EXECUTIVE SUMMARY
- TRUMP ROILS MARKETS WITH TARIFF THREAT ON CHINA, MEXICO, CANADA
- FED’S KASHKARI SAYS IT’S REASONABLE TO WEIGH RATE CUT NEXT MONTH
- ECB’S REHN HINTS AT FURTHER CUTS IN "LATE WINTER"
- GERMANY’S CDU IN POLE POSITION AS SCHOLZ CONFIRMED AS SPD CANDIDATE
Figure 1: USD/CAD spikes to multi-year high on Trump tariff talk
Source: MNI/Bloomberg
NEWS
US (BBG): Trump Roils Markets With Tariff Threat on China, Mexico, Canada
President-elect Donald Trump vowed additional tariffs on China as well as US neighbors Canada and Mexico, roiling markets with his first specific threat to curb global trade flows since his election win. Trump said he would impose additional 10% tariffs on goods from China and 25% tariffs on all products from Mexico and Canada in posts to his Truth Social network on Monday. The Canadian dollar fell to a four-year low on the news, while the peso traded close to its weakest since 2022. China’s yuan edged lower offshore. Trump cast the new levies as necessary to clamp down on migrants and illegal drugs flowing across borders. He accused China of failing to follow through on promises to institute the death penalty for traffickers of fentanyl, writing that “drugs are pouring into our Country, mostly through Mexico, at levels never seen before.”
FED (BBG): Fed’s Kashkari Says It’s Reasonable to Weigh Rate Cut Next Month
Federal Reserve Bank of Minneapolis President Neel Kashkari said it is still appropriate to consider another interest-rate cut at the central bank’s December meeting. “It’s still a reasonable consideration,” Kashkari said Monday on Bloomberg Television in response to a question about whether policymakers should reduce borrowing costs by a quarter point at their last meeting of the year. “Right now, knowing what I know today, still considering a 25-basis-point cut in December - it’s a reasonable debate for us to have.”
US/MEXICO (WSJ): Mexico Gets Cold Feet Over New Chinese EV Plant After Trump Win
Chinese electric-vehicle maker BYD is finalizing plans for a factory in Mexico, a push that will test Donald Trump’s trade policies and the Mexican government’s appetite for conflict with the president-elect. BYD officials say the company is aiming to reach a deal with Mexico state officials to break ground on a factory near one of the automotive hubs in central or northern Mexico.
ISRAEL (MNI): Sec Cab Set to Approve Lebanon Ceasefire Despite Pushback
Ahead of the meeting of Israel's Security Cabinet at 1730 local (1030ET, 1530GMT) that is expected to finalise the acceptance of a ceasefire deal with Hezbollah, there remains criticism of the agreement from both sides of the political spectrum. Security Minister Itamar Ben-Gvir from the ultranationalist Otzma Yehudit (OY) said the agreement represented a "historical missed opportunity" to destroy Hezbollah, while opposition National Unity leader Benny Gantz said that stopping military operations in Lebanon would represent doing only “half the job”.
ECB (MNI): Rehn Hints at Further ECB Cuts in "Late Winter"
Headlines crossing from Bank of Finland Governor Rehn, speaking in a public hearing at the Finnish parliament (comments via Bloomberg): "can cut rates in December if data, forecasts support it". Little changed from Rehn's previous comments on November 12: "Disinflation in the euro-area is "well on track" and the growth outlook "seems to be weakening" [...] "that strengthens the case for a rate cut in December". Rehn also says "moving from restrictive toward neutral in late winter", suggesting Rehn could also support another rate cut in late January (there is not a February ECB meeting), though we would caution over-interpretation from just the headline at this stage. The comments come amid speculation that the ECB could tweak its guidance at the December meeting (by removing its pledge to keep policy restrictive).
ECB (BBG): ECB’s Guindos Says More Rate Cuts to Come If Forecasts Hold
European Central Bank Vice President Luis de Guindos said more reductions in interest rates are on the way if policymakers’ forecasts for inflation hold. The trajectory of any future cuts “will depend on the evolution of inflation,” Guindos told Nordic newspaper Helsingin Sanomat. He said it’s difficult to make predictions about the specific number and size of moves. “We have cut interest rates three times and the trajectory of our monetary policy is clear,” Guindos said in an interview published Tuesday. “If our projections are confirmed, we will continue making our monetary policy stance less restrictive.”
ECB (MNI): Tariffs Could Bring Structural Inflation - de Guindos
The initial impact from any tariffs introduced by US President-elect Donald Trump would likely hit growth, but they could also indirectly lead to more persistent inflation depending on monetary and fiscal policy responses, European Central Bank Vice-President Luis de Guindos said in an interview with Helsingin Sanomat on Tuesday. “Afterwards, if this initial impact on inflation were accommodated by fiscal and monetary policy, it could become much more structural,” he said, adding that growth would bear the brunt of the immediate effects.
FRANCE (BBG): French Central Bank Chief Urges Clarity as Budget Doubts Persist
France’s central bank governor, Francois Villeroy de Galhau, called for more certainty around plans to repair the country’s finances as the government struggles to get the budget through parliament. “Investors who lend to France and French people themselves, both households and companies, expect clarity and confidence on how we will reduce our deficits and control our public debt,” he said at the Investir Day conference in Paris on Tuesday.
GERMANY (MNI): CDU in Pole Position as Scholz Confirmed as SPD Candidate
Opinion polling ahead of the early federal election, likely to take place on 23 Feb, continues to show a fragmented party political landscape that could see lengthy coalition negotiations required after the vote. On 25 Nov, it was confirmed that Chancellor Olaf Scholz will serve as the chancellor candidate for the centre-left Social Democrats (SPD). The news was widely expected after Defence Minister Boris Pistorius posted a video late last week saying that he was not seeking the party's nomination. Some within the SPD had called for Scholz to step aside given that some polls had shown Pistorius as the most popular politician in Germany, while Scholz polled as the least popular.
UK (BBG): UK Starts Consultation to Simplify Guidelines on Banker Bonuses
The UK’s Prudential Regulation Authority and Financial Conduct Authority set out plans to reduce the restrictions on senior bankers’ bonuses, according to a statement. “We should not return to the very dangerous pay structures that were commonly in place before 2008, but these proposals will reduce bureaucracy and support responsible risk-taking,” PRA Deputy Governor of Prudential Regulation and CEO Sam Woods said
RIKSBANK (MNI): Riksbank Puts Neutral Rate in 1.5 to 3.0% Range
The Riksbank has unveiled its updated estimate of the long-term neutral rate ahead of the December policy decision and forecast round, with Deputy Governor Anna Seim saying that it was in a 1.5 to 3 per cent range, a full percentage point below the last full esimate of 2.5 to 4% published back in 2017. The change, however, appears to be of limited practical significance. The central bank had more recently said that the neutral rate had fallen and was most likely in the lower half of its 2017 range and its latest forecasts in the September Monetary Policy Report showed the policy rate troughing at 2.25% , the mid-point of the new range.
CHINA (MNI): China Supports Globalisation Despite Turbulence
MNI (Beijing) China will continue opening up and working towards a multi-polar and inclusive global economic system, despite the world entering a period of turbulence, Han Zheng, vice president of the People's Republic of China said on Tuesday. Han, speaking at the International Supply Chain Expo in Beijing, said China's large domestic market with rising consumption levels offers opportunities for international firms. China will promote industrial capacity cooperation with other nations, Han added.
JAPAN (BBG): Japan’s Ishiba Renews Pressure on Companies to Ramp Up Pay
Japanese Prime Minister Shigeru Ishiba called on companies to continue ramping up pay for workers, as his government seeks to secure stable inflation and economic growth while also responding to the rising cost of living. “I asked for cooperation in next year’s wage negotiations for a substantial wage increase, building on this year’s momentum,” Ishiba said after meeting with labor union and business leaders. Average wage deals this year hit a 33-year-high as firms responded to demands to raise pay amid ongoing inflation.
JAPAN (MNI): Japan Govt Keeps Economic Assessment, Ups Imports
Japan’s government left its overall economic assessment in November for the fourth straight month but upgraded its view on imports for the first time since May 2024, the Cabinet Office said on Tuesday. The assessments on other major components, such as exports, private consumption, capital investment and production were left from the previous month. But the government tweaked its assessment on consumer prices for the first time since January 2024 and on corporate goods price index for the first time since September.
MNI RBNZ PREVIEW - NOVEMBER 2024: 50bp Closer to Neutral
The RBNZ is widely expected to cut rates 50bp at its November meeting that also includes updated staff forecasts. The discussion could be centred around 25bp, 50bp or even 75bp of easing though. Inflation is in the RBNZ's target band, and weak growth & excess capacity persist, and so there is no reason to slowdown to 25bp. Monthly data are signalling that while the economy is still soft, it may be stabilising, and so there is no need to panic and cut by 75bp.
BITCOIN (BBG): ‘UltraShort’ Bitcoin ETF Draws Record Inflows as Rally Stalls
A fund giving investors a way to turbocharge bets against Bitcoin notched its highest daily inflow in a sign that some investors consider the rally unleashed by Donald Trump’s election to the White House overdone. The ProShares UltraShort Bitcoin exchange-traded fund (SBIT) aims to deliver twice the inverse daily performance of the token. It recorded a net inflow of $18.8 million on Monday, the largest since its April launch. Investors also piled into the ProShares Short Bitcoin ETF (BITI), which drew in about $23 million over the past two trading sessions, among the highest inflows this year.
DATA
UK DATA (MNI): Annual Shop Prices Fall for Fourth Month - BRC-NielsenIQ
- UK NOV BRC SHOP PRICES +0.2% M/M, -0.6% Y/Y
In data released overnight, BRC-NielsenIQ Shop Prices remained in deflation territory for a fourth consecutive month in November, printing -0.6% Y/Y (vs -0.8% prior). However, this is the first time the Y/Y print has been higher than the previous month since May 2023. On a monthly basis, Shop Prices grew 0.2% M/M (vs 0.1% prior). The Non-Food component increased in Y/Y terms though remained in deflation for the eighth consecutive month, printing -1.8% Y/Y (vs -2.1% in October), rising 0.2% M/M (vs 0.1% rise prior).
SWEDEN DATA (MNI): Food Prices Continue to Climb According to October PPI Report
Swedish producer prices rose 0.5% M/M in October but fell 1.3% on an annual comparison (vs -2.3% prior). The price index for domestic supply, which provides a better signal of domestic price pressures, rose 0.7% M/M but fell 2.4% Y/Y (vs -3.0% prior). Excluding energy, domestic supply prices rose 0.2% M/M and 0.3% Y/Y (vs 0.2%
prior). On a 3m/3m basis, price growth remained negative. Consumer goods (ex-food) prices rose 0.5% M/M, but the annual and 3m/3m comparisons were also negative.
JAPAN DATA (MNI): Japan Oct Services PPI Rises 2.9% vs. Sept 2.8%
- JAPAN OCT SERVICES PPI +2.9% Y/Y; SEPT REV +2.8%
- JAPAN OCT SERVICES PPI +0.8% M/M: SEPT UNREV -0.1%
Japan’s services producer price index rose 2.9% y/y in October, accelerating from September’s revised 2.8%, showing that corporate pass-through of cost increases remained solid in addition to price revisions, preliminary data released by the Bank of Japan on Tuesday showed. The SPPI rose 0.8% m/m in October after falling 0.1% in September. The October index was boosted by transportation and postal activities (+3.3% y/y vs. +1.6%) and by advertising services (+4.9% vs. +4.6%).
FOREX: CAD Sold in Size as Trump Targets Day One Tariff
- Markets hold a risk-off footing into the NY crossover, with Trump's tariff talk overnight unnerving sentiment and prompting outperformance in haven currencies. As a result, JPY outperforms, while trade sensitive FX (most notably CAD and AUD) are softer against all others.
- While the pursuit of tariffs is certainly not new news for the administration, the market reaction across both the MXN and CAD today suggests markets had been expecting a more gradual approach to trade restrictions following the nomination of Scott Bessent to the Treasury over the weekend.
- Trump's pledge to pass the tariffs via executive order could well be setting a precedent here, with high-level economic policy passed through directly from the Oval Office. With CAD the primary target in G10, USD/CAD made light work of the 1.4100 handle as well as YTD highs, printing 1.4178 in the process.
- Sustainability of the move lower in CAD will depend on the Canadian authorities' ability to cooperate with the Trump administration on drug and migration controls, with solid concessions likely needed to avoid any punitive measures on trade.
- US consumer confidence data marks the data highlight today, with markets expecting the number to tick higher to 111.4 from 108.7. With the data capturing the immediate aftermath of the Presidential election, markets will be on watch for any further reversal of pre-vote jitters - as evidenced in the gradual incline for the University of Michigan sentiment index over November.
EGBS: Tight Range for Bunds on Limited Regional Data Calendar
Bund futures have traded in a tight 28 tick range this morning on light volumes, currently little changed at 133.59. Today’s regional calendar has been headlined by supply from Italy and Germany, which was digested smoothly.
- Italy sold E3.75bln of BTP Short-term and BTPei’s, while Germany issued E4bln of the 2.50% Oct-29 Bobl.
- This morning’s ECB speakers (de Guindos, Centeno and Rehn) were not major market movers. Rehn re-iterated his view that the ECB can cut rates in December if supported by data and the updated projections. Headlines also suggested that he could support a further rate cut in late-January.
- 10-year EGB spreads to Bunds are little changed. We have seen several sell-side analysts highlight the potential for further OAT/Bund spread widening amid ongoing political/fiscal uncertainty.
- Regional focus remains on the November flash inflation round, starting on Thursday with Spanish and German data.
GILTS: Spread to Bunds Around Cycle Wides, BoE’s Pill Due Later
Gilts again look to U.S. Tsys for direction this morning, selling off after Trump’s tariff threats against China, Canada & Mexico.
- Futures last -34 at 94.82 vs. lows of 94.74.
- Initial support & resistance at yesterday’s range boundaries (94.58/95.35), corrective bullish cycle remains in play within bearish trend.
- Yields ~2bp higher across the curve.
- 10-Year yields hit the lowest level seen since late October yesterday, printing 4.316%.
- The benchmark stabilised around the October 29 level that we flagged ahead of time (4.317%), before retaking 4.35% this morning.
- Gilt/Bund spread hovers 0.2bp below cycle closing highs, last 215.6bp.
- Expected strong demand materialised at today’s 1.25% Nov-54 I/L gilt syndication, with order books hitting GBP65bln and spread set at the tight end of the guidance range, per bookrunners.
- SONIA futures flat to 4.5 lower, given increased inflation premium linked to Trump’s latest tariff comments.
- BoE-dated OIS flat to 1.5bp more hawkish on the day, showing 2bp of cuts for next month, 21.5bp of easing through February, 30.5bp of cuts through March, 54bp of easing through June and 75bp of cuts through Dec ’25.
- Comments from BoE chief economist Pill (15:00 London) will be closely monitored, given his previous hawkish dissent.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.681 | -1.9 |
Feb-25 | 4.486 | -21.4 |
Mar-25 | 4.393 | -30.7 |
May-25 | 4.233 | -46.7 |
Jun-25 | 4.160 | -54.0 |
Aug-25 | 4.067 | -63.3 |
Sep-25 | 4.029 | -67.1 |
Nov-25 | 3.972 | -72.8 |
Dec-25 | 3.948 | -75.2 |
EQUITIES: E-Mini S&P Holding Onto Bulk of Recent Gains, Theme Remains Bullish
A bear threat in the Eurostoxx 50 futures contract remains present 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 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, the Nov 6 high, where a break would highlight a reversal. S&P E-Minis started the week on a bullish note with the contract extending the recovery from 5855.00, the Nov 19 low. Recent weakness appears to have been a correction. Medium-term trend signals such as moving average studies, continue to highlight a dominant uptrend. Sights are on the bull trigger at 6053.25, the Nov 11 high. A break would resume the uptrend. On the downside, key short-term support to watch is 5855.60, the 50-day EMA.
- Japan's NIKKEI closed lower by 338.14 pts or -0.87% at 38442 and the TOPIX ended 26.05 pts lower or -0.96% at 2689.55.
- Elsewhere, in China the SHANGHAI closed lower by 4.003 pts or -0.12% at 3259.757 and the HANG SENG ended 8.21 pts higher or +0.04% at 19159.2.
- Across Europe, Germany's DAX trades lower by 109.19 pts or -0.56% at 19293.26, FTSE 100 lower by 36.85 pts or -0.44% at 8254.44, CAC 40 down 54.65 pts or -0.75% at 7202.83 and Euro Stoxx 50 down 36.75 pts or -0.77% at 4763.21.
- Dow Jones mini down 12 pts or -0.03% at 44812, S&P 500 mini down 1 pts or -0.02% at 6005, NASDAQ mini up 3.5 pts or +0.02% at 20882.5.
Time: 09:50 GMT
COMMODITIES: Monday's Move Lower Reinforces Bearish WTI Future Trend Conditions
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. Price has recovered from its recent lows and Monday’s move lower is - for now - considered corrective, despite it being a very sharp pullback. Resistance to watch is $2721.4, yesterday’s high. Clearance of this level would be a bullish development. Key support is $2536.9,Nov 14 low. A break would be bearish.
- WTI Crude up $0.5 or +0.73% at $69.47
- Natural Gas down $0.05 or -1.57% at $3.316
- Gold spot down $1.48 or -0.06% at $2624.37
- Copper down $1.65 or -0.4% at $414.35
- Silver up $0.1 or +0.33% at $30.403
- Platinum down $7.73 or -0.82% at $932.54
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 26/11/2024 | 1100/1100 | ** |  GB | CBI Distributive Trades |
| 26/11/2024 | 1305/0805 |  CA | BOC Deputy Mendes speech in PEI. | |
| 26/11/2024 | 1330/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 26/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 26/11/2024 | 1400/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Home Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 26/11/2024 | 1500/1000 | *** | US | New Home Sales |
| 26/11/2024 | 1500/1000 | *** | US | Conference Board Consumer Confidence |
| 26/11/2024 | 1500/1000 | ** | US | Richmond Fed Survey |
| 26/11/2024 | 1500/1500 | GB | BOE's Pill at Economic Affairs Committee | |
| 26/11/2024 | 1530/1030 | ** | US | Dallas Fed Services Survey |
| 26/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 26/11/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 26/11/2024 | 1800/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/11/2024 | 1900/1400 | *** | US | FOMC Minutes |
| 27/11/2024 | - |  NZ | Reserve Bank of New Zealand Meeting | |
| 27/11/2024 | 0030/1130 | *** |  AU | Quarterly construction work done |
| 27/11/2024 | 0030/1130 | *** | AU | CPI Inflation Monthly |
| 27/11/2024 | 0100/1400 | *** | NZ | RBNZ official cash rate decision |
| 27/11/2024 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 27/11/2024 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 27/11/2024 | 0930/1030 | * |  DE | GFK Consumer Climate |
| 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 | 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" |