Source: MNI - Market News/Bloomberg
UK
FINANCE (BBC): “UK public sector pension funds are not big enough to generate good returns for British savers, Chancellor Rachel Reeves has told the BBC. Her comments come as the government reveals plans to merge the UK's local government pension scheme, a group of funds which together manage £354bn in investments, into a handful of "pension megafunds".”
OIL (BBC): “The UK government has admitted in court that the country's largest untapped oilfield, Rosebank off Shetland, was approved unlawfully.”
EU
GERMANY (MNI BRIEF): Germany’s GDP will shrink by 0.1% in 2024 and grow by just 0.4% in 2025, with debt brake reform and special vehicles key to providing the additional fiscal headroom needed to boost spending in vital areas, the German Council of Economic Experts said in its Annual Report on Wednesday.
GERMANY (DW): “Tax relief, economic development, child benefit increases — those are just four of around 100 draft laws that have got stuck in the legislature since Olaf Scholz's coalition collapsed last week. The chancellor's government has been left high and dry now that his Social Democrats (SPD) and Greens no longer have a parliamentary majority.”
GERMANY (POLITICO): “In a speech to parliamentarians on Wednesday, Scholz said he stands by his decision not to supply Kyiv with long-range missiles that could be used to strike Russian territory, claiming the approach helped avoid escalating the war.”
FRANCE (POLITICO): “Prosecutors on Wednesday asked that far-right French lawmaker Marine Le Pen be found guilty of embezzlement, sentenced to prison and barred from running for public office — including the French presidency — for the next five years.”
UKRAINE (DW): “Outgoing US Secretary of State Antony Blinken sought to reassure allies in Brussels on Wednesday that the current administration in Washington would not waver in its support for Ukraine in the weeks that remain until Donald Trump returns to the White House.”
TRADE (POLITICO): “Mario Draghi and Emmanuel Macron delivered a sharp wake-up call to Brussels on Wednesday, insisting Europe needed to prepare fast for the impending second round of a trade war with Donald Trump.”
TRADE (POLITICO): “The trade accord that the European Union wants to strike with the Mercosur bloc of South American nations would be “disastrous” for French farmers, Prime Minister Michel Barnier said in Brussels on Wednesday, saying it should not be passed against his country’s will.”
US
FED (MNI BRIEF): Federal Reserve Bank of St. Louis President Alberto Musalem said Wednesday he will wait for more concrete details on President-Elect Donald Trump's policy proposals before adding them into his economic forecasts this year.
FED (MNI): Federal Reserve Bank of Dallas President Lorie Logan on Wednesday said the central bank will most likely need more rate cuts to finish the journey to sustainably deliver both maximum employment and stable prices, but it’s difficult to be sure how many cuts may be needed and how soon they may need to happen.
FED (MNI INTERVIEW): Fed Cuts To Continue But Neutral Not Far-Tracy
FED (MNI BRIEF): Kansas City Fed President Jeff Schmid on Wednesday repeated that even as the supply of government debt has jumped and is expected to continue growing at a very rapid rate it will not be inflationary because the central bank will achieve its 2% inflation objective.
CPI (MNI BRIEF): U.S. CPI inflation in October largely matched Wall Street expectations, printing a 0.244% increase for all items and 0.280% for core prices. Higher than expected energy costs boosted overall inflation to the high side of expectations for a 0.2% increase.
POLITICS (RTRS): “ President-elect Donald Trump on Wednesday named incendiary Republican U.S. Representative Matt Gaetz to be his nominee for attorney general, selecting an ally who has faced Justice Department scrutiny to run the agency.”
POLITICS (BBG): “South Dakota Senator John Thune, a longtime deputy of Mitch McConnell and an advocate of free trade, won election to lead the Republican Senate majority next year, setting up potential conflicts with President-elect Donald Trump over tariffs and Ukraine aid.”
OTHER
MIDDLE EAST (RTRS): “ Israeli airstrikes pounded Beirut's Hezbollah-controlled southern suburbs for a second consecutive day on Wednesday, as Lebanon waited to hear Washington's latest ceasefire proposals after a U.S. official expressed hope a truce could be reached.”
AUSTRALIA (MNI BRIEF): The unemployment rate remained at 4.1% in October, while the economy added 15,914 jobs, lower than the 25,000 market estimate, data released by the Australian Bureau of Statistics showed Thursday.
AUSTRALIA (MNI): RBA Rate On Track For Cuts, Trump Adds To Risk-Ex Staff
CHINA
MARKETS (SECURITIES DAILY): “Many of China’s major securities houses have expressed optimism over the outlook for the A-share market next year in their annual investment strategy report, Securities Daily said in a report Thursday.”
MARKETS (SHANGHAI SECURITIES NEWS): “Investors have been adding leverage to buy A-shares since late September, as reflected by a steady increase in the outstanding amount of margin debt balance on Shanghai, Shenzhen and Beijing bourses, according to a report by Shanghai Securities News.”
YUAN (BBG): “China moved to support the under-pressure yuan for a second day, through its daily reference rate for the managed currency.”
DEBT (BBG): “China just borrowed dollars in global credit markets at essentially the same cost as the country that prints them, and traders immediately drove the yields on the bonds down even further.”
CHINA MARKETS
MNI: PBOC Net Injects CNY309 Bln via OMO Thursday
The People's Bank of China (PBOC) conducted CNY328.2 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY309 billion after offsetting the maturity of CNY19.2 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6317% at 09:24 am local time from the close of 1.7038% on Wednesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Wednesday, compared with the close of 48 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1966 Thurs; +0.94% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1966 on Thursday, compared with 7.1991 set on Wednesday. The fixing was estimated at 7.2325 by Bloomberg survey today.
MARKET DATA
AUSTRALIA OCT. EMPLOYMENT +15.9K M/M; EST. +25.0K; PRIOR +61.3K
AUSTRALIA OCT. JOBLESS RATE 4.1%; EST. 4.1%; PRIOR 4.1%
AUSTRALIA OCT. FULL-TIME EMPLOYMENT +9.7K M/M; PRIOR +48.8K
AUSTRALIA OCT. PART-TIME EMPLOYMENT +6.2K M/M; PRIOR +12.5K
AUSTRALIA OCT. PARTICIPATION RATE 67.1%; EST. 67.2%; PRIOR 67.2%
AUSTRALIA MI INFLATION EXPECTATIONS NOV. +3.8% y/y; PRIOR +4.0%.
NEW ZEALAND OCT. FOOD PRICES -0.9% M/M; PRIOR +0.5%
NEW ZEALAND REINZ HOUSE SALES OCT. +20% Y/Y; PRIOR +3.2%
SOUTH KOREA MONEY SUPPLY L SEP. +0.7% M/M; PRIOR 0.0%
SOUTH KOREA MONEY SUPPLY M2 SEP. +0.2%; PRIOR +0.2%
MARKETS
US TSYS: Tsys Curve Bear-Steepens Ahead Of PPI & Powell
- Short-end tsys yields are edging higher and now trade at session highs, with investors cautious ahead of Jerome Powell's speech on the economic outlook later. The curve has bear-flattened with the 2yr is +3.4bps at 4.32% still within the weekly highs made overnight of 4.367%, the 10yr is +2.4bps at 4.475% and now trading at May 31 highs.
- Tsys futures are lower although the short-end still trades with yesterday's ranges with TU -02½ at 102-20⅛, while TY is -06+ at 109-07, and has broken below yesterday's lows.
- The 10yr yield has now climbed 88bps since the September lows of 3.60%
- The 2s10s curve has flattened at touch to 15.355bps after reaching a high of 17.6bps overnight, while the 2s30s is last -1.3bps at 33.2bps although trades 18bps off Nov 12 lows.
- Short end rates outperformed as projected rate cuts into early 2025 gained vs. early Wednesday levels (*) : Dec'24 cumulative -20.8bp (-15.5bp), Jan'25 -27.7bp (-23.0bp), Mar'25 -41bp (-35.1bp), May'25 -57.6bp (-41.3bp).
- Investors will be watching a host of speeches from Fed officials later including Jerome Powell, Alberto Musalem, Thomas Barkin and Adriana Kugler.
- Focus turns to PPI & Jobless claims later today
JGBS: Futures Near Session Lows, US PPI & Claims Data Due, Q3 GDP Tomorrow
JGB futures are holding weaker and near Tokyo session lows, -12 compared to settlement levels.
- Outside of the previously outlined weekly international investment flows, there hasn't been much by way of domestic drivers to flag.
- BOJ Deputy Governor Shinichi Uchida said the nation’s financial system has been maintaining stability with banks having sufficient capital bases and stable funding.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s twist-steepening. The US calendar sees PPI and jobless claims data later today.
- Cash JGBs have bear—steepened across benchmarks beyond the 1-year (+3.1bps), with yields flat to 3bps higher. The benchmark 10-year yield is 1.1bps higher at 1.061% versus the cycle high of 1.108%.
- The yield on the 30-year JGB rose as high 2.312% today, its highest level since March 2010. This came despite yesterday’s supply being comfortably absorbed. The 30-year auction saw the low price beat dealer expectations and the cover ratio edge up to 3.4353x from 3.3438x. However, the auction tail did lengthen.
- Swap rates are flat to 5bps higher, with a steeper curve. Swap spreads are mixed.
- Tomorrow, the local calendar will see Q3 GDP, Industrial Production, Capacity Utilization and Tertiary Industry Index data alongside 5-year supply.
AUSSIE BONDS: Twist-Steeper After Jobs Data, Focus On US PPI & Claims Data
ACGBs (YM flat & XM -3.0) are holding a bear-steepening after today’s employment report for October.
- It is not surprising that after five consecutive months of more than 30k new jobs, there would be payback at some point, especially in a month that includes school holidays. Employment in October printed below expectations at +15.9k with September revised down to 61.3k but the unemployment rate was steady at 4.1%. A tight labour market is consistent with the RBA on hold.
- MI consumer inflation expectations are heading in the right direction with the November reading moderating 0.2pp to 3.8%, the lowest since the pandemic-impacted February 2021.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s twist-steepening. The US calendar sees PPI and jobless claims data later today.
- Cash ACGBs are 1bp lower to 3bps cheaper with the AU-US 10-year yield differential at +22bps.
- Swap rates are flat to 3bps lower, with the 3s10s curve steeper.
- The bills strip is mostly richer, with pricing -1 to +2.
- RBA-dated OIS pricing is 1-3bps softer across 2025 meeting. A 25bps rate cut is not fully priced until August.
- Tomorrow, the local calendar is empty apart from the AOFM’s planned sale of A$700mn of the 4.75% 21 April 2027 bond.
NZGBS: Closed With A Twist-Steepening As US Tsys Weigh
NZGBs closed with a twist-steepening of the 2/10 curve. Benchmark yields finished 4bps lower to 4bps higher, with the NZ-US and NZ-AU 10-year yield differentials little changed.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s twist-steepening. The US calendar sees PPI and jobless claims data later today.
- Today’s weekly supply saw mixed results, with cover ratios ranging from 2.28x (May-35) to 4.12x (Apr-37).
- NZ released a number of monthly CPI series for October which account for around 40% of the total CPI index. Most major components posted a monthly rise but food prices posted their first drop since May, leaving the annual rate at 1.2%.
- With rental growth down on a year ago, food steady and petrol negative, the RBNZ is likely to be reassured that inflation should stay in the band in Q4. It will have updated forecasts at its November 27 meeting.
- Swap rates closed 2bps lower to 2bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing is 1-7bps softer across 2025 meetings. A cumulative 87bps of easing is priced by February, with 51bps by year-end.
- Tomorrow, the local calendar will see the BusinessNZ Manufacturing PMI.
FOREX: USD Juggernaut Rolls On, US PPI Up Later
The USD juggernaut rolls on, with the BBDXY index trending towards 1287 at the time of writing. This is fresh highs in the index back to Nov 2022.
- Firmer yields continue to underpin dollar strength. US benchmark Tsy yields are 2-3bps higher, led marginally by the front end. The 10yr yield is near 4.48%, fresh highs back to early July.
- This has weighed on the yen, with USD/JPY breaching the 156.00 handle. We are down around 0.40% in yen terms. SO far today, we haven't seen any fresh rhetoric from the Japan authorities around FX weakness. As we noted earlier, the continued rise in US yields and less short positioning in yen (compared to earlier in the yen) may blunt any intervention effectiveness in the near term.
- Focus could rest on 156.67, a projection level, while 157.86 was the July 19 high.
- AUD/USD is down close to 0.25%, last near 0.6465/70. This is fresh lows back to the intra-session sell off on Aug 5. Employment figures showed a slowdown in jobs growth but a steady unemployment rate.
- NZD/USD is closer to intra-session Aug 5 lows (0.5850), last near 0.5860. Earlier data showed mixed Oct inflation trends, but the RBNZ is still likely to be confident of the 1-3% inflation target being maintained in Q4.
- EUR/USD is back under 1.0550, fresh lows back to Nov last year.
- In the equity space, US equity futures are down a touch. In the regional Asia Pac space, trends are mixed. China and Hong Kong markets are lower, but losses are less than 1% at this stage. Japan and Australian markets are higher.
- Looking ahead, the Fed’s Powell, Kugler, Barkin and Williams speak and US October PPI and jobless claims print. The ECB’s Lagarde, de Guindos and Schnabel appear and the October meeting account is published. Preliminary Q3 euro area GDP & employment and September IP are released.
ASIA STOCKS: Asian Equities Edge Lower, Semiconductor Stocks Struggle
Asian equities are mixed today, the MSCI Asia Pacific is 0.40i% lower although it has been a quiet session with ranges tight. Japan, South Korea & Australian equities have edged up slightly higher driven by expectations that the Fed may lower interest rates in December after US inflation data aligned with forecasts. China, Hong Kong & Taiwan equities continue to struggle following announcement from Trump he will be appointing people critical of China to key government positions. On the data front, the focus was on Australian employment data which came in below expectations ending 5 consecutive months of more than 30k new jobs.
- Hong Kong shares slid amid thin volumes as the market stayed open despite signs of severe weather. Shares of Tencent Holdings rose as much as 2.8% after the Chinese tech giant posted better-than-expected earnings. Hong Kong & China Property stocks initially rose after the government announced measures including tax cut for homebuyers and developers, however pared gains with major benchmarks now lower, Mainland Property Index -2.25%, CSI 300 Real Estate Index -0.50%, BBG China Property Developer Gauge is -1.80%.
- Asia semiconductor shares continues to sell-off as investors concern grow on the sector’s outlook after Trump’s win. TSMC -0.50%, SK Hynix -5%, Hon Hai -0.50%, Tokyo Electron is 3.50% lower after Wednesday jump higher following strong earnings, while Samsung is 1.20% higher after hitting four-year lows on Wednesday.
- Foreign investors continue to sell South Korean equities, in particular Samsung which has seen -$520m of outflows. There has however been buying across Services, Transport & Machinery stocks, the KOSPI has seen net outflows of -$178m so far today.
- Japan's TOPIX +0.40%, Nikkei +0.10%. Hong Kong's HSI -0.9%, China's CSI 300 -0.30%. South Korea's KOSPI +0.50%. Taiwan's Taiex -0.35%. Australia's ASX200 +0.50%.
OIL: Crude Lower But In A Narrow Range Ahead Of US EIA Data & IEA Report
Oil prices have been range trading during today’s APAC session but are slightly lower as the US dollar continues to strengthen (USD BBDXY +0.1%) and the market is edgy ahead of Friday’s China October data dump. Brent is down 0.4% to $72.01/bbl, close to the intraday low, while WTI is 0.5% lower at $68.11/bbl.
- The market has worried about China’s demand for some time, as it has been the world’s largest crude importer, but the US EIA said in its report this week that India is now the largest consumer in Asia. A soft economy and increased EV use has reduced China’s demand.
- Bloomberg reported that US crude inventories fell 800k barrels last week, according to people familiar with the API data. Cushing saw a 1.9mn drawdown, while gasoline rose 300k and distillate 1.1k. The official EIA data is out later today.
- The IEA’s monthly report is also published today. It has been more pessimistic on the market outlook than OPEC and has been expecting a surplus in 2025 for some time.
- Later the Fed’s Powell, Kugler, Barkin and Williams speak and US October PPI and jobless claims print. The ECB’s Lagarde, de Guindos and Schnabel appear and the October meeting account is published. Preliminary Q3 euro area GDP & employment and September IP are released.
Gold is 0.5% lower in today’s Asia-Pac session, after closing 1.0% lower at $2572.98 on Wednesday. This came as the US dollar posted further gains, despite the softer-than-expected US supercore CPI inflation data.
- US Treasuries reversed course following in-line October CPI inflation data. The probability of a 25bp cut next month leapt to more than 80% from shy of 60% the previous session.
- US curves twisted steeper, with the 2-year yield finishing down 6bps versus a 2bp rise for the 10-year.
- Core CPI was exactly as expected at 0.35%, and basically unchanged from September (0.35%). However, supercore (core services ex housing) came in on the soft side at 0.31% vs 0.39% expected and 0.40% prior.
- Fed Musalem said he supports further interest rate cuts if inflation keeps falling, but added the risks that it doesn't have risen as the labour market stays healthy.
- Lower rates are typically positive for gold, which doesn’t pay interest.
- According to MNI’s technicals team, the latest pullback in gold appears to be corrective, but the recent weakness has brought the yellow metal below the 50-day EMA, at $2,642.0, signalling scope for a deeper retracement towards $2,547.0 the Sep 18 low.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 14/11/2024 | 0700/0800 | *** |  SE | Inflation Report |
| 14/11/2024 | 0800/0900 | *** |  ES | HICP (f) |
| 14/11/2024 | 0830/0930 |  EU | ECB's De Guindos remarks at event organised by ABC and Deloitte | |
| 14/11/2024 | 1000/1100 | *** | EU | GDP (p) |
| 14/11/2024 | 1000/1100 | ** | EU | Industrial Production |
| 14/11/2024 | 1200/0700 |  US | Fed Governor Adriana Kugler | |
| 14/11/2024 | 1230/1330 | EU | Publication of the ECB MonPol meeting account | |
| 14/11/2024 | - |  GB | Rachel Reeves’ debut Mansion House dinner speech as chancellor | |
| 14/11/2024 | 1300/1300 | GB | BOE's Mann at Revitalising the global economy event | |
| 14/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 14/11/2024 | 1330/0830 | *** | US | PPI |
| 14/11/2024 | 1415/0915 | US | Richmond Fed's Tom Barkin | |
| 14/11/2024 | 1530/1030 | ** | US | Natural Gas Stocks |
| 14/11/2024 | 1600/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 14/11/2024 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 14/11/2024 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 14/11/2024 | 1830/1930 | EU | ECB's Schnabel in panel on "Reassessing policy tools" | |
| 14/11/2024 | 1900/1400 | *** |  MX | Mexico Interest Rate |
| 14/11/2024 | 2000/1500 | US | Fed Chair Jerome Powell | |
| 14/11/2024 | 2100/2100 | GB | BOE's Bailey speech at Mansion House | |
| 14/11/2024 | 2115/1615 | US | New York Fed's John Williams | |
| 15/11/2024 | 2350/0850 | *** |  JP | Japan GDP 1st Estimate |
| 15/11/2024 | 0200/1000 | *** |  CN | Fixed-Asset Investment |
| 15/11/2024 | 0200/1000 | *** | CN | Retail Sales |
| 15/11/2024 | 0200/1000 | *** | CN | Industrial Output |
| 15/11/2024 | 0200/1000 | ** | CN | Surveyed Unemployment Rate M/M |
| 15/11/2024 | 0430/1330 | ** | JP | Industrial Production |
| 15/11/2024 | 0700/0800 | ** | SE | Unemployment |
| 15/11/2024 | 0700/0700 | ** | GB | UK Monthly GDP |
| 15/11/2024 | 0700/0700 | *** | GB | GDP First Estimate |
| 15/11/2024 | 0700/0700 | ** | GB | Index of Services |
| 15/11/2024 | 0700/0700 | *** | GB | Index of Production |
| 15/11/2024 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 15/11/2024 | 0700/0700 | ** | GB | Trade Balance |
| 15/11/2024 | 0730/0730 | GB | DMO to publish FQ4 (Jan-Mar) gilt operations calendar | |
| 15/11/2024 | 0745/0845 | *** |  FR | HICP (f) |
| 15/11/2024 | 0800/0900 | * |  CH | CH Flash GDP |
| 15/11/2024 | 0900/1000 | ** |  IT | Italy Final HICP |
| 15/11/2024 | 1330/0830 | ** | US | Import/Export Price Index |
| 15/11/2024 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 15/11/2024 | 1330/0830 | ** | CA | Wholesale Trade |
| 15/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 15/11/2024 | 1330/0830 | *** | US | Retail Sales |
| 15/11/2024 | 1330/0830 | ** | US | Empire State Manufacturing Survey |