• European bourses have eked out a marginal extension of their initial upside, Euro Stoxx 50 +0.9%, with both newsflow and the schedule ahead sparse.
• ES +0.6%; post-earnings NKE +12.5% & FDX +4.8%
• DXY has managed to attain an incremental foothold at 104.00, with peers ex-NZD generally contained in tight ranges.
• An early recovery bounce has seemingly run out of steam ahead of US 20yr supply, with Bunds and Gilts fading from respective 136.00+ and 101.50+ peaks.
• Commodities are contained, though crude benchmarks extended to fresh incremental peaks amid Russian Defense Ministry commentary
• Looking ahead, highlights include US MBA Mortgage Applications, Canadian CPI, CNB Decision, Supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses have eked out a marginal extension of their initial upside, Euro Stoxx 50 +0.9%, with both newsflow and the schedule ahead sparse.
• Sectors are firmer across the board, with outperformance in Retail post-Nike and in Real Estate after recent pronounced pressure.
• Stateside, futures are similarly bid, ES +0.6%, with specific ex-corporate updates focused on gov't funding & Ukraine.
• FedEx (FDX) Q2 23 (USD): Adj. EPS 3.18 (exp. 2.80), Revenue 22.8bln (exp. 23.7bln). FY23 capex view cut by 400mln to 5.9bln. Cost reduction initiatives accelerated, identifies additional 1bln above Sept. forecast. Weak profit guidance.
• Nike Inc (NKE) Q3 2022 (USD): EPS 0.85 (exp. 0.65), Revenue 13.32bln (exp. 12.57bln). North America 5.83bln (exp. 5.35bln). Greater China 1.79bln (1.81bln). Executive expects FY revenue to grow in the low teens in constant currency (prev. low double-digit growth); expects around 700bps of FX headwinds. Executive says North American Black Friday and Cyber Week performance set highs for demand and traffic; in Greater China, demand grew mid-teens outpacing the sports industry.
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FX

• DXY has managed to attain an incremental foothold at 104.00, with peers generally contained in tight ranges given the limited newsflow.
• However, NZD is the stand-out laggard and below 0.63 after poor domestic data.
• JPY has finally run out of impetus and USD/JPY has paused for breath towards the lower-end of 131.51-132.36 parameters.
• EUR, CHF and CAD all reside in sub 50-pip ranges at present.
• While GBP is marginally softer after the ONS reported the highest borrowing requirement for November on record.
• PBoC set USD/CNY mid-point at 6.9650 vs exp. 6.9644 (prev. 6.9861)
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• An early recovery bounce has seemingly run out of steam ahead of US 20yr supply, with Bunds and Gilts fading from respective 136.00+ and 101.50+ peaks.
• Stateside, USTs are directionally in-fitting and similarly contained pre-supply, the curve is steepening slightly but with yields mixed.
• BoJ unscheduled operation: offered to buy JPY 100bln in 3-5yr JGBs and JPY 100bln in 5-10yr JGBs, according to Reuters.
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COMMODITIES

• A contained session for the crude complex, with the benchmarks within sub-USD 2/bbl parameters in limited newsflow.
• A modest extension to fresh peaks occurred in proximity to commentary from the Russian Defence Ministry that oil tanks were destroyed in Kharvic, Ukraine.
• US Private Inventories (bbls): Crude -3.1mln (exp. -1.7mln), Cushing +0.84mln, Gasoline +4.5mln (exp. +2.1mln). Distillate +0.828mln (exp. +0.3mln).
• Indonesia is to ban the export of bauxite from June 2023; a move to encourage the development of onshore bauxite processing, according to the Indonesian President, according to Reuters.
• Russia decreased oil exports by 11% M/M between Dec 1-20th, according to Kommersant.
• India has imposed anti-dumping duty on stainless steel tubes and pipe imports from China for five years, according to a government notification.
• Spot gold is little changed overall but has experienced some very modest pressure as the DXY continues to scramble for a foothold at 104.00 and broader equity/crude upside advances somewhat from initial levels.
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NOTABLE DATA

• UK Lloyds Business Barometer (Dec) 17 (Prev. 10).
• UK PSNB, GBP (Nov) 21.196B GB (Prev. 12.728B GB); highest borrowing for November on record.
• UK PSNB Ex Banks GBP (Nov) 22.017B GB vs. Exp. 13.0B GB (Prev. 13.549B GB, Rev. 14.194B GB); PSNCR, GBP (Nov) 20.336B GB (Prev. 9.732B GB)

NOTABLE US HEADLINES

• US Senate's USD 1.66tln government funding bill has secured enough support to advance in the first procedural vote, according to Reuters.
• Tesla (TSLA) CEO Musk said he will resign as Twitter CEO as soon as he finds a replacement, and after that, he will just run the software and servers teams, via Twitter.

GEOPOLITICS

• Naval exercises of Russia and China with practical rocket and artillery firing will start in the East China Sea on Wednesday, according to Interfax.
• IAEA Chief Grossi is to visit Russia on Thursday, according to a Russian diplomat.

CRYPTO

• Bitcoin is essentially unchanged and has been meandering between sub-USD 300 parameters throughout the morning.

APAC TRADE

EQUITIES

• APAC stocks eventually traded mixed following a mostly positive lead from Wall Street and with news flow on the quieter side.
• ASX 200 outperformed and was lifted by gains across gold miners after the yellow metal topped USD 1,800/oz.
• Nikkei 225 remained pressured by the recent JPY strengthening, whilst the region overlooked reports that Japan maintained its overall economic view in December.
• Hang Seng and Shanghai Comp gave up earlier gains but remained within tight parameters

NOTABLE ASIA-PAC HEADLINES

• China reported zero new COVID deaths in the mainland on Dec 20th vs five a day earlier; reported 3,101 new COVID cases in the mainland on Dec 20th vs 2,722 a day earlier.
• "China will no longer take measures to isolate people from overseas and go to isolation facilities from January 3, 2023" according to HKSTV; "The policy optimized to 0+3 also means that China will fully open up from 2023 in the new year."
• China's Foreign Ministry says, on their plan to improve quarantine for overseas travellers, they will provide more convenience when appropriate.
• PBoC injected CNY 19bln via 7-day reverse repos with the rate maintained at 2.00%; injects CNY 141bln via 14-day reverse repos with the rate maintained at 2.15%; daily net injection CNY 158bln.
• China State Planner is holding a meeting to study measures to deal with excessive hog price decline, according to Reuters.
• Japanese Foreign Minister Hayashi is to delay his trip to China to late-January or later, according to TV Asahi.
• Japan maintained its overall economic view in December; the economy is recovering moderately, said Japan needs to pay close attention to China's COVID situation, via Reuters.
• Japanese Economy Minister Goto acknowledged that the BoJ's Tuesday decision was not meant to be a tweak or exit from monetary policy, according to Reuters.
• IMF said the BoJ's YCC tweak is "a sensible step", according to Reuters.
• Japanese government to set assumed interest rate at a record low of 1.1% for compilation of FY23/24 budget, according to Reuters sources.
• South Korean Finance Minister sees 2023 GDP growth at 1.6% (vs 2022 estimate of 2.5%) and 2023 CPI growth at 3.5% (vs 2022 estimate of 5.1%), according to Reuters.

DATA RECAP

• New Zealand Consumer Confidence (Dec) 73.8 (prev. 80.7); Trade Balance (Nov) -14.63B (Prev. -12.88B, Rev. -13.86B)
• New Zealand Trade Balance (Nov) -1863M (Prev. -2129.0M, Rev. -2298M)
• New Zealand Imports (Nov) 8.54B (Prev. 8.27B, Rev. 8.26B); Exports (Nov) 6.68B (Prev. 6.14B, Rev. 5.96B)
• South Korea (Dec 1-20) Imports +1.9% Y/Y, Exports -8.8% Y/Y; Trade Balance USD -6.43bln, according to the Customs Agency.