MNI US OPEN - Gilts Sit Lower Ahead of Sombre UK Budget

NEWS

UK (MNI): Autumn Statement timing: Expect around 11:30GMT

Today's Autumn Statement looks like it will begin around 11:30GMT. The order paper for the Commons has been released and shows urgent questions from 10:30GMT then business questions then ministerial statements including the Autumn Statement. Business questions usually last 45-60 minutes or so which would see the Autumn Statement begin some time around 11:30GMT.

See full MNI Autumn Budget Preview here

US/CHINA (MNI): China, U.S. to Coordinate on Trade - MOFCOM

China’s Ministry of Commerce will support the consensus reached by President Xi Jinping and U.S. President Joe Biden during their meeting in Bali this week, with both sides agreeing to communicate and coordinate on economic and trade issues, said spokeswoman Shu Jueting at a briefing on Thursday, without disclosing further details.

CHINA (MNI): Xi Seeks to Distance Beijing from Moscow

Xi has taken his most significant step to create space between Beijing and Moscow since Putin invaded Ukraine almost nine months ago, Bloomberg report, after China signed off on a communique Wednesday saying that “most members strongly condemned the war in Ukraine.” Nevertheless, Russia is expecting a state visit from the Chinese president Xi next year, likely after the Chinese parliamentary session in March, Russian Ambassador to China Morgulov said according to Tass.

CHINA (MNI): Chinese Developer Defaults Loom Despite Property Support

Chinese property developers are at risk of defaulting on higher cost U.S. dollar bonds despite Beijing’s rescue package that includes easier funding to support the ailing property market, with debt restructuring plans needed to minimise losses for creditors, advisers told MNI.

NORTH KOREA (MNI): N. Korea Test-Fired Unknown Ballistic Missile into East Sea

North Korea fired an unidentified ballistic missile into the East Sea, Yonhap News Agency reports citing South Korea's Joint Chiefs of Staff. The launch comes after an eight-day hiatus since the previous missile drill, which involved firing a short-range ballistic missile (SRBM) into the East Sea. Earlier today, North Korea's Foreign Minister Choe vowed "fiercer" military actions if the U.S. continues to expand its deterrence capabilities in the region together with South Korea and Japan.

JAPAN (MNI): BOJ's Kuroda Says 2% Target Can Achieved

Bank of Japan Governor Haruhiko Kuroda said on Thursday that 2% inflation target can be achieved in a stable and sustainable manner accompanied with wage hikes, although it will take time. Kuroda told lawmakers it is the most important that the BOJ firmly support the economy with easy policy in order to create an environment for businesses to raise wages next spring.

DATA

EUROZONE OCT FINAL HICP +1.5% M/M, +10.6% Y/Y (MNI)
EUROZONE SEP CONSTRUCTION OUTPUT +0.1% M/M, +1% Y/Y (MNI)

JAPAN DATA (MNI): Japan's Oct Exports Rise; Auto Exports Slow

• JAPAN OCT EXPORTS +25.3% Y/Y; SEP +28.9%
• JAPAN OCT IMPORTS +53.5% Y/Y; SEP +46.0%

October exports continued to support the Bank of Japan view that exports are trending higher as the effects of supply-side constrains wane, but bank officials are worried about the prospect of a slowdown caused by weaker overseas demand. Japan posted a trade deficit of JPY2.16 trillion in the wake of high resource prices, leading to the 15th straight deficit following a deficit of JPY2.09 trillion in September.

AUSTRALIA DATA (MNI): Strong Labour Data Across the Board, RBA Hikes to Continue

• AUSTRALIA OCT UNEMPLOYMENT RATE +3.4%
• AUSTRALIA OCT LABOR PARTICIPATION RATE +66.5%
• AUSTRALIA OCT EMPLOYED PERSONS CHANGE 32.2K

Australia's labour market data for October came in significantly stronger than expected. The details are also strong and not only support consumption going forward but make a 25bp RBA hike in December highly likely. But it is unlikely to be enough to make it 50bp though, given that consistency is important to the RBA, their other concerns and the lagging nature of the labour market.

HONG KNONG (MNI) Hong Kong's Jobless Rate Edges Lower in Oct

Hong Kong's unemployment rate edged down to 3.8% in the three months to the end of October as more jobs were added in industries previously affected by pandemic measures, according to data released by the Census and Statistics Department on Thursday.

FX SUMMARY: Greenback Creeping Higher Ahead of Housing, Labour Market Data

• The greenback is making uniform gains across G10 Thursday, with the USD Index within range of the Wednesday high ahead of NY hours. Market action has been few and far between overnight, with the greenback gaining despite Fed's Waller late yesterday outlining his growing preference for a 50bps move from the FOMC in December.
• GBP trades moderately well ahead of the UK Autumn Statement, with UK Chancellor Hunt expected to outline a stark budget of tax rises and spending cuts to address the loss of market credibility and the outsized energy support guarantee for households.
• AUD is the weakest currency so far, with NOK not far behind as equities and commodity markets sit lower ahead of the US Open.
• Focus turns to US housing starts and building permits data for October as well as the weekly US jobless claims release. The central bank speakers slate is similarly busy, with scheduled appearances from BoE's Pill, Tenreyro, ECB's Villeroy as well as Fed's Bullard, Bowman, Mester and Kashkari.

BOND SUMMARY: USTs / Gilts Move Lower While Bunds Remain Supported on Dovish ECB Hopes

• Treasuries and gilts are off of yesterday's highs but Bunds have been more range-bound today and hit their highest level since early October this morning.
• The German curve has been driven by a Bloomberg sources story which suggests a 50bp hike is more likely than 75bp from the ECB at its December meeting. This has also seen Euribor Whites move higher (in contrast to the moves seen) in SONIA / Eurodollar futures.
• Both Treasuries and gilts have moved lower this morning ahead of the UK Autumn Statement (mini-budget). We have set out our expectations for the Autumn Statement in our preview here. The market will be focusing on both the new gilt remit and the wider tone of the statement. In terms of individual policies the market would like (but may not get today) more details on the replacement for the Energy Price Guarantee from April.
• There are a number of Fed, ECB and BOE speakers later today as well as weekly claims data and US housing data.
• TY1 futures are down -0-9 today at 112-29+ with 10y UST yields up 4.3bp at 3.735% and 2y yields up 1.3bp at 4.370%.
• Bund futures are up 0.16 today at 140.54 with 10y Bund yields down -0.7bp at 1.987% and Schatz yields down -1.1bp at 2.035%.
• Gilt futures are down -0.24 today at 106.28 with 10y yields up 2.8bp at 3.170% and 2y yields up 5.9bp at 3.025%.

EQUITIES: Equity Futures Holding Onto Recent Gains

• A bullish EUROSTOXX 50 futures outlook remains intact. Price is consolidating but importantly, the contract is trading at its recent highs. Resistance at 3810.00, the Aug 17 high and an important bull trigger, has been breached. Moving average studies are in a bull mode set-up and this highlights positive market sentiment. The focus is on 3944.00, Mar 29 high on the continuation chart. Initial firm support lies at 3697.00, the Nov 10 low.
• S&P E-Minis are consolidating but the contract remains bullish and is holding on to the bulk of its recent gains. A bull theme follows last week’s strong gains that resulted in a break of 3928.00, Nov 1 high. This strengthens a short-term bullish condition and price has established a sequence of higher highs and higher lows on the daily scale. The focus is on 4100.00 next. On the downside, key short-term support is at 3704.25, the Nov 3 low.

• Japan's NIKKEI closed lower by 97.73 pts or -0.35% at 27930.57 and the TOPIX ended 2.99 pts higher or +0.15% at 1966.28.
• Elsewhere, in China the SHANGHAI closed lower by 4.545 pts or -0.15% at 3115.435 and the HANG SENG ended 210.82 pts lower or -1.15% at 18045.66.
• Across Europe, Germany's DAX trades higher by 79.17 pts or +0.56% at 14339.9, FTSE 100 lower by 25.13 pts or -0.34% at 7332.87, CAC 40 down 1.49 pts or -0.02% at 6619.39 and Euro Stoxx 50 up 10.59 pts or +0.27% at 3900.77.
• Dow Jones mini up 55 pts or +0.16% at 33682, S&P 500 mini up 7.75 pts or +0.2% at 3981.25, NASDAQ mini up 35 pts or +0.3% at 11788.5.

COMMODITIES: Short-Term Gold Conditions Remain Bullish Following Last Week's Rally

• WTI futures appear vulnerable following last week’s bearish price activity and the contract is trading at this week’s lows. A bearish shooting star candle on Nov 7 was followed by a bearish engulfing candle the following day and these patterns highlighted an early reversal signal. A continuation lower would open $81.30, the Oct 18 low and a key support. On the upside, key short-term resistance is at $93.74, Nov 7 high.
• Short-term trend conditions in Gold remain bullish. Last week’s rally resulted in the break of a number of important resistance points. The yellow metal has cleared $1729.5, the Oct 4 high. This strengthens the current bullish theme and opens the $1800.0 handle and a key resistance at $1807.9, the Aug 10 high. On the downside, initial firm support is seen at $1702.3, the Nov 9 low. A pullback would be considered corrective.

• WTI Crude down $0.76 or -0.89% at $85.27
• Natural Gas up $0.17 or +2.79% at $6.376
• Gold spot down $6.73 or -0.38% at $1768.1
• Copper down $3.6 or -0.95% at $375.2
• Silver down $0.31 or -1.42% at $21.1994
• Platinum down $2.59 or -0.26% at $1008.45