EXECUTIVE SUMMARY
- RBA HOLDS, BUT COMMUNICATION TURNS SLIGHTLY DOVISH
- MACRON WIDENS TALKS IN QUEST FOR STABLE FRENCH GOVERNMENT
- CHINA NOVEMBER EXPORTS SLOWS, IMPORTS SLIDE
- GERMAN IFO PRICE EXPECTATIONS FELL IN NOVEMBER
Figure 1: EUR/GBP drops to new pullback lows
Source: MNI/Bloomberg
NEWS
MNI US CPI PREVIEW - DECEMBER 2024: Setting the Tone for 2025
Analysts’ forecasts for November CPI imply remarkably steady sequential inflation versus October, with the MNI median and average for core expected to show an unchanged 0.28% M/M. Combined with Thursday’s estimates for PPI inputs, core PCE is in turn seen moderating to between 0.18-0.25% M/M in November, vs 0.27% in October. Headline inflation is seen picking up slightly, to 0.27% (median) from 0.24% prior, with both food and energy prices accelerating slightly on a sequential basis.
MNI BOC PREVIEW - DECEMBER 2024: Eyeing a ‘Hawkish’ 50bp Cut
The BoC is mostly priced to cut its policy rate by 50bps for a second consecutive meeting, with last week’s strong increase in the unemployment rate playing a significant role. We expect the statements to point to a need for further rate cuts ahead but will be keenly watching for any more explicit signs that the pace of easing could slow.
US (WaPo): Hegseth Returns to Hill to Try to Shore Up Support for Defense Post
Pete Hegseth, President-elect Donald Trump's embattled pick for defense secretary, returned to Capitol Hill on Monday for more meetings with Republican senators, as he seeks to shore up support for confirmation. Hegseth will meet with 20 Republican senators this week, according to an adviser for him who spoke on the condition of anonymity to discuss his schedule.
RBA (MNI): RBA Holds, Notes Declining Inflation Risk
The Reserve Bank of Australia Board decided to hold the 4.35% cash rate Tuesday, but noted growing confidence that inflationary pressures are declining. “Some of the upside risks to inflation appear to have eased and while the level of aggregate demand still appears to be above the economy’s supply capacity, that gap continues to close,” the Board noted in a statement. The Board’s decision, its last for 2024, was largely anticipated.
RBA (MNI): Bullock Says No Rate Change Discussed, Inflation "Risks Haven't Gone Away"
Governor Bullock has held the post-meeting press conference and stated that a shift in rates was not discussed but if the policy stance was “appropriate” and also scenarios that would require a response. She noted that the economy is developing broadly in line with the RBA’s forecasts, which has given them confidence, but inflation “risks haven’t gone away”. The statement language was changed to show that the Board has “noticed” that the real economy is slower, but it is not an indication that it is about to cut rates. Bullock made it very clear that she doesn’t know when the easing discussion will begin and when it will cut. It will be in a position to consider easing if the economy continues to develop as expected but don’t know when that will be.
FRANCE (BBG): Macron Widens Talks in Quest for Stable French Government
Emmanuel Macron will bring together a broad group of political parties for a meeting on Tuesday, in an effort to find a new prime minister to replace Michel Barnier, whose government was ousted last week over a budget dispute. The French president aims to meet with “all political parties who have indicated that they are willing to compromise in order to form a government of general interest, or to make such a government possible,” his office said late Monday.
FRANCE (MNI): Draft 'Special Law' on Budget to be Examined in Parl't 16 Dec
Le Monde reports that a draft 'special law' will be examined by the National Assembly on 16 Dec. Prior to this, the legislation will be first presented to the Council of Ministers tomorrow (11 Dec). If passed, the law will allow the gov't to continue raising taxes and roll over state expenditures from the 2024 budget from 1 Jan in the event that a new state budget is not in place. President Emmanuel Macron announced the 'temporary law' during his address last week following the collapse of PM Michel Barnier's administration.
ISRAEL (BBG): Netanyahu Takes Witness Stand in Historic Corruption Trial
Israeli Prime Minister Benjamin Netanyahu is set to take the witness stand for the first time in a corruption trial in which he’s accused of bribery, fraud and breach of trust, a case that’s played havoc with the nation’s political life for nearly a decade. His testimony is scheduled for three times a week, six hours a day, over several weeks, meaning that as Israel fights a war in Gaza, bombs military sites in Syria and takes part in a ceasefire in Lebanon, its leader will be on a witness stand in Tel Aviv.
ISRAEL/SYRIA (MNI): IDF Denies Advance Beyond Syria Buffer Zone
Conflicting reports in the media regarding the advance of the Israeli Defence Forces (IDF) into the buffer zone between Israel and Syria in the Israeli-occupied Golan Heights. The zone was established in the 1970s following the Yom Kippur War and has since then had the IDF on one side and forces of the Assad regime on the other with UN peacekeepers in place. Following the ouster of Syrian President Bashar al-Assad by rebel forces, the IDF has moved to capture the Syrian side of Mount Hermon as well as the entire buffer zone.
SOUTH KOREA (MNI): PPP to Discuss Yoon Resignation Feb/Mar, Election 2 Months Later
Reuters reporting that the governing conservative People Power Party (PPP) of President Yoon Suk-yeol is to discuss the possibility of the president's resignation in February or March of 2025, followed by a snap presidential election two months later. The comments come as the main opposition liberal Democratic Party of Korea (DPK) seeks to pressure the PPP ahead of another impeachment vote due to take place ~1700 local time on Saturday 14 December. The impeachment vote against Yoon held on 7 December fell short of the two-thirds majority to send it to the constitutional court.
SOUTH KOREA (MNI): Minister Calls for Halt to Removal of Officials to Avoid Government Vacuum
Minister of Culture, Sports and Tourism Yoo In-chon, delivering comments as a spokesman for the gov't, has called on opposition parties to refrain from seeking the impeachment of members of President Yoon Suk-yeol's administration to avoid a vacuum at the top of gov't. Yoo: "I earnestly appeal to the party with the majority of seats to show wisdom and self-restraint so that legal and political procedures can be carried out in accordance with the rule of law, and so that the government can focus on stable state administration.”
BRAZIL (BBG): Brazil’s Lula in Intensive Care After Brain Surgery
Brazilian President Luiz Inacio Lula da Silva is in the intensive care unit of the Sírio-Libanês hospital in São Paulo after undergoing emergency surgery, according to an official statement from the hospital. The craniotomy was uneventful and Lula is in good health and being monitored, the hospital said. Lula, 79, felt headaches late Monday evening and a brain scan showed intracranial hemorrhage, resulting from the accident he suffered at home in October, the hospital said.
CORPORATE (BBG): Ashtead to Move Primary Listing to US in New Blow to London
Construction equipment rental company Ashtead Group Plc delivered the latest setback to the UK stock market as it proposed moving its primary listing from London to the US. The US is “the natural long-term listing venue for the group,” according to a statement from Ashtead, which reports in dollars and gets almost all its operating profit from North America.
CORPORATE (BBG): Oracle Posts Disappointing Growth, Denting Cloud Enthusiasm
Oracle Corp. reported quarterly revenue in line with estimates, disappointing investors who have boosted the stock to a record high in recent weeks on enthusiasm for the company’s ascendant cloud business. The shares fell the most in a year in premarket trading. Fiscal second-quarter revenue increased 9% to $14.1 billion, the company said Monday in a statement. Sales from Oracle’s closely watched cloud infrastructure business jumped 52% to $2.4 billion, in line with the growth projected by analysts.
DATA
GERMANY DATA (MNI): German Inflation Breadth Stalls Further in November
- GERMAN NOV CPI +2.2 % Y/Y
German final November HICP was unrevised from the flash readings at 2.4% Y/Y (2.4% prior) and -0.7% M/M (+0.4% prior). The final reading to CPI was also unrevised at 2.2% Y/Y (2.0% prior) and -0.2% M/M (+0.4% prior). Core CPI printed at 3.0% Y/Y (2.9% prior), the same rate as last April. Overall, the data confirms the main conclusions from the flash reading - services remained stable on its yearly rate (contribution +0.01pp vs prior) and goods inflation decelerated, driven by energy (contributing +0.18pp vs prior).
GERMAN DATA (MNI): IFO Price Expectations Fell in November
IFO price expectations for Germany fell in November, with decreasing values in consumer services which can be interpreted as a good sign re fading stickiness in that category: "Price expectations in the consumer-related service sectors continued to decline, falling to 15.8 points, down from 18.5 points in October. This is the lowest level since March 2021 and only slightly higher than the average balance in the years 2005 to 2019 (14.6 points)" Note that that comes amid overall softer services momentum recently.
ITALY DATA (MNI): Trend in Industrial Production Remains Stagnant
Italian industrial production was unchanged in October, meeting consensus expectations. September's reading was revised a tenth higher to -0.3% M/M. However, on a 3m/3m basis, production fell for a second consecutive month to -0.7% (vs -0.6% prior) and recent sentiment data suggests the stagnation in Italian industry is set to continue through Q4 and into 2025.
NORWAY DATA (MNI): Goods Inflation Drives CPI-ATE Uptick
- NORWAY NOV CPI +0.3% M/M, +2.4% Y/Y
- NORWAY NOV CORE CPI +0.1% M/M, +3% Y/Y
Smaller than expected "Black week" sales look to be a driver of the firmer-than-expected November CPI-ATE print, with domestic goods inflation accelerating to 5.2% Y/Y (vs 4.1% prior). Services inflation was steady at 3.5% Y/Y. As noted earlier, we don't think there isn't enough of a downward surprise to the September MPR projections to shift consensus towards a December Norges Bank rate cut, but will be closely watching Thursday's Regional Network Survey. Seasonally adjusted inflation momentum (3m/3m saar) picked up to 2.5% (vs 2.2% prior), though remains below the YTD average of 2.9%.
SWEDEN DATA (MNI): Weak October Activity Data Will Weigh on Decmeber Rate Path
The Swedish October activity data were soft, suggesting underlying domestic demand remained weak to begin Q4. A 25bp Riksbank cut in December was already more than fully priced heading into the release, but the data will weigh on the revised rate path presented at the upcoming decision. Statistics Sweden notes that the 0.4% M/M GDP print (vs a 1.1pp downwardly revised -1.5% prior) was driven by "weak figures for household consumption expenditure and exports concerning goods, with the latter mirroring weak figures in manufacturing".
CHINA DATA (MNI): China Nov Exports Slows, Imports Slide
- CHINA NOV TRADE SURPLUS +$97.44 BLN VS OCT +$95.7 BLN
- CHINA NOV EXPORTS +6.7% Y/Y VS MEDIAN +8.9% Y/Y
- CHINA NOV IMPORTS -3.9% Y/Y VS MEDIAN +0.9% Y/Y
MNI (Beijing) China's exports grew 6.7% y/y to USD312.3 billion in November, below the 8.9% y/y consensus and last month's 12.7% y/y increase, according to data released by China Customs on Tuesday. Imports, which amounted to USD214.9 billion, registered a 3.9% y/y drop, dipping further from the consensus of a 0.9% y/y gain and last month's 2.3% y/y decrease. Imports increased 1.2% y/y over the Jan-Nov period, while exports increased 5.4%. China’s trade surplus in the first 11 months hit USD884.67 billion, with November contributing USD97.44 billion.
CHINA DATA (MNI): China Crude Oil Imports Accelerate in November
MNI (Beijing) China imported 48.5 million metric tonnes of crude oil in November, up from 44.6 mmt previously, narrowing the 3.4% y/y decline from January to October to -1.9% y/y during the first eleven months, data from the General Administration of Customs showed on Tuesday. Inbound shipments of copper ore and its concentrates reached 2.25 million tonnes last month, down from 2.30 million tonnes in October, bringing total import growth over January to November to 2.2% y/y, a deceleration from the 3.3% y/y during the first 10 months.
AUSTRALIA DATA (MNI): NAB Business Survey Points to Another Weak Quarter
November NAB business survey came in weak with conditions down to 2.4 from 7.2, the lowest since end-2019 outside of Covid. Confidence fell to -2.8 from +5.3. There was weakness across components but cost pressures picked up while final product prices remained in line with the historical average. The data is suggesting another soft quarter, but little further progress on inflation. The RBA is widely expected to leave rates at 4.35% later today.
FOREX: AUD Slips as Markets Bring Forward RBA Rate Cut View
- The RBA rate decision worked against the AUD, as the bank are reportedly "gaining some confidence" over the trajectory of inflation. As a result, markets (and sell-side) have bought forward their view for the next likely rate cut in Australia. As a result, AUD/USD faded to 0.6380 intraday, keeping support under pressure at the December pullback low of 0.6373.
- EUR/GBP has broken to new YTD lows, with spot dropping to new pullback lows, and the lowest levels in over two-and-a-half years as markets re-enter a previously-tested area of demand. We had noted across the past few weeks a clear area of demand in the cross layered between 0.8260-87 that coincides with the longer-term range-defining support. Note that this equates to 1.21 in GBP/EUR - a psychological resistance level that often draws attention, and has not been meaningfully broken since 2016 and the year of the Brexit referendum.
- EUR/USD spot has been led lower by the uptick in US yields, putting spot through yesterday's lows and within range of 1.0517, the 38.2% retracement for the upleg off the cycle low from mid-November, and next major support. Overnight EUR vols have crested just above 14 points - below the prevailing levels seen pre-NFP last week. With tomorrow's print the last of the year and likely directly influencing next week's rate decision, an outside-of-consensus print will test the sustainability of the USD Index's stabilisation above December lows.
- Tuesday data and speaker schedule is light, with no notable US releases outside of nonfarm productivity stats and unit labour costs. The Fed remain inside their pre-rate decision media blackout period - keeping the calendar clear.
EGBS: Bund Futures Lack Conviction Ahead of Key Events Later This Week
Bund futures have lacked conviction this morning, with few fundamental catalysts to note. Markets are focused on tomorrow’s US CPI report and Thursday’s ECB decision. After slipping to intraday lows of 135.75, Bund futures have recovered back to 135.97, 5 ticks below yesterday’s settlement levels.
- The German curve has lightly twist steepened, with 2-year yields almost 1bp lower and 30-year yields ~2bps higher. The 10-year yield found resistance around 2.14% (23.6% retracement of the Nov 7 to Dec 3 move lower).
- 10-year EGB spreads to Bunds are mixed, with BTPs a little wider and OATs almost 2bp tighter. President Macron is set to meet with political party leaders today, as he looks to form another government. RN leader Le Pen has not been invited. Le Monde reports that a draft 'special law' on the budget will be examined by the National Assembly on 16 Dec.
- German final November HICP confirmed flash estimates, while Italian October industrial production signalled ongoing stagnation in the manufacturing sector.
- Austria sold E1.15bln of 10/30-year RAGBs this morning.
GILTS: Futures Pierce Initial Support, 10s Hit Fresh Dec High, Weakness Limited
Gilts continue to take cues from wider core global FI markets, with news flow remaining subdued.
- Futures last -26 at 95.50, off lows at 95.45.
- Initial support at the Dec 4 low (95.49) pierced earlier.
- Fresh downside would expose the November 28 low (95.17), although the short-term bullish corrective phase in the contract remains intact. Initial resistance located at 96.18.
- Yields 1-3bp higher on the day, 10- to 40-Year zone leads the sell off.
- Monday’s foray below 4.25% in 10s failed to challenge last week’s low (4.190%), with 10s then printing month-to-date highs (4.306%) this morning.
- Spread to Bunds now 2.5bp wider on the day, last 217bp, sticking to the recent range.
- 220bp caps, while stickier UK inflation and fiscal/issuance risks in the UK limit pullbacks.
- GBP1.5bln 0.75% Nov-33 linker supply was smoothly digested.
- SONIA futures tracking long end, last flat to -2.5.
- BoE-dated OIS prices 82bp of cuts through ’25 vs. 84bp at yesterday’s close/early today.
- That remains off the multi-week dovish extreme of ~88bp but is notably more dovish than the ~55bp briefly printed in the days that followed the BoE’s November decision.
- No tier 1 risk events of note today, which will leave focus on cross-market spill over.
- Tomorrow’s U.S. CPI data presents the next key macro risk event.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.700 | +0.0 |
Feb-25 | 4.499 | -20.1 |
Mar-25 | 4.412 | -28.8 |
May-25 | 4.235 | -46.5 |
Jun-25 | 4.153 | -54.7 |
Aug-25 | 4.023 | -67.7 |
Sep-25 | 3.990 | -71.0 |
Nov-25 | 3.913 | -78.7 |
Dec-25 | 3.883 | -81.7 |
EQUITIES: Short-Term Pullbacks in E-Mini S&P Considered Corrective
Eurostoxx 50 futures maintain a firmer tone following recent gains. The move higher undermines a recent bearish theme. Price has traded through the 50-day EMA, at 4878.04. The clear breach of this average strengthens a bullish theme and note that 4961.00, the Nov 6 high, has also been cleared. This opens 5015.00, the Oct 29 high. Key support is 4699.00, the Nov 19 low. Initial support lies at 4870.94, the 20-day EMA. The S&P E-Minis contract maintains a bullish tone and short-term pullbacks are considered corrective. 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, highlighting a dominant uptrend and positive market sentiment. Sights are on 6145.26, a Fibonacci projection. Initial support to watch lies at 6014.79, the 20-day EMA.
- Japan's NIKKEI closed higher by 207.08 pts or +0.53% at 39367.58 and the TOPIX ended 6.85 pts higher or +0.25% at 2741.41.
- Elsewhere, in China the SHANGHAI closed higher by 20.127 pts or +0.59% at 3422.661 and the HANG SENG ended 102.81 pts lower or -0.5% at 20311.28.
- Across Europe, Germany's DAX trades lower by 20.27 pts or -0.1% at 20325.88, FTSE 100 lower by 48.16 pts or -0.58% at 8303.99, CAC 40 down 44.3 pts or -0.59% at 7435.84 and Euro Stoxx 50 down 18.9 pts or -0.38% at 4966.56.
- Dow Jones mini down 48 pts or -0.11% at 44432, S&P 500 mini down 8 pts or -0.13% at 6058, NASDAQ mini down 29.25 pts or -0.14% at 21455.75.
Time: 10:00 GMT
COMMODITIES: Long-Term Bullish Trend in Gold Remains
A bearish threat in WTI futures remains present and the contract is trading closer to its recent lows. A continuation of the bear cycle would open $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support. For bulls, a stronger reversal to the upside would instead refocus attention on the key short-term resistance at $77.04, the Oct 8 high. Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high. Gold traded higher Monday. 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, highlighting a dominant uptrend. Resistance to watch is $2721.4, the Nov 25 high. Clearance of this level would highlight a bullish short-term development. Key support to monitor is $2536.9, the Nov 14 low. First support is $2605.3, the Nov 26 low.
- WTI Crude down $0.31 or -0.45% at $68.09
- Natural Gas down $0.02 or -0.6% at $3.163
- Gold spot up $4.88 or +0.18% at $2665.08
- Copper down $2.9 or -0.68% at $424.55
- Silver down $0.01 or -0.04% at $31.815
- Platinum up $0.04 or +0% at $941.29
Time: 10:00 GMT
| Date | GMT/Local | Impact | Country | Event |
| 10/12/2024 | 1100/0600 | ** |  US | NFIB Small Business Optimism Index |
| 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 |
| 11/12/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 11/12/2024 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 11/12/2024 | - | *** |  CN | Money Supply |
| 11/12/2024 | - | *** | CN | New Loans |
| 11/12/2024 | - | *** | CN | Social Financing |
| 11/12/2024 | 1330/0830 | *** | US | CPI |
| 11/12/2024 | 1330/0830 | * |  CA | Intl Investment Position |
| 11/12/2024 | 1445/0945 | *** | CA | Bank of Canada Policy Decision |
| 11/12/2024 | 1530/1030 | CA | BOC Governor Press Conference | |
| 11/12/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 11/12/2024 | 1800/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 11/12/2024 | 1900/1400 | ** | US | Treasury Budget |