MNI US OPEN - Markets Watch For Clues in UMich, PPI

NEWS

CHINA (MNI): China to Sell CNY 750bln in Special Bonds

MNI (London) - Bloomberg report that China are to sell CNY 750bln in special sovereign bonds to aid the economy. The three-year bond sale will take place on December 12th and the MoF state the sale will aid the economy. Note on these China sovereign bond sales headlines, it's not too far outside of expectations. The China Securities Journal wrote back in October that "China may issue special bonds planned for 2023 in 4Q of this year to bolster spending on infrastructure and stabilize growth".

CHINA (BBG): Xi Visit to Saudi Arabia Brings Pledge of More Oil Trade

China is willing to expand oil trade with Saudi Arabia, President Xi Jinping said during a visit to the kingdom that reinforced ties between the world’s No. 2 economy and its top supplier of crude. In a meeting in Riyadh on Thursday, Xi and Crown Prince Mohammed bin Salman also agreed to hold summits every two years and upgraded the relationship to a comprehensive strategic partnership, the official Xinhua News Agency reported.

CHINA (MNI): China Prepares to Launch Swap Connect In 2023

MNI (Beijing- Chinese regulators are preparing to launch the Swap Connect next year, which will provide global investors with access to China's derivatives market, said Huo Yingli, party secretary of the China Foreign Exchange Trade System, at a forum on Friday.

SWEDEN (MNI): Optimism Inflation Can Be Curbed - Riksbank Jansson

Riksbank Deputy Governor Per Jansson expressed optimism that with central banks having acted "relatively early and in unison" that the prospects for dampening global inflation were good. At a Swedbank event Friday, Jansson said that comparisons with the 1970s were misleading, despite inflation having risen to a level, over 9%, that was similar to that seen in the 70s.

RUSSIA/TURKEY (MNI): Erdogan Criticises NATO Allies; Will Talk w/Putin & Zelensky on Grain Deal

Turkish President Recep Tayyip Erdogan has confirmed that he will hold a call with his Russian counterpart Vladimir Putin. Speaking at the TRT Wolrd Forum, Erdogan states that he will also talk to Ukrainian President Volodymyr Zelenskyy in an effort to maintain the uneasy truce over grain shipments from Black Sea ports brokered by Turkey and the UN.

JAPAN (MNI): BOJ Eyes 2023 CPI as Trigger for Policy Tweaks

Bank of Japan officials may initiate preliminary discussions about adjusting monetary policy if its 2023 inflation forecast is revised up, laying the groundwork for a possible change in its easing bias after April should its 2% inflation target come into sight, MNI understands.

DATA

NORWAY DATA (MNI): CPI Cools from '87 Highs, Stats Norway Sees Sticky 2023 Inflation

• NORWAY NOV CPI -0.2% M/M, +6.5% Y/Y
• NORWAY NOV CORE CPI -0.1% M/M, +5.7% Y/Y

Norwegian CPI was lower than anticipated in November, declining by -0.2% m/m (vs Oct and forecast +0.3%) and easing 1pp to +6.5% y/y in November (vs forecast +7.0%). The Norges Bank's closely watched underlying CPI (CPI-ATE) recorded a downside surprise, ticking down 0.3pp from the October series high to +5.7% y/y. Month-on-month downward pressure emanated from easing food, furnishings, transport, communications, recreation and hospitality prices. Statistics Norway released their December Economic Trends report this morning.

UK DATA (BBG): Bank of England Says Consumer Inflation Outlook Drifts Higher

The Bank of England said the expectations that British consumers have about where inflation is headed drifted further above its 2% target, and more people were dissatisfied with the way the central bank is doing its job. The central bank said consumers in November expected prices across the economy to rise about 3.4% within the next two years, up from 3.2% when the survey by Ipsos was last conducted in August. Asked about inflation in five years’ time, respondents gave a median answer of 3.3%, up from 3.1%.

CHINA DATA (MNI): China's Nov CPI Falls To 8 Month Low; PPI Declines

• CHINA NOV CPI +1.6% Y/Y VS +2.1% Y/Y OCT
• CHINA NOV CPI -0.2% M/M VS +0.1% M/M OCT
• CHINA NOV FOOD PRICES +3.7% Y/Y VS +7.0% Y/Y OCT
• CHINA NOV PPI -1.3% Y/Y VS -1.3% Y/Y OCT
• CHINA NOV PPI +0.1% M/M VS +0.2% M/M OCT

MNI (Beijing) - China's November Consumer Price Index fell to an eight-month low of 1.6% y/y, in line with the median forecast, while slowing sharply from October's 2.1% y/y pace as Covid-19 outbreaks and a high base effect sapped the gain, data from the National Bureau of Statistics released on Friday showed.

FX SUMMARY: Markets Awaiting Inflationary Cues From UMich, PPI

• Currency markets are generally extending the intraday trends that bedded in ahead of the Thursday close, with EUR and GBP extending their bounce against the greenback. EUR/USD printed an overnight high at 1.0588, just shy of the multi-month best printed on Monday. This reinforces the importance of 1.0595 as resistance going forward, with today's US data of particular importance.
• Equities futures are mixed, with US indices a touch firmer, while Europe looks weak in comparison. The e-mini S&P is continuing to edge back through the Monday/Tuesday losses, but a more significant rally will be needed to take out Tuesday's 4014.75 and Monday's 4075.75.
• On an intraday basis, JPY and GBP are the firmest in G10, while CAD and AUD are among the poorest performers. Nonetheless, ranges remain tight, with conviction limited ahead of the raft of CB meetings next week.
• The prelim read for December Uni of Michigan confidence is due, with inflation expectations seen holding at 4.9% and 3.0% on the one- and 5-10yr horizon respectively and markets will be looking to see whether slowdown in the Y/Y rate of CPI has filtered into inflationary expectations. US PPI is also due, adding to the inflationary picture ahead of next week's CPI release and the FOMC meeting.

BOND SUMMARY: Some Divergence Between Europe and the US

• EGBs and Bund have been under early pressure, potentially led ahead of the ECB TLTRO repayment announcement expected at 11.05GMT.
• Despite the early selling futures contracts are off their lows at the time of typing.
• Italian BTP is underperforming, pushing the BTP/Bund spread 4bps wider and widest since the 30th November.
• All peripheral spread sits wider against the German 10yr in early trade, with Italy leading.
• Gilt is mostly trading inline with Europe, although outperforms somewhat, but still in the red.
• Gilt/Bund spread is 1.4bp tighter, but within past ranges.
• There's a continued divergence between the US and Europe in the past few sessions, and Treasuries trade in the green, as well as the Eurodollar rate strip.
• TYH3/Bund spread is lowest since 12th October.
• Next immediate support will at that date's low, at 158.23bps.
• A clear break through the latter, opens to 153.95bps, the October low, and tightest print since 22nd June.
• Looking ahead, TLTRO will be up next, and later, sees US PPI and Prelim Michigan.
• US Wholesale Inventories will be final reading.

EQUITIES: EuroStoxx Maintains Price Sequence of Higher Highs

EUROSTOXX 50 futures trend conditions remain bullish and the recent move lower is considered corrective - for now. Recent high prints mark an extension of the uptrend that started in early October and this maintains the price sequence of higher highs and higher lows. The recent break of 3810.00, Aug 17 high, also strengthens the case for bulls. The focus is on 4049.50, Feb 23 high (cont). First support to watch is 3896.50, the 20-day EMA. S&P E-Minis remain below last week’s high and the contract is trading closer to this week's lows. The move down is considered corrective - for now. The uptrend that started on Oct 13 remains intact but attention is on support at the 50-day EMA, which intersects at 3917.08. A clear break of this EMA would threaten bullish conditions and suggest potential for a deeper reversal. The bull trigger, to resume recent bullish activity, is at 4110.00.

• Japan's NIKKEI closed higher by 326.58 pts or +1.18% at 27901.01 and the TOPIX ended 20.06 pts higher or +1.03% at 1961.56.
• Elsewhere, in China the SHANGHAI closed higher by 9.6 pts or +0.3% at 3206.95 and the HANG SENG ended 450.64 pts higher or +2.32% at 19900.87.
• Across Europe, Germany's DAX trades higher by 22.01 pts or +0.15% at 14275.77, FTSE 100 lower by 9.3 pts or -0.12% at 7465.66, CAC 40 down 13.04 pts or -0.2% at 6632.51 and Euro Stoxx 50 down 2.22 pts or -0.06% at 3917.37.
• Dow Jones mini up 27 pts or +0.08% at 33842, S&P 500 mini up 8.5 pts or +0.21% at 3976.75, NASDAQ mini up 43 pts or +0.37% at 11698.

COMMODITIES: Gold Trend Conditions Remain Bullish

Trend conditions in WTI futures remain bearish and this week’s move lower has reinforced this theme. $74.96, the Sep 28 low, has been cleared. This break confirms a resumption of the downtrend and sights are on the $70.00 psychological handle. Moving average studies are in a bear mode condition, highlighting the current trend direction. Key resistance is at $82.17, the 50-day EMA. Trend conditions in Gold remain bullish and Monday’s retracement appears to be a correction. A fresh trend high last week reinforced a bullish theme and price breached $1786.5, the Nov 15 high and a bull trigger, confirming a resumption of the uptrend. $1800.0 has also been cleared and sights are on resistance at $1807.9, the Aug 10 high that has been pierced. A clear break would be bullish. Key trend support is at $1729.0, the Nov 23 low.

• WTI Crude up $0.16 or +0.22% at $71.67
• Natural Gas down $0.03 or -0.54% at $5.941
• Gold spot up $1.78 or +0.1% at $1791.24
• Copper down $0.15 or -0.04% at $388.85
• Silver down $0.05 or -0.21% at $23.0491
• Platinum down $5.63 or -0.56% at $1004.23