Source: MNI - Market News/Bloomberg
UK
BOE (MNI): There are no quick fixes to the UK’s problems with weak potential growth, Bank of England Governor Andrew Bailey said in his annual Mansion House speech on Thursday, 14 November 2024, though he backed the case for boosting investment and pressing ahead with infrastructure projects.
BOE (MNI BRIEF): Independent Bank of England Monetary Policy Committee member Catherine Mann set out the implications of her belief in rate activism at a Society of Professional Economists event on Thursday, saying that after a period of wait-and-see to ensure inflation has diminished she could then back acting "fast and forcefully."
EU
ECB (MNI BRIEF): A EUR1 trillion reduction in the European Central Bank’s bond holdings portfolio could increase long-term risk-free interest rates in the euro area by approximately 35 basis points, with Italian and Spanish bonds seeing rises of 45 and 50 basis points respectively, according to estimates published by the ECB in a blog on Thursday, based on its Survey of Monetary Analysts.
ITALY (MNI): Italian Gov't Sees Yields Declining Despite Trump
NORWAY (MNI): Signs FX Affecting Prices Faster - Norges Bank Director
US
FED (MNI BRIEF): The Federal Reserve might need to slow the pace of rate cuts as it approaches a neutral rate of interest, Fed chair Jerome Powell said Thursday.
FED (MNI): Federal Reserve Chair Jerome Powell said Thursday a strong economy means policymakers do not need to be in any rush to lower interest rates toward more neutral levels.
FED (MNI): Federal Reserve Chair Jerome Powell on Thursday repeated the central bank has the tools to defend its independence and Fed independence is broadly understood on Capitol Hill.
POLITICS (BBG): “ President-elect Donald Trump said he’s tapping Robert F. Kennedy Jr. to run the Department of Health and Human Services, a move that would elevate a prominent vaccine skeptic and pharmaceutical industry critic to a top role on federal health policy.”
FX (TREASURY): "Seven economies are on Treasury’s “Monitoring List” of major trading partners that merit close attention to their currency practices and macroeconomic policies: China, Japan, Korea, Singapore, Taiwan, Vietnam, and Germany."
OTHER
JAPAN (MNI BRIEF): Japan's economy grew for the second straight quarter over Q3, up 0.2% q/q, or an or an annualised 0.9%, but slowed from Q2's revised 0.5% q/q gain following weaker capital investment and net exports, preliminary GDP data released by the Cabinet Office showed on Friday.
JAPAN (MNI INTERVIEW): Conditions Exist For BOJ Dec Rate Hike – Sekine
MIDDLE EAST (BBG): “Israeli ground forces are expanding their six—week-old sweep of villages in southern Lebanon, triggering new clashes with Hezbollah militants while US-led cease-fire plans remain in limbo.”
MEXICO (BBG): "Mexico’s credit outlook was lowered to negative from stable by Moody’s Ratings, which said recent constitutional changes risk hurting Latin America’s second-biggest economy. "
CHINA
RETAIL (MNI BRIEF): China's consumption rebounded more than expected in October, driven by a week-long National Day holiday and the ongoing consumer trade-in programme, though production and investment performance were mediocre, data released by the National Bureau of Statistics on Friday showed.
PROPERTY (MNI BRIEF): Authorities are optimistic about the future trend of the real-estate market, despite property investment falling 10.3% in October, after a package of measures to promote the sector proved effective, according to Fu Linghui, spokesperson for the National Bureau of Statistics on Friday.
FISCAL (ECONOMIC INFORMATION DAILY): “China’s deficit-to-GDP ratio is expected to exceed 3% next year, with the possibility to approach or even exceed historical high, Economic Information Daily reported citing Guo Kai, executive director of China Finance 40 Forum.”
EQUITIES (SECURITIES DAILY): “The Shanghai Stock Exchange will revise the SSE 180 Index to make it a benchmark representative index and increase its investment value, Securities Daily reported.”
HOUSING (CCTV): “Local governments have completed a total of 2.85 million units in housing delivery programme as of Nov 13, largely improving market expectations, CCTV News reported citing the Ministry of Housing.”
CHINA MARKETS
MNI: PBOC Net Injects CNY968.8 Bln via OMO Friday
The People's Bank of China (PBOC) conducted CNY981 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY968.8 billion after offsetting the maturity of CNY12.2 billion today. There is another CNY1450 billion 1-year MLF maturing today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6294% at 09:41 am local time from the close of 1.7174% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 44 on Thursday, compared with the close of 50 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1992 Fri; +0.72% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1992 on Friday, compared with 7.1966 set on Thursday. The fixing was estimated at 7.2471 by Bloomberg survey today.
MARKET DATA
**MNI JAPAN Q3 REAL GDP +0.2% Q/Q; MNI MEDIAN +0.2%
JAPAN Q3 GDP POSTS 2ND STRAIGHT GROWTH
JAPAN Q3 CONSUMPTION 0.9% Q/Q; +0.5 PP CONTRIBUTION
JAPAN Q3 REAL GDP +0.9% ANNUALIZED; MNI MEDIAN +0.8%
JAPAN Q3 CAPEX -0.2% Q/Q; -0.0 PP CONTRIBUTION
**CHINA OCT INDUSTRIAL OUTPUT +5.3% Y/Y VS MEDIAN +5.5% Y/Y: NBS
**CHINA OCT RETAIL SALES +4.8% Y/Y VS MEDIAN +3.8% Y/Y
**CHINA YTD FIXED-ASSET INVESTMENT +3.4% Y/Y VS MEDIAN +3.5% Y/Y
**CHINA OCT UNEMPLOYMENT RATE +5.0% VS SEP +5.1%
MARKETS
US TSYS: Tsys Futures Edge Lower Ahead Of Retail Sales & Fed Speak
- Tsys futures have continued to edge lower throughout the session although we do trade slightly off the morning lows. TU is -03+ at 102-18⅛, while TY is -09+ at 109-08, we still trade just off Thursday lows.
- Tsys yields have continued to rise through the Asian session, the curve has bear-steepened with yields +0.5 to +2.5bps. The 10yr is +2.6bps at 4.461% after hitting new highs of 4.48% overnight.
- Projected rate cuts have continued to cool throughout the Asian session following Powell's comments vs Thursday's levels (*) : Dec'24 cumulative -14.7bp (-19.8bp), Jan'25 -21.7bp (-27.8bp), Mar'25 -35.8bp (-42.4bp), May'25 -42.5bp (-49.9bp).
- The weakness in yields comes following Powell's hawkish comments where he mentioned that the central bank does not need to hurry in cutting interest rates saw bets on future rate cuts cool this morning, with fed futures now pricing in just a 60% chance of a 25bps cut in December with no full cut until March 2025.
- The 2s10s curve is +2bps at 10.5 today, after the curve flattened about 10bps overnight, while the 2s30s is +2.5bps at 25.8 flattening from 35bps overnight.
- There will be more fed speak tonight with Goolsbee (Chicago), Collins (Boston), Williams (New York) and Barkin (Richmond) to speak
- Later today we have Empire Manufacturing, Retail Sales, Import Price Index, Industrial Production
JGBS: Cash Bonds Cheaper With US Tsys Ahead Of US Retail Sales
JGB futures weaker but off Tokyo session lows, -22 compared to settlement levels.
- Just released, September industrial production was revised up to 1.6% y/y. Japan’s operating ratio rose to 101.9 in September compared to 97.6 in the previous month. September Tertiary Industry Index falls 0.2% m/m versus +0.2% estimate.
- Cash US tsys are flat to 2bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-flattener.
- Later today, the US calendar will see Retail Sales, Empire Manufacturing, Import/Export Prices, Capacity Utilisation and Business Inventory data.
- Cash JGBs are 1-2bps cheaper across benchmarks beyond the 1-year (+4.8bps). The benchmark 5-year yield is 1.8bps higher at 0.714% after today’s supply.
- Today’s 5-year bond auction showed solid demand. The auction price exceeded dealer expectations, the cover ratio edged up and the auction tail shortened. The results were likely influenced by bids encountering an outright yield around 15bps higher than last month’s offering and at a cyclical peak.
- The swap curve has bear-steepened, with rates 1-4bps higher.
- On Monday, the local calendar will see Core Machine Orders data alongside BOJ Rinabn operation covering 1-3-year and 5-25-year OTR JGBs. Next Friday's national CPI for October is likely to be the next major focus point. Domestic-related services inflation will be eyed.
AUSSIE BONDS: Richer Ahead Of US Retail Sales Later Today
ACGBs (YM +3.0 & XM +5.5) are holding stronger and near Sydney session highs on a data-light day.
- Cash US tsys are flat to 2bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-flattener.
- Later today, the US calendar will see Retail Sales, Empire Manufacturing, Import/Export Prices, Capacity Utilisation and Business Inventory data.
- Cash ACGBs are 4-6bps richer with the AU-US 10-year yield differential at 18bps.
- Swap rates are 3-5bps lower, with the 3s10s curve flatter.
- The bills strip has bull-flattened, with pricing -1 to +3.
- RBA-dated OIS pricing is 1-5bps softer but continues to price little chance of easing by year-end. A 25bps rate cut is not fully priced until August.
- On Monday, the local calendar will see Christopher Kent, Assistant Governor (Financial Market) deliver a speech at the Sir Leslie Melville Lecture. RBA Minutes for the November Meeting are due on Tuesday.
- Next week, AOFM plans to sell A$300mn of the 2.75% 21 May 2041bond on Monday, A$800mn of the 4.25% 21 December 2035 bond on Wednesday and A$700mn of the 2.75% 21 November 2028bond on Friday.
NZGBS: Slightly Mixed But Underperformed $-Bloc Despite Weak Data
NZGBs closed slightly mixed, settling near the middle of today’s range, with benchmark yields fluctuating within +/-1bp. The NZGB 10-year underperformed relative to its $-bloc counterparts, with the NZ–US yield differential widening by 1bp and the NZ–AU differential widening by 5bps.
- The local market was likely supported by the news today that NZ’s manufacturing industry contracted for a record 20th consecutive month, reinforcing signs the economy will need further stimulus to get back up to speed.
- Cash US tsys are flat to 2bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-flattener.
- Later today, the US calendar will see Retail Sales, Empire Manufacturing, Import/Export Prices, Capacity Utilisation and Business Inventory data.
- The swaps curve twist flattened, with rates 1bp higher to 3bps lower.
- RBNZ dated OIS pricing closed little changed across meetings for 2025. A cumulative 88bps of easing is priced by February, with 51bps by year-end.
- On Monday, the local calendar will see the Performance Services Index, and PPI and Non-Resident Bond Holdings data.
FOREX: Dollar Advance Trimmed, But Still Tracking Up For 7th Straight Week
Some modest retracement has been evident in the USD as Friday's Asia Pac session unfolds. The BBDXY index was last near 1286.7, off close to 0.15% for the session. We are still up strongly for the week, +1.49%, which would mark the seventh straight weekly gain. Thursday intra-session highs in the index were around 1290.
- USD/JPY is back close to unchanged, last near 156.40, after earlier touching fresh multi month highs of 156.75. Earlier comments from the FinMin around FX moves have likely helped, 'monitoring FX markets with a very high sense of urgency'. The market may also be assessing what BoJ Governor Ueda will say in a speech on Monday in Japan. No fresh hawkish rhetoric would likely weigh on yen all else equal.
- US yields are marginally off earlier highs as well, helping yen at the margins. Like the USD we are still up strongly for the week in yield terms.
- AUD/USD and NZD/USD have ticked up by around 0.20%. A$ last near 0.6465/70, NZD at 0.5860, so both still very close to weekly lows recorded on Thursday.
- It is a similar backdrop for most USD/Asia pairs as well, USD/CNH has tested back under 7.2400, USD/KRW spot near 1400.
- The regional equity tone is mixed, but has turned slightly more positive as the session has progressed. Japan and Hong Kong markets are higher, while China markets are struggling after mixed Oct activity data, although the consumer is showing signs of life with higher retail sales than forecast.
- Looking ahead, we have UK data, including monthly GDP on tap. In the US retail sales is out. Fed speak from Goolsbee and Collins will also cross. ECB speak is also due.
China Stocks See Small bounce Post Data
Chinese & Hong Kong Listed stocks have seen a bounce, post China data although are now trading off the post data highs. Property stocks have seen a small bounce following the slowing pace of home price declines.
- The Overall market is relatively subdued today, with lingering concerns surrounding the Trump presidency and its impacts on local markets. The CSI 300 is 0.15% lower, with consumer discretionary stocks struggling, while Telecom stocks see a bounce after trading lower on Thursday. The HSI is 0.30% higher, Oil & Gas stocks are trading well with the Mainland O&G Index up 0.90%, the HSTech Index was up 1.40% at one stage however trades just 0.70% now, while Property stocks have recovered somewhat from earlier lows with the Mainland Property Index down just 0.20%.
- The Shanghai Stock Exchange will revise the SSE180 Index on December 16, increasing the weighting of technology, healthcare, and other strategic industries, while excluding companies with ESG ratings of C or lower to improve the index's performance and market value coverage.
- October's Industrial Production in China rose 5.3%, slightly below market expectations of 5.6% and down from September's 5.4%. Key gains were seen in crude steel (+2.9%), steel products (+3.5%), industrial AI (+33.4%), and motor vehicles (+4.8%). However, declines were noted in mobile phones, integrated circuits, and electricity output. Despite economic challenges, Industrial Production has averaged 5.6% over the past year, showing resilience with a peak of 6.8% in December 2023 and a low of 4.5% in March 2024.
- Retail sales grew by 4.8% y/y in October, marking the highest growth this year and surpassing market expectations of 3.8%. This followed a 3.2% increase in September. Authorities have been focused on improving consumer sentiment, weakened by the real estate sector's struggles, with various stimulus measures since September.
EQUITIES: Asian Equities Edge Higher, On Track to End 5-Day Losing Streak
- Asian stocks rose, driven by gains in Japanese shares as a weaker yen supported exporters. Chinese stocks in Hong Kong rebounded on stronger-than-expected retail sales growth, reflecting the impact of Beijing's recent stimulus measures. The MSCI Asia Pacific Index gained as much as 0.5% ending a five day losing streak, with tech giants like Samsung, NetEase, and TSMC contributing to the advance. Positive earnings from Japan's largest banks also bolstered market sentiment. However, the region remains on track for a weekly decline due to concerns over a stronger dollar and potential tariff impacts from President-elect Donald Trump's policies.
- Asia suppliers to Tesla have fallen after Reuters reported Donald Trump plans to eliminate a key consumer tax credit amid at boosting EV adoption in the US.
- US equity futures have edged lower throughout the session, with Nasdaq the worst performing, down 0.50%, while S&P 500 futures are 0.30% lower.
OIL: Supply Expectations Sees Oil Down for the Week.
- The International Energy Agency (“IEA”)’s monthly report suggests that global oil markets in 2025 may face over supply as the demand from China continues to decline.
- China’s demand for oil has declined with the weakening in the domestic economy and the transition away from the reliance on oil.
- Crude prices are seemingly highly correlated to Chinese demand with both down over 10% in the second half of 2024.
- Overnight the release of a report from the US government showed gasoline stockpiles have declined to a 10-year (seasonally adjusted) low gave support to prices overnight, which were reacting to the IEA report.
- WTI peaked at US$69.30 during the US trading day, only to decline (following the IEA report) to $68.10 before recovering to $68.60 where it is opening in Asia.
- It trended lower all day to $68.10 despite robust Industrial Production and Retail Sales in China, suggesting the economy is stabilizing.
- WTI is down -3.25% for the week.
- Brent too had a similar price action peaking at US$73.22 before declining to $72 before recovering to $72.40 for the Asia open.
- It has trended lower all day to $71.90 and is on course to finish the week -0.90% lower.
- In the Middle East it was reported that Israel is focusing on a cease-fire proposal in Lebanon as preparations begin for the new administration in the White House.
GOLD: Powell’s Comments Extend Pullback
Gold is 0.2% higher in today’s Asia-Pac session. After piercing $2,547.0, the Sep 18 low, early in yesterday’s session, bullion recovered as the US dollar gave up some of its gains. The yellow metal ended at $2,564/oz, 0.3% lower on the day.
- Yesterday, US rates firmed after Chairman Powell's prepared remarks on the economy, delivered in Dallas, were released.
- Chair Powell's speech contained several quotes that sounded similar to what he said at last week's press conference. As such, there is nothing really "new", but by the same token, there is nothing dovish here, which may help explain the hawkish market reaction.
- "The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully."
- Lower rates are typically positive for gold, which doesn’t pay interest.
- According to MNI’s technicals team, the long-term trend condition in gold remains bullish, and the recent pullback appears corrective. However, recent weakness has resulted in a breach of the 20- and 50-day EMAs, signalling scope for a deeper retracement. Below $2,547, next support is seen at $2511.1, the Sep 12 low.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 15/11/2024 | 0700/0800 | ** |  SE | Unemployment |
| 15/11/2024 | 0700/0700 | ** |  GB | UK Monthly GDP |
| 15/11/2024 | 0700/0700 | *** | GB | GDP First Estimate |
| 15/11/2024 | 0700/0700 | ** | GB | Index of Services |
| 15/11/2024 | 0700/0700 | *** | GB | Index of Production |
| 15/11/2024 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 15/11/2024 | 0700/0700 | ** | GB | Trade Balance |
| 15/11/2024 | 0730/0730 | GB | DMO to publish FQ4 (Jan-Mar) gilt operations calendar | |
| 15/11/2024 | 0745/0845 | *** |  FR | HICP (f) |
| 15/11/2024 | 0800/0900 | * |  CH | CH Flash GDP |
| 15/11/2024 | 0900/1000 | ** |  IT | Italy Final HICP |
| 15/11/2024 | 1330/0830 | ** |  US | Import/Export Price Index |
| 15/11/2024 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 15/11/2024 | 1330/0830 | ** | CA | Wholesale Trade |
| 15/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 15/11/2024 | 1330/0830 | *** | US | Retail Sales |
| 15/11/2024 | 1330/0830 | ** | US | Empire State Manufacturing Survey |
| 15/11/2024 | 1400/0900 | * | CA | CREA Existing Home Sales |
| 15/11/2024 | 1400/0900 | US | Boston Fed's Susan Collins | |
| 15/11/2024 | 1415/0915 | *** | US | Industrial Production |
| 15/11/2024 | 1500/1000 | * | US | Business Inventories |
| 15/11/2024 | 1500/1600 |  EU | ECB's Lane at seminar on Fragmenting Trading System | |
| 15/11/2024 | 1515/1615 | EU | ECB's Cipollone in discussion on productivity | |
| 16/11/2024 | 1115/1215 | EU | ECB's De Guindos at Trilateral Commission meeting | |
| 16/11/2024 | 1300/1400 | EU | ECB's Schnabel speech at Chicago Booth Conference |