-sized enterprises, and improve the efficiency of bank-enterprise matching to strengthen financial services, according to a statement on its website.”
POLICY (CSJ): “Beijing has approved two state-owned enterprises directly managed by the central government to issue a total of CNY500 billion in special bonds to stabilise growth and expand investment this week, China Securities Journal reported.”
DEBT SWAP (SECURITIES DAILY): “Sixteen localities in China have rolled out more than 1 trillion yuan ($138 billion) worth of special bond issuance plans to refinance “hidden” local government debts, Securities Daily reports, citing its own calculations.”
GLOBALISATION (MNI BRIEF): China will continue opening up and working towards a multi-polar and inclusive global economic system, despite the world entering a period of turbulence, Han Zheng, vice president of the People's Republic of China said on Tuesday.
CHINA MARKETS
MNI: PBOC Net Injects CNY11.0 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY299.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY11.0 billion after offsetting the maturity of CNY288.3 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7065% at 09:58 am local time from the close of 1.7680% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 44 on Monday, compared with the close of 55 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1910 Tues; -1.46% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1910 on Tuesday, compared with 7.1918 set on Monday. The fixing was estimated at 7.2394 by Bloomberg survey today.
MARKET DATA
JAPAN PPI SERVICES OCT. +2.9% Y/Y; EST. +2.5%; PRIOR +2.8%
SOUTH KOREA CONSUMER CONFIDENCE NOV. 100.7; PRIOR 101.7
SOUTH KOREA RETAIL SALES OCT. +6.7% Y/Y; PRIOR +6.7%
SOUTH KOREA DEPARTMENT STORE SLES OCT. -2.6% Y/Y; PRIOR +0.3%
UK NOV BRC SHOP PRICE INDEX Y/Y -0.6%; MEDIAN -0.6%; PRIOR -0.8%
MARKETS
US TSYS: Tsys Yields Edge Higher, Curves Flattens On Trump Tariffs
- Cash tsys yields are trading slightly higher this morning, however ranges well inside Monday's. The curve has flattened, the 2s10s inverted briefly overnight, however now trades +1.6bps higher at 1.4bps.
- The 2yr is +1.7bps at 4.286%, while the 10yr is +1.2bps at 4.285%. The 10yr is now -16.5bps since closing at its recent highs of 4.45% on Nov 13th, while the 2yr has only tightened 2.5bps.
- Tsys futures are trading lower with TU -01⅛ at 102-21, while TY is -05 at 110-12
- Earlier, Trump stated "we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America." He also said he would hit Canada & Mexico with a 25% tariff on “ALL products,” until such time as they stop drugs in particular "fentanyl" and "all Illegal Aliens" from entering the US. MXN & CAD plunged on these headlines while the BBDXY now trades 0.45% higher.
- Fed Funds implied rates are little changed for the near-term but the broader rally increasingly weighs further out into 2025. It leaves 14bp of cuts for Dec before a cumulative 20bp for Jan and 56bp for June.
- Later today we have New Home sales, Conf. Board Consumer Confidence followed by FOMC minutes, a 2yr & 5yr Tsys auction and there will also be a string of Fed speakers ahead of a shortened Thanksgiving week.
JGBS: Richer Despite PPI Services Beat, 40Y Supply Tomorrow
JGB futures are stronger and near Tokyo session highs, +15 compared to settlement levels, after reversing early losses seen after the PPI Services beat.
- Outside of the previously outlined PPI Services, there hasn't been much by way of domestic drivers to flag.
- Japan shouldn’t rush changes in monetary and fiscal policies, according to Yuichiro Tamaki, head of Democratic Party for the People. Tightening policy too much can send Japan back to deflation, Tamaki said Tuesday at a press conference. (per BBG)
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after news of President-elect Donald Trump’s threat to add another 10% to existing tariffs on China and impose 25% import tariffs on Canada and Mexico.
- Today in the US will see FOMC minutes after a string of hawkish Fedspeak and 5Y supply. It’s followed by GDP/PCE data and 7Y supply on Wed before Thanksgiving closures.
- Cash JGBs are 1-2bps richer across benchmarks, with a slight flattening bias. The benchmark 10-year yield is 1.6bps lower at 1.060% versus the cycle high of 1.108%.
- The swaps curve has twist-steepened, pivoting at the 20-year, with rates 1bp lower to 3bps higher. Swap spreads are generally wider.
- Tomorrow, the local calendar is empty apart from 40-year supply.
AUSSIE BONDS: Richer, Trump’s Tariff Policy In Focus, October CPI Tomorrow
ACGBs (YM +6.0 & XM +5.5) are stronger, though off their best levels from the Sydney session in what has been a data-light local trading day.
- The market took a positive cue from yesterday’s sharp rally in US tsys. The rally began during the Asia-Pacific session in response to President-elect Trump’s selection of Scott Bessent as Treasury Secretary and extended further in the NY session.
- Cash US tsys are trading flat to 1bp cheaper in today’s Asia-Pacific session following news of President-elect Trump’s threats to increase tariffs on China by 10% and impose 25% import tariffs on Canada and Mexico.
- Cash ACGBs are 5-6bps richer with the AU-US 10-year yield differential at +15bps.
- Swap rates are 3-4bps lower.
- The bills strip has bull-flattened with pricing flat to +4.
- RBA-dated OIS pricing is flat to 4bps softer across 2025 meetings. A 25bps rate cut is not fully priced until July.
- The local calendar tomorrow will see October’s CPI ahead of RBA Governor Bullock’s speech at the CEDA Conference on Thursday.
- Across the ditch, the RBNZ policy decision is due tomorrow, with all economists surveyed by Bloomberg looking for at least a 50bp cut.
- The AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond tomorrow and A$700mn of the 1.50% 21 June 2031 bond on Friday.
BONDS: NZGBS: Richer Ahead Of The RBNZ Policy Decision Tomorrow
NZGBs closed 5-6bps richer but slightly off the local session’s best levels.
- The local market opened stronger on the back of a sharp rally in US tsys. The rally had started in yesterday’s Asia-Pac session in response to President-elect Trump’s selection of Scott Bessent for Treasury Secretary. The rally then extended in the NY session.
- Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session after news of President-elect Donald Trump’s threat to add another 10% to existing tariffs on China and impose 25% import tariffs on Canada and Mexico.
- Swap rates are 3-5bps lower.
- Tomorrow sees the RBNZ’s policy decision. All but one of the economists surveyed by Bloomberg are looking for a 50bp cut. One economist is looking for a 75bp cut. Our policy team noted early last week that an ex-RBNZ economist said that the central bank would consider a 75bps cut.
- RBNZ dated OIS pricing is flat to 2bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps priced for tomorrow’s meeting.
- 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$75mn of the 1.75% May-41 bond.
FOREX: CAD & MXN Weaken On Tariff Threat, Yen Outperforms
The USD BBDXY index sits up 0.25% for the first part of Tuesday trade, last near 1288.2. We are off earlier highs in the index though, which printed at 1293.55 (which was also just short of recent YTD highs close to 1295).
- Broader risk sentiment has stabilized somewhat after the earlier headlines around 25% tariffs on Canada and Mexico, along with an additional 10% tariff on China, drove sharp risk off moves in the FX space.
- USD/CAD got to fresh multi year highs of 1.4178, but we sit back closer to 1.4100 in latest dealings, still around 0.80% weaker in CAD terms. USD/MXN is up over 1% to 20.53, but is off earlier highs of 20.7504. USD/CNH got above 7.2700, but sits back at 7.2635 in latest dealings.
- US equity futures are back to being modestly in the green, Eminis were off at one stage by 0.60%. Regional equity sentiment is mixed, with Hong Kong and China markets up at the lunch time break. Fresh US tariffs may evoke fresh stimulus from the authorities. US yields are up, but away from best levels for the session.
- USD/JPY is tracking under 154.00, last near 153.75/80, up around 0.30% in yen terms. Yen is the only G10 currency firmer against the USD so far today. The early risk off tone on tariff headlines was supportive, although equity markets are away from worst levels. The other positive was the firmer PPI services print, which reinforces the live nature of the upcoming Dec BoJ meeting.
- We also had comments from PM Ishiba, stating he wanted bigger wage gains next year compared to this year.
- The A$ got to lows of 0.6434, but sits back at 0.6490/95 in latest dealings, only down modestly for the session. NZD/USD touched sub 0.5800 (fresh YTD low), but is back to 0.5840/45 now, close to flat.
- AUD/JPY got to lows of 99.07, but sits back at 99.85/90 now.
- Later the FOMC November meeting minutes are published and the ECB’s McCaul and BoE’s Pill speak. US September house prices, October new home sales, November consumer confidence and November Richmond, Philly and Dallas Fed indices print.
EQUITIES: Asian Equities Edge Lower On Tariffs
Asian stocks declined on Tuesday as traders weighed the potential impact of additional US tariffs on China, Mexico, and Canada, with the MSCI Asia Pacific Index down 0.5%. Japan, Taiwan, and South Korea led losses, with tech hardware and financials dragging the regional gauge. Chinese stocks recovered slightly after three days of losses amid expectations of potential fiscal easing from Beijing.
- President-elect Donald Trump's comments on imposing a 10% tariff on Chinese goods and a 25% tariff on goods from Canada and Mexico triggered market caution, particularly for export-driven companies. Defense stocks in South Korea and Japan also fell as reports suggested Israel and Hezbollah were nearing a cease-fire deal. Investors are now focused on the Federal Reserve’s upcoming meeting minutes and its preferred inflation gauge for further policy clues.
- US equity futures have erased earlier losses to trade flat to slightly higher, Dow and S&P futures are flat, while Nasdaq 100 futures are +0.06% after earlier being down 0.80%.
- Japanese equities are the worst performing market in the region today, as exporter trade lower on the tariff news. The TOPIX was 1.40% lower, while the Nikkei is 1.30% lower.
- Foreign investors have again been better sellers of South Korean equities today, although outflows look to be slowly with just $64m of outflows so far today, with healthcare and chemical names seeing the majority of the outflows.
- Tech stocks are mixed today, with the HSTech Index +0.43% led by Baidu after it jumped 5.40% on reports of its autonomous ride-hailing trial in Hong Kong, BBG Semiconductor Index fell 0.50% with Tokyo Electron leading the declines, last down 2.80%. Tech stocks have been trading in a range since mid August now.
Chart. Asia Tech Stocks Remain Rangebound
ASIA STOCKS: China & HK Equities Brush Off Trump Tariffs News
Chinese and Hong Kong markets showed resilience on Tuesday, recovering from earlier losses as investors weighed the potential impact of President-elect Donald Trump's proposed tariffs on Chinese imports. The HSI is trading 0.3% higher, Baidu surged by a 5% on reports of its autonomous ride-hailing trial in Hong Kong. Onshore, the CSI 300 and Shanghai Composite indices are both trading about 0.2% higher, driven by optimism in sectors such as Macau casinos, with Sands China up 3.4%.
- Trump’s tariff threats, including an additional 10% levy on Chinese goods and a possible universal 60% rate, spurred caution, though investors noted the importance of implementation details and magnitude, while it was widely expected tariffs would be in trumps plans, anything below 60% was largely seen as positive.
- Looking at onshore markets today, healthcare and consumer staples are the top performing sectors, small-caps are underperforming slightly with the CSI 1000 & 2000 trading about 0.30% lower. Overall markets are trading slightly higher however ranges are narrow.
OIL: Crude Recovers Following Trump Tariff Statement Sell Off
Oil prices have trended higher since the US dollar turned down again after rising strongly earlier in the session following US President-elect Trump announcing that one of the first things he’ll do in office is add another 10% to existing tariffs on China and introduce 25% on Mexico and Canada (USD BBDXY +0.3%). WTI is up 0.3% to $69.12/bbl, close to the intraday high, and Brent is 0.3% higher at $73.26/bbl.
- US oil imports from Canada would be impacted by the tariff announcement as it stands.
- Despite the recent risk to Russian oil infrastructure from the escalation in the Ukraine/Russia conflict, and optimism that a ceasefire deal between Israel and Hezbollah is imminent, supply/demand fundamentals remain in focus. US industry-based inventory data print later today with official EIA figures on Wednesday and the OPEC+ meeting on the weekend.
- A representative from Iran said that the non-OPEC supply outlook means that the group has little room to reduce output cuts, according to Bloomberg.
- The prospect of a truce for Lebanon drove a sharp fall in oil prices on Monday and they now stand up less than a percent on the month.
- Later the FOMC November meeting minutes are published and the ECB’s McCaul and BoE’s Pill speak. US September house prices, October new home sales, November consumer confidence and November Richmond, Philly and Dallas Fed indices print.
GOLD: Sharp Decline As Haven Demand Wanes
Gold is steady in today’s Asia-Pac session after falling earlier on President-elect Donald Trump’s threat of 25% import tariffs on Canada and Mexico buoyed the dollar.
- Yesterday, bullion closed 3.4% lower at $2625 as some of the geopolitical risk premium surrounding the Israel-Lebanon conflict was removed.
- Gold had already slipped on the back President-elect Trump nominating Scott Bessent for Treasury Secretary, with his policy preferences deemed less inflationary than some of the alternatives. Lower rates are typically positive for gold, which doesn’t pay interest.
- In terms of the prevailing technicals, the trend remains bullish for now, according to MNI’s technicals team. However, yesterday’s move has brought gold through initial support at the 50-day EMA at $2,638.9, increasing the bearish threat, with the next support at $2,610.5, the Nov 19 low.
- Similarly, silver declined over 3%. Medium-term bullish conditions in silver remain intact and the bear cycle that started on Oct 23 still appears to be a correction. However, price has recently breached the 20- and 50-day EMAs exposing $28.446, a Fibonacci retracement. Initial firm resistance to watch is $31.315, the 20-day EMA.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 26/11/2024 | 0700/0800 | ** |  SE | PPI |
| 26/11/2024 | 1100/1100 | ** |  GB | CBI Distributive Trades |
| 26/11/2024 | 1305/0805 |  CA | BOC Deputy Mendes speech in PEI. | |
| 26/11/2024 | 1330/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 26/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 26/11/2024 | 1400/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1500/1000 | *** | US | New Home Sales |
| 26/11/2024 | 1500/1000 | *** | US | Conference Board Consumer Confidence |
| 26/11/2024 | 1500/1000 | ** | US | Richmond Fed Survey |
| 26/11/2024 | 1500/1500 | GB | BOE's Pill at Economic Affairs Committee | |
| 26/11/2024 | 1530/1030 | ** | US | Dallas Fed Services Survey |
| 26/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 26/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 26/11/2024 | 1800/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/11/2024 | 1900/1400 | *** | US | FOMC Minutes |
| 27/11/2024 | - |  NZ | Reserve Bank of New Zealand Meeting | |
| 27/11/2024 | 0030/1130 | *** |  AU | Quarterly construction work done |
| 27/11/2024 | 0030/1130 | *** | AU | CPI Inflation Monthly |
| 27/11/2024 | 0100/1400 | *** | NZ | RBNZ official cash rate decision |
| 27/11/2024 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 27/11/2024 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 27/11/2024 | 0930/1030 | * |  DE | GFK Consumer Climate |
| 27/11/2024 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 27/11/2024 | 1330/0830 | *** | US | GDP |
| 27/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 27/11/2024 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/11/2024 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |