• European bourses are little changed overall but do feature a slim positive skew, Euro Stoxx 50 +0.1%, pre-NFP; US futures similarly contained
• DXY maintains its recovery momentum ahead of the US agenda with the index up to a 105.52 peak at best, with JPY taking the brunt of this.
• EGBs experienced modest but ultimately fleeting downside in wake of hot core/super-core EZ inflation, though the benchmarks are little changed overall pre-NFP
• Crude benchmarks are firmer, but have been subject to two-way price action throughout the morning which has been directionally in-fitting with but slightly more pronounced than equity action.
• Looking ahead, highlights include US and Canadian Labour Market Reports, US ISM Services PMI, speeches from Fed's Bostic, Cook, Barkin.

EUROPEAN TRADE

EQUITIES

• European bourses are little changed overall but do feature a slim positive skew, Euro Stoxx 50 +0.1%, pre-NFP.
• US futures are similarly contained with modest divergence around the unchanged mark, ES +0.1%, with attention on the NFP print, subsequent ISM Services PMI and Fed speak thereafter.
• Tesla (TSLA) to cut Model 3 & Y prices in China, Japan and South Korea according to reports. Subsequent Reuters sources state price cuts outside of China are being done with a view to support plant output.
• Citi (C) equity updates: cuts US to Underweight, raises continental-Europe to Overweight, raises Australia to Neutral.
• Click here for more detail.

FX

• DXY maintains its recovery momentum ahead of the US agenda with the index up to a 105.52 peak at best.
• Though, it has slipped a touch from this in wake of hotter-than-expected core EZ inflation, sending EUR/USD more comfortably above 1.05, though shy of initial best levels.
• JPY has taken the brunt of the USD's resurgence amid reports that the BoJ sees little need for further hasty YCC tweaks, with USD/JPY surpassing 134.50.
• More broadly, peers are down across the board vs the USD, though to varying degrees with the overall tone somewhat tentative pre-NFP.
• PBoC set USD/CNY mid-point at 6.8912 vs exp. 6.8914 (prev. 6.8926)
• Click here for more detail.

Notable FX Expiries, NY Cut:

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FIXED INCOME

• Bunds experienced modest but ultimately fleeting downside in wake of the hot core/super-core EZ inflation print, sending the German benchmark to a 135.74 low.
• Albeit, the move pared back in short order with EGBs and USTs lower to the tune of around 10/15 and 5 ticks respectively ahead of the PM agenda.
• Australian government cuts FY22/23 bond issuance by AUD 10bln vs original plans, according to reports.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are firmer, but have been subject to two-way price action throughout the morning which has been directionally in-fitting with but slightly more pronounced than equity action.
• Currently, WTI Feb’23 and Brent Mar’23 are posting gains just shy of 1.0% as the upside stalled a touch around USD 0.30/bbl shy of the USD 75/bbl and USD 80/bbl handles respectively.
• China Energy has reportedly placed an order for Australian coal - among the first deals since the 2020 unofficial ban, according to Reuters sources.
• Spot gold is modestly firmer though is yet to recoup all of the marked downside seen in yesterday’s session, which saw the yellow metal surrender the USD 1850/oz handle.
• Click here for more detail.

NOTABLE HEADLINES

• German Chancellor Scholz to invite the auto industry for talks on Tuesday, to discuss supply chains, mobility and climate.

NOTABLE DATA

• EU HICP Flash YY (Dec) 9.2% vs. Exp. 9.7% (Prev. 10.1%); Ex-Food & Energy Flash YY (Dec) 6.9% vs. Exp. 6.5% (Prev. 6.6%); Ex-Food, Energy, Alcohol & Tobacco Flash YY (Dec) 5.2% vs. Exp. 5.0% (Prev. 5.0%).
• EU Consumer Confidence Final (Dec) -22.2 vs. Exp. -22.2 (Prev. -22.2)
• EU Economic Sentiment (Dec) 95.8 vs. Exp. 94.7 (Prev. 93.7, Rev. 94.0); Consumer Inflation Expectations (Dec) 23.7 (Prev. 30.1, Rev. 29.9); Selling Price Expectations (Dec) 38.4 (Prev. 40.4)
• German Retail Sales MM Real (Nov) 1.1% vs. Exp. 1.0% (Prev. -2.8%); YY Real (Nov) -5.9% (Prev. -5.0%)
• German Industrial Orders MM (Nov) -5.3% vs. Exp. -0.5% (Prev. 0.8%, Rev. 0.6%)
• UK Halifax House Prices MM (Dec) -1.5% (Prev. -2.3%, Rev. -2.4%)

NOTABLE US HEADLINES

• US House voted to adjourn until noon Friday after failing to elect a House Speaker.
• A source close to Republican McCarthy confirmed a deal is on the table. It will not be enough to take him over the line, according to Reuters' Slattery.
• Tesla (TSLA) cut prices in China for Model 3 by 13.5% and Model Y by 10%.
• Click here for the US Early Morning note.

GEOPOLITICS

• US and Japan to hold security talks in Washington on January 11th, according to Bloomberg.
• Russian State TV says the ceasefire has come into force along the entire front in Ukraine; in-fitting with the order from President Putin.
• Turkish Defence Minister says Greece is carrying out acts of incitement against us, and we did not get a positive response from them regarding the establishment of a dialogue, via AJ Breaking.

CRYPTO

• Bitcoin is little changed overall and currently resides towards the lower end of a contained sub-USD 200 range.

APAC TRADE

• APAC stocks traded mostly with cautious gains despite a negative lead from Wall Street, and ahead of the US labour market data.
• ASX 200 saw gains across the Metals, Mining and Resources names, but the upside was capped by the Healthcare and Tech sectors.
• Nikkei 225 briefly topped the 26k level whilst the banking sector underperformed after Thursday’s sectoral outperformance.
• Hang Seng and Shanghai Comp were firmer with the former initially bolstered by property names, with source reports from Bloomberg flagging further housing market easing measures, although the earlier gains faded throughout the session.

NOTABLE ASIA-PAC HEADLINES

• BoJ reportedly sees little need to rush major yield adjustments, according to Bloomberg sources
• BoJ to conduct emergency bond buying for 5yr and 10yr maturities, according to Reuters.
• China could ease "three red lines" property rules in a major shift, according to Bloomberg sources. It will allow some property firms to add more leverage, and it pushes back the grace period for meeting debt targets, whilst deadlines may be extended by at least six months.
• PBoC drained a net CNY 1.6tln for the week via OMO - the largest weekly net cash withdrawal on record, according to Reuters.
• PBoC injected CNY 2bln via 7-day reverse repos with the rate maintained at 2.00%; daily net drain CNY 384bln
• Samsung Electronics (005930 KS) Prelim Q4 (KRW): Revenue 70tln (exp. 71tln), Operating Profit 4.3tln (exp. 5.9tln, BBG exp. 6.65tln); Memory chip demand fell more than expected in Q4 amid clients' concerns on consumer sentiment. Smartphone sales fell in Q4 due to demand weakness from macro issues. Price of memory chips fell continuously in Q4 due to chipmakers' increased inventory, according to Reuters.
• China has released the 10th edition of COVID prevention and control protocols, will further optimise clinical catergorisation and treatment method. Adds positive antigen tests as a diagnostic standard.
• Evergrande (3333 HK) to hold a meeting with offshore bondholders on Wednesday, to discuss debt restructuring proposals, via Reuters citing sources.

DATA RECAP

• Japanese Real Cash Earnings (Nov) -3.8% vs Exp. -2.8%; fastest Y/Y fall since May 2014
• Japanese Overtime Pay (Nov) 5.2% (Prev. 7.9%)
• Japanese Services PMI (Dec F) 51.1 (Prelim. 51.7); Composite 49.7 (Prelim. 50.0)