• European bourses remain on a downward trajectory as the post-ECB slump continues with US futures similarly afflicted
• DXY has whipsawed within a 104.20-73 range, well within yesterday's bands, though an overall underlying USD bid has emerged
• EGBs continue to slide. With Bunds lower by over 150 ticks and the associated 10yr yield above 2.2% post-ECB.
• Crude benchmarks have succumbed to the above price action but remain someway above the existing WTD trough
• Looking ahead, highlights include US Flash PMIs, Quadruple Witching, Fed's Williams, Daly & Mester.
• Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses remains on a downward trajectory as the post-ECB slump continues, Euro Stoxx 50 -1.0%.
• Sectors were initially mixed but are now all underwater with Real Estate lagging giving the detrimental rate environment.
• Stateside, US futures are pressured in-line with the above price action and ahead of a handful of Fed speakers, ES -1.1%.
• Click here for more detail.

FX

• USD has whipsawed within a 104.20-73 range, well within yesterday's bands, though an overall underlying bid has emerged, with the DXY climbing to incremental new peaks on multiple occasions.
• Though, this action is capped by marked JPY upside given its traditional haven allure and post-data; USD/JPY down to 136.83 at worst.
• GBP impaired further post-BoE dissent on the USD's move and as the EUR proves comparably more resilient given the hawkish ECB; Cable to 1.2120 and EUR/USD holding above 1.06.
• Elsewhere, G10 peers are generally downbeat given the above narrative, though CAD has proven relatively resilient to the crude action.
• PBoC set USD/CNY mid-point at 6.9791 vs exp. 6.9844 (prev. 6.9343)
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0400-05 (1.97BN), 1.0425-30 (638M), 1.0450 (2.15BN), 1.0500 (2.11BN), 1.0520-25 (496M), 1.0550 (455M), 1.0600 (528M)
• Click here

FIXED INCOME

• EGBs continue to slide. With Bunds lower by over 150 ticks and the associated 10yr yield above 2.2% post-ECB.
• Gilts are pressured in-turn, though to a slightly lesser extent given the BoE's dovish dissenters.
• USTs are in the red, but with magnitudes much more contained and the curve steepening ahead of Fed speak and the region's PMIs.
• Click here for more detail.

COMMODITIES

• Currently, the crude benchmarks are posting losses in excess of 2.0%; though, WTI still has around USD 4.0/bbl of downside required to bring it back to the WTD low of USD 70.25/bbl which printed on Monday.
• Qatar Energy sells February Al-Shaheen crude at USD 1.30-1.50/bbl above Dubai quotes, according to sources.
• French President Macron said EU energy policy is likely to be finalised during the meeting on Monday, while it was separately reported that the Czech PM said EU leaders agreed the gas price cap deal must be done by Monday at the energy ministers' meeting, according to Reuters.
• ICE warned it may pull the gas market from the EU over the Brussels price cap, according to FT.
• Currently, Dutch TTF Jan’23 is lower by around 8% on the session, though seemingly found a floor around EUR 120/MWh.
• Panama's government ordered the suspension of operations at First Quantum Minerals' copper project.
• Spot gold and silver are experiencing some marked divergence with the yellow metal essentially unchanged, while silver has slipped by around 2% to the mid-USD 22/oz region
• Click here for more detail.

CENTRAL BANKS

• ECB's Villeroy says must not speculate on the number of interest rate rises, too early to talk about the terminal rate.
• ECB's Muller says rates are likely to increase by more than the market expects. Cannot rely on an economic slowdown to tame inflation.
• ECB's Rehn says rates need to rise significantly. Interest rates will still have to rise significantly to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target.
• ECB's Holzmann says inflation still poses a challenge, does not want to say where the terminal rate is, the hawkish statement is equivalent to a 75bp hike.
• Bundesbank: German recession now expected in 2023, downturn not seen severe. Click here for more detail.

NOTABLE DATA

• UK Retail Sales MM (Nov) -0.4% vs. Exp. 0.3% (Prev. 0.6%, Rev. 0.9%); YY (Nov) -5.9% vs. Exp. -5.6% (Prev. -6.1%, Rev. -5.9%)
• UK Retail Sales Ex-Fuel MM (Nov) -0.3% vs. Exp. 0.3% (Prev. 0.3%, Rev. 0.7%); YY* (Nov) -5.9% vs. Exp. -5.8% (Prev. -6.7%, Rev. -6.4%)
• UK GfK Consumer Confidence (Dec) -42 vs. Exp. -43.0 (Prev. -44.0)
• EU S&P Global Manufacturing Flash PMI (Dec) 47.8 vs. Exp. 47.1 (Prev. 47.1); Services Flash PMI (Dec) 49.1 vs. Exp. 48.5 (Prev. 48.5)
• EU S&P Global Composite Flash PMI (Dec) 48.8 vs. Exp. 48.0 (Prev. 47.8); "... December signals a strong possibility of recession, the survey also hints that any downturn will be milder than thought likely a few months ago."
• UK Flash Services PMI (Dec) 50.0 vs. Exp. 48.5 (Prev. 48.8); Manufacturing PMI (Dec) 44.7 vs. Exp. 46.3 (Prev. 46.5)
• UK Flash Composite PMI (Dec) 49.0 vs. Exp. 48.0 (Prev. 48.2); "... PMI indicating a 0.3% GDP contraction in the fourth quarter after the 0.2% decline seen in the three months to September".

NOTABLE US HEADLINES

• US Senate voted 71-19 to pass a week-long stopgap funding bill and avert a government shutdown ahead of a midnight Friday deadline which gets sent to President Biden to sign into law, according to Reuters.
• US Senate voted 83-11 to pass the USD 858bln Defence Authorisation Bill and sends the measure to President Biden for signing, according to Reuters.
• Click here for the US Early Morning Note.

GEOPOLITICS

• North Korean Leader Kim Jong Un guided a successful test of a 'high-thrust solid-fuel motor' at the satellite launching ground and the test was said to have provided a guarantee for the development of another new strategic weapon system, while Kim hopes the new-type strategic weapon would be made in the shortest span of time, according to KCNA.

CRYPTO

• HKEX (388 HK) welcomed Asia's first crypto assets ETFs after the listing of CSOP Bitcoin Futures ETF & CSOP Ether Futures ETF, according to Reuters.
• FTX is reportedly seeking permission to sell off LedgerX, Ember and its branches in Japan and Europe before they lose value and have their licences revoked, according to Cointelegraph.
• Kraken says "We are investigating reports from clients having difficulty connecting to the site and API as well as via mobile apps.".
• Binance reports that Mazars is to pause work for crypto clients, via Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks were pressured on spillover selling from global counterparts following the slew of central bank rate hikes and with markets also unnerved by a flurry of dismal US data releases.
• ASX 200 was lower with sentiment not helped by a deterioration in the latest Australian flash PMI data releases.
• Nikkei 225 underperformed after the ruling LDP tax panel agreed and provided details on the tax hike plan to boost the defence budget and with index-heavyweight Fast Retailing hit by the announcement of a 3-for-1 stock split.
• Hang Seng and Shanghai Comp lacked firm direction amid mixed headlines with some encouragement from reports related to US audits in which Chinese companies averted a delisting after the US was given full inspection access, while there was also a constructive tone in discussions between US Treasury Secretary Yellen and China's Ambassador to the US in which they agreed to step up coordination on trade and policies.

NOTABLE ASIA-PAC HEADLINES

• China National Health Commission issued a plan to step up COVID control and prevention in rural areas where it will strengthen reserves of essential drugs and COVID home test kits. China will also accelerate COVID vaccination of the rural population, especially among the elderly and said that people returning to their hometowns in rural areas should monitor their health and reduce contact with the elderly at home, according to Reuters.
• China's NDRC said the economy is facing more complex and grim external environments but added that the long-term positive trend hasn't changed and it approved CNY 1.5tln of major projects as of end-November. NDRC said China's economic growth is expected to continue picking up following the implementation of new COVID rules and that they will focus on stabilising growth, employment and prices, as well as speed up infrastructure project construction and expand effective investment, according to Reuters.
• China's securities regulator said it welcomes the US PCAOB decision on auditing and will continue supervision work on auditing in the future, while it will create a more stable regulatory environment with the US, according to Reuters.
• China's ambassador to the US met with US Treasury Secretary Yellen to discuss their views on global macroeconomic and financial developments, while it was reported that they agreed to step up coordination on trade and policies.
• Japan's government is to implement defence tax hikes in stages over multiple years to secure more than JPY 1tln by fiscal 2027, while it is to adopt a new corporate surtax of 4.0%-4.5% and will introduce a surtax of 1% on incomes for the time being. Furthermore, it is to raise the tobacco tax in stages by JPY 3 a piece and said it will implement defence taxation at an appropriate time from 2024 onwards, according to a draft by the ruling LDP cited by Reuters.

DATA RECAP

• Japanese Manufacturing PMI (Nov P) 48.8 (Prev. 49.0); Services PMI (Nov P) 51.7 (Prev. 50.3)
• Australian Manufacturing PMI Flash (Dec) 50.4 (Prev. 51.3); Services PMI Flash (Dec) 46.9 (Prev. 47.6)
• New Zealand Manufacturing PMI* (Nov) 47.4 (Prev. 49.3)