MNI US OPEN - Israel Under Pressure to Extend Ceasefire

NEWS:

ECB (MNI): ECB Too Confident On Rates-Holtemoeller
The European Central Bank is likely to keep rates at current levels beyond the second quarter of next year, a leading German government adviser told MNI, but he added that it had been unwise to commit to keeping policy unchanged for an extended period. “I think monetary policy rates will stay where they are until late 2024,” said Oliver Holtemoeller, vice president of the Halle Institute for Economic Research (IWH), and a member of the Federal Stability Council Advisory Board.

UK (MNI): BOE Remit Should Be Reviewed Every 5 Years-UK Lords
The UK Parliament should conduct an "overarching review of the Bank's remit and operations every five years", thereby boosting the ability of legislators to hold Threadneedle Street to account and express its view on the Bank’s performance and leadership, a report published Monday concludes. The report by the House of Lords Economics Affairs Committee says the "policy errors" in recent years as inflation rose had tested the BOE's framework of operational independence and resulted in a pblic loss of confidence in the institution.

UK (BBG): Sunak Says Claims UK Headed for Austerity ‘Simply Unfounded’
Rishi Sunak denied his economic plans are about to deliver a fresh bout of UK austerity, even as the official fiscal watchdog warned his tax-cutting strategy assumes a significant squeeze on stretched public services. “Any commentary or accusation that’s what’s happening is just simply unfounded,” the British prime minister said in a Bloomberg TV interview late Sunday. “Government is already spending a lot of people’s money. I’d rather focus on efficiency in the public sector and prioritize cutting people’s taxes rather than the government spending ever more of their money.”

UK/AUSTRALIA (MNI): BoE's Hauser Joins RBA As Deputy Gov
The Reserve Bank of Australia has appointed Andrew Hauser, former executive director, markets at the Bank of England, deputy governor. Hauser replaces Luci Ellis who left earlier in the year to join Westpac as its chief economist. He joined the BoE in 1992 and has held senior roles across the bank.

NETHERLANDS (MNI): Scout Intending To Sound Out Coalition Resigns Amid Fraud Links
Senator Gom van Strien has resigned as parliamentary 'scout', the individual tasked with making initial inquiries with party leaders about the potential formation of a coalition gov't following elections. Media reportsover the weekend found that van Strien, finance spox for the PVV in the Senate, was linked to a fraud at his former employer Utrecht Holdings.

ISRAEL (The Times): Israel facing pressure to extend Gaza ceasefire to bring hostages home
Pressure is mounting on Israel to extend a ceasefire agreement in Gaza to secure the release of further hostages after Hamas said it was open to extending the truce. Hamas said it was willing to prolong the ceasefire, which is due to expire on Monday evening after the final scheduled release of 11 Israeli hostages. The terror group says it is still holding 10-20 women and children eligible for release under the agreement.

CHINA (BBG): Xi to Visit Shanghai for First Time Since Lockdown, SCMP Says
Chinese President Xi Jinping will visit Shanghai for the first time since the financial hub’s bruising two-month Covid lockdown, local media reported, as he tries to boost waning private sector sentiment. Xi is scheduled to visit the Shanghai Futures Exchange and several technology giants operating in the mega-city on Tuesday, the South China Morning Post reported, citing people familiar with the matter. He will also urge officials to boost market liberalization to spur cross-border trade and capital flows during his three-day trip, according to the Monday report.

CHINA (MNI): China Should Set A 5% Growth Target For 2024
China should set its economic growth target at 5% for 2024 to boost market confidence, though the GDP is estimated to print near 4.8%, according to a report released by a prominent think tank on Sunday. The economy will likely further recover next year, as both the inventory cycle and balance sheet repair have begun to bottom out with narrowing declines in export and real-estate investment, according to the annual report by the China Macroeconomy Forum.

JAPAN (MNI): BOJ Cannot Sufficiently Foresee 2% Target - Ueda
Bank of Japan Governor Kazuo Ueda said on Monday that the BOJ cannot sufficiently foresee the probability that the economy will achieve the 2% price target in a stable and sustainable manner. Ueda told lawmakers that Japan’s economy is recovering moderately and the output gap has improved close to zero percent but there is high uncertainty that a virtuous cycle between wages and prices will strengthen in the future.

JAPAN (MNI): Economic Concerns Weigh On BOJ's April Exit Plan
Growing concern over Japan’s outlook due to weaker-than-anticipated GDP alongside anxiety over a slower U.S. economy could lead the Bank of Japan to delay a shift away from easy policy expected in April, MNI understands. BOJ officials will focus on revision to preliminary Q3 GDP data on Dec. 8, which fell 0.5% q/q – the first contraction in three quarters, which has led some to question whether an April exit remains possible, despite persistently strong inflation and growing hope for wage hikes in 2024.

JAPAN (MNI): PM Kishida Approval Rating Drops To New Low - Press
The approval rating of Japanese Prime Minister Fumio Kishida's cabinet plunged to a new low at 30%, slipping 3 percentage points from October, in the latest poll by Nikkei and TV Tokyo, the Nikkei reported on Monday. The 30% approval rating is the lowest of Kishida's time in office, which began in October 2021. It is also the lowest since his Liberal Democratic Party regained power in 2012 with Shinzo Abe's second stint as prime minister.

KOREA (MNI): N. Korea Restores Guard Posts At Border, S. Korea Reshuffles Spy Agency Leadership
South Korean Defence Ministry reported that the North has started moving troops and rebuilding military infrastructure at the inter-Korean border after the 2018 bilateral tension-reduction pact effectively collapsed on the back of Pyongyang's successful launch of a spy satellite last week.

ARGENTINA (BBG): Argentina’s Milei Heads to US, Invites Lula to Inauguration
Argentina President-elect Javier Milei heads to the US on Sunday night while his incoming foreign minister traveled to Brazil to invite President Luiz Inacio Lula da Silva to the Dec. 10 inauguration. Milei’s delegation will meet with officials from the US Treasury, the White House and the International Monetary Fund in Washington, according to a text message from a Milei spokesperson. The purpose of the meetings is to explain the incoming administration’s economic plan including the fiscal adjustment, monetary reform, state reform and deregulation. The delegation is not seeking financing on this trip, according to the spokesperson.

DATA

JAPAN (MNI): Japan Oct Services PPI Rises 2.3% Vs. Sept's 2.0%
Japan's services producer price index rose 2.3% y/y in October, marking the 32nd straight rise and accelerating from September's revised 2.0%, showing that pass-through of cost increases continued in services, preliminary data released by the Bank of Japan on Monday showed. The Bank of Japan will focus on whether high services prices will lead to wage hikes in non-manufacturers. The SPPI rose 0.5% m/m in October after being unchanged in September.

FOREX: AUD/USD Builds on Recent Strength to Touch Multi-Month High

• Scandi currencies are modestly outperforming, with SEK and NOK firmer against most others ahead of the NY crossover. The USD index is on the backfoot, keeping last week's lows of 103.178 within reach. Weakness through here would put the USD Index at the lowest levels since late August, with 102.936 the next downside level to watch.
• CAD is the poorest performer in G10 as oil prices continue to perform poorly and undermine the currency. Markets watch the awaited and delayed OPEC meeting later in the week, at which they are under pressure to cut supply further in order to prop up a price that's faltered due to global demand concerns and tighter economic conditions. USD/CAD trades back above last week's 1.3594 low, with the 1.3679 50-dma the next upside level.
• AUD strength has built on last week's rally, with the pair benefiting from the first close above the 200-dma since July (0.6584). Resultingly, AUD/USD has touched the best level since Aug10 at 0.6601 ahead of the US open.
• US new home sales and the Dallas Fed manufacturing activity index make up the data schedule for Monday, with ECB's Lagarde the sole central bank speaker. She appears in front of EU Parliament, conducting a monetary dialogue with lawmakers.

EGB SUMMARY: Bunds A Touch Firmer, Peripherals Tighten

Bund futures are +20 or so, above 130.50 and registering fresh session highs at typing. We haven’t seen much in the way of meaningful headline flow, leaving the space to trade in a two-way manner alongside wider core global FI markets.

• German yields are 1.0-2.0bp lower across the curve.
• Light hedging flows ahead of EU bond supply may have applied some modest pressure, but the move more than reversed ahead of auction results.
• Over the weekend, Bundesbank chief Nagel called on Germany to resolve the ongoing budget situation quickly, while sticking to his usual hawkish monetary policy tone, stressing that the ECB is "not yet where we want to be" on inflation.
• Elsewhere, Bank of Spain Governor de Cos noted on Friday that Eurozone bank lending has been "falling faster than we expected."
• Finally, Estonian CB chief Muller does not currently see the need for more rate hikes from the ECB.
• 10-Year peripherals are tighter to Bunds with the exception of Greece. The 10-year BTP/Bund spread is currently 2.3bps narrower at 172.7bps, still some 4bps wider than the multi-month tights seen last Monday, post-Moody's ratings update (Italy affirmed at Baa3, outlook upgraded to stable from negative).
• Today's European docket is highlighted by comments from ECB President Lagarde (1400GMT/1500CET), who speaks at the EU Parliament before the Committee on Economic and Monetary Affairs.

GILTS: Futures Recover To Mid-Range After Early Two-Way Flow

The early pullback from best levels saw gilt futures stabilise around unchanged levels, before ticking back up to the 95.65 area, +25 on the day. The contract last shows ~25 ticks shy of the peak of its ~50 tick range. Note that the early move higher saw a brief closure of Friday’s opening gap lower.

• Cash gilts yields are 1-2bp richer on the day, with 5s leading the move at the margin.
• A quick reminder that BoE Governor Bailey reaffirmed a familiar train of thought in his latest interview with the local press, pushing back on the idea of rate cuts in the foreseeable future. Elsewhere, he noted that recent inflation figures were “very good news.” Although the latter point was essentially a repeat, it seemingly provided some support for the short end early on, which spilled into gilts.
• Still, Bailey’s insistence re: no rate cuts in the foreseeable future, the realisation that the “very good news” comments were essentially a repeat and the presence of some corporate £IG supply limited/countered the richening move.
• SONIA futures are flat to 5bp richer, a little off best levels.
• BoE-dated OIS is 0.5-4.0bp softer on the day.
• Looking ahead, the BoE will sell short maturity gilts today. Elsewhere, lower tier domestic data is due.

EQUITIES: Bullish EuroStoxx50 Theme Persists Into End-November

A bullish theme in S&P e-minis remains intact and price is trading closer to its recent high. Recent gains have resulted in the break of a trendline drawn from the Jul 27 high. This breach reinforces bullish conditions and signals scope for a climb towards 4597.50, the Sep 1 high. A bullish theme in Eurostoxx 50 futures remains intact and the contract traded higher Friday as the uptrend extends. Moving average studies are in a bull-mode position signalling a rising cycle and the potential for a continuation higher.

• Japan's NIKKEI closed lower by 177.86 pts or -0.53% at 33447.67 and the TOPIX ended 9.18 pts lower or -0.38% at 2381.76. Elsewhere, in China the SHANGHAI closed lower by 9.272 pts or -0.3% at 3031.7 and the HANG SENG ended 34.36 pts lower or -0.2% at 17525.06.
• Across Europe, Germany's DAX trades lower by 39.68 pts or -0.25% at 15995.56, FTSE 100 lower by 27.55 pts or -0.37% at 7463.79, CAC 40 down 10.09 pts or -0.14% at 7285.73 and Euro Stoxx 50 down 8.36 pts or -0.19% at 4365.07.
• Dow Jones mini down 81 pts or -0.23% at 35344, S&P 500 mini down 11.75 pts or -0.26% at 4561, NASDAQ mini down 38 pts or -0.24% at 15987.5.

COMMODITIES: Bearish Theme Plays Out in WTI Futures

The trend condition in Gold remains bullish and last week’s gains reinforce this condition. The yellow metal has started this week on a bullish note and pierced resistance at $2009.4, the Nov 7 high. A clear break of this hurdle would confirm a resumption of the uptrend and open $2022.2. A bearish theme in WTI futures remains in play and recent gains are considered corrective. Attention is on support at $72.37, the Nov 16 low. A break would confirm a resumption of the downtrend that started late September and maintain a price sequence of lower lows and lower highs.

• WTI Crude down $0.69 or -0.91% at $74.85
• Natural Gas down $0.13 or -4.66% at $2.721
• Gold spot up $14.21 or +0.71% at $2014.66
• Copper down $1.75 or -0.46% at $381.65
• Silver up $0.43 or +1.78% at $24.7407
• Platinum up $2.78 or +0.3% at $938.81