Trump said he's decided on next Fed Chair but no name reveal until official announcement before Christmas

EU Mid-Market Update: Trump said he's decided on next Fed Chair but no name reveal until official announcement before Christmas; OpenAI's new model next week.

Notes/Observations

- Theme is little changed from yesterday’s trade. UK budget still floating in the mind of European desks. Budget could be a long-running problem for sterling as it's questionable whether back-loaded savings will be pursued in the run-up to the 2029 elections. Nationwide house price index was higher than consensus at 1.8% YoY.

- Remaining on UK, BOE released bank stress results, deciding to lower the UK systemic capital buffer from ~14% to 13% of RWA - first easing since 2008, freeing up capital for lending. All major 7 UK banks passed comfortably (Barclays, HSBC, Lloyds, Nationwide, NatWest, Santander UK, Standard Chartered).

- WSJ’s Timiraos reports that the Fed chair search is unofficially all but settled, with President Trump gravitating toward Kevin Hassett for his blend of loyalty and market credibility even as formal interviews with JD Vance and senior White House staff get under way this week. A Hassett nomination might fuse the White House’s push for rapid rate cuts with a simplified money-market framework, making the integrity of Fed independence one of the central macro risks heading into 2026.

- OpenAI CEO Sam Altman has reportedly declared a “Code Red,” rushing out a new reasoning model next week and delaying side projects like ads, just after DeepSeek launched its V3.2 suite, which said to beat Gemini 3.0-Pro on multiple benchmarks. Tier1 analysts say that DeepSeek-V3.2 demonstrates that LLM performance enhancement could be achieved through continuous algorithm and architecture innovation.

- Bitcoin slides toward recent lows again; Crypto market has lost ~$1.4T since October amid fears Japanese investors may repatriate capital as JGB yields rise.

- Oil sentiment swings on Russia-Ukraine peace talks and renewed concern over Venezuelan supply under rising US pressure; Russia Pres Putin meeting with US envoy Witkoff to start around 9:00ET (14:00GMT).

- US dollar stays weak after a two-week low, with markets pricing deeper Fed cuts following a soft ISM manufacturing print and expectations of a December cut. Speculation grows that Trump’s potential Powell successor - possibly Kevin Hassett - would back further easing.

- Asia closed mixed with KOSPI outperforming +1.9%. EU indices +0.2-0.9%. US futures +0.1-0.2%. Gold -1.1%, DXY +0.1%; Commodity: Brent -0.3%, WTI -0.2%; Crypto: BTC +0.3%, ETH -1.2%.

Asia

- New Zealand Q3 Terms of Trade Index Q/Q: -2.1% v +4.2% prior.

- South Korea Nov CPI M/M: -0.2% v -0.3%e; Y/Y: 2.4% v 2.3%e; CPI (ex-food/energy) Y/Y: 2.0% v 2.0%e.

- Australia Q3 Current Account Balance (A$): -16.6B v -13.2Be.

- Australia Oct Building Approvals M/M: -6.4% v -5.0%e.

Europe

- UK Nov BRC Shop Price Index Y/Y: 0.6% v 1.0% prior.

- ECB’s Kocher (Austria): Slight deviations above or below 2% target shouldn't trigger ECB rates move and should keep enough dry powder to be able to react quickly if necessary.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.17% at 576.26, FTSE +0.22% at 9,723.95, DAX +0.49% at 23,711.57, CAC-40 +0.18% at 8,111.26, IBEX-35 +0.92% at 16,540.13, FTSE MIB +0.62% at 43,526.00, SMI +0.30% at 12,873.52, S&P 500 Futures +0.12%].

Market Focal Points/Key Themes: European indices opened mixed but turned generally positive as the session progressed; among sectors leading the way higher are health care and utilities; lagging sectors include telecom and communication services; banking subsector supported after ECB cuts capital requirements to 13% reportedly L’Oreal looking to invest in Armani; reportedly Exxon could buy Lukoil’s Iraq assets; earnings expected in the upcoming US session include American Eagle.

Equities

- Financials: Barclays [BARC.UK] +1.5% (BOE stress test).

- Healthcare: Bayer [BAYN.DE] +11.5% (welcomes Solicitor General support for U.S. Supreme Court review of roundup case).

- Industrials: Rheinmetall [RHM.DE] +0.5% (positioning ahead of US-Russia talks in Moscow), Victrex [VCT.UK] +9.0% (earnings), Severfield [SFR.UK] -4.0% (earnings).

- Technology: ASML [ASML.NL] +1.0% (Trump Admin via Commerce Dept signs LOI to take equity stake of $150M in chip-related startup Xlight, which roduces Free Electron Lasers or FELs, an alternative to EUV lithography scanners (i.e. ASML)).

Speakers

- Bank of England (BOE) Financial Stability Report noted that global risks remained elevated; maintained its Countercyclical Capital Buffer (CCyB) at 2.0%. The 2025 capital stress test indicate that banking sector could continue to support economy even if economic conditions materially worsen more than expected.

- Czech Central Bank (CNB) Gov Michl stated that saw rates staying stable this year.

Currencies/fixed income

- USD was steady in a quiet session.

- USD/JPY moved back towards the 155 area. Yen did post gains on Monday on the back of BOJ rate hile expectations but the mood was more tepid in today’s session.

- EUR/USD caught within a tight range holding just above the 1.16 level. ECB members have been adamant that current level of rates are appropriate.

- GBP/USD at 1.3220 area by mid-session as dealers continued to debate the recent UK budget. PM Starmer defended Treasury chief Rachel Reeves, rejecting accusations that she misled voters by being overly pessimistic about the economic outlook to justify higher taxes.

- 10-year German Bund yield at 2.75%, France 10-year Oat at 3.82% and 10-year Gilt yield at 4.48% 10-year Treasury yield: 4.09%.

Economic data

- (NL) Netherlands Nov Preliminary CPI Y/Y: 2.9% v 3.0%e; CPI EU Harmonized M/M: -1.4% v +0.6% prior; Y/Y: 2.6% v 3.0%e.

- (UK) Nov Nationwide House Price Index M/M: 0.32% v 0.1%e; Y/Y: 1.8% v 1.6%e.

- (HU) Hungary Q3 Final GDP Q/Q: 0.0% v 0.0% prelim; Y/Y: 0.6% v 0.6% prelim.

- (FR) France Oct YTD Budget Balance: -€136.2B v -€155.4B prior.

- (ES) Spain Nov Unemployment Change: -18.8K v +22.1K prior; Employment Net Change M/M: +44.7K v +64.6K prior.

- (AT) Austria Nov Preliminary CPI M/M: 0.4% v 0.4% prior; Y/Y: 4.1% v 4.0% prior.

- (BR) Brazil Nov CPI FIPE (Sao Paulo) M/M: 0.2% v 0.2%e.

- (IT) Italy Oct Unemployment Rate: 6.0% v 6.1%e

- (ZA) South Africa Q3 GDP Q/Q: 0.5% v 0.5%e; Y/Y: 2.1% v 1.8%e.

- (EU) Euro Zone Nov Advance Preliminary CPI Estimate Y/Y: 2.2% v 2.1%e; CPI Core Y/Y: 2.4% v 2.4%e.

- (EU) Euro Zone Oct Unemployment Rate: 6.4% v 6.3%e.

- (BE) Belgium Oct Unemployment Rate: 6.4% v 6.4% prior.

- (GR) Greece Oct Unemployment Rate: 8.6% v 8.7% prior.

Fixed income issuance

- (ZA) South Africa sold total ZAR3.0B vs. ZAR3.0B indicated in 2027, 2039 and 2044 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €4.98B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.

- (UK) DMO sold £1.0B in 0.125% Aug 2031 inflation-linked Gilts (UKTi); Real Yield: 0.949% v 0.889% prior; bid-to-cover: 3.88x v 3.49x prior.

Looking ahead

- (RO) Romania Nov International Reserves: No est v €76.9B prior.

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

- 05:25 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (DE) Germany to sell €4.5B in 2.0% Dec 2027 Schatz.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €3.0B in 3-month, 6-month and 12-month bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (PT) Portugal Oct Retail Sales M/M: No est v -1.4% prior; Y/Y: No est v 2.3% prior.

- 06:00 (IT) Italy Oct PPI M/M: No est v 0.2% prior; Y/Y: No est v 1.5% prior.

- 07:00 (BR) Brazil Oct Industrial Production M/M: +0.5%e v -0.4% prior; Y/Y: 0.3%e v 2.0% prior.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (SG) Singapore Nov Purchasing Managers Index (PMI): No est v 50.0 prior; Electronics Sector Index: No est v 50.4 prior.

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

- 08:00 (SI) ECB’s Dolenc (Acting Slovenia gov).

- 08:55 (US) Weekly Redbook LFL Sales data.

- 10:00 (US) Fed’s Bowman.

- 11:00 (DK) Denmark Nov Foreign Reserves (DKK): No est v 675.5B prior.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 16:00 (KR) South Korea Nov Foreign Reserves: No est v $428.8B prior.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 17:00 (AU) Australia Nov Final PMI Services: No est v 52.7 prelim; PMI Composite: No est v 52.6 prelim.

- 18:00 (KR) South Korea Q3 Preliminary GDP (2nd reading) Q/Q: 1.2%e v 1.2% advance; Y/Y: 1.7%e v 1.7% advance.

- 19:00 (NZ) New Zealand Nov ANZ Commodity Price M/M: No est v -0.3% prior.

- 19:30 (JP) Japan Nov Final PMI Services: No est v 53.1 prelim; PMI Composite: No est v 52.0 prelim.

- 19:30 (SG) Singapore Nov PMI (whole economy): No est v 57.4 prior.

- 19:30 (HK) Hong Kong Nov PMI (whole economy): No est v 51.2 prior.

- 19:30 (AU) Australia Q3 GDP Q/Q: 0.7%e v 0.6% prior; Y/Y: 2.2%e v 1.8% prior.

- 20:01 (IE) Ireland Nov PMI Services: No est v 56.7 prior; PMI Composite: No est v 53.7 prior.

- 20:45 (CN) China Nov RatingDog PMI Services: 52.1e v 52.6 prior; PMI Composite: No est v 51.8 prior.

- 21:30 (HK) Hong Kong to sell combined HK$2.5B in 5-year and 15-year bonds.

- 22:30 (TH) Thailand Nov CPI M/M: 0.0%e v -0.1% prior; Y/Y: -0.6%e v -0.8% prior; CPI Core Y/Y: 0.6%e v 0.6% prior.