Source: MNI - Market News/Bloomberg
EU
FRANCE (BBG): “French Prime Minister Francois Bayrou is aiming to present a new cabinet over the weekend and deliver a budget by mid-February, warning that failure to navigate the current political disarray could be catastrophic for the country.”
FRANCE (BBG): “Bank of France Governor Francois Villeroy de Galhau said a new government must still target significant deficit reduction next year, even though such efforts led to the downfall of the last government.”
NORWAY (MNI NORGES WATCH): Norges Bank left its policy rate on hold at 4.5% at its December meeting, the same level at which it has been throughout 2024, but signalled the next cut could come soon.
SWEDEN (MNI RISKBANK WATCH): The Riksbank cut its policy rate 25 basis points to 2.5% on Thursday but it suggested it is close to the end of the easing cycle, with its guidance stating that the next cut will come in the first half of next year and its forecasts showing 2.25% is expected to be the trough.
US
GOVERNMENT (RTRS): “A spending bill backed by Donald Trump failed in the U.S. House of Representatives on Thursday as dozens of Republicans defied the president-elect, leaving Congress with no clear plan to avert a fast-approaching government shutdown that could disrupt Christmas travel.”
FED (MNI BRIEF): The Federal Reserve Bank of New York will expand the timing of the Standing Repo Facility around year-end to better understand how the facility's timing can impact the effectiveness of the tool during money market pressures.
JOBS (MNI INTERVIEW): Job Weakness To Keep Fed On Easing Path-Tilley
CORPORATE (BBG): “Boeing Co. won an order valued at $36 billion from Pegasus Hava Tasimaciligi AS, in its biggest commitment so far this year that deals a blow to rival Airbus SE, previously the preferred choice for the Turkish low-cost airline.”
CORPORATE (BBG): “FedEx Corp. shares soared after the company said it plans to spin off its freight division into a separate publicly traded company in a deal that will streamline the parcel giant.”
STRIKE ACTION (BBG): “The union representing Starbucks Corp. baristas plans to go on strike for five days from Friday after a final-stage bargaining session reached an impasse, the group said.”
OTHER
JAPAN (RTRS): “Japan's core inflation accelerated in November as rising food and fuel costs hit households, data showed on Friday, keeping the central bank under pressure to raise interest rates.”
JAPAN (BBG): “Japan ramped up its warnings against currency speculation Friday after the yen slid to a five-month low following a hint from the central bank chief that he may wait longer than expected before raising interest rates.”
JAPAN (BBG): "Japan’s currency chief Atsushi Mimura tells reporters that he’s deeply concerned about recent forex moves, and authorities will respond appropriately to excessive moves."
CANADA (MNI BRIEF): Canada's Justice Minister Arif Virani on Thursday declined to say if Prime Minister Justin Trudeau should quit or stay on, adding to a week of uncertainty about political leadership that's helped push the country's dollar to the weakest in several years.
SOUTH KOREA (BBG): “South Korea will ease the cap on banks’ FX forward positions by 50% as part of measures to increase FX inflows and ease the demand and supply imbalances in the local FX market, the Bank of Korea and finance ministry say in a statement listing measures to improve FX market supply and demand.”
MEXICO (MNI EM WATCH): The Central Bank of Mexico's unanimous interest rate cut Thursday was accompanied by a decidedly dovish policy statement that strongly hinted not only at additional reductions ahead but also an acceleration of the pace of easing early next year.
CHINA
LPR (MNI BRIEF): China's Loan Prime Rate remained unchanged on Friday according to a People's Bank of China statement, in line with expectations and following the central bank's decision to hold its key 7-day reverse repo rate stable.
FISCAL (XINHUA): “China’s plans for a more proactive fiscal policy will drive an increase in government bond issuance, quicker allocation of fiscal funds and structural changes to improve public welfare and boost consumption, the state-run Xinhua News Agency reported, citing Liu Rihong, an official at the State Council Research Office.”
BONDS (MNI): Beijing will increase local special bond issuance in 2025. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
GROWTH (SECURITIES DAILY): “The Chinese economy is expected to grow about 5% in 2025 amid increased countercyclical adjustments and base effects, Securities Daily reported, citing analysts.”
ELECTRICITY (NEA): “China’s total electricity consumption reached 785 billion kWh in November, up 2.8 y/y and slower than the 7.1% growth during the first 11 months, according to National Energy Administration data.”
CHINA MARKETS
MNI: PBOC Net Drains CNY103.5 Bln via OMO Friday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY101.6 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY103.5 billion after offsetting the maturity of CNY205.1 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5903% at 09:51 am local time from the close of 1.6880% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Thursday, the same as the close on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1901 Fri; -2.13% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1901 on Friday, compared with 7.1911 set on Thursday. The fixing was estimated at 7.3060 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND DEC ANZ CONSUMER CONFIDENCE M/M 0.4%; PRIOR 9.4%
NEW ZEALAND DEC ANZ CONSUMER CONFIDENCE INDEX 100.2; PRIOR 99.8
NEW ZEALAND NOV TRADE BALANCE -473mn; PRIOR -1658mn
AUSTRALIA NOV PRIVATE SECTOR CREDIT M/M 0.5%; MEDIAN 0.5%; PRIOR 0.6%
AUSTRALIA NOV PRIVATE SECTOR CREDIT Y/Y 6.2%; PRIOR 6.1%
JAPAN NOV NATL CPI Y/Y 2.9%; MEDIAN 2.9%; PRIOR 2.3%
JAPAN NOV NATL CPI EX FRESH FOOD Y/Y 2.7%; MEDIAN 2.6%; PRIOR 2.3%
JAPAN NOV NATL CPI EX FRESH FOOD, ENERGY Y/Y 2.4%; MEDIAN 2.4%; PRIOR 2.3%
CHINA 5-YR LPR DEC 3.60%; MEDIAN 3.60%; PRIOR 3.60%
CHINA 1-YR LPR DEC 3.10%; MEDIAN 3.10%; PRIOR 3.10%
SOUTH KOREA NOV PPI 1.4%; PRIOR 1.0%
MARKETS
US TSYS: Tsys Futures Steady Ahead Of PCE Data
- Tsys futures are trading steady today as investors await the release of US core PCE data, after the Fed signaled concern over the risk of inflation pressure facing the economy. TU is 00+ at 102-22⅝ while TY is +04 at 108-23+.
- A bearish short-term theme in Treasury futures remains intact and Wednesday’s move lower reinforces the current trend condition. The TY contract has traded through key short-term support and the bear trigger at 109-02+, the Nov 15 low. The breach confirms a resumption of the downtrend and opens 108+12+, a Fibonacci projection. On the upside, initial firm resistance is at 110-13, the 20-day EMA.
- The Republican-led House rejected a temporary funding plan backed by President-elect Donald Trump with just over 24 hours to go before a US government shutdown, while the new proposed bill has so far been unable to gain enough votes to pass,
- Cash tsys are trading flat to 1.5bps lower so far today, with the 5 & 7yr tenors outperforming. The 2yr is trading -1.1bps at 4.306%, while the 10yr is -0.6bps at 4.490%, the 2s10s remains near its steepest levels since June 2022 at +24bps.
- Fed Fund futures are pricing in no further cuts until July, when there is 28.4bps of cut priced, and only 38bps of cuts priced through to December 2025.
- Friday's schedule includes the November PCE report and the final December UMichigan survey, while we also get the first post-FOMC meeting commentary with SF's Daly and NY's Williams appearing in the morning.
JGBS: Futures Spike, But Past Month Ranges Hold, BoJ Ueda Speech Next Week
JGB futures have mostly maintained a positive bias through the first part of Friday trade. The March future (JBH5) was last 142.56, +.42, versus settlement levels. Earlier highs were at 142.72, which were close to earlier Dec 9 highs.
- These moves threaten to break us out of ranges that have held over the past month or so.
- Support has been evident from a positive US Tsy futures backdrop. US equity futures are down as well, with some concern around a government shut down in the near term, with the US House failing to pass the latest funding bill late on Thursday US time. A generally softer commodity price backdrop in the past week has also likely been a support.
- Earlier on the data front we had Nov national CPI print, which was a touch above market expectations for the core print, but the detail was mostly softer outside of a bounce in utility prices. Yen has been volatile as verbal jawboning picks up after Thursday's sharp drop.
- Cash JGB yields are all softer, with the belly of the curve the weakest in yield terms. The 7ys is down 3bps to sub 0.79%. The 10yr yield is back to 1.05%.
- Swap rate falls have been slightly in the belly of the curve. The 10yr swap rate is back close to 1.00%.
- Next week we have the Oct BoJ Mins on Dec 24, while Governor Ueda will speak on Christmas day, then the Summary of Opinions from the BoJ Dec meeting will be released on Dec 27th. Also out on the 27th is Tokyo Dec CPI.
BONDS: ACGB Curve Bear-Steepens, Tracking Moves In Tsys
Aussie bonds saw a bear-steepening move occur today, largely tracking moves made in US tsys. Earlier today we had a 2028 bond auction, followed by Australia Private sector Credit data which was in line with estimates
- Australia's credit to business and consumers increased by 0.5% month-on-month in November, meeting expectations, according to the RBA. Year on year, credit rose 6.2%, up from 6.1% in October. Housing loans grew 0.5% m/m and 5.4% y/y, while consumer credit declined 0.2% m/m but rose 2.1% y/y. Lending to non-financial businesses increased 0.7% m/m and 8.5% y/y.
- There was a 2028 bond action today, the notes drew an average yield that was 1.4bps lower than the mid-rate in the secondary market, signaling strong investor demand
- US tsys are trading steady ahead of the release of US core PCE data, after the Fed signaled concern over the risk of inflation pressure facing the economy
- ACGBs have traded cheaper today, the curve has bear-steepening with the 2s10s +1.5bps at 48bps. The 2yr is trading -0.4bps at 3.978% while the 10yr is +7bps at 4.478% and now trade about 33bps higher than the December lows.
- ACGB futures are currently YM -0.5, VTA -0.55, XM -0.7
- Swap curves are trading +1 to +2bps, with the 2y underperforming
- Bill strip is flat to -6,
- RBA-dated OIS pricing has firmed 2-10bps throughout the week, with 16bps of cuts priced for Feb, or a 63% chance of a cut, the first full cut is now priced in for the April meeting. However the market further out the curve has cooled, with only 67bps of cumulative cuts now priced by December 2025, down from 80bps to start the week.
- Next week we have the RBA Minutes of Dec. Policy Meeting due out on December 2024
BONDS: NZGBs Trade Cheaper, Curve Steepens Tracking US tsys
NZGBs have closed cheaper today with curves steepening after concern over US debt supply and sticky inflation propelled a similar move in Treasuries. Earlier, Trade Balance data showed the deficit had narrowed, while the consumer confidence index rose 0.40% in December, after a 9.4% jump in November.
- New Zealand's total credit card spending dropped 0.8% m/m to NZ$4.67b in November, reversing October's 1% rise, according to RBNZ data. Domestic billings on New Zealand-issued cards fell 1.3% to NZ$3.97b. On an annual basis, credit card spending declined 3.2%, following a 0.3% increase in October. Separately, total advances outstanding decreased 0.8% m/m and 1.9% y/y to NZ$6.23b in November.
- New Zealand's trade deficit narrowed to NZ$437m in November from NZ$1.66b in October, driven by a 9.1% rise in exports to NZ$6.5b, led by dairy products and crude oil. Imports fell 3.9% to NZ$6.9b, primarily due to a 32% drop in petroleum imports. Annually, the trade deficit shrank to NZ$8.2b, down from NZ$13.5b a year earlier.
- US tsys have done very little during the Asian session today, with yields trading flat to 1.1bps lower, as the curve bull-steepens. The US 10yr remains above 4.50% at 4.558% after hitting 4.59% overnight.
- NZGBs curve has bear-steepened again today, the 2yr still hovers near yearly lows at 3.679%, +0.7bps for the session, while the 10yr is +6.7bps at 4.526% at session highs. The 5s10s is +0.50bps at 56.70 and now trades at its steepest levels for the year and almost 40bps steepening since August.
- RBNZ dated OIS is pricing in 54.2bps of cut for the Feb meeting, and 101bps of cumulative cuts are now priced in by May. There is a cumulative 123bps of cuts priced in through to October 2025.
- There is no further data out for New Zealand this year.
FOREX: Safe Havens Outperforming, Rhetoric On FX Returns From Japan Officials
Safe havens have outperformed in the first part of G10 Friday trade. Most focus has rested on USD/JPY, with fresh highs reached before verbal rhetoric returned from Japan officials. The USD BBDXY index was last near 1305, slightly up for the session.
- USD/JPY got to highs of 157.93 in early trade, levels last seen in July of this year. We had FinMin Kato come across the wires stating he was deeply concerned about FX moves. Later on Chief FX Diplomat Mimura also expressed deep concern around FX moves. Both officials stated action would be taken if FX moves were excessive.
- USD/JPY has dipped a few times sub 157.00 (lows of 156.84) but support has been evident. We were last 157.20/25, around 0.15% stronger in yen terms. Earlier data showed y/y momentum for national CPI picked up in Nov, although some of the m/m detail was softer. The BoJ is waiting for the new year before deciding the timing on the next hike, with a strong focus on wage outcomes.
- USD/CHF is down a touch last near 0.8980. US equity futures are off, led by the tech side, (Nasdaq futures down 0.70%). Prospects of a government shut down (as the latest funding bill failed to pass the House) is a headwind for risk appetite.
- US yields are mostly lower, but losses are not much beyond 1bps at this stage.
- AUD/USD is down, last near 0.6225, off 0.20%, but above yesterday's lows under 0.6200. Softer commodity prices are also weighing on A$ appetite. NZD/USD is back towards 0.5620, slightly outperforming the AUD so far today. Earlier NZ sentiment and trade data didn't impact.
- Looking ahead, we have US PCE data for Nov, along with the final U. of Mich survey for Dec. Fed speak returns as well, with Daly and Williams due. Before that, UK retail sales prints.
EQUITIES: Asian Equities Mixed, Ranges Narrow, US PCE Later
Asian equities are mixed on today as investors continue to digest the Fed's hawkish policy stance and awaited US personal consumption expenditure data for November. The US has been unable to pass the stopgap funding bill yet, but overall it has been a rather quiet session as we head into the Holidays, focus will now turn to PCE numbers later tonight.
- The data calendar saw some tier 2 data today, nothing of which really moved markets at all. New Zealand's Trade Deficit narrowed, Japan's National CPI was largely in line with expectations, while China kept the 1 & 5yr LPRs unchanged.
- Japanese equities are trading only slightly higher with the Nikkei +0.10% & TOPIX +0.05% exporters have been the top performing following the weakening of the JPY. Banking stocks have lagged after the BoJ left interest rates unchanged, with comments from Governor Ueda dampening expectations for a January hike.
- Hong Kong equities are trading slightly higher, however ranges are narrow. The HS Tech Index did trade 1% earlier, before paring some of those gains, the Mainland Property Index is 1.20% lower, while the wider HSI is 0.10% higher. In China mainland equities, the CSI 300 is 0.30% higher, with Tech stocks leading the way, Industrials are the worst performing sector.
- Australia'sASX200 fell 1.3% to a seven-week low, with a weekly decline of 2.8%, marking one of its worst performances this year. Consumer discretionary stocks led losses, with Wesfarmers down 3.4% after announcing a $770 million divestment. Major banks and miners also declined, though Fortescue managed a 1.2% gain.
- South Korea'sKOSPI declined 1.8% as foreign and institutional investors sold heavily following the Fed's hawkish stance. The KRW hovered at a 15-year low of 1,450 per dollar. Tech giants like Samsung Electronics and SK hynix fell 1.7% and 3.4%, respectively.
- Taiwan’s Taiex declined 1.10%, led by losses in semiconductor stocks, including TSMC, last -1.90%.
Oil Heading for Weekly Decline on Fed and Focus on Supply Glut in 2025.
- Stronger US GDP and PCE inflation revised up saw declines in oil prices into US market close as traders re-assessed the probability of rate cuts.
- Having closed Wednesday night at US$70.58 WTI had spiked to $71.26 leading into the data release, only to decline for the rest of trading day to finish at $69.91 and has moved little in Asia’s trading day to be at $68.97.
- WTI is on track to finish the week -3.20% lower following the Fed’s pivot and ongoing concerns about a supply glut in 2025.
- China’s Sinopec’s annual report pointed to oil demand in China having peaked with declines likely to accelerate as Chinese drivers shift to electric cars.
- Brent opened Thursday morning in the US at US73.39 to rise leading into the data release to $73.86, only to decline down to $72.88 for Asia’s open, but has continued to trend down to $72.45.
- Brent is on track to fall -2.75% for the week.
- Oil industry leaders are getting on the front foot with the incoming Trump administration lobbying for insulation from tariffs, rolling back environmental regulations and allowing drilling in more locations.
- BP Plc and the Iraqi government took another step toward reviving one of the OPEC member’s most prolific oil and gas resources, the Kirkuk field in Northern Iraq.
- The US has sanctioned more tankers and companies it alleges are involved in the trade of Iranian oil, which generates revenue that supports Tehran-backed militia groups such as Hamas and the Houthis according to BBG.
Gold Set for Poor Week as Rate Cuts Melt Away.
- Gold tried to rally following its decline post Fed, but the rally ran out of steam into the US close and it has done very little in Asian trading today.
- Opening at US$2,585.35 Gold initially surged higher reaching $2,626.49 just prior to the release of a raft of US economic data but fell away into the close to finish at $2,594 and has done very little stable at $2,596.81.
- The move lower in recent days sees gold on track to decline -1.95% for the week.
- US overnight data was stronger than expected, bringing into question the rate cuts expectations built into the US market for 2025.
- Gold has posted strong returns this year on the back of expectations for rate cuts, safe haven demand and news that key Central Banks have started to purchase the precious commodity again.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 20/12/2024 | 0700/0700 | *** |  GB | Public Sector Finances |
| 20/12/2024 | 0700/0800 | ** |  DE | PPI |
| 20/12/2024 | 0700/0800 | ** |  SE | PPI |
| 20/12/2024 | 0700/0800 | ** | SE | Retail Sales |
| 20/12/2024 | 0700/0700 | *** | GB | Retail Sales |
| 20/12/2024 | 0745/0845 | ** |  FR | PPI |
| 20/12/2024 | 0800/0900 | ** | SE | Economic Tendency Indicator |
| 20/12/2024 | 0900/1000 | ** |  IT | ISTAT Business Confidence |
| 20/12/2024 | 0900/1000 | ** | IT | ISTAT Consumer Confidence |
| 20/12/2024 | 1100/1200 | ** | IT | PPI |
| 20/12/2024 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 20/12/2024 | 1330/0830 | *** |  US | Personal Income and Consumption |
| 20/12/2024 | 1330/0830 | ** |  CA | Retail Trade |
| 20/12/2024 | 1330/0830 | ** | CA | Retail Trade |
| 20/12/2024 | 1330/0830 | *** | US | Personal Income and Consumption |
| 20/12/2024 | 1400/1500 | ** |  BE | BNB Business Confidence |
| 20/12/2024 | 1500/1600 | ** |  EU | Consumer Confidence Indicator (p) |
| 20/12/2024 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 20/12/2024 | 1630/1630 | GB | BOE to announce Q1-25 APF sales schedule | |
| 23/12/2024 | 0700/0700 | *** | GB | GDP Second Estimate |
| 23/12/2024 | 0700/0700 | * | GB | Quarterly current account balance |
| 23/12/2024 | 0800/0900 | *** |  ES | GDP (f) |
| 23/12/2024 | 1330/0830 | * | CA | Industrial Product and Raw Material Price Index |
| 23/12/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 23/12/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |