Yields in focus as Fed's expected 25bps rate cut and BoJ's 25bps rate hike highlight diverging policies

Notes/observations

- Global equities mixed but cautious on light volume as markets brace for Wed’s Fed decision; 87% odds of 25bps cut, but dot plot and Powell tone eyed for 2025 pace.

- Nvidia is >2% in premarket after confirmed H200 China exports.

- Bitcoin dipped marginally to ~$90K as easing uncertainty offsets the Hashkey IPO buzz.

- French National Assembly is voting today on the 2026 Social Security financing bill (PLFSS), with the outcome remains uncertain and major political stakes for PM Lecornu. Socialist leader Olivier Faure and former president François Hollande are urging the left to vote in favor, while Horizons is being pushed by Édouard Philippe to abstain, and the Ecologists have announced they will not vote “for” the text.

- UK gilt curve softening after BOE’s Taylor flagged inflation nearing target soon; 10-year yield at 4.54%; 2032 gilt auction had strong BTC at 4.35x

- BOJ rate hike odds have slipped below 90%, ahead of decision end of next week. Japan Fin Min notes monitoring bond moves; The 5-year JGB auction was solid with >3x BTC.

- Trump is warning that if the Supreme Court curbs his tariff authority, it would be "the biggest threat in history" to U.S. national security, leaving the country "financially defenseless," especially while Europe moves to slap tariffs on China. He frames existing tariffs as the reason the U.S. is now the "financially strongest" country and suggests that only "dark and sinister forces" would want the Court to undermine that tool.

- WSJ reports that after this week’s planned GPT-5.2 release, OpenAI is already targeting another model launch in January 2026 with stronger image generation, faster responses and a “better personality,” which leadership hopes will finally end the internal “code red” phase.

- Notable Corp News: Thyssenkrupp down ~10% after weak FY26 guidance against estimates; Ashtead launched fresh $1.5B buyback; Moonpig ~5% higher after H1 results with core brand strength; Man Group up on expected performance-fee tailwind from fund recovery.

- Asia closed mixed with Hang Seng underperforming -1.3%. EU indices -0.3% to +0.4%. US futures mixed%. Gold +0.4%, DXY -0.2%; Commodity: Brent +0.2%, WTI +0.2%; Crypto: BTC -2.1%, ETH -1.8%.

Asia

- Australia Nov NAB Business Confidence: 1 v 6 prior;

- Reserve Bank of Australia (RBA) left Cash Rate Target unchanged at 3.60% (as expected). Decision to hold was unanimous. Statement noted that recent data suggested the risks to inflation had tilted to the upside, but it would take a little longer to assess the persistence of inflationary pressures.

- BOJ Gov Ueda testified in Parliament that long-term bond yields should be determined by the market; Would make appropriate decision at December meeting.

- Japan Fin Min Katayama said she is closely monitoring developments in the bond market, and will enhance dialogue with bond market players.

- Bank of Korea today held its first bond purchase since 2022 in order to "stabilize rising rates".

Europe

- UK Nov BRC Sales Like-For-Like Y/Y: 1.2% v 2.5%e.

- BOE's Taylor (dovish dissenter): Foot still on the brake a bit still, but I see us achieving inflation target in near term; Wage and services inflation coming down.

Americas

Trade:

- Trump said he was considering “very severe” tariffs on imports of fertilizer from Canada.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.02% at 578.26, FTSE -0.07% at 9,637.90, DAX +0.33% at 24,134.19, CAC-40 -0.43% at 8,073.78, IBEX-35 -0.12% at 16,691.99, FTSE MIB +0.44% at 43,622.00, SMI -0.13% at 12,966.60, S&P 500 Futures +0.02%].

Market Focal Points/Key Themes: European indices opened generally higher; financials, industrials; real health; defense subsector outperforming following approval of German budget;

Equities

- Consumer staples: British American Tobacco [BATS.UK] -4.0% (trading update).

- Financials: Ashtead Group [SHT.UK] -1.5% (earnings).

- Industrials: Rheinmetall [RHM.DE] +4.5% (Germany said to approve record €52B in military orders), Renault [RNO.FR] +0.5% (partnership with Ford), Thyssenkrupp [TKA.DE] -9.5% (earnings; initial guidance).

- Technology: Restore [RST.UK] +8.0% (trading update; divestment).

Speakers

- Pres. Trump posted on social media that the biggest threat in history to United States National Security would be a negative decision on Tariffs by the U.S. Supreme Court. We would be financially defenseless. Now Europe was going to Tariffs against China, as they already did against others. We would not be allowed to do what others already do!.
China MOFCOM commented on US allowing Nvidia H200 chips to China, China always believed US and China should achieve mutual benefits through cooperation.

- Japan BOJ Gov Ueda: Expected domestic economy to get back to growth in Q4 and beyond that. To keep adjusting easing level until prices were sustainable. Not seeing very high risk of too much inflation at present. Tight labor market to put upward pressure on wages. Watching impact of food inflation and FX on price trend.

Currencies/fixed income

- USD put in a mixed performance in a quiet EU session. Dealers focusing on the Fed rate decision on Wed.

- USD/JPY moved above the 156 level as dealers take caution on the Japanese stimulus and its impact on debt levels for the country.

- EUR/USD steady at 1.1650. ECB futures now price ~60% of 25bps rate hike by ECB by May 2027 following recent hawkish speak by ECB members.

- Global bond yields remain on the upward path as global govt debate the issue of to spend or not to spend. The question begs of forthcoming fears of a fiscal unraveling.

- 10-year German Bund yield at 2.85%, France 10-year Oat at 3.58% and 10-year Gilt yield at 4.50% 10-year Treasury yield: 4.15%.

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 Nov CPI M/M: -0.8% v +0.3% prior; Y/Y (final): 2.9% v 2.9% prelim.

-(NL) Netherlands Nov Final CPI EU Harmonized M/M: -1.4%v -1.4% prelim; Y/Y: 2.6% v 2.6% prelim.

- (NL) Netherlands Oct Consumer Spending Y/Y: 0.8% v 0.8% prior.

- (DE) Germany Oct Trade Balance: €16.9B v €15.7Be; Exports M/M: 0.1% v 0.2%e; Imports M/M: -1.2% v -0.5%e.

- (NO) Norway Nov PPI (including Oi) M/M: 2.0% v 0.1% prior; Y/Y: -8.1% v -6.9% prior.

- (DK) Denmark Oct Current Account Balance (DKK): 32.9B v 38.9B prior.

- (HU) Hungary Nov CPI M/M: 0.1% v 0.1%e; Y/Y: 3.8% v 3.9%e.

- (ZA) South Africa Q4 BER Consumer Confidence: -9 v -13 prior.

- (TW) Taiwan Nov Trade Balance: $16.1B v $19.4Be; Exports Y/Y: 56.0% v 42.1%e; Imports Y/Y: 44.9% v 16.7%e.

- (CZ) Czech Nov International Reserves: $172.6B v $171.9B prior.

- (GR) Greece Nov CPI Y/Y: 2.4% v 2.0% prior; CPI EU Harmonized Y/Y: 2.8% v 1.6% prior.

Fixed income issuance

- (ID) Indonesia sold total IDR8.0T vs. IDR7.0T target in Islamic bills and bonds (sukuk).

- (ES) Spain Debt Agency (Tesoro) sold total €2.256B vs. €2.0-3.0B indicated range in 3-month and 9-month bills.

- (ZA) South Africa sold total ZAR3.0B vs. ZAR3.0B indicated in 2022, 2044 and 2048 bonds.

- (UK) DMO sold £750M in 4.25%$ Jun 2032 Gilts via tender; Avg Yield: 4.109% v 4.206% prior; bid-to-cover: 4.35x v 3,72x prior; Tail: 0.4BPS vs. 0.2bps prior.

- (AT) Austria Debt Agency (AFFA) sold €B vs. €575M indicated in 2.8% Sept 2032 RAGB Bonds; Avg Yield: 2.807%; bid-to-cover: 2.39x.

Looking ahead

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

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €8.961 with 45 bids recd).

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

- 06:00 (US) Nov NFIB Small Business Optimism: 98.3e v 98.2 prior.

- 06:30 (CL) Chile Nov Trade Balance: $1.6Be v $1.4B prior; Exports: No est v $9.4B prior; Imports: No est v $8.0B prior; Copper Exports: No est v $5.0B prior.

- 06:30 (CL) Chile Nov International Reserves: No est v $48.0B prior.

- 06:30 (TR) Turkey to sell Bonds.

- 06:30 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (MX) Mexico Nov CPI M/M: 0.6%e v 0.4% prior; Y/Y: 3.7%e v 3.6% prior.

- 07:00 (MX) Mexico Nov CPI Core M/M: 0.1%e v 0.3% prior; Y/Y: 4.3%e v 4.3% prior.

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

- 08:30 (UR) Ukraine Nov CPI M/M: No est v 0.9% prior; Y/Y: 9.8%e v 10.9% prior.

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

- 09:15 (YK) BOE’s Lombardelli.

- 10:00 (US) Oct & Sept JOLTS Jobs Opening: 7.150Me.

- 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report.

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

- 13:00 (US) Treasury to sell 10-year Notes Reopening.

- 14:00 (AR) Argentina Oct Industrial Production Y/Y: No est v -0.7% prior; Construction Activity Y/Y: No est v 6.8% prior.

- 14:10 (NZ) RBNZ Gov Breman.

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

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

- 18:50 (JP) Japan Nov PPI (domestic CGPI) M/M: 0.3%e v 0.4% prior; Y/Y: 2.7%e v 2.7% prior.

- 20:00 (PH) Philippines Oct Unemployment Rate: No est v 3.8% prior.

- 20:30 (CN) China Nov CPI Y/Y: 0.7%e v 0.2% prior; PPI Y/Y: -2.0%e v -2.1% prior.

- 22:00 (KR) South Korea Nov Total Bank Lending To Household (KRW): No est v 1,173.7T prior.