EXECUTIVE SUMMARY
- TRUMP TAPS LUTNICK, OZ, MCMAHON FOR KEY ADMINISTRATION ROLES
- PUTIN OPEN TO TALKS ON UKRAINE CEASE-FIRE DEAL WITH TRUMP: RTRS
- UK INFLATION PICKS UP PACE AS ENERGY COSTS RISE
- UPTICK IN ECB Q3 NEGOTIATED WAGES IN LINE WITH EXPECTATIONS
Figure 1: Annual UK CPI and CPIH inflation rates rise for the first time since July 2024
Source: ONS
NEWS
INVITATION: MNI Webcast with ECB's Philip Lane on Dec 18
You are invited to listen to an MNI Webcast with Philip R. Lane, Chief Economist and Member of the Executive Board of the European Central Bank. Details below:
- Topic of discussion: 'Eurozone economy and the ECB's monetary policy'
- Date: Wednesday 18 December
- Time: 9am - 1030am London; 10am - 1130am Frankfurt
- This event is on the record and will run as a Zoom Webinar
To register please click here.
US (BBG): Trump Taps Lutnick, Oz, McMahon for Key Administration Roles
President-elect Donald Trump continues to reach into the ranks of loyalists, allies and television personalities as he fills out the remainder of his cabinet. On Tuesday, he chose Cantor Fitzgerald LP Chief Executive Officer Howard Lutnick to lead the Commerce Department, a central position in an administration that will likely be shaped by proposals for sweeping tariff increases. One of Trump’s most prominent Wall Street supporters and a co-chair of his transition, Lutnick had been a candidate to become Treasury secretary, a selection that the president-elect has yet to announce.
US/RUSSIA (RTRS): Putin, Ascendant in Ukraine, Eyes Contours of a Trump Peace Deal
Vladimir Putin is open to discussing a Ukraine ceasefire deal with Donald Trump but rules out making any major territorial concessions and insists Kyiv abandon ambitions to join NATO, five sources with knowledge of Kremlin thinking told Reuters. In the first detailed reporting of what President Putin would accept in any deal brokered by Trump, the five current and former Russian officials said the Kremlin could broadly agree to freeze the conflict along the front lines. There may be room for negotiation over the precise carve-up of the four eastern regions of Donetsk, Luhansk, Zaporizhzhia and Kherson, according to three of the people who all requested anonymity to discuss sensitive matters.
US/UKRAINE (BBG): US Embassy in Kyiv Closes on Potential Nov. 20 Air Attack
US Embassy in Ukrainian capital says has “received specific information of a potential significant air attack on November 20.” Decision to close made out of “an abundance of caution,” mission says on website. Embassy issues instructions of actions to take and contacts for assistance.
US (WSJ): U.S. Companies Stock Up to Get Ahead of Trump’s China Tariffs
By 9 p.m. on election night, it had become clear to Jason Junod that Donald Trump was returning to the White House. That night, he contacted his skin-care company’s suppliers in China to order a year’s worth of inventory for about $50,000—as much as he could afford to buy and had room to store. His hope is that the roughly 30,000 body brushes and exfoliating gloves make it to Bare Botanics’ facility in Madison, Wis., before Inauguration Day. He thinks Trump is serious about his campaign promise to impose tariffs of 60% on all Chinese goods.
ECB (MNI): Financial Risks Elevated, Growth Outlook Weak - ECB
The European Central Bank sees elevated financial stability vulnerabilities from the “volatile environment” with growth risks to the downside, geopolitical uncertainty, high valuation and risk concentration and debt sustainability concerns in some countries, the November Financial Stability Review said on. The economy remains fragile and credit risk vulnerabilities in euro area households “could lead to weaker asset quality for banks and non-bank financial intermediaries if downside risks to growth materialize”, the report, published Wednesday, said, noting that high valuations and risk concentration “make markets more susceptible to sudden corrections”.
GERMANY (MNI): VW Travails Play Outsized Role in Political Landscape Ahead of Election
Daniele Cavallo, the chair of the General and Group Works Council at Volkswagen, has been talking about the troubles facing the carmaker. Cavallo says 'The board assumes that in all scenarios there will be factory closures', and that 'the factories which remain will have [a] significant reduction in capacity'. Given an early federal election is approaching in February 2025 there is a significant political dimension to the decisions by VW and the German gov't.
UK (FT): Keir Starmer to Visit Saudi Arabia and UAE to Try to Secure Investment
Sir Keir Starmer will travel to Saudi Arabia and the United Arab Emirates next month in a bid to drum up fresh investment for the UK from the oil-rich Gulf, according to people familiar with his plans. The British prime minister’s trip is part of a drive to strengthen UK diplomatic relations in the region and seek billions of pounds from Gulf sovereign wealth funds to boost the Labour government’s growth agenda. Saudi Crown Prince Mohammed bin Salman, the kingdom’s de facto leader, may also visit London next year, but plans are yet to be finalised. The UK is keen to secure investment from Gulf countries for sectors ranging from energy to infrastructure, including projects such as the Sizewell C nuclear power plant in eastern England.
CHINA (MNI): China Nov LPR Holds Steady
MNI (Beijing) China's Loan Prime Rate remained unchanged on Wednesday according to a People's Bank of China statement, in line with expectation and as the central bank held its key 7-day reverse repo rate stable. The LPR was held at 3.1% for the one-year maturity and 3.6% for the over five-year tenor. Both tenors fell 25 basis points last month, the largest reduction since authorities reformed the LPR pricing system in 2019, following the PBOC’s 20bp reduction at its 7-day reverse repo rate in September.
CHINA (MNI): Chinese Aluminium Exporters to Renegotiate Prices
MNI (Beijing) Chinese aluminium exporters will attempt to renegotiate higher prices with buyers following the government's decision to cancel a 13% tax rebate on overseas shipments, Shanghai Metals Market analysts said on Wednesday, calculating the move will add CNY2,859 per tonne to exporters costs. Export volumes will likely drop in the short term and negatively impact domestic prices, the analysts said.
INDONESIA (BBG): Indonesia Sees Less Room for Easing, Will Act to Support Rupiah
Bank Indonesia warned there is less scope for it to further lower interest rates as political developments in the US add to global risks, spurring fund flows into the dollar and pressuring the rupiah. “The room for rate cuts that we previously saw as wide does seem narrower now,” Bank Indonesia Governor Perry Warjiyo said in a briefing on Wednesday, after he announced that the benchmark BI-Rate would be kept unchanged at 6%.
DATA
UK DATA (MNI): Inflation Data Marginally Higher Overall, Maybe Worth 2-4bp for SONIA
- UK OCT CPI +0.6% M/M, +2.3% Y/Y
- UK OCT CORE CPI +0.4% M/M, +3.3% Y/Y
- UK OCT SERVICES CPI +0.4% M/M, +5% Y/Y
- UK OCT RPI +0.5% M/M, +3.4% Y/Y
Going into the data, we had flagged upside risks from air fares, second hand cars and clothing - the first two of these saw larger upside surprises than expected while clothing increased more in line with expectations. Air fares contributed 0.07ppt to the change in headline CPI (and about double this contribution to services). Package holidays partially offset this, contributing -0.03ppt. Energy was the big contributor - but that was almost exactly in line with expectations.
Overall, this data can be viewed as marginally higher than expected. But there shouldn't be too much in the way of changes to monpol expectations. As we noted after the testimonies to the Treasury Select Committee yesterday we don't see a near-term domestic macro driver that can really change the course of quarterly cuts for at least February and May. And then it will be the re-setting of annual services CPI prices as well as the strength of wage growth that will determine the pace of cuts.
UK DATA (MNI): Median Pay Awards Remain at 4% - Brightmine
- UK AUG-OCT MEDIAN PAY AWARDS +4% :Brightmine
Brightmine median basic pay awards in the 3 months to October remained at 4.0% for the fourth consecutive month. The release states "Businesses cite economic constraints, affordability, and recent government budget measures as primary factors expected to impact pay award decisions in 2025." The Brightmine 2025 Pay Forecast forecast looks for a rise of 3.0%. Despite median awards remaining stable, the interquartile range widened with the upper quartile rising to 5.5% whilst the lower quartile fell to 3.0%.
EUROZONE DATA (MNI): Uptick in Q3 Negotiated Wages In Line With Expectations
ECB Q3 Negotiated wages rose 5.42% Y/Y (vs 3.54% prior), broadly in line with the handful of analyst estimates we had seen coming into the release. We noted earlier that the ECB are likely to look through this uptick, given it was driven by temporary increases in Germany, and because the central bank's focus has shifted more towards the weaker growth outlook in recent months. There was no material reaction in EUR FX or STIR markets as a result. Negotiated wage growth is expected to fall back in Q4 (Citi expect 3.75% Y/Y), not least due to last week's IG Metall Union and Gesamtmetall pay deal in Germany.
GERMANY DATA (MNI): PPI Ex-Energy Slightly Firmer in October
- GERMANY OCT PRODUCER PRICES -1.1% Y/Y
German PPI fell by 1.1% Y/Y in October, remaining below consensus expectations of -1.1% Y/Y but ticking up vs September's -1.4% Y/Y. Consistent with German CPI in October, energy deflation was less prominent than before, at -5.6% Y/Y (vs -6.6% prior), driving the headline rate higher. That leaves ex-energy PPI slightly firmer than before, at 1.3% Y/Y - compares to September's +1.2%, and the highest rate since August 2023. Looking at the non-energy categories, there was relatively little movement,
except for non-durable goods - that category ticked up considerably, to 1.9% Y/Y (vs 1.5% Sep), continuing its uptrend in place since 8 months.
JAPAN DATA (MNI): Japan Oct Exports Post First Rise In Two Months
- JAPAN POSTS JPY461.2 BLN TRADE DEFICIT IN OCT
- JAPAN OCT EXPORTS +3.1% Y/Y; SEPT -1.7%
Japan’s exports in October increased 3.1% y/y, higher than the 1% market estimate, and its first year-on-year rise in two months following September's 1.7% fall due to higher semiconductor manufacturing equipment and median products shipments, data released by the Ministry of Finance showed on Wednesday. The data was largely within the Bank of Japan’s latest assessment and will support the bank’s rate hike path, but bank officials are vigilant against the impact of slowing overseas economies, particularly China and the eurozone, on Japanese exports.
JAPAN DATA (MNI): BOJ October Real Export Index Falls 4.9% M/M
The Bank of Japan's real export index, calculated using Ministry of Finance trade data, fell 4.9% m/m in October for the first drop in four months following an unrevised 4.0% rise in September, data released by the BOJ showed on Wednesday. The figures were calculated by MNI based on BOJ data and confirmed by bank officials. The BOJ will release details of the index on Monday.
FOREX: USD Recovers Well Off O/N Lows, UK CPI Provides Scant Support for GBP
- The greenback trades firmer against most others in G10 Wednesday, as markets walk back against the late spell of USD weakness that dominated the second half of US trade yesterday. While EUR/USD is well off highs, it remains comfortably clear of the weekly lows at 1.0524 for now.
- JPY has slipped, with the currency weaker on the back of the more stable equity market backdrop and the overriding market perception that while Ukraine-Russia tensions are ratcheting higher, the endgame remains the same, typified by Putin comments this morning that reiterated that Moscow would prepared to negotiate a ceasefire should demands be met.
- USD/JPY's overnight rally puts prices back above Y155.50 and within range of Y156.75, the cycle high. Clearance above here would resume the primary uptrend that's proved dominant off the September low.
- GBP saw only limited support on the back of a firmer CPI print (Core Y/Y at 3.3% vs. Exp. 3.1%, Services CPI at 5.0% vs. Exp. 4.9%), with the release seen doing little to divert policy expectations across '25, which remain focused on the employers NIC hike, and the implications of the last UK Budget.
- Key datapoints are few and far between Wednesday, keeping focus on the central bank speaker slate. ECB's de Guindos, Stournaras and Makhlouf are set to appear, as well as Fed's Cook - who comments on the economic outlook and policy. BoE's Ramsden is also to address monetary policy at a speech at the University of Leeds.
EGBS: Tight Range for Bund Futures This Morning
Bund futures have traded in a 36 tick range this morning, currently -28 ticks at 132.05. Initial support in Bund futures is seen at 131.68/131.66 (circa 2.50% in yield), while resistance is 132.99 (Nov 19 high).
- A Reuters source report suggesting President Putin is open to discussing a Ukraine ceasefire deal with Donald Trump weighed slightly on core FI ahead of the cash bond open, which was followed by the firmer-than-expected UK CPI report. However, these moves have mostly faded.
- The German cash curve has bear steepened, with 30-year yields 2.5bps higher ahead of supply at 1030GMT/1130CET.
- There was limited reaction to the ECB Q3 negotiated wage data, which jumped to 5.4% Y/Y (broadly in line with expectations).
- 10-year peripheral spreads to Bunds are a little wider, with the 10-year BTP/Bund spread 1bp wider at 122bps.
- The Bank of Spain said that recent floods are likely to reduce GDP by 20bps in Q4.
- The remainder of today’s regional calendar is light, with de Guindos, Stournaras and Makhlouf scheduled to speak this evening.
GILTS: Holding Lower After CPI, BoE's Ramsden Due Later
Intraday recoveries in gilts have proved fleeting so far, with futures to fresh session lows at 93.44 in recent trade.
- Feedthrough from the firmer-than-expected CPI data continues to be felt, while assessment of the future of the Russia-Ukraine conflict has regained greater prominence in recent days.
- Initial support in futures seen at the Friday/Monday double bottom (93.32/33), although Thursday’s low (92.97) provides more meaningful support.
- Yields now 4.5-5.5bp higher across the curve, with 10s testing 4.50%.
- Gilt/Bund spread out to ~213.5bp, a little over 3bp wider on the day and ~2bp off closing cycle wides (215.8bp).
- BoE-dated OIS pricing 1.0-4.5bp more hawkish on the day through Dec ’25, showing 62.5bp of cuts through the end of next year.
- Exact pricing levels shown in the table below.
- We still look for cuts in February & May, with more data needed to provide any real assessment of likely moves beyond those meetings.
- SONIA futures flat to -5.5, off session lows. November lows intact across the strip.
- Comments from BoE’s Ramsden due later today (16:00 London). He will speak on monetary policy.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.689 | -1.1 |
Feb-25 | 4.524 | -17.6 |
Mar-25 | 4.451 | -24.9 |
May-25 | 4.308 | -39.2 |
Jun-25 | 4.257 | -44.3 |
Aug-25 | 4.178 | -52.2 |
Sep-25 | 4.147 | -55.3 |
Nov-25 | 4.098 | -60.3 |
Dec-25 | 4.076 | -62.4 |
EQUITIES: Medium-Term Trend Signals in E-Mini S&P Highlight Dominant Uptrend
A bearish condition in Eurostoxx 50 futures remains intact. A fresh cycle low this 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, the Nov 6 high, where a break would highlight a reversal. First resistance is at 4848.22, the 20-day EMA. The latest move lower in the S&P E-Minis contract appears corrective. Medium-term 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 5834.60, 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, Nov 11 high.
- Japan's NIKKEI closed lower by 62.09 pts or -0.16% at 38352.34 and the TOPIX ended 11.74 pts lower or -0.43% at 2698.29.
- Elsewhere, in China the SHANGHAI closed higher by 21.979 pts or +0.66% at 3367.989 and the HANG SENG ended 41.34 pts higher or +0.21% at 19705.01.
- Across Europe, Germany's DAX trades higher by 104.32 pts or +0.55% at 19164.68, FTSE 100 higher by 19.4 pts or +0.24% at 8118.21, CAC 40 up 33.93 pts or +0.47% at 7262.25 and Euro Stoxx 50 up 27.84 pts or +0.59% at 4778.05.
- Dow Jones mini up 116 pts or +0.27% at 43521, S&P 500 mini up 11.75 pts or +0.2% at 5951.75, NASDAQ mini up 37 pts or +0.18% at 20809.25.
Time: 09:50 GMT
COMMODITIES: WTI Futures Trading Above Monday's Lows, But Trend Remains Bearish
A bearish theme in WTI futures remains intact and the move lower from the Nov 7 high has reinforced a bear theme. Attention is on $65.74, the Oct 1 low, and $63.90, 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 $77.04, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial firm resistance is $72.41, the Nov 7 high. The long-term trend condition in Gold is unchanged, it remains bullish and the latest move down is considered corrective. Price has recovered from its recent lows. The 20-day EMA is at $2651.3. A clear break above it would highlight a possible reversal and signal the end of the recent bearish corrective cycle. This would open $2710.4, the Nov 11 high. Key short-term support lies at $2536.9, Nov 14 high. A break would resume the bear cycle.
- WTI Crude up $0.54 or +0.78% at $69.93
- Natural Gas up $0.05 or +1.7% at $3.049
- Gold spot down $10.64 or -0.4% at $2621.53
- Copper up $2.2 or +0.53% at $420.3
- Silver down $0.33 or -1.06% at $30.878
- Platinum down $9.43 or -0.97% at $965.16
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 20/11/2024 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 20/11/2024 | 1300/1400 |  EU | ECB's Lagarde address on financial stability | |
| 20/11/2024 | 1500/1000 | US | Fed Vice Chair Michael Barr | |
| 20/11/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 20/11/2024 | 1600/1600 |  GB | BOE's Ramsden speech on monetary policy | |
| 20/11/2024 | 1600/1100 | US | Fed Governor Lisa Cook | |
| 20/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 20/11/2024 | 1715/1215 | US | Fed Governor Michelle Bowman | |
| 20/11/2024 | 1800/1900 | EU | ECB's De Guindos speech on financial stability | |
| 20/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 20/11/2024 | 2100/1600 | US | Boston Fed's Susan Collins | |
| 21/11/2024 | 0700/0700 | *** | GB | Public Sector Finances |
| 21/11/2024 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 21/11/2024 | 0830/0930 | EU | ECB's Cipollone at ECRB meeting | |
| 21/11/2024 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 21/11/2024 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 21/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 21/11/2024 | 1330/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 21/11/2024 | 1330/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 21/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 21/11/2024 | 1345/0845 | US | Cleveland Fed's Beth Hammack | |
| 21/11/2024 | 1400/1400 | GB | BOE Mann fireside chat with Brown Brothers Harriman | |
| 21/11/2024 | 1500/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 21/11/2024 | 1500/1000 | *** | US | NAR existing home sales |
| 21/11/2024 | 1500/1000 | * | US | Services Revenues |
| 21/11/2024 | 1530/1030 | ** | US | Natural Gas Stocks |
| 21/11/2024 | 1530/1630 | EU | ECB's Lane in panel on macroeconomic effects of geopolitical uncertainty | |
| 21/11/2024 | 1530/1630 | EU | ECB's Elderson at the University of Cyprus | |
| 21/11/2024 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 21/11/2024 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 21/11/2024 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 21/11/2024 | 1730/1230 | US | Chicago Fed's Austan Goolsbee | |
| 21/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for TIPS 10 Year Note |
| 21/11/2024 | 2140/1640 | US | Fed Vice Chair Michael Barr | |
| 22/11/2024 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 22/11/2024 | 2330/0830 | *** |  JP | CPI |