Source: MNI - Market News/Bloomberg
UK
POLITICS (POLITICO): “In a major foreign affairs-focused speech in the City of London, Starmer said his fledgling Labour government will continue to seek closer ties with a Trump-led United States — which is mulling tariffs on its traditional allies — and European capitals.”
EU
FRANCE (BBC): “French Prime Minister Michel Barnier faces a vote of no confidence in his minority government after using special powers to push through a social security budget bill without a vote by MPs. The government is unlikely to survive the vote, which was triggered this afternoon by the radical left France Unbowed (LFI) opposition party and Marine Le Pen's far-right National Rally (RN). It is likely to take place on Wednesday.”
NATO (INDEPENDENT): “Shoring up allied support for Ukraine ahead of President-elect Donald Trump 's return to the White House in January will top the agenda at NATO foreign ministers meetings in Brussels on Tuesday and Wednesday, according to the State Department.”
GERMANY (POLITICO): “German Chancellor Olaf Scholz vowed his country would continue providing military aid to Ukraine during a surprise visit to Kyiv on Monday, even as he faced criticism at home for sending mixed signals on the war amid an election campaign.”
ROMANIA (POLITICO): “Constitutional Court rules no fraud occurred in first round of presidential election, sending nationalist candidate Călin Georgescu to runoff in pole position.”
GEORGIA (POLITICO): “Estonia, Latvia and Lithuania imposed sanctions on Georgia’s ruling officials following the violent crackdown on anti-government protesters in Tbilisi.”
US
FED (MNI): Federal Reserve Governor Chris Waller said Monday that slowing inflation and a moderating but still-solid economy has him leaning towards another interest-rate cut at this month's FOMC meeting, continuing the work of returning monetary policy to a more neutral setting.
FED (MNI): New York Fed President John Williams said Monday he expects continued interest-rate reductions over time to a more neutral setting, and didn't comment specifically on the December FOMC meeting.
FED (MNI): Federal Reserve Bank of Atlanta President Raphael Bostic said Monday he remains confident inflation is slowing but is uncertain how restrictive monetary policy needs to be.
MANUFACTURING (MNI INTERVIEW): US Factory Activity On Path For Growth - ISM
OTHER
MIDDLE EAST (RTRS): “Hundreds of Iran-backed Iraqi fighters crossed into Syria on Monday to help the government fight rebels who seized Aleppo last week, but Lebanon's Hezbollah has no plans for now to join them, according to sources.”
ISRAEL (BBG): “The Israel Defense Forces said the country “remains obligated” to a US-backed ceasefire after carrying out airstrikes in Lebanon Monday in response to Hezbollah’s first attack under the truce, shrugging off fears that the agreement might collapse.”
CANADA (MNI): Expanding Bank of Canada secondary market debt operations begun during QE to more regular balance-sheet management would align policy with global peers, and perhaps help show monetary policy independence, according to staff briefings MNI obtained through a freedom of information request.
JAPAN (BBG): “Japan could use a wake-up call over its mountain of debt through credit rating firms warning of the potential for cuts to sovereign bond ratings, according to a government advisor.”
CHINA
POLICY (PBOC): “The People’s Bank of China will keep monetary policy supportive in 2025, while increasing countercyclical regulation, maintaining reasonable liquidity and reducing financing costs for enterprises and residents, Governor Pan Gongsheng said at a recent forum.”
CPI (SECURITIES DAILY): “Analysts expect China’s November CPI to grow moderately, ranging from 0.15% to 0.6% y/y, compared to October’s 0.3%, Securities Daily reported. Declining food prices amid better weather and supply, falling prices of crude oil, industrial raw materials, metals and other commodities will weigh down CPI, the newspaper said citing analysts.”
YUAN (BBG): Traders defied China’s efforts to support the yuan, sending the currency to a one-year low on bets policymakers will have to ease monetary policy further due to lackluster growth and the risk of higher US tariffs.
CHINA MARKETS
MNI: PBOC Net Drains CNY248 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY51.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY248 billion after offsetting the maturity of CNY299.3 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5755% at 9:50 am local time from the close of 1.6054% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 49 on Monday, compared with the close of 48 last Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1996 Tue; -1.92% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1996 on Tuesday, compared with 7.1865 set on Monday. The fixing was estimated at 7.2691 by Bloomberg survey today.
MARKET DATA
UK NOV. BRC LIKE-FOR-LIKE RETAIL SALES -3.4% Y/Y; EST. +0.6%; PRIOR +0.3%
AUSTRALIA Q3 NET EXPORTS ADD 0.1% PTS TO GDP; EST. 0.3%; PRIOR +0.2PP
AUSTRALIA Q3 CURRENT ACCOUNT DEFICIT A$14.149B; EST. -A$10.9B; PRIOR –A$16.4B
AUSTRALIA Q3 PUBLIC SECTOR DEMAND TO CONTRIBUTE 0.7%-PT TO GDP; PRIOR +0.4PP
NEW ZEALAND Q3 MERCHANDISE TERMS OF TRADE +2.4% Q/Q; EST. +1.3%; PRIOR +2.1%
NEW ZEALAND Q3 MERCHANDISE EXPORT VOLUMES -1.8% Q/Q; PRIOR -4.3%
NEW ZEALAND Q3 MERCHANDISE IMPORT VOLUMES +3.0% Q/Q; PRIOR +3.6%
JAPAN NOV. MONETARY BASE -0.3% Y/Y; PRIOR -0.3%
SOUTH KOREA NOV. CONSUMER PRICES +1.5% Y/Y; EST. +1.7%; PRIOR +1.3%
SOUTH KOREA NOV. CONSUMER PRICES -0.3% M/M; EST. -0.1%; PRIOR 0.0%
SOUTH KOREA NOV. CPI EX FOOD & ENERGY +1.9% Y/Y; EST. +1.9%; PRIOR +1.8%
MARKETS
US TSYS: Yields Higher on a Data Heavy Week.
- US cash bonds saw yields +0.5 – 2bps higher across the curve today in Asia with the intermediate maturities the worst performers.
- US 5-year +1.4bp at 4.102% and the US 10-year at 4.209% +1.5bp and the 30 year +1.7bp to 4.38% with the 2s10s curve +1bp steeper.
- The US 10YR Note Mar 25 was -03 lower today in Asia trading at 111-0 having opened at 111-03
- Data tonight will focus on JOLTS job openings, and MBA Mortgage Applications.
JGBS: Cash Bonds Little Changed Despite Weak 10Y Auction
JGB futures are holding an uptick, +2 compared to settlement levels, on a data-light session.
- The 10-year JGB auction delivered disappointing results, with the low price falling short of expectations at 98.34. Additionally, the cover ratio dipped and the tail lengthened.
- This came despite the auction offering an outright yield 10bps higher than last month, just below the July cyclical high. However, the 2s/10s yield curve had flattened to near its lowest point since mid-2023.
- Weaker sentiment toward global long-end bonds—though somewhat improved from two weeks ago—and expectations of further near-term tightening by the BOJ appear to have weighed on demand.
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session. Focus now turns to Wednesday's ADP private employment and ISM data ahead of Friday's non-farm payroll release.
- Cash JGBs are slightly mixed across benchmarks. The benchmark 10-year yield is 0.3bp higher at 1.083% after today’s supply.
- The swaps curve has bear-steepened, with rates flat to 2bps higher.
- Tomorrow, the local calendar will see Jibun Bank PMI Composite & Services alongside BOJ Rinban Operations covering 1-5-year and 10-25-year OTR JGBs.
- The next major release will be on Friday's wages data. Next week delivers Q3 GDP revisions then the Tankan survey is out on 13 December.
AUSSIE BONDS: Richer, AU-US 10Y Diff. Tighter, Q3 GDP Tomorrow
ACGBs (YM +2.0 & XM +2.5) are richer but off Sydney session bests.
- The net export contribution to growth in Q3 was 0.1pp, less than expected, but the strongest public demand contribution since Q1 2022 means that GDP forecasts are likely to be little changed or maybe skewed to the upside.
- Real public demand grew 2.4% q/q after 0.9% in Q2. It is expected to contribute 0.7pp to GDP tomorrow. The increase was driven by state & local government expenditure and public GFCF.
- Cash US tsys are slightly cheaper in today’s Asia-Pac session. Focus now turns to Wednesday's ADP private employment and ISM data ahead of Friday's non-farm payroll release.
- Cash ACGBs are 2-3bps richer with the AU-US 10-year yield differential at +10bps.
- Swap rates are 2bps lower.
- The bills strip has bull-flattened, with pricing flat to +3.
- RBA-dated OIS pricing is flat 4bps softer for 2025 meetings. A 25bps rate cut is not fully priced until May.
- Tomorrow, the local calendar will see S&P Global PMI Composite & Services and Q3 GDP data alongside AOFM’s planned sale of A$700mn of the 3.25% 21 April 2029 bond. The AOFM also plans to sell A$800mn of the 3.75% 21 April 2037 bond on Friday.
BONDS: NZGBS: Bull-Flattener, NZ-US 10Y Diff. Near Lowest Since Mid-2021
NZGBs closed showing a bull-flattener, with benchmark yields flat to 4bps lower.
- The NZGB 10-year slightly outperformed on the day, with the NZ-US and NZ-AU 10-year differentials 1-2bps tighter. At +10bps, the NZ-US differential sits near its tightest levels since mid-2021.
- NZ export volumes fell for a second straight quarter, adding to signs of a mid-year recession. Exports of goods dropped 1.8% in the third quarter from the previous three months, Statistics New Zealand said. Imports rose 3%, meaning net exports — which are comparable to measures used in the gross domestic product report — fell 4.8% from the second quarter, when they dropped 7.9%. (per BBG)
- Swap rates closed 3-7bps lower.
- RBNZ dated OIS pricing closed flat to 2bps softer, with late-2025 leading. 42bps of easing is priced for February, with a cumulative 94bps by November 2025.
- Tomorrow, the local calendar will see ANZ Commodity Prices. The RBNZ also appears before a Select Committee for its Annual Review.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 3.00% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% Apr-37 bond.
FOREX: USD Ticks Up, Yen Down Modestly On Firmer US Yields/Higher Equities
The USD is up against all of the G10 currencies, albite to varying degrees. The BBDXY index was last +0.15% firmer, above the 1283 level, but still sub intra-session highs from Monday.
- Aggregate G10 moves have been fairly modest. Yen has given back some of Monday's outperformance, at the margins. USD/JPY was last near 150.15/20, up around 0.35%. Earlier lows were at 149.50.
- US yields have ticked higher as the session progressed, with the back end slightly firmer, up a little over 1.5bps. Regional equities have mostly tracked higher, aided by tech/chip stocks. US chip curbs on China were not as harsh as feared.
- This has likely aided higher beta plays against the yen, albeit at the margins.
- AUD/USD is still down for the session, last near 0.6470. NZD/USD is underperforming, off 0.20% to 0.5875/80, but is up from earlier lows of 0.5864.
- USD/CNH has broken higher, above 7.3000, reaching fresh YTD highs. This has been another constraint on AUD and NZD trends.
- On the data front, in Australia, Q3 net exports contributed 0.1pp, less than expected, and public demand 0.7pp to GDP growth. Q3 GDP is out tomorrow. In NZ the terms of trade improved, but good export volumes were weak.
- Looking ahead, the Fed’s Daly, Kugler & Goolsbee and ECB’s Cipollone speak. In terms of data, US October job openings and Spanish November unemployment print.
ASIA STOCKS: Stocks Perform Well on Less US Restrictions.
- A generally good day across Asian equity markets with the KOSPI the outperformer as the new restrictions from the Biden administration on tech exports were not as punitive as feared.
- The tech heavy KOSPI rose 1.60% as a weak CPI release suggested that the BOK may be forced to cut rates more than many expected.
- China equities were weaker as the Yuan fixing was at the weakest level in over a year, suggesting the economy is weaker than expected.
- China Equity markets were mixed today despite the supportive words from the PBOC Governor. CSI 300 flat, Hang Seng +0.36%, Shanghai +0.20% and Shenzhen -0.02%.
- Indonesia’s Jakarta Composite shrugged off four straight days of losses to bounce up by +1.35% today following comments by the BI governor that pointed to rates being stable.
- In Malaysia, following on from yesterday’s directionless day, the FTSE Bursa Malaysia KLCI faired only marginally better today up +0.22%.
- India’s NIFTY 50 is putting in a second day of performance up +0.60% following solid PMI data.
OIL: Crude Range Trading Pressured By Stronger US Dollar
Oil prices have been trading in a narrow range and are off their intraday lows to be down slightly on the day. WTI is down 0.1% to $68.18/bbl after a low of $67.91 and Brent is 0.1% lower at $71.93/bbl after falling to $71.68. The stronger US dollar continued to pressure crude (USD BBDXY +0.1%) offsetting mild optimism from China’s manufacturing PMI.
- Cold weather in Europe has increased heating demand boosting natural gas prices, but also distillate which includes heating oil.
- US industry-based inventory data is out later today. Crude stocks have been declining but products rising. The official EIA figures are on Wednesday.
- The focus of the week will be Thursday’s OPEC+ meeting, where it seems likely that supply increases will be pushed out into Q1, and Friday’s US payrolls report.
- Later the Fed’s Daly, Kugler & Goolsbee and ECB’s Cipollone speak. In terms of data, US October job openings and Spanish November unemployment print.
GOLD: Treading Water Ahead of Big Week for US Data.
- Gold traded in a very narrow range over night in a week that could determine the outcome of the last meeting for the year for the Federal Reserve on December 19.
- Gold started the US trading day at $2,643.13, headed lower to $2,622 before finishing at $2,639.
- It opened slightly firmer in Asia’s trading morning.
- Gold markets are watching for indications from the US data as to whether the Federal Reserve will cut rates at it’s December meeting, a move that should benefit gold.
- Yesterday’s announcement that Australia’s biggest gold miner, Northern Star, was buying its rival De Grey mining for $5 billion could be the start of a round of consolidation in the gold industry.
- The potential uncertainty that is emanating from the White House and incoming President’s policies has driven investors to gold thereby giving the bigger mining companies the cashflow to take out their rivals.
- Central Banks and Hedge funds are among the investors that are adding to their gold allocations, with the latter holding the biggest long positions since early November.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 03/12/2024 | 0700/0200 | * |  TR | Turkey CPI |
| 03/12/2024 | 0730/0830 | *** |  CH | CPI |
| 03/12/2024 | 0800/0900 |  EU | ECB's Cipollone at GeoEconomy Talk | |
| 03/12/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 03/12/2024 | - | *** |  US | Domestic-Made Vehicle Sales |
| 03/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 03/12/2024 | 1500/1000 | *** | US | JOLTS jobs opening level |
| 03/12/2024 | 1500/1000 | *** | US | JOLTS quits Rate |
| 03/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 03/12/2024 | 1735/1235 | US | Fed Governor Adriana Kugler | |
| 03/12/2024 | 1830/1330 | US | Chicago Fed's Austan Goolsbee | |
| 03/12/2024 | 2045/1545 | US | Chicago Fed's Austan Goolsbee | |
| 04/12/2024 | 2200/0900 | * |  AU | S&P Global Final Australia Services PMI |
| 04/12/2024 | 2200/0900 | ** | AU | S&P Global Final Australia Composite PMI |
| 04/12/2024 | 0030/1130 | *** | AU | Quarterly GDP |
| 04/12/2024 | 0030/0930 | ** |  JP | S&P Global Final Japan Services PMI |
| 04/12/2024 | 0030/0930 | ** | JP | S&P Global Final Japan Composite PMI |
| 04/12/2024 | 0145/0945 | ** |  CN | S&P Global Final China Services PMI |
| 04/12/2024 | 0145/0945 | ** | CN | S&P Global Final China Composite PMI |
| 04/12/2024 | 0815/0915 | ** |  ES | S&P Global Services PMI (f) |
| 04/12/2024 | 0815/0915 | ** | ES | S&P Global Composite PMI (final) |
| 04/12/2024 | 0845/0945 | ** |  IT | S&P Global Services PMI (f) |
| 04/12/2024 | 0845/0945 | ** | IT | S&P Global Composite PMI (final) |
| 04/12/2024 | 0850/0950 | ** |  FR | S&P Global Services PMI (f) |
| 04/12/2024 | 0850/0950 | ** | FR | S&P Global Composite PMI (final) |
| 04/12/2024 | 0855/0955 | ** |  DE | S&P Global Services PMI (f) |
| 04/12/2024 | 0855/0955 | ** | DE | S&P Global Composite PMI (final) |
| 04/12/2024 | 0900/1000 | ** | EU | S&P Global Services PMI (f) |
| 04/12/2024 | 0900/1000 | ** | EU | S&P Global Composite PMI (final) |
| 04/12/2024 | 0900/1000 | EU | ECB's Cipollone speech on behavioural financial regulations | |
| 04/12/2024 | 0900/0900 | GB | BOE's Bailey keynote interview at the FT Boardroom | |
| 04/12/2024 | 0930/0930 | ** | GB | S&P Global Services PMI (Final) |
| 04/12/2024 | 0930/0930 | *** | GB | S&P Global/ CIPS UK Final Composite PMI |
| 04/12/2024 | 1000/1100 | ** | EU | PPI |
| 04/12/2024 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 04/12/2024 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 04/12/2024 | 1315/0815 | *** | US | ADP Employment Report |
| 04/12/2024 | 1330/1430 | EU | ECB's Lagarde statement at ECON hearing | |
| 04/12/2024 | 1345/0845 | US | St. Louis Fed's Alberto Musalem |