Source: MNI - Market News/Bloomberg
UK
DATA (BBG): "The same kind of survey failures that have left the UK unsure about the number of people in Britain’s workforce are now raising doubts about the size of its economy."
EU
ECB (BBG/HRT1): “ The European Central Bank will go on lowering borrowing costs in 2025, according to Governing Council member Boris Vujcic. “The direction is clear, it’s the continuation of the direction from 2024, and that is the further reduction of interest rates,” the Croatian central bank chief told state broadcaster HRT1 in an interview Saturday.
ECB (FT/BBG): "Outlook for next year is clouded by more uncertainty on Donald Trump’s incoming US presidential term than the early stages of Covid-19, ECB governing council member Gabriel Makhlouf told FT.
FRANCE (BBG): “French Prime Minister Francois Bayrou is running out of time to meet his self-imposed deadline to name a new cabinet that won’t be quickly toppled by a no-confidence vote in parliament.”
US
GEOPOLITICS (BBG): “ President-elect Donald Trump said Saturday that the Panama Canal is charging “exorbitant prices and rates of passage” on US naval and merchant ships, and he demanded that fees be lowered or else Panama should return the canal to the US.”
ECONOMY (BBG): “President-elect Donald Trump is nominating Stephen Miran to lead his Council of Economic Advisers, enlisting a former Treasury official who served in Washington during his first administration.”
FED (MNI BRIEF): Cleveland Fed President Beth Hammack said Friday she dissented against this week's FOMC rate cut in favor of keeping policy on hold because the risk has risen that inflation pressures will linger for longer.
STRIKE ACTION (RTRS): “Starbucks workers have expanded their strike to four more U.S. cities, including New York, the union representing over 10,000 baristas said late on Saturday.”
US/CHINA (RTRS): “President-elect Donald Trump indicated on Sunday that he favored allowing TikTok to keep operating in the United States for at least a little while, saying he had received billions of views on the social media platform during his presidential campaign.”
OTHER
CANADA (MNI BRIEF): Prime Minister Justin Trudeau signaled Friday he's staying in office after the last opposition party agreed to force him out with a nonconfidence motion after Parliament returns Jan. 27, and the leading Conservatives pushed Canada's ceremonial head of state to re-open the legislature to do that immediately.
AUSTRALIA (MNI INTERVIEW): A former RBA economist discusses the rate outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
AUSTRALIA (BBG): “Rupert Murdoch’s News Corp. agreed to sell Foxtel Group to sports platform DAZN Group Ltd. in a deal that values the Australian pay-television and streaming service at A$3.4 billion ($2.1 billion).”
NEW ZEALAND (BBG): “ New Zealand’s economic downturn is significantly deeper than most expected but “despite these changes, timely data continues highlighting the worst is behind us and so we continue to expect activity to recover over 2025,” the Treasury Dept. says in Fortnightly Economic Update released Monday in Wellington.”
TAIWAN (BBG): "Nvidia plans to build overseas headquarters in Taiwan, Taipei-based Commercial Times reports, citing an unidentified government official familiar with the matter."
CHINA
PROPERTY (BBG): “One of China’s leading developers is now on authorities’ radar for default risk. A major Hong Kong builder is asking lenders to extend loans. Another industry peer is selling an iconic but largely empty mall in Beijing.”
STOCKS (CSJ): " China needs to roll out policies to encourage long-term funds to invest in the stock market by improving the institutional environment, China Securities Journal says in a commentary."
PENSION (SECURITIES TIMES): "China’s private pension fund saw an increase in participants after the pilot program was expanded nationwide, Securities Times reported Monday, citing securities brokerages."
CHINA MARKETS
MNI: PBOC Net Drains CNY643.5 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY109.6 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY643.5 billion after offsetting the maturity of CNY753.1 billion today, according to Wind Information.
The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5169% at 09:51 am local time from the close of 1.5713% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 43 on Friday, compared with the close of 45 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1870 Mon; -2.26% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1870 on Monday, compared with 7.1901 set on Friday. The fixing was estimated at 7.2901 by Bloomberg survey today.
MARKET DATA
SOUTH KOREA DEC EXPORTS 20 DAYS Y/Y 6.8%; PRIOR 5.8%
SOUTH KOREA DEC IMPORTS 20 DAYS Y/Y 7.5%; PRIOR -1.0%
SOUTH KOREA NOV RETAIL SALES Y/Y 8.0%; PRIOR 6.7%
UK DEC LLOYDS BUSINESS BAROMETER 39; PRIOR 41
UK DEC LLOYDS OWN PRICE EXPECTATIONS 62; PRIOR 60
MARKETS
US TSYS: Tsys Futures Steady, 10yr Hovers Near 4.50%
- Tsys futures are trading little changed today, ranges are narrow while volumes are slightly below average. TU is +00¼ at 102-22¾, while TY is trading +00 + at 108-31+.
- Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
- Traders are betting yields will continue to rise, taking at look at TLT (iShares 20+yr Treasury Bond) Etf, investors withdrew a net $1.55b from it in the last session for which data is available, reducing the fund's assets by 2.9% to $51.1b, the lowest level since June 21. This was the biggest one-day decrease in at least a year. The most active option for the Jan 15 expiry is the 85 put, we last trade at 88.31.
- In Treasury options on friday, flows included A large options trade targeting a rise in US 10yr Treasury yields to around 5.4% by January 24 saw 50,000 February 103.00 puts bought for approximately $1.5m. This appears to be new risk, given the low prior open interest of 7,036 contracts at this strike. While in SOFR futures stand out flows included a large block sale in the Dec25 futures over the US morning session
- Later today we have durable goods orders and new home sale
JGBS: Futures Drift A Touch Lower, JGB Yields Unchanged
JGB futures have had a slightly downside bias since the lunchtime break, but overall moves remain contained. The March contract (JBH5) last 142.42, -.05 versus settlement levels. US Tsy futures have been relatively steady today as market wind down for the holiday period later this week.
- Cash JGB yields are little changed, the 10yr remaining just under 1.07% at this stage. The 10yr swap rate is around 1.015%, also little changed for the session. Aggregate moves are less than 1bps across keys parts of the JGB curve and swap rate space.
- We do have some BoJ and data event risks this week, the mins of the BoJ Oct meeting are out tomorrow, services PPI on Wednesday (Christmas day), along with a Ueda speech. On Friday the Tokyo CPI for Dec prints.
- It remains to be seen if these events shift market sentiment, as the central bank awaits January trends on wages (for 2025), along with early US policy shifts (under the returning Trump administration).
BONDS: ACGB Richer, 10yr Yield 9bps Lower, RBA Minutes Tomorrow
Aussie bonds have outperformed in the APAC region today, curves have bull-flattened, with yields trading 5-10bps lower, with the 10yr outperforming.
- ACGB yields have rallied today, outperforming the US Tsys move, with the passing of the US stopgap bill supporting markets. The 2yr is is -5.7bps at 3.919%, while the 10yr is trading -9.2bps at 4.40%. The 2s10s dropped 3.5bps at now trades 46.50bps, it briefly touched 50bps on Friday.
- ACGB futures are currently YM +6.0, VTA +4.5, XM +9.5
- Swap curves are trading -2bps across the curve
- Bill strip is +2 to +6,
- RBA-dated OIS pricing has firmed 1-3bps across the the next few meetings today, with 17bps of cuts priced for Feb, or a 69% chance of a cut, the first full cut is now priced in for the April meeting. Further out the curves there is 72.5bps of cumulative cuts now priced by December 2025, down from 80bps to start the week.
- Tomorrow we have the Minutes of the RBA December rate meeting, which will close out the year for any data releases.
BONDS: NZGBs Close Richer As Curve Bull-Flattens
NZGBs have closed richer today, outperforming the move made on Friday in US tsys. In has been a very slow session
- New Zealand’s Treasury Department acknowledges a deeper-than-expected economic downturn but remains optimistic about a recovery beginning in early 2025, as highlighted in its Fortnightly Economic Update. Indicators such as improving consumer and business confidence, easing inflationary pressures, and higher card spending suggest the worst may be over. However, they caution that future GDP revisions could remain larger than usual.
- NZ's residential mortgage lending in November totaled NZ$7.41b, up 13% y/y but down 4% m/m after seasonal adjustment. First-home buyers accounted for NZ$1.5b (20.2% of total), a 3.7% annual decline, while investors borrowed NZ$1.6b, up 41% y/y. The number of new mortgage commitments fell 1.5% m/m to 18,981.
- US Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
- NZGBs curve has bull-flattened today, the 2yr is -2.8bps and trades at yearly lows, while the 10yr is -8.4bps at 4.446%. The 3s10s is +0.5bps at trades at its steepest level this year.
- RBNZ dated OIS is pricing is little changed today with 54.7bps of cuts for the Feb meeting, and 100bps of cumulative cuts are now priced in by May. There is a cumulative 124bps of cuts priced in through to October 2025.
- There is no further data out for New Zealand this year.
FOREX: Firmer Equities Aids FX Risk Appetite, But Muted Moves
G10 FX markets have started the holiday impacted week in fairly muted fashion. There has been a slight risk on tone in early trade, but follow through has been very limited for the likes of AUD and NZD. The USD BBDXY index was last little changed near the 1297 level.
- AUD/USD has found resistance near 0.6270, which marked highs from late last week (post softer US data outcomes). On the downside, moves sub 0.6250 have been supported, and we last tracked close to this level. This leaves us little changed for the session. The NZD has followed a similar trajectory, last near 0.5650/55, also little changed for the session.
- USD/JPY has drifted a little higher, last in the 156.50/55 region, not too far from session highs (156.69). Lows for the session were in the first part of trade and at 156.14, above intra-session lows from Friday (just under 156.00).
- We do have some event risks on the calendar for Japan this week, the mins of the BoJ Oct meeting are out tomorrow, services PPI on Wednesday (Christmas day), along with a Ueda speech. On Friday the Tokyo CPI for Dec prints.
- EUR/USD is a touch higher, last near 1.0440/45.
- In the cross asset space, US equity futures are higher, led by the tech side, up nearly 0.60% for the Nasdaq. Regional equity markets are mostly higher, led by the tech side.
- US yields are close to flat at this stage, retreating from recent highs on Friday post the softer core PCE inflation reading. This is likely helping broader risk appetite in the equity space as week.
- Looking ahead, we have UK GDP revisions later, along with US durable good orders and building permits.
EQUITIES: Asian Equities Rallying, Semiconductors Outperform
- Asian markets rebounded today, lifted by easing US inflation and renewed Fed rate rate-cut bets. Japan's Nikkei 225 rose 1.10%, while the Topix climbed 0.9%, driven by Toyota Motor and bank stocks ahead of BOJ minutes and Governor Ueda's speech. Hong Kong’s Hang Seng gained 0.7%, supported by record mainland Chinese buying of HK$778b ($100b) in 2024, as a weaker yuan and Beijing’s stimulus fueled demand.
- South Korea's Kospi jumped 1.470% and Taiwan's Taiex advanced 2.50%, with tech stocks like TSMC and Hon Hai leading gains. Australia’s ASX 200 jumped 1.4%, tracking the rally in U.S. equities. Mainland China saw modest gains as Premier Li Qiang called for innovation in semiconductors, while investor sentiment remained cautious due to global trade concerns. The broader MSCI Asia Pacific Index snapped a six-day losing streak, offering some respite after recent volatility sparked by robust U.S. data and reduced Fed rate-cut expectations for 2025.
- There were heavy outflows on Friday in the tech heavy markets of South Korea and Taiwan, foreign investors have returned somewhat to Korea today, although inflows are well below what is needed to cover recent outflows, with just $100m inflows so far today, with majority of the flows heading into financial stocks.
OIL: Hedge Funds Turn Bullish on Oil.
- Hedge Funds increased their bullish positioning on oil with net longs growing through mid-December according to CFTC.
- The rise represents the biggest gain since September 2023.
- Oil is faced with a balancing act of potential supply glut, versus potential further sanctions as a last policy from the Biden administration.
- WTI had a poor week last week but finished higher today at US$69.85 having opened at $69.46.
- Brent too rose to US$73.28, having closed on Friday at $72.94.
- Adding to the potential supply glut for 2025, Belarus confirmed it is receiving Russian oil following a shut down.
- However Russia is forecasting a slowdown in exports next year after Moscow ordered the refineries to focus on domestic markets first.
- Support for restrictions on OECD restrictions on financing for oil projects has collapsed with the idea of a deal to limit carbon heavy financing now appearing remote.
Gold Up on Poor US Data Friday.
- Gold was left floundering into the end of last week, only to receive a small kicker from weaker than expected PCE data in the US.
- Gold had been hovering around US$2600 in early trading Friday only to jump to $2622.91 at the close and it has hovered around that level all day in Asia.
- With lower rates typically good for gold, the muted Personal Consumption Expenditure revives the debate on how many rate cuts in the US in 2015.
- Having had a very good year in 2024 on a view of rate cuts, gold appears evenly poised in the coming months, pending the outlook for rates.
- The FED had indicated that the possibility exists for less rate cuts that is currently priced in and this has the potential to be challenging for gold.
- Tonight sees Building Permits, Chicago Fed National Activity Index Durable Good and New Home Sale releases for further guidance on rates.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 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 | ** |  US | Durable Goods New Orders |
| 23/12/2024 | 1500/1000 | * | US | US Treasury Auction Result for 26 Week Bill |
| 23/12/2024 | 1500/1000 | * | US | US Treasury Auction Result for 13 Week Bill |
| 23/12/2024 | 1500/1000 | *** | US | New Home Sales |
| 23/12/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 23/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 23/12/2024 | 1800/1300 | * | US | US Treasury Auction Result for 2 Year Note |
| 23/12/2024 | 1830/1330 | CA | Bank of Canada meeting minutes | |
| 24/12/2024 | 0030/1130 |  AU | RBA Minutes | |
| 24/12/2024 | 1330/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 24/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |