Source: MNI - Market News/Bloomberg
UK
GROWTH (MNI BRIEF): The UK economy will grow at a "steady yet unimpressive pace through to 2026, primarily driven by household spending," the CBI said Friday in its Economic Forecast.
BOE (MNI BRIEF): Bank of England Monetary Policy Committee member Megan Greene cited persisent inflation pressures at an FT event, saying that wage growth, although slowing, has not come down "as quickly as I would have liked" and that the output gap, the difference between actual and potential growth, was "roughly closed."
EU
EU (MNI BRIEF): EU Commission President Ursula von der Leyen and Trade Commissioner Maros Sefcovic are currently in the Mercosur region and ready to discuss the "final political compromises" of a comprehensive partnership and trade agreement on Friday, the Commission said today.
FRANCE (MNI BRIEF): The economic impact of the French budget crisis is so far "rather limited", the European Commission said Thursday.
FRANCE (BBG): “Marine Le Pen said France can overcome government collapse to deliver a budget in “a matter of weeks” — so long as the next prime minister is prepared to narrow the deficit more slowly.”
US
TECH (WSJ):"President-elect Donald Trump named a Silicon Valley investor close to Elon Musk as the White House's artificial intelligence and cryptocurrency policy chief, signaling the growing influence of tech leaders and loyalists in the new administration.”
US/CHINA (RTRS): “U.S. President-elect Donald Trump said on Thursday he has chosen former Senator David Perdue to be ambassador to China.”
FED (MNI INTERVIEW): Three Fed Cuts Before Mid-2025 Pause - Giannoni
FED (MNI): The Federal Reserve’s review beginning in January is likely to aim for an easier-to-understand and more robust framework fit for all scenarios in a world in which supply shocks are more likely, former Fed officials told MNI.
OTHER
JAPAN (BBG): “ Japan’s major life insurance companies are positioned for a weaker yen as they slash hedges that protect against currency appreciation to the lowest levels in over a decade.”
JAPAN (MNI BRIEF): Inflation-adjusted real wages, a barometer of household purchasing power, was unchanged from a year earlier after staying in negative territory for two months, preliminary data released by the Ministry of Health, Labour and Welfare on Friday showed.
SOUTH KOREA (RTRS): “South Korea's ruling party leader said on Friday President Yoon Suk Yeol needs to be removed from authority for trying to impose martial law, but stopped short of urging members to vote for impeachment.”
SOUTH KOREA (BBG): “South Korea’s Army Special Forces Commander Kwak Jong-keun says there will be no second martial law and he will reject if there is an order of troops deployment.”
CANADA (MNI BRIEF): The Bank of Canada will lower the current 3.75% policy interest rate to as low as 3% late next year though the path could be slowed by governments handing out short-term tax breaks and relief checks, former Governor David Dodge said Thursday.
CHINA
TRADE (21ST CENTURY BUSINESS HERALD): “China’s average freight index for exports to the U.S. east and west coast reached 1179.5 and 1213.0 points in November, typically the start of the off-season, down 4.2% and up 1.2% from the previous month, 21st Century Business Herald has reported, citing Shanghai Shipping Exchange data.”
REFORMS (ECONOMIC DAILY): “China must accelerate reforms and strengthen policy coordination to reduce the financial burden on enterprises and stimulate vitality, said Economic Daily in a commentary piece.”
SHARES (ECONOMIC INFORMATION DAILY): “The People’s Bank of China has extended its share buyback and shareholding facility's relending maturity to three years from one year, Economic Information Daily reported, citing industry insiders. The maximum financing ratio was raised to 90% from 70%, the newspaper said.”
CHINA MARKETS
MNI: PBOC Net Drains CNY288.1 Bln via OMO Friday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY190.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY288.1 billion after offsetting the maturity of CNY479 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6610% at 09:53 am local time from the close of 1.7179% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 53 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 Lower At 7.1848 Fri; -1.64% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1848 on Friday, compared with 7.1879 set on Thursday. The fixing was estimated at 7.2513 by Bloomberg survey today.
MARKET DATA
JAPAN OCT LABOR CASH EARNINGS Y/Y 2.6%; MEDIAN 2.6%; PRIOR 2.5%
JAPAN OCT REAL CASH EARNINGS Y/Y 0.0%; MEDIAN -0.1%; PRIOR -0.4%
JAPAN OCT CASH EARNINGS - SAME SAMPLE BASE Y/Y 2.7%; MEDIAN 3.0%; PRIOR 2.9%
JAPAN OCT SCHEDULED FULL-TIME PAY - SAME BASE Y/Y 2.8%; MEDIAN 2.9%; PRIOR 2.8%
JAPAN OCT HOUSEHOLD SPENDING Y/Y -1.3%; MEDIAN -2.5%; PRIOR -1.1%
SOUTH KOREA OCT BOP GOODS BALANCE $8118.9MLN; PRIOR $10486.2MLN
SOUTH KOREA OCT BOP CURRENT ACCOUNT $9783.6MLN; PRIOR $10940.4MLN
MARKETS
US TSYS: All Quiet Ahead of NFP.
- Cash bonds very quiet in Asian trading today with yields up 1bp in front end and lower 1bp in intermediate and longs.
- US2YR 4.156% (+1BP), 5YR 4.079% (+0.2bp), 10YR 4.176% (-0.2bp), 30YR 4.327% (-0.9bp)
- Futures were very quiet with small volumes and little movement from where they started at 111-04 for the US10YR Mar25 contract.
- Projected rate cuts into early 2025 have cool slightly, current levels vs. this morning (*) as follows: Dec'24 cumulative -18bp, Jan'25 -24.5bp, Mar'25 -39.5bp, May'25 -49.6bp.
- Non-Farm Payroll expectations tonight are for 220k, and reminder, the Federal Reserve enters their self-imposed blackout period at midnight Friday through December 19, the day after the final FOMC policy announcement for 2024.
JGBS: Bull-Flattener Ahead Of US Payrolls Data
JGB futures are stronger and near session bests, +8 compared to settlement levels, despite slightly better than expected domestic data.
- BOJ-dated OIS pricing continues to hold firmer across meetings versus levels prevailing ahead of the BOJ’s October 30-31 meeting.
- However, pricing is 1-5bps softer across meetings compared to earlier in the week despite today’s labour earnings and household spending figures being a little better than expected, albeit more so in real than nominal terms.
- Currently, OIS pricing sits 3-15bps firmer across meetings versus pre-BOJ MPM (Oct), with September 2025 leading the gains.
- Cash US tsys are slightly mixed, with a flattening bias, in today’s Asia-Pac session ahead of US Payrolls data. Payroll growth is expected to bounce sharply to 215k in November after October’s strike and weather-related disruption.
- Cash JGBs are little changed across benchmarks to the 7-year and 1-2bps richer beyond.
- The swaps curve has twist-steepened, pivoting at the 20-year, with rates 2bp lower to 2bps higher. Swap spreads are mixed.
- On Monday, the local calendar will see Q3 GDP (F) and Bank Lending data alongside BOJ Rinban Operations covering 1-3-year, 5-10-year and 25-year+ JGBs.
- “Japan’s 3Q GDP is likely to be revised up to show 1.7% growth (quarter-on-quarter annualized) from a preliminary estimate of a 0.9% expansion.” (per BBG)
AUSSIE BONDS: Unchanged On A Typical Pre-US Payrolls Friday
ACGBs (YM flat & XM flat) are flat after dealing in narrow ranges on a data-light pre-US Payrolls Friday.
- Cash US tsys are slightly mixed, with a flattening bias, in today’s Asia-Pac session ahead of US Payrolls data. Payroll growth is expected to bounce sharply to 215k in November after October’s strike and weather-related disruption.
- Analysts are split on whether to call for a 4.1% or 4.2% unemployment rate in November after the 4.145% in October. The FOMC’s dovish shift to a 4.4% forecast for 4Q24 will likely be undershot.
- We expect a soft payrolls report to cement expectations of a 25bp cut from the FOMC on Dec 18 (currently 18.5bp priced) whilst a strong report would see next week’s CPI as the decider. (See MNI US Payrolls Preview here)
- The Federal Reserve enters its self-imposed blackout period at midnight today through December 19.
- Cash ACGBs are unchanged with the AU-US 10-year yield differential at +6bps.
- Swap rates are little changed.
- The bills strip is flat across contracts.
- RBA-dated OIS pricing is little changed across meetings. A 25bps rate cut is not fully priced until May.
- On Monday, the local calendar is empty apart from AOFM’s planned sale of A$1000mn of the 2.75% 21 November 2029 bond.
BONDS: NZGBS: Twist-Steepener Ahead Of US Payrolls
NZGBs closed showing a twist-steepener, with benchmark yields 1bp lower to 2bps higher. With the domestic calendar empty today, price action has been driven by global bonds ahead of key US employment later today.
- Cash US tsys are little changed in today’s Asia-Pac session ahead of US Payrolls data. Payroll growth is expected to bounce sharply to 215k in November after October’s strike and weather-related disruption.
- Analysts are split on whether to call for a 4.1% or 4.2% unemployment rate in November after the 4.145% in October. The FOMC’s dovish shift to a 4.4% forecast for 4Q24 will likely be undershot.
- We expect a soft payrolls report to cement expectations of a 25bp cut from the FOMC on Dec 18 (currently 18.5bp priced) whilst a strong report would see next week’s CPI as the decider. (See MNI US Payrolls Preview here)
- The Federal Reserve enters its self-imposed blackout period at midnight today through December 19.
- Swap rates closed 1-2bps higher.
- RBNZ dated OIS pricing closed 1-2bps firmer. 43bps of easing is priced for February, with a cumulative 105bps by November 2025.
- On Monday, the local calendar is empty, with the next key release being Mfg Activity Volume on Wednesday.
FOREX: USD Mostly Higher, NZD & AUD Underperform
The USD BBDXY sits a touch higher in the first part of Friday dealings, the index last near 1276.7. Most of the focus has been on AUD and NZD weakness, and some modest JPY gains.
- Cross asset moves have been very muted in the US space, with US equity futures flat, while US Tsy yields haven't moved a great deal either. We have the US NFP print later, which will be key for the Dec Fed outcome. We expect a soft payrolls report to cement expectations of a 25bp cut from the FOMC on Dec 18 (currently 18.5bp priced) whilst a strong report would see next week’s CPI as the decider.
- USD/JPY is down a touch, but within recent ranges, last near 150.0. The earlier wages and household spending data may not shift BoJ thinking around a potential Dec hike. Trends remain mostly positive, but real wages are flat and real household spending is still negative.
- AUD/USD has maintained its underperforming tone, off 0.40% at this stage. We are 0.6425/30 in latest dealings. The currency has largely ignored the better HK/China equity seen so far today. The pair has been on the back foot since the Q3 GDP print earlier this week, which highlighted soft underlying private growth conditions.
- Metals in terms of iron ore and copper are also firmer today, but the AUD isn't tracking higher with these metals.
- NZD/USD is also weaker, last off 0.50%, to 0.5855/60, slightly outpacing A$ losses. AUD/NZD is slightly higher in latest dealings, up to 1.0970/75.
- We had South Korea assets sell off earlier, as the opposition party stated they had intelligence on a 2nd martial law call. However, sentiment stabilized when the South Korean military said there would be no second martial law call. President Yoon is currently meeting with the PPP leader.
- Outside of the US NFP, we also have some Fedspeak, before the blackout period kicks in.
ASIA STOCKS: China Strong Whilst Others Mixed.
- Chinese stocks are finishing the week strongly with the major indexes all up over 1%. Hang Seng +1.35%, CSI 300 +1.55%, Shanghai +1.23%, Shenzhen +1.50% with some market commentators speculating that there is a chance of further stimulus announcements in the coming day.
- The KOSPI is completing a horrible week given the political turmoil and is down -0.65%
- Indonesia’s Jakarta Composite is on track for a very strong week following the BI Governors suggestion that rates are on hold, today up +0.36% and looking to finish the week +3.00%.
- Malaysia’s FTSE KLCI is on track to finish over 1% up for the week, but is off today down -0.17%.
- India is opening up to a quiet start but is on track to finish the week over 2% better just as the RBI stays on hold, whilst cutting the cash reserve ratio for banks.
OIL: Prices Decline Further on News of OPEC+ Delay.
- OPEC+’s continued indecision around supply sees another delay to any planned increase in production for at least three months.
- OPEC+ suggests that they still intend to add supply to the market next year but for now will gradually unwind the production cuts currently in place, from April next year.
- In what appears somewhat an indecisive result, it is more a reflection of China’s economic woes and the increase in supply in the US in response to the Trump election win.
- Demand for oil has dropped for six successive reporting periods in China at a time the US output ramps up and news of new supply coming from Brazil and Canada.
- WTI had finished Wednesday at US$68.63 only to trade lower throughout the US trading day, hitting a low of $67.98 before finishing at $68.45.
- It then traded down in the morning session to $68 before recovering to $62.30.
- For the week WTI is up +0.40%.
- Brent had finished Wednesday at US$72.31to trade down at $71.80 before finishing at $72.17.
- It traded down to $71.50 in early trading before recovering to $72.00.
- For the week Brent is off -1.25%.
GOLD: Prices Bounce on Technical Levels.
• Gold prices moderated into the US trading day end as markets await Friday’s Non-Farm payrolls report and today have oscillated around the 20-day EMA $2,646.45 and th 50-day EMA $2,639.31 in Asian trading.
• Economist surveys point to a +220k payrolls result following October’s Hurricane impacted 12k result.
• Federal Reserve Chairman Powell said ahead of Fed Blackout this week that he expects ‘officials to move cautiously as they continue to lower rates.’
• As gold does not pay interest, rate cuts are positive as it directly impacts the financing costs for buying gold.
• Gold opened the US trading session at US$2,649.90, slipping to $2,623.61 before recovering to $2,631.91 into the close, where it opened in Asia before bouncing mid-morning to reach $2,642.07
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 06/12/2024 | 0700/0800 | ** |  DE | Industrial Production |
| 06/12/2024 | 0700/0700 | * |  GB | Halifax House Price Index |
| 06/12/2024 | 0745/0845 | * |  FR | Foreign Trade |
| 06/12/2024 | 1000/1100 | * |  EU | Employment |
| 06/12/2024 | 1000/1100 | * |  IT | Retail Sales |
| 06/12/2024 | 1000/1100 | *** | EU | GDP (final) |
| 06/12/2024 | 1330/0830 | *** |  US | Employment Report |
| 06/12/2024 | 1330/0830 | *** |  CA | Labour Force Survey |
| 06/12/2024 | 1415/0915 | US | Fed Governor Michelle Bowman | |
| 06/12/2024 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 06/12/2024 | 1500/1000 | * | CA | Ivey PMI |
| 06/12/2024 | 1530/1030 | US | Chicago Fed's Austan Goolsbee | |
| 06/12/2024 | 1700/1200 | US | BOE's Greene at Financial Times Live | |
| 06/12/2024 | 1700/1200 | US | Cleveland Fed's Beth Hammack | |
| 06/12/2024 | 1800/1300 | US | San Francisco Fed's Mary Daly | |
| 06/12/2024 | 2000/1500 | * | US | Consumer Credit |