Source: MNI - Market News/Bloomberg
UK
MARKETS (BBG): “J Sainsbury Plc’s biggest shareholder, the Qatar Investment Authority, plans to offload $400 million worth of shares in Britain’s second-largest grocer.”
EU
FRANCE (BBG): “The French government unveiled a budget for next year that aims to deliver a €60.6 billion ($66.2 billion) remedy for its creaking public finances and rebuild investor confidence even as it risks eviction by a hostile parliament.”
FRANCE (BBG): “France has announced plans to sell €300 billion ($328 billion) in government bonds next year to finance its budget, following months of political turmoil.”
PORTUGAL (BBG): “Portugal’s government aims to post a budget surplus of 0.3% of gross domestic product in 2025 as economic growth accelerates, helped by investment.”
US
FED (MNI): The U.S. labor market is solid, inflation is closing in on 2% and the Federal Reserve is finally lowering interest rates to a "more neutral setting over time," New York Fed President John Williams said Thursday.
FED (MNI BRIEF): Federal Reserve officials generally agree that interest rates will come down gradually to levels "well below" where they are now despite some disagreement on the pace of easing needed to keep the economy on an even keel, Chicago Fed President Austan Goolsbee said Thursday.
DATA (MNI BRIEF): U.S. inflation in September was slightly firmer than markets expected, while initial claims for unemployment insurance also rose to the highest level since June 2023, according to Bureau of Labor Statistics reports Thursday. The Federal Reserve is watching both price and labor market data closely as officials debate how quickly to lower interest rates this year and next.
CORPORATE (BBG): “Warren Buffett can take his time to reveal trades in Bank of America Corp. stock now that his conglomerate’s stake has been trimmed below a 10% regulatory threshold requiring rapid disclosure.”
OTHER
ISRAEL (BBG): “Israel’s security cabinet met Thursday night to discuss how to retaliate against Iran for its missile attack last week, as US efforts to influence the decision remained in question.”
SOUTH KOREA (MNI BRIEF): “The Bank of Korea board on Friday decided to lower its policy interest rate to 3.25% from 3.50% as the bank's confidence on lowering inflation grows, Wowkorea reported.”
IRON ORE (MNI): Iron Ore Volatility Eyed On Uncertain Fiscal Response
CHINA
STIMULUS (BBG): “Investors and analysts are expecting China to deploy as much as 2 trillion yuan ($283 billion) in fresh fiscal stimulus as Beijing seeks to shore up the world’s No. 2 economy and boost confidence.”
DEPOSIT RATES( SHANGHAI SECURITIES NEWS): “Many small and medium-sized banks, including rural banks, have lowered deposit rates by between 10 to 110 basis points for different maturities, with analysts expecting further cuts this year, according to a report in the Shanghai Securities News.”
MARKETS (PEOPLE’S DAILY): “China will strengthen economic monitoring and increase macro-control efforts, Zheng Shanjie, Chairman of the National Development and Reform Commission writes in an opinion piece published on People’s Daily.”
EQUITIES (FINANCIAL NEWS): “PBOC’s equity swap facility will have maturity of one year and is extendable, according to a front-page report by the official Financial News.”
CHINA MARKETS
MNI: PBOC Net Drains CNY183.8 Bln via OMO Friday
The People's Bank of China (PBOC) conducted CNY94.2 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY183.8 billion after offsetting maturities of CNY333 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5000% at 09:35 am local time from the close of 1.6542% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 47 on Thursday, compared with the close of 44 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.0731 Fri; +3.03% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0731 on Friday, compared with 7.0742 set on Thursday. The fixing was estimated at 7.0749 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND SEP BUSINESSNZ MANUFACTURING PMI 46.9; PRIOR 46.1
NEW ZEALAND FOOD PRICES M/M 0.5%; PRIOR 0.2%
NEW ZEALAND NET MIGRATION SA 1840; PRIOR 3000
JAPAN SEP MONEY STOCK M2 Y/Y 1.3%; PRIOR 1.3%
SOUTH KOREA BOK BASE RATE 3.25%; MEDIAN 3.25%; PRIOR 3.50%
SOUTH KOREA BANK LENDING TO HOUSEHOLD KR1135.7t; PRIOR 1130.0t
MARKETS
US TSYS: Tsys Futures Trade In Narrow Range On Low Volumes Ahead Of PPI
- Tsys futures have traded in narrows ranges throughout the APAC session today, with a late move post NY close accounting for all of today's gains, while volumes are well down on recent averages. TU is +01⅞ at 103-14. while TY is +06 at 112-08+ post NY close.
- It has been a very slow session across all asset classes here in Asia today, early weakness in China equities, however that now looks to have steadied as investors await headlines out of the MOF meeting on Saturday, while NFRA, MIIT and SAMR will hold a press briefing on Monday. The market has turned focus to tonight's US PPI & U. of Mich. Sentiment.
- French bond futures gapped higher on the open following the Budget announcement with the 2025 budget featuring spending cuts and higher taxes on businesses, the wealthy and energy.
- Investors preferred eight-week vs four-week bills at auction on Thursday since the issue will mature well after the Fed's November interest-rate decision and therefor be more impact by potential cuts.
- Cash tsys curves are little changed with yields +0.5bps to -0.5bps, the 10yr hit a high of 4.115% overnight and trades back at 4.06% at the moment, the curve is a touch flatter with the 2s30s -0.4bps at 39.242.
- Fed fund futures are steady today vs pre data highs with Nov'24 cumulative -21.4bp (-22.7bp), Dec'24 -45.6bp (-46.5bp), Jan'25 -65.4bp (-68.9bp).
- Chicago Fed President Austan Goolsbee, his Dallas counterpart Lorie Logan, and Fed Governor Michelle Bowman are all due to speak later today
JGBS: Richer But Another Subdued Session, Local Market Closed On Monday
JGB futures are stronger after a choppy Tokyo session, +16 compared to settlement levels.
- Outside of the previously outlined M2 & M3 stock data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s bull-steepener. Focus now turns to today’s PPI and University of Michigan inflation expectations, as well as the start of the latest earning cycle with several banks reporting before the open: Wells Fargo, JP Morgan, Bank of NY Mellon and Blackrock.
- Cash JGBs are 1-2bps richer across benchmarks beyond the 1-year (+2.0bps).
- BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs showed lower offer cover ratios and negative spreads for the longer-dated buckets.
- Swap rates are 1-2bps lower out to the 30-year and 3bps higher beyond. Swap spreads are tighter out to the 30-year.
- The local market is closed on Monday in observance of the Health-Sports Day.
AUSSIE BONDS: Flat, Narrow Ranges, Focus On US PPI Data
ACGBs (YM flat & XM flat) are flat after trading in narrow ranges in today’s data light session.
- The latest round of ACGB Nov-28 supply saw the weighted average yield print 1.69bps through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s bull-steepener. Focus now turns to today’s PPI and University of Michigan inflation expectations, as well as the start of the latest earning cycle with several banks reporting before the open: Wells Fargo, JP Morgan, Bank of NY Mellon and Blackrock.
- Cash ACGBs are flat to 1bp richer, with the AU-US 10-year yield differential at +16bps.
- Swap rates are flat to 1bp lower, with the 3s10s curve steeper.
- The bills strip is slightly cheaper, with pricing -1 across contracts.
- RBA-dated OIS pricing is little changed across 2025 meetings. A cumulative 7bps of easing is priced by year-end.
- The local calendar is empty on Monday apart from the AOFM’s planned sale of A$300mn of the 1.75% 21 June 2051 bond. The AOFM also plans to sell A$700mn of the 3.75% 21 May 2034 bond on Wednesday and A$500mn of the 4.75% 21 April 2027 bond on Friday.
NZGBS: Closed On A Weak Note, PMI & Food Prices Weigh
NZGBs closed on a weak note, with benchmark yields 4-6bps higher.
- NZGBs underperformed compared to their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield spreads widening by 4-5bps.
- This underperformance likely stems from a combination of factors, including a rebound in the PMI, the largest annual increase in food prices since February, and continued selling pressure following yesterday's announcement of a larger-than-expected budget deficit.
- “New Zealand's annual inflation is poised to return to the central bank's target band for the first time in nearly three years in the September quarter, but the so-called "disinflation progress" is more driven by global factors than by recent domestic monetary tightening, ANZ Research said in a Friday report.” (per MT Newswires)
- Swap rates closed 5-6bps higher.
- RBNZ-dated OIS pricing closed 5-14bps softer across meetings out to Apr- 2025 versus pre-RBNZ levels, despite today's 2-5bps firming. 52bps of easing is priced in for November (4.23%), with a cumulative easing of 90bps for February 2025 (3.85%) and 147bps for July 2025 (3.28%).
- On Monday, the local calendar will see the Performance Services Index and Card Spending Total data as well as a speech by RBNZ Governor Orr on Maori Access to Capital.
FOREX: Dollar Trends Steady Ahead Of More Data/Fedspeak
G10 FX markets have had a relatively muted start to Friday trade. The USD BBDXY index is down slightly, last near 1243.25.
- US yields are closed to unchanged as markets await PPI & U. of Mich. Sentiment later, while we also have more Fed speak. US equity futures are slightly higher, but we also have key earnings kicking off later.
- Regional equity sentiment is mixed, with China markets down ahead of tomorrow's MOF fiscal briefing. We also hear from other authorities in China on Monday.
- Still, this hasn't stopped AUD and NZD nudging a little higher. AUD/USD was last near 0.6745/50, still down for the week (-0.70%). NZD/USD has tracked back above 0.6100, still trying to recoup post RBNZ losses. Earlier data showed manufacturing in NZ stayed in contraction, while annual migration continued to slow. Food prices rose in September but this is ahead of next week's Q3 CPI print. Inflation is expected to fall back inside the RBNZ's target band (1-3%).
- USD/JPY has drifted a little higher, the pair last near 148.70/75 but Thursday highs at 149.55 remain comfortably intact.
- Outside of the US data outcomes, we also have UK data coming up, headlined by monthly GDP.
EQUITIES: Asian Equities Mixed Today, China Underperforms Ahead Of Key Meetings
Asian equity are trading mixed today with Chinese stocks underperforming due to growing caution ahead of a key weekend briefing that could unveil fiscal stimulus measures. The CSI 300 Index is -1.90%, reversing Thursday's gains. In contrast, Japan and South Korea saw share price increases, sidestepping losses from Wall Street following stronger-than-expected U.S. core inflation data.
- All eyes are on China's weekend briefing, where up to 2t yuan in stimulus may be announced to support the economy. Hong Kong markets were closed for a holiday.
- US equity futures edge slightly higher with Nasdaq 100 (+0.16%) outperforming S&P 500 (+0.05%). Elon musk presented at Tesla's Robotaxi event, where he has unveiled a "Cybercab" & "Robovan" which looks to have gained positive reactions.
- Earlier, BOK cut interest rates, signaling the start of a gradual easing cycle to support South Korea's economy, which has been impacted by sluggish domestic demand and export reliance. Despite inflation stabilizing below 2%, BOK remains cautious about future risks, including household debt and geopolitical developments. Foreign investors continue the trend of selling Korean equities with a net outflow of $230m so far today. The Kospi is trading +0.20% with its largest weighting Samsung (+1.20%) contributing the most to the gains today although is only trading just above key support of 59,000 after yesterday making new yearly lows, while the small-cap focused KOSDAQ is trading 0.10% lower
- Taiwan's Taiex is +1.40% with TSMC +2.45% & Hon Hai +0.25% contributing most to the gains. There has been little in the way of headlines out of the region, local equities are benefitting from the move higher in Nvidia overnight.
- Japan equities continue to benefit from the weaker yen, after it slid to 149.60 on Thursday while strong results from Fast Retailing (Uniqlo) have helped support the market and the outperformance in the Nikkei (+0.70%) vs Topix which trades flat.
- Australia's ASX200 has closed the session little changed today with Miners down following a drop in commodity prices. New Zealand equities closed 0.70% higher after Infratil (Owners of Wellington Airport) jumped 1.60% following the announcement that the Wellington city council wont sell its 34% stake in the airport.
OIL: Tracking Higher For 2nd Straight Week, Israel Response Still Awaited
Brent crude sits slightly off end US Thursday levels, last near $79.10/bbl in terms of the active contract. We are still tracking up close to 1.5% for the week. WTI was last near $75.65/bbl, up around 1.75% for the past week. This follows the +9% gain for the benchmarks last week. For Brent, recent highs just above the $81/bbl remain intact. The benchmark sits above all key EMAs except the 200-day day. The 50-day day is back at $76.58/bbl.
- Oil gains from Thursday trade are largely being held, as uncertainty over Israel's retaliation against Iran lingers. The Israeli cabinet met on Thursday and oil traders may be nervous ahead of the weekend around any potential Israel action.
- US President Biden and Gulf states continue to call for Israel not to target Iran's oil assets.
- In the cross asset space, the front end yield pull back on Thursday, coupled with a more mixed USD backdrop, likely helped oil at the margins.
- Note tomorrow we also have the China fiscal briefing from the MOF, with any fresh stimulus measures eyed for the China outlook.
GOLD: Rebounds After Mixed US Data & Fedspeak
Gold is 0.5% higher in today’s Asia-Pac session, after closing 0.8% higher at $2629.74 on Thursday.
- After six consecutive days of losses, bullion steadied after upside surprises in US CPI and jobless claims and mixed Fedspeak imparted conflicting signals over the size of the Federal Reserve’s expected rate cut next month.
- In the US, easing expectations have been pared noticeably over the past week, with last Friday’s stronger-than-expected Non-Farm Payrolls report as the primary catalyst. Recent Fedspeak has assisted the move.
- Yesterday, Atlanta Fed Bostic said the door is open to skip a rate cut in November. However, NY Fed Williams said policymakers should reduce rates to a more neutral level ‘over time’.
- Lower rates are typically positive for gold, which doesn’t pay interest.
- According to MNI’s technicals team, the yellow metal has pierced firm support at $2,615.9, the 20-day EMA, this week and a clear break would signal scope for a deeper retracement to $2,584.9, the Sep 20 low. On the upside, a continuation of gains would refocus attention on $2,690.2, a Fibonacci projection.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 11/10/2024 | 0600/0700 | ** |  GB | UK Monthly GDP |
| 11/10/2024 | 0600/0700 | ** | GB | Trade Balance |
| 11/10/2024 | 0600/0700 | ** | GB | Index of Services |
| 11/10/2024 | 0600/0700 | *** | GB | Index of Production |
| 11/10/2024 | 0600/0700 | ** | GB | Output in the Construction Industry |
| 11/10/2024 | 0600/0800 | *** |  DE | HICP (f) |
| 11/10/2024 | - | *** |  CN | Money Supply |
| 11/10/2024 | - | *** | CN | New Loans |
| 11/10/2024 | - | *** | CN | Social Financing |
| 11/10/2024 | 1230/0830 | *** |  US | PPI |
| 11/10/2024 | 1230/0830 | * |  CA | Building Permits |
| 11/10/2024 | 1230/0830 | *** | CA | Labour Force Survey |
| 11/10/2024 | 1345/0945 | US | Chicago Fed's Austan Goolsbee | |
| 11/10/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 11/10/2024 | 1430/1030 | ** | CA | BOC Business Outlook Survey |
| 11/10/2024 | 1445/1045 | US | Dallas Fed's Lorie Logan | |
| 11/10/2024 | 1600/1200 | *** | US | USDA Crop Estimates - WASDE |
| 11/10/2024 | 1710/1310 | US | Fed Governor Michelle Bowman | |
| 13/10/2024 | 0130/0930 | *** | CN | CPI |
| 13/10/2024 | 0130/0930 | *** | CN | Producer Price Index |