Risk of unusually high number of dissents at today's FOMC

EU Mid-Market Update: Risk of unusually high number of dissents at today's FOMC; Oracle's high-stakes report tonight with potential jumbo debt tomorrow.

Notes/observations

- European equities open mostly lower after soft Tuesday close; Focus locked on tonight's FOMC. Treasury yields dip with full attention on Powells tone and 2026 guidance; 25bps cut priced at 90%, but market braces for hawkish tilt - tighter language, possible multiple dissents and unchanged dot plot (25bp each in 2026/2027).

- Tier1 analysts see roughly three dissents in today’s FOMC decision: two hawkish (Schmid plus one of Collins/Musalem/Goolsbee) and one dovish (Miran pushing for 50 bps), and sees extra dissent risk from Bowman/Waller if the Fed layers on new balance sheet tools. The statement will likely drop the phrase that unemployment “remained low” and tweak guidance to signal a higher bar for further cuts, as a gesture to hawks. Analysts also look for the Fed to announce term repos and reserve management purchases starting in January, with low odds of a pure IOR cut but a decent chance of a small, parallel cut in both IOR and the SRF rate.

- SNB seen on hold tomorrow despite weak inflation. More critical rate decisions next week from ECB, BOJ and BOE. Notably there are divisions amongst BOE’s MPC but analysts see a cut as likely.

- Trump gives Ukraine days to accept deal accepting territorial losses for US guarantees; Kyiv preparing counterproposal. EU fast-tracks law to override vetoes on Russian asset use for Ukraine.

- China reportedly set to restrict Nvidia H200 access despite fresh US export approval.

- Oracle’s tonight earnings call is a live stress test of whether a $455B AI backlog - anchored by an estimated $300 billion OpenAI data center pact - can sustain roughly 15 percent revenue growth and 70 percent plus cloud acceleration while Oracle levers up toward as much as $100 billion in AI-related debt. With leverage already inflated by a recent $18 billion bond deal and five-year CDS at post-2009 highs, the fate of a still-unfinalised ~$38 billion Oracle-Vantage loan package will show whether markets treat that backlog as solid collateral or as a concentrated, single-lab risk that has to be warehoused in a clubby bank structure rather than a clean jumbo bond.

- In FX space, Sterling needs growth confirmation to hold gains vs euro; Scandinavian currencies favored.

- Bitcoin flat, rebound stalled; Gold holds above $4,200; Oil steady amid bearish demand/supply balance.

- Asia closed mixed with Hang Seng outperforming +0.4%. EU indices -0.9% to +0.1%. US futures +0.1%. Gold -0.4%, DXY -0.1%; Commodity: Brent +0.1%, WTI +0.2%; Crypto: BTC +3.0%, ETH +8.1%.

Asia

- South Korea Nov Unemployment Rate: 2.7% v 2.6%e.

- Japan Nov PPI (domestic CGPI) M/M: 0.3% v 0.3%e; Y/Y: 2.7% v 2.7%e.

- China Nov CPI Y/Y: 0.7% v 0.7%e; PPI Y/Y: -2.2% v -2.0%e.

- Japan PM Takaichi testified that was watching yield trends carefully. Reiterated view that a weak Yen currency had both merits and demerits for the economy.

Global conflict/tensions

- Pres Trump said to have told Ukrainian Pres Zelenskiy he had until Christmas to accept the peace deal to end the Russia/Ukraine war; warned Ukraine would eventually succumb to Russia if the peace deal wasn’t signed.

Europe

- France legislators approved 2026 social security budget.

- Bank of France forecasted Q4 GDP +0.2% v +0.5% in Q3.

Energy

- Weekly API Crude Oil Inventories: -4.8M v +2.5M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.17% at 576.78, FTSE +0.07% at 9,649.00, DAX -0.51% at 24,049.61, CAC-40 -0.28% at 8,029.62, IBEX-35 -0.15% at 16,710.01, FTSE MIB -0.52% at 43,347.00, SMI -0.86% at 12,830.20, S&P 500 Futures +0.11%].

Market focal points/key themes: European indices open generally lower and remained under pressure through the early part of the session; markets seen in holding pattern ahead of central bank decisions; better performing sectors include materials and energy; sectors leading the way lower include telecom and financials; higher commodity prices seen supporting mining subsector; oil & gas subsector under pressure after EIA ups US oil output forecast; Anglo American shareholders approve merger with Teck; focus on FOMC rate decision later in the day; earnings expected in the upcoming US session include Adobe and Oracle.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] +7.5% (to release comprehensive shareholder letter which also highlights commitment of Management and Supervisory Boards to addressing current share price performance), TUI [TUI1.DE] -3.5% (earnings; guidance), FirstGroup [FGP.UK] +1.0% (major contract win).

- Energy: Siemens Energy [ENR.DE] +4.5% (GE Vernova targets).

- Financials: Aegon [AGN.NL] -8.5% (CMD).

- Technology: ASML [ASML.NL] +1.0% (TSMC monthly sales; Oracle results tonight), Cicor Technologies [CICN.CH] -26.5% (outlook cut).

- Materials: Anglo American [AAL.UK] +1.0% (approve merger with Teck Resources).

Speakers

- ECB's Simkus (Lithuania): No need to change rates with inflation at target; Dec decision would not be difficult. Rate can probably stay at the current level at further meetings.

- ECB's Villeroy stated that would be wise to keep policy steady at current level; no reason to raise interest rates soon; ECB must remain agile at future meetings. Was in favor of 2026 budget deficit to GDP ratio of 4.6% for France but not likely to be achieved. Suspending pension reforms does not solve the financing of pension issue.

- Chancellor Reeves (Fin Min) reiterated in strongest terms that budget leaks were unacceptable.

- German Chemical Industry Association (VCI): 2025 Rev €220B -1% y/y; 2026 outlook has little hope for improvement.

- IMF raised 2025 China growth forecast from 4.8% to 5.0% and raised the 2026 GDP growth forecast from 4.2% to 4.5%. Urged bolder stimulus to rebalance economy and trade and speed up structural reform. Country was too big to generate growth from exports.

- Japan PM Takaichi stated that she expeted BOJ to conduct appropriate monetary policy to stably hit price target (next meeting on Dec 18-19th)

- Mexico Lower House reportedly approved import tariffs reform.

Currencies/fixed income

- USD locked in tight ranges ahead of the FOMC rate decision. Fed expected to cut by 25bps with the focus on the vote. Dealers note that a hawkish guidance was anticipated.

- EUR/USD drifted higher to test 1.1655. Dealers noted that recent hawkish talk from ECB officials had evaporated any expectations of additional rate cuts from the ECB and now saw a 50-50 change of tightening beginning in 2026 or early 2027.

- USD/JPY edging towards the 157 neighborhood as fiscal concerns for Japan outweighed the anticipated looming rate hike by the BOJ.

- 10-year German Bund yield at 2.89%, France 10-year Oat at 3.60% and 10-year Gilt yield at 4.54% 10-year Treasury yield: 4.20%.

Central bank rate decisions expected during the week

WED (Dec 10th)

- 09:45 (CA) Bank of Canada (BOC) Interest Rate Decision.

-14:00 (US) FOMC Interest Rate Decision.

- 16:30 (BR) Brazil Central bank (BCB) Interest Rate Decision.

Thurs (Dec 11th)

- 01:30 (PH) Philippines Central Banbk (BSP) Interest Rate Decision.

- 03:30 (CH) SNB Interest Rate Decision.

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision.

- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision.

- 18:00 (PE) Peru Central Bank (BCRP Interest Rate Decision.

Economic data

- (NL) Netherlands Oct Manufacturing Production M/M+0.2% v -0.2% prior; Y/Y: 1.9% v 2.4% prior; Industrial Sales Y/Y: -1.8% v +6.5% prior.

- (FI) Finland Oct Industrial Production M/M: +2.4% v -0.2% prior; Y/Y: +2.3% v -1.5% prior.

- (SE) Sweden Oct GDP Indicator M/M: -0.3% v -0.1%e; Y/Y: 2.1% v 2.8% prior.

- (SE) Sweden Oct Private Sector Production M/M: -1.4% v +1.3% prior; Y/Y: 3.6% v 5.3% prior.

- (SE) Sweden Oct Industrial Orders M/M: +4.7% v -2.8% prior; Y/Y: 12.1% v 6.7% prior.

- (SE) Sweden Oct Industry Production Value Y/Y: 5.9% v 14.6% prior; Service Production Value Y/Y: 3.0% v 2.4% prior.

- (SE) Sweden Oct Household Consumption M/M: -0.9% v +0.5% prior; Y/Y: 2.3% v 3.6% prior.

- (NO) Norway Nov CPI M/M: +0.1% v -0.1%e; Y/Y: 3.0% v 2.7%e.

- (NO) Norway CPI Underlying M/M: -0.3% v -0.2%e; Y/Y: 3.0% v 3.1%e.

- (NO) Norway Q3 Current Account Balance (NOK): 174.5B v 179.3B prior.

- (DK) Denmark Nov CPI M/M: -0.3% v +0.4% prior; Y/Y: 2.1% v 2.1% prior.

- (DK) Denmark Nov CPI EU Harmonized M/M: -0.5% v +0.6% prior; Y/Y: 2.0% v 2.1% prior.

- (TR) Turkey Oct Industrial Production M/M: -0.8% v -2.1% prior; Y/Y: 2.2% v 3.0% prior.

- (AT) Austria Oct Industrial Production M/M: +0.8% v -0.9% prior; Y/Y: +3.3% v -1.7% prior.

- (CZ) Czech Nov Final CPI M/M: -0.3% v -0.3% prelim; Y/Y: 2.1% v 2.1% prelim.

- (CZ) Czech Oct Import Price Index Y/Y: -4.5% v -3.3% prior; Export Price Index Y/Y:-3.6 % v -2.7% prior.

- (IT) Italy Oct Industrial Production M/M: -1.0% v -0.2%e; Y/Y: -0.3% v +0.3%e; Industrial Production NSA (unadj) Y/Y:-0.3% v +4.5% prior.

- (GR) Greece Oct Industrial Production Y/Y: 6.4% v 7.3% prior.

Fixed income issuance

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

- (UK) DMO sold £4.5B in 4.75% Oct 2035 Gilts; Avg Yield: 4.613% v 4.608% prior; bid-to-cover: 3.05x v 2.84x prior; Tail: 0.3bps v 0.6bps.

- (IT) Italy Debt Agency (Tesoro) sold €9.0B vs. €9.0B indicated in 12-month bills; Avg Yield: 2.181% v 2.06% prior; Bid-to-cover: 1.41x v 1.41x prior.

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 12-month Bills.

Looking ahead

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

- 05:55 (EU) ECB chief Lagarde.

- 06:00 (ZA) South Africa Oct Retail Sales M/M: No est v 0.0% prior; Y/Y: 2.5%e v 3.1% prior.

- 06:00 (PT) Portugal Oct Trade Balance: No est v -€2.6B prior.

- 06:00 (IL) Israel Nov Consumer Confidence: No est v 93 prior.

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

- 06:30 (CL) Chile Central Bank Economist Survey.

- 07:00 (US) MBA Mortgage Applications w/e Dec 5th: No est v -1.4% prior.

- 07:00 (BR) Brazil end-Nov IBGE Inflation IPCA M/M: 0.2%e v 0.1% prior; Y/Y: 4.5%e v 4.7% prior.

- 07:00 (IS) Iceland Nov Unemployment Rate: No est v 3.9% prior.

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

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

- 08:30 (US) Q3 Employment Cost Index (ECI): 0.9%e v 0.9% prior.

- 08:30 (UR) Ukraine Q3 GDP Q/Q: No est v 0.2% prior; Y/Y: 0.8%e v 0.7% prior.

- 09:45 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 2.25%.

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

- 11:00 (RU) Russia Nov CPI M/M: 0.5%e v 0.5% prior; Y/Y: 6.7%e v 7.7% prior.

- 11:00 (RU) Russia Nov CPI Core M/M: No est v 0.1% prior; Y/Y: No est v 6.9% prior.

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

- 14:00 (US) FOMC Interest Rate Decision: Expected to cut Target Range by 25bps to 3.50-3.75%.

- 14:00 (US) Fed Staff Projections.

- 14:00 (US) Nov Federal Budget Balance: -$206.3Be v -$284.4B prior.

- 14:30 (US) Fed Gov Powell post rate decision press conference.

- 16:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Target Rate unchanged at 15.00%.

- 16:45 (NZ) New Zealand Q3 Manufacturing Activity Q/Q: No est v -3.0% prior; Manufacturing Activity Volume Q/Q: No est v -2.9% prior.

- 18:50 (JP) Japan Q4 BSI Large All Industry Q/Q: No est v 4.7 prior; Large Manufacturing Q/Q: No est v 3.8 prior.

- 19:00 (KR) South Korea Dec Exports 10 Days Y/Y: No est v 6.4% prior; Imports 10 Days Y/Y: No est v 8.2% prior.

- 19:01 (UK) Nov RICS House Price Balance: -21%e v -19% prior.

- 19:30 (AU) Australia Nov Employment Change: +20.0Ke v +42.2K prior; Unemployment Rate: 4.4%e v 4.3% prior; Full Time Employment Change: No est v +55.3K prior; Part Time Employment Change: No est v -13.1K prior; Participation Rate: 67.0%e v 67.0% prior.

- 21:00 (JP) Japan Nov Tokyo Avg Office Vacancies: No est v 2.6% prior.

- 22:35 (JP) Japan to sell 20-year JGB Bonds.