Calm Monday ahead of week of key central banks' last decision of 2023

Notes/observations

- Generally quiet session ahead of an important macro week with rate decisions from FOMC, BoE and ECB on Wed and Thurs respectively. US Nov CPI tomorrow will be the last data point the Fed can weigh on before its decision, with market currently pricing a 99.7% for continued hold at 5.25-5.50% target range.

- Volatility spiked on JPY (yen) after financial press reported that BoJ does not see a need to end negative rates in Dec, refuting speculation on Thurs Dec 7th, raising USD/JPY back towards 146.50.

- Asia closed higher with Nikkei225 outperforming at +1.6%. EU indices are -0.4% to +0.7%. US futures are -0.1%. Gold -0.5%, DXY +0.1%; Commodity: Brent -0.5%, WTI -0.7%, TTF -5.3%; Crypto: BTC -2.8%, ETH -3.2%.

Asia

- China Nov CPI data registered its largest annualized decline since Nov 2020 (Y/Y:-0.5% v -0.2%e).

- Japan Q4 BSI Large All Industry Index Q/Q: 4.8 v 5.8 prior; Large Manufacturing Q/Q: 5.7 v 5.4 prior.

Global conflict/tensions

- Qatar PM stated that talks for fresh Gaza pause ongoing. Chances for deal growing slimmer due to Israeli strike.

- Israel National Security Adviser said to have warned that Israel “can no longer accept” the presence of Hezbollah on its border. Would have to “act” if they continued to pose a threat.

Europe

- German govt coalition continuing budget talks.

- Germany Public sector workers in federal states said to have agreed on a wage deal with employers. Agreement covers around 1.1 million workers, whose wages will rise by more than 11% on average by the time it ends on Oct. 31, 2025.

- Russia Pres Putin formally confirmed he would run for new 6-year presidential term in Mar 2024 (as expected). Later reports added that Putin ordered soldiers to intensify attacks before Russian presidential elections.

Americas

- President Biden gave rare take on interest rates and stated that the Fri jobs report did not encourage Fed to raise rates.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.01% at 472.30, FTSE -0.32% at 7,530.35, DAX +0.03% at 16,764.75, CAC-40 +0.27% at 7,547.20, IBEX-35 -0.14% at 10,209.57, FTSE MIB -0.13% at 30,363.00, SMI +0.07% at 11,079.40, S&P 500 Futures +0.01%].

Market focal points/key themes: European indices open mixed and took on a negative bias in the early trading hours; better performing sectors include energy and industrials; underperforming sectors include materials and real estate; oil & gas subsector supported after Brent climbs above $75/bbl; earnings expected in the upcoming US session include Oracle and Casy’s General Stores.

Equities

- Consumer staples: Unilever [UNA.NL] -0.5% (analyst downgrade).

- Energy: Uniper [UN01.DE] +11.5% (shareholders approving proposed capital cut).

- Healthcare: MorphoSys [MOR.DE] +11.5% (Pelabresib improves therapy for bone marrow cancer), Basilea Pharmaceutical [BSLN.CH] +3.5% (FDA approves Cresemba use), Novartis [NOVN.CH] +0.5% (trial results).

- Industrials: Paragon [PGN.DE] +5.5% (guides FY24).

- Materials: Anglo American [AAL.UK] +1.5% (analyst downgrade).

- Utilities: Encavis [ECV.DE] -5.5% (analyst downgrade).

Speakers

- BOJ was said to see little need to end its negative rate policy at the upcoming Dec meeting. Had yet to see enough evidence that wage growth is strong enough to justify ending its ultra-loose monetary policy.

Currencies/fixed income

- USD was holding on to its gains from Friday when non-farm payroll data showed the resilience in the labor market which pushed back expectations of how soon the Fed could begin cutting rates.

- JPY currency (Yen) weakens to test above 146.25 as reports circulated that BOJ would be patient on ending negative rates.

- CNY currency (Yuan) hit a 3-month low after China Nov CPI registered its largest annualized decline since Nov 2020.

Economic data

- (SE) Sweden SEB Swedish Housing-Price Indicator: 4 v 0 prior.

- (NO) Norway Nov CPI M/M: 0.5% v 0.7%e; Y/Y: 4.8% v 4.9%e.

- (NO) Norway Nov CPI Underlying M/M: -0.1% v -0.1%e; Y/Y: 5.9% v 5.9%e.

- (NO) Norway Nov PPI (including oil) M/M: -0.3% v 5.2% prior; Y/Y: -15.6% v -10.9% prior.

- (DK) Denmark Nov CPI M/M: -0.3% v +0.3% prior; Y/Y: 0.6% v 0.1% prior.

- (DK) Denmark Nov CPI EU Harmonized M/M: -0.4% v +0.3% prior; Y/Y: +0.3% v -0.4% prior.

- (DK) Denmark Oct Current Account Balance (DKK): 18.9B v 12.0B prior; Trade Balance (ex-shipping): 5.1B v 4.4B prior.

- (TR) Turkey Oct Current Account Balance: $0.2B v $0.5Be.

- (TR) Turkey Oct Unemployment Rate: 8.5% v 9.1% prior.

- (TR) Turkey Oct Industrial Production M/M: -0.4% v -0.1% prior; Y/Y: 1.1% v 4.1% prior.

- (CZ) Czech Nov CPI M/M: +0.1% v -0.1%e; Y/Y: 7.3% v 7.2%e.

- (CZ) Czech Oct Export Price Index Y/Y: -2.2% v -3.5% prior; Import Price Index Y/Y: -6.5% v -9.2% prior.

Fixed income issuance

- None seen.

Looking ahead

- (MX) Mexico ANTAD Nov Same-Store Sales Y/Y: No est v 2.9% prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 ((DE) Germany to sell €2.0B in 6-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month Bills.

- 06:00 (IL) Israel to sell combined ILS3.15B in 2026, 2029, 2030, 2031, 2037 and 2051 bonds.

- 06:00 (IL) Israel Nov Consumer Confidence: No est v 56 prior.

- 06:00 (PT) Portugal Oct Trade Balance: No est v -€2.2B prior.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:00 (CZ) Czech Central Bank comments on CPI data.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (UR) Ukraine Q3 GDP Q/Q: No est v 0.8% prior; Y/Y: 8.4%e v 19.5% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.1-6.7B in 3-month, 6-month and 12-month bills.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 09:45 (UK) BOE Gilt sale operation.

- 11:00 (US) NY Fed Nov 1-Yr Inflation Expectations: No est v 3.6% prior.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 13:00 (US) Treasury to sell 3-Year and 10-year Notes.

- 16:45 (NZ) New Zealand Nov Total Card Spending M/M: No est v -0.3% prior; Retail Card Spending M/M: No est v -0.7% prior.

- 16:45 (NZ) New Zealand Oct Net Migration : No est v 7.5K prior.

- 18:30 (AU) Australia Dec Westpac Consumer Confidence Index: No est v 79.9 prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: No est v 76.4 prior.

- 18:50 (JP) Japan Nov PPI M/M: 0.2%e v -0.4% prior; Y/Y: 0.1%e v 0.8% prior.

- 19:30 (AU) Australia Nov NAB Business Confidence: No est v -2 prior; Business Conditions: No est v 13 prior.

- 20:00 (PH) Philippines Oct Trade Balance: -$3.6Be v -$3.5B prior; Exports Y/Y: -8.6%e v -6.3% prior; Imports Y/Y: -6.8%e v -14.7% prior.

- 22:35 (JP) Japan to sell 5-Year JGB Bonds.