Trump trade train in full steam ahead mode

EU mid-market update: Trump trade train in full steam ahead mode; Germany dials in election for Feb 23rd, while its ZEW index hits lowest since pandemic.

Notes/observations

- No sign of Trump trade easing, with Bitcoin testing $90K and its market cap overtaking silver, becoming the world’s 8th largest asset; Talk is circulating on the longevity of the overall Trump rally, before technical and business fundamentals could start to dial the euphoria back.

- Analysts also weigh in on the impact of potential tariffs to Euro Area and subsequent effects on growth and inflation, causing sentiment to sour, leading to risk off flows for EU equities.

- German lawmakers agree to hold Federal Election on Feb 23rd; Also out of Germany, Metalworker Union IG Metall finally agreed wage deal with govt.

- Notable EU Earnings: Bayer collapses >10% after miss in Q3 results, cutting FY EBITDA guidance and sees muted outlook for next year (FY25); AstraZeneca Q3 beat on both top and bottom line, and raised guidance.

- Asia closed lower with Hang Seng underperforming -2.8%. EU indices are -0.6% to -1.1%. US futures are -0.1%. Gold -1.1%, DXY +0.3%; Commodity: Brent +0.6%, WTI +0.6%; Crypto: BTC +6.4%, ETH +4.9%.

Asia

- Australia Nov Westpac Consumer Confidence: 94.6 v 89.8 prior.

- Australia Oct NAB Business Confidence: +5 v -2 prior.

- China said to plan to slash home buying taxes to boost property sector; home purchase deed tax could be cut to 1% from 3%. Move to boost the property sector and signals more fiscal support for the sluggish economy.

Global conflict/tensions

- Israeli newly appointed Defense Min Katz stated that there would be no ceasefire in Lebanon; would continue to hit Hezbollah with full force (**Note: Reports circulated that Israel was working with US on deal to end fighting in Lebanon).

- North Korea said to have ratified a mutual defense treaty with Russia back in Jun. Called for each side to come to the other's aid in case of an armed attack.

Americas

- DDHQ projected Republican Party had won a majority in the US House of Representatives with party to hold a majority in both chambers of Congress.

- Pres-elect Trump expected to nominate Senator Marco Rubio (R-FL) as Secretary of State; Mike Waltz to be his White House national security adviser.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.87% at 507.90, FTSE -0.88% at 8,054.08, DAX -0.59% at 19,335.75, CAC-40 -0.98% at 7,354.21, IBEX-35 -0.58% at 11,526.00, FTSE MIB -0.77% at 34,080.00, SMI -0.83% at 11,818.26, S&P 500 Futures -0.15%].

Market Focal Points/Key Themes: European indices open lower across the board and remained under pressure through the early part of the session; risk appetite falters in the face of higher yields; all sectors start the day in the red; among less negative sectors are telecom and energy; sectors leading the way lower include consumer discretionary and health care; reportedly Lufthansa could sign a deal with Italian government for ITA in a matter of days; earnings expected in the upcoming US session include De Longhi, Tyson Foods, Home Depot and Spotify.

Equities

- Healthcare: AstraZeneca [AZN.UK] +0.5% (Q3 results beat estimates, raises guidance; Submits BLA in US for Dato-DXd; Invests $3.5B for R&D in US), Bayer [BAYN.DE] -12.0% (Q3 results misses estimates, trims guidance), Merck KGaA [MRK.DE] -1.5% (Phase III MANEUVER trial of pimicotinib met its primary endpoint), ConvaTec [CTEC.UK] +19.5% (trading update; raises outlook) - Industrials: Maersk [MAERSKB.DK] -1.0% (South African terminal performance is still challenged), Volvo Cars [VOLCARB.SE] -2.5% (reportedly Geely considering cutting stake in co.), BAE Systems [BA.UK] +1.0% (trading update, affirms guidance), Airbus [AIR.FR] -0.5% (positive comments on China demand and aircraft certification) - Technology: Infineon [IFX.DE] +2.0% (Q4 results misses estimates, guides Q1 and FY25 weak; media call comments), Temenos [TEMN.CH] +3.5% (mid-term FY24-28 targets at CMD presentation) - Telecom: Vodafone Group [VOD.UK] -4.0% (earnings).

Speakers

- ECB's Rehn (Finland) clarified that ECB was not data point dependent, but data-dependent. Disinflation was well on track in the region.

- ECB’s Holzmann (Austria) noted that Trump tariffs would put pressure on our inflation.

- BOE's Pill (chief economist) noted that wage growth was sticky at high levels and hard to reconcile with 2% CPI target; Have seen substantial disinflation in economy and was not obvious 2 years ago that CPI would now be at target. Policy had anchor inflation expectations close to target.

- German Metal Worker Union (IG Metall) to receive 2.0% pay increase as of Apr 2025 and receive 3.1% pay increase as of Apr 2026. To receive one-time payment of €600M, no later than Feb 2025.

- German ZEW Economists commented that expectations had been overshadowed by Trump's Presidential victory and the collapse of the German coalition. Expecting economic prospects to improve with snap elections.

Currencies/fixed income

- US participants return from recent holiday. Markets continued to parse the implications of the US election last weekend continued seemed relatively optimistic at the moment. Dealers noted that the economic environment was a little different from when Trump was last in power. Some believe if large tariffs were imposed on China it would likely pose a big risk for the global economy and worsen the deceleration of the Chinese economy. Greenback continued to hold onto its post-election gains as markets ponder whether the Fed's policy path might be affected.

- EUR/USD at a 1-year low at 1.0630 as German ZEW survey continued to disappoint.

- GBP/USD was hovering above the .128 level as unemployment rate continued to tick higher while wage growth slowed again.
USD/JPY back above 154 level by mid-session.

Economic data

- (SE) Sweden Oct PES Unemployment Rate: 3.6% v 3.6% prior.

- (NL) Netherlands Oct CPI M/M: +0.5% v -0.5% prior; Y/Y (final): 3.5 v 3.6% prelim.

- (NL) Netherlands Oct CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 3.3% v 3.3% prelim.

- (UK) Oct Jobless Claims Change: +26.7K v +10.1 prior; Claimant Count Rate: 4.7% v 4.7% prior; Payrolled Employees (monthly change): -5K v -20Ke.

- (UK) Sept Average Weekly Earnings 3M/Y: 4.3% v 3.9%e; Weekly Earnings (ex-bonus) 3M/Y: 4.8% v 4.7%e.

- (UK) Sept ILO Unemployment Rate: 4.1% v 4.1%e; Employment Change 3M/3M: +220K v +287Ke.

- (DE) Germany Oct Final CPI M/M: 0.4% v 0.4% prelim; Y/Y: 2.0% v 2.0% prelim.

- (DE) Germany Oct Final CPI EU Harmonized M/M: 0.4% v 0.4% prelim; Y/Y: 2.4% v 2.4% prelim.

- (TR) Turkey Sept Current Account Balance: $3.0B v $2.8Be.

- (TR) Turkey Sept Retail Sales Y/Y: 15.9% v 13.7% prior.

- (RO) Romania Oct CPI M/M: 0.6% v 0.4%e; Y/Y: 4.7% v 4.6%e.

- (HU) Hungary Oct CPI M/M: 0.1% v 0.4%e; Y/Y: 3.2% v 3.5%e.

- (ZA) South Africa Q3 Unemployment Rate: 32.1% v 32.8%e.

- (DE) Germany Nov ZEW Current Situation Survey: -91.4 v -85.0e; Expectations Survey: 7.4 v 13.2e.

- (EU) Euro Zone Nov ZEW Expectations Survey: 12.5 v 20.1 prior.

Fixed income issuance

- (ID) Indonesia sold total IDR22.0T vs. IDR22.0T target in bills and bonds.

- (ZA) South Africa to sell USD-denominated 12-year and 30-year bonds via syndicate.

- (NL) Netherlands Debt Agency (DSTA) sold €2.105B vs. €1.5-2.5B indicated range in 0.25% July 2029 DSL Bonds; Avg Yield: 2.295% v -0.115% prior.

- (ES) Spain Debt Agency (Tesoro) sold total €1.84B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.

- (ZA) South Africa sold total ZAR3.75B vs. ZAR3.75B indicated in 2033, 2035 and 2038 bonds.

- (UK) DMO sold £2.25B in 4.75% Oct 2043 Gilts; Avg Yield: % v 4.421% prior; bid-to-cover: x v 3.27x prior; Tail: bps v 0.1bps prior.

- (IT) Italy Debt Agency (Tesoro) sold total €9.0B vs. €9.0B in 12-month bills (2 tranches).

Looking ahead

- (DE) Germany Sept Current Account: No est v €14.4B prior.

- (CO) Colombia Oct Consumer Confidence: -15.0e v -16.0 prior.

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

- 05:30 (IN) India Oct CPI Y/Y: 5.9%e v 5.5% prior.

- 05:30 (IN) India Sept Industrial Production Y/Y: +2.9%e v -0.1% prior.

- 05:30 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €5.0B in 2.0% Dec 2026 Schatz.

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

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €3.4B in 3-month and 12-month bills.

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

- 06:00 (ZA) South Africa Sept Manufacturing Production M/M: +0.9%e v -0.6% prior; Y/Y: +0.7%e v -1.2% prior.

- 06:00 (US) Oct NFIB Small Business Optimism: 92.0e v 91.5 prior.

- 06:00 (BR) Brazil Central Bank (BCB) Nov Minutes.

- 06:00 (FI) Finland to sell l combined €2.0B in 6-month and 9-month Bills.

- 06:00 (TR) Turkey to sell Bonds.

- 06:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

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

- 07:00 (BR) Brazil Sept Retail Sales M/M: +1.3%e v -0.3% prior; Y/Y: 3.5%e v 5.1% prior.

- 07:00 (BR) Brazil Sept Broad Retail Sales M/M: +2.3%e v -0.8% prior; Y/Y: 4.7%e v 3.1% prior.

- 08:00 (RU) Russia Sept Trade Balance: No est v $9.3B prior; Exports: No est v $34.5B prior; Imports: No est v $25.2B prior.

- 08:30 (CA) Canada Sept Building Permits M/M: +3.2%e v -7.0% prior.

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

- 09:00 (FR) France Debt Agency (AFT) to sell €6.3-7.9B in 3-month, 6-month and 12-month bills.

- 09:00 (IT) ECB’s Cipollone (Italy).

- 10:00 (US) Fed's Waller at Banking Conference.

- 10:15 (US) Fed’s Barkin.

- 11:00 (US) Oct NY Fed 1-Yr Inflation Expectations Survey: No est v 3.0% prior.

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

- 14:00 (AR) Argentina Oct National CPI M/M: 3.0%e v 3.5% prior; Y/Y: 193.6%e v 209.0% prior.

- 16:00 (KR) South Korea Oct Import Price Index M/M: No est v -2.2% prior; Y/Y: No est v -3.3% prior.

- 16:00 (KR) South Korea Oct Export Price Index M/M: No est v -2.3% prior; Y/Y: No est v 1.2% prior.

- 16:45 (NZ) New Zealand Sept Net Migration: No est v 1.8K prior.

- 17:00 (US) Fed’s Harker.

- 17:30 (US) Fed’s Barkin.

- 18:00 (KR) South Korea Oct Unemployment Rate : 2.6%e v 2.5% prior.

- 18:50 (JP) Japan Oct PPI (domestic CGPI) M/M: 0.0%e v 0.0% prior; Y/Y: 2.9%e v 2.8% prior.

- 19:30 (AU) Australia Q3 Wage Price Index Q/Q: 0.9%e v 0.8% prior; Y/Y: 3.6%e v 4.1% prior.

- 20:30 (KR) Bank of Korea to sell KRW800B in 1-Year Bonds.

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