EXECUTIVE SUMMARY
- RBNZ CUTS OCR 50BP, POINTS TO FUTURE VOLATILE CPI
- ECB’S SCHNABEL SEES ONLY LIMITED ROOM FOR FURTHER RATE CUTS
- RISKS TO LONGEVITY OF ISRAEL-HEZBOLLAH CEASEFIRE & IMPACT ON GAZA
- AUSTRALIA TRIMMED MEAN INFLATION RISES IN OCTOBER
Figure 1: USD/JPY breaks below 200-DMA and 50-day EMA
Source: MNI/Bloomberg
NEWS
US/CHINA (BBG): Trump’s Trade Chief Advocates ‘Strategic Decoupling’ From China
President-elect Donald Trump’s pick for the top trade position sees China as a “generational challenge” to the US and has advocated for a strategic decoupling from the country. Jamieson Greer, who’s been nominated as the US Trade Representative, played a key role in imposing tariffs on China during Trump’s first term. As former chief of staff to Robert Lighthizer, who was Trump’s trade representative then, Greer shares a tough stance on Beijing.
US (NYT): Trump Taps Kevin Hassett to Lead National Economic Council
President-elect Donald J. Trump selected Kevin Hassett on Tuesday to be the director of the White House National Economic Council, giving an adviser who served as his top economist during his first term a leading role in steering his economic agenda. As the director of the N.E.C., Mr. Hassett will work closely with the Treasury secretary to push forward Mr. Trump’s economic plans, focused on cutting taxes, increasing tariffs and expanding energy production.
ISRAEL/MIDEAST (MNI): Risks to Longevity of Israel-Hezbollah Ceasefire & Impact on Gaza
Some initial thoughts on the Israel-Hezbollah ceasefire now that it is in action. The ceasefire is intended to be permanent. The first target will be reaching 60 days. It is during these first two months that Hezbollah is supposed to move northward all operatives and arms between the 'blue line' (the Israel-Lebanon border) and the Litani River, and the IDF shift southward. If this milestone can be reached without a resumption of hostilities then it is a good sign of a more long-lasting peace.
Needless to say, there are lots of risks. There are questions about whether the Lebanese army, intended to occupy the zones left by Hezbollah, will fire on Hezbollah if the group seeks to re-establish itself. It is also uncertain whether Israeli forces will immediately begin firing on Lebanon if they get a whiff of Hezbollah rearming. The deal is the most robust ceasefire agreed to date but not invulnerable to collapse from either side.
RBNZ (MNI): RBNZ Cuts OCR 50bp, Points to Future Volatile CPI
The Reserve Bank of New Zealand monetary policy committee cut the official cash rate 50 basis points to 4.25% on Wednesday, noting inflation was expected to remain close to its 1-3% target midpoint. The Reserve’s updated forecasts showed a 3.1% terminal OCR by March 2027, slightly later than the December 2026 timeline within its previous Monetary Policy Statement. The Bank also now expects more volatility within its annual inflation outlook, particularly over 2025. However, GDP should grow at 0.3% in Q4, 20 basis points higher than August’s prediction, with 0.6% growth noted across 2025.
ECB (MNI SOURCES): ECB Closer to Dropping "Restrictive" Language
MNI speaks to ECB sources about monetary policy - On MNI Policy MainWire now, for more details please contact sales@marketnews.com
ECB (BBG): ECB’s Schnabel Sees Only Limited Room for Further Rate Cuts
The European Central Bank needs to be wary of cutting interest rates too far as borrowing costs are already near a level that no longer restrains the economy and going lower could backfire, according to Executive Board member Isabel Schnabel. Officials can continue to loosen monetary policy, but should do so only gradually to avoid taking rates below the so-called neutral threshold, Schnabel said in an interview. Easing too much could squander valuable policy space, the hawkish policymaker warned.
EU (MNI): VdL Delivers Speech Before MEPs to Debate & Vote on New Commission
European Commission President Ursula von der Leyen is delivering the opening address at the European Parliament plenary session in Strasbourg ahead of the vote (expected around 0600ET/1100GMT/1200CET) on confirming her second College of Commissioners. Unlike the vote on her confirmation as president for another term held in July, in order for the new Commission to be approved en masse it requires a majority of all ballots cast rather than an overall majority of all 720 MEPs.
US/UK (FT): US Trade Tariffs Would Pose Risk to Economic Growth, Top BoE Official Warns
Donald Trump’s proposed trade tariffs would pose a risk to economic growth in countries including the UK, a top Bank of England official has warned, as she voiced concerns about persistent domestic inflation. Clare Lombardelli told the Financial Times that uncertainty about the US president-elect’s trade policies could weigh on growth in the short term and that increased trade frictions would dent productivity in the longer term.
RIKSBANK (MNI): Riksbank Dec Cut on if Things Hold - Jansson
There is a greater risk of inflation coming in below rather than above the 2% and the Riksbank can deliver the rate cut signalled for December, with another in the first half of 2025, if things hold, Riksbank Deputy Governor Per Jansson said in a speech to the Southern Swedish Chamber of Commerce. Jansson expressed concern about economic activity saying that "There are some green shoots, but the recovery is slower than expected" and he said that a pick up was needed to stabilize inflation around target.
CHINA (FT): China’s Defence Minister Placed Under Investigation for Corruption
China has put its defence minister under investigation in the latest corruption-related scandal to hit the top of the People’s Liberation Army, according to current and former US officials familiar with the situation. Admiral Dong Jun, who was named in December 2023 after his predecessor was fired for corruption, is being investigated as part of a broader probe into graft in the PLA, the US officials said. He is the third consecutive serving or former defence minister to be investigated for alleged corruption.
CHINA (MNI): China Profits Fall in October Y/Y
MNI (Beijing) Corporate profits in China fell 10.0% y/y in October, narrowing from the 27.1% drop in September, National Bureau of Statistics data showed on Wednesday. The results showed the corporate profit decline was narrowing with firms in equipment and high-tech manufacturing supporting the recovery, said Yu Weining, statistician at the NBS, in a note. From January to October, operating income of industrial enterprises went up 1.9% y/y, with corporate profits down 4.3% y/y, Yu said.
RUSSIA (The Times): Russia Advancing in Ukraine at Fastest Pace Since Start of War
Russia’s army has made its biggest monthly advance in Ukraine since the early days of its full-scale invasion, analysts have said, with its troops entering a key frontline town in the Donetsk region. The gains came as Russia vowed a fresh response to new Ukrainian strikes on its territory with US-supplied missiles, something the Kremlin has warned could spark a nuclear war, as one of President Putin’s top allies said Moscow had no interest in a ceasefire.
PHILIPPINES (BBG): Philippine VP Duterte Faces Police Charges Amid Marcos Feud
The Philippine police filed a complaint against Vice President Sara Duterte and her security detail over an alleged assault and coercion during a recent incident in Congress, a move which comes amid her deepening conflict with President Ferdinand Marcos Jr. The allegations relate to events during the transfer of Duterte’s chief of staff, Zuleika Lopez, to a government hospital from the House of Representatives, where Lopez was detained, according to a police statement. “Multiple charges” were filed over “unlawful acts related to the assault, disobedience, and coercion that occurred during the incident,” it said.
MNI BOK PREVIEW - NOVEMBER 2024: On Hold Amid FX Weakness
Economic data has continued to moderate with GDP, CPI, Exports and Industrial Production lower. Due to a resurgent USD following the US election, the KRW has weakened by over 3% since the last BOK meeting. There are some early signs that the policies put in place to slow the Seoul property market is working. Several key voting members at the last monetary policy meeting indicated their preference for rates to remain on hold until 2025.
DATA
GERMAN DATA (MNI): Consumer Climate Gives Up (Bumpy) Gains of Last 6 Months in Dec
- GERMANY GFK DECEMBER CONSUMER CLIMATE -23.3
The GfK Consumer Climate for Germany fell sharply in the December print, declining 4.9 points to -23.3, now standing at a level similar to where it was in May, giving up its (bumpy but overall significant) gains since then. "Income expectations fall sharply and the willingness to buy declines slightly. As the willingness to save rises at the same time, the forecast for the last month of this year decreases significantly." This comes amid consumer demand being one of the few comparatively stronger areas of the German economy recently.
FRANCE NOV CONSUMER SENTIMENT 90 (MNI)
AUSTRALIA DATA (MNI): Aussie Trimmed Mean Rises in Oct
Australian monthly trimmed mean inflation rose 30 basis points over October to 3.5% y/y, while headline CPI grew 2.1% y/y, 20bp above expectations, data from the Australian Bureau of Statistics showed Wednesday. Trimmed mean is the Reserve Bank of Australia’s preferred measure of inflation. The RBA expects the metric to print at 3.4% y/y by Q4 and be back within the top of its 2-3% target band by June 2025.
JAPAN DATA (MNI): BOJ’s JGB Unrealised Loss Rises to JPY13.7 Tlrn
The Bank of Japan posted JPY13.7 trillion of unrealised losses connected to its Japanese government bond holdings at the end of September, up from JPY9.4 trillion at the end of March, the BOJ's half year results showed Wednesday. The losses were a record high on a half year basis due to the rise in interest rates. The balance of the BOJ's exchange-traded fund holdings rose to JPY37.2 trillion at the end of September, unchanged from the end of March, with an unrealised profit at JPY33.1 trillion, down from JPY37.3 trillion.
FOREX: USD/JPY Sell-off Extends, EUR Bid on Schnabel
- USD/JPY's sell-off has extended into a second session with today's pullback low at 151.43 marking a break below the 200-dma of Y152.00 and, more significantly, the 50-day EMA of 151.56. A close at current or lower levels confirms a reversal of the election-triggered rally, with Trump's tariff threats a key driver on top of the building expectation for a BoJ rate hike at the December meeting (OIS-markets see a 25bps hike near 65% priced).
- This week's price action also shows well that USD/JPY can shrug off US equity strength, should risk-off be pervasive elsewhere (particularly via European stock markets).
- The greenback is the poorest performer in G10 FX, with the USD Index showing well through yesterday's lows thanks to both the strengthening JPY as well as a better-bid EUR, which gained on the back of a somewhat hawkish appearance from ECB's Schnabel. She firmed her language on the ECB rate path, stating that the room for further rate cuts is "limited". EUR/USD neared first resistance at the Tuesday high of 1.0545 before fading.
- The MNI Chicago PMI data due later today is the schedule highlight - markets expect the figure to improve to 45.0 from 41.6, but still signalling contraction. The secondary read for US GDP is unlikely to press prices in either direction, with the weekly jobless claims data to take precedent, brought forward by one day due to the Thanksgiving holidays from tomorrow.
EGBS: German Yields Lower Despite Hawkish Schnabel, OAT Widening Persists
The German curve has bull flattened this morning, with the short-end lagging after a hawkish-leaning interview by ECB Executive Board member Schnabel. 2-year German yields are ~1.5bps lower today, while 10-year yields are almost 4bps lower.
- Schnabel warned against cutting rates into accommodative territory, pushing back on current market pricing of a ~1.75% terminal rate.
- ECB-dated OIS now price 30bps of easing through the December meeting, down from 32bps this morning. Meanwhile, there are 148bps of easing priced through the end of next year, 3bps less dovish than before Schnabel's interview was published.
- Bund futures are +65 ticks at 134.22, having reversed almost all of the Schnabel-induced knee-jerk lower.
- The 10-year OAT/Bund spread is 1bp wider today at 87bps, after rising sharply into yesterday’s close on renewed political uncertainty.
- With the remainder of today’s regional calendar light, focus turns to the significant amount of US data due this afternoon.
GILTS: Dips Bought, Macro Risks Eyed
Gilts have been bought on dips, with increased French political and fiscal risk underpinning core global FI markets this morning.
- Spill over from a downtick in equities provides further support.
- Hawkish comments from ECB’s Schnabel were quickly countered, while yesterday evening’s FT interview with BoE’s Lombardelli had little impact.
- Futures (H5) last +64 at 95.57, 95.25-64 range.
- Contract through the first couple of resistance levels (95.42/54). Next resistance located at the 1.764 projection of the Nov 18-19-20 price swing (95.73).
- Zooming out, the trend condition remains bearish, however, a corrective cycle is in play and this week’s climb reinforces current bullish conditions.
- Yields 4-6bp lower.
- 10s below 4.30% for the first time since November 30.
- SONIA futures flat to +6.5.
- BoE-OIS within 1bp of yesterday’s settlement levels. ~2bp of cuts priced for next month, 21.5bp showing through Jan, 30bp through March, 54bp through June and 77bp through Dec ’25.
- Little of note on the UK calendar today, will leave participants focused on macro/cross-market inputs.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.683 | -1.7 |
Feb-25 | 4.487 | -21.3 |
Mar-25 | 4.397 | -30.3 |
May-25 | 4.239 | -46.1 |
Jun-25 | 4.163 | -53.7 |
Aug-25 | 4.062 | -63.8 |
Sep-25 | 4.019 | -68.1 |
Nov-25 | 3.960 | -74.0 |
Dec-25 | 3.934 | -76.6 |
EQUITIES: E-Mini S&P Sets Sights on Key Resistance at $6053.25
A downtrend in Eurostoxx 50 futures remains intact and short-term gains are considered corrective - for now. A fresh cycle low last week marked a resumption of the downtrend that started Sep 30. Price has traded through 4746.94, 61.8% of the Aug 5 - Sep 30 bull cycle. This exposes 4662.12, the 76.4% retracement point. Initial firm resistance has been defined at 4961.00, the Nov 6 high, where a break would highlight a reversal. S&P E-Minis are trading at this week’s highs and sights are on the key resistance and bull trigger at 6053.25, the Nov 11 high. A break of this hurdle would resume the uptrend and open 6070.16, a Fibonacci projection. Moving average studies remain in a bull-mode set-up and this highlights a dominant uptrend and positive market sentiment. Initial support to watch lies at 5944.60, the 20-day EMA.
- Japan's NIKKEI closed lower by 307.03 pts or -0.8% at 38134.97 and the TOPIX ended 24.21 pts lower or -0.9% at 2665.34.
- Elsewhere, in China the SHANGHAI closed higher by 50.022 pts or +1.53% at 3309.779 and the HANG SENG ended 443.93 pts higher or +2.32% at 19603.13.
- Across Europe, Germany's DAX trades lower by 121.5 pts or -0.63% at 19174.15, FTSE 100 higher by 12.1 pts or +0.15% at 8270.84, CAC 40 down 81.37 pts or -1.13% at 7113.14 and Euro Stoxx 50 down 43.14 pts or -0.91% at 4718.85.
- Dow Jones mini down 44 pts or -0.1% at 44907, S&P 500 mini down 11.5 pts or -0.19% at 6026.5, NASDAQ mini down 78.25 pts or -0.37% at 20914.
Time: 10:00 GMT
COMMODITIES: Long-Term Trend Condition in Gold Unchanged and Bullish
A bearish theme in WTI futures remains intact and Monday’s move lower reinforces this theme. Attention is on $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. Clearance of this level would resume the recent uptrend. Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high. The long-term trend condition in Gold is unchanged, it 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. Monday’s move lower is - for now - considered corrective, despite it being a very sharp pullback. Resistance to watch is $2721.4, Monday’s high. Key support to monitor is $2536.9, the Nov 14 low. A break would be bearish.
- WTI Crude up $0.36 or +0.52% at $69.15
- Natural Gas down $0.12 or -3.49% at $3.346
- Gold spot up $15.71 or +0.6% at $2648.53
- Copper up $4.65 or +1.13% at $416.3
- Silver up $0.08 or +0.25% at $30.5065
- Platinum up $3.31 or +0.36% at $932.23
Time: 10:00 GMT
| Date | GMT/Local | Impact | Country | Event |
| 27/11/2024 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 27/11/2024 | 1330/0830 | *** | US | GDP |
| 27/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 27/11/2024 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/11/2024 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/11/2024 | 1445/0945 | *** | US | MNI Chicago PMI |
| 27/11/2024 | 1500/1000 | *** | US | Personal Income and Consumption |
| 27/11/2024 | 1500/1000 | ** | US | NAR Pending Home Sales |
| 27/11/2024 | 1500/1000 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/11/2024 | 1500/1000 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/11/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 27/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/11/2024 | 1700/1200 | ** | US | Natural Gas Stocks |
| 27/11/2024 | 1800/1900 |  EU | ECB's Lane dinner remarks at conference on "Macroeconomic modelling frontiers for research and policy" | |
| 28/11/2024 | - | EU | European Central Bank Meeting | |
| 28/11/2024 | 0030/1130 | * |  AU | Private New Capex and Expected Expenditure |
| 28/11/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 28/11/2024 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 28/11/2024 | 0900/1000 | ** | EU | M3 |
| 28/11/2024 | 0900/1000 | ** |  IT | ISTAT Business Confidence |
| 28/11/2024 | 0900/1000 | ** | IT | ISTAT Consumer Confidence |
| 28/11/2024 | 0900/1000 | ** | IT | PPI |
| 28/11/2024 | 0900/1000 | *** |  DE | North Rhine Westphalia CPI |
| 28/11/2024 | 0900/1000 | *** | DE | Bavaria CPI |
| 28/11/2024 | 1000/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 28/11/2024 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 28/11/2024 | 1300/1400 | *** | DE | HICP (p) |
| 28/11/2024 | 1330/0830 | * |  CA | Current account |
| 28/11/2024 | 1330/0830 | * | CA | Payroll employment |
| 28/11/2024 | 1700/1800 | EU | ECB's Lane speech at the 25th anniversary of Euro 50 Group at Banque de France | |
| 29/11/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 29/11/2024 | 2330/0830 | * | JP | Labor Force Survey |
| 29/11/2024 | 2350/0850 | * | JP | Retail Sales (p) |
| 29/11/2024 | 2350/0850 | ** | JP | Industrial Production |