MNI US OPEN - JPY Off Highs, Sources See Ueda as Overinterpreted

NEWS

US: MNI US Payrolls Preview: Looking Beyond The Post-Strike Boost
We have published and e-mailed to subscribers the MNI Payrolls Preview, including MNI analysis and views from nineteen analysts. Please find the full report here: https://roar-assets-auto.rbl.ms/files/58364/USNFPD...

CHINA (MNI): China To Prioritise Economic Stability - Politburo
China will prioritise economic stability in 2024 as it balances the need to expand domestic demand with deepening supply-side reform, the state-run Xinhua News Agency reported on Friday following a Politburo meeting presided by President Xi Jinping. Authorities will moderately increase the intensity of proactive fiscal policy and keep prudent monetary policy flexible as they seek to strengthen counter- and cross-cyclical adjustments, Xinhua reported. The meeting emphasised the need to coordinate high-quality development with security, and stressed that macro policies should be more consistent.

EU (MNI): No EU Deal Yet On Fiscal Rules As Talks Stall
EU finance ministers failed to reach a deal in negotiations over new EU fiscal rules in late night talks Thursday that continued until early in the morning, sources said. The most important stumbling block remains intact - a split between France and Germany over whether to define an excessive deficit based on the primary or structural budget balance, an important distinction for France which may well face an Excessive Deficit Procedure next year.

GERMANY (MNI): German-China FDI To Fall In 2024 - Snr Trade Rep
De-risking and the diversion of capital to the U.S. could see German foreign direct investment into China fall next year to below the pre-Covid level of EUR5.5 billion after reaching a near record high of EUR10.3 billion in H1 this year, a senior trade representative told MNI.

JAPAN (Reuters): Softening consumption may delay BOJ's exit from easy policy
Recent weakness in consumption has emerged as a fresh source of concern for Bank of Japan policymakers who are eyeing an exit from negative interest rates, three sources familiar with its thinking said, suggesting market expectations of an imminent rate hike may be over-blown.

JAPAN (MNI): Japan Nov Outlook Index Rise First In Four Months
Japan's outlook index for two-three months ahead rose 1.0 point to 49.4 in November from 48.4 in October, its first rise in four months, while the sentiment index remained unchanged at 49.5 after rising over the last three months, according to the Economy Watchers report released by the Cabinet Office on Friday. Companies noted lower private consumption due to price hikes, while household savings have increased, which has clouded the outlook, a cabinet office official told reporters.

DATA

MNI: BOJ Tankan To Show Steady Sentiment, Solid Capex Plans
The Bank of Japan's December Tankan quarterly survey due next week will show a slight improvement to business sentiment among smaller and major firms, and while capital investment plans are expected to fall, they remain solid compared to recent weak implementation, economists told MNI. The diffusion index (DI) for sentiment among major manufacturers will likely rise to +10 in December from +9 in September, according to the economists. A positive figure indicates the majority of firms see better business conditions.

MNI BRIEF: Japan Q3 GDP Revised Lower On Spending
Japan's economy contracted at a faster pace than initial estimates in Q3, down 0.7% q/q or 2.9% annualised from the first preliminary -0.5% or -2.1% annualised estimate, as authorities revised private consumption lower, second preliminary data released by the Cabinet Office showed on Friday.

MNI BRIEF: Japan October Real Wages Fall, 19th Straight Drop
The y/y drop of inflation-adjusted real wages, a barometer of households' purchasing power, narrowed to 2.3% in October from a 2.9% fall in September, the 19th straight monthly fall, data released by the Ministry of Health, Labour and Welfare showed on Friday. Total cash earnings, or nominal wages, posted a 1.5% y/y rise in October, accelerating from September's 0.6%.

FOREX: JPY Off Week's Best Levels as BoJ-Inspired Moves Seen Overextended

• Following yesterday's sharp rally, the JPY remains in focus as USD/JPY holds below the Y145.00 handle having printed a new pullback low at 141.71 in late US hours. The market moves increase the focus on the 200-dma, crossing at 142.34, which has acted as a magnet for prices.
• Recovery from lows has also been aided by a Reuters article citing sources in reporting that the comments from Ueda earlier this week were over-interpreted by markets - helping keep JPY from being the strongest performer in G10 for a second session.
• Downtrodden commodity-tied currencies have bounced modestly early Friday, with AUD and CAD among the strongest performers this morning as oil prices rebound very slightly off the Thursday pullback low.
• Focus turns to the November US nonfarm payrolls release, for which markets expect the US to have added 183k jobs over the month, keeping the unemployment rate unchanged at 3.9%. Average hourly earnings are seen slowing to 4.0% from 4.1% previously. UMich sentiment survey follows to round off the week.

GILTS: Holding Cheaper & Steeper, Global Dynamics Helping

Gilt futures last show -70 at 97.95, just off fresh session lows.

• Cash gilt yields are 4.5-8.0bp higher on the day, with the curve bear steepening.
• Weakness in wider core global FI markets provided the impetus for the early softening in gilts, allowing participants to look through the 3-year low in wage growth and slowing in hiring registered in the latest KPMG-REC labour market survey.
• Mixed dynamics within the BoE-Ipsos inflation attitudes survey provided little in the way of definitive steer for gilts with the early session lows in futures holding during the initial post-release downtick (which was presumably a result of the move higher in 5-year inflation expectations), before being broken in more recent trade.
• Wednesday’s boundaries remain intact.
• SONIA futures have followed gilts lower, last showing flat to -6.0 through the blues.
• BoE-dated OIS is little changed to 2.5bp firmer through ’24 MPC contracts.
• There isn’t much to note on the local calendar through the remainder of today’s session, with broader macro focus falling on the NFP release, particularly given the extent of the recent dovish repricing for the Fed/global central banks.

EGBs: Softer Ahead Of US NFP; Peripheries Widen

Core/semi-core EGBs are off intraday lows but remain softer on the day, with global markets squarely focused on the US labour market data released at 1330GMT.

• Bunds and OATs began the European session weaker as another round of pressure for long end JGBs provided a headwind for core global bonds in Asia hours, though a Reuters sources article playing down the BoJ's expected pivot away from NIRP may have helped EGBs find a base in recent trade.
• The latest uptick in equity futures may be supporting the sell-off, as participants substitute out of EGBs to take part in the rally. Higher Brent crude futures will also be providing pressure.
• That leaves Bund and OAT futures down around 40 ticks each today, with cash curves seen bear steepening.
• Peripheries are wider to Bunds in spite of the risk-on tone in equity markets, led by BTPs with the 10-Yr BTP/Bund spread is 2.0bps wider at 176.4bps.
• Domestically, there will also be some interest in the Ecofin meeting of finance ministers, with hopes that a deal on fiscal rules can be reached.
• Ahead of the US data later, the local docket is otherwise quiet today (note the ECB are in their pre-meeting quiet period).

EQUITIES: Bullish equity backdrop persists

A bullish theme in S&P e-minis remains intact and the contract continues to trade closer to its recent highs. Since the October 27 reversal, corrections have been shallow - this is a bullish signal. Note too that moving average studies are in a bull-mode position. A bullish theme in Eurostoxx 50 futures remains intact and the contract has traded higher this week. Resistance at 4387.00, Nov 24 high, was breached on Nov 30 . The break confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows.

• Japan's NIKKEI closed lower by 550.45 pts or -1.68% at 32307.86 and the TOPIX ended 35.44 pts lower or -1.5% at 2324.47.
• Elsewhere, in China the SHANGHAI closed higher by 3.353 pts or +0.11% at 2969.559 and the HANG SENG ended 11.52 pts lower or -0.07% at 16334.37.
• Across Europe, Germany's DAX trades higher by 72.26 pts or +0.43% at 16700.39, FTSE 100 higher by 43.63 pts or +0.58% at 7557.58, CAC 40 up 74.26 pts or +1% at 7502.49 and Euro Stoxx 50 up 32.48 pts or +0.73% at 4506.07.
• Dow Jones mini up 32 pts or +0.09% at 36196, S&P 500 mini up 3.75 pts or +0.08% at 4589.25, NASDAQ mini down 1.25 pts or -0.01% at 16037.5.

COMMODITIES: WTI Hits New Pullback Low, Reinforces Bearish Condition

Gold traded in a volatile manner Monday. The trend condition is bullish and Monday’s initial gains reinforce this theme. The precious metal touched a fresh all-time high of $2135.4 and this signals potential for a climb towards $2177.6 next, a Fibonacci projection. Bearish conditions in WTI futures remain intact and Wednesday’s sell-off reinforces this condition. The contract has cleared support at $72.37, the Nov 16 low. The break lower confirms a resumption of the downtrend and note too that moving average studies are in a bear-mode position.

• WTI Crude up $0.98 or +1.41% at $70.3
• Natural Gas up $0.01 or +0.19% at $2.588
• Gold spot up $1.58 or +0.08% at $2030.33
• Copper up $3.7 or +0.97% at $383.5
• Silver up $0.01 or +0.06% at $23.8307
• Platinum up $16.19 or +1.78% at $926.56