Source: MNI - Market News/Bloomberg
UK
EU (BBC): “The UK government is hiring a new negotiator to help deliver a “reset” of relations with Europe.”
RUSSIA (BBC): “Russia is ready to carry out cyber attacks on the United Kingdom and other allies in a bid to weaken support for Ukraine, a senior minister will warn later.”
US (BBC): “A number of unidentified drones have been spotted over three airbases in Britain, the United States Air Force (USAF) has confirmed.”
EU
ECB (MNI BRIEF): Falling inflation makes it possible for the ECB to make further cuts in interest rates, Bank of France Governor Francois Villeroy said in an interview published Sunday.
NATO (POLITICO): “In a statement published Saturday, NATO said the two met in Palm Beach and discussed “the range of global security issues facing the alliance.” The meeting appeared to be the first time Rutte has met with Trump since the former president’s reelection earlier this month.”
FRANCE (BBC): “Jean-Noël Barrot said that Ukraine could fire French long-range missiles into Russia "in the logics of self defence", but would not confirm if French weapons had already been used.”
GERMANY (DW): “European Parliament President Roberta Metsola said the results of the upcoming German snap elections would be a "litmus test for all of Europe" as the far-right AfD and left-wing, anti-migrant BSW gain in opinion polls.”
RUSSIA (POLITICO): “Moscow will continue using a powerful new missile in its war against Ukraine, Russian President Vladimir Putin said amid a major escalation in the conflict.”
ROMANIA (RTRS): “A Romanian hard-right NATO critic and leftist Prime Minister Marcel Ciolacu appeared in dead heat after the first round of presidential elections on Sunday, partial tallies showed, in a shock result threatening Romania's staunchly pro-Ukraine stance.”
US
DOLLAR (BBG): “ The selection of Scott Bessent as the next Treasury Secretary has fueled a rally in currencies around the world, as traders trim bets that the return of Donald Trump will send tremors throughout global markets.”
POLITICS (BBG): “ Scott Bessent, the veteran hedge fund manager who Donald Trump picked to become the next Treasury secretary, wants tariffs, a shadow chair for the Federal Reserve and maybe a weaker dollar.”
POLITICS (WSJ): Scott Bessent spent the past 40 years studying economic history. Now, as Donald Trump's choice to lead the Treasury Department, he has the chance to make his mark on it.
FED (MNI BRIEF): The Federal Reserve said Friday it sees financial sector leverage and rising consumer delinquencies among lower-income borrowers as key risks to financial stability.
FED (MNI): The Federal Reserve will stick to its 2% inflation target as part of its 2025 framework review and focus on the Statement on Longer-Run Goals and Monetary Policy Strategy and its communications tools, according to a statement released Friday.
FED (MNI): The Federal Reserve’s monetary policymaking process could be enhanced by the use of artificial intelligence tools that act as a crosscheck on sometimes unreliable or frequently revised economic data, Fed Governor Michelle Bowman said Friday.
OTHER
MIDDLE EAST (RTRS): “Iran is preparing to "respond" to Israel, Ali Larijani, a senior adviser to the country's supreme leader, said in an interview published by Iran's Tasnim news agency on Sunday.”
IRAN (BBG): “Iran plans to hold talks about its nuclear program with the UK, France and Germany this week, Kyodo reported on Sunday, citing Iranian diplomatic sources who weren’t identified.”
CHINA
POLICY RATE (BBG): “China’s central bank kept a policy loan rate unchanged after last cutting it in September, as the authorities stay patient in ramping up monetary stimulus.”
CHINA MARKETS
MNI: PBOC Net Injects CNY76.7 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY249.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY76.7 billion after offsetting the maturity of CNY172.6 billion today. PBOC conducted another CNY900 billion via 1-year MLF today with rate at 2.00%, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6899% at 09:49 am local time from the close of 1.6451% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 55 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 7.1918 Mon; -1.35% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1918 on Monday, compared with 7.1942 set on Friday. The fixing was estimated at 7.2422 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND RETAIL SALES VOLUMES Q3 -0.1% Q/Q; EST. -0.5%; PRIOR -1.2%
NEW ZEALAND TRADE BALANCE OCT -NZ$1544M; PRIOR –NZ$2154M
NEW ZEALAND TRADE BALANCE YTC OCT –NZ$8956M; PRIOR –NZ$9145M
MARKETS
US TSYS: Tsys Futures Hold Onto Gains, Curve Bull-Flattens On Bessent Nom
- Tsys futures rallied this morning following Scott Bessent being announced as the Treasury Secretary nomination, the market views him as taking a more phased approach on tariffs and attempting to rein in the budget deficit. TU is 01⅝ at 102-18+, while TY is +11+ at 110-00 both near session's best levels.
- The 10y futures contract is still trading below initial resistance of 110-06 (20-day EMA), and remains in the bear trend for now, support holds at 108-30 (Nov 15 lows).
- There has been little else driving the markets today, Gold is lower following a strong rally late last week, while equity futures are slightly higher, however have traded in narrow ranges post the open.
- Cash tsys are trading 3-5.5bps richer this morning, the 2yr is trading -3.2bps at 4.341% while the 10yr is -5.3bps at 4.347%. Curves have bull-flattened with the 2s30s 1.5bps lower at 19.25, this follows a 4bps flattening move on Friday. The 2s10s briefly inverted earlier hitting -0.186, but is now back at 0.632
- In the week to Nov. 19, hedge funds unwound $15.6m/DV01 in short positions across 2-, 5-, and 10-year Treasury notes and $5.2m/DV01 in ultra-long bonds, while asset managers reduced $4.9m/DV01 in long-bond positions but increased $3.3m/DV01 in ultra 10-year note futures. In SOFR futures, hedge funds cut $5m/DV01 in net longs to their lowest since July, as asset managers made minor additions to net long positions.
- Later today we have Chicago Fed Nat Activity Index & Dallas Fed Manf. Activity
JGBS: Subdued Dealings In A Data-Light Session
JGB futures are holding stronger and near the mid-point of today’s Tokyo session range, +9 compared to settlement levels.
- Coincident & Leading Indices have just printed at 115.3 and 109.1 respectively.
- Today, the local calendar will also see Nationwide Dept Sales alongside an Enhanced Liquidity Auction covering 1-5-year JGBs.
- Cash US tsys are 3-5bps richer in today’s Asia-Pac session after Trump announced Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with consensus thinking he will be positive overall for the economy and markets.
- The swap markets gives a better-than-even chance of the BOJ lifting its benchmark interest rate next month.
- “Interest rates strategists are concerned about a potential spike in yields because they judge that a move by the BOJ at its Dec. 18-19 meeting would bring another increase into view as soon as April, and investors have not positioned for this yet.” (per BBG)
- Cash JGBs are flat to 1bp richer across benchmarks beyond the 1-year.
- Swap rates are flat to 1bp lower out to the 10-year but 4bps higher for the 20-30-year zone. Swap spreads are little changed apart from the 4bps widening in the 20-30-year zone.
- Tomorrow, the local calendar will see PPI Services data.
AUSSIE BONDS: Richer, This Week’s Focus Is On CPI & RBA Gov. Bullock Speech
ACGBs (YM +4.0 & XM +6.0) are richer but sitting mid-range on a data-light Sydney session.
- The local calendar is empty until October’s CPI on Wednesday and RBA Governor Bullock’s speech at 1955 AEDT on Thursday at the CEDA Conference.
- October headline CPI is projected to pick up to 2.3% y/y from 2.1%. It is the first month of the quarter and so there won’t be updates for most services.
- Cash US tsys are 4-6bps richer in today’s Asia-Pac session after Trump announced Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with consensus thinking he will be positive overall for the economy and markets.
- Cash ACGBs are 5-7bps richer with the AU-US 10-year yield differential at 13bps.
- Swap rates are 3-5bps lower with the 3s10s curve flatter and EFPs wider.
- The bills strip has twist-flattened with pricing -1 to +3.
- RBA-dated OIS pricing is 1-4bps softer across 2025 meetings, with no easing priced by year-end. A 25bps rate cut is not fully priced until July.
- This week, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday.
NZGBS: Very Strong Session, Focus On Wednesday’s RBNZ Policy Decision
NZGBs closed 10-11bps richer, with the 10-year outperforming its $-bloc counterparts.
- This move came despite Q3 retail sales volumes falling less than expected and less than in Q2, which saw a sharp fall of 1.2% q/q. Q3 was down 0.1% q/q and 2.7% y/y.
- However, ten of the fifteen retail sectors contracted in the quarter, signalling that household spending remains very weak as monetary policy is still restrictive and the 75bp of easing to date will take time to feed through to consumers.
- NZGB’s strength today was also aided by cash US tsys, which are 4-6bps richer in today’s Asia-Pac session, following Trump’s announcement of Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with the market of consensus he will be positive overall for the economy and markets.
- Swap rates closed 9bps lower.
- RBNZ dated OIS pricing closed 1-5bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps for this Wednesday.
- Tomorrow, the local calendar is empty ahead of the RBNZ policy decision on Wednesday.
- On Thursday, 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.
GOLD: Weaker Today After Beast Week Since March 2023
Gold prices rose by 1.7% on Friday, closing at $2,716.19, marking a fifth consecutive day of gains. This rally brought the week's total increase to approximately 6%, the largest weekly rise since March of last year, according to Bloomberg.
- However, in today's Asia-Pacific session, bullion has dipped 0.7%, as US equities and Treasury yields climb. The shift follows news that Donald Trump has selected Scott Bessent as Treasury Secretary. Bessent is seen as a measured and stabilizing choice, potentially boosting confidence in the US economy and financial markets.
- With gold’s reversal higher extending, the yellow metal has pierced $2,710.4, the Nov 11 high on Friday, opening $2,730.4, a Fibonacci retracement, according to MNI’s technicals team.
OIL: Crude Down Moderately After Rising Strongly Last Week
Oil prices are down moderately during APAC trading today after rising around 6% last week driven by geopolitical developments. Profit-taking seems to be driving today’s move. Brent is down 0.4% to $74.89/bbl after a low of $74.79, and WTI is also 0.4% lower at $70.94/bbl following a drop to $70.83. The softer greenback hasn’t been able to support dollar-denominated crude (USD index -0.5%).
- A crude surplus is widely expected in 2025 and markets will likely focus on that again if geopolitics move to the background. OPEC has already delayed the start of its output normalisation twice and currently the gradual increase in supply is due to start at the end of December. The group meets on December 1 and many are expecting the reduction in output cuts to be pushed out into 2025.
- Iran declared that it will increase its nuclear fuel-making capability after being reproached by the International Atomic Energy Agency. Talks with Europe are scheduled to begin later this week. Stricter sanctions against Iran, including more diligent enforcement of current ones, under the Trump administration are expected which could reduce global supply by around 1mbd.
- The conflict between Russia and Ukraine also risks Russian oil infrastructure.
- Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.
ASIA STOCKS: Asian Equities Edges Higher Following Bessent Nomination
Asian equity markets are broadly higher today, driven by optimism over US economic resilience and favorable policy expectations under the incoming Trump administration. Japanese stocks gained as exporters and domestic demand-related sectors, such as rail operators, advanced on strong U.S. business activity data and activist fund interest. In China, modest gains reflect relief over a measured Treasury Secretary nomination, though concerns linger over the need for stronger stimulus to sustain momentum after a tech-driven selloff last week. Australian shares hit a record high, led by property and mining sectors. South Korea's KOSPI climbed, supported by institutional buying and gains in tech heavyweights like Samsung Electronics. Meanwhile, renewable energy stocks across Asia rose after COP29 agreements on increased climate funding.
- Hong Kong listed equities are slightly outperforming mainland China equities with the HSI +0.25%, while the CSI 300 trades just +0.10%. Chinese tech stocks are still struggling somewhat with the CSI 300 Tech Index -1.70%, while the HSTech Index trades flat.
- Asia semiconductor stocks have jumped higher with the BBG Asia Semiconductor Index up 1%, led by a 3.80% jump from Tokyo Electron and a 2.50% move higher from Samsung.
- Foreign investors were better buyers of South Korean stocks on Friday and have continued to buy although only smalls this morning, however the region has seen outflows of $2b over the past two weeks.
- US equity futures are trading higher today, with gains coming on the back of the nomination of Scott Bessent as Treasury Secretary. Dow futures +0.57%, S&P 500 +0.45% while NASDAQ 100 futures are +0.53%
EQUITIES: China & HK Equities Struggle, Investors Hope For Further Stimulus
The continued underperformance of Chinese and Hong Kong equities, following last week's sharp sell-offs, underscores the market's need for stronger policy support to regain investor confidence. Weak earnings from Tencent and Alibaba have dampened sentiment, adding pressure for additional stimulus measures to attract buyers. Last week’s high trading volumes suggest that investors who returned following the first round of stimulus measures were announced may now be taking profits and exiting, further weighing on momentum.
- Hong Kong & China equities are trading in very ranges today, major benchmarks and now trading at session lows, after earlier opening slightly higher as global risk markets edged higher following the Nomination of Scott Bessent to US Treasury Secretary. The CSI300 is -0.60%, while the HSI is 0.50% lower.
- The likelihood of a RRR cut by the PBOC is rising as year-end approaches, according to a China Securities Journal report. Analysts suggest the central bank will continue deploying various monetary tools to ensure sufficient market liquidity. Last month, PBOC Governor Pan Gongsheng indicated a potential RRR reduction of 25-50bps by year-end, contingent on liquidity conditions.
- A new round of consumption vouchers has been issued across the country to stimulate domestic demand and boost confidence with major cities such as Shanghai, Beijing, Chengdu, Hangzhou, Zhengzhou and Wuhan all participating per the Economic Information Daily.
FOREX: Dollar Dips On Bessent Nomination But Downside Follow Through Limited
The USD is holding lower, with the dollar indices off between 0.50-0.55%. We gapped lower at the open, but have largely been range bound since then. The BBDXY was last near 1285, slightly up from session lows near 1283.54.
- Sentiment in the FX space has been dictated by the nomination of Scott Bessent, the former hedge fund manager, to the US Treasury Secretary position.
- Bessent's public comments around looking to curb the deficit, and that incoming President Trump can use tariffs as a negotiating tool has weighed on broader USD sentiment (as they are seen as less reflationary). Still, headlines have crossed the afternoon from the WSJ that Bessent sees delivering Trump tax cuts and keeping the USD as the world's reserve currency as a priority.
- This has helped stabilize USD sentiment at the margins. USD/JPY got close to the 20-day EMA support (near 153.50), but now sits back at 154.00, around 0.50% stronger in yen terms. EUR/USD got as high as 1.0501, but is back to 1.0480. AUD and NZD sit off earlier highs as well. AUD/USD last near 0.6525/30, NZD/USD around 0.5855. Earlier data showed NZ real retail sales for Q3 fall less than forecast.
- As we noted earlier even with a potentially market friendly appointment like Bessent, the near term macro backdrop is still USD positive, particularly from a data momentum standpoint.
- In the cross asset space, US yields sit lower, down 3-5.5bps, but much like the USD, had an initial gap lower, but there hasn't been follow through. US equity futures are up 0.45-0.55%, led by the tech side.
- Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 25/11/2024 | 0800/0900 | ** |  ES | PPI |
| 25/11/2024 | 0900/1000 | *** |  DE | IFO Business Climate Index |
| 25/11/2024 | 0900/0900 |  GB | BOE's Lombardelli At Watchers' Conference | |
| 25/11/2024 | 1030/1030 |  GB | BOE's Dhingra At Watchers' Conference | |
| 25/11/2024 | 1330/0830 | * |  CA | Quarterly financial statistics for enterprises |
| 25/11/2024 | 1400/1500 | ** |  BE | BNB Business Sentiment |
| 25/11/2024 | 1530/1030 | ** |  US | Dallas Fed manufacturing survey |
| 25/11/2024 | 1630/1730 |  EU | ECB's Lane at BoE Watchers' Conference | |
| 25/11/2024 | 1630/1130 | * |  US | US Treasury Auction Result for 13 Week Bill |
| 25/11/2024 | 1630/1130 | * |  US | US Treasury Auction Result for 26 Week Bill |
| 25/11/2024 | 1800/1300 | * |  US | US Treasury Auction Result for Cash Management Bill |
| 25/11/2024 | 1800/1300 | * |  US | US Treasury Auction Result for 2 Year Note |
| 26/11/2024 | 0001/0001 | * |  GB | BRC Monthly Shop Price Index |
| 26/11/2024 | 0700/0800 | ** |  SE | PPI |
| 26/11/2024 | 1100/1100 | ** |  GB | CBI Distributive Trades |