UK Chancellor Reeves receives mixed response to budget

EU mid-market update: US Thanksgivings; UK Chancellor Reeves receives mixed response to budget; US ties any future security guarantees for Ukraine to the prior existence of a peace deal.

Notes/observations

- UK assets are digesting details of Autumn Budget from yesterday, with no surprises from what was speculated, pre-announced and also released early by OBR. Economics/analysts’ general consensus is of praise for Reeves, repairing fiscal damage and stabilizing debt, but disappointment remains on the growth side. Real disposable incomes set for worst parliament since 1950s. No meltdown in bond market, but 30-year gilt yields now highest in G7. Sterling (GBP) pares some of the firmness garnished in Weds afternoon trade.

- Elsewhere, themes are unchanged as news flow and liquidity dries up for US Thanksgiving holiday. US markets are closed in full, with half day tomorrow, Fri Nov 28th.

- China’s largest tech firms are quietly shifting significant AI training offshore to Southeast Asia to secure access to Nvidia hardware after the United States restricted H20 sales in April, with Alibaba and ByteDance among those moving major LLM workloads abroad. A notable outlier is DeepSeek, which continues training domestically while working with Huawei and other local chipmakers to co design the next wave of Chinese accelerators, underscoring Beijing’s strategic push to localize its AI stack even as private firms hedge offshore.

- US is reportedly tying any future security guarantees for Ukraine to the prior existence of a peace deal, a shift that has coincided with a change in Moscow’s tone from years of blunt dismissal to a mix of grudging engagement and nervous ambiguity as Trump’s back channel plan moves from fringe to plausible. Russia’s new blend of acknowledgment and denial suggests the Kremlin now sees the process as real enough to constrain it, treating the leaked Miami and revised Geneva drafts less as propaganda and more as documents that could solidify into a binding record if mishandled.

- The true front line in the recent TPU-GPU fight is not flops but numerical formats, with Nvidia betting that 4 and 6 bit microscaling types such as MXFP4 and MXFP6 can safely compress most transformer math while Google’s new TPU v7 pointedly rejects that race and doubles down on a fat, stable FP8 pipeline backed by huge HBM. Nvidia’s Blackwell architecture makes MXFP4 a system wide religion, but Google is wagering that the long tail of messy, agentic real world prompts in 2026 will punish fragile 4 bit stacks and reward an FP8 centric design that delivers steadier latency, easier integration and ultimately lower cost per token for hyperscalers like Meta now exploring TPU adoption.

- Worth noting Nasdaq100 futures are sitting at a key resistance level that saw a sharp sell off last Thurs. Week so far has been led by bulls, triggered by reignition of Dec rate cut expectations for Fed.

- Asia closed higher with Nikkei outperforming +1.3%. EU indices -0.3% to +0.4%. US futures mixed. Gold -0.2%, DXY +0.1%; Commodity: Brent +0.1%, WTI +0.1%; Crypto: BTC +5.4%, ETH +3.9%.

Asia

- Bank of Korea (BOK) Left the 7-Day Repo Rate unchanged at 2.50% (as expected). Statement noted that was open to rate cut possibility and would decide whether and when to implement any further base rate cuts (**Note: Removed phrase `maintain rate cut stance' from statement).

- New Zealand Q3 Retail Sales (ex Inflation) Q/Q: 1.9% v 0.6%e.

- New Zealand Nov ANZ Business Confidence: 67.1 v 58.1 prior.

- Australia Q3 Private Capital Expenditure: 6.4% v 0.5%e.

- China Oct Industrial Profits Y/Y: -5.5% v +21.6% prior.

- BOJ Board member Noguchi noted that would gradually adjust monetary accommodation if outlook held. Premature hike would entail risk for price goal; needed more time for expectations to be anchored. Hiking too early or too late to cause problems.

- Japan said likely to increase sale of Treasury discount bills by ~¥6T; Total JGB sales for FY25 are expected to increase by ~¥7.0T under revised plan from the current ¥171.8T- Japan's 2025 supplementary budget is expected to be ¥18.3T (prior: ¥17.7T).

- RBNZ Acting Gov Hawkesby: Hurdle was high for any further rate cuts.

Taiwan

- President Trump reportedly advised Japan's PM to not provoke China on Taiwan.

Americas

- US markets closed for Thanksgiving holiday.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.16% at 573.30, FTSE -0.38% at 9,654.30, DAX +0.32% at 23,770.60, CAC-40 -0.13% at 8,085.45, IBEX-35 -0.31% at 16,311.07, FTSE MIB -0.06% at 43,104.00, SMI -0.29% at 12,796.66, S&P 500 Futures -0.03%].

Market focal points/key themes: European indices open generally lower and remained under pressure though the early part of the session; DAX notable exception following better than expected consumer confidence data; among better performing sectors are financials real estate; sectors leading the way lower include materials and technology; reportedly Volkswagen weighing options for its Europcar unit; US closed for holiday.

Equities

- Consumer discretionary: Puma [PUM.DE] +14.5% (China's Anta Sports said to be among potential suitors exploring buyout offers), Remy Cointreau [RCO.FR] +4.5% (earnings), Entain [ENT.UK] -0.5% (response to UK tax changes), Evoke [EVOK.UK] -6.5% (response to UK tax changes), Flutter Entertainment [FLTR.UK] +0.5% (response to UK tax changes).

- Healthcare: Novo Nordisk [NOVOB.DK] +3.5% (analyst downgrade).

Speakers

- Japan PM Takaichi: Necessary budget items should be included in initial budget; Aim to reflect inflation appropriately in FY26 budget.

- ECB’s Villeroy (France): Budgetary debate in France was worrying.

- UK Chancellor Reeves stated that she did not accept that govt was raising taxes to fund welfare. More action to help grow the economy

- Hungary Econ Min Nagy stated that saw 2025 GDP growth around 0.5%.

- India Finance Ministry Monthly Economic Report (DEA): Inflation outlook remain encouraging.

- Japan Chief Cabinet Sec Kihara stated that it was not true that Trump advised PM Takaichi to not provoke China over Taiwan (as per WSJ article)

- Japan MOF: Primary dealers sought more 2-year, 5-year and 10-year bond sales and less from super-long end sales.

- S&P affirmed Philippines sovereign rating at 'BBB+'; Outlook positive.

Currencies/fixed income

- USD was steady in quiet trade. Greenback has been a touch softer in recent sessions after soft US data prompting speculation that the Fed may cut rates again in Dec. Dealers taking note that if White House economic adviser Kevin Hassett - an advocate for rate cuts - were appointed the next Federal Reserve chair it ought to be negative for the USD.

- EUR/USD holding below the 1.16 level.

- GBP/USD at 1.3225.

- USD/JPY at 156.20. BOJ’s Noguchi turned a bit dovish as he advocated a gradual interest rate hikes.

Economic data

- (NL) Netherlands Nov Producer Confidence: -1.7 v -0.8 prior.

- (FI) Finland Nov Consumer Confidence: -6.5 v -7.6 prior; Business Confidence: -6 v -4 prior.

- (DE) Germany Dec GfK Consumer Confidence: 23.2 v -23.5e.

- (SE) Sweden Oct Trade Balance (SEK): 1.5B v 4.9B prior.

- (SE) Sweden Oct Household Lending Y/Y: 2.9% v 2.8% prior.

- (NO) Norway Oct Trend Unemployment Rate: 4.7% v 4.6% prior

- (FI) Finland Sept Final Trade Balance: -€0.5B v -€0.4B prelim.

- (DK) Denmark Oct Retail Sales M/M: 0.9% v 0.0% prior; Y/Y: 4.9% v 3.3% prior.

- (TR) Turkey Nov Economic Confidence: 99.5 v 98.2 prior.

- (TR) Turkey Oct Trade Balance: -$7.6B v -$7.4Be.- (TW) Taiwan Oct Monitoring Indicator: 35 v 34 prior.

- (SE) Sweden Nov Consumer Confidence: 96.1 v 96.8 prior; Manufacturing Confidence: 100.9 v 100.4 prior; Economic Tendency: 101.7 v 101.0e.

- (ES) Spain Sept Total Mortgage Lending Y/Y: 30.8% v 25.9% prior; House Mortgage Approvals Y/Y: 12.2% v 7.5% prior.

- (IS) Iceland Nov CPI M/M: -0.5% v +0.5% prior; Y/Y: 3.7% v 4.3% prior- (IT) Italy Nov Consumer Confidence: 95.0 v 97.6e v; Manufacturing

Confidence: 89.6 v 88.2e.

- (EU) Euro Zone Oct M3 Money Supply Y/Y: 2.8% v 2.8%e.

- 04:30 (PT) Portugal Nov Consumer Confidence: -15.2 v -15.9 prior; Economic Climate Indicator: 3.0 v 2.9 prior- 04:30 (ZA) South Africa Oct PPI

M/M: -0.1% v 0.2%e; Y/Y: 2.9% v 3.1%e.

- 05:00 (EU) Euro Zone Nov Economic Confidence: 97.0 v 97.0e; Industrial Confidence: -9.3 v - 8.3e; Services Confidence: 5.7 v 4.4e: Consumer Confidence (final): -14.2 v -14.2 advance.

- 05:00 (IT) Italy Sept Industrial Sales M/M: +2.1% v -0.7% prior; Y/Y: +3.4% v -0.1% prior.

Fixed income issuance

(IT) Italy Debt Agency (Tesoro) sold total €5.5B vs. €4.5-5.5B indicated range in 5-year and 10-year BTP bonds.

(IT) Italy Debt Agency (Tesoro) sold €4.0B vs. €3.5-4.0B indicated range in new Apr 2035 Floating Rate Note (CCTeu).

Looking ahead

- (BR) Brazil Oct Central Govt Budget Balance (BRL): No est v -14.5B prior.

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

- 05:30 (BE) Belgium Nov CPI M/M: No est v 0.4% prior; Y/Y: No est v 2.0% prior.

- 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 (CZ) Czech Republic to sell CZK5.0B in 12-month bills; Avg Yield: % v 3.430% prior; bid-to-cover: x v 1.83x prior (Nov 13th 2025).

- 06:00 (BR) Brazil Nov FGV Inflation IGPM M/M:0.3%e v -0.4% prior; Y/Y: -0.1%e v 0.9% prior.

- 07:00 (MX) Mexico Oct Trade Balance: -$0.5Be v -$2.4B prior; Exports: No est v $56.5B prior; Imports: No est v $58.9B prior.

- 07:30 (EU) ECB Oct Minutes.

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

- 08:00 (RU) Russia Nov Gold and Forex Reserve w/e Nov 21st: No est v $734.1B prior.

- 08:30 (CA) Canada Q3 Current Account Balance: -$15.4Be v -$21.2B prior.

- 16:00 (NZ) New Zealand Nov ANZ Consumer Confidence Index: No est v 92.4 prior.

- 16:45 (NZ) New Zealand Oct Filled Jobs M/M: No est v 0.3% prior.

- 18:00 (KR) South Korea Oct Industrial Production M/M: +0.3%e v -1.2% prior; Y/Y: -0.6%e v +11.6% prior; Cyclical Leading Index Change: No est v 0.1 prior.

- 18:30 (JP) Japan Oct Jobless Rate: 2.5%e v 2.6% prior; Job-To-Applicant Ratio: 1.20et v 1.20 prior.

- 18:30 (JP) Japan Nov Tokyo CPI Y/Y: 2.7%e v 2.8% prior; CPI (ex-fresh food) Y/Y: 2.7%e v 2.8% prior; CPI (ex-fresh food/energy) Y/Y: 2.8%e v 2.8% prior.

- 18:50 (JP) Japan Oct Retail Sales M/M: 0.8%e v 0.0% prior (revised from 0.3%); Y/Y: 0.8%e v 0.2% prior (revised from 0.5%);; Dept. Store, Supermarket Sales Y/Y: No est v 1.9% prior.

- 18:50 (JP) Japan Oct Preliminary Industrial Production M/M: -0.6%e v +2.6% prior; Y/Y: -0.5%e v +3.8% prior.

- 19:01 (UK) Nov Lloyds Business Barometer: 47e v 50 prior; Own Price Expectations: No est v 63 prior.

- 19:30 (AU) Australia Oct Private Sector Credit M/M: 0.6%e v 0.6% prior; Y/Y: No est v 7.3% prior.

- 20:00 (PH) Philippines Oct Trade Balance: -$4.4Be v -$4.4B prior; Exports Y/Y: 14.2%e v 15.9% prior; Imports Y/Y: -5.3%e v +2.1% prior.

- 21:00 (SG) Singapore Oct M2 Money Supply Y/Y: No est v 8.5% prior; M1 Money Supply Y/Y: No est v 11.9% prior.

- 22:30 (JP) Japan to sell 3-month bills.

- 22:35 (JP) Japan to sell 2-year JGB bonds.

- 23:00 (TH) Thailand Oct ISIC Manufacturing Production Index Y/Y: -0.6%e v +1.0% prior; Capacity Utilization: No est v 58.13 prior.