Trump ratchets up pressure on Venezuela

EU mid-market update: SNB keeps policy steady and avoids negative rates; Oracle weighing down tech futures ahead of new AI debt and GPT-5.2; Trump ratchets up pressure on Venezuela.

Notes/observations

- European markets are mostly flat, except for French CAC40, which is being lifted by healthy mid-term targets from Schneider Electric at a Capital Markets Day. US futures seeing more action with Nasdaq100 down ~1.0%, triggered by disappointing Oracle results as mentioned below.

- Overall, participants are digesting the Fed decision: a 25-bps rate cut as expected with three dissents, forward guidance tweak, and $40B/month Treasury bill purchases. Powell said he sees policy rate at neutral.

- Oracle reported slightly below consensus FQ2 cloud growth, with total cloud revenue up 34% to ~$8B and infrastructure up 68% to just over $4B, raising concern that its huge AI bookings backlog will take longer than hoped to turn into revenue. Larry Ellison also said that Oracle would continue to buy the latest GPUs from NVIDIA, but need to be prepared and able to deploy whatever chips our customers want to buy.

- Oracle lifted FY26 capex guidance from roughly $35B to ~$50B and argued that talk of ~$100B in needed AI financing is overdone (Oracle may file ~$40B debt in coming week). They flagged a rapid ramp in GPU and multi cloud capacity plus ~$4B of extra FY27 revenue already in RPO, and reiterated 30-40% AI infra margin targets while pledging to keep an investment grade rating using flexible capital structures and some customer provided chips: “customers may bring their own chips to be installed in our data centers and suppliers who may lease their chips rather than sell them.. to enable Oracle to synchronize payments with receipts and borrow substantially less than most people are modeling”.

- SNB left policy rate at 0%, as expected with much reiteration in the statement over FX intervention. Additionally, they did not rule out cutting rates into negative territory if needed. Staff projections raised 2025 GDP on lower US tariffs, and cut 2026-27 inflation forecasts.

- Ahead of potential release of OpenAI’s GPT-5.2, Nvidia IR reaffirmed that the Vera Rubin architecture is on track for 2H 26 and argued its GPUs remain at least a full generation ahead of TPUs and rivals, noting that current leading LLMs still run on older Hopper chips while upcoming Blackwell based models, already leading on MLPerf and InferenceMAX, should make that gap obvious in 2026.

- Tensions in Americas increased after US seized a Venezuela oil tanker; Carrying ~1.8M barrels of Venezuelan crude bound for Cuba, it was targeted to enforce sanctions on a smuggling network funding Iran's IRGC-Quds Force and Hezbollah; Said to disrupt revenue for Maduro regime, which has been evading US sanctions since 2019 and part of broader US pressure: military buildup, jet flyovers, threats against Maduro.

- Asia closed mixed with Nikkei225 underperforming -0.9%. EU indices +0.1-0.4%. US futures -0.2% to -0.8%. Gold -0.1%, DXY -0.1%; Commodity: Brent -1.5%, WTI -1.5%; Crypto: BTC -2.2%, ETH -3.4%.

Asia

- New Zealand Q3 Manufacturing Activity Q/Q: +2.7% v -2.8% prior.

- Japan Q4 BSI Large All Industry Q/Q: 4.0 v 4.7 prior; Large Manufacturing Q/Q: 4.7 v 3.8 prior.

- South Korea Dec Exports 10 Days Y/Y: 17.3% v 6.4% prior; Imports 10 Days Y/Y: 8.0% v 8.2% prior.

- Australia Nov Employment Change: -21.3K v +20.0Ke; Unemployment Rate: 4.3% v 4.4%e.

Global conflict/tensions

- US seized a large oil tanker off the coast of Venezuela destined for Cuba.

Europe

- UK Nov RICS House Price Balance: -16% v -21%e.

Americas

FOMC cut Target Range by 25bps to 3.50-3.75% (as expected) for its 3rd straight rate cut (6th overall) under the current phase of its easing cycle. Vote was 6-2-1 (Goolsbee and Schmid dissented in favor of no cut; Miran voted in favor of 50bp cut). Statement noted it was attentive to risks on both sides of dual mandate, judged that downside risks to employment had risen. To buy $40B in T-bills in next 30 days.

- Fed Staff Projections saw no shift in the median dot plot projections across the forecast horizon,
Fed Gov Powell post rate decision press conference noted that the outlook for employment and inflation had not changed much from last meeting; Labor market appeared to be gradually cooling; Short-term Treasury purchases for maintaining ample supply of reserves over time.

- US Nov Federal Budget Balance: -$173.3B v -$175.0Be.

- Brazil Central Bank (BCB) left Selic Target Rate unchanged at 15.00% (as expected) for its 4th straight pause current tightening cycle. (**Note: Unchanged statement from November. Dealers note that the wording of the Statement makes a January cut unlikely).

Trade

- Mexico Senate approved up to 50% tariffs on China and other Asian countries.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.15% at 579.02, FTSE +0.14% at 9,669.52, DAX +0.01% at 24,119.94, CAC-40 +0.48% at 8,061.49, IBEX-35 +0.05% at 16,755.35, FTSE MIB +0.09% at 43,505.00, SMI +0.06% at 12,926.50, S&P 500 Futures -0.57%]

Market focal points/key themes: European indices opened generally lower, but managed to recover in the early hours of trading; risk appetite affected by concerns around tech after Oracle earnings disappoint; among outperforming sectors are materials and consumer discretionary; underperforming sectors include utilities and technology; CAC 40 supported after Schneider electric announces mid-term targets and intention to buy back shares; Nilfisk to be acquired by Freudenberg; DKSH acquires Invita; Smiths sells its Interconnect unit to Molex; earnings expected in the upcoming Americas session include Costco, Ciena and Broadcom.

Equities

- Consumer staples: J Sainsbury [SBRY.UK] +1.5% (analyst upgrades), Carl Zeiss Meditec [AFX.DE] +7.5% (earnings), Ontex [ONTEX.BE] -18.5% (cuts outlook; new CEO).

- Energy: Nordex [NDX1.DE] +2.0% (analyst upgrade).

- Healthcare: Zealand Pharma [ZEAL.DK] -0.5% (2030 strategy).

- Industrials: Volkswagen [VOW3.DE] +1.5% (to decide €160B investment budget on Thurs, Dec 11th).

- Technology: SAP [SAP.DE] -2.5% (Oracle results and guidance).

Speakers

- SNB Policy Statement noted it would adjust monetary policy as necessary. Reiterated stance that was prepared to intervene in FX market; if needed. Inflationary pressure was virtually unchanged compared to the last decision. Main risk to domestic economy was the global economy but outlook had improved slightly due to lower tariffs.

- SNB updated its Staff Projections which cut 2026 CPI from 0.5% to 0.3% and cut 2027 CPI from 0.7% to 0.6%. Projections maintained 2026 GDP growth at 1.0%.

- SNB President Schlegel post rate decision press conference noted that current policy is appropriate. Inflation forecast within 0-2% over entire horizon. Monetary policy remained expansionary. Policy to stoke inflation slowly in next quarters.

- German Chancellor Merz: Possible meeting on Ukraine in Berlin during week of Dec 15th. Made clear to Trump that Ukraine must decide on own territory. EU plan would extend Russian asset freeze via emergency powers.

- Czech Central Bank (CNB) Seidler: Most likely scenario is monetary policy rates remain at current levels for some time but necessary to stay flexible
Czech Central Bank (CNB) Member Kubicek noted that a rate hike was more likely as next step than cut, but can't predict timing.

- Poland Central Bank (NBP) Member Duda said to urge caution in next rate cuts.

- China Commerce Ministry (MOFCOM) stated that the country faced challenge from supply chain adjustment.

- China Pres Xi spoke at the Economic Work Conference and said to maintain a necessary fiscal deficit, country was still facing economic challenges. China to uphold policy support and reform and consolidate and stabilize economy.

- Philippines Central Bank Policy Statement noted that monetary easing was nearing its end. Additional easing likely limited and guided by incoming data. Reiterated outlook for inflation benign while inflationary expectations were firmly anchored. Domestic growth outlook weakened further; expected to rebound slowly.

- Philippines Central Bank (BSP) Gov Remolona post rate decision press conference noted that the Dec rate cut to help revive economy a bit in 2026 and 2027. Another rate cut would be justified if things were worse than thought.

- South Korea Finance Ministry on issuance: 55-60% of the KRW225.7T in government bond issuance for 2026 will be issued in H1.

Currencies/fixed income

- USD locked within tight ranges and consolidated some recent post Fed softness in the session.

- EUR/USD moved back below the 1.17 level and well contained with the 1.15-1.20 trading range.

- USD/CHF drifted lower after SNB kept its policy steady and noted that the bar to negative rates remain high. Pair at 0.7992 by mid-session.

- USD/JPY just below the 156 level with focus on next week’s BOJ rate decision. Yen had been softening this week on concerns of the fiscal impact of the PM’s stimulus program.

- 10-year German Bund yield at 2.86%, France 10-year Oat at 3.58% and 10-year Gilt yield at 4.49% 10-year Treasury yield: 4.15%.

Economic data

- (SE) Sweden Nov PES Unemployment Rate: 3.7% v 3.7% prior.

- (PH) Philippines Central Bank (BSP) cut Overnight Borrowing Rate by 25bps to 4.50% (as expected).

- (SE) Sweden Nov Final CPI M/M: -0.4% v -0.4% prelim; Y/Y: 0.3%e v 0.3% prelim.

- (SE) Sweden Nov Final CPIF M/M: -0.3% v -0.3% prelim; Y/Y: 2.3%e v 2.3% prelim.

- (SE) Sweden Nov Final CPIF (ex-energy) M/M: -0.6% v -0.6% prelim; Y/Y: 2.4%e v 2.4% prelim; CPI Level: 417.83 v 419.35 prior.

- (TR) Turkey Oct Retail Sales Y/Y: No est v 14.9% prior.

- (CH) Swiss National Bank (SNB) left Policy Rate unchanged at 0.00% (as expected).

- (NO) Norway Q4 Regional Network Survey Output Survey (Current Quarter) Q/Q: 0.4% v 0.4% prior; Next Quarter Q/Q: 0.3% v 0.4% prior.

- (IT) Italy Q3 Unemployment Rate: 6.1% v 6.3% prior.

- (ZA) South Africa Oct Total Mining Production M/M: 2.1% v 2.6% prior; Y/Y: 5.8% v 1.4% prior; Gold Production Y/Y: -1.2% v +5.9% prior; Platinum Production Y/Y: 3.9% v 3.9% prior.

- (ZA) South Africa Q3 Non-Farm Payrolls Q/Q: 0.3% v -0.7% prior; Y/Y: -0.7% v -2.0% prior.

- (ZA) South Africa Nov Sacci Business Confidence: 132.3.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) sold total €5.0B vs. €4.0-5.0B in 3-year BTP bonds.

- (SE) Sweden sold total SEK750M vs. SEK750M indicated in index linked 2032 and 2039 bonds.

Looking ahead

- OPEC Monthly Oil Report.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IE) Ireland Nov CPI M/M: No est v 0.5% prior; Y/Y: No est v 2.9% prior.

- 06:00 (IE) Ireland Nov Final CPI EU Harmonized M/M: No est v -0.2% prelim; Y/Y: No est v 3.2% prelim.

- 06:00 (ZA) South Africa Oct Manufacturing Production M/M: No est v -0.5% prior; Y/Y: -1.7%e v +0.3% prior.

- 06:00 (IL) Israel Nov Trade Balance: No est v -$3.4B prior.

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One Week Repo Rate by 100bps to 38.50%.

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

- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Interest Rates unchanged at 15.50%.

- 07:00 (BR) Brazil Oct Retail Sales M/M: 0.0%e v -0.3% prior; Y/Y: 0.0%e v 0.8% prior.

- 07:00 (BR) Brazil Oct Broad Retail Sales M/M: 0.2%e v 0.2% prior; Y/Y: -1.4%e v 1.1% prior.

- 07:00 (BR) Brazil CONAB Crop Production.

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

- 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 5th: No est v $733.4B prior.

- 08:30 (US) Initial Jobless Claims: 220Ke v 191K prior; Continuing Claims: 1.94Me v 1.939M prior.

- 08:30 (US) Sept Trade Balance: -$63.0Be v -$59.6B prior; Exports M/M: No est v 0.1% prior; Imports M/M: No est v -5.1B prior.

- 08:30 (CA) Canada Sept Int'l Merchandise Trade (CAD): -4.5Be v -6.3B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 10:00 (US) Sept Final Wholesale Inventories M/M: 0.1%e v % prior; Wholesale Trade Sales M/M: 0.4%e v 0.1% prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

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

- 13:00 (US) Treasury to sell 30-Year Bond Reopening.

- 13:00 (MX) Mexico Central Bank Releases Regional Economy Report.

- 14:00 (AR) Argentina Nov National CPI M/M: 2.3%e v 2.3% prior; Y/Y: 31.2%e v 31.3% prior.

- 16:00 (KR) South Korea Nov Export Price Index M/M: No est v 4.1% prior; Y/Y: No est v 4.8% prior.

- 16:00 (KR) South Korea Nov Import Price Index M/M: No est v 1.9% prior; Y/Y: No est v 0.5% prior.

- 16:30 (NZ) New Zealand Nov Manufacturing PMI: No est v 51.4 prior.

- 16:45 (NZ) New Zealand Nov Total Card Spending M/M: No est v 0.0% prior; Retail Card Spending M/M: No est v 0.2% prior.

- 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 4.25%.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 23:00 (MY) Malaysia Oct Industrial Production Y/Y: 5.3%e v 5.7% prior; Manufacturing Sales Value Y/Y: No est v 4.3% prior.

- 23:30 (JP) Japan Oct Final Industrial Production M/M: No est v 1.4% prelim; Y/Y: No est v 1.5% prelim; Capacity Utilization M/M: No est v 2.5% prior.