EXECUTIVE SUMMARY
- MNI FOMC MINUTES PREVIEW: DECEMBER 2024
- TRUMP’S MIDEAST ENVOY SAYS HOSTAGE DEAL WITH HAMAS IS CLOSE
- CHINA BOOSTS FX SUPPORT AS YUAN HEADS TOWARD POLICY RED LINE
- EUROZONE PPI SLIGHTLY ABOVE EXPECTATIONS IN NOVEMBER
Figure 1: Eurozone PPI slightly higher than expected but Y/Y remains in deflation
Source: MNI/Eurostat
NEWS
MNI FOMC MINUTES PREVIEW: DECEMBER 2024
The minutes to the December 2024 FOMC meeting (released Wednesday Jan 8 at 1400ET) should provide further context for what Chair Powell dubbed a “closer call” but ultimately the “right call” to cut rates by 25bp. There are several elements to watch for in the minutes, including the degree to which anticipated Trump administration policies affected participants' forecasts, the shift in the perceived balance of risks, and how "close" a call it was to cut rates at all in December.
US/MIDEAST (BBG): Trump’s Mideast Envoy Says Hostage Deal With Hamas Is Close
US President-elect Donald Trump’s incoming special envoy to the Middle East said negotiators were on the verge of a deal to secure the release of hostages taken by Hamas in its war against Israel. “I think that we’ve had some really great progress, and I’m really hopeful that by the inaugural we’ll have some good things to announce on behalf of the president,” Steven Witkoff said Tuesday at a press conference at Trump’s Mar-a-Lago resort in Florida.
US (RTRS): Trump Will Not Rule Out Force to Take Panama Canal, Greenland
U.S. President-elect Donald Trump refused on Tuesday to rule out using military or economic action to pursue acquisition of the Panama Canal and Greenland, part of a broader expansionist agenda he has promoted since winning the Nov. 5 election. Trump, who takes office on Jan. 20, also floated the idea of turning Canada into a U.S. state, said he would demand far higher defense spending from NATO allies and promised to change the name of the Gulf of Mexico to the Gulf of America.
DENMARK (MNI): Greenland PM to Meet w/King Following Trump Jr. Visit
Greenlandic Prime Minister Múte Egede will meet with King Frederik X at 1400CET amid intense national and international political focus on the future of Greenland. The meeting was initially called off by Egede on the evening of 7 Jan citing 'calendar gymnastics' but was this morning reinstated at an earlier time. This followed the controversial visit of Donald Trump Jr. to the capital, Nuuk, on the same day.
AUSTRIA (MNI): Foreign Minister Schallenberg to Take Over as Interim Chancellor
Der Standard reports that Foreign Minister Alexander Schallenberg will, for the second time in his career, be sworn in as interim chancellor. The transition will come on Friday 10 January and comes after incumbent Chancellor Karl Nehammer announced that following the collapse of coalition talks he would step down as head of the conservative Austrian People's Party (ÖVP) and chancellor.
CHINA (BBG): China Boosts FX Support as Yuan Heads Toward Policy Red Line
China stepped up its support for the yuan as the managed currency weakened toward a policy no-go area - the edge of its allowed trading range against the dollar. The central bank set a daily reference rate that was stronger than analyst estimates by the most since April on Wednesday, with the currency approaching a record low offshore this week. State-owned banks continued to scale back their yuan lending in Hong Kong, making it costlier for investors to build short positions, traders said.
CHINA (BBG): China Boosts Consumer Subsidies, Vows More Funding to Aid Demand
China will subsidize more consumer products and boost funding for industrial equipment upgrades, ramping up a program aimed at bolstering domestic consumption in the face of growing headwinds for exports. Consumers will qualify for a 15% subsidy for buying new mobile phones, tablets and smartwatches under 6,000 yuan ($818) this year, according to an official notice published Wednesday by China’s top economic planner and the Ministry of Finance. The benefit is capped at 500 yuan for at most one device in each category.
S. KOREA (BBG): South Korean Standoff Over Yoon’s Arrest Risks Violent Turn
South Korea’s impeached leader is barricaded in his Seoul residence, protected by a blockade of buses, barbed wire, crowds of supporters and his own armed security guards. The question now is whether investigators can arrest him without a violent confrontation. Senior leaders of the Corruption Investigation Office for High-ranking Officials are mulling just how to peacefully bring President Yoon Suk Yeol into custody, five days after they gave up on their first try to haul him in for questioning over his failed bid to impose martial law last month.
DATA
EUROZONE DATA (MNI): PPI Slightly Higher Than Expected Though Y/Y Remains in Deflation
- EUROZONE NOV PPI +1.6% M/M, -1.2% Y/Y
Eurozone PPI in November printed slightly above expectations at -1.2% Y/Y (vs -1.4% consensus, -3.3% revised prior) and 1.6% M/M (vs 1.5% consensus, 0.4% prior). This is the nineteenth consecutive month of Y/Y deflation, though the highest reading since mid 2023 as energy base effects still work their way out of the Y/Y comparison. Note that excluding energy the PPI index level has been broadly unchanged since April whereas including energy it has been increasing since May.
EUROZONE DATA (MNI): Economic Sentiment Slips, Downside Risk to Growth
Eurozone economic sentiment softened more than expected in December to 93.7 (cons 95.6) after a marginally downward revised 95.6 (initial 95.8). It's a notable miss and decline just a month after the US presidential election, pushing through late 2023 lows for its lowest since late 2020. Historically, this level would suggest downside risk to Eurozone real GDP growth of 0.9% Y/Y back in Q3 (which was helped by a solid 0.4% Q/Q non-annualised in Q3)
GERMANY NOV RETAIL SALES -0.6% M/M (FCST: 0.5%) (MNI)
GERMANY NOV RETAIL SALES 2.5% Y/Y (MNI)
GERMANY NOV FACTORY ORDERS -5.4% M/M (MNI)
FRANCE DEC CONSUMER SENTIMENT 89 (MNI)
SWEDEN DATA (MNI): Swedish Flash Inflation a Little Softer - But No MonPol Impacts
- SWEDEN FLASH DEC CPIF +1.5% Y/Y
The Riksbank had forecast CPIF at 1.9% Y/Y (consensus 1.7%Y/Y, actual 1.5% Y/Y). So 0.4ppt below the stale Riksbank forecast and 0.2ppt below consensus. For CPIF ex energy the Riksbank forecast was 2.2% Y/Y (consensus was also 2.2% Y/Y). That came in at 2.1% Y/Y so only 0.1ppt below both the Riksbank and consensus.
AUSTRALIA DATA (MNI): Aussie Trimmed Mean Falls to 3.2% in Nov
Australian monthly trimmed mean inflation fell 20 basis points over November to 3.2% y/y, while headline CPI grew 2.3% y/y, up from October’s 2.1%, data from the Australian Bureau of Statistics showed Wednesday. Trimmed mean is the Reserve Bank of Australia’s preferred measure of inflation. (See MNI: RBA Rate On Track For Cuts, Trump Adds To Risk-Ex Staff) 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): Japan Dec Consumer Confidence Index Drops
Japan's consumer confidence index fell in December to 36.2, down from November's 36.4, as two out of four components dropped from the previous month but the government left its assessment, data released by the Cabinet Office on Wednesday showed. The indexes linked to overall economic well-being and the willingness to buy durable goods buy fell but the the indexes linked to income conditions and the labour market rose.
JAPAN DATA (MNI): Q3 Output Gap Hits 18th Negative Result - BOJ
The Bank of Japan estimated the country's output gap at -0.53% in Q3, its 18th consecutive negative result following -0.58% in Q2, indicating upward pressure on prices continued with a time lag, data released by the BOJ showed on Wednesday. The BOJ's estimate of the output gap, based on capital and labour stocks, is smaller than the Cabinet Office's last estimate of -0.4% in Q3 (vs. -0.6% in Q2), which is based on revised second preliminary Q3 GDP data showing a 0.3% q/q rise, or an annualised rate of 1.2%.
FOREX: Greenback Firmer Ahead of FOMC Minutes, Underlying Trend Prevailing
- Aggregate G10 FX moves have been relatively muted in early Wednesday trade, with the US dollar slightly firmer (DXY approaching 109.00 once more) as we approach the FOMC minutes later in the session.
- EURUSD has been slowly eroding the rally from earlier in the week, that was underpinned by higher-than-expected German inflation and hints that US tariffs could be more selective than first thought. With the underlying bullish dollar trend prevailing, EURUSD is now ~120 pips off the week’s highs and notably back below the prior breakdown point of 1.0335.
- The bullish trend for USDCHF since the US election remains firmly intact, and yesterday’s Swiss CPI data has assisted the pair back above the 0.91 handle during this morning’s session. Cycle highs reside at 0.9137, and above here, the medium-term targets at 0.9158 and 0.9224 appear well defined. Prior pullbacks have been well supported by the 20-day exponential moving average, which now intersects at 0.9015.
- Notably, EURCHF has been consolidating back above 0.9400 and a resumption of strength would place the technical focus on a cluster of September highs around the 0.95 handle.
- AUDUSD sits a little softer on the session as the trimmed mean measure of Australia CPI eased 0.3pp to 3.2%. However, given the RBA continues to focus on quarterly CPI data and it wants to be confident that inflation will return sustainably to the band, downside AUD momentum failed to materialise given it may be too early to tell if monthly inflation is trending lower again.
- US ADP employment and jobless claims headline the Wednesday data calendar before the FOMC minutes. FOMC Member Waller is on the speaker schedule, while ECB’s Villeroy speaks in Paris.
BONDS: Off Lows, Supply Caps Recovery, Bearish Techs Intact
A narrow session for core global FI markets, with TY, Bund & gilt futures all trading above yesterday’s lows.
- Continued heavy IG supply limits any recoveries at this stage.
- The initial EGB syndications of ’25 have generated strong demand.
- Little reaction to fresh multi-month highs in crude futures.
- Bearish technicals intact.
- Bund futures flat around 132.00, German yields -0.5bp to +0.5bp, light steepening.
- EGB spreads to Bunds -2bp to +0.5bp.
- European equity rally promotes some outperformance for the likes of GGBs and BTPs.
- GGBs continue early ’25 outperformance, aided by fiscal/ratings trajectory and the PDMA’s conservative ’25 issuance target. Spread to Bunds further below 75bp, on track for another cycle closing low.
- BTPs have tightened by ~1.5bp vs. Bunds, aided by solid demand at today’s syndication (orderbooks have hit a record level for a dual tranche offering). Spread to Bunds nearing 110bp, a level not closed below since December 11.
- PGBs the laggard this morning, perhaps driven by expectations for a PGB syndication announcement.
- Gilts saw some light concession into this morning’s ’30 gilt auction, although have stabilised since, aided by solid enough demand (which was notable given the bearish backdrop).
- Futures last little changed at ~91.40. Yields little changed across the curve.
- ECB & BoE pricing little changed on the day, showing 102bp and 55.5bp of cuts through ’25, respectively.
- U.S. ADP employment and weekly jobless claims data due later.
- Comments from Fed’s Waller & ECB’s Villeroy also scheduled.
- Bund supply due shortly, with U.S. 30-Year supply on deck later.
EQUITIES: Bull Cycle in Eurostoxx 50 Futures Intact Following This Week's Rally
A bull cycle in the Eurostoxx 50 futures contract remains intact. This week’s strong rally highlights a reversal of the recent corrective pullback. Resistance at 5040.00, the Dec 9 high, has been pierced. A clear break of this level would confirm a resumption of the bull cycle that started on Nov 21 last year and open 5068.13, a Fibonacci projection. On the downside, initial firm support lies at 4925.88, the 50-day EMA. A bear threat in the S&P E-Minis contract remains present despite the most recent move higher. The reversal lower from the Dec 26 high, highlights the end of the Dec 20 - 26 correction. Attention is on 5866.00, Dec 20 low and a key S/T support. Clearance of this level would strengthen a bearish theme. Initial firm resistance is 6107.50, Dec 26 high. A breach of this hurdle would highlight a bull reversal and open key resistance at 6178.75, the Dec 6 high.
- Japan's NIKKEI closed lower by 102.24 pts or -0.26% at 39981.06 and the TOPIX ended 16.57 pts lower or -0.59% at 2770.
- Elsewhere, in China the SHANGHAI closed higher by 0.524 pts or +0.02% at 3230.168 and the HANG SENG ended 167.74 pts lower or -0.86% at 19279.84.
- Across Europe, Germany's DAX trades higher by 50.56 pts or +0.25% at 20391.34, FTSE 100 higher by 1.67 pts or +0.02% at 8247.05, CAC 40 down 9.86 pts or -0.13% at 7478.23 and Euro Stoxx 50 up 4.54 pts or +0.09% at 5016.36.
- Dow Jones mini up 89 pts or +0.21% at 42893, S&P 500 mini up 15 pts or +0.25% at 5969.25, NASDAQ mini up 57.75 pts or +0.27% at 21417.5.
Time: 09:50 GMT
COMMODITIES: Bear Threat in Gold Remains Present Despite Latest Recovery
The trend structure in WTI futures remains bullish and the contract is holding on to its recent gains. A stronger reversal to the upside has exposed key short-term resistance at $76.41, the Oct 8 high. A firm resistance at $71.97, the Nov 7 high, has been breached, strengthening a bullish theme. On the downside, a reversal lower would expose support at the 20-day EMA, at $71.11. This average is seen as a key short-term support. A bear threat in Gold remains present despite the latest recovery. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low. The first firm support to watch is $2583.6, the Dec 19 low. On the upside, a strong climb would instead signal scope for a climb towards resistance at $2726.2, the Dec 12 high.
- WTI Crude up $0.83 or +1.12% at $75.06
- Natural Gas up $0.15 or +4.41% at $3.597
- Gold spot up $4.45 or +0.17% at $2652.93
- Copper up $2.05 or +0.49% at $421.5
- Silver up $0.15 or +0.5% at $30.2022
- Platinum up $8.24 or +0.87% at $958.88
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 08/01/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 08/01/2025 | 1300/0800 | US | Fed Gov Waller | |
| 08/01/2025 | 1315/0815 | *** | US | ADP Employment Report |
| 08/01/2025 | 1330/0830 | *** | US | Jobless Claims |
| 08/01/2025 | 1500/1000 | ** | US | Wholesale Trade |
| 08/01/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 08/01/2025 | 1700/1200 | ** | US | Natural Gas Stocks |
| 08/01/2025 | 1800/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
| 08/01/2025 | 1900/1400 | *** | US | FOMC Minutes |
| 08/01/2025 | 2000/1500 | * | US | Consumer Credit |
| 09/01/2025 | 2330/0830 | ** |  JP | average wages (p) |
| 09/01/2025 | 0001/0001 | ** |  GB | KPMG/REC Jobs Report |
| 09/01/2025 | 0001/0001 | * | GB | BRC Monthly Shop Price Index |
| 09/01/2025 | 0030/1130 | ** |  AU | Retail Trade |
| 09/01/2025 | 0030/1130 | ** | AU | Trade Balance |
| 09/01/2025 | 0130/0930 | *** |  CN | CPI |
| 09/01/2025 | 0130/0930 | *** | CN | Producer Price Index |
| 09/01/2025 | 0700/0800 | ** |  DE | Trade Balance |
| 09/01/2025 | 0700/0800 | ** | DE | Industrial Production |
| 09/01/2025 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 09/01/2025 | 0930/0930 | GB | Decision Maker Panel data | |
| 09/01/2025 | 1000/1100 | ** |  EU | Retail Sales |
| 09/01/2025 | 1400/0900 | US | Philly Fed's Pat Hrker | |
| 09/01/2025 | 1600/1600 | GB | BOE's Breeden Speech at University of Edinburgh | |
| 09/01/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 09/01/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 09/01/2025 | 1745/1245 | US | Fed's Barkin | |
| 09/01/2025 | 1835/1335 | US | Fed Gov Bowman | |
| 10/01/2025 | 2330/0830 | ** | JP | Household spending |