EXECUTIVE SUMMARY
- SOFT NFP REPORT SHOULD CEMENT DECEMBER CUT
- SOUTH KOREA’S YOON LOSES KEY ALLY AHEAD OF IMPEACHMENT VOTE
- GERMAN IP DRAGGED DOWN BY ENERGY BUT MANUFACTURING ALSO WEAK
- JAPAN OCT REAL WAGES UNCHANGED Y/Y
Figure 1: Recent US labour market developments
NEWS
MNI US PAYROLLS PREVIEW: Soft Report Should Cement Dec Cut
Nonfarm payrolls growth is expected to bounce sharply to 215k in November in the reversal of October’s strike and weather-related disruption saw a much weaker than expected 12k. Revisions will be watched particularly closely after a historically low initial response rate last month, with broad expectations for an upward revision.
US/CHINA (BBG): Trump’s China Ambassador Pick May Open Path for Cooperation
President-elect Donald Trump tapped ex-Senator David Perdue as the US ambassador to China, enlisting a former businessman with experience dealing with Communist Party officials for one of his key diplomatic roles. “He will be instrumental in implementing my strategy to maintain Peace in the region, and a productive working relationship with China’s leaders,” Trump said in a post on his Truth Social network on Thursday, as he dished out a series of appointments to allies.
US/JAPAN (BBG): Japan Eyes Talks With Trump That Include Cutting Auto Tariffs
Japanese Foreign Minister Takeshi Iwaya said Tokyo intends to pick up trade talks with President-elect Donald Trump with an understanding that the elimination of tariffs on cars and auto parts will be on the agenda. The understanding was made five years ago during Trump’s first term, according to Iwaya, as the two nations struck a trade deal that gave US farmers greater access to the Japanese market while Tokyo was able to dodge extra tariffs on its auto exports to the US.
FRANCE (MNI): PS Willing to Work w/Macronists, But Would Still Be Short of Majority
Earlier this morning French media reported comments from Olivier Faure, First Secretary of the centre-left Socialist Party (PS) that his party was ready to negotiate with the centrist Ensemble bloc supportive of President Emmanuel Macron and the conservative Les Republicains in an effort to form a gov't. Faure said the negotiations would take place on the basis of "reciprocal concessions" and would exist as a "fixed-term contract", likely until the summer of 2025 when the fresh legislative elections can be called. The PS leader is expected to meet with Macron at the Elysee Palace at 1200CET (0600ET, 1100GMT).
UK (BBG): UK House Prices Jump Most in Over Two Years, Halifax Says
UK house prices soared by the most in over two years after an end to budget uncertainty, an interest-rate cut and low unemployment boosted buyer demand, according to one of the country’s biggest mortgage lenders. Halifax said the average home price rose 1.3% to a new record high of £298,083 ($379,830), the fifth consecutive monthly gain and the biggest increase since June 2022. Prices were 4.8% higher than a year earlier.
UK (MNI): UK Set for 'Steady, Unimpressive Gowth' in 2025 - CBI
The UK economy will grow at a "steady yet unimpressive pace through to 2026, primarily driven by household spending," the CBI said Friday in its Economic Forecast. The business lobby group expected the economy to expand by 1.6% in 2025 -- a slightly slower pace than the 1.9% seen in their June forecast round. Consumer spending growth is expected to decelerate, as real incomes growth is squeezed, with inflation remaining above the Bank of England's 2% target through 2026.
CHINA (BBG): China Says Confidence Returning Ahead of Key Politburo Meeting
The confidence of Chinese companies is recovering despite a number of headwinds including weak domestic demand and cutthroat competition, state media said before key meetings of top economic decision-makers. Many companies face pressure from weak investment and consumption growth domestically, accelerating technology changes and a shrinking market for traditional industries as the economy transitions to new growth drivers, the official Xinhua News Agency wrote in a commentary Friday.
S. KOREA (BBG): South Korea’s Yoon Loses Key Ally Ahead of Impeachment Vote
South Korean President Yoon Suk Yeol lost the support of a key ally, increasing the chances he’ll be impeached in a vote set to take place over the next few days. In an abrupt U-turn on Friday, Han Dong-hoon - head of Yoon’s ruling People Power Party - called for the president to be suspended from office quickly. Citing credible evidence that Yoon ordered the arrest of key politicians on the night he declared martial law, Han told parliament that it would be dangerous to allow the president to stay in office.
INDIA (BBG): RBI Holds Rates, Adds Liquidity to Boost Slowing Economy
India’s central bank left the benchmark interest rate unchanged, while taking steps to boost liquidity in the banking system and stem a decline in the rupee. The Reserve Bank of India’s monetary policy committee voted four-to-two to keep the repurchase rate at 6.5%, in line with the forecasts. The cash reserve ratio — the proportion of deposits that banks must set aside with the RBI— was lowered by 50 basis points to 4%, to address a potential cash squeeze.
BRICS (BBG): India Downplays BRICS Common Currency Plan That Angered Trump
There has been no decision by the so-called BRICS block about creating a common currency to reduce usage of the dollar, India’s central bank chief said. “BRICS currency was an idea raised by one of the members and was discussed but no decision has been taken,” Reserve Bank of India Governor Shaktikanta Das said in a post-policy briefing on Friday. “The geographical spread of the countries has also to be kept in mind, unlike the euro zone which has geographical contiguity.”
ARGENTINA (MNI): BCRA Cuts Benchmark Rate Further to 32%
Argentina’s central bank decided on Thursday to cut the key leliq rate by 300bps to 32%. This takes the number of benchmark rate reductions to eight within Javier Milei’s term, from its peak of 133% in October 2023. The decision promptly followed the BCRA publishing a market expectations survey which showed a lower median analyst forecast for inflation this year. On average, a year-end CPI rate of 118.8% is expected, compared to 120% in the prior survey. Indeed, the central bank said it based its decision on "the observed consolidation of expectations for a lower inflation rate."
CORPORATE (BBG): Aviva Reaches Initial £3.6 Billion Deal to Buy Direct Line
Aviva Plc reached a preliminary agreement to buy Direct Line Insurance Group Plc for £3.6 billion ($4.6 billion) in a deal that would create the UK’s largest motor insurer. London-listed Aviva sweetened its bid in the latest negotiations with Direct Line to 275 pence per share, according to a statement on Friday. The cash-and-stock proposal would see Aviva issue new shares and make dividend payments to Direct Line shareholders.
DATA
EUROZONE DATA (MNI): Final Q3 GDP In-Line With Flash; Consumption Firm, Net Trade Weak
- EUROZONE Q3 GDP +0.4% Q/Q, +0.9% Y/Y
Eurozone Final Q3 GDP printed in-line with flash at 0.4% Q/Q (vs 0.2% in Q2) - the strongest quarterly reading since Q3 2022 and 0.9% Y/Y (vs 0.6% in Q2) - the highest annual reading since Q1 2023. The details show the rise in quarterly GDP was driven by household consumption, Gross Fixed Capital Formation (GFCF) and Change in Inventories each contributing 0.4pp. Household consumption rose 0.7% Q/Q (vs being flat in Q2), and Gross Fixed Capital Formation (GFCF) increased 2.0% Q/Q (vs a fall of 2.4% in Q2) - though the Y/Y rate remains weak at -1.3% Y/Y with the prior 2 quarters recording negative GFCF readings.
ITALY DATA (MNI): Real Retail Sales Continue to Lag Survey Signals
Italian nominal retail sales fell 0.5% M/M in October (vs a 1.3% rise in September), while real sales were also negative at -0.8% M/M (vs 1.2% prior). On a 3m/3m real basis, retail sales rose 0.4%, comfortably above the 0.1% YTD average. Although real sales of both food and non-food products fell in October, 3m/3m trends remain positive. Italian retail sentiment has climbed in both the ISTAT and EC surveys in recent months, though actual retail sales have not yet seen as aggressive an uptick.
GERMAN DATA (MNI): IP Dragged Down By Energy But Manufacturing Weak Also
- GERMANY OCT IND PROD -1% M/M
German industrial production decreased by 1.0% M/M in October, disappointing against a consensus estimate of +1.0%, and comparing to a prior of -2.0%, revised from -2.5%. On a yearly basis, IP came in at -4.5% (vs -3.3% cons; -4.3% prior, revised from -4.6%). MNI had flagged downside risks to consensus after yesterday's revenue in manufacturing print (a parallel release with factory orders). As such, despite yesterday's comparatively solid factory orders print, the data shows the ongoing slump in the industrial sector not disappearing any time soon - mirrored by sentiment.
NORWAY DATA (MNI): Petroluem-related Manufacturing IP Shows Signs Of Rolling Over
There may be early signs that the offshore sector-related boom in manufacturing industrial production is beginning to rollover. Analysts expects the tailwind from the offshore sector to overall GDP to fade a little from next year, which may pressure supplier industries. Meanwhile, production for manufacturing firms excluding petroleum related industries remains subdued. Overall manufacturing IP fell 1.6% M/M and rose 0.3% Y/Y in October. On a 3m/3m basis, production fell 0.6% (vs a 2.6% rise in September).
JAPAN DATA (MNI): Japan Oct Real Wages Unchanged Y/Y
Inflation-adjusted real wages, a barometer of household purchasing power, was unchanged from a year earlier after staying in negative territory for two months, preliminary data released by the Ministry of Health, Labour and Welfare on Friday showed. Bank of Japan officials expect real wages to turn positive as early as November and to rise gradually in December due to bonuses as nominal wages are likely to continue increasing.
RATINGS: Busy Ratings Schedule After Hours, Scope on Greece the Highlight
Potential sovereign rating reviews of note scheduled for after hours on Friday include:
- Fitch on Cyprus (current rating: BBB+; Outlook Positive), Hungary (current rating: BBB; Outlook Negative) & Slovakia (current rating: A-; Outlook Stable)
- Moody’s on Norway (current rating: Aaa; Outlook Stable)
- S&P on Malta (current rating: A-; Outlook Stable) & Slovenia (current rating: AA-; Outlook Stable)
- Morningstar DBRS on Estonia (current rating: AA (low), Stable Trend) & Slovenia (current rating: A (high), Stable Trend)
- Scope Ratings on Greece (current rating: BBB-; Outlook Positive), Slovenia (current rating: A; Outlook Stable) & Turkey (current rating: B; Outlook Positive)
FOREX: USD/JPY Edges Closer to Key Resistance
- USD/JPY trades higher early Friday, benefiting from both the uptick in the US 10y yield as well as strength in European (and particularly French) equity markets. France's CAC-40 has now rallied over 4% off the November low, and is helping underpin sentiment across the continent. This brings spot within range of yesterday's 150.78 high, above which 151.25/94 marks the key upside levels - today's 50- and 20-day EMA values. Overnight JPY vols added a 7 point premium ahead of today's NFP print, with yesterday's 20.7 print in overnight implied the highest since US election day.
- AUD, NZD underperform, with NZD clearly leading the losses - there was an element of concern that the appointment of David Perdue by Trump as the Ambassador to China is a strong signal of hawkish intent toward China under the Trump admin next year - which is certainly negative for both AUD and NZD, but flow-driven moves and idiosyncratic price action is also at play.
- Perhaps notably, EUR/AUD and EUR/NZD are rallying sharply - both of which have rallied well across the French political fallout and may be triggering broader participation in AUD, NZD sales.
- The USD is firmer, rising against most others in G10, albeit within broader ranges.
- Jobs data set for Friday provides the near-term volatility risk, with markets expecting job gains of 220k over the month of November, and a step lower in average hourly earnings. The whisper number has improved across the week and now matches consensus, after being closer to 150k at the beginning of the month. Prelim UMich sentiment data is set to follow.
GILTS: Lower as Bunds Soften
Cues from EGBs (spreads to Bunds tighter) and the bid in European equities weighs on gilts this morning.
- Futures through the base of yesterday’s range but the move is still quite limited, lows of 95.58 registered in recent trade.
- A bullish corrective cycle remains in play in the contract and recent gains reinforce the short-term condition.
- Initial support and resistance derived from range extremes seen over the past couple of session, 95.49/96.18.
- Yields 1.0-2.5bp higher, curve a touch flatter.
- 2s10s trades either side of 0bp, around the middle of the ~17bp range witnessed over the last 2 months or so.
- 5s30s in the middle of their multi-month range, last ~65bp.
- Weakness in bonds filters into STIRs.
- SONIA futures flat to -3.0.
- BoE-dated OIS flat to 4bp less dovish on the day, showing 20bp of cuts through February, 27bp through March and 75bp through December.
- Dovish BoE dissenter Dhingra will appear on Bloomberg TV at 10:40 London.
- Her dovish views are well-documented, and we don’t expect a meaningful change in tone in this appearance.
- Further out, this afternoon’s U.S. NFP release dominates the macro calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.695 | -0.5 |
Feb-25 | 4.500 | -20.0 |
Mar-25 | 4.430 | -27.0 |
May-25 | 4.270 | -43.0 |
Jun-25 | 4.195 | -50.5 |
Aug-25 | 4.073 | -62.7 |
Sep-25 | 4.045 | -65.5 |
Nov-25 | 3.975 | -72.5 |
Dec-25 | 3.950 | -75.0 |
EGBS: Spreads to Bunds Tighten on Equity Rally, French Politics
EGB spreads to Bunds have continued to tighten this morning, aided by strength in European equities and a lack of escalation of French political uncertainty.
- The 10-year OAT/Bund spread is 3.5bps tighter today at ~74bps, now almost 15bps below Monday’s closing levels.
- In an address yesterday evening, President Macron vowed to complete his 5-year term (to 2027) in full. Meanwhile, the centre-left PS’ First Secretary, Olivier Faure, said that his party was ready to negotiate with the centrist Ensemble bloc supportive of President Emmanuel Macron and the conservative Les Republicains in an effort to form a gov't.
- The BTP/Bund spread has similarly narrowed, now ~2.5bps tighter today at 106bps.
- These spread-related moves have weighed on German paper, with 10-year Bund yields 1bp higher today.
- Bund futures are -11 ticks at 136.00, with initial support the Nov 29 low at 135.93.
- Eurozone final Q3 GDP confirmed flash estimates at 0.4% Q/Q, while compensation per employee fell to 4.4% Y/Y (vs 4.7% prior).
- Market focus turns to the US labour market report at 1330GMT/1430CET.
EQUITIES: Eurostoxx 50 Futures Extends This Week's Rally, Above November Highs
Eurostoxx 50 futures have traded higher this 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 4868.67. The clear breach of this average strengthens a bullish theme and note that 4961.00, the Nov 6 high, has been pierced. This opens 5015.00, the Oct 29 high. Key support is 4699.00, the Nov 19 low. Initial support lies at 4844.40, the 20-day EMA. The S&P E-Minis contract maintains a bullish tone and price traded higher yesterday. This confirms a resumption of the uptrend and signals 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 the 6145.26, a Fibonacci projection. Initial support to watch lies at 5990.65, the 20-day EMA.
- Japan's NIKKEI closed lower by 304.43 pts or -0.77% at 39091.17 and the TOPIX ended 15.02 pts lower or -0.55% at 2727.22.
- Elsewhere, in China the SHANGHAI closed higher by 35.221 pts or +1.05% at 3404.076 and the HANG SENG ended 305.41 pts higher or +1.56% at 19865.85.
- Across Europe, Germany's DAX trades higher by 46.91 pts or +0.23% at 20405.73, FTSE 100 lower by 5 pts or -0.06% at 8344.57, CAC 40 up 81.83 pts or +1.12% at 7413.27 and Euro Stoxx 50 up 21.31 pts or +0.43% at 4973.52.
- Dow Jones mini down 10 pts or -0.02% at 44857, S&P 500 mini down 2.5 pts or -0.04% at 6086.25, NASDAQ mini up 4 pts or +0.02% at 21477.
Time: 09:55 GMT
COMMODITIES: WTI Futures Return to Week's Lows, Bearish Theme Reinforced
A bearish threat in WTI futures remains present and the Nov 25 move lower reinforces this theme. A resumption of bearish price action 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 continues to trade inside a 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, 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.
- WTI Crude down $0.35 or -0.51% at $67.97
- Natural Gas down $0.05 or -1.49% at $3.035
- Gold spot up $9.85 or +0.37% at $2641.65
- Copper up $5.25 or +1.25% at $424.55
- Silver up $0.01 or +0.02% at $31.329
- Platinum down $2.85 or -0.3% at $937.62
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 06/12/2024 | 1330/0830 | *** |  US | Employment Report |
| 06/12/2024 | 1330/0830 | *** |  CA | Labour Force Survey |
| 06/12/2024 | 1415/0915 | US | Fed Governor Michelle Bowman | |
| 06/12/2024 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 06/12/2024 | 1500/1000 | * | CA | Ivey PMI |
| 06/12/2024 | 1530/1030 | US | Chicago Fed's Austan Goolsbee | |
| 06/12/2024 | 1700/1200 | US | BOE's Greene at Financial Times Live | |
| 06/12/2024 | 1700/1200 | US | Cleveland Fed's Beth Hammack | |
| 06/12/2024 | 1800/1300 | US | San Francisco Fed's Mary Daly | |
| 06/12/2024 | 2000/1500 | * | US | Consumer Credit |
| 09/12/2024 | 2350/0850 | *** |  JP | GDP |