EXECUTIVE SUMMARY
- LIBERAL PUSH TO OUST TRUDEAU GAINS MOMENTUM IN ONTARIO: CBC
- ECB VERY CLOSE TO MEETING 2% INFLATION TARGET, LAGARDE TELLS FT
- FRANCE AWAITS NEW GOVERNMENT AS THE PREMIER’S DEADLINE NEARS
- UK Q3 GDP GROWTH REVISED LOWER
Figure 1: UK real GDP estimated to have shown no growth in Q3 2024
Source: ONS
NEWS
US/CHINA (MNI): Biden Admin Launches New Probe Into Chinese 'Legacy' Semiconductors
US President Joe Biden’s Trade Representative, Katherine Tai, announced that the White House has launched an investigation into Chinese-made "legacy" semiconductors that could result in additional tariffs on 'mature-technology' chips that power autos, appliances, medical devices and other goods, according to Tai. Tai said the investigation comes because, “China’s rapid, state-driven expansion of semiconductor output is artificially lowering chip prices,” adding that the probe is, “based on evidence that China is using anti-competitive, non-market policies to dominate global chip production.”
US (BBG): Trump Makes Crypto and Defense Picks for His Second-Term Team
President-elect Donald Trump filled out key defense and crypto policy roles in his next administration, making billionaire Stephen Feinberg official as the No. 2 at the Pentagon and picking Michael Kratsios to lead tech policy at the White House. Trump will nominate Kratsios to lead the Office of Science and Technology Policy, a Senate-confirmed position. The managing director of Scale AI served in lower technology-related posts in the first Trump administration and has been helping to staff up the Department of Government Efficiency, the Elon Musk-driven initiative to downsize the federal government.
US (BBG): Elon Musk Makes ‘Overstaffed’ Fed Target in Quest for Efficiency
Elon Musk, the billionaire tasked with making the US government more efficient come January, has zeroed in on the Federal Reserve. The central bank in charge of protecting the world’s largest economy is “absurdly overstaffed,” Musk wrote on social-media platform X. The remarks were part of a thread beginning when someone posted about the Fed’s latest policy decision. They come after US President-elect Donald Trump also made the Fed a target, arguing he should have a say in monetary policy and the setting of interest rates.
CANADA (BBG): Liberal Push to Oust Trudeau Gains Momentum in Ontario: CBC
More than 50 Liberal Party members of parliament from Ontario came to a “consensus” during a conference call Saturday that Justin Trudeau must step down as prime minister, the Canadian Broadcasting Corp. reported. That would represent about a third of the Liberal caucus, which has 153 seats in Canada’s House of Commons. However, there’s no formal mechanism for Liberal lawmakers to eject their leader or trigger a contest. While the Liberals comprise the largest group in parliament, they lack a majority and have relied on votes from members of other parties - primarily the New Democratic Party - to pass legislation and stay in power.
ECB (BBG): ECB Very Close to Meeting 2% Inflation Target, Lagarde Tells FT
The European Central Bank is nearing its consumer-price target but must remain alert to lingering dangers in some sectors, according to President Christine Lagarde. “We’re getting very close to that stage when we can declare that we have sustainably brought inflation to our medium-term 2%,” Lagarde said in an FT podcast released Monday. “I’m saying that with a little reservation because I still believe that we should be very vigilant about services.” She noted that price gains in that industry remain almost twice the ECB’s goal, also urging policymakers to keep an eye on the trajectories of wages and corporate profits in the 20-nation euro zone.
FRANCE (BBG): France Awaits New Government as the Premier’s Deadline Nears
French Prime Minister Francois Bayrou is running out of time to meet his self-imposed deadline to name a new cabinet that won’t be quickly toppled by a no-confidence vote in parliament. A new team was widely expected to be unveiled over the weekend after Bayrou said last week he and President Emmanuel Macron would finalize their choice before the Christmas holiday. But French media outlets reported on Sunday evening the decision has been delayed to Monday at the earliest. The president’s office did not respond to requests for comment.
RBA (BBG): RBA’s Full Employment Estimate Was 4.67% in September, FOI shows
The Australian central bank’s estimate of full employment - the lowest jobless rate that can be sustained without triggering faster inflation, or NAIRU — stood at 4.67% in early September, according to a document released Monday under a freedom of information request. The document also showed the Reserve Bank’s models indicate the unemployment gap, or the difference between the NAIRU and the jobless rate “remains negative, roughly between -1% to -0.25%.”
ROMANIA (MNI): Ciolacu Poised to Stay on as PM After Pro-EU Parties Reach Deal
News wires report that Romanian pro-EU parties reached an accord on the formation of a new government, which will see Prime Minister Marcel Ciolacu stay in office, while the new ruling coalition will support Crin Antonescu in the upcoming presidential election. Ciolacu told reporters that pro-EU parties "have a political agreement that is a precursor to a governing coalition and a parliamentary majority," as he announced the outcome of talks between his Social Democratic Party (PSD), National Liberal Party (PNL), the Democratic Alliance of Hungarians in Romania (UDMR), as well as representatives of other ethnic minorities.
DATA
UK DATA (MNI): UK Q3 GDP Growth Revised Lower
- UK Q3 GDP +0% Q/Q, +0.9% Y/Y
UK GDP saw no growth in Q3 (July to Sept) 2024, as it was revised down from the first estimate increase of 0.1%, the Office for National Statistics said Monday. The quarterly path of real GDP at an aggregate level is unchanged from Q1 2023 to Q1 2024, however, there have been downward revisions of 0.1 percentage points in Q2 and Q3 2024. “The economy was weaker in the 2nd and 3rd quarters of this year than our initial estimates suggested with bars and restaurants, legal firms and advertising, in particular, performing less well," ONS Director of Economic Statistics Liz McKeown said.
SPAIN Q3 FINAL GDP +3.3% Y/Y (MNI)
SPAIN Q3 FINAL GDP +0.8% Q/Q (MNI)
FOREX: EUR Trades Heavy, But Quiet Market Looks Through Tariff Talk
- Newsflow and price action is understandably muted, with market volumes well below average for this time of day given the proximity to the Christmas market closures that kick in in earnest tomorrow. That said, EUR is softer on the session, with continued focus on French politics. The French PM is set to unveil a new cabinet later today - a slightly later timeline than initially expected - which may be weighing on French bonds and, in turn, the single currency.
- Having traded 0.8315 overnight, EUR/GBP is back to negative on the day - having reversed ahead of any test on the 50-dma at 0.8319 - a level markets have failed to break on three occasions in the past week or so.
- EUR/NOK is lower for a second session, extending the reversal off the post-Norges Bank high to just over 1%. Rate is now meeting support at the confluence of the 50-, 100-dmas of 11.7666/65. The greenback is more mixed. The USD Index is very mildly higher, but is holding the majority of Friday's slippage - leaving 108.541 the key level ahead.
- As a gauge of lighter volumes and limited liquidity today: EUR futures have traded volumes ~20% below average for this time of day, GBP ~50% lower and JPY ~40% lower. Tariff headlines failed to ignite significant market moves, despite reports that the US have triggered investigations into the legacy semiconductors industry that could result in steeper tariffs on Chinese goods once Trump is in office.
- Building permits data is unlikely to move the needle, however prelim durable goods data is also set for release, as well as the December consumer confidence report. There are no central bank speakers of note.
BONDS: Bunds Off Lows on Tariff Worry & Downtick in Oil, OATs & Gilts 1bp Wider
Core global FI markets off session lows, with oil ticking lower and short-term technical levels holding in German paper.
- Continued focus on potential U.S.-China trade tariffs likely factored into the recovery as well, given the readthrough for European growth.
- Core global FI yields still higher on the day.
- Bund futures last -18 at 133.96. German yields 1-2bp higher.
- Bears failed to push Bund yields meaningfully above Dec highs, with 3 tests ultimately failing (2.323% session high vs. prior Dec highs of 2.322%).
- OATs ~1bp wider vs. Bunds (and wider vs. all EGBs on the day), spread sticks to multi-week range, last 80bp. PM Bayrou’s cabinet is set to be named later today.
- Peripherals 0.5bp wider to Bunds, spreads back from session highs as European equities edge away from lows.
- Some attributed the early weakness in bonds to comments from ECB President Lagarde, although we don’t think she was particularly hawkish.
- ECB-dated OIS little changed on the day, showing just under 120bp of ’25 cuts.
- Gilts generally looking to core global FI peers for direction.
- Futures within Friday’s range, -25 at 92.68.
- Yields 2-4bp higher across the curve, steeper, last week’s highs untouched.
- 10-Year spread to Bunds 1bp wider at 223bp.
- BoE-dated OIS stable, showing just over 60bp of cuts through ’25.
- U.S. durable goods and consumer confidence data headlines the macro calendar today, little else of note scheduled.
- Proximity to Christmas will limit liquidity over the coming days.
EQUITIES: Bull Cycle in Eurostoxx 50 Futures Remains Intact
A bull cycle in the Eurostoxx 50 futures contract remains intact, however, the recent move down highlights a corrective cycle and a short-term bear threat remains present - for now. Price has traded through the 50-day EMA, at 4922.49. The Dec 20 sell-off resulted in a print below 4846.57, 61.8% of the Nov 21 - Dec 9 bull cycle. Key short-term resistance has been defined at 5040.00, the Dec 9 high. Initial resistance is at 4935.29, the 20-day EMA. A sell-off in the S&P E-Minis contract on Dec 18 highlights a short-term top and a corrective cycle. The move down resulted in a breach of the 20- and 50-day EMAs. A resumption of weakness would open 5811.65, 38.2% of the Aug 5 - Dec 6 bull leg. Support at 5921.00, Nov 19 low, has been pierced. A clear break of it would strengthen a bearish threat. Initial resistance is 6067.90, the 20-day EMA. A clear break of it would be a bullish development.
- Japan's NIKKEI closed higher by 459.44 pts or +1.19% at 39161.34 and the TOPIX ended 24.75 pts higher or +0.92% at 2726.74.
- Elsewhere, in China the SHANGHAI closed lower by 16.812 pts or -0.5% at 3351.257 and the HANG SENG ended 162.43 pts higher or +0.82% at 19883.13.
- Across Europe, Germany's DAX trades lower by 6.33 pts or -0.03% at 19878.2, FTSE 100 higher by 5.25 pts or +0.06% at 8089.62, CAC 40 down 3.83 pts or -0.05% at 7270.15 and Euro Stoxx 50 down 6.91 pts or -0.14% at 4855.08.
- Dow Jones mini up 61 pts or +0.14% at 43374, S&P 500 mini up 20 pts or +0.33% at 6021.5, NASDAQ mini up 117.5 pts or +0.54% at 21683.
Time: 09:50 GMT
COMMODITIES: Recent Gains in WTI Futures Still Considered Corrective
A bearish threat in WTI futures remains present and recent gains are - for now - considered corrective. A resumption of the bear cycle would open $65.57, the Oct 1 low, and $63.73, 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 $76.41, the Oct 8 high. Initial firm resistance to watch is unchanged at $71.97, the Nov 7 high. Gold traded sharply lower on Dec 18. The move down undermines a recent bullish theme. A resumption of weakness would signal scope for an extension towards the key support at $2536.9, the Nov 14 low. Moving average studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2642.9, the 20-day EMA. A breach of this EMA would be positive for bulls.
- WTI Crude up $0.36 or +0.52% at $69.83
- Natural Gas up $0.16 or +4.14% at $3.896
- Gold spot up $4.25 or +0.16% at $2627.82
- Copper up $2.25 or +0.55% at $412.3
- Silver up $0.22 or +0.75% at $29.7515
- Platinum up $11.14 or +1.2% at $939.11
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 23/12/2024 | 1330/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 23/12/2024 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 23/12/2024 | 1330/0830 | ** |  US | Durable Goods New Orders |
| 23/12/2024 | 1500/1000 | * | US | US Treasury Auction Result for 26 Week Bill |
| 23/12/2024 | 1500/1000 | * | US | US Treasury Auction Result for 13 Week Bill |
| 23/12/2024 | 1500/1000 | *** | US | New Home Sales |
| 23/12/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 23/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 23/12/2024 | 1800/1300 | * | US | US Treasury Auction Result for 2 Year Note |
| 23/12/2024 | 1830/1330 | CA | Bank of Canada meeting minutes | |
| 24/12/2024 | 0030/1130 |  AU | RBA Minutes | |
| 24/12/2024 | 1330/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 24/12/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 24/12/2024 | 1500/1000 | ** | US | Richmond Fed Survey |
| 24/12/2024 | 1630/1130 | * | US | US Treasury Auction Result for 5 Year Note |
| 24/12/2024 | 1630/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |