Source: MNI - Market News/Bloomberg
UK
MIGRATION (BBG): “ Prime Minister Keir Starmer promised to cut net migration after the latest data showed the number of people arriving in the UK remained historically high despite curbs introduced by the last Conservative government.”
EU
ECB (MNI BRIEF): High inflation is no longer a problem in the euro area and the European Central Bank should avoid allowing to return to low levels, Bank of Portugal Governor Mario Centeno said on Thursday, adding that he is convinced that inflation will converge to the 2% target.
FRANCE (BBG): ‘Marine Le Pen’s National Rally set out further demands for changes to the French government’s 2025 budget bill after Prime Minister Michel Barnier dropped plans to raise taxes on electricity in a key concession.”
US
BITCOIN (BBG): “A group of one dozen US Bitcoin exchange-traded funds is on the cusp of a record monthly net inflow, bolstered by the digital asset’s historic surge toward $100,000 on President-elect Donald Trump’s embrace of crypto.”
OTHER
JAPAN (MNI BRIEF): The year-on-year rise in the Tokyo core inflation rate accelerated to 2.2% in November from October’s 1.8%, rising above 2% for the first time in two months, data from the Ministry of Internal Affairs and Communications showed on Friday.
JAPAN (MNI BRIEF): Japan's industrial output rose 3.0% m/m in October for the second straight rise following September's 1.6% gain, thanks to higher production machinery, motor vehicles and fabricated metals, data released by the Ministry of Economy, Trade and Industry showed on Friday.
MIDDLE EAST (RTRS): “The Israeli military said its air force struck a facility used by Hezbollah to store mid-range rockets in southern Lebanon on Thursday, after both sides accused each other of breaching a ceasefire that aims to halt over a year of fighting.”
ISRAEL (BBG): “Conditions have improved for reaching a deal to free the hostages held by Hamas in Gaza, Prime Minister Benjamin Netanyahu says in interview with Israel’s Channel 14.”
AUSTRALIA (BBG): “ Australia’s surprise late-night passage of legislation that will split the Reserve Bank’s board into two entities may pave the way for it to reveal votes similar to the Federal Reserve, while also raising uncertainty over the future path of interest rates.”
MEXICO (RTRS): “Mexico's Senate on Thursday passed a measure to abolish the autonomous bodies that regulate some economic sectors and ensure government transparency, a reform that has sparked outcry from the opposition and industry.”
BRAZIL (MNI): MNI spoke with a former BCB economist about the monetary implications of last night's spending cuts.
BRAZIL (BBG): “The Brazilian real dropped to a record low and stocks slumped the most since early 2023 as a proposal to cut some $12 billion in public spending disappointed investors who have grown increasingly concerned about the country’s budget deficit.”
BRAZIL (BBG): “Central bank is concerned about unanchored inflation expectations, Galipolo says. Fiscal policy has boosted economic growth, and the labor mkt is tight. Inflation is the bank’s main concern, and the central bank will do what’s needed to tame it. The bank will continue to pursue its inflation target
CHINA
CHINA/US (RTRS): "China will extend tariff exemptions for the import of some U.S. products until Feb. 28, 2025, the Customs Tariff Commission of the State Council said on Friday."
CHINA/EU (MNI): Trade and policy advisors share their view on China, EU relations post Trump inauguration.
POLICY (CHINA BUSINESS NEWS): “China’s central bank may cut the reserve requirement ratio for banks by 0.25-0.5 percentage point later this year, China Business News reports, citing Sheng Songcheng, a former director of the PBOC statistics and analysis department.”
M&A (CSJ): “China’s local state-owned companies have increased merger and acquisition moves, completing 139 deals in November through Nov. 25, a year-on-year increase of 14.9%, the China Securities Journal reports, citing data from a consulting company Zhiben Consulting.”
MARKETS (YICAI): “Shenzhen city said it will comprehensively improve the quality of listed companies with their total market value exceeding CNY15 trillion by 2027, Yicai.com reported citing the municipal government’s plan.”
CHINA/EU (MNI BRIEF): President-elect Donald Trump's anti-globalisation policies will create more opportunities for cooperation between Beijing and Brussel's as both regions face pressure from U.S. protectionism and geopolitical challenges, according to a report released by the Bank of China's Research Institute.
CHINA MARKETS
MNI: PBOC Net Drains CNY156.1 Bln via OMO Friday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY479 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY156.1 billion after offsetting the maturity of CNY635.1 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5333% at 09:29 am local time from the close of 1.7414% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 49 on Thursday, compared with the close of 47 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1877 Fri; -1.39% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1877 on Friday, compared with 7.1894 set on Thursday. The fixing was estimated at 7.2409 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND NOV ANZ CONSUMER CONFIDENCE 99.8; PRIOR 91.2
NEW ZEALAND NOV ANZ CONSUMER CONFIDENCE M/M 9.4%; PRIOR -4.1%
AUSTRALIA OCT PRIVATE CREDIT M/M 0.6%; MEDIAN 0.5%; PRIOR 0.5%
AUSTRALIA OCT PRIVATE CREDIT Y/Y 0.6%; MEDIAN 0.5%; PRIOR 0.5%
JAPAN NOV TOKYO CPI Y/Y 2.6%; MEDIAN 2.2%; PRIOR 1.8%
JAPAN NOV TOKYO CPI, EX FRESH FOOD Y/Y 2.2%; MEDIAN 2.0%; PRIOR 1.8%
JAPAN NOV TOKYO CPI, EX FRESH FOOD, ENERGY Y/Y 1.9%; MEDIAN 1.9%; PRIOR 1.8%
JAPAN OCT JOBLESS RATE 2.5%; MEDIAN 2.5%; PRIOR 2.4%
JAPAN OCT JOB-TO-APPLICANT RATIO 1.25; MEDIAN 1.24; PRIOR 1.24
JAPAN OCT RETAIL SALES M/M 0.1%; MEDIAN 0.4%; PRIOR -2.2%
JAPAN OCT RETAIL SALES Y/Y 1.6%; MEDIAN 2.0%; PRIOR 0.7%
JAPAN OCT P INDUSTRIAL PRODUCTION M/M 3.0%; MEDIAN 4.0%: PRIOR 1.6%
JAPAN OCT P INDUSTRIAL PRODUCTION Y/Y 1.6%; MEDIAN 2.0%: PRIOR -2.6%
SOUTH KOREA OCT INDUSTRIAL PRODUCTION M/M 0.0%; MEDIAN 0.2%: PRIOR -0.1%
SOUTH KOREA OCT INDUSTRIAL PRODUCTION Y/Y6.3%; MEDIAN 2.2%: PRIOR -1.4%
SOUTH KOREA OCT CYCLICAL LEADING INDEX CHANGE -0.1; PRIOR 0.1
MARKETS
US TSYS: Yields Lower Across the Curve in Asian Trading.
- US10YR Dec24 future opened at 110-23, and traded up at 110-25 where it settled in the afternoon.
- Cash Bonds are 1.5bp- 2.5bp lower across the curve with intermediate maturities outperforming.
- T4.25 ’26 at 4.217% (-1.5bp), T4.125 ’29 at 4.114% (-2.5bp) and T4.125% ’34 at 4.24% (-2.5bp).
- There was little change in Fed Funds implied rates today, showing 16bp of cuts for Dec before a cumulative 22bp for Jan, 35bp for Mar and 52bp for June.
- There is no key data out in the US tonight before starting the week with Manufacturing PMI and ISM data.
JGBS: Twist-Flattener With Long-Term Assisted By US Tsys
JGB futures have clawed back to a small gain, +3 compared to settlement levels, after reversing the weakness seen following this morning’s local data drop.
- Of particular importance was the Tokyo CPI print, a leading indicator of the national average. Today core CPI registered a 2.2% increase in November, up from the 1.8% growth in October, while the core-core CPI rose 1.9% y/y in November, quicker than the 1.8% y/y previously.
- For the upcoming December 18-19 meeting, ois pricing has increased by 10bps since late October, reflecting a 54% probability of a 25bp rate hike.
- Cash US tsys have opened 2-3bps richer in today’s Asia-Pac session after yesterday’s holiday.
- Cash JGBs have twist-flattened, pivoting at the 20-year, with yields 1.5bps higher to 2bps lower. The benchmark 2-year yield is 1.1bps higher at 0.593% after today’s supply.
- The 2-year bond auction displayed mixed demand metrics today. The low price surpassed dealer expectations but the cover ratio declined and the auction tail lengthened versus the previous month. This came despite the 2-year yield standing at its highest level since 2008.
- The swaps curve has bear-steepened, with rates flat to 3bps higher. Swap spreads are mostly wider.
- On Monday, the local calendar will see Capital Spending and Jibun Bank PMI Mfg data.
AUSSIE BONDS: Slightly Cheaper, Narrow Ranges, Heavy Local Calendar On Monday
ACGBs (YM -3.0 & XM flat) are slightly weaker after dealing in narrow ranges in today’s Sydney session.
- (DJ Glynn) RBA Governor, Michele Bullock, remarked this week that after a little over a year in the top job at the central bank, she was surprised to find that a lot of attention had been directed toward her, not just in terms of her policy decisions, but as a person. (See link)
- Cash US tsys are 1-2bps richer in today’s Asia-Pac session.
- Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at +12bps.
- Swap rates are 1bp lower to 1bp higher with the 3s10s curve flatter.
- The bills strip is cheaper with pricing -1 to -3.
- RBA-dated OIS pricing is flat to 4bps softer. A 25bp rate cut is not fully priced until May.
- On Monday, the local calendar is heavy with CoreLogic Home Values, S&P Global PMI Mfg, Melbourne Institute Inflation, ANZ-Indeed Job Advertisements, Building Approvals and Retail Sales alongside Q3 GDP partials: Inventories and Company Profits.
- Next week, the AOFM plans to sell A$300mn of the 4.25% 21 June 2034bond on Monday, A$700mn of the 3.25% 21 April 2029bond on Wednesday and A$800mn of the 3.75% 21 April 2037bond on Friday.
BONDS: NZGBS: Closed With A Twist-Flattener As Market Prices Out Some Easing
NZGBs showed a twist-flattening at the close, with yields 2bps higher to 2bps lower.
- Stronger NZ consumer confidence looks to have weighed on short-end pricing, with the long-end taking its lead from US tsys, which are 1-2bps richer in today’s Asia-Pac session after yesterday’s holiday.
- NZ-US 10-year yield differential closed 1bp wider at +14bps, while the NZ-AU differential was 1bp tighter at +2bp.
- NZ housing and personal consumer lending rose 3.4% on an annual basis in October, following a 3.3% increase in September. Business lending went up 1.1%, lower than the 2% growth rate in September. Agriculture lending rose 1% following a 1.6% increase.
- Swap rates closed flat to 2bps higher, with the 2s10s curve flatter.
- RBNZ dated OIS pricing is flat to 7bps firmer on the day, October 2025 leading, but 4-12bps firmer than Wednesday’s pre-RBNZ decision levels. 42bps of easing is priced for February, with a cumulative 91bps by November 2025.
- On Monday, the local calendar will see Building Permits data.
FOREX: USD/JPY Tests Sub 150.00 On Firmer Tokyo CPI, A$ & NZD Aided By Equities
Yen gains have dominated the first part of Friday G10 FX trade, post the stronger Tokyo CPI print. The yen is up around 1% and USD/JPY is probing sub 150.00 levels. The rest of the G10 is up against the USD, albeit to varying degrees. NZD and AUD are seeing some outperformance (except against yen). The BBDXY USD index was last near 1276.3, off around 0.25% and fresh lows back to Nov 12.
- USD/JPY last tracked near 150.00, slightly up from session lows (149.76). Note the Oct 21 low sits back at 149.09 as a potential downside target.
- Futures volumes have spiked when we have tested sub 150.00. Also not surprisingly FX options activity has been dominated by USD/JPY. Strike levels have been set below spot and have been a mixture of USD calls and puts.
- The Tokyo CPI comfortably beat market expectations and while this partly reflected higher utility costs, underlying momentum still looks positive across services and other sub-categories. This should give the BoJ increased confidence around sustainably achieving its 2% inflation target. Other data in terms of retail sales and IP were slightly below market expectations.
- JGB yields are only modestly higher, but with US cash Tsy resuming and seeing modest yield losses, this has kept US-JP momentum to the downside. USD/JPY is catching up with such trends though, see the chart below.
- NZD/USD is test resistance at its 20-day EMA, the pair last near 0.5910/15, around 0.40%. Earlier we had a strong bounce in ANZ consumer confidence for NZ.
- AUD/USD is also firmer, but lagging NZD slightly, the pair last near 0.6515/20. Aiding sentiment for both currencies is the rebound in China/HK equities. Month end flows may be helping, while the MoF extending some tariff exemptions for the US, was another positive.
- Looking ahead, we have German retail sales, along with French consumer spending and CPI. In Canada GDP prints. US markets will be on lighter hours due to Thanksgiving.
Fig 1: USD/JPY Catching Up With Weaker US-JP Yield Spreads
Source: MNI - Market News/Bloomberg
ASIA STOCKS: China Aided By Tariff Headlines/Month End, Rest of Asia Weaker.
- As month end approaches for markets, most of Asia is experiencing a weak finish with China the exception where all major indices are up on a combination of month end rebalancing, news that Beijing may be less willing to take a hard line on US trade tensions than first thought and expectations for tomorrow’s PMI release.
- Notably headlines crossed earlier from BBG which quoted the MoF. They stated tariff waivers on some goods would be extended to Feb 28 next year (see this link).
- Indonesia’s Jakarta composite is finishing the month with a whimper, down -1.10% to finish around 6% lower in a month where the Central Bank were on hold, 10-year government bond yields were significantly higher and the currency -0.55% weaker.
- Malaysia’s FTSE Bursa KLCI index is slowly moving into month end, down -0.10% for the day and is on track to finish -0.35% down in a month where economic data was generally good, bond yields lower and the currency weaker by -1.4%.
- South Korea’s KOSPI is the poster child for the equity market weakness today following the BOK’s surprise rate cut yesterday. The reality of the weakening growth dynamic in the country could not be offset by this morning’s stronger than expected y/y industrial production as the MoM figure was flat. The KOSPI is on track to finish -3.5% lower, the worst performance of its regional peers.
- The daily volatility for China equities continues to be a key theme into month end, despite efforts made by authorities. The CSI 300 is leading the way today up +2% and on track to finish the month up +0.85%; the Hang Seng is telling a different story whilst +1% today, is on track to finish the month down -2.8%; Shanghai is up +1.5% today and on track to finish +1.4% for the month and Shenzhen is up +2.10%, looking to finish +1.00 for November.
- In India, the NIFTY 50 has opened this morning very weak and in early trade is down -1.50%. Despite India’s growth profile remaining robust, recent days have seen some significant outflows across equities and bonds. The NIFTY 50 is on track to post a -1.15% decline.
COMMODITIES: OIL + GOLD : Little Changed on Low Volumes Ahead of Weekend.
- Oil markets were quiet given the holiday in the US with both WTI and Brent trading in tight ranges.
- OPEC+ meeting has been delayed and is now set to be held on December 5.
- It is expected that the meeting will confirm that any supply increases will be delayed for some time.
- WTI opened yesterday at $68.76 trading down to a low of $68.27, before rebounding back to $69.30. It had opened this morning in Asian trading with very light volumes at $68.84, before trading up to $69.19.
- WTI is set to finish the month -1.85% lower as tensions in the Middle East cool, US stockpiles rise and OPEC+ meet to decide on whether to increase output.
- Brent opened yesterday at US$72.91, trading down for most of the morning session before a mid-afternoon bounce to $73.49 and opened this morning at $73.17, before rising to $73.38.
- Brent is to finish the month +0.23% higher.
- US crude inventories fell by 1.8m barrels last week, marking the first decline in three weeks.
- Gold eked out gains yesterday following on from the US inflation data print.
- The probability for a December rate cut improved somewhat as core personal consumption was in line with expectations.
- Gold opened marginally stronger in Asian trading at $2,638.73, before climbing to $2,660.90.
- For the month, Gold is set to finish 3.00% lower.
- Uncertainty from the Middle East and Ukraine are never far away, underpinning the safe haven bid for Gold but as tensions appear to be cooling, the bid has lost some of its lustre.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 29/11/2024 | 0700/0800 | ** |  DE | Retail Sales |
| 29/11/2024 | 0700/0800 | ** | DE | Import/Export Prices |
| 29/11/2024 | 0700/0800 | ** |  SE | Retail Sales |
| 29/11/2024 | 0700/0800 | *** | SE | GDP |
| 29/11/2024 | 0745/0845 | *** |  FR | HICP (p) |
| 29/11/2024 | 0745/0845 | ** | FR | Consumer Spending |
| 29/11/2024 | 0745/0845 | *** | FR | GDP (f) |
| 29/11/2024 | 0745/0845 | ** | FR | PPI |
| 29/11/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 29/11/2024 | 0800/0900 | *** | CH | GDP |
| 29/11/2024 | 0855/0955 | ** | DE | Unemployment |
| 29/11/2024 | 0900/1000 | ** |  EU | ECB Consumer Expectations Survey |
| 29/11/2024 | 0930/0930 | ** |  GB | BOE M4 |
| 29/11/2024 | 0930/0930 | ** | GB | BOE Lending to Individuals |
| 29/11/2024 | 1000/1100 | *** | EU | HICP (p) |
| 29/11/2024 | 1000/1100 | *** |  IT | HICP (p) |
| 29/11/2024 | 1030/1030 | GB | Financial Policy Summary and Record and Financial Stability Report | |
| 29/11/2024 | 1130/1230 | EU | ECB's de Guindos speaking at the "Encuentro de Economia" in Barcelona | |
| 29/11/2024 | 1330/0830 | *** |  CA | GDP - Canadian Economic Accounts |
| 29/11/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 29/11/2024 | 1330/0830 | *** | CA | CA GDP by Industry and GDP Canadian Economic Accounts Combined |
| 29/11/2024 | 1330/0830 | ** |  US | WASDE Weekly Import/Export |
| 29/11/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 29/11/2024 | 1600/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 30/11/2024 | 0130/0930 | *** |  CN | CFLP Manufacturing PMI |
| 30/11/2024 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |