EXECUTIVE SUMMARY:
- CHINA CENTRAL BANK MAKES FIRST SHIFT IN MONPOL STANCE SINCE 2011
- ISRAELI GROUND FORCES CROSS INTO SYRIA
- BOJ PLANS RARE JANUARY SPEECH
- LOW PRODUCTIVITY TO EXTEND RBA CPI TIMELINE
Figure 1: AUD/JPY bounces off lows on China policy shift
NEWS
CHINA (MNI): China To Strengthen Policy Easing In 2025: Politburo
China will implement a more proactive fiscal policy and a moderately loose monetary policy in 2025 to boost domestic demand and stabilize both property and stock markets, according to a Political Bureau meeting Monday.Chaired by President Xi Jinping, the meeting called for more vigorous macroeconomic policies, an enriched policy toolbox and strengthened countercyclical adjustments via enhancing the foresight, targeting, and greater effectiveness of policy moves.
US/CHINA (BBG): Trump Says for First Time He Communicated With Xi After Election
Donald Trump said he had an exchange with Chinese leader Xi Jinping in recent days, the first clear indication of direct contact between the two men since the former US president’s reelection in November. In an interview with NBC’s Meet the Press that aired over the weekend and was taped on Friday, Trump said “we’ve had communication” as recently as last week, without specifying when that was or what was discussed. They last met in person in June 2019 on the sidelines of the Group of 20 summit in Japan.
GERMANY (BBG): VW Faces More Walkouts as Union Talks Enter Fourth Round
Volkswagen AG workers are prepared to escalate walkouts if management and labor leaders fail to break through a stalemate over painful cuts at the carmaker’s namesake brand. Thousands of VW employees are already poised to walk off their jobs Monday morning — the second time this month — as management and the powerful IG Metall union sit down for a fourth round of deliberations.
SYRIA/ISRAEL (NYT): Israeli Ground Forces Cross into Syria, Officials Say
Israeli ground forces have overtly crossed into Syrian territory for the first time since the 1973 October War, passing the demilitarized border zone, two Israeli officials said. Israeli ground forces advanced beyond the demilitarized zone on the Israel-Syria border over the weekend, marking their first overt entry into Syrian territory since the 1973 October War, according to two Israeli officials speaking anonymously to discuss sensitive developments.
ISRAEL (MNI): Names Exchanged In Possible Sign Of Progress On Gaza Ceasefire
Qatari outlet Al Araby Al Jadeed reports that according to its sources, indirect negotiations between Israel and Hamas on a Gaza ceasefire-for-hostages deal have reached the stage of exchanging names of hostages and prisoners via mediators. Hamas is said to have passed to Egypt a list of ill or elderly Israeli hostages that would be released as part of a first phase in the agreement.
JAPAN (BBG): BOJ Plans a Rare January Speech That May Lift Rate Hike Views
The Bank of Japan is taking an unusual step that signals its efforts to improve communications, in a move that may increase market expectations for a rate hike next month. The central bank’s Deputy Governor Ryozo Himino will be giving a speech to local business leaders in Yokohama followed by a press conference on Jan. 14, the BOJ said Monday. The move is unusual, as board members haven’t held this kind of event before the first policy meeting of the year at least since former Governor Haruhiko Kuroda began his term in 2013.
SOUTH KOREA (BBG): South Korea’s Yoon Banned From Overseas Travel as Probes Mount
South Korea banned President Yoon Suk Yeol from traveling overseas as a series of probes put the embattled leader at risk of detention over his chaotic declaration of martial law. The Justice Ministry accepted a request for the ban on Monday from the Corruption Investigation Office For High-ranking Officials, according to Bae Sang-up, commissioner of the ministry’s Korea Immigration Service.
RBA (MNI): Low Productivity To Extend RBA CPI Timeline- Ex Staff
Low productivity growth coupled with the Wage Price Index level will pressure the Reserve Bank of Australia to reconsider its current timeline for returning underlying inflation to the top its 2-3% target band by Q2 next year, former RBA staff told MNI
DATA
CHINA (MNI): China Nov CPI Slows To 5-Month Low Of 0.2% Y/Y
China's Consumer Price Index rose 0.2% y/y in November, slowing for the third straight month from October's 0.3% and reaching a five month low, underperforming expectations by 20 basis points, while core CPI continued to rebound to 0.3%, data from the National Bureau of Statistics showed Monday. CPI fell 0.6% m/m, falling further from October’s 0.3% decline, mainly due to the 2.7% drop in food prices, which was 2.5 percentage points deeper than the average level over the same period in the past decade, as warmer weather boosted supply, the NBS said.
JAPAN (MNI): Japan Q3 GDP Revised Up On Net Exports, Capex
Japan's economy for Q3 grew at a faster pace as net exports and private inventories were revised up from its first preliminary estimates, although private consumption was revised down, preliminary data released by the Cabinet Office showed on Monday. The contribution of net exports was revised to -0.2 pp from -0.4 pp. Private-sector inventories to total domestic output contributed a revised +0.2 pp from +0.1 pp. Capital investment fell 0.1% q/q, revised up from -0.2% seen in the preliminary release. The contribution from capital investments was unrevised at -0.0 pp.
JAPAN (MNI): Japan Nov Sentiment, Outlook Indexes Rise
Japan's sentiment and outlook indices two-three months ahead posted their first rise in three months in November but the government left its assessment unchanged, the Economy Watchers report released by the Cabinet Office showed Monday. The index linked to households rose but those focused on business and labour-market conditions fell. The Economy Watchers sentiment index for the current economic climate stood at a seasonally adjusted 49.4 in November, down from 47.5 in October.
EGBS: Bund Futures Off Lows As Equites and Oil Fade
Bund futures have moved away from intraday lows, now +11 ticks today at 136.19. Bunds were pressured by the contained risk-positive move following China’s dovish monetary policy stance tweak earlier, but have since recovered as European equity and crude oil futures move off highs.
- The December Eurozone Sentix investor confidence survey was weaker-than-expected at -17.5 (vs -12.3 cons, -12.8 prior), but had little market impact.
- German yields are within 0.5bps of Friday’s close, while 10-year EGB spreads to Bunds are a little tighter (albeit off narrowest levels).
- Political machinations in France following last week’s no confidence vote remain a key focus for EGB markets. President Macron is set to meet with parliamentary groups this morning, with Le Parisien reporting that he hopes to name a PM tomorrow. The 10-year OAT/Bund spread is ~1bp tighter at 76bps.
- We estimate EGB net flows at negative E6.6bln this week, versus negative E29.0bln last week, with issuance starting to wrap up for the year.
- Regional focus remains on Thursday’s ECB decision, MNI’s preview will be released later this week.
GILTS: Slight Outperformance Vs. Bunds, BoE's Ramsden Eyed Later
Gilts continue to stick to narrow ranges, adjusting to the late Friday bid in wider core global FI markets and spill over from today’s dovish tweak in China’s monetary policy stance.
- Futures +22 at 95.88, within Friday’s range.
- Initial support/resistance at 95.49/96.18.
- Bullish corrective cycle in the contract remains in play.
- Yields 0.5-1.5bp lower.
- 10s 1bp tighter vs. Bunds. Spread last 215.5bp, 220bp continuing to cap, while relative fundamentals limit pullbacks.
- SONIA futures flat to +4.5, little changed vs. pre-open levels.
- BoE-dated OIS showing 82bp of cuts through Dec ’25, 21bp of easing priced through Feb, 29bp through March, flat to 2bp more dovish on day.
- The KPMG-REC Report on Jobs provided the latest downbeat assessment of the labour market.
- Looking ahead, BoE Deputy Governor Ramsden will speak on "Financial stability and the Bank of England’s toolkit" (13:00 London).
- The speech itself is unlikely to be a market mover but the Q&A will be watched for any deviation from Ramsden's view that case 2 (gradual cuts required) is most likely, with risks skewed towards case 1 (requiring faster cuts).
- He last spoke on 20 November so it’s unlikely his view will have substantially changed.
- Elsewhere, the has FT reported that the EU is drawing up tough red lines for its "reset" negotiations with the UK, with Chancellor Reeves attending today’s Eurogroup meeting.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.699 | -0.2 |
Feb-25 | 4.494 | -20.7 |
Mar-25 | 4.408 | -29.3 |
May-25 | 4.231 | -46.9 |
Jun-25 | 4.149 | -55.1 |
Aug-25 | 4.021 | -67.9 |
Sep-25 | 3.989 | -71.1 |
Nov-25 | 3.913 | -78.7 |
Dec-25 | 3.882 | -81.8 |
FOREX: AUD Firms, JPY Slips on China Policy Tweak
- The greenback is slightly softer, with the JPY similarly backtracking after risk sentiment saw support on the back of China headlines alongside the European open. China's Politburo meeting ended with a firmer commitment to easing and propping up the economy next year, with the central bank also making a major dovish shift to monetary policy for the first time since 2011.
- As such, equity markets are firmer in Europe, however US futures are yet to receive the full benefits, pointing to a modestly lower open on Wall Street later today. AUD and NZD are the session's best performers in the interim.
- News from China this morning has provided a boost to risk sentiment across FX543wf markets, with AUD (+0.88) leading the G10 charge. We noted the monetary policy stance tweak and fiscal language used today reduces the odds of a meaningful move lower in the country's GDP growth target for '25. Despite AUDUSD’s advance, trend conditions remain bearish and resistance is at 0.6497, the 20-day EMA. This average has capped gains well in recent weeks.
- Focus for the remainder of Monday trade turns to the NY Fed's 1-year inflation expectations print as well as an appearance from BoE's Ramsden. The Fed have entered the their pre-meeting media blackout - leaving the speaker schedule more quiet than usual.
EQUITIES: EuroStoxx Holds on to Recovery
The S&P E-Minis contract maintains a bullish tone and price is trading at its latest highs. Recent gains confirm a resumption of the uptrend and signal scope for a continuation near-term. Note that moving average studies are in a bull-mode set-up. Eurostoxx 50 futures traded higher last week and the contract is holding on to its latest gains. The move higher undermines a recent bearish theme. Price has traded through the 50-day EMA, at 4873.27.
- Japan's NIKKEI closed higher by 69.33 pts or +0.18% at 39160.5 and the TOPIX ended 7.34 pts higher or +0.27% at 2734.56.
- Elsewhere, in China the SHANGHAI closed lower by 1.542 pts or -0.05% at 3402.534 and the HANG SENG ended 548.24 pts higher or +2.76% at 20414.09.
- Across Europe, Germany's DAX trades lower by 2.71 pts or -0.01% at 20378.86, FTSE 100 higher by 25.72 pts or +0.31% at 8333.32, CAC 40 up 37.25 pts or +0.5% at 7461.32 and Euro Stoxx 50 up 10.92 pts or +0.22% at 4987.2.
- Dow Jones mini up 2 pts or +0% at 44722, S&P 500 mini down 2.25 pts or -0.04% at 6097.25, NASDAQ mini down 14.5 pts or -0.07% at 21644.75.
COMMODITIES: Bearish WTI Threat Remains
Gold is unchanged and continues to trade inside a tight range, for now. The long-term trend condition remains bullish and the Oct 31 - Nov 14 bear leg appears to have been a correction. Moving average studies are in a bull-mode position. A bearish threat in WTI futures remains present and recent weakness reinforces this theme. A continuation down would open $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support.
- WTI Crude up $0.8 or +1.19% at $67.99
- Natural Gas up $0.16 or +5.33% at $3.241
- Gold spot up $21.05 or +0.8% at $2654.46
- Copper up $8 or +1.91% at $427.65
- Silver up $0.39 or +1.25% at $31.359
- Platinum up $19.61 or +2.11% at $951.38
| Date | GMT/Local | Impact | Country | Event |
| 09/12/2024 | 1300/1300 |  GB | BOE's Ramsden speech at OMFIF "Financial stability and the Bank of England's toolkit" | |
| 09/12/2024 | - |  JP | Economy Watchers Survey | |
| 09/12/2024 | - |  EU | ECB's Cipollone in Eurogroup meeting | |
| 09/12/2024 | 1500/1000 | ** |  US | Wholesale Trade |
| 09/12/2024 | 1600/1100 | ** | US | NY Fed Survey of Consumer Expectations |
| 09/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 09/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 10/12/2024 | 0330/1430 | *** |  AU | RBA Rate Decision |
| 10/12/2024 | 0700/0800 | *** |  DE | HICP (f) |
| 10/12/2024 | 0700/0800 | *** |  NO | CPI Norway |
| 10/12/2024 | 0700/0800 | ** |  SE | Private Sector Production m/m |
| 10/12/2024 | 0900/1000 | * |  IT | Industrial Production |
| 10/12/2024 | 1000/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 10/12/2024 | 1100/0600 | ** | US | NFIB Small Business Optimism Index |
| 10/12/2024 | - | *** |  CN | Trade |
| 10/12/2024 | - | *** | CN | Money Supply |
| 10/12/2024 | - | *** | CN | New Loans |
| 10/12/2024 | - | *** | CN | Social Financing |
| 10/12/2024 | - | EU | ECB's De Guindos in ECOFIN meeting | |
| 10/12/2024 | 1330/0830 | ** | US | Non-Farm Productivity (f) |
| 10/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 10/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 10/12/2024 | 1700/1200 | *** | US | USDA Crop Estimates - WASDE |
| 10/12/2024 | 1800/1300 | *** | US | US Note 03 Year Treasury Auction Result |