EXECUTIVE SUMMARY
- UKRAINIAN AIR FORCE CONFIRMS WHAT COULD BE 1ST-EVER USE OF ICBM IN WAR
- FED’S WILLIAMS SAYS ‘NOT QUITE THERE YET’ ON COOLING PRICES
- BOJ’S UEDA INDICATES NEXT MEETING IS LIVE WITH UNCERTAIN OUTCOME
- ECB’S VILLEROY SEES NO BIG INFLATION HIT FROM TRUMP TARIFFS
Figure 1: Gold price back above 50-dma on renewed geopolitical risk
Source: MNI/Bloomberg
NEWS
FED (BBG): Fed’s Williams Says ‘Not Quite There Yet’ On Cooling Prices
Federal Reserve Bank of New York President John Williams said that while prices have come down in a still-solid economy, there’s still room to go for inflation to come into the Fed’s 2% target. There has been “a significant decline in inflation toward our 2% goal. Obviously [we’re] not quite there yet,” Williams said in a Barron’s interview published Thursday. “I expect it will be appropriate over time to bring the fed-funds rate down closer to more-normal or neutral levels.”
FED (FT): US is Vulnerable to Inflation Shocks, Top Fed Official Warns
Tom Barkin, president of the Richmond Fed, told the Financial Times that he expected inflation to continue dropping across the world’s largest economy, even though progress has plateaued, according to monthly data released by government agencies. But he cautioned that businesses were passing on costs to consumers more readily than in the past - although to a much lesser extent than at the height of the coronavirus pandemic - which was having an impact on prices. “We’re somewhat more vulnerable to cost shocks on the inflation side, whether they be wage-[related] or otherwise, than we might have been five years ago,” said Barkin, who is a voting member on the rate-setting Federal Open Market Committee this year.
US/UKRAINE (BBG): Biden White House Seeks to Cancel $4.6 Billion of Ukraine’s Debt
The Biden administration told Congress it plans to cancel $4.65 billion in debt owed by Ukraine, according to a letter obtained by Bloomberg News, the latest in a series of moves meant to bolster support for Kyiv before President-elect Donald Trump takes office. The White House will cancel half of a $9 billion loan delivered to Ukraine as part of a $60 billion supplemental package approved in April. The loan idea was first floated by Trump during the campaign and was a key tweak to the legislation made by House Republican leaders, though the administration had always signaled a part of it would be forgiven.
UKRAINE (MNI): Air Force Confirms Missile Attack, Could Be 1st-Ever Use of ICBM in War
The Ukrainian Air Force has confirmed that the city of Dnipro was hit by a missile attack earlier today, with an RBC Ukraine report adding to social media claims that Russia may have fired an RS26 two-stage intercontinental ballistic missile (ICBM) at the city. Unverified videos on social media show what appear to be six (non-nuclear) warheads striking Dnipro. If confirmed this would mark the first time in history that an ICBM has been launched as part of an active war, marking another escalation in the conflict (and a costly one for Russia at that). While this attack used conventional warheads, ICBM's would be the primary launch method of nuclear warheads.
RUSSIA (MNI): Russia Takes Responsible Position in Preventing Nuclear Conflict - Kremlin
Following a possible ICBM strike on Ukraine, Kremlin spox Dmitry Peskov claims that "Russia takes a responsible position in terms of making maximum efforts to prevent [nuclear] conflict. We expect that other countries will also take the same responsible position and not engage in provocative actions." Peskov said that the information about the use of Anglo-French Storm Shadow missiles on targets in Russia was 'a new escalation'. It should be noted that the use of an ICBM has not been confirmed. Indeed Patrick Reevell at ABC News posts on X: "A Western official has told ABC News that Russia did NOT use an ICBM against Ukraine last night, contradicting Ukraine’s Air Force. The official said it was a ballistic missile but declined to characterize it further saying the impact was still being assessed."
US (BBG): Trump Seeks His Perfect Treasury Candidate as Search Drags On
Donald Trump’s search for a Treasury secretary remains in flux, with the president-elect telling allies and advisers in recent days that he’s yet to be completely sold on the candidates he’s interviewed so far. Hedge fund executive Scott Bessent, Apollo Global Management Inc. executive Marc Rowan and former Federal Reserve Governor Kevin Warsh remain among the leading contenders for the post. Each met Wednesday with Trump, with Rowan flying from Hong Kong, but none of the conversations prompted him to finalize and announce his decision as of Wednesday night.
ECB (BBG): ECB’s Villeroy Sees No Big Inflation Hit From Trump Tariffs
Potential trade levies during a second Donald Trump presidency wouldn’t derail the European Central Bank’s easing plans, Governing Council member Francois Villeroy de Galhau said. Possible US tariffs aren’t expected to significantly alter the outlook for inflation in Europe, where risks to price increases and growth are “shifting to the downside,” the French central bank chief said at a conference in Tokyo on Thursday. “Based on this assessment, our Governing Council decided on Oct. 17 to lower the deposit facility rate by 25 basis points to 3.25% - this was the third cut in interest rates, and it will not be the last,” he said.
ECB (MNI): Monpol Alone Can't Mitigate Global Tensions - ECB's Knot
Rising geopolitical tensions cannot be mitigated by monetary policy alone, while fiscal action is constrained partly due to past pandemic support measures, Dutch National Bank Governor Klaas Knot said Thursday. Noting that the ECB tightened policy to counter the inflationary impact of Russia's invasion of Ukraine in 2022, Knot said the current situation was more difficult.
ECB (BBG): ECB Should Cut Each Meeting Until It Reaches 2%, Stournaras Says
The European Central Bank should lower borrowing costs at each meeting until it reaches a level that neither restricts nor stimulates economic activity, according to Governing Council member Yannis Stournaras. “As inflation develops now and as the real economy develops now, I think yes we should have a cut in every meeting from now on until we get to what we call the neutral rate,” the Greek central-bank chief told Bloomberg TV on Thursday. “This is an illusive concept but according to the estimates, it’s about 2%.”
CHINA (MNI): Yuan's Global Payment Share Falls Again in October
MNI (Beijing) The yuan's share of global payments declined in October to 2.93% from the previous month's 3.61%, but maintained its position as the fifth most active global payment currency, according to data from the Society for Worldwide Interbank Financial Telecommunication (Swift) on Thursday. The decline followed September's soft performance when the currency's overall payment value also decreased by 23.55%, marking the lowest level since October 2023, while the month-on-month fall reached 1.1 percentage points, the largest on record.
CHINA (MNI): China to Step Up Trade Bloc Negotiations
MNI (Beijing) China will step up negotiations on joining the Digital Economy Partnership Agreement (DEPA), following a ministerial meeting between Beijing and the member nations at the recent Asia-Pacific Economic Cooperation conference, He Yongqian, spokesperson for the Ministry of Commerce said on Thursday. Following bi-lateral meetings with several Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) member states last week, China would continue in-depth communication and exchanges with members and actively promote joining the the trade bloc, He added.
BOJ (BBG): BOJ’s Ueda Indicates Next Meeting Is Live With Uncertain Outcome
Bank of Japan Governor Kazuo Ueda gave the clearest hint yet that the central bank’s next monetary policy meeting will involve a live discussion over whether to raise interest rates. “It’s impossible to predict the outcome of the meeting at this point,” Ueda said in response to questions at a Europlace forum in Tokyo on Thursday. “The next meeting is December, but there’s still a month to go. The vast amount of data and information will become available between now and then.”
JAPAN (BBG): Japan’s Ishiba Set to Announce $140 Billion Stimulus Package
Japanese Prime Minister Shigeru Ishiba is set to unveil a $140 billion economic stimulus package to address a range of challenges from inflation to wage growth, following his election promises to alleviate a cost-of-living crunch. The package will add up to ¥21.9 trillion, according to documents seen by Bloomberg, a fraction larger than last year’s array of measures. The package will include ¥13.9 trillion of spending from the general account, and ¥0.9 trillion from the special account. Together with private sector spending, the impact of the package overall is expected to be around ¥39 trillion, the documents said.
INDIA (BBG): RBI Defends FX Policy as India’s Attempt to Avert Global Risks
India is trying to keep its currency stable to ensure the economy is insulated from global spillovers and financial stability risks, according to the nation’s central bank. The level of the rupee is determined by demand and supply in the market, which is reflective of the macro fundamentals of the economy, Reserve Bank of India officials including Deputy Governor Michael Patra wrote in their monthly bulletin Wednesday.
MNI CBRT PREVIEW - NOVEMBER 2024: No Change to Rates or Stance Yet
The CBRT is expected to keep its one-week repo rate on hold at 50% with month-on-month CPI readings showing well-above 2% and inflation expectations still elevated. However, President Recep Tayyip Erdogan’s recent comments, where he said interest rates will fall together with inflation, could suggest that a cut at the December meeting is on the cards. All analysts surveyed in this document expect no change to the repo rate this month, though some flag the possibility of a rate cut next month.
CORPORATE (BBG): Nvidia Says New Chip on Track After Forecast Disappoints
Nvidia Corp. assured investors that its new product lineup can maintain the company’s artificial intelligence-fueled growth run, though the rush to get the chips out the door is proving more costly than expected. Speaking after the release of quarterly results, Chief Executive Officer Jensen Huang said that Nvidia’s highly anticipated Blackwell products will ship this quarter amid “very strong” demand. But the production and engineering costs of the chips will weigh on profit margins, and Nvidia’s sales forecast for the current period didn’t match some of Wall Street’s more optimistic projections.
DATA
UK DATA (MNI): UK Government Borrowing at Record Non-Covid Levels
- UK OCT PSNB GBP+17.35 BN
- UK OCT PSNB-X GBP+17.35 BN
- UK OCT PSNCR GBP11.13 BN
- UK OCT CGNCR GBP19.63 BN
UK government borrowing stood at GBP17.4 billion in October, £1.6 billion more thana year ago and behind only October 2020 as the second highest borrowing for that month since records began in January 1993, the Office for National Statistics said Thursday. Central government debt interest payable was £9.1 billion in October 2024, £0.5 billion more than in October 2023 and the highest October figure since monthly records began in January 1997. Overall borrowing in the financial year to October 2024 was £96.6 billion, £1.1 billion more than at the same point in the last financial year and the third highest financial year-to-October borrowing since monthly records began in January 1993.
FRANCE NOV MANUF SENTIMENT AT 97 (MNI)
NORWAY DATA (MNI): Rosier Development of Productivity Growth in Revised National Accounts
The revised national accounts data (also incorporating the Q3 figures) paints a somewhat rosier picture for Norwegian productivity than previously thought. Mainland hours worked rose 0.1% Q/Q in Q3, implying real productivity per hour growth of 0.4% Q/Q for the second consecutive quarter. On net, this could be considered a dovish input for the Norges Bank, as stronger productivity growth puts downward pressure on unit labour costs. Overall employment growth was 0.2% Q/Q, in line with the Q3 Regional Network Survey expectations.
FOREX: JPY's Resurgent Status as Haven FX Keeps Cross-JPY Under Pressure
- JPY's resurgent safe haven status is again underpinning the currency, with JPY running firmer alongside another ratchet higher in geopolitical tensions. In response to the use of US and Franco-British long-range missiles in Ukrainian territory, Russia have launched an ICBM strike on Ukraine - the first recorded use of such a weapon in warfare.
- USD/JPY is well through yesterday's lows, narrowing the gap with the Tuesday low at Y153.29, which marks next support in the pair. GBP/JPY is again testing a confluence of support at the 50-, 100- and 200-dmas, which all sit layered between 194.34-71. The currency also gained a tailwind on Ueda's appearance overnight, at which he retained a non-committal message on the December BoJ meeting - keeping market pricing either side of 50/50 for a 25bps hike.
- EUR trades poorly on exposure to the Ukraine crisis, keeping EUR/CAD under pressure and touching a new pullback low. Today's show below 1.47 is the first since early July. GBP trades similarly poorly, with public sector net borrowing figures coming in much wider-than-expected for October.
- Focus for the duration of the Thursday session turns to weekly jobless claims data and and October existing home sales. Central bank speak is thick and fast, with four Fed members speaking across 5 events, 12 ECB members across 9 events, and Catherine Mann representing the BoE.
EGBS: Bunds Rally on Further Russia/Ukraine Escalation
Bund futures rallied on reports that Russia may have conducted an attack on Ukraine using an ICBM this morning. Futures are currently close to intraday highs, up 38 ticks at 132.46.
- Short-term gains are still considered corrective for now, with key resistance at the Nov 19 high of 132.99.
- Support remains at 131.28, the November 14 low.
- The German cash curve has bull steepened, with geopolitical fears supporting STIR markets. ECB-dated OIS price 141bps of easing through the end of 2025 (vs 138bps this morning).
- 10-year EGB spreads to Bunds have widened amid the souring of risk sentiment.
- Sovereign supply from Spain and France was digested smoothly, with geopolitical developments outweighing any related pressure in the run-up to the bidding deadlines. French linkers are due at 1050GMT.
- Today’s ECB speaker calendar is heavy. BdF’s Villeroy said US tariffs are not expected to significantly alter the inflation outlook in Europe, while Bank of Greece’s Stournaras re-iterated his dovish views. Several policymakers are still scheduled to speak today.
GILTS: Underpinned by Russia-Ukraine Escalation
Gilts have rallied on the back of the latest escalation in the Russia-Ukraine war (Russia reportedly using an ICBM), although moves remain limited as odds of a full-blown nuclear escalation remain low at this stage.
- Futures last +35 at 94.02 vs. session highs of 94.06.
- Bearish technical theme intact.
- First resistance of note seen at the 20-day EMA (94.43 today).
- Yields 2.0-3.5bp lower, 5s outperform.
- Early outperformance vs. Bunds saw the 10-Year spread below 210bp, but subsequent demand for German paper leaves the spread ~1bp wider on the day, just below 213bp. Closing cycle wides at 215.8bp untested.
- The GBP2bln 0.125% Jan-26 gilt tender saw the cover ratio top 4.00x and a 0.6bp tail, although the low price was marginally below mids that prevailed ahead of the supply. Markets looked to the solid cover, with no immediate weakness seen after the auction (fresh demand for gilts in general also helped).
- SONIA futures flat to +4.5, firming alongside gilts.
- BoE-dated OIS shows ~71bp of cuts through December ’25, with ~19bp priced through February and 27bp priced through March. Contracts are 0.5-3.5bp more dovish on the day.
- BoE dissenting hawk Mann will speak in a fireside chat this afternoon (14:00), don’t expect her to change her tone if she does comment on monetary policy.
EQUITIES: Recent Weakness in E-Mini S&P Appears Corrective
A bearish theme in the Eurostoxx 50 futures contract 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 4838.11, the 20-day EMA. Recent weakness 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 support at the 20-day EMA and the next key support to monitor is 5838.64, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement. The bull trigger is at 6053.25, Nov 11 high. A break would resume the uptrend.
- Japan's NIKKEI closed lower by 326.17 pts or -0.85% at 38026.17 and the TOPIX ended 15.48 pts lower or -0.57% at 2682.81.
- Elsewhere, in China the SHANGHAI closed higher by 2.415 pts or +0.07% at 3370.404 and the HANG SENG ended 103.9 pts lower or -0.53% at 19601.11.
- Across Europe, Germany's DAX trades lower by 32.42 pts or -0.17% at 18972.93, FTSE 100 lower by 3.85 pts or -0.05% at 8081.4, CAC 40 down 36.14 pts or -0.5% at 7162.31 and Euro Stoxx 50 down 21.11 pts or -0.45% at 4708.6.
- Dow Jones mini down 74 pts or -0.17% at 43442, S&P 500 mini down 22.5 pts or -0.38% at 5915.25, NASDAQ mini down 103.75 pts or -0.5% at 20644.75.
Time: 10:00 GMT
COMMODITIES: Gold Breaks Through 20- and 50-Day EMAs
WTI futures are unchanged. A bearish theme 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 appears to have been a correction. Price has recovered from its recent lows and the metal is again trading higher, today. The 20-day EMA at $2651.2, has been breached. This highlights a stronger reversal and signals the end of the recent bearish corrective cycle, opening $2710.4, the Nov 11 high. Key short-term support lies at $2536.9, Nov 14 high.
- WTI Crude up $0.94 or +1.37% at $69.7
- Natural Gas up $0.17 or +5.2% at $3.358
- Gold spot up $18.16 or +0.69% at $2668.77
- Copper down $3.3 or -0.79% at $415.65
- Silver up $0.28 or +0.92% at $31.1385
- Platinum down $1.71 or -0.18% at $960.6
Time: 10:00 GMT
| Date | GMT/Local | Impact | Country | Event |
| 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 | 1730/1230 | US | Kansas City Fed's Jeff Schmid | |
| 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 |
| 22/11/2024 | 0001/0001 | ** | GB | Gfk Monthly Consumer Confidence |
| 22/11/2024 | 0030/0930 | ** | JP | Jibun Bank Flash Japan PMI |
| 22/11/2024 | 0700/0800 | *** |  DE | GDP (f) |
| 22/11/2024 | 0700/0700 | *** | GB | Retail Sales |
| 22/11/2024 | 0815/0915 | ** |  FR | S&P Global Services PMI (p) |
| 22/11/2024 | 0815/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 22/11/2024 | 0830/0930 | ** | DE | S&P Global Services PMI (p) |
| 22/11/2024 | 0830/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 22/11/2024 | 0830/0930 | EU | ECB's Lagarde on Europe and New World Order | |
| 22/11/2024 | 0840/0940 | EU | ECB's De Guindos at Foro Observatorio Económico | |
| 22/11/2024 | 0900/1000 | ** | EU | S&P Global Services PMI (p) |
| 22/11/2024 | 0900/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 22/11/2024 | 0900/1000 | ** | EU | S&P Global Composite PMI (p) |
| 22/11/2024 | 0930/0930 | *** | GB | S&P Global Manufacturing PMI flash |
| 22/11/2024 | 0930/0930 | *** | GB | S&P Global Services PMI flash |
| 22/11/2024 | 0930/0930 | *** | GB | S&P Global Composite PMI flash |
| 22/11/2024 | 1330/0830 | ** | CA | Retail Trade |
| 22/11/2024 | 1330/0830 | ** | CA | Retail Trade |
| 22/11/2024 | 1445/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 22/11/2024 | 1445/0945 | *** | US | S&P Global Services Index (flash) |
| 22/11/2024 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 22/11/2024 | 1545/1645 | EU | ECB's Schnabel in panel on MonPol | |
| 22/11/2024 | 2315/1815 | US | Fed Governor Michelle Bowman |