Source: MNI - Market News/Bloomberg
UK
BOE (FT/BBG): - Bank of England Deputy Governor Clare Lombardelli said she needs to see more evidence of cooling price pressures before she backs another interest rate cut.
BOE (MNI BRIEF): Bank of England Chief Economist Huw Pill told the Lords Economic Affairs Committee Tuesday that alternative data sources suggest that employment is higher and economic inactivity due to sickness lower than the headline Labour Force Survey has shown.
ECONOMY (BBC): “Young people will have guaranteed access to apprenticeships and training, the government has pledged, as part of a wider proposed overhaul of the jobs market.”
BUSINESS (BBC): “The owner of Vauxhall has announced plans to close its van-making factory in Luton, putting about 1,100 jobs at risk. Stellantis, which also owns brands including Citroen, Peugeot and Fiat, said it would combine its electric van production at its other UK plant.”
ENERGY (ECONOMIST): “from Wednesday Britain will roll out a scheme that could help to reduce the country’s use of fossil fuels. The “Demand Flexibility Service” allows homes and businesses to get paid for using power at times when the grid is less strained.”
RUSSIA (BBC): “Downing Street has denied allegations that a British diplomat expelled from Russia was a spy.”
RUSSIA (POLITICO): “Britain’s Deputy Prime Minister Angela Rayner was one of many top U.K. politicians who were banned from entering Russia Tuesday, as Moscow continued its tit-for-tat diplomatic feud with London and accused senior Labour figures of “Russophobic” leanings.”
EU
EU (ECONOMIST): “On Wednesday, barring a surprise, the European Parliament will endorse Ursula von der Leyen to run the European Commission for a second five-year term. Mrs von der Leyen has the backing of the European People’s Party, a grouping of centre-right parties that topped continent-wide elections in June. She cobbled together an alliance including other centrist parties (and gained tacit support from some on the hard right) to ensure her re-election.”
EU (POLITICO): “A top EU lawmaker is demanding that TikTok's chief executive appear before the European Parliament to answer questions about the platform's role in Sunday's Romanian presidential election, as researchers warn of covert activity on thousands of fake accounts leading up to the vote.”
FRANCE (POLITICO): “French Prime Minister Michel Barnier said Tuesday that France could face fiscal calamity should lawmakers decide to topple his government over a budget dispute.”
FRANCE (POLITICO): “French lawmakers from across the political spectrum voted in favor of a government declaration condemning as “unacceptable” a proposed trade agreement between the European Union and the South American countries of the Mercosur bloc on Tuesday.”
US
FED (MNI): Federal Reserve officials agree they have room to continue reducing interest rates but should do so gradually given uncertainty surrounding the neural rate, minutes from the central bank's November meeting showed Tuesday.
POLITICS (BBG): “President-elect Donald Trump named Kevin Hassett to direct the National Economic Council and Jamieson Greer as the US Trade Representative, filling two key posts on his economic team.”
OTHER
MIDDLE EAST (BBG): “Israel reached a deal for a 60-day cease-fire with the Lebanese militant group Hezbollah after weeks of talks mediated by the US, a first step toward ending a conflict that’s killed thousands of people and opening the door to fresh peace initiatives in the Gaza Strip.”
CANADA (MNI BRIEF): Canadian Finance Minister Chrystia Freeland said Tuesday that while she believes U.S. President-elect Donald Trump's threatened 25% tariffs related to border security can be headed off, there will be economic pain for Americans if the plan is put into force.
AUSTRALIA (MNI BRIEF): Australian monthly trimmed mean inflation rose 30 basis points over October to 3.5% y/y, while headline CPI grew 2.1% y/y, 20bp better than expected, data from the Australian Bureau of Statistics showed Wednesday.
NEW ZEALAND (MNI BRIEF): The Reserve Bank of New Zealand monetary policy committee cut the official cash rate 50 basis points to 4.25% on Wednesday, noting inflation was expected to remain close to its 1-3% target midpoint.
SOUTH KOREA (MNI BOK WATCH): The Bank of Korea is expected to keep its policy rate at 3.25% on Thursday, although the Board may consider a 25 basis point reduction due to lingering weak domestic demand.
CHINA
POLITICAL (FT/BBG): "China is investigating its defense minister for corruption, according to the Financial Times, the latest scandal to rock the People’s Liberation Army after a slew of high-profile purges took down both of his predecessors."
PROFITS (BBG): "China’s industrial firms saw profits decline for the third straight month, as worsening producer price deflation and sluggish factory output overshadowed the impact of recent stimulus measures."
MNI (PROPERTY): China real-estate advisors share their property market outlook.
CHINA MARKETS
MNI: PBOC Net Drains CNY33.8 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY268.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY33.8 billion after offsetting the maturity of CNY302.1 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6777% at 09:31 am local time from the close of 1.7481% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 44 on Tuesday, the same as the close on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1982 Weds; -1.45% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1982 on Wednesday, compared with 7.1910 set on Tuesday. The fixing was estimated at 7.2540 by Bloomberg survey today.
MARKET DATA
AUSTRALIA CPI OCT. 2.1% Y/Y; EST. 2.3%; PRIOR 2.1%
AUSTRALIA TRIMMED MEAN CPI OCT. 3.5%; PRIOR 3.2%
AUSTRALIA CONSTRUCTION WORK DONE Q3 +1.6% Q/Q; EST. +0.4%; PRIOR +1.1%
CHINA INDUSTRIAL PROFITS OCT. YTD -4.3% Y/Y; PRIOR -3.5%
CHINA INDUSTRIAL PROFITS OCT. -10% Y/Y; PRIOR -27.1%
SOUTH KOREA DEC. MANUFACTURING CONFIDENCE FALLS TO 66
SOUTH KOREA DEC. NON-MANUFACTURING CONFIDENCE RISES TO 70" - BBG
MARKETS
US TSYS: Tsys Futures Steady Ahead Of Busy Data Session
- There is very little happening in tsys today, ranges are narrow, most of the trading volumes look to be roll related ahead of the Thanks giving holiday. It is a busy US session for data tonight, with major focus on GDP revisions for Q3 and monthly PCE for October.
- Futures are trading little changed, TU last +00¼ at 102-22⅜, while TY is +02+ at 110-13. The 10yr contract broke through resistance (20day EMA) on Monday and has held onto those gains, the moves were largely attributed to Scott Bessent being announced for Treasury Secretary.
- Cash tsys yields are trading 0.5-2bps lower today, with the 2yr outperforming -1.7bps at 4.240%, while the 10yr is -1.4bps at 4.293%.
- Traders are increasingly bearish, positioning for a potential surge in yields in the coming weeks. Demand for put options on 10yr futures, particularly in January and February contracts, has risen, with strikes targeting yields between 4.45% and 4.7%, yields not seen since April 2024. There was a large trade on Tuesday targeting yields as high as 4.9%, suggesting concern over renewed inflationary pressures linked to President-elect Donald Trump’s policies, including steeper tariffs.
- Later today we have a busy session ahead of the Thanksgiving Holiday with MBA Mortgage Applications, GDP revisions for Q3, monthly PCE for October, Wholesale Inventories, Durable Goods Orders, Jobless Claims & MNI Chicago PMI
JGBS: Bear-Steepener As Poor 40Y Auction Weighs
JGB futures are weaker and not far from lows, -14 compared to settlement levels, on a data-light Tokyo session.
- The issuance of 40-year bonds today encountered a poor reception, with the actual high yield overshooting dealer expectations. As per the BBG poll, the anticipated yield was projected at 2.54% versus the realised yield of 2.55%.
- Additionally, the cover ratio was lower at 2.2364x versus 2.5798x at the prior outing.
- As noted in the auction preview, today’s yield was approximately 30bps higher than the prior auction, with the 20/40-year yield curve slightly steeper and near its steepest level in the past 12 months.
- Given these factors, the auction outcome was viewed as disappointing.
- Cash US tsys are flat to 1bp richer, with a steepening bias in today’s Asia-Pac session.
- Cash JGBs are flat to 2bps cheaper across benchmarks beyond the 1-year, with the 40-year leading. The benchmark 40-year yield is 2.1bps higher at 2.64%.
- Swap rates are 1bp lower to 2bps higher, with the belly outperforming.
- Tomorrow, the local calendar will see Weekly International Investment Flow data alongside BOJ Rinban operations covering 3-25-year and Inflation-Indexed JGBs.
AUSSIE BONDS: Cheaper After CPI Monthly But Muted Reaction
ACGBs (YM +1.0& XM +2.0) are slightly stronger but slightly cheaper after October’s CPI data. There was an initial spike richer, but that was quickly unwound.
- October CPI printed at 2.1%, lower than expected but in line with September. However, the trimmed mean increased to 3.5% from 3.2%, the highest since July. The first month of the quarter has limited updates for services components.
- The RBA is currently focusing on underlying and services measures due to the temporary decline in headline inflation from government electricity rebates. It also prefers the quarterly CPI data with Q4 out on January 29.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session.
- Cash ACGBs are 1-2bp richer with the AU-US 10-year yield differential at +13bps.
- Swap rates are flat to 2bps lower.
- Bills strip pricing is flat to +2, with a flattening bias.
- RBA-dated OIS pricing is flat to 3bps softer across meetings, with the mid-2025 leading the move.
- A 25bp rate cut is not fully priced until July. It was May before the data.
- Tomorrow, the local calendar will see Q3 Private Capital Expenditure data and a speech by RBA Governor Bullock at the CEDA Conference aftermarket.
BONDS: NZGBS: Cheaper After RBNZ Decision
NZGBs closed 3-5bps cheaper after today’s RBNZ policy decision and release of updated forecasts.
- The RBNZ cut rates 50bp to 4.25% as was widely expected as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it. It published a revised set of forecasts, which if the economy develops close to its expectations it should be able to cut rates further.
- The MPC only discussed a 50bp rate cut this month. The OCR path implies another 50bp in February, which Governor Orr confirmed in his press conference as policy is still restrictive.
- Swap rates closed 4-10bps higher, with the 2s10s curve flatter.
- The market had anticipated 55bps of easing at this policy meeting.
- OIS pricing closed 4–9bps firmer across the meetings. For the February meeting, 41bps of additional easing is priced, compared to 95bps cumulatively (including today’s cut) before the decision.
- The local calendar will see Filled Jobs and ANZ Business Confidence tomorrow. RBNZ Assistant Governor will also be before the Select Committee on MPS.
- Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 3.0% Apr-29 bond, NZ$175mn of the 3.5% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.
FOREX: NZD Rebounds Post RBNZ, USD/JPY Tracking Towards 200-day MA Support
The main focus today has been the NZD bounce post the RBNZ's 50bps cut. Yen has also continued to rally. Trends elsewhere have been relative steady. The USD BBDXY is little changed, last near 1287.3, off a touch versus end NY levels from Tuesday.
- NZD/USD got to highs of 0.5882, post the as expected 50bps RBNZ cut. The statement implied further cuts into 2025, but not as much as the market had priced pre the meeting.
- We did see a brief NZD/USD pull back during the press conference as RBNZ Governor Orr stressed the central bank was now projecting more cuts compared to the August review. Still, NZ rates are higher for session., +4-10bps for swap rates. NZD/USD was last near 0.5865, up close to 0.50% for the session. We are still some distance from resistance at 0.5915/0.5920 (20-day EMA/Nov 20 highs) though.
- AUD/USD sits unchanged at this stage, last at 0.6475. The Oct monthly CPI print was mixed, headline softer, but core re-accelerating in y/y terms.
- USD/JPY continues to track lower, last near 152.30, off around 0.50% for the session. This continues Tuesday's outperformance theme. There has been no fresh major macro news today. On-going speculation around a Dec hike is likely helping (amid supportive domestic services inflation and likely firm wage gains again next year). The simple 200-day MA isn't far away at 152.00. The 50-day EMA is at 151.50.
- In the cross asset space, US equity futures are slightly lower, while regional equities are mixed. US yields sit down a touch, so likely benefiting the yen at the margins.
- Later revised US Q3 GDP, jobless claims, November MNI Chicago PMI, preliminary October durable orders, October trade, personal income/spending & PCE price indices print. The ECB’s Lane speaks.
EQUITIES: Chinese Equities Edge Higher, Industrial Profits Fall 10%
Chinese equities are on track to end three days of negative returns, with the CSI 300 trading 0.95% higher at the break. Equities initial opening lower however, turned higher following Industrial Profits falling 10% marking the third month straight months of declines as worsening producer-price deflation and sluggish factory output overshadowed the impact of recent stimulus measures, with traders now expecting the PBoC to cut RRR to add liquidity and aid growth.
- Tech has been the top performing sector for the CSI 300 today, trading up 2.45%, led by the likes of GoerTek & Luxshare after Huawei announced a new flagship phone. Hong Kong listed equities are also broadly higher, the HSTech Index is 0.80% higher, while the broader HSI is 0.45% higher, property stocks are trading mixed.
- China's industrial profits fell 10% y/y in October, marking a third consecutive monthly decline despite recent stimulus efforts. Weak domestic demand, persistent deflation, and stagnant factory output overshadowed early signs of recovery, such as steady infrastructure investment and a drop in unemployment. Adding to concerns, U.S. President-elect Donald Trump's tariff threats pose new risks to China's export sector.
EQUITIES: Asian Equities Mixed, Tariffs The Focus, RBNZ Lower OCR
Asian markets are trading mixed today as investors weigh US trade policies and weaker corporate earnings. Korean chipmakers and Japanese automakers fell amid concerns over US tariffs and subsidies, while Chinese stocks declined as industrial profits dropped 10% in October, highlighting economic pressure. The HSI approached a two-month low, with auto stocks underperforming but Chow Tai Fook surging on a share buyback plan.
- A stronger Yen is weighing on Japanese equities today, the USD/JPY was last -0.24% at 152.71. The TOPIX is -0.85%, while the Nikkei is 0.75% lower.
- Australian shares advanced, led by gains in consumer discretionary and mining stocks, as inflation data eased concerns over RBA policy shifts, the ASX200 is 0.60% higher, trading just shy of all time highs. New Zealand equities are also higher, with the NZX50 up 0.40% following a 50bps cut from the RBNZ, however this was expected.
- Semiconductors stocks in the region tracked global peers lower, following Qualcomm cooling on a takeover of Intel, while the sector also saw some headwinds following comments from Vivek Ramaswamy calling the Chips Act “wasteful.”
- Foreign investors have again been better sellers of South Korean equities today, with $130m of outflows from tech names, they have however been buying services, financials and communication stocks, the market is currently let with a net outflow of $40m.
- Meanwhile, weaker-than-expected earnings from Dell and HP weighed on Asian tech hardware makers, though HP's strength in printers provided a bright spot for Japanese peers. Overall, regional sentiment remains cautious amid lingering macro uncertainties.
OIL: OPEC Expected To Delay Output Increase Again, US EIA Data Later
Oil is little changed during APAC trading today as a 60-day truce between Israel and Hezbollah began at 0200 GMT. Brent is up 0.1% to $72.86/bbl, close to the intraday high, and WTI is moderately higher at $68.80/bbl after a low of $68.58. The USD index is down 0.1% but still 2.2% higher in November, which has weighed on dollar-denominated crude.
- The market will be focussing now on not just today’s EIA data, but also the weekend’s OPEC meeting. There have been comments that the non-OPEC supply outlook is not conducive for OPEC+ to begin reducing its output cuts suggesting that they are likely to be delayed further.
- The ceasefire between Israel and Hezbollah will be monitored closely with both sides attacking in the hours before the truce was due to begin.
- A petroleum industry group has estimated that Trump’s 25% tariff on imports from Canada could impact almost 4mn barrels of Canadian oil and would increase US gasoline prices, according to Bloomberg.
- Bloomberg reported a significant 5.9mn US crude inventory drawdown last week, according to people familiar with the API data. Stocks at Cushing fell 700k, while products rose with gasoline up 1.8mn and distillate 2.5mn. The official EIA data is out later today.
- Later revised US Q3 GDP, jobless claims, November MNI Chicago PMI, preliminary October durable orders, October trade, personal income/spending & PCE price indices print. The ECB’s Lane speaks.
GOLD: Grinding Higher After Monday’s Sharp Decline
Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.3% higher at $2633.15 on Tuesday. Bullion briefly spiked higher earlier in the session on headlines of a possible further escalation in tensions between Russia and Kyiv.
- The FOMC minutes were largely taken in the market's stride given the lack of any overtly hawkish messaging. Lower rates are typically positive for gold, which doesn’t pay interest.
- According to MNI’s technicals team, Monday’s sharp pullback is considered corrective, for now, and the long-term trend condition remains bullish. Resistance to watch is $2,721.4, Monday's high. Clearance of this level would be a bullish development. Key support is $2,536.9, the Nov 14 low.
- Silver slightly outperformed, with the gold-silver ratio at 86.2, around 1% below Monday's 2½-month high.
- Medium-term bullish conditions in silver remain intact, although the corrective cycle that started on Oct 23 is still in play, exposing $28.446, a Fibonacci retracement. Initial firm resistance to watch is $31.287, the 50-day EMA.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 27/11/2024 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 27/11/2024 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 27/11/2024 | 0930/1030 | * |  DE | GFK Consumer Climate |
| 27/11/2024 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 27/11/2024 | 1330/0830 | *** | US | GDP |
| 27/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 27/11/2024 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/11/2024 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/11/2024 | 1445/0945 | *** | US | MNI Chicago PMI |
| 27/11/2024 | 1500/1000 | *** | US | Personal Income and Consumption |
| 27/11/2024 | 1500/1000 | ** | US | NAR Pending Home Sales |
| 27/11/2024 | 1500/1000 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/11/2024 | 1500/1000 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/11/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 27/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/11/2024 | 1700/1200 | ** | US | Natural Gas Stocks |
| 27/11/2024 | 1800/1900 |  EU | ECB's Lane dinner remarks at conference on "Macroeconomic modelling frontiers for research and policy" | |
| 28/11/2024 | - | EU | European Central Bank Meeting | |
| 28/11/2024 | 0030/1130 | * |  AU | Private New Capex and Expected Expenditure |
| 28/11/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 28/11/2024 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 28/11/2024 | 0900/1000 | ** | EU | M3 |
| 28/11/2024 | 0900/1000 | ** |  IT | ISTAT Business Confidence |
| 28/11/2024 | 0900/1000 | ** | IT | ISTAT Consumer Confidence |
| 28/11/2024 | 0900/1000 | ** | IT | PPI |
| 28/11/2024 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 28/11/2024 | 0900/1000 | *** | DE | Bavaria CPI |
| 28/11/2024 | 1000/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 28/11/2024 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 28/11/2024 | 1300/1400 | *** | DE | HICP (p) |
| 28/11/2024 | 1330/0830 | * |  CA | Current account |
| 28/11/2024 | 1330/0830 | * | CA | Payroll employment |