Growing confidence for Fed to cut 25bps at Dec meeting

EU Mid-Market Update: Growing confidence for Fed to cut 25bps at Dec meeting; Odds now >85%; Pro-risk basket seen bidding; BoFA says Thanksgiving spending was not strong.

Notes/observations

- Risk tone improves globally, with particular bidding seen in Bitcoin, back above $90K for 7-8% jump. US dollar lower and equities higher. Catalyst from firmed up Fed rate cut expectations for next decision in Dec.

- Service PMIs impressed across main European players, all in growth territory. Spain said services still red-hot, noting firms can’t meet workloads, driving hiring despite first drop in foreign demand in 5 months. Italy posted strongest expansion in 2.5 years, becoming Europe’s outperformer and lifting the Composite PMI to a 19-month high. France had first private-sector growth in over a year as services rebound, finally breaking a long contraction streak. Germany said services held the line despite deeper manufacturing recession; fiscal stimulus expected to push services growth >1% next year.

- BOFA reports that total card spending rose just 0.2% year over year in the week ending Nov 29th, with a broad based slowdown and higher core goods inflation making real growth even weaker, and the usual Thanksgiving boost far softer than in 2024. Weakness hit entertainment, department stores, furniture, airlines and electronics, while online retail and services held up, and BOFA notes that unfavorable base effects mean sequential monthly growth could still look solid once post Cyber Monday data arrive.

- Unverified SimilarWeb data circulating among traders suggest that in the two weeks since Google launched Gemini 3.0, ChatGPT’s unique daily active users (7-day average) fell about 6%, while Gemini’s usage rose from roughly 22 percent to 31 percent of ChatGPT’s traffic. The emerging narrative on X and other social platforms is that silent model changes OpenAI has recently made and the perceived suppression of GPT-4o since August are driving user frustration, with markets now watching one number above all – how fast Gemini’s user base is scaling from its last disclosed 650M.

- Coreweave signaled a pivot to nonrecourse SPV financing anchored by investment grade offtake – led by Nvidia’s $6.3 B interruptible contract – framing it as the bridge to an IG rating even as FY25 revenue was earlier cut on Q4 vendor delays.

- Truflation’s US aggregated inflation gauge has climbed back to 2.51%, near its 2025 highs and up from 2.37% week over week, continuing its rebound from the post holiday lull.

- IBM's CEO stated that AGI is highly improbable with current tech (0-1% odds) without significant breakthroughs, but refuted the idea of an AI bubble, likening the industry to the fiber world where few players succeed. He emphasized that quantum computing will be essential for tackling problems classical systems cannot, with IBM aiming for utility-grade QC by 2030.

- Notable EU corp news: Airbus cut 2025 deliveries; Guerbet lowered FY25 targets; Inditex beat with Nov sales +10.6%; Hugo Boss guided FY26 sales to decline mid-high single digits.

- Asia closed mixed with Hang Seng underperforming -1.3%. EU indices -0.1% to +0.8%. US futures +0.2%. Gold -0.1%, DXY -0.2%; Commodity: Brent +1.2%, WTI +1.4%; Crypto: BTC +6.6%, ETH +8.4%.

Asia

- Australia Q3 GDP Q/Q: 0.4% v 0.7%e; Y/Y: 2.1% v 2.2%e.

- South Korea Q3 Preliminary GDP (2nd reading) Q/Q: 1.3% v 1.2%e; Y/Y: 1.8% v 1.7%e.

- China Nov RatingDog PMI Services: 52.1 v 52.1e.

- Japan Nov Final PMI Services: 53.2 v 53.1 prelim.

- Australia Nov Final PMI Services: 52.8 v 52.7 prelim.

- New Zealand Nov ANZ Commodity Price M/M:-1.6% v -0.3% prior.

- RBA Gov Bullock: Labour market still a bit tight; Inflation had surprised on the upside; if CPI pressures build, would respond accordingly.

Global conflict/tensions

- Putin Special Envoy Dmitriev: Talks with US officials were "productive"; We were no closer to resolving the crisis in Ukraine and much work remains to be done.

- President Trump said the US military would “very soon” start missile strikes on land against drug smugglers.

Americas

Pres Trump stated that would 'probably' announce Fed Chair pick in early 2026; Reiterated that Bessent did not want Fed Chair job; Reiterated going to issue refunds from tariff revenues.

Energy

- Weekly API Crude Oil Inventories: +2.5M v -1.9M prior.

- EU Council: Have reached deal on phasing out Russian gas imports by 2027.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.33% at 577.58, FTSE -0.07% at 9,694.60, DAX +0.35% at 23,791.92, CAC-40 +0.25% at 8,094.56, IBEX-35 +1.59% at 16,728.42, FTSE MIB +0.74% at 43,676.00, SMI +0.10% at 12,904.08, S&P 500 Futures +0.18%].

Market focal points/key themes: European indices open higher across the board; retail tech; financials; Qatar sells part of its Sainsbury stake; Smiths divests its Detection unit to CVC; earnings expected in the upcoming US session include Macy’s, Salesforce and Tui’s summer program presentation.

Equities

- Consumer discretionary: Inditex [ITX.ES] +9.0% (earnings; Nov sales acceleration), Hugo Boss [BOSS.DE] -11.0% (strategy update; price increases).

- Consumer staples: J Sainsbury [SBRY.UK] -4.0% (Qatar Investment Authority to sell up to 83.6M Sainsbury shares).

- Financials: Paragon Banking [PAG.UK] -7.0% (earnings).

- Healthcare: Cosmo Pharmaceuticals [COPN.CH] +19.5% (hair loss drug trial).

- Industrials: Airbus [AIR.FR] +2.5% (cut deliveries outlook), Rheinmetall [RHM.DE] +1.5% (no breakthrough in US-Russia talks on Ukraine; Putin comments on potential war with Europe), Stellantis [STLA.NL] +5.5% (analyst upgrade).

- Technology: ASML [ASML.NL] +3.0% (Marvell results; Nvidia and Coreweave presentations).

Speakers

- Germany Econ Min Reiche stated that could achieve economic growth in 2026 and 2027 if we successfully invest in infrastructure.

- NATO Sec Gen Rutte noted that had to make sure Ukraine is in strongest position possible in talks. US was consulting with EU allies on Ukraine. Best way to put pressure on Russia is to make sure weapons to Ukraine keep flowing.

- Russia govt spokesperson: Wrong to say Putin rejected US plan on Ukraine; process was a first exchange of opinions.

Currencies/fixed income

- USD on some soft footing throughout the session. Dealers noted greenback softness stemmed after President Trump touted Kevin Hassett as a potential candidate for the next Federal Reserve Chair. Market participants said to turn cautious ahead of US jobs data as Hassett was expected to favor lower interest rates. Currently markets forecast approx. 85% chance of a Fed rate cut next week.

- EUR/USD probing 1.1650 as revised higher final PMI Services readings for Europe provided a tailwind in the pair.

- 10-year German Bund yield at 2.74%, France 10-year Oat at 3.48% and 10-year Gilt yield at 4.48% 10-year Treasury yield: 4.08%.

Economic data

- (RU) Russia Nov Services PMI: 52.2 v 51.7 prior.

- (TR) Turkey Nov CPI M/M: 0.9% v 1.4%e; Y/Y: 31.1% v 31.6%e; CPI Core Y/Y: 31,7% v 31.5%e.

- (TR) Turkey Nov PPI M/M: 0.8% v 1.6% prior; Y/Y: 27.2% v 27.0% prior.

- (ZA) South Africa Nov PMI (whole economy): 49.0 v 48.8 prior.

- (CH) Swiss Nov CPI M/M: -0.2% v -0.1%e; Y/Y: 0.0% v 0.1%e.

- (CH) Swiss Nov CPI EU Harmonized M/M: -0.6% v 0.0% prior; Y/Y: 0.0% v 0.1% prior; CPI Core Y/Y: 0.4% v 0.5%e.

- (SE) Sweden Nov PMI Services: 59.1 v 56.0; PMI Composite: 57.8 v 55.6 prior.

- (ES) Spain Nov Services PMI: 55.6 v 56.3e (27th month of expansion); Composite PMI: 55.1 v 55.8e.

- (IT) Italy Nov Services PMI: 55.0 v 53.9e (12th month of expansion); Composite PMI: 53.8 v 52.8e.

- (FR) France Nov Final Services PMI: 51.4 v 50.8 prelim (confirmed 1st expansion in 15 months); Composite PMI:50.4 v 49.9 prelim.

- (DE) Germany Nov Final Services PMI: 53.1 v 52.7 prelim (confirmed 3rd month of expansion); Composite PMI: 52.4 v 52.1 prelim.

- (EU) Euro Zone Nov Final Services PMI: 53.6 v 53.1 prelim (confirmed 6th month of expansion); Composite PMI: 52.8 v 52.4 prelim.

- (UK) Nov Final Services PMI: 51.3 v 50.5 prelim (confirmed 7th month of expansion); Composite PMI: 51.2 v 50.5 prelim.

- (UK) Nov Official Reserves Changes: $1.4B v $1.3B prior.

- (EU) Euro Zone Oct PPI M/M: 0.1% v +0.1%e; Y/Y: -0.5% v -0.5%e.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK3.04B in 2027 and 2035 DGB Bonds.

- (UK) DMO sold £4.75B in 4.00% May 2029 Gilts; Avg Yield: 3.855% v 3.845% prior; bid-to-cover: 3.10x v 3.06x prior; Tail: 0.4bps v 0.4bps prior.

- (SE) Sweden sold total SEK6.0B vs. SEK6.0B indicated in 2028 and 2036 Bonds.

- (NO) Norway sold total NOK in 2029 and 2034 bonds.

Looking ahead

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to cut Base Rate by 25bps to 4.00%.

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

- 05:30 (IE) ECB’s Lane (Ireland, chief economist).

- 06:00 (PT) Portugal Oct Industrial Production M/M: No est v 0.6% prior; Y/Y: No est v 2.0% prior.

- 06:00 (IE) Ireland Nov Unemployment Rate: No est v 5.0% prior.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:00 (EU) European Union to sell combined €3.5B in 3-month, 6-month and 12-month bills.

- 06:01 (NZ) New Zealand Nov Cotality Home Value M/M: No est v 0.2% prior.

- 07:00 (US) MBA Mortgage Applications w/e Nov 28th: No est v 0.2% prior.

- 07:00 (MX) Mexico Sept Gross Fixed Investment M/M: -0.8%e v -2.7% prior; Y/Y: -7.7%e v -10.4% prior; Private Consumption Y/Y: 1.6%e v 0.1% prior.

- 07:00 (MX) Mexico Nov Vehicle Domestic Sales: No est v 129.7K prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (HU) Hungary Central Bank (MNB) Nov Minutes.

- 08:00 (BR) Brazil Nov Services PMI: No est v 47.7 prior; Composite PMI: No est v 48.2 prior.

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

- 08:15 (US) Nov ADP Employment Change: +10.0Ke v +42K prior.

- 08:30 (US) Sept Import Price Index M/M: 0.0%e v 0.3% prior; Y/Y: 0.4%e v 0.0% prior; Import Price Index (ex-petroleum) M/M: 0.1%e v 0.2% prior.

- 08:30 (US) Sept Export Price Index M/M: -0.1%e v +0.3% prior; Y/Y: No est v 3.4% prior.

- 08:30 (CA) Canada Q3 Labor Productivity Q/Q: No est v -1.0% prior- 08:30 (EU) ECB chief Lagarde at conference.

- 09:15 (US) Sept Industrial Production M/M: +0.1%e v -0.1% prior (revised from 0.1%); Manufacturing Production: 0.1%e v 0.1% prior (revised from 0.2%); Capacity Utilization: 77.3%e v 75.8% prior (revised from 77.4%).

- (PL) Poland Central Bank (NBP) Interest Rate Decision.

- 09:30 (CA) Canada Nov Services PMI: No est v 50.5 prior; Composite PMI: No est v 50.3 prior.

- 09:45 (US) Nov Final S&P Services PMI: 55.0e v 55.0 prelim; Composite PMI: No est v 54.8 prelim.

- 10:00 (US) Nov ISM Services Index: 52.0e v 52.4 prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 10:30 (EU) ECB chief Lagarde at Econ hearing.

- 11:00 (RU) Russia Oct Real Retail Sales Y/Y: 2.1%e v 1.8% prior.

- 11:00 (RU) Russia Oct Unemployment Rate: 2.3%e v 2.2% prior.

- 11:00 (RU) Russia Sept Real Wages Y/Y: 3.4%e v 3.8% prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to sell 10-year Bonds.

- 12:00 (UK) BOE’s Mann.

- 16:00 (NZ) New Zealand Government 4-Month Financial Statements.

- 16:45 (NZ) New Zealand Q3 Volume of All Buildings Q/Q: 0.2%e v -1.8% prior.

- 19:30 (AU) Australia Oct Trade Balance (A$): 4.5Be v 3.9B prior; Exports M/M: No est v 7.9% prior; Imports M/M: No est v 1.1% prior.

- 19:30 (AU) Australia Oct Household Spending M/M: 0.6%e v 0.2% prior; Y/Y: 4.6%e v 5.1% prior.

- 21:30 (HK) Hong Kong to sell combined CNY2.0B in 1-year and 5-year bonds.

- 22:35 (JP) Japan to sell 30-year JGB Bonds.