CBs and bonds remain focal point

General trend and developments

- China Monetary Policy turning point? Strong JP 30-yr auction sees curve flatten; Hotter AU data continues.

- Nikkei far outperformed Asia, +2.0% with chips and robot-related again outperforming.

- Traders eye a potential turning point with the offshore Yuan, which reached up into the 7.05 handle overnight, strongest since Oct, 2024. This morning China PBOC Gov Pan changed official language in an op-ed for the People’s Daily that China must maintain "prudent" monetary policy (vs prior language in August was "moderately loose"). Immediately following today’s fix, which was the strongest since Oct 14th, 2024, Offshore Yuan instead weakened towards the 7.07 handle.

- Comes as press reports that the China PBOC macro-prudential management of property finance is needed to rescue the drowning property market, exacerbated in recent days by Vanke’s continued suspension of bonds as several bondholders said to be opposed the company’s one-year debt extension plan and two Chinese banks refusing loans last week.

- Also saw CN 30-year govt bond futures drop to a one-year low.

- Japan 10-year JGB yield rose to the highest level since 2007 [1.93%] while 30-year JGBs were initially just shy of 3.43%, a fresh record high.

- However the JP 30-year Auction was very well supported with the strongest bid-to-cover (>4x) since 2019 and the narrowest tail since Feb. 30-year JGB yields promptly fell -3.5bps back down to 3.385%.

- Japanese flows for last week of Nov showed foreign buying of Japan bonds up to ¥1.1T for the week. Meanwhile the JP front-end and belly of the curve actually rose today, flattening the overall curve.

- Gov Ueda added nothing new in parliamentary testimony over his apparent openness to hike in Dec (as flagged on Mon).

- Australia household spending in Oct saw the biggest increase since Jan 2024, comes after improved consumer confidence figures recently and hawkish comments from Gov Bullock this week. Market overnight in Australia was now pricing in an 85% chance of a rate hike next year. AU 3-year yields cracked 4%, +7bps to 4.06%.

- Demand at RBNZ's first weekly reverse repo ops since the pandemic saw demand nearly double the offered amount by the RBNZ.

- NTT Data CEO warned of a bubble in data center capacity, sees a short-term reckoning coming even with increased Sovereign AI needed in coming years.

- Further focus on OpenAI’s narrowing of focus to be on core ChatGPT performance as Google’s Gemini gains market traction, with CEO Altman's reported discussions with rocket company Stoke Space to compete with SpaceX and put data centers in space said to be no longer active.

- LME Copper prices rose to a fresh record high on supply concerns. China copper miners +2-3%.

- US equity FUTs XXXX during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Fri Dec 5th JP Oct Household Spending, (Fri night US Sept Core PCE, Michigan Dec prelim Consumer Sent.

Holidays in Asia this week

- Fri Dec 5th Thailand.

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,612.

- Australia Oct Household Spending M/M: 1.3% v 0.6%e; Y/Y: 5.6% v 4.6%e (m/m biggest increase since Jan 2024).

- Australia Oct Trade Balance (A$): 4.4B v 4.5Be.

- New Zealand Q3 Volume of All Buildings Q/Q: 1.5% v 0.2%e.

- New Zealand Nov Cotality Home Value M/M: 0.0% v 0.1% prior [overnight update].

- New Zealand sells total NZ$450M in 2030, 2035 and 2051 bonds.

- New Zealand RBNZ sells NZ$4.0B in reverse repo Open Market Operations (first weekly OMO ops since 2021).

China/Hong Kong

- Hang Seng opens +0.2% at 25,804; Shanghai Composite opens +0.1% at 3,879.

- PBOC Gov Pan: China must maintain "prudent" monetary policy (prior "moderately loose") - People's Daily op-ed.

- China PBOC has called for macro-prudential management of property finance in order to promote the stable and healthy development of the housing market - Press.

- US Treasury Sec Bessent: Confirms 'things going very well' with China and Taiwan; Remainder of President Trump term will be 'good' with China - Fox News.

- (FR) China Pres Xi holds talks with France Pres Macron in Beijing, as scheduled.

- China said to be likely to chase 5.0% GDP growth in 2026, according to government advisers and analysts - financial press [update].

- Nvidia CEO: Need to offer the most competitive chips we can to China; We can't degrade the chips that we sell to China, and don't know if China would accept H200 chips - CNBC interview [overnight update].

- (EU) Unveils €3B plan to boost raw materials access amid China tensions – press [overnight update].

- China Nov Preliminary Retail Passenger Vehicle Sales M/M: +1% v -0.1% prior; Y/Y: +7% v -0.1% prior – PCA [overnight update].

- China PBOC sets Yuan reference rate: 7.0733 v 7.0754 prior.

- China PBOC Open Market Operation (OMO): Injects CNY181B in 7-day Reverse Repos; Net drains CNY176B v drains CNY134B prior.

Japan

- Nikkei 225 opens +0.2% at 49,942.

- Japan sells ¥700B VS ¥700B IN 30-year JGB bonds; AVG yields: 3.4270% V 3.1660% prior; bid-to-cover: 4.04X V 3.12X prior (strongest btc since 2019).

- Japan 30-year JGB yield falls 3.5bps to 3.385% (follows strong auction and record high yesterday just shy of 3.43%).

- Japan BOJ Gov Ueda: Reiterates can only estimate neutral rate with wide range thus far, cannot specify terminal rate - parliamentary testimony.

- Japan Fin Min Katayama: Cannot comment on monetary policy.

- Japan 10-year JGB yield rises to the highest level since 2007 [1.93%].

- Japan releases weekly flows data [period ended Nov 28th]: Foreign buying of Japan equities: +¥656B v -¥349T prior; Japan buying of foreign bonds: -¥771.3B v +¥577B prior.

- Japan banks' NPL ratios decline to record low; cites data from Tokyo Shoko Research - Nikkei [update].

- Japan Council of metalworker unions said to be aiming for another record wage hike in Spring 2026 negotiations - financial press [overnight update].

Korea

- Kospi opens -0.4% at 4,018.

Other Asia

- Taiwan Central Bank (CBC): Stablecoin development will depend on market demand and regulatory framework [the stablecoin rules are speculated to be ready by as early as H2 2026].

- Follow Up: US Commerce Sec Lutnick expects Taiwan investment pledge of potentially >$300B as part of the trade talks - US financial press [update].

- Taiwan Pres Lai: Taiwan will do everything necessary to protect itself.

North America

- OpenAI CEO Altman's discussions with rocket company Stoke Space to compete with SpaceX and put data centers in space no longer active - WSJ, citing sources.

- (US) MBA Mortgage Applications w/e Nov 28th: -1.4% v +0.2% prior.

- (US) Nov preliminary NA Class 8 Net Orders 20.2K units, -17% m/m, -44% y/y - FTRintel.com.

- (BR) Brazil Nov Services PMI: 50.1 v 47.7 prior (1st expansion in 8 months).

- (US) Nov monthly adp employment change: -32K V +10.0KE (worst since Dec 2020); "While November's slowdown was broad-based, it was led by a pullback among small businesses."

- (VE) Reportedly Trump Admin is considering allowing Venezuela's Maduro to relocate to Qatar - press.

- (CA) Canada Nov Services PMI: 44.3 v 50.5 prior (returns to contraction).

- Microsoft said to lower AI software sales quotas as customers hold off on uptake of new products - The Information.

- (US) NOV ISM services index: 52.6 V 52.0E (9 month high): Prices Paid: 65.4 v 68.0e (7-month low); New Orders Index: 52.9 v 56.2 prior.

- (US) DOE CRUDE: +0.6M V +2.8M PRIOR; GASOLINE: +4.5M V +2.5M PRIOR; DISTILLATE: +2.1M V +1.1M PRIOR.

- (US) Reportedly some bondholders warned Treasury about selecting Hassett as Fed Chair - FT.

Europe

- Meta: EU said to launch antitrust probe into Meta over use of AI in WhatsApp - FT.

- (IE) Ireland Nov Unemployment Rate: 4.9% v 5.0% prior.

- (EU) ECB Pres Lagarde: We are not pre-committing to a particular rate path; ECB to present bank simplification proposals on Dec 11th - speech text.

- (PL) Poland Central Bank (NBP) cuts base rate by 25bps to 4.00%; as expected.

Levels as of 01:20 ET

- Nikkei 225 +2.0%, ASX 200 +0.3%; Hang Seng +0.1% Shanghai Composite -0.2%; Kospi -0.7%.

- Equity S&P500 Futures flat; Nasdaq100 -0.1%; DAX +0.5%; FTSE100 +0.2%.

- EUR 1.1654-1.116.75; JPY 155.03-155.54; AUD 0.6598-0.6615; NZD 0.5761-5777.

- Gold -0.3% at $4,220/oz; BTC -0.6% at $93,061; Crude Oil +0.5% at $59.27/bbl; Copper +0.3% at $5.4100/lb.