EXECUTIVE SUMMARY
- FED’S COLLINS FAVORS MORE PATIENCE AND FEWER RATE CUTS IN 2025
- BIDEN TO FURTHER LIMIT NVIDIA AI CHIP EXPORTS IN FINAL PUSH
- COMMONS SPEAKER GRANTS URGENT QUESTION ON RISING UK FISCAL PRESSURES
- CHINA DEC CPI SLOWS TO NINE-MONTH LOW OF 0.1% Y/Y
Figure 1: GBP/USD drops to lowest level in over a year
Source: MNI/Bloomberg
NEWS
FED (BBG): Fed’s Collins Favors More Patience and Fewer Rate Cuts in 2025
Federal Reserve Bank of Boston President Susan Collins said she favors fewer rate cuts in 2025 than she had anticipated just a few months ago, following strong employment data and lingering inflation. Collins, who emphasized the need for patience, said her outlook for interest rates was consistent with the median projection from officials released after the Fed’s December meeting. That pointed to two quarter-point reductions this year, down from four in September forecasts.
US (BBG): Biden to Further Limit Nvidia AI Chip Exports in Final Push
President Joe Biden’s administration plans one additional round of restrictions on the export of artificial intelligence chips from the likes of Nvidia Corp. just days before leaving office, a final push in his effort to keep advanced technologies out of the hands of China and Russia. The US wants to curb the sale of AI chips used in data centers on both a country and company basis, with the goal of concentrating AI development in friendly nations and getting businesses around the world to align with American standards, according to people familiar with the matter.
US (BBG): US Dockworkers Union, Port Employers Reach Deal to Avert Strike
The International Longshoremen’s Association and US Maritime Alliance reached tentative agreement on all items for a new six-year master contract. The two sides will operate under the current contract until the union can schedule a ratification vote and port employers can ratify the terms.
ECB (MNI): ECB Outlook Already Assumes Higher Gas - Cippolone
The recent surge in natural gas prices should have relatively little impact on European Central Bank inflation projections, with the December outlook already assuming prices on average 25% higher in 2025 than over the previous 12 months, Executive Board member Piero Cipollone said in an interview with Corriere della Sera. "Futures prices currently appear to indicate slightly higher prices over the coming months," Cippolone said, but noted that "a gradual decrease is projected in subsequent years."
UK (MNI): Commons Speaker Grants UQ on Rising Pressure on Gov't Borrowing Costs
Speaker of the House of Commons Sir Lindsay Hoyle has confirmed that he has granted an urgent question in the Commons today to shadow chancellor Mel Stride, asking Chancellor of the Exchequer Rachel Reeves to deliver a statement on the "growing pressure of borrowing costs on the public finances." Either Reeves or another Treasury minister will be required to answer in person. Urgent questions are from 1030GMT (0530ET, 1130CET).
GERMANY (MNI): AfD's Weidel to Hold High-Profile Talk w/Musk @1900CET
Alice Weidel, chancellor candidate for the right-wing nationalist Alternative for Germany (AfD) will hold a high-profile conversation with tech billionaire Elon Musk on the 'Spaces' streaming feature of his X social media platform at 1900CET (1300ET, 1800GMT). The discussion is set to last an hour and be an unstructured 'off the cuff' talk. The talk, coming ahead of the 23 Feb federal election could offer further opportunity for the AfD, currently sitting in second place nationwide, to boost its standing further.
CHINA/EU (BBG): China Paves Way for Possible EU Retaliation as Probe Ends
China said the European Union’s measures to shield its companies from foreign subsidies are a barrier to trade and investment, marking the latest clash in the ongoing trade dispute between the two sides. The Ministry of Commerce released the findings of its investigation into the EU’s Foreign Subsidies Regulation on Thursday, highlighting “selective implementation” as a major concern. The inquiry started in July last year after the EU started examining Chinese subsidies for electric vehicles.
CHINA (MNI): PBOC to Issue Record Volume of CNH Bills Next Week
MNI (Beijing) The People’s Bank of China will issue CNY60 billion of offshore yuan-denominated bills in Hong Kong to shore up the currency which is under pressure due to U.S tariff concerns. According to the Hong Kong Monetary Authority,the bills will be issue on Jan 17 with a maturity of six months. It is a record volume of offshore yuan bills issued by the PBOC so far. The issuance is believed to be a tool for the central bank to adjust liquidity in the CNH market.
JAPAN (MNI): BOJ Report Shows Mixed Wages View
Japanese businesses have provided a mixed picture on wage hikes this year, with some reporting increases to ensure necessary workers amid the labour shortage, while others have noted no, or reduced hikes, the Bank of Japan’s regional economic report showed on Thursday. The BOJ wants to see clear wage hike momentum so it can raise the policy interest rate, but uncertainties over the scale of wage hikes at smaller firms could impede any rate hike chance when the board meets over Jan 22-23.
JAPAN (MNI): BOJ Sees All Regions Recovering, Picking Up
All nine regions reported that their respective economies had been recovering moderately, picking up, or picking up moderately, although some weakness had been seen in part, the Bank of Japan’s quarter regional economic report showed on Thursday. Two out of the nine regions upgraded their economies from the previous meeting in October and the remaining seven kept their assessment from three months ago.
DATA
EUROZONE DATA (MNI): A Tepid Bounce for Retail Sales
- EUROZONE NOV RETAIL SALES +0.1% M/M, +1.2% Y/Y
Eurozone retail trade volumes printed below consensus at 0.1% M/M in November (vs 0.3% consensus) although it followed an upward revised -0.3% in October (initial -0.5%). On an annual basis, volumes rose 1.2% Y/Y after 2.1% Y/Y in October (revised up from 1.9%) for its lowest rate since July 2024. The monthly sequential improvement came from a bounce in fuel sales whilst growth in food, drinks & tobacco softened slightly. Non-food products fell further, by the same pace as in October.
UK DATA (MNI): Something for Everyone in the DMP Data
In general employment (both realised and expected) was not quite as disappointing as last month's survey while expected price growth picked up again - this gives both the hawks and doves on the MPC encouragement - so net-net little huge impact from this data. Firm's expected own-price growth increased to 3.9% in the three months to November (up from 3.7% in the 3-months to Nov and 3.5% in the 3-months to Oct). The single number print of 4.0%Y/Y was the highest since April (up 0.2ppt from Nov and up 0.4ppt from Oct).
UK DATA (MNI): BRC-NielsenIQ: Shop Price Data Soft But Impacted by Black Friday Timing
- UK DEC BRC SHOP PRICES +0% M/M, -1% Y/Y
BRC-NielsenIQ Shop Prices became more deflationary in December at -1.0% Y/Y (vs -0.6%Y/Y in November). However, this was impacted by the timing of Black Friday with the press release noting that this year's print included Cyber Monday and the end of Black Friday sales, whereas last year's period did not include this. The headline series is therefore lower than it otherwise would have been but nevertheless, this was the lowest reading since July 2021 and the fifth consecutive month of deflation. On a monthly basis, Shop Prices were flat (vs 0.2% growth in November).
UK DATA (MNI): KPMG-REC Report on Jobs: Fastest Decline in Perm Placements Since Aug 23
There were some mixed details in a broadly downbeat KPMG-REC Report on Jobs but the main takeaway for us was the continued decline in permanent placements with the rate of decline the fastest since August 2023. The report notes that this was due to continued concerns regarding cost pressures from the Budget measures. Temporary placements also fell (noted for the same reason) reverting to October levels and below November levels.
GERMANY DATA (MNI): IP Stronger Than Expected in November; Weakness Trend Remains
- GERMANY NOV IND PROD +1.5% M/M
German industrial production was stronger than expected in November at +1.5% M/M, outstripping consensus of 0.5%, especially considering October's print was upwardly revised by 0.6pp to -0.4%. On a Y/Y basis, IP came in at -2.8% (vs -4.5% cons; prior was revised from -4.5% to -4.2%). November's data overall does not suggest an upcoming turn for the struggling industrial sector in Germany.
GERMANY NOV TRADE BALANCE E19.7BLN (MNI)
GERMANY NOV EXPORTS +2.1% M/M; NOV IMPORTS -3.3% M/M (MNI)
CHINA DATA (MNI): China Dec CPI Slows to Nine-Month Low of 0.1% Y/Y
China's Consumer Price Index rose 0.1% y/y in December, slowing for the fourth straight month from November's 0.2% and reaching a nine month low, in line with market expectation, though core CPI continued to rebound to 0.4%, data from the National Bureau of Statistics showed Thursday. The slowdown was mainly attributed to a 0.5% decline in food as pork and vegetable prices were tamed by sufficient supply. This was partly offset by a 0.2% y/y rise in non-food prices amid increased demand for travel and entertainment amid holiday season. CPI grew 0.0% m/m, improving from November’s 0.6% decline.
JAPAN DATA (MNI): Japan Nov Real Wages Post 4th Straight Drop
Inflation-adjusted real wages, a barometer of household purchasing power, posted their fourth straight drop in November, down 0.3% vs. -0.4% in October, preliminary data released by the Ministry of Health, Labour and Welfare on Thursday showed. Total CPI minus imputed rents rose 3.4% y/y in November, accelerating from 2.6% in October, while contractual cash earnings rose 2.6% y/y in November after rising 2.3% in October. Total cash earnings, or nominal wages, posted a 3.0% year-on-year gain, accelerating from 2.2% in October.
AUSTRALIA DATA (MNI): Surplus Widens But Trend Export Growth Weak
- AUSTRALIA NOV TRADE BALANCE A$+7079
The November merchandise trade surplus widened sharply to $7.08bn from $5.67bn as export growth outpaced imports. Through the volatility though goods exports remain soft and imports consistent with lacklustre domestic demand. Goods exports rose 4.8% m/m to be still down 5% y/y after -10.1% y/y in October. Both rural and non-rural shipments rose on the month up 18.1% and 2.1% respectively.
AUSTRALIA NOV RETAIL SALES +0.8% M/M (MNI)
FOREX: GBP Selloff Deepens, Weak Retail Sales Weighs on AUD
- Sterling weakness remains the focus for G10 currency markets on Thursday, with early moves prompting GBPUSD to print at 1.2239 - its lowest level since November 2023. Moves have stabilised since, however, GBP remains weaker across the board. The likes of GBPJPY and EURGBP are seeing similar size adjustments as fiscal worries continue to permeate.
- EURGBP has also extended its recovery, printing a two-month high above 0.8400. Recall on Wednesday, we had a firm break above 50-day EMA resistance, which intersected at 0.8311. Today’s continued strength undermines the recent bearish theme and suggests scope for a stronger short-term recovery. Note too that 0.8376, the Nov 19 high and a key resistance, has also been cleared. This opens 0.8424 initially, a Fibonacci retracement, and 0.8448, the Oct 31 high and reversal trigger.
- AUDUSD is trading back below 0.6200, and has printed fresh cycle lows of 0.6172. We had retail sales slightly below expectations (+0.80%, versus +1.0% forecast), while the trade surplus was higher than forecast. Market pricing for an RBA cut at the Feb meeting is just over 70%, supported after yesterday's slower core CPI print and retail sales today.
- The USD index is close to unchanged, but has been consolidating above 109.00 amid the US federal holiday. All attention for the greenback will be on tomorrow’s US employment report, however we do have the Fed’s Harker, Barkin, Schmid and Bowman due to speak today.
EGBS: Futures Off Intraday Lows as Supply Passes, EZ Retail Sales Tepid
Major EGB futures have moved away from intraday lows following today's Spanish/French supply and the weaker-than-expected Eurozone retail sales print. However, Bund futures remain on track for a fifth consecutive losing session, currently -24 ticks today at 131.48.
- The German curve has bear flattened, with 2-year yields 2.5bps higher today and 30-year yields 1bp higher. Stronger-than-expected German industrial production data drove the initial short-end weakness earlier.
- Both the Spanish and French auctions passed smoothly. Spain sold E6.222bln of nominals (the top half of its E5.5-6.5bln target) while France sold E12.997bln of LT OATs (top of the target range and the largest auction since March). The spread has been set for today’s 10-year PGB syndication.
- 10-year EGB spreads to Bunds are biased wider, with OATs and GGBs underperforming.
- Broader focus in France remains on developments ahead of PM Bayrou’s general policy speech to the National Assembly on Tuesday 14 Jan, where a budget is expected to be presented shortly after.
- The remainder of today’s global macro calendar is light, with US session activity likely to be limited by today’s federal holiday.
GILTS: Off Lows, Fiscal Worry to Be Addressed by Treasury
Gilts are comfortably off early session lows after continued fiscal worry applied fresh pressure at the open.
- Futures based at 89.00 before a recovery to 89.90 as of typing.
- Bearish technical theme remains intact.
- Bulls initially need to retake yesterday’s high (91.58).
- Yields 1.5-3.5bp higher, 10s lead the weakness. Benchmarks 9-10bp off highs.
- 10s failed to test 5.00%, stalling well ahead of that level, peaking at 4.921%.
- 30s topped out at 5.473%, failing to test the next round number at 5.50%.
- UK headline flow has been relatively limited, but the Treasury’s assurances surrounding the government’s fiscal credibility hasn’t promoted much confidence amongst market participants.
- The potential for fiscal stress is getting attention in the political sphere.
- Speaker of the House of Commons Sir Lindsay Hoyle has confirmed that he has granted an urgent question in the Commons today to shadow chancellor Mel Stride, asking Chancellor of the Exchequer Rachel Reeves to deliver a statement on the "growing pressure of borrowing costs on the public finances."
- Either Reeves or another Treasury minister will be required to answer in person. Urgent questions are from 10:30.
- BoE-dated OIS back to little changed on the day after gilts recover from lows.
- 45.5bp of cuts priced through year-end vs. ~39bp that briefly printed during this morning’s hawkish extension.
- SONIA futures flat to -5.0.
- BoE DMP survey data provided something for everyone, while the latest S&P-KPMG-REC report on jobs was relatively downbeat.
- Comments from BoE’s Breeden are due this afternoon (16:00 London).
EQUITIES: Eurostoxx 50 Futures Remain Close to Recent Highs
A bull cycle in the Eurostoxx 50 futures contract remains intact. This week’s strong rally highlights a reversal of the recent corrective pullback. Resistance at 5040.00, the Dec 9 high, has been pierced. A clear break of this hurdle would confirm a resumption of the bull cycle that started on Nov 21 last year and open 5068.13, a Fibonacci projection. On the downside, initial firm support lies at 4929.18, the 50-day EMA. A bear threat in the S&P E-Minis contract remains present. The reversal lower from the Dec 26 high, highlights the end of the Dec 20 - 26 correction. Attention is on 5866.00, Dec 20 low and a key short-term support. Clearance of this level would strengthen a bearish theme. Initial firm resistance is 6107.50, the Dec 26 high. A breach of this hurdle would highlight a bull reversal and open key resistance at 6178.75, the Dec 6 high.
- Japan's NIKKEI closed lower by 375.97 pts or -0.94% at 39605.09 and the TOPIX ended 34.08 pts lower or -1.23% at 2735.92.
- Elsewhere, in China the SHANGHAI closed lower by 18.775 pts or -0.58% at 3211.393 and the HANG SENG ended 38.95 pts lower or -0.2% at 19240.89.
- Across Europe, Germany's DAX trades lower by 55.4 pts or -0.27% at 20273.16, FTSE 100 higher by 31.85 pts or +0.39% at 8282.77, CAC 40 down 5.01 pts or -0.07% at 7444.45 and Euro Stoxx 50 down 10.24 pts or -0.2% at 4984.76.
- Dow Jones mini up 18 pts or +0.04% at 42894, S&P 500 mini down 6.25 pts or -0.1% at 5952.75, NASDAQ mini down 59 pts or -0.28% at 21301.
Time: 09:50 GMT
COMMODITIES: Trend Structure in WTI Futures Remains Bullish
The trend structure in WTI futures remains bullish and the contract traded to a fresh cycle high again, yesterday. A stronger reversal to the upside has exposed key short-term resistance at $76.41, the Oct 8 high. A firm resistance at $71.97, the Nov 7 high, has been breached, strengthening a bullish theme. On the downside, a reversal lower would expose support at the 20-day EMA, at $71.32. This average is seen as a key short-term support. Recent gains in Gold appear corrective - for now. A bear threat remains present. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low. The first firm support to watch is $2583.6, the Dec 19 low. On the upside, a stronger climb would instead signal scope for gains towards resistance at $2726.2, the Dec 12 high.
- WTI Crude down $0.24 or -0.33% at $73.08
- Natural Gas down $0.06 or -1.53% at $3.598
- Gold spot up $3.68 or +0.14% at $2665.44
- Copper up $5.15 or +1.21% at $430.85
- Silver up $0.16 or +0.53% at $30.263
- Platinum up $0.51 or +0.05% at $958.97
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 09/01/2025 | 1400/0900 |  US | Philly Fed's Pat Hrker | |
| 09/01/2025 | 1405/0905 | US | Fed's Collins | |
| 09/01/2025 | 1600/1600 |  GB | BOE's Breeden Speech at University of Edinburgh | |
| 09/01/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 09/01/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 09/01/2025 | 1745/1245 | US | Fed's Barkin | |
| 09/01/2025 | 1830/1330 | US | Fed's Schmid | |
| 09/01/2025 | 1835/1335 | US | Fed Gov Bowman | |
| 10/01/2025 | 2330/0830 | ** |  JP | Household spending |
| 10/01/2025 | 0645/0745 | ** |  CH | Unemployment |
| 10/01/2025 | 0700/0800 | *** |  NO | CPI Norway |
| 10/01/2025 | 0700/0800 | ** |  SE | Private Sector Production m/m |
| 10/01/2025 | 0745/0845 | * |  FR | Industrial Production |
| 10/01/2025 | 0745/0845 | ** | FR | Consumer Spending |
| 10/01/2025 | 0800/0900 | ** |  ES | Industrial Production |
| 10/01/2025 | 0900/1000 | * |  IT | Retail Sales |
| 10/01/2025 | 1330/0830 | * |  CA | Building Permits |
| 10/01/2025 | 1330/0830 | *** | CA | Labour Force Survey |
| 10/01/2025 | 1330/0830 | *** | US | Employment Report |
| 10/01/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 10/01/2025 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 10/01/2025 | 1700/1200 | *** | US | USDA Crop Estimates - WASDE |
| 10/01/2025 | 1700/1200 | ** | US | USDA GrainStock - NASS |
| 10/01/2025 | 1700/1200 | *** | US | USDA Winter Wheat |
| 10/01/2025 | 1900/1400 | ** | US | Treasury Budget |