Source: MNI - Market News/Bloomberg
UK
POLITICS (BBC): “Prime Minister Sir Keir Starmer has said a new phase for his government will begin this week, under what he calls a "plan for change" for Britain.”
EU
FRANCE (BBG): “Finance Minister Antoine Armand said France won’t accept artificial budget deadlines from Marine Le Pen even as the far-right leader gave her strongest indication yet that she’s prepared to topple the government as soon as this week.”
FRANCE (FRANCE24): “French far-right figurehead Marine Le Pen said Sunday that the government had effectively "put an end to discussions" on the country's 2025 budget, increasing the likelihood of a vote of no confidence in Prime Minister Michel Barnier.”
GERMANY (DW): “The IG Metall trade union called for widespread labor strikes at all Volkswagen plants in Germany from Monday, after negotiations over looming job cuts fell through last week.”
IRELAND (BBC): "Two-thirds of seats in the Irish parliament have been filled, with the Fianna Fáil party leading a tight three-way battle in the country's general election. With all 43 constituencies' initial counts in, first preference percentage share for the largest three parties is: Fianna Fáil 21.9%, Fine Gael 20.8%, Sinn Féin 19.0%."
UKRAINE (BBC): “President Volodymyr Zelensky has suggested that the parts of Ukraine under his control should be taken "under the Nato umbrella" to try and stop the "hot phase" of the war.”
GEORGIA (BBC): “After nights of large-scale street demonstrations and a string of public resignations, Georgia's prime minister has rejected calls for new elections and said protesters have fallen victim to opposition lies.”
GEORGIA (BBC): “Georgia's pro-Western president has said she will stay in post until new parliamentary elections are held, as protests continue over the government's decision to put EU accession negotiations on hold.”
GEORGIA (POLITICO): “The United States suspended its strategic partnership with Georgia on Saturday, condemning the country’s decision to pause its efforts toward accession to the European Union amid unprecedented protests against the move.”
ROMANIA (POLITICO): “Romania’s pro-EU and pro-NATO parties appeared to be holding off the far right in a parliamentary election on Sunday, but the strength of the radical vote suggested that an ultranationalist, pro-Russian candidate could still win the presidency next week.”
ICELAND (POLITICO): “Iceland’s Social Democrats are on track to win the country’s snap election, according to partial results published Sunday, as voters appeared to reject incumbent parties. The center-left Social Democratic Alliance had won 21 percent of the vote, securing 15 seats in the 63-seat parliament, according to an early tally reported by Iceland’s broadcaster RÚV. European Union membership also resurfaced in the campaign for the first time in more than a decade, Reuters reported.
US
GEOPOLITICS (BBG): “US President-elect Donald Trump warned the so-called BRICS nations that he would require commitments that they would not move to create a new currency as an alternative to using the US dollar and repeated threats to levy a 100% tariff.”
POLITICS (RTRS): “U.S. President Joe Biden said on Sunday he had pardoned his son, Hunter Biden, who had been convicted of making false statements on a gun background check and illegally possessing a firearm and plead guilty to federal tax charges.”
CANADA/US (RTRS): “Canadian Prime Minister Justin Trudeau promised President-elect Donald Trump that Canada would toughen controls over the long undefended joint border, a senior Canadian official said on Sunday.”
OTHER
JAPAN (MNI BRIEF): Bank of Japan Governor Kazuo Ueda said further yen weakening with inflation above 2% might prompt the BOJ to take countermeasures, according to an interview with the Nikkei published on Saturday.
JAPAN DATA (MNI BRIEF): Third quarter Combined capital investment by non-financial Japanese companies excluding software rose 0.8% q/q, slowing from 1.5% growth in Q2, a quarterly revised survey released by the Ministry of Finance Monday showed.
AUSTRALIA (BBG): “Australian retail sales accelerated in October, marking its third straight month of gains as consumers turn more confident about their finances in anticipation the next move in interest rates is likely to be a cut.”
CHINA
PMI (MNI BRIEF): China's Caixin manufacturing PMI registered 51.5 in November, up from October's 50.3, its highest level since August, staying in the expansionary zone above the 50 mark for the second month, the financial publisher said on Monday.
PROPERTY (SECURITIES TIMES): "China’s home sale transaction area in 30 key cities and land acquired by 30 major developers hit 2024 highs in November, Securities Times reported. Total transaction area grew 20% y/y or 3% m/m, with the four tier-one cities growing 57% y/y or 5% m/m, according to data by China Real Estate Information Corp."
DEFICT (21ST CENTURY BUSINESS): "Authorities should consider a deficit-to-GDP ratio higher than 3.8% to support a growth target of about 5% next year, 21st Century Business Herald reported, citing Wang Yiming, vice chairman at the China Center for International Economic Exchanges."
CHINA MARKETS
MNI: PBOC Net Drains CNY216 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY33.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY216 billion after offsetting the maturity of CNY249.3 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5803% at 10:16 am local time from the close of 1.6422% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Friday, compared with the close of 49 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1865 Mon; -1.50% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1865 on Monday, compared with 7.1877 set on Friday. The fixing was estimated at 7.2363 by Bloomberg survey today.
MARKET DATA
AUSTRALIA CORELOGIC HOME VALUE NOV. +0.1% M/M; PRIOR +0.2%
AUSTRALIA S&P GLOBAL MANUFACTURING PMI NOV. 49.4; OCT. 47.3
AUSTRALIA MELBOURNE INSTITUTE INFLATION GAUGE NOV. +0.2% M/M & 2.9% Y/Y; PRIOR +0.3% & 3.0%
AUSTRALIA OCT. RETAIL SALES +0.6% M/M; EST. +0.4%; PRIOR +0.1%
AUSTRALIA Q3 INVENTORIES -0.9% Q/Q; EST. -0.2%; PRIOR +0.5%
AUSTRALIA Q3 COMPANY PROFITS -4.6% Q/Q; EST. +0.7%; PRIOR -6.8%
AUSTRALIA OCT. BUILDING APPROVALS +4.2% M/M; EST. +1.3%; PRIOR +5.8%
AUSTRALIA OCT. PRIVATE HOUSES -5.2% M/M; PRIOR +4.1%
AUSTRALIA NOV. ANZ JOB ADVERTISEMENTS -1.3% M/M; PRIOR +0.7%
NEW ZEALAND OCT. HOME-BUILDING APPROVALS -5.2% M/M; PRIOR +2.4%M/M
JAPAN Q3 CAPITAL SPENDING +8.1% Y/Y; EST. 6.7%; PRIOR +7.4%
JAPAN Q3 CAPITAL SPENDING EX-SOFTWARE +9.5% Y/Y; EST. 8.2%; PRIOR +9.1%
JAPANESE COMPANIES Q3 SALES +2.6% Y/Y; EST. +3.2%; PRIOR +3.5%
JAPANESE COMPANIES Q3 PROFITS -3.3% Y/Y; EST. +9.3%; PRIOR +13.2%
JAPAN JIBUN NOV. MANUFACTURING PMI 49; OCT. 49.2
CHINA CAIXIN MANUFACTURING PMI NOV. 51.5; EST. 50.6; OCT. 50.3
SOUTH KOREA S&P GLOBAL NOV. MANUFACTURING PMI 50.6; OCT. 48.3
SOUTH KOREA TRADE BALANCE NOV. $5.61B; EST. $5.05B; OCT. $3.15B
SOUTH KOREA EXPORTS NOV. +1.4% Y/Y; EST. +2.8%; PRIOR +4.6%
SOUTH KOREA IMPORTS NOV. -2.4% Y/Y; EST. -0.9%; PRIOR +1.7%
MARKETS
US TSYS: Sell Off Continues into European Session..
- Treasuries have continued to be weak in the Asian trading day, with bond yields higher and futures lower in today's trading.
- Cash trading yields are 3-5bps higher across the curve with the 10-year +4.4bps to 4.217%.
- The five year was the underperformer today up 5bps in yield at 4.10%.
- US10YR Mar25 future is down +04 at the open to 111-01 , having closed Friday at +111-05.
- Risk appetite has opened strongly in the region with most equity markets up strongly, with Taiwan and China leading the way.
- President-elect Trump has threatened BRICs nations about their need to continue using the USD as the base currency and this has put a firm bid under the USD today.
- Tonight sees ISM data in the US alongside Manufacturing PMI and construction spending.
JGBS: Cash Bond Bear Flattener, 10y Supply Tomorrow
JGB futures are weaker, -28 compared to the settlement levels, after trading in a relatively tight range for most of the session.
- JGBs were pressured early in the Tokyo session from comments made by BOJ Governor Kazuo Ueda in an interview with the Nikkei published on Saturday. Governor Ueda said further yen weakening with inflation above 2% might prompt the BOJ to take countermeasures. Ueda made no comment as to the timing of the next rate hike and warned of major uncertainties around the U.S. economy.
- Outside of the previously outlined Jibun Bank PMI Mfg and Capex data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are 3-5bps cheaper in today’s Asia-Pac session after Friday’s solid gains. This week's US calendar is headlined by the November payrolls report. We also hear from the Fed Powell, Waller & Williams and get ISM Services.
- The cash JGB curve has bear-flattened, with yields flat to 3bps higher. The benchmark 10-year yield is 2.9bps higher at 1.077% ahead of tomorrow’s supply.
- The swaps curve has bear-steepened, with rates 2-5bps higher. Swap spreads are mixed.
- Tomorrow, the local calendar will see Monetary Base data alongside 10-year supply.
AUSSIE BONDS: Slightly Mixed After A Mixed Domestic Data Drop
ACGBs (YM -1.0 & XM +2.0) are slightly mixed and off the Sydney session's best levels following today’s mixed domestic data drop.
- October retail sales rose 0.6% m/m, stronger than expected, to be up 3.4% y/y, the highest growth rate since May 2023.
- However, Q3 company profits were weak again falling 4.6% q/q after -6.8% q/q (revised down from -5.3%) to be down 8.5% y/y after -4.0%, driven by the mining sector. Also, the drop in inventory volumes was more than expected at -0.9% q/q, which shouldn’t be enough to change Q3 GDP estimates though, with Q2 revised up to +0.7%.
- Cash US tsys are 3-4bps cheaper in today’s Asia-Pac session after Friday’s solid gains.
- Cash ACGBs are 1bp cheaper to 2bps richer after being 4-5bps richer earlier. The AU-US 10-year yield differential is at +11bps.
- Swap rates are 2bps higher to 2bps lower, with the 3s10s curve flatter.
- The bills strip is flat to -3, with a steepening bias.
- RBA-dated OIS pricing is flat to 2bps firmer across the 2025 meeting. A 25bps rate cut is not fully priced until May.
- Tomorrow, the local calendar will see Current Account, Net Exports and Government Spending data for Q3. Q3 GDP on Wednesday.
BONDS: NZGBS: Closed Richer, AU-NZ10Y Diff Too High
NZGBs closed slightly above the session’s best levels, flat to 4bps richer. The NZ-US and NZ-AU 10-year yield differentials closed 1bp tighter.
- The AU-NZ 10-year yield differential stands at -1bp compared to the early November high of +10bps, the highest level since August 2022.
- The recent decline in the 10-year yield differential has mirrored a similar move in the AU-NZ 1-year forward 3-month swap rate (1Y3M) spread.
- However, a simple regression analysis of the AU-NZ 10-year yield differential against the AU-NZ 1Y3M spread over the past 12 months shows that the 10-year differential is around 9bps above fair value based on the regression model (-1bp compared to a fair value of -10bps).
- Outside of the previously outlined Building Permits, there hasn't been much by way of domestic drivers to flag.
- Swap rates closed 2-4bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing is flat to 2bps softer. 42bps of easing is priced for February.
- Tomorrow, the local calendar will see Q3 Terms of Trade data alongside Finance Minister Nicola Willis’s appearance at a select committee to discuss Financial Statements.
- This week, the NZ Treasury plans to sell NZ$200mn of the 3.00% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% Apr-37 bond.
FOREX: USD/Yields Up To Start The Month, Multi Supports In Play
The USD is holding higher across the board in the first part of Monday dealing. The USD BBDXY index was last 1280.3, close to session highs. A number of support points have been evident for the USD today.
- EUR/USD has fallen, down 0.50% to 1.0525/30 in latest dealings. Headlines around French budget concerns (Finance Minister saying they won't blackmailed over the budget, per BBG) weighing in the first part of trade. Recent lows of 1.0425 (from Nov 26) may come into focus. French government bond futures are weaker. NOK has lost 0.60%, SEK down 0.50% so far today.
- US yields have started Dec off on a positive footing, unwinding some of the losses seen through the tail end of Nov. We sit 2.5-4.5bps firmer across the Tsy benchmarks, away from best levels for the session, but still up firmly. Clear of month end flows may be helping, while weekend rhetoric from incoming President Trump on tariffs on BRIC nations if they abandon the USD is another potential driver.
- USD/CNH is up to fresh multi-month higher, last near 7.2745. A better Caixin PMI print not helping the yuan much.
- USD/JPY got to early lows of 149.51, but sits back at 150.45/50 now. 150.74 was the session high so far. Yen showing sensitivity to the US yield rebound. Earlier data showed Q3 capex stronger than forecast but profits slumped. Focus remains on the upcoming Dec policy meeting given recent rhetoric from BoJ Governor Ueda.
- Australian data was mixed, arguably most important though was the retail sales beat. AUD/USD is off 0.20% at this stage, but is outperforming most of the G10. NZD/USD is down around 0.30%, last near 0.5895/00.
- Looking ahead, later the Fed’s Waller and Williams speak and ECB President Lagarde appears. Euro area October unemployment rate, European/Canadian manufacturing November PMIs and US manufacturing ISM/PMI print.
ASIA STOCKS: A Positive Start to December for Markets.
- Asia’s equity markets greeted the last month of the year positively with most major markets up.
- Taiwan’s TAIEX led the way up +2.00% following PMI data showing that the country’s manufacturers are still expanding, despite the threats from the US.
- China equities were strong across the board also bond yields threatened lows and the Caixin PMI Manufacturing rebounded.
- China’s CSI 300 is up +0.70%, Shanghai +1.00%, Shenzhen +1.05% and Hang Seng +0.20%.
- South Korea’s KOSPI had some better-than-expected data to spur demand on in the first trading session of the month and was +0.50% stronger.
- The Philippines has had a very strong day with their PMI Manufacturing surprising to the upside given impetus to an equity market rally, their index up +1.6%.
- Malaysia however despite enjoying one of the strongest growth profiles of its Asean neighbours saw PMI’s contract and the equity market not participating in today’s rally, up only +0.05%.
- Indonesia’s PMI was very weak and despite the Central Bank governor suggesting rates could be on hold for some time, the Jakarta Composite was one of the few markets down today off -0.20%.
- India has opened flat with limited trading, following on from last week’s strong finish to the week.
OIL: Crude Moderately Higher On Better China PMI
After finishing last week and month down, oil prices have started today slightly higher but still in a narrow range. Brent is up 0.5% to $72.23/bbl and WTI +0.5% to $68.37, both close to their intraday highs despite a stronger US dollar (USD BBDXY +0.4%). The modest rise was supported by China’s Caixin manufacturing PMI for November rising over one point to 51.5.
- OPEC+ delayed its meeting from last weekend to December 5 to enable time to frame its output strategy. It has already pushed out planned gradual output increases twice to the end of this year but they are widely expected to be postponed again in this week’s statement. It’s unclear if the group can agree on a way forward, as it also doesn’t want to lose market share and non-OPEC production is expected to rise in 2025.
- Developments in the Middle East have driven oil prices in both directions for over a year now. The ceasefire between Israel and Iran-backed Hezbollah appears to be holding, but rebels have taken Aleppo in Syria and Iran has said it will support the Syrian government to retake it. Risks to Iran’s oil supply have remained the market’s main concern from conflict in the region.
- Later the Fed’s Waller and Williams speak and ECB President Lagarde appears. Euro area October unemployment rate, European/Canadian manufacturing November PMIs and US manufacturing ISM/PMI print.
GOLD: Down Again on Trump’s Shot at BRICs.
- President elect Trump warned BRICs nations of their requirement to continue to us the USD as the base currency.
- This put upward pressure on the USD and saw Gold down.
- Having closed on Friday at $2,643.15, in Asia morning trade it has slipped to $2,635.50.
- Gold finished last week on a weak footing, down over 5% for the week on moderating geo-political tensions in the middle east despite fears of further escalation in Ukraine.
- In Australia this morning, news out that Northern Star Resources Ltd will buy De Grey Mining Ltd for US$3.3bn in what could be the start of consolidation for the sector.
- Gold markets will focus on Non-Farm Payrolls in the US this week as an indication for interest rates.
- Lower interest rates are generally seen as good for gold as it does not pay interest.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 02/12/2024 | 0730/0830 | ** |  CH | Retail Sales |
| 02/12/2024 | 0815/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 02/12/2024 | 0845/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 02/12/2024 | 0850/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 02/12/2024 | 0855/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 02/12/2024 | 0900/1000 | *** | IT | GDP (f) |
| 02/12/2024 | 0900/1000 | ** |  EU | S&P Global Manufacturing PMI (f) |
| 02/12/2024 | 0930/0930 | ** |  GB | S&P Global Manufacturing PMI (Final) |
| 02/12/2024 | 1000/1100 | ** | EU | Unemployment |
| 02/12/2024 | 1000/1100 | EU | ECB's Lagarde in EIB Group Climate Council | |
| 02/12/2024 | 1445/0945 | *** |  US | S&P Global Manufacturing Index (final) |
| 02/12/2024 | 1500/1000 | *** | US | ISM Manufacturing Index |
| 02/12/2024 | 1500/1000 | * | US | Construction Spending |
| 02/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 02/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 02/12/2024 | 2015/1515 | US | Fed Governor Christopher Waller | |
| 02/12/2024 | 2130/1630 | US | New York Fed's John Williams | |
| 03/12/2024 | 0001/0001 | * | GB | BRC-KPMG Shop Sales Monitor |
| 03/12/2024 | 0030/1130 |  AU | Balance of Payments: Current Account | |
| 03/12/2024 | 0700/0200 | * |  TR | Turkey CPI |
| 03/12/2024 | 0730/0830 | *** | CH | CPI |
| 03/12/2024 | 0800/0900 | EU | ECB's Cipollone at GeoEconomy Talk | |
| 03/12/2024 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 03/12/2024 | - | *** | US | Domestic-Made Vehicle Sales |
| 03/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |