EXECUTIVE SUMMARY
- TRUMP MAKES FIRST KEY APPOINTMENT, TAPS SUSIE WILES FOR CHIEF OF STAFF
- TRUMP TO RENEW 'MAXIMUM PRESSURE' AGAINST IRAN WITH NEW OIL SANCTIONS
- DEBT SWAP PACKAGE MEETS CNY10TLN EXPECTATIONS, MORE TO COME IN '25
- SCHOLZ UNDER MOUNTING PRESSURE TO AGREE TO JANUARY GERMAN VOTE
Figure 1: Post-election normalization of 3m implied vols proves stickier for some
Source: MNI/Bloomberg
NEWS
US (WaPo): Trump Makes First Key Appointment, Taps Susie Wiles for White House Chief of Staff
President-elect Donald Trump on Thursday announced that Susie Wiles, his campaign manager, would serve as White House chief of staff, as leading contenders emerged for other Cabinet roles such as attorney general in a second Trump administration. "Susie Wiles just helped me achieve one of the greatest political victories in American history, and was an integral part of both my 2016 and 2020 successful campaigns," Trump said in a statement Thursday evening that called Wiles "universally admired and respected." She would be the first female White House chief of staff.
US (BBG): Trump Set to Move Courts Further Right, Deepening Judicial Clout
Donald Trump rapidly filled a swath of vacancies in the US judiciary in his first term, dramatically reshaping the federal bench with right-leaning judges. Now he has a chance to cement his influence, particularly over the appeals courts that rule on some of the most important and divisive issues in American society. There are currently only two vacancies on those courts, known as circuits. But over the coming presidential term, out of 177 active circuit judges, 34 Republican-appointed and 29 Democratic-appointed appellate judges could retire, according to data gathered by Russell Wheeler, a nonresident senior fellow in the Brookings Institution’s Governance Studies program.
US/IRAN (WSJ): Trump to Renew 'Maximum Pressure' Against Iran With New Oil Sanctions
President-elect Donald Trump plans to drastically increase sanctions on Iran and throttle its oil sales as part of an aggressive strategy to undercut Tehran's support of violent Mideast proxies and its nuclear program, according to people briefed on his early plans. Trump took a dim view of Iran during his first term, aborting a six-nation agreement with Tehran - known as the Joint Comprehensive Plan of Action - that sought to curb Iran's nuclear weapons work. He also imposed what was described as a "maximum pressure" strategy in hopes Iran would abandon ambitions for a nuclear weapon, stop funding and training what the U.S. considers terrorist groups and improve its human-rights record.
CHINA (MNI): Debt Swap Package Meets CNY10tln Expectations, More to Come in '25
The policymaker press conference confirmed that the Chinese debt swap package for local governments will total CNY10tln, with the aim of cutting hidden local government debt by CNY12tln come ’28 (from CNY14.3tln to CNY2.3tln). A reminder that a debt package of ~CNY10ln was previously outlined by RTRS. This package seems broadly in line with that, at least at first glance. The policymakers also noted that bank recapitalisation work will be accelerated, while tax measures to support the property sector will be rolled out soon. We suggested that more meaningful consumer support may not be forthcoming at this juncture ahead of the press conference and that has held true (at least as of typing).
EU/CHINA (BBG): EU and China Tout Progress on Negotiations to Avoid EV Tariffs
The European Union and China said they made some progress after a week of technical talks in Beijing aimed at scaling back or reversing tariffs that the bloc applied to electric vehicles made in China. The EU’s executive arm described the outcome of this week’s negotiations as making “technical progress,” and China’s Ministry of Commerce echoed that conclusion in a separate statement. Both Brussels and Beijing have previously warned that significant gaps remain over how to address what the bloc says are unfair subsidies to Chinese-made EVs.
EUROPEAN COUNCIL (MNI): Leaders Meet With 2nd Trump Presidency The Main Talking Point
EU member state leaders hold an informal meeting in Budapest, Hungary today where they will try to agree on a joint communique. As was the case with the European Political Community meeting on 7 Nov, the looming second Trump presidency will dominate conversations. Trump's well-publicised comments regarding Europe paying for its own defence will place pressure on EU budgets, while the president-elect's tariff plans threaten major upheaval for those European industries reliant on US demand.
GERMANY (BBG): Scholz Under Mounting Pressure to Agree to January German Vote
German Chancellor Olaf Scholz is coming under mounting pressure to agree to an early election in January, with a new poll showing two-thirds of voters want a national ballot as soon as possible and business groups calling for an end to political turmoil. The survey for public broadcaster ARD gives fresh ammunition to center-right opposition leader Friedrich Merz, who accused Scholz of seeking to delay the election until March purely for party political advantage.
ECB (MNI): EZ Real Rates Not That High - ECB's Wunsch
Eurozone real interest rates are still 'not that high' despite the tightening cycle of recent years, Belgian National Bank head Pierre Wusch told an MNI Connect event in London. That probably means that r* remains 'quite low', although it is still difficult to pinpoint it exactly, he said. However, domestic inflation, perhaps best observed through the services inflation, remains high and measured against that, real rates are closer to zero.
EUROPE/UKRAINE (BBG): Europe Can’t Fund ‘Lost’ War in Ukraine Without US, Orban Says
Europe won’t be able to finance Ukraine’s defenses against Russia’s invasion on its own if the US withdraws support under Donald Trump’s next presidency, Hungarian Prime Minister Viktor Orban said Friday. Orban said recent events vindicated the conclusions from his controversial July diplomatic mission to Kyiv, Moscow and Beijing and showed Ukraine was losing the war.
JAPAN (MNI): Japan's MOF Buys JPY5.5 Trln of Yen in July
The Ministry of Finance conducted a total of JPY5.53 trillion of yen-buying interventions on July 11 and 12 to curb depreciation, data on forex interventions for the period from July through September 2024 released by the MOF showed on Friday. The dollar rose to JPY161.94 on July 3 on the back of a differential interest rate between Japan and the U.S. for the highest level since December 1986. The yen fell to JPY154 level on Tuesday following the U.S. presidential election, increasing speculation over yen-buying intervention.
BOJ (MNI INTERVIEW): BOJ Jan Hike Most Likely, But Yen Crucial
Former BOJ Chief Economist Kazuo Momma shares his policy rate outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
S.KOREA (BBG): Korea to Actively Respond to Post-Election Market Volatility
South Korea said it will bolster its monitoring of financial markets and respond “actively” to ease any excessive volatility as policymakers brace for the implications of Donald Trump’s return to the White House. The government will expand its around-the-clock monitoring of global events ranging from the Mideast conflict to financial and foreign exchange markets as authorities step up their efforts to manage risks, Finance Minister Choi Sang-mok said Friday.
RBA (MNI INTERVIEW): RBA Could Hike Again - Former Economist
A former RBA economist dissects the RBA's recent call and forecasts. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
TURKEY (MNI): CBRT Raise Year-End Inflation Estimate to 44%
Turkey’s central bank raised its 2024 inflation forecast to 44% from 38%, CBRT Governor Fatih Karahan said at the presentation of the central bank’s latest inflation report. The 2025 forecast was revised higher to 21% from 14%, bringing both estimates more in-line with sell-side forecasts. During the presentation, Karahan said the main inflation trend is improving but at a slower than expected. He added that the tight monetary policy stance will continue (even if the cutting cycle starts).
DATA
FRANCE DATA (MNI): Wage Growth at the Slowest Y/Y Pace Since Q1-22
France's basic monthly salary (SMB) index preliminary reading increased a marginal 0.3% Q/Q in Q3 2024, from 0.6% in Q2. Over the year the index is estimated to have risen 2.7% Y/Y (vs 2.9% in Q2) - the lowest rate of increase since Q1 2022. French wages are therefore back on their way to being closer to inflation target-consistent levels. The softness was driven by a slowdown in industrial sector wages to 0.4% Q/Q (vs 0.9% prior). Both construction and tertiary sector wages also slowed to 0.2% Q/Q (vs 0.6% in Q2) and 0.3% Q/Q (vs 0.5% in Q2).
ITALY DATA (MNI): Industrial Production Trends Remain Subdued
Although Italian September industrial production was a tenth above consensus expectations at -0.4% M/M, this was offset by a one tenth downward revision to August's print. On an annual basis, production fell 4.0% Y/Y (the -3.5% Y/Y consensus was formed of just five analysts, compared to 11 for the monthly reading). Overall, industrial production clearly remains subdued, consistent with the manufacturing PMI tracking below the neutral 50-handle since April. ISTAT's manufacturing confidence series has also continued to deteriorate. On a 3m/3m basis, production fell 0.6% (vs 0.2% prior). This series has been negative for the last 18 consecutive months.
UK DATA (MNI): KPMG-REC Data Shows Increasing Labour Market Slack (But Pre-Budget)
The October KPMG-REC survey was conducted before the Budget with data collected between 10-25 October. So any results from the survey may be heightened by uncertainty in anticipation of the measures - but not in direct response to the announcements. The permanent placements component fell at its fastest pace since March while temporary placements also fell further. The press release notes "reports of recruitment freezes" ahead of the Budget.
SWEDEN DATA (MNI): Consumption Doesn't Appear to Be Behind Weak Flash Q3 GDP
Although the Swedish household consumption indicator fell 0.3% M/M in September, consumption still rose 1.0% on a 3m/3m (i.e. quarterly) basis. This suggests other GDP components were behind the weaker-than-expected flash Q3 GDP print of -0.1% Q/Q (vs 0.3% cons, 0.2% Riksbank Sep MPR). Full details of the Q3 GDP print will have to wait until the final release on Nov 29.
CHINA DATA (MNI): China Outstanding Mortgage Loans Decline Further
MNI (Beijing) China's outstanding housing mortgage loans fell for a sixth consecutive quarter by end-Q3, as early repayments from property owners continued. The balance of mortgage fell by 2.3% y/y to CNY37.56 trillion, accelerating from the previous 2.1% decline, data by the People’s Bank of China on Friday showed. The outstanding developers’ loans balance increased by 2.7% y/y to CNY13.79 trillion.
JAPAN DATA (MNI): Real Household Spending Better Than Forecast, But Still Negative
- JAPAN SEPT HOUSEHOLD SPENDING -1.1% Y/Y; AUG -1.9%
- JAPAN SEPT HOUSEHOLD SPENDING -1.3% M/M; AUG +2.0%
Japan Sep household spending was -1.1% y/y, better than the -1.8%y/y consensus forecast. Spending was down -1.3% in m/m terms. Whilst the headline result is better than expected, real spending trends remain in negative territory. The chart below plots spending in y/y terms (the white line) against real cash earnings growth, which printed yesterday. Spending has barely been positive in recent years, albeit we aren't as negative as we were in 2023.
FOREX: Post-Election Moderation Continues, AUD Suffers on China Package
- JPY gains are outstripping all others in G10 as the post-election normalization continues. USD/JPY has slipped back below the Y152.50 level to further narrow the gap with pre-election levels - and weakness through 151.30 would provide a full reversal.
- AUD is the poorest performer in G10 as China stimulus news came in below market expectations, with no firm signals of fresh consumption support as part of the broader fiscal package. The falter at highs for AUD/USD firms the 100-dma as key resistance ahead - crossing today at 0.6692.
- Daily low prints of 0.8306 and 0.8309 in the last two sessions continue to highlight the ongoing and building significance of the medium-term inflection point for EURGBP. The post UK budget pressure on sterling proved short-lived last week and EURGBP’s spike to 0.8448 has steadily reversed.
- Key short-term support and the bear trigger remains at 0.8295, the Oct 18 low. Moving average studies are in a bear-mode position, highlighting a dominant downtrend and a break below this level would confirm a resumption of the current downtrend.
- The Canadian jobs data for October takes focus going forward, with markets expecting a tick higher in the unemployment rate to 6.6%, while US focus rests on the prelim UMich survey - although the respondents will likely be reflecting pre-election sentiment in their answers given the survey closed on November 4th. Central bank speakers today include BoE's Pill and Fed's Bowman.
EGBS: Bund Futures Underpinned as China Stimulus Disappoints
Bund futures remain underpinned after a lack of upside surprises in China’s latest stimulus package. Futures are +41 at 131.83, but remain short of Wednesday’s post US election high of 132.22
- The bearish technical theme in Bund futures remains intact, though a breach of Wednesday’s high would be seen as an early bullish development.
- German swap spreads are off yesterday’s lows, with 10-year Bund vs 3m Euribor hovering around 0bps.
- The German curve has bull flattened, but 2s10s remains over 7bps steeper than Tuesday’s close, currently 19.5bps.
- 10-year peripheral spreads to Bunds have widened, with the Chinese stimulus news pulling European equity futures 1% lower. The BTP/Bund spread is back above 130bps at typing.
- The subdued trend in Italian industrial production persisted in September.
GILTS: Holding Onto Most of Early Rally, BoE's Pill Due Later
Gilts hold onto the bulk of the rally triggered by late Thursday demand in Tsys and risk-off trade surrounding Chinese fiscal policy.
- Futures +46 at 93.97 vs. highs of 94.21.
- Initial resistance at the November 1 high (94.73) is untested, with the bearish technical theme still in play.
- Yields 3.0-4.5bp lower across the curve.
- 10- to 30-Year zone outperforms wings.
- Spreads to Bunds little changed at ~206bp, following yesterday’s sharp narrowing off cycle highs (which was mostly driven by the German leg).
- BoE-dated OIS shows 4bp of cuts for December, 22bp of easing through February, 31bp through March and 47bp through May, little changed vs. pre-gilt open levels, pointing to quarterly cuts in the immediate term.
- SONIA futures -1.5 to +7.0, easing from session highs as the bid in gilts moderates a little.
- BoE chief economist Pill will speak later today (12:15 London), giving a briefing on the latest monetary policy decision.
EQUITIES: E-Mini S&P Breaches $6000 Handle, Bullish Theme Strengthening
A bearish condition in Eurostoxx 50 futures remains intact and Wednesday’s sell-off reinforces current conditions. The contract has traded to a fresh cycle low and pierced 4815.50, the 50.0% retracement of the Aug 5 - Sep 30 bull cycle. This exposes 4757.00, the Sep 6 / 10 low and a key support. Initial firm resistance has been defined at 5015.00, the Oct 29 high, where a break would highlight a reversal. Bullish conditions in S&P E-Minis remain intact and this week’s gains reinforce current conditions. A key short-term support has been defined at 5724.25, Nov 4 low. The move higher resulted in a breach of the bull trigger at 5927.25, Oct 17 high, confirming a resumption of the primary uptrend. The 6000.0 psychological handle has been pierced. Sights are on 6028.44, a Fibonacci projection. Initial support is at 5927.25, the Oct 17 high.
- Japan's NIKKEI closed higher by 118.96 pts or +0.3% at 39500.37 and the TOPIX ended 0.93 pts lower or -0.03% at 2742.15.
- Elsewhere, in China the SHANGHAI closed lower by 18.364 pts or -0.53% at 3452.297 and the HANG SENG ended 225.15 pts lower or -1.07% at 20728.19.
- Across Europe, Germany's DAX trades lower by 70.68 pts or -0.37% at 19293.12, FTSE 100 lower by 35.9 pts or -0.44% at 8104.84, CAC 40 down 42.31 pts or -0.57% at 7383.97 and Euro Stoxx 50 down 24.12 pts or -0.5% at 4828.3.
- Dow Jones mini down 0 pts or 0% at 43909, S&P 500 mini up 5 pts or +0.08% at 6008.75, NASDAQ mini up 13.25 pts or +0.06% at 21237.75.
Time: 09:55 GMT
COMMODITIES: This Week's Gains in WTI Futures Considered Corrective
A bearish theme in WTI futures remains intact and the latest recovery, including this week’s gains, appears to be corrective. A resumption of weakness would expose $65.99, the Oct 1 low, and $64.16, the Sep 10 low and key support. For bulls, a clear reversal would instead refocus attention on the key S/T resistance at $77.70, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial resistance is $74.35, the Oct 14 high. The trend condition in Gold is unchanged, it remains bullish and the latest pullback is considered corrective. The yellow metal has cleared the 20-day EMA and this highlights potential for an extension of the corrective cycle. Attention is on a key support at $2645.8, the 50-day EMA. A clear break of this average would expose $2604.9, the Oct 8 low. For bulls a reversal higher would refocus attention on the bull trigger at $2790.1, the Oct 31 high.
- WTI Crude down $1.04 or -1.44% at $71.26
- Natural Gas up $0.01 or +0.22% at $2.699
- Gold spot down $18.04 or -0.67% at $2688.75
- Copper down $6.9 or -1.56% at $436.2
- Silver down $0.51 or -1.59% at $31.527
- Platinum down $9.34 or -0.94% at $988.2
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 08/11/2024 | 1110/0610 |  CA | BOC Deputy Gravelle speaks on panel at ECB conference. | |
| 08/11/2024 | 1215/1215 |  GB | BOE's Pill and Shortfall hold MPC Agency briefing | |
| 08/11/2024 | 1330/0830 | *** | CA | Labour Force Survey |
| 08/11/2024 | 1500/1000 | ** |  US | U. Mich. Survey of Consumers |
| 08/11/2024 | 1600/1100 | US | Fed Governor Michelle Bowman | |
| 08/11/2024 | 1700/1200 | *** | US | USDA Crop Estimates - WASDE |
| 08/11/2024 | 1930/1430 | US | St. Louis Fed's Alberto Musalem | |
| 09/11/2024 | 0130/0930 | *** |  CN | CPI |
| 09/11/2024 | 0130/0930 | *** | CN | Producer Price Index |
| 09/11/2024 | 1535/1635 |  EU | ECB's Lagarde in Climate risks event |