Source: MNI - Market News/Bloomberg
UK
HOUSE PRICES (BBG): “ Rightmove report UK November house prices -1.4% m/m, +1.2% y/y to £366,592”
G20 (POLITICO): “Keir Starmer is set to meet Xi Jinping for the first face-to-face talks between the Chinese president and a British prime minister in more than six years.”
EU
GEOPOLITICS (MNI BRIEF): An escalation in trade barriers between blocs would increase the volatility of output and inflation in world economies and trigger severe losses in efficiency and welfare, Bank of Italy Governor Fabio Panetta said on Friday.
EU (ECONOMIST): “Foreign ministers of the European Union’s 27 members meet on Monday, with their attention on Ukraine and its prospects after Donald Trump returns to the White House.”
TRADE (POLITICO): “French President Emmanuel Macron slammed the Mercosur trade deal again on Sunday after meeting with Argentinian President Javier Milei in Buenos Aires. Macron has struggled to find enough support among European Union countries to block the deal and now appears to be looking further afield for allies in his mission to derail the trade pact.”
GERMANY (POLITICO): “German Chancellor Olaf Scholz said he was positively surprised by his phone call with Donald Trump following the Republican's reelection as U.S. president last week.”
GERMANY (POLITICO): “Lawmakers from Germany’s Social Democratic Party (SPD) have spoken out for the first time in an internal meeting in favor of running in the February election with the more popular Defense Minister Boris Pistorius instead of Chancellor Olaf Scholz, Spiegel reported on Saturday.”
GERMANY (POLITICO): “Robert Habeck, Germany’s economy minister, was chosen on Sunday to represent the Greens in the race to become the country’s next chancellor early next year. Habeck won an overwhelming 96.5 percent of votes during a Green Party conference in Wiesbaden.”
GERMANY (DW): “The number of skilled worker visas issued by Germany is on course to rise 10% in 2024 compared to last year, the government said on Sunday, a year after immigration rules were eased to boost the labor market.”
UKRAINE (BBC): “Ukraine's President Volodymyr Zelensky says he is certain the war with Russia will “end sooner” than it otherwise would have once Donald Trump becomes US president. Zelensky said he had a “constructive exchange” with Trump during their phone conversation after his victory in the US presidential election.”
UKRAINE (BBC): “A “massive” Russian missile and drone attack has targeted power infrastructure across Ukraine, the country's President Volodymyr Zelensky has said.”
RUSSIA (BBC): “German Chancellor Olaf Scholz told Russian President Vladimir Putin on Friday that Russia’s deployment of North Korean troops against Ukraine was a “grave escalation” of the conflict, according to government sources.”
US
UKRAINE (RTRS): “ President Joe Biden's administration has allowed Ukraine to use U.S.-made weapons to strike deep into Russia, two U.S. officials and a source familiar with the decision said on Sunday, in a significant reversal of Washington's policy in the Ukraine-Russia conflict.”
FED (MNI INTERVIEW): Federal Reserve officials appear to be gradually shifting their views to acknowledge that strong recent economic data call for less monetary easing, laying the groundwork for a pause in rate cuts in the coming months, former Richmond Fed President Jeffrey Lacker told MNI.
POLITICS (NYT): “ President-elect Donald J. Trump is expected to invite the contenders for the role, including Kevin Warsh and Marc Rowan, to Mar-a-Lago this week.”
OTHER
JAPAN (MNI): Bank of Japan Governor Kazuo Ueda on Monday maintained his stance that the bank will continue to raise the policy rate if the economy realises the BOJ's outlook for economic activity and prices. “Real interest rates have been negative and even lower than in the 2010s, and thus the degree of monetary accommodation can be judged to have actually increased,” Ueda told business leaders in Nagoya City. However, he slightly downplayed an imminent hike, noting the timing of adjustments "will continue to depend on developments in economic activity and prices as well as financial conditions going forward.”
CANADA (MNI INTERVIEW): Canada will mirror corporate tax cuts taken in Donald Trump’s second term even with Justin Trudeau facing his own fiscal pinch because that's needed to avoid another threat to sagging investment, former top finance official Tim Sargent told MNI.
CHINA
CHINA/US (BBG): “Xi Jinping used his final meeting with Joe Biden to send a clear message to Donald Trump: China wants to be friends, but is ready for a fight if necessary.”
RETAIL (MNI BRIEF): “Beijing municipality’s total retail sales growth between January to October decreased by 1.3% y/y, narrowing from the 1.6% decline between January to September, data from the Beijing municipal government showed on Monday.”
STEEL (CISA): “China’s manufacturing sector share of steel demand in China will rise from last year’s 52%, driven by growth in new energy products and high-end equipment manufacturing, according to Jiang Wei, vice president and secretary-general of the China Iron and Steel Association.”
CHINA MARKETS
MNI: PBOC Net Injects CNY38.9 Bln via OMO Monday
The People's Bank of China (PBOC) conducted CNY172.6 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY38.9 billion after offsetting the maturity of CNY133.7 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6498% at 09:41 am local time from the close of 1.7230% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 54 on Friday, compared with the close of 44 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1907 Mon; +0.11% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1907 on Monday, compared with 7.1992 set on Friday. The fixing was estimated at 7.2298 by Bloomberg survey today.
MNI: China CFETS Yuan Index Up 0.49% In Week of Nov 15
The CFETS Weekly RMB Index was 100.05 on Nov 15, up 0.49% compared with 99.56 as of Nov 8.
MARKET DATA
NEW ZEALAND OCT. BNZ SERVICES PSI 46; PRIOR 45.7
NEW ZEALAND Q3 PRODUCER OUTPUT PRICES +1.5% Q/Q; PRIOR 1.1%
NEW ZEALAND Q3 PRODUCER INPUT PRICES +1.9% Q/Q; PRIOR +1.4%
JAPAN SEPT. CORE MACHINE ORDERS -0.7% M/M; EST. +1.5%; PRIOR -1.9%
JAPAN SEPT. CORE MACHINE ORDERS -4.8% Y/Y; EST. +1.8%; PRIOR -3.4%
MARKETS
US TSYS: Tsys futures Steady, Ranges Narrow, Trump Weighing Up Tsy Secretary
- It has been an uneventful day in Tsys so far, range have been narrow, with little in the way of headlines. TU is -00¼ at 102-20⅝, while TY is -02 at 109-15, the contract remains in a bear trend, key support is 108-18+ (1.236 proj of the Oct 1 - 10 - 16 price swing), while resistance is seen at 109-30+ (Nov 13 highs).
- Cash tsys curves steepened heading into Friday's close, with yields -4.5bps to +3bps, there has been little to note during the Asian session today, with yields flat to 1bps lower. The 2yr is 0.4bps at 4.299% holding steady in the middle of the past weeks range, the 10yr is -0.4bps at 4.435%, after briefly hitting 4.50% on Friday. The 2s10s is unchanged at 13.193 after steepening +4.5bps on Friday, while the 5s30s is +1bp 31.558.
- Projected rate cuts have firmed slightly vs Friday morning's levels (*): Dec'24 cumulative -16.3bp (-15.6bp), Jan'25 -24.3bp (-22.5bp), Mar'25 -38.7bp (-36.3bp), May'25 -46.3bp (-43.6bp).
- Trump is deliberating his Treasury Secretary pick, with Kevin Warsh and Marc Rowan emerging as contenders alongside prior frontrunners Howard Lutnick and Scott Bessent. Trump seeks a candidate with significant wealth and Wall Street status while avoiding choices that could disrupt market momentum or oppose his economic agenda.
- The data calendar is light tonight, there will be a 3m & 6m note auction while Goolsbee is schedule to speak.
JGBS: Cash Bonds Slightly Cheaper, BOJ Ueda Cautious Uncertainties
JGB futures are holding stronger, +6 compared to the settlement levels, after shifting higher on BOJ Governor Ueda’s remarks to business leaders today.
- While Ueda maintained his stance that the bank will continue to raise the policy rate if the economy realises the BOJ's outlook for economic activity and prices, he slightly downplayed an imminent hike, noting the timing of adjustments "will continue to depend on developments in economic activity and prices as well as financial conditions going forward.”
- At a press conference underway in Nagoya, Governor Ueda emphasised the importance of carefully calibrated monetary policy. Key remarks included: "Rapid hikes could be needed without the right policy steps"; "The BOJ will examine the impacts of FX on the economic outlook" and "We will assess risks at every meeting and decide on policy accordingly." These comments underscore the BOJ’s cautious approach to navigating economic uncertainties.
- Cash US tsys are slightly richer across benchmarks in today’s Asia-Pac session.
- Cash JGBs are slightly cheaper across benchmarks. The benchmark 10-year yield is 0.5bp higher at 1.078% versus the cycle high of 1.108%.
- The swaps curve has twist-steepened, pivoting at the 20-year, with rates 3bps lower to 1bp higher. Swap spreads are tighter out to the 10-year.
- Tomorrow, the local calendar is empty apart from 1-year supply.
AUSSIE BONDS: Richer, Narrow Ranges, RBA Minutes Tomorrow
ACGBs (YM +5.0 & XM +3.0) are richer after dealing in narrow ranges in today’s data-light Sydney session.
- "Australia and other countries in the Asia-Pacific bloc must raise revenue and cut spending to ensure their budgets are prepared for the next global shock, and they need to embrace “ambitious” reform to lift growth and productivity, the International Monetary Fund says." (per AFR)
- "Goldman Sachs is urging investors to choose copper and aluminium over iron ore in 2025 as weak demand from China collides with an excess supply of Australia’s key export, keeping prices below $US100 a tonne." (per AFR)
- Cash US tsys are little changed across benchmarks in today’s Asia-Pac session after Friday’s bull-steepening.
- Cash ACGBs are 3-5bps richer with the AU-US 10-year yield differential at +17bps.
- Swap rates are 3-5bps lower, with the 3s10s curve steeper.
- The bills strip has bull-flattened, with pricing +1 to +6.
- RBA-dated OIS pricing is 1-6bps softer across meetings for 2025. No easing is priced by year-end, with a 25bp rate cut not fully priced until July.
- RBA Minutes for the November meeting are to be released tomorrow.
NZGBS: Closed Richer & Near Bests But Subdued Session
NZGBs closed richer and near session bests, with benchmark yields 3-4bps lower. NZ-US & NZ-AU 10-year yield differentials closed 1-2bps wider.
- Outside of the previously outlined PSI & PPI data, there hasn't been much by way of domestic drivers to flag.
- NZGBs held by international investors increased to 62% in October from 61.3% in September.
- Cash US tsys are little changed across benchmarks in today’s Asia-Pac session after Friday’s bull-steepening.
- Swap rates closed 3-5bps lower, with the 2s10s curve steeper.
- RBNZ-dated OIS pricing has little changed. A cumulative 88bps of easing is priced by February, with 51bps by year-end.
- Tomorrow, the local calendar is empty.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 3.0% Apr-29 bond, NZ$225mn of the 2.0% May-32 bond and NZ$75mn of the 1.75% May-41 bond.
FOREX: USD/JPY Volatile, But Little Net Change, Ueda Doesn't Give Dec Hike Hints
The BBDXY USD index is down modestly, but up from session lows. We were last near 1285, only off 0.05% versus Friday NY closing levels. Lows were near 1283 earlier, while we aren't too far away from session highs. Highs from last week in the index remain intact (around 1290).
- USD/JPY has seen the largest degree of volatility today, more than a 100pip range. Early bias, ahead of BoJ Governor Ueda's speech was lower, but we found support at 153.80/85 and rebounded to 155.14 as Ueda spoke. We sit back near 154.45 in latest dealings, only down a touch in yen terms for the session.
- The BoJ Governor spoke about further policy adjustments, if forecasts are realised, but didn't give a sense of urgency. This may mean a wait and see approach through the December meeting. The new year may provide more information around the 2025 wage outlook as well.
- US yields are down slightly at the front end of the curve, but not displaying sharp shifts. US equity futures are up after cash losses in Friday US trade
- AUD/USD is a touch higher, but has been range bound, last near 0.6465/70. It may be receiving modest support from higher commodity prices, with gold and iron ore up (the latter supported by firmer China steel production).
- NZD/USD is down a little, last near 0.5860. We had second tier data outcomes earlier, with the services PMI remaining in contraction territory.
- Later the Fed’s Goolsbee speaks and November NY Fed services and NAHB housing indices print. We also hear from the RBA's Kent. The ECB’s Lagarde, de Guindos, Lane and Buch also appear and euro area September trade data are out. BoE’s Greene speaks.
ASIA STOCKS: China & HK Equities Jump, Samsung Surges On Buyback News
Asian equities are mixed today. Japan's stocks fell as disappointing corporate earnings and caution ahead of the BoJ Governor's speech weighed on sentiment, alongside US Fed rate uncertainty. South Korea's Samsung surged on a surprise stock buyback, offsetting broader weakness in semiconductor stocks following concerns about Nvidia’s chip issues. Chinese and Hong Kong markets saw earlier losses however have seen traded higher, lingering concerns surrounding geopolitical tensions, deflation worries, and reduced optimism over Beijing's stimulus clouding sentiment have limited further upside so far though. In Australia, miners and gold stocks rose, supported by strong commodity prices, but banking sector losses capped gains.
- Japanese tech stocks are struggling today with Tokyo Electron down 2.25%, following concerns around Nvidia's chip issues, the Nikkei is 0.80% lower, while the broader TOPIX is 0.50% lower. Earlier, BoJ's Ueda spoke, he maintained a cautious, data-dependent stance on monetary policy, avoiding clear signals of a December rate hike, he emphasized that the timing of policy adjustments will depend on economic and price developments, as well as financial conditions.
- Chinese and Hong Kong stocks have rebounded following last week’s sharp declines, as optimism grew around China’s earnings and stimulus prospects. The HS China Enterprises Index is up 2%, led by gains in ENN Energy and JD.com, while the HSI advanced 1.7%, driven by Tencent, China Construction Bank, and HSBC. China onshore equities saw the CSI 300 Index climbed 1.6%, snapping a two-day loss after its worst weekly drop since July. The improvements in retail sales and property data, along with strong tech earnings look to be the major drivers for the moves, though continued concerns surrounding Trump's nominations could be limiting further upside.
- Foreign investors have been slightly better buyers of South Korea stocks this morning, however have been net sellers of tech stocks. The majority of inflows have been focused on financial stocks. The KOSPI is 2.10% higher, largely due to the jump higher from Samsung, which last trades up 5%. Taiwan equities are lower, as TSMC & Hon Hai trade lower following the 3.42% drop in the Philadelphia SE Semiconductor Index on Friday.
OIL: Weak Outlook Limits Crude’s Upside
After falling sharply on Friday oil prices are moderately higher today as commodity prices rise and the US dollar is little changed. WTI is up 0.4% to $67.27/bbl after a high of around $67.30 and Brent has risen 0.4% to $71.34, close to the intraday high. Crude has struggled to make up losses as supply/demand fundamentals continue to look weak with a market surplus forecast for 2025.
- With the appointment of fracking chief Wright as the next US energy secretary, an increase in US oil output looks even more likely under the next administration. OPEC may also increase its supply in 2025 as it delayed its own production increase to the end of December 2024.
- Apparently there is increasing pressure on Ukraine’s Zelensky to find a way to a peace deal with Russia. But Russia attacked Ukraine’s energy infrastructure across the country on the weekend and the US has given Ukraine permission to use its missiles to strike some sites on Russian territory.
- The market remains concerned over the strength of China’s crude demand. October product exports were weak with diesel shipments down 57.2% y/y and gasoline -12.8% y/y.
- Later the Fed’s Goolsbee speaks and November NY Fed services and NAHB housing indices print. The ECB’s Lagarde, de Guindos, Lane and Buch also appear and euro area September trade data are out. BoE’s Greene speaks.
GOLD: Strong Rebound After Worst Week Since 2021
Gold is trading 1% higher in today’s Asia-Pacific session, recovering some ground after closing marginally unchanged on Friday at $2,563.25. Despite the modest Friday performance, the metal ended the week around 4.5% lower, marking its largest weekly decline since 2021, driven by a stronger US dollar.
- On Friday, US Treasuries rallied off session cheaps as US equities weakened. The US 10-year rate was fractionally higher by the close at 4.44% after testing 4.50% early in Friday’s NY session. The US 2-year finished 4bps lower at 4.30% as rate-cut bets crept back in. Lower rates are typically positive for gold, which doesn’t pay interest.
- Fast two-way trade as US Treasury yields see-sawed higher on Friday after stronger than expected Retail Sales for October and up-revisions for prior. Meanwhile, import/export price indexes come out higher than expected, while Empire Mfg jumps to late 2021 levels.
- According to MNI’s technicals team, the move down has resulted in a breach of the 20- and 50-day EMAs, signalling scope for a deeper retracement towards $2,511.1 next, the Sep 18 low.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 18/11/2024 | 0815/0915 |  EU | ECB's De Guindos speech at 27th Euro Finance Week | |
| 18/11/2024 | 1000/1100 | * | EU | Trade Balance |
| 18/11/2024 | 1300/1400 | EU | ECB's Lane lecture on Inflation Expectations | |
| 18/11/2024 | 1315/0815 | ** |  CA | CMHC Housing Starts |
| 18/11/2024 | 1330/0830 | * | CA | International Canadian Transaction in Securities |
| 18/11/2024 | 1500/1000 | ** |  US | NAHB Home Builder Index |
| 18/11/2024 | 1500/1000 | US | Chicago Fed's Austan Goolsbee | |
| 18/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 18/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 18/11/2024 | 1830/1930 | EU | ECB's Lagarde on economic and human challenges | |
| 18/11/2024 | 1830/1830 |  GB | BOE's Greene Fireside Chat On The Future of Inflation | |
| 18/11/2024 | 2100/1600 | ** | US | TICS |
| 19/11/2024 | 0030/1130 |  AU | RBA Minutes | |
| 19/11/2024 | 0845/0945 | EU | ECB's Elderson at 10th Green Finance Forum | |
| 19/11/2024 | 0900/1000 | ** | EU | EZ Current Account |
| 19/11/2024 | 1000/1100 | *** | EU | HICP (f) |
| 19/11/2024 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 19/11/2024 | 1000/1000 | GB | BOE's Bailey, Lombardelli, Mann and Taylor at TSC |