• European bourses & US futures are essentially unchanged, with price action & newsflow limited post-Thanksgiving
• DXY tilts lower with GBP bid as UK yields rise, NZD underpinned by retail data while EUR was largely unreactive to Ifo
• EGBs & USTs continue to slump with supply-side dynamics in play
• Commodities await any fresh OPEC and/or geopolitical updates, the latter following the Israel-Hamas truce commencing
• Looking ahead, highlights include Canadian Retail Sales, US PMI (Flash), Speeches from ECB’s de Cos & de Guindos. Early Market Closures in the US Post-Thanksgiving.

EUROPEAN TRADE

EQUITIES

• European bourses are essentially unchanged with newsflow very light post-Thanksgiving, Euro Stoxx 50 +0.1%
• Sectors are mixed but similarly contained with incremental outperformance in defensively-biased names at times while Auto names lag after broker activity.
• Stateside, futures are similarly contained on Black Friday with developments light aside from NVDA ahead of US Flash PMIs.
• Nvidia (NVDA) has reportedly informed customers that it is delaying the launch of the China-targeted H20 AI chip until Q1 2024 with the delay due to issues server manufacturers are having integrating the H20 chip, according to Reuters sources. -2.3% in -pre-market trade
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FX

• Dollar drifts sideways pre-flash US PMIs, with DXY restrained between 103.84-62 parameters.
• Pound perky amidst elevated UK yields as Cable eclipses recent peaks, at 1.2565, and EUR/GBP probes 50 DMA.
• Kiwi underpinned as NZ retail sales defy consensus for a fall and coalition government is formed, NZD/USD 0.6050+ and AUD/NZD cross sub-1.0850.
• Euro remains capped by expiries close to 1.0900 vs the Greenback and the Yen is hampered by higher Treasury yields as USD/JPY pivots 149.50.
• Loonie straddles 1.3700 awaiting Canadian retail sales.
• PBoC set USD/CNY mid-point at 7.1151 vs exp. 7.1440 (prev. 7.1212)
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FIXED INCOME

• Debt futures flogged on Black Friday and only enticing buyers at fresh weekly lows.
• Bunds towards the bottom of 130.11-63 range, with technical and psychological support at 130.00.
• Gilts midway between 96.07-71 parameters and T-note closer to 108-12 than 108-31 ahead of preliminary US PMIs.
• German Finance Minister Lindner says will put to Cabinet the supplementary budget for 2023 next week; says can only decide about 2024 budget once the country has a supplementary budget for 2023.. Prior to this: Germany is to suspend borrowing limit for 2023 (fourth consecutive year) after the budget ruling; German Finance Minister Lindner is to announce debt brake suspension on Thursday, according to Bloomberg.
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COMMODITIES

• WTI and Brent January futures trade horizontally but show a mismatch in intraday price changes amid the lack of settlement.
• Spot gold is flat intraday and just under the USD 2k/oz mark with base metals similarly uneventful given the non-committal tone thus far.
• Volumes remain light with newsflow similarly sparse after initial OPEC+ sources alongside the commencement of the Israel-Hamas four-day truce.
• OPEC+ is moving closer towards a compromise with African oil producers, according to Reuters citing two OPEC+ sources.
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NOTABLE HEADLINES

• BoE's Pill said the challenge for the Bank and other central banks is that headline inflation is coming down, while he added that economic activity and employment growth are weakening and that the central bank cannot afford to ease off tight monetary policy. Pill stated that UK monetary policy is in a difficult phase and warned of stubbornly high price pressures in the British economy, as well as noted that the MPC had to resist the temptation to declare victory and move on from battle to quash inflation, according to FT.
• ECB's Villeroy said he doesn't think the ECB will raise rates again unless there is an unexpected event, while he noted that a gradual reduction in rates will come one day, but added that they are not there yet.
• ECB's Holzmann says the likelihood of another rate hike is not smaller than that of rate cuts; do still have high inflation numbers, via Die Presse; suggestion on PEPP would be that ECB reduces reinvestments step by step as of March.
• German Finance Minister Lindner confirmed the debt brake suspension for 2023 but added the suspension does not mean new debt.

DATA RECAP

• German Ifo Business Climate New (Nov) 87.3 vs. Exp. 87.5 (Prev. 86.9); Current Conditions New (Nov) 89.4 vs. Exp. 89.5 (Prev. 89.2)
• German Ifo Expectations New (Nov) 85.2 vs. Exp. 85.7 (Prev. 84.7, Rev 84.8); Court ruling on debt brake had no visible effect on the survey.
• Ifo President says the German economy is stabilising and maybe growing slightly; Germany is probably past the worst of the downturn; the worst case for the budget situation would be a recession, via Bloomberg TV.
• UK GfK Consumer Confidence (Nov) -24 vs. Exp. -28 (Prev. -30)

GEOPOLITICS

• A four-day truce in the Israel-Hamas war took effect at 7:00 am local time (05:00 GMT) on Friday, with hostages held in the Gaza Strip set to be released later in the day in exchange for Palestinian prisoners, according to AFP.
• Israel’s military said achieving control over the northern half of Gaza is only the first stage in the campaign to destroy Hamas, while they are preparing for the next stages and are looking forward in the coming days in which they will focus on planning and fulfilling the next stages of the war, according to Reuters.
• Israeli military sounded sirens in two villages near Gaza warning of possible rocket launches despite the touted start of the truce.
• Hamas’ armed wing spokesperson called for an escalation of the confrontation with Israel on all resistance fronts.
• An Israeli government official has told LBC News there is scope to extend a four-day pause in fighting with Hamas; The first set of civilians held captive by Hamas are expected to be freed from Gaza this afternoon.
• "3 Palestinians injured in IDF shooting at civilians trying to return to the northern Gaza Strip", according to Al Jazeera - DETAILS LIGHT (08:25GMT/03:25EST).
• Taiwan's Defence Ministry said an Australian warship sailed through the Taiwan Strait.
• The White House is reportedly concerned that the UK's Rwanda plan undermines the Good Friday agreement in Northern Ireland, according to The Times.
• Russia's Kremlin says the idea of creating a military Schengen zone in Europe to allow NATO forces to freely move around is a cause for concern; Russia will respond if such a zone becomes a reality.

CRYPTO

• Celsius revamp plan hits speed bump with SEC; US SEC wants more information about the assets of the former crypto lender which is reorganizing through bankruptcy, according to CoinDesk sources.

APAC TRADE

• APAC stocks traded mixed in the absence of a lead from Wall St and as markets headed into the start of the Israel-Hamas truce.
• ASX 200 was led higher by strength in utilities, financials and the energy sector albeit with gains capped by tech weakness and after an Australian warship sailed through the Taiwan Strait which risks stoking frictions between Australia and its largest trading partner.
• Nikkei 225 outperformed on return from its holiday closure as participants digest data releases including national CPI which printed softer than expected although mostly accelerated from the previous month.
• Hang Seng and Shanghai Comp were pressured despite the lack of obvious catalysts, while PBoC liquidity efforts and news that China is mulling unprecedented support for the property sector by allowing banks to offer unsecured short-term loans to qualified developers have failed to support the risk tone.

NOTABLE HEADLINES

• WHO held talks with Chinese health authorities in which requested data on the upsurge of respiratory illnesses among children in northern China was provided and no changes in the disease presentation were reported by Chinese health authorities. Furthermore, Chinese health authorities said the rise in respiratory illness has not resulted in patient loads exceeding hospital capacities and there has been no detection of unusual or novel pathogens or unusual clinical presentations including in Beijing and Liaoning.
• Chinese Premier Li met with the French Foreign Minister in Beijing and said that China and France's relationship is developing better in all aspects this year, according to Reuters.
• US Navy operations chief is excited by prospects of improved communications with the Chinese military and said work is needed to solidify the next steps with the Chinese military, according to Reuters.
• New Zealand's National, NZ First and ACT parties signed a coalition agreement to form a government with Winston Peters appointed as Deputy PM for the first half of the three-year parliamentary term and David Seymour to be Deputy PM in the second half, while Nicola Willis is to be appointed as Finance Minister. Furthermore, incoming PM Luxon said the Reserve Bank Act will be amended to focus monetary policy on price stability and the incoming government's policy includes repealing the ban on offshore oil and gas exploration.

DATA RECAP

• Japanese National CPI YY (Oct) 3.3% vs. Exp. 3.4% (Prev. 3.0%); Ex. Fresh Food 2.9% vs. Exp. 3.0% (Prev. 2.8%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Oct) 4.0% vs. Exp. 4.1% (Prev. 4.2%)
• Japanese Manufacturing PMI Flash (Nov) 48.1 (Prev. 48.7); Services 51.7 (Prev. 51.6); Composite 50.0 (Prev. 50.5)