Source: MNI - Market News/Bloomberg
UK
BOE (MNI): Just months after committing to produce alternative economic scenarios in order to make its monetary policy reasoning clearer, the Bank of England is lagging private forecasters as it wrestles with the problem of how to incorporate the significant but uncertain implications of U.S. President-elect Donald Trump’s incoming government into its projections.
JOBS (BBG): ‘Britain has underestimated the number of people in employment by almost 1 million, according to a new report that casts further doubt on official estimates that are crucial for the Bank of England.”
EU
GERMANY (MNI): Volkswagen Pay Rises Seen Lagging Peers-Insiders
GERMANY (BBG): “Chancellor Olaf Scholz said he would be his party’s candidate in the upcoming German election, brushing aside speculation that the Social Democrats would choose a more popular official to run in his place.”
TAIWAN/EU (BBG): "Taiwanese Foreign Minister Lin Chia-lung started his weeklong trip to Europe with a stop in Brussels that’s likely to trigger Beijing."
US
FED (MNI): Faster productivity growth and expanding federal deficits boost interest rates over time, while an aging U.S. population exerts a downward force on borrowing costs, creating uncertainty over where the Federal Reserve should set rates over the longer term, Kansas City Fed President Jeff Schmid said Tuesday.
POLITICS (BBG): “President-elect Donald Trump is tapping Cantor Fitzgerald LP chief executive officer Howard Lutnick to lead the Commerce Department, a central pick in an administration that will likely be shaped by sweeping tariff hike proposals.”
POLITICS (BBG): “ President-elect Donald Trump has yet to announce his pick for Treasury secretary, but Kevin Warsh — a former Federal Reserve board member well known to Wall Street — has at least won some backing in the bond market.”
OTHER
JAPAN (MNI BRIEF): Japan’s exports in October increased 3.1% y/y, higher than the 1% market estimate, and its first year-on-year rise in two months following September's 1.7% fall due to higher semiconductor manufacturing equipment and median products shipments, data released by the Ministry of Finance showed on Wednesday.
CANADA (MNI): Canadian inflation quickened to the middle of the central bank's target band at 2% in October led by an unflattering "base effect" comparison to year-ago gas prices, the kind of short-term bump officials and economists said could be overlooked as a weak economy creates slack requiring further interest-rate cuts.
NEW ZEALAND (MNI INTERVIEW): Easing Capital Rules On NZ Banks Would Backfire.
CHINA
LOAN PRIME RATES (MNI BRIEF): China's Loan Prime Rate remained unchanged on Wednesday according to a People's Bank of China statement, in line with expectation and as the central bank held its key 7-day reverse repo rate stable.
CONSUMPTION (JD.GROUP): China’s high-frequency data suggests consumption will remain strong in November and December, according to Shen Jianguang, chief economist at JD Group, who highlighted 567,000 vehicles were sold between November 1-10, up 29% y/y, of which new energy vehicles increased by 70% y/y. Home-appliance sales are expected to benefit from new-home total square metre transactions in 30 large and medium-sized cities rising 7.3% between November 1 to 17, Shen added.”
PROPERTY (NATIONAL BUSINESS DAILY): “Shenzhen has become the third tier-one city to cancel taxation distinctions between ordinary and non-ordinary housing categories, following Beijing and Shanghai, National Business Daily reported. Deed tax for first and second family homes below 140 square metres will be reduced to 1%, and exemptions given on value-added tax after two years of ownership versus 5% for those selling within two years.”
BANK DEBT (SECURITIES DAILY): “Chinese banks have issued nearly 1.5 trillion yuan ($207 billion) worth of tier-2 capital bonds and subordinated bonds so far this year to replenish capital, the Securities Daily reports Wednesday.”
CHINA MARKETS
MNI: PBOC Net Injects CNY69.1 Bln via OMO Wednesday
The People's Bank of China (PBOC) conducted CNY302.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY69.1 billion after offsetting the maturity of CNY233 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6592% at 09:56 am local time from the close of 1.7299% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Tuesday, compared with the close of 47 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1935 Weds; +0.09% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1935 on Wednesday, compared with 7.1911 set on Tuesday. The fixing was estimated at 7.2374 by Bloomberg survey today.
MARKET DATA
AUSTRALIA OCT WESTPAC LEADING INDEX M/M 0.18%; PRIOR 0.01%
JAPAN OCT TRADE BALANCE -¥461.2BN; MEDIAN -¥391.9BN; PRIOR -¥294.1BN
JAPAN OCT EXPORT Y/Y 3.1%; MEDIAN 1.0%; PRIOR -1.7%
JAPAN OCT IMPORTS Y/Y 0.4%; MEDIAN -1.9%; PRIOR 1.8%
CHINA 5-YR LPR 3.60%; MEDIAN 3.60%; PRIOR 3.60%
CHINA 1-YR LPR 3.10%; MEDIAN 3.10%; PRIOR 3.10%
SOUTH KOREA OCT PPI Y/Y 1.0%; PRIOR 1.0%
SOUTH KOREA Q3 SHORT-TERM EXTERNAL DEBT $158.7bn; PRIOR $142bn
MARKETS
US TSYS: Tsys Futures Steady Ahead Of Fed Speak
- It has been a very slow session for tsys we do trade just off session lows, although ranges have been narrow, while volumes are below averages. The front-end of the cash tsys curve is unchanged, while the longer end is trades slightly cheaper. TU is -00¾ at 102-21+, while TY is -04 at 109-23, both trading within Tuesday's ranges.
- There is nothing on the data calendar tonight, with focus turning to US jobless claims figures Thursday, as well as speeches this week from Fed officials such as Michael Barr, Lisa Cook, Michelle Bowman and Susan Collins.
- Overnight moves higher were driven by risk aversion after Ukraine hit Russia with US missiles and Russian President Vladimir Putin approved an updated nuclear doctrine expanding the conditions for using atomic weapons, however those moves have largely been erased. There was no reaction to Biden approving Ukraine for the use of anti-personal landmines.
- Cash tsys curve has steepened slightly, the front-end is unchanged, while the 10yr is trading +0.6bps at 4.402%.
- Projected rate cuts into early 2025 receded overnight vs. Tuesday levels (*) : Dec'24 cumulative -14.7bp (-15.4bp), Jan'25 -21.7bp (-24.0bp), Mar'25 -36.0bp (-39.5bp), May'25 -43.9bp (-48.2bp).
JGBS: Cash Bonds Twist-Flatten, 20Y Supply Tomorrow, Natl. CPI Friday
JGB futures have swung into negative territory, -2 compared to settlement levels, after closing stronger overnight.
- Outside of the previously outlined trade balance data, there hasn't been much by way of domestic drivers to flag.
- No. of condominium units supplied in Tokyo and surrounding areas rose 23.4% from a year earlier to 23 units in October. Machine Tool Orders data is due later.
- Cash US tsys are flat to 1bp cheaper, with a slight steepening bias, in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- Cash JGB curve has twist-flattened, with yields 2bps higher to 2bps lower. The benchmark 20-year yield is 0.5bp lower at 1.890%.
- The swaps curve has bear-steepened, with rates flat to 4bps higher. Swap spreads are mostly wider.
- Tomorrow, the local calendar will see weekly International Investment Flows alongside 20-year supply. National CPI is due for release on Friday.
AUSSIE BONDS: Little Changed, RBA Governor Speech Tomorrow
ACGBs (YM -1.0 & XM +0.5) are slightly mixed, with a flattening bias, in today’s data-light Sydney session.
- "Investors such as UBS Asset Management and Jamieson Coote Bonds Pty see value in Australian bonds as the global debt selloff looks stretched and anticipation of a policy pivot grows." (See link)
- The latest round of ACGB Dec-35 supply showed strong pricing, with the weighted average yield printing 0.47bp through prevailing mids. The higher outright yield and steep curve likely aided the absorption of today’s ACGB supply. However, the notable worsening in global bond sentiment likely weighed on demand at today’s auction.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- Cash ACGBs are flat, with the AU-US 10-year yield differential at +16bps.
- Swap rates are little changed.
- The bills strip is slightly cheaper across contracts, with pricing flat to -3.
- RBA-dated OIS pricing shows no easing by year-end. A 25bps rate cut is not fully priced until July.
- Tomorrow, the local calendar will see a speech by RBA Governor Bullock at the Women In Payments Conference.
BONDS: NZGBS: Bull-Flattens, Tracking US Tsys
NZGBs closed showing a bull-flattener, with benchmark yields 1-3bps lower. With the domestic calendar light again, the local market has simply tracked developments abroad.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- NZ-US and NZ-AU 10-year yield differentials closed unchanged.
- Westpac has upgraded its milk price forecast. This follows the solid auction overnight. "We have increased our farmgate milk price forecast for this season to $10.00/kg (previously $9.00/kg). This would be a new record milk price in dollar terms, though not after adjusting for inflation or the trend increase in farmers’ costs. Chinese buyers are facing a substantial challenge to rebuild their stocks of milk powders in particular.
- Swap rates closed flat to 1bp lower, with the implied short-end swap spread wider.
- RBNZ dated OIS pricing closed slightly softer. A cumulative 93bps of easing is priced by February, with 52bps by year-end.
- The local calendar is light for the remainder of the week. The next key release will be Q3 Retail Sales ex Inflation on Monday.
- Tomorrow, the NZ Treasury plans to sell NZ$200mn of the 3.0% Apr-29 bond, NZ$225mn of the 2.0% May-32 bond and NZ$75mn of the 1.75% May-41 bond.
FOREX: USD Supported On Dips, But Aggregate Moves Modest, USD/JPY Around 155.00
The earlier outperformance from risk currencies has given way to a firmer USD backdrop as Wednesday trade has unfolded. The USD BBDXY index was last around 1279.20, a touch higher for the session. Earlier lows in the index were at 1277.22.
- Aggregate FX moves are not large at this stage. USD/JPY has traded with a positive bias, getting to highs of 155.14, but we sit back closer to 155.00 in latest dealings, around 0.25% weaker in yen terms. Earlier data showed slightly stronger than expected export growth, but a still persistent trade deficit in Japan
- US yields sit close to unchanged, albeit with a slight bias to move higher at the back end.
- US equity futures are off earlier highs but still sit in positive territory, last +0.15%. This comes ahead of the key Nvidia earnings release. Regional equities are mixed, but aggregate moves aren't much beyond 0.50% at this stage.
- AUD and NZD sit off earlier highs, but are only down 0.10% at this stage. AUD/USD last near 0.6525, NZD just under 0.5910. EUR/USD has slipped back under 1.0600.
- We remain within broader ranges though, as markets await fresh catalysts. Technical indicators still suggest USD dips will be supported.
- Looking ahead, the main focus will be UK CPI. We also hear from ECB and Fed speakers.
EQUITIES: China & HK Equities Trade In Narrow Ranges Ahead Of Nvidia Earnings
Hong Kong and China equities are mostly higher today, with earlier losses now being erased. China's central bank kept its loan prime rates unchanged, in line with expectations. The HSI is trading flat with losses in Geely Automobile, Xiaomi, and Alibaba offsetting wider gains, while the CSI 300 now trades 0.2% higher. Investors remained cautious ahead of Nvidia's earnings, which could serve as a key catalyst for global sentiment. Meanwhile, Chinese tech stocks faced uncertainty amid geopolitical concerns tied to the next Trump administration.
- China healthcare stocks are the top performing today, the CSI 300 Healthcare Index is 2.45% higher with Tigermed jumping 8%. Small & mid-cap stocks out outperforming large-cap today, with the CSI 2000 up 2.50%, while the CSI 1000 trades 1.60% higher.
- Hong Kong listed equities are trading in narrow ranges today, with major benchmarks trading little changed.
Equities Mixed, As Geopol Tensions Rise, Nvidia's Earnings Tomorrow
Asian equities are mixed today as investors await Nvidia's earnings for fresh direction, with the chipmaker's outlook expected to influence global sentiment. Japanese stocks fluctuated amid concerns over the Russia-Ukraine war and its potential impact on energy prices, while South Korea's KOSPI edged higher, led by gains in tech and financial shares. In China, the CSI300 is trading 0.25% lower, while the HSI trades 0.15% lower. Australia's ASX200 retreated from record highs, weighed down by geopolitical jitters, with tech stocks leading losses.
- In what has been a very quiet data week, drivers of price have been macro based, overnight we saw Russia/Ukraine tensions picked-up with Biden approving Ukraine's use of US missiles on Russia, while he also approved used of anti-personal landmines earlier today, this caused equities to sell-off, however the move was quickly reversed.
Nvidia is set to report Q3 results on Nov 21 with consensus revenue at $33.25b, driven by strong AI hardware demand, though manufacturing delays for its new Blackwell chips add uncertainty. The market expected Nvidia to exceed estimates by up to $2b in Q3 and potentially guide $4b higher for Q4, with FY2025 revenue projected at $126.58b.
OIL: Prices Steady Ahead of Report Tonight on US Inventory Levels.
- Wednesday in the US will see the release of the Energy Information Administration report on inventories and it expected to show that the US has built up their inventories in recent months.
- Volatility for oil was driven by news overnight that Ukraine fired US missiles into Russia was followed by Vladimir Putin’s approval of a nuclear doctrine that lowers the threshold for using atomic weapons.
- Additionally, Iran announced that that it had agreed to stop producing uranium enriched for nuclear weapons.
- Also Lebanon and Hezbollah militia have agreed to a US proposal for a cease fire with Israel according to Reuters, yet this was rejected by US officials saying that discussions were ongoing.
- WTI whipped around during the US session only to finish higher on the day at $69.39, having been as low as $68.45 earlier. It has opened in the Asian trading session marginally higher and traded in a tight range around $69.50.
- Brent finished at US$73.30 having been as low as $72.61. It has opened in Asian trading higher before settling around $73.25 in a very low volume day
GOLD: Geopolitical Tensions Extend The Rebound
Gold is 0.3% higher in today’s Asia-Pac session, after closing 0.8% higher at $2632.08 on Tuesday, amid the escalation in geopolitical tensions between Russia and the West.
- Heightened geopolitical tensions lent support to haven trades after Ukraine launched US made long range missiles into Russia. Despite President Putin's move to revise Russia's nuclear doctrine, however, US State Department Spokesperson Matthew Miller told reporters that the US has seen no reason to adjust its own nuclear posture.
- Short end rates then pushed higher in the second half of the NY session, as projected rate cut pricing into early 2025 was tempered. Lower rates are typically positive for gold, which doesn’t pay interest.
- KC Fed Schmid said "now is the time to dial back restrictiveness of policy". Schmid repeated "While now is the time to begin dialing back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle."
- According to MNI’s technicals team, the technicals for gold remain bullish, with eyes on the 20-day EMA at $2,651.1. A clear break above this average would highlight a possible reversal and signal the end of the recent bearish corrective cycle. This would open $2,710.4, the Nov 11 high.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 20/11/2024 | 0700/0800 | ** |  DE | PPI |
| 20/11/2024 | 0700/0700 | *** |  GB | Consumer inflation report |
| 20/11/2024 | 0700/0700 | *** | GB | Producer Prices |
| 20/11/2024 | 1000/1100 | ** |  EU | Construction Production |
| 20/11/2024 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 20/11/2024 | 1300/1400 | EU | ECB's Lagarde address on financial stability | |
| 20/11/2024 | 1500/1000 | US | Fed Vice Chair Michael Barr | |
| 20/11/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 20/11/2024 | 1600/1600 | GB | BOE's Ramsden speech on monetary policy | |
| 20/11/2024 | 1600/1100 | US | Fed Governor Lisa Cook | |
| 20/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 20/11/2024 | 1715/1215 | US | Fed Governor Michelle Bowman | |
| 20/11/2024 | 1800/1900 | EU | ECB's De Guindos speech on financial stability | |
| 20/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 20/11/2024 | 2100/1600 | US | Boston Fed's Susan Collins | |
| 21/11/2024 | 0700/0700 | *** | GB | Public Sector Finances |
| 21/11/2024 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 21/11/2024 | 0830/0930 | EU | ECB's Cipollone at ECRB meeting | |
| 21/11/2024 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 21/11/2024 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 21/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 21/11/2024 | 1330/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 21/11/2024 | 1330/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 21/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 21/11/2024 | 1345/0845 | US | Cleveland Fed's Beth Hammack |