EXECUTIVE SUMMARY
- SCOTT BESSENT SEES A COMING 'GLOBAL ECONOMIC REORDERING'
- ISRAEL AND HEZBOLLAH CLOSE TO TRUCE, SAYS ISRAEL ENVOY TO US
- ECB’S LANE SAYS US PROTECTIONISM NET NEGATIVE FOR GLOBAL ECONOMY
- GERMAN IFO MATCHES PMI IN SERVICES DECLINE; FALLS BELOW EXPECTATIONS
Figure 1: IFO Business Climate Index falls in November, coming in short of expectations
Source: MNI/IFO
NEWS
US (WSJ): Scott Bessent Sees a Coming 'Global Economic Reordering'
In his first interview following his selection, Bessent said his policy priority will be to deliver on Trump's various tax-cut pledges. Those include making his first-term cuts permanent, and eliminating taxes on tips, social-security benefits and overtime pay. Enacting tariffs and cutting spending will also be a focus, he said, as will be "maintaining the status of the dollar as the world's reserve currency."
ISRAL/MIDEAST (BBG): Israel and Hezbollah Close to Truce, Says Israel Envoy to US
Israel is potentially days away from a cease-fire deal with Lebanon’s Hezbollah, the Israeli ambassador to the US said, following a new round of shuttle diplomacy by a senior envoy for the outgoing Biden administration. “We are close to a deal,” Michael Herzog told Israel’s Army Radio on Monday. “It could happen within days.”
IRAN/EUROPE (BBG): Iran Plans Nuclear Talks with European Countries This Week
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. The European Union would also take part as a mediator at the talks planned for Nov. 29 in Geneva, according to the Japanese news agency. These would be the first such discussions since Masoud Pezeshkian became Iran’s president in July.
G7 (BBG): G-7 Poised to Boost Pressure on China Over Russian Support
Group of Seven allies are set to step up pressure on China while offering Kyiv “unwavering commitment” amid accusations that Beijing has increased support for Russia in its war against Ukraine. The G-7 foreign ministers, who are meeting in Italy on Monday and Tuesday, are expected to vow “appropriate measures consistent with our legal systems, against actors in China and in other third countries” who are supporting Russia’s “war machine” in Ukraine, according to an early draft of the communique seen by Bloomberg.
ECB (MNI): US Protectionism Net Negative for Global Economy - Lane
The net effects from protectionism following Donald Trump's election will be negative for the global economy, ECB chief economist Philip Lane said in an interview published on Monday, although he said there were two way risks for the eurozone. "If the global economy is more protectionist, this will impair the growth rate of the European economy, and that will be likely to reduce inflationary pressures. On the other hand, if there is a lot of protectionism, import prices may be higher. So we will need to strike a balance in our assessment between external pressure on inflation – which may be stronger from the U.S. but weaker from China – and possibly less domestic pressure on inflation," he told Les Echos.
ECB (MNI): Slower Inflation Allows More Rate Cuts - Villeroy
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. Villeroy told French regional newspaper OUEST-FRANCE that this would remain the case even if the US Federal Reserve paused its own rate cuts. The governor also warned about the protectionist plans of President-elect Donald Trump, which Villeroy said would mean "more inflation in the United States and less growth everywhere."
ECB (BBG): ECB Must Cut Rates Next Month on Poor Economy, Kazaks Says
The European Central Bank should lower interest rates next month, according to Governing Council member Martins Kazaks. “Of course there will be a discussion, but my conviction is that looking at what’s happening at the moment in the European economy, there has to follow another rate cut already in December,” he told Latvia’s public broadcaster in a television interview on Monday.
BOE (MNI): Lombardelli's In-Line with TSC View, Risks Balanced But Case 3 More Costly
Lombardelli key comments on near-term monpol in line with last week at the TSC (looking through the rest of the speech on the Bernanke review now): "I view the probabilities of downside and upside risks to inflation as broadly balanced. But at this point I am more worried about the possible consequences if the upside materialised, as this could require a more costly monetary policy response."
FRANCE (MNI): Le Pen - Gov't Has Little Time to Improve Budget Bill
Far-right Rassemblement National (National Rally, RN) parliamentary leader Marine Le Pen speaks following her meeting with PM Michel Barnier.Comes as the PM attempts to reach a majority, or at least avoid having to use Art. 49.3 of the constitution to force the bill through without a vote. Le Pen says that in its current form RN would not support the budget or the PM.
CHINA (BBG): China Keeps Policy Loan Rate Unchanged for Second Month
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. The People’s Bank of China held the interest rate on the one-year medium-term lending facility steady at 2%, according to a statement on Monday. All of the 14 economists surveyed by Bloomberg forecast no change.
ROMANIA (MNI): Far-Right Candidate Takes Lead in First Round of Romanian Presidential Race
Far-right candidate Calin Georgescu unexpectedly emerged as the front-runner after the first round of Romania's presidential election, securing around 23% of the vote, as per partial results available at typing. Georgescu runs as an independent, but is known for his nationalist, pro-Russian and anti-NATO remarks. With more than 99.9% of the votes counted, Prime Minister Marcel Ciolacu of the Social Democratic Party (PSD) and liberal Save Romania Union's (USR's) Elena Lasconi are locked in a tight race for the second place, with the latter edging ahead by a razor-thin margin of a few thousand votes. Two leading candidates will advance to the run-off to be held on December 8.
DATA
GERMAN DATA (MNI): IFO Matches PMI in Services Decline; Falls Below Expectations
- GERMANY NOV IFO BUSINESS CLIMATE INDEX 85.7
Germany's IFO Business Climate Index fell in November, to 85.7 (86.5 prior), also coming in short of expectations of 86.0. The print broadly mirrors Friday's flash PMI release in that the services sector saw a clear decline - however, in the IFO, also manufacturing went weaker again. Overall, the print underpins the narrative of ongoing weakness in the German economy. The main downside driver was the current assessment, which declined to 84.3 (vs 85.5 cons; 85.7 prior). However, also expectations were slightly weaker than before, at 87.2 (vs 87.0 cons; 87.3 prior).
FOREX: Markets Sell USD on the Back of Bessent Nod
- Markets sold the dollar to begin the week, with the appointment of Scott Bessent as Treasury Secretary under Trump providing some relief to markets. His nomination has pinned back concerns that a tariff regime will go too far, too fast, with his views on gradualism likely meaning a more forceful approach on trade will come step-by-step, rather than an abrupt shift.
- The USD pullback has helped spur short-covering across EUR, which outperforms all others in G10. EUR/USD is testing 1.05, marking a ~160 pip recovery off last week's pullback lows.
- German IFO data painted a poor picture of the German economy, The print mirrored last week's flash PMI release in that the services sector saw a clear decline - however, in the IFO, also manufacturing went weaker again. Overall, the print underpins the narrative of ongoing weakness in the German economy. The EUR's resilience to the soft data may suggest much of the economic bad news and likely policy response from the ECB is becoming priced in - which should increase the importance of 1.0335 support ahead.
- With German IFO data cleared, focus shifts to the central bank speaker slate, as appearances are due from ECB's Centeno, Lane, Nagel and Makhlouf.
EGBS: Bund Futures Off Highs Alongside USTs, OATs Underperform
The digestion of Scott Bessent as the US Treasury Secretary nominee provided support to core FI overnight/at the European open, but Bund futures have since followed USTs off highs, now +9 ticks at 133.20. The rally in Bunds late last week undermined the recent bearish theme and exposes the Oct 24 high at 133.54.
- Bunds were likely also pressured a little by the slightly stronger-than-expected expectations component of the German November IFO survey (87.2 vs 87.0 cons), given the degree of dovish ECB pricing already evident in markets, along with wider-held, elevated worry surrounding the health of the German economy.
- The overall IFO Business Climate component was nonetheless weaker-than-expected, underscoring the softness in Friday’s flash PMIs.
- Schatz yields are ~4bps higher, likely a combination of the IFO expectations and non-committal comments from ECB’s Lane and Kazaks at the open around the size of the (likely) December cut.
- The 10-year OAT/Bund spread has moved above the 80bp handle on the latest signs of fiscal slippage from budget minister Saint-Martin, 2bps wider today.
- EU bonds also ~3bp wider, with the presence of this morning’s EU-bond supply (bidding deadline 1030BST/1130CET) acting as an additional headwind there.
- Scheduled ECB-speak starts from 1600GMT with Centeno, followed by appearances from Lane, Nagel and Makhlouf.
GILTS: Off Highs, Global Cues Dominate
Gilts have taken cues from moves in wider core global FI markets.
- Initially rallying on the nomination of Scott Bessent for U.S. Tsy Secretary (policy preferences deemed less inflationary than some of his former fellow contenders) before selling off as EGBs pulled away from highs (OAT-led as French fiscal/political risks intensify).
- Gilt futures last +27 at 94.75 vs. highs of 94.95.
- Fresh extension higher in futures would target round number resistance (95.00) followed by the 50-day EMA (95.78 today). A break of the latter would increase the threat to the bearish technical picture.
- Yields little changed to 1.5bp lower, curve bull flattens.
- 10s registered 4.35%, a level that had not been seen since October 31. The benchmark topped out at 4.594% on November 6, in the aftermath of Trump’s election victory.
- SONIA futures have generally tracked gilts, last -1.0 to +3.0, light twist flattening.
- BoE-dated OIS 0.5-1.5bp more hawkish on the day, last showing 75.5bp of cuts through December ’25, with the next 25bp move fully discounted through the March ’25 MPC.
- BoE’s Lombardelli offered little new this morning, supporting gradual rate cuts and outlining greater worry surrounding hawkish developments than dovish surprises.
- Dovish dissenter BoE Dhingra will speak on a panel shortly.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.680 | -2.1 |
Feb-25 | 4.490 | -21.0 |
Mar-25 | 4.402 | -29.8 |
May-25 | 4.243 | -45.7 |
Jun-25 | 4.167 | -53.3 |
Aug-25 | 4.071 | -62.9 |
Sep-25 | 4.030 | -67.0 |
Nov-25 | 3.970 | -73.0 |
Dec-25 | 3.945 | -75.5 |
EQUITIES: E-Mini S&P Starts the Week on a Bullish Note, Extends Recent Recovery
A bearish theme in the Eurostoxx 50 futures contract remains intact and short-term gains are considered corrective - for now. A fresh cycle low last week marked a resumption of the downtrend that started Sep 30. Price has breached 4746.94, 61.8% of the Aug 5 - Sep 30 bull cycle. This exposes 4662.12, the 76.4% retracement point. Initial firm resistance has been defined at 4961.00, the Nov 6 high, where a break would highlight a reversal. S&P E-Minis have started the week on a bullish note, extending the recovery from last Tuesday’s 5855.00 low. Recent weakness appears to have been a correction. Medium-term trend signals such as moving average studies, continue to highlight a dominant uptrend. Sights are on the bull trigger at 6053.25, the Nov 11 high. A break would resume the uptrend. On the downside, key short-term support to watch is 5849.44, the 50-day EMA.
- Japan's NIKKEI closed higher by 496.29 pts or +1.3% at 38780.14 and the TOPIX ended 19.07 pts higher or +0.71% at 2715.6.
- Elsewhere, in China the SHANGHAI closed lower by 3.432 pts or -0.11% at 3263.76 and the HANG SENG ended 78.98 pts lower or -0.41% at 19150.99.
- Across Europe, Germany's DAX trades higher by 77.8 pts or +0.4% at 19400.1, FTSE 100 higher by 31.61 pts or +0.38% at 8293.52, CAC 40 up 36.87 pts or +0.51% at 7291.88 and Euro Stoxx 50 up 26.24 pts or +0.55% at 4815.08.
- Dow Jones mini up 287 pts or +0.65% at 44682, S&P 500 mini up 29 pts or +0.48% at 6016, NASDAQ mini up 115.75 pts or +0.56% at 20965.75.
Time: 09:55 GMT
COMMODITIES: Bearish Theme in WTI Futures Intact Despite Last Week's Gains
WTI futures traded higher last week. However, a bearish theme remains intact and attention is on $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support. For bulls, a stronger reversal to the upside would instead refocus attention on the key short-term resistance at $77.04, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high. The long-term trend condition in Gold is unchanged, it remains bullish and the Oct 31 - Nov 14 bear leg appears to have been a correction. Price has recovered from its recent lows and today’s move lower is considered corrective - for now. A resumption of gains would open $2730.4, a Fibonacci retracement. Initial support is at $2639.7, the 50-day EMA. A clear break of the average would highlight a bearish threat.
- WTI Crude down $0.35 or -0.49% at $70.89
- Natural Gas up $0.21 or +6.58% at $3.335
- Gold spot down $41.47 or -1.53% at $2674.13
- Copper up $2.75 or +0.67% at $416
- Silver down $0.53 or -1.7% at $30.799
- Platinum down $12.94 or -1.34% at $953.01
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 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 |
| 26/11/2024 | 1305/0805 | CA | BOC Deputy Mendes speech in PEI. | |
| 26/11/2024 | 1330/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 26/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 26/11/2024 | 1400/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1500/1000 | *** | US | New Home Sales |
| 26/11/2024 | 1500/1000 | *** | US | Conference Board Consumer Confidence |
| 26/11/2024 | 1500/1000 | ** | US | Richmond Fed Survey |
| 26/11/2024 | 1500/1500 | GB | BOE's Pill at Economic Affairs Committee | |
| 26/11/2024 | 1530/1030 | ** | US | Dallas Fed Services Survey |
| 26/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 26/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 26/11/2024 | 1800/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/11/2024 | 1900/1400 | *** | US | FOMC Minutes |