EXECUTIVE SUMMARY
- GRADUAL HIKES TO KEEP BOJ AHEAD OF INFLATION – UEDA
- TRUMP RETHINKS CANDIDATES FOR TREASURY SECRETARY AFTER FLURRY OF CABINET PICKS
- BIDEN APPROVES UKRAINE’S USE OF LONG-RANGE MISSILES INSIDE RUSSIA
- SCHOLZ’S PARTY ALLIES START FIGHT BACK AGAINST INTERNAL CRITICS
Figure 1: Indeed Wage Tracker update shows broad-based deceleration of posted wage growth
NEWS
BOJ (MNI): Gradual Hikes to Keep BOJ Ahead of Inflation - Ueda
Bank of Japan Governor Kazuo Ueda said on Monday the BOJ needs to raise the policy interest rate gradually to avoid falling behind the curve on inflation. Not raising the rate as appropriate risked inflation accelerating above 2% amid low real interest rates, which would force the BOJ to hike more rapidly, Ueda told reporters. “Even if economic activity and prices are on track, we will not raise the policy every meeting," he cautioned. "We are focused on whether the probability of achieving the 2% price target will be realised."
US (NYT): After Flurry of Cabinet Picks, Trump Rethinks Candidates for Treasury Secretary
President-elect Donald J. Trump is eyeing a new candidate for Treasury Secretary amid internal debate over who should have the role: the former Federal Reserve governor Kevin Warsh. Mr. Trump is also considering the Wall Street billionaire Marc Rowan. Mr. Trump had been expected to pick either Howard Lutnick, the chief executive of the Wall Street firm Cantor Fitzgerald, or Scott Bessent, the founder of the investment firm Key Square Capital Management and a former money manager for George Soros. And he had been seen as likely to make the selection late last week. But he has been having second thoughts about the top two candidates, and has slowed down his selection process. He is expected to invite the contenders to interview with him this week at Mar-a-Lago.
US (WSJ): Biden Approves Ukraine’s Use of Long-Range Missiles Inside Russia
President Biden has for the first time authorized Ukrainian forces to use Western-made long-range weapons to strike inside Russia, allowing Kyiv to better defend itself against Russia, according to U.S. officials. That means Ukraine could initially target positions in the Kursk region, where Russia has amassed more than 50,000 troops, including some 10,000 soldiers from North Korea, in an effort to recapture the territory. Ukraine’s forces seized the territory earlier this year.
ECB (MNI): Nagel Focuses on the Inflationary Impact of Trade Fragmentation
Monday comments from Bundesbank President Nagel appear more focused on the inflationary impact of trade fragmentation compared to when he spoke last week. He notes that "central banks have all of the tools necessary to handle" a rise in fragmentation-related inflationary pressures. In fitting with his hawkish leanings: "a noticeable reduction in global integration would mean that it would have to set interest rates higher to keep inflation at bay". However, he concedes that "the magnitude [on inflation] seems minor" at present, limiting the overall hawkish readthrough.
ECB (MNI): Highly Uncertain Fin Stability Threats - ECB Guindos
Current weak economic conditions and the uncertain geopolitical outlook is increasing financial stability risks across the euro area as underlying vulnerabilities make financial markets "prone" to future bouts of volatility, European Central Bank Vice President Luis de Guindos said Monday. Investors may be underestimating the likelihood and potential impact of adverse scenarios for the bloc, and the concentration of equity market capitalization in the past years has increased the concerns over the possibility of an asset price bubble connected to artificial intelligence, de Guindos said, adding that sovereign and credit risk were also vulnerabilities to financial stability.
GERMANY (BBG): Scholz’s Party Allies Start Fight Back Against Internal Critics
Olaf Scholz received some support from the ranks of his Social Democrats after several party officials questioned whether he should be the top candidate in Germany’s upcoming snap election given his poor popularity ratings. SPD head Lars Klingbeil backed Scholz late Sunday on German public broadcaster ARD, following calls by lawmakers who urged a quick decision in favor of the current chancellor in order to end a potentially bruising debate for the party that currently trails Friedrich Merz’s Conservative bloc and the far-right Alternative for Germany.
RBA (BBG): RBA Policy Effect Is No Stronger Than Other Economies, Kent Says
Australia’s monetary policy effect is no more potent than those of other advanced economies, even though its households carry a large stock of variable-rate mortgage debt, a senior Reserve Bank official said. Assistant Governor Christopher Kent said Monday that the central estimates from RBA models of how much GDP and inflation decline in response to an unanticipated increase in policy rates sit near estimates generated by models in the US, euro area, UK, Canada and Sweden.
NORTH KOREA (MNI): Kim Warns of Strengthening Nuclear Forces "Without Limitation"
North Korean Supreme Leader Kim Jong-un called for a development of his nation's nuclear forces "without limitation" and pressing ahead with war preparations in his closing remarks at a military conference held in Pyongyang on Friday, the Korean Central News Agency (KCNA) reported today. The dictator pointed to the trilateral US-South Korea-Japan military cooperation as a key factor destabilising the Korean Peninsula.
DATA
EUROZONE DATA (MNI): Broad-based Deceleration of Posted Wage Growth in October: Indeed
The 3mma of Eurozone posted wage growth eased to 3.4% in October (vs 3.7% prior) according to Friday's Indeed Wage Tracker update. This was the lowest reading since March 2022. The last three months of data have seemingly put to rest concerns around a nascent re-acceleration of posted wage growth from the Spring, underpinning the ECB's forecast for a gradual easing of compensation per employee growth through 2026. The October Indeed sample was based on 127k observations, after two months
below 100k in August and September. Posted wage growth decelerated across the four major Eurozone countries. The 3mma of Y/Y wage growth fell to 3.7% in Germany (vs 3.9% prior) and 1.6% in France (vs 1.8% prior).
CHINA DATA (MNI): Beijing Retail Sales Growth Decline Narrows in Oct
MNI (Beijing) Beijing municipality’s total retail sales growth between January to October decreased by 1.3% y/y, narrowing from the 1.6% decline between January to September, data from the Beijing municipal government showed on Monday. Investment in real-estate development decreased by 7.1% y/y during the first ten months, accelerating from the 4.5% fall during the first nine months, the data showed.
CHINA DATA (MNI): China’s October Youth Employment Rate Remains High
MNI (Beijing) China's October youth unemployment rate (16-24 years old labor force) excluding students was 17.1%, a still high level as the economy continues to recover, data issued by National Bureau of Statistics Monday showed. The rate was lower than 17.6% in September and 18.8% in August, but still the third highest this year and much higher than the 5% overall unemployment rate, the data showed.
RATINGS: S&P Move Ireland & South Africa to Positive Outlooks
Sovereign rating reviews of note from after hours on Friday include:
- Fitch affirmed Ireland at AA; Outlook Stable
- Fitch affirmed Latvia at A-; Outlook revised to Stable from Positive
- S&P affirmed Ireland at AA; Outlook revised to Positive
- S&P affirmed South Africa at BB-; Outlook revised to Positive
- Morningstar DBRS confirmed the United Kingdom at AA, Stable Trend
FOREX: EUR Favoured in Early Europe Trade, But Conviction Lacking
- The EUR trades well, rising against most others in G10 on relatively shallow price action. A pick up in volumes coincided with the European open, and aided the recovery in EUR. Over 2k contracts traded inside two minutes at 0922GMT across EUR futures, for a cash equivalent of ~$300mln and the best activity of the session so far.
- The resultant EUR/GBP highs puts the cross at the best level since Nov06, which narrows the gap with 0.8448, a break above which would resume the upleg posted off multi-year range-defining support at the ~0.83 handle.
- The JPY is the weakest, helping USD/JPY gravitate back toward the Y155.00 handle, with the currency receiving little support from an appearance from BoJ's Ueda, who declined to provide a clear indication or time-linked path for the next BoJ rate hike.
- Market focus remains on Trump's cabinet picks, with the Treasury Secretary position still up for grabs. Latest reports suggest that Trump's shortlist is growing, and he is to hold interviews this week with the leading candidates, including (but not limited to) Scott Bessent, Howard Lutnick, Kevin Warsh and Marc Rowan. Their perceived support for Trump's tariff regime will prove key to any market reaction on the formal appointment.
- The speaker schedule is the focus ahead, with appearances from ECB's Lane, Stournaras, Vujcic and Lagarde, as well as BoE's Greene on the docket. Fedspeak just sees Fed's Goolsbee providing welcome remarks.
EGBS: Short-End Leads Sell-Off in EGBs, Spreads to Bunds Mixed
The short-end has led today’s sell-off in EGBs, with 2-year Schatz yields up ~6bps and Schatz futures -12.5 at 106.685 – just off intraday lows. Initial support in Schatz futures is the Nov 8 low at 106.645.
- ECB-dated OIS price 138bps of cuts through December 2025 down from ~145bps at Friday’s close.
- This morning, Bundesbank President Nagel provided customary hawkish rhetoric around the inflationary impact of trade fragmentation, but short-end pressure was already prevalent before his comments crossed.
- Bund futures are -54 ticks at 131.66, through last Friday’s low.
- Anticipation of this week’s heavy sovereign supply calendar (we estimate net flows at E31.3bln vs -E1.2bln last week) may be adding further pressure to EGBs this morning.
- 10-year EGB spreads to Bunds are mixed, with Irish bonds outperforming on positive ratings action from S&P on Friday and DSL spreads widening amid an uptick in political uncertainty.
- 10-year peripheral (ex-Ireland) and OAT spreads to Bunds are biased wider given the hawkish ECB repricing.
- The Eurozone September trade surplus was a little larger than expected, with Q3 current account data due tomorrow.
- ECB’s Lane and Lagarde are scheduled to speak this afternoon.
GILTS: Weaker Alongside Peers, Outperforming Bunds
Weakness in core global FI peers has weighed on gilts today, with hawkish repricing in the front end of the EUR curve noted (ECB-dated OIS still prices 5x 25bp cuts over the next 5 meetings, with risk of 50bp moves seen over the next 3).
- Some typically hawkish comments from ECB’s Nagel this morning, but markets were moving ahead of that.
- No real UK drivers of note.
- Gilt futures traded to fresh session lows of 93.46 recently but stick comfortably within Friday’s range.
- Technical setup for the contract remains bearish.
- Initial support at the November 14 low (92.97), while resistance is located at the 20-day EMA (94.64).
- Yields 2-4bp higher, curve flattens.
- Outperformance vs. Bunds has pulled the 10-Year spread below 210bp, a little over 1.5bp tighter on the day. Spread remains under 10bp off closing cycle highs.
- 5s30s 57.8bp last vs. November multi-month lows at 45.2bp.
- BoE-dated OIS shows 2.5bp of cuts for next month, 19.5bp through February, 26bp through March, 45bp through June and 63bp through December ’25, with the bulk of the hawkish post-Budget repricing still holding.
- Contracts little changed to ~4bp less dovish on the day. Next 25bp cut fully discounted for the March MPC.
- SONIA futures flat to -4.5.
- Comments from BoE’s Greene due after the close today.
- Wednesday’s CPI data headlines this week’s UK calendar (expect our full CPI preview Tuesday).
EQUITIES: Move Lower in E-Mini S&P Last Week Appears Corrective
Despite recent gains, a bearish condition in Eurostoxx 50 futures remains intact. The move lower last week marks a resumption of the downtrend that started Sep 30. Price has breached 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, Nov 6 high, where a break would highlight a reversal. The move lower last week in S&P E-Minis appears corrective. Medium-trend signals such as moving average studies, continue to highlight a dominant uptrend. The contract has traded through the 20-day EMA. The next key support to monitor is 5826.69, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement. A resumption of gains would refocus attention on the bull trigger at 6053.25, the Nov 11 high.
- Japan's NIKKEI closed lower by 422.06 pts or -1.09% at 38220.85 and the TOPIX ended 19.88 pts lower or -0.73% at 2691.76.
- Elsewhere, in China the SHANGHAI closed lower by 6.877 pts or -0.21% at 3323.849 and the HANG SENG ended 150.27 pts higher or +0.77% at 19576.61.
- Across Europe, Germany's DAX trades lower by 51.65 pts or -0.27% at 19161.16, FTSE 100 higher by 12.66 pts or +0.16% at 8076.71, CAC 40 down 11.78 pts or -0.16% at 7258.27 and Euro Stoxx 50 down 22.84 pts or -0.48% at 4772.01.
- Dow Jones mini down 69 pts or -0.16% at 43499, S&P 500 mini up 2.5 pts or +0.04% at 5898.5, NASDAQ mini up 79.5 pts or +0.39% at 20571.25.
Time: 09:55 GMT
COMMODITIES: Bearish Theme in WTI Futures Remains Intact, Attention on $65.99
A bearish theme in WTI futures remains intact and the move lower from the Nov 7 high has reinforced current conditions. Attention is on $65.99, the Oct 1 low, and $64.16, the Sep 10 low and key support. For bulls, a clear reversal to the upside would instead refocus attention on the key short-term resistance at $77.70, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial firm resistance is $72.88, the Nov 7 high. The long-term trend condition in Gold is unchanged, it remains bullish and the latest pullback is considered corrective. The recent move down has resulted in a breach of the 20- and 50-day EMAs, and the metal is trading at its recent lows. The breach of the EMAs signals scope for a deeper retracement and sights are on $2511.1 next, the Sep 18 low. Firm resistance is seen at $2657.6, the 20-day EMA.
- WTI Crude up $0.25 or +0.37% at $67.28
- Natural Gas up $0.08 or +2.9% at $2.904
- Gold spot up $32.45 or +1.27% at $2595.64
- Copper up $2.3 or +0.56% at $413.05
- Silver up $0.47 or +1.57% at $30.7465
- Platinum up $15.29 or +1.62% at $957.48
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 18/11/2024 | 1300/1400 |  EU | ECB's Lane lecture on Inflation Expectations | |
| 18/11/2024 | 1315/0815 | ** |  CA | CMHC Housing Starts |
| 18/11/2024 | 1330/0830 | * | CA | International Canadian Transaction in Securities |
| 18/11/2024 | 1500/1000 | ** |  US | NAHB Home Builder Index |
| 18/11/2024 | 1500/1000 | US | Chicago Fed's Austan Goolsbee | |
| 18/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 18/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 18/11/2024 | 1830/1930 | EU | ECB's Lagarde on economic and human challenges | |
| 18/11/2024 | 1830/1830 |  GB | BOE's Greene Fireside Chat On The Future of Inflation | |
| 18/11/2024 | 2100/1600 | ** | US | TICS |
| 19/11/2024 | 0030/1130 |  AU | RBA Minutes | |
| 19/11/2024 | 0845/0945 | EU | ECB's Elderson at 10th Green Finance Forum | |
| 19/11/2024 | 0900/1000 | ** | EU | EZ Current Account |
| 19/11/2024 | 1000/1100 | *** | EU | HICP (f) |
| 19/11/2024 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 19/11/2024 | 1000/1000 | GB | BOE's Bailey, Lombardelli, Mann and Taylor at TSC | |
| 19/11/2024 | 1330/0830 | *** | CA | CPI |
| 19/11/2024 | 1330/0830 | *** | US | Housing Starts |
| 19/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 19/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 19/11/2024 | 1810/1310 | US | Kansas City Fed's Jeff Schmid | |
| 20/11/2024 | 2350/0850 | ** |  JP | Trade |