• European equities are on a weaker footing following a negative handover from the APAC session; whilst US futures are mixed with NQ holding in the green
• Dollar subdued with the Yen dominating as it benefits from higher JGB yields post BoJ Ueda
• BoJ Governor Ueda suggested that the “handling of monetary policy would get tougher from the end of the year”
• Crude attempts to nurse recent losses while precious metals are flat pre-data, base metals benefit from the Dollar pullback
• Bunds bounce on more weak Q4 data, BoE/Fed pricing eases slightly from extremes
• Looking ahead, highlights include US IJC, US Wholesale Sales, NZ Manufacturing Sales, Japanese Cash Earnings & GDP (Revised), Speech from ECB’s Elderson

EUROPEAN TRADE

EQUITIES

• European equities Eurostoxx50 (-0.3%) are on a weaker footing following a negative handover from the APAC session.
• European sectors have a heavy negative bias, though Utilities hold onto marginal gains; whilst Travel & Leisure is weighed on by Air France (-5.9%) and Lufthansa (-4.5%) amid broker downgrades. Additionally, Retail names are impacted to varying degrees amid research reports of shows that the named brands are at risk of sourcing products which have been made by Uyghurs forced to work in state-imposed labor transfer programs.
• US equity futures are mixed with specifics relatively light thus far; NQ (+0.2%) is holding onto gains ahead of US IJCs and Wholesale Sales.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• The broader Dollar and index are pressured in early European trade by a rampant Yen, with participants attributing the notable upside in the Japanese currency to a surge in JGB yields coupled with commentary from BoJ Governor Ueda.
• USD/JPY has now extended losses of around 1.8% bringing the price below the 145.00 level; down to a 144.55 trough.
• Both the EUR and GBP trade with modest gains against the Dollar and flat against each other, with the currencies failing to fully benefit from the Dollar’s pullback amid losses in EUR/JPY and GBP/JPY.
• AUD, NZD, CAD trade mixed with the NZD and CAD flat against the Dollar while the AUD narrowly outperforms as base metals attempt a recovery.
• PBoC set USD/CNY mid-point at 7.1176 vs exp. 7.1623 (prev. 7.1140).
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FIXED INCOME

• Déjà vu for Bunds with another data-driven uptick occurring at the start of the session lifting the contract above the 135.00 mark to a 135.77 high.
• Gilts and USTs are once again softer as recent pronounced dovish pricing eases incrementally ahead of US NFP (Fri), CPI (Tue) and then the FOMC/BoE next week.
• France sells EUR 4.99bln vs exp. EUR 4-5bln 2.75% 2027, 0.00% 2032, 1.25% 2034 OATs and 0.10% 2029 I/L OAT
• Spain sells EUR 2.93bln vs exp. EUR 2.5-3.5bln 0.60% 2029, 3.90% 2039 Bono and EUR 0.505bln vs. exp. 0.25-0.75bln 0.70% 2033 I/L
• BoE allots GBP 4bln of one-week funds in the short-term repo operation, a new record
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COMMODITIES

• WTI and Brent (+1.1%) are firmer intraday amid the pullback in the Dollar coupled with some corrective price action after yesterday’s slump.
• Spot gold tilts higher amid the softer Dollar but remains around recent ranges near USD 2,030/oz awaiting today’s US data ahead of Friday’s NFP; base metals also benefit from Dollar weakness.
• Russia's Kremlin spokesman said President Putin and Saudi Arabia's Crown Prince discussed OPEC+ cooperation which will continue, according to TASS.
• Kuwait supports the OPEC+ agreement and is committed to voluntary cuts, according to the state news agency.
• Algeria does not rule out extending voluntary oil cuts beyond Q1 or taking additional measures, according to the energy minister.
• Venezuela's PDVSA authorised loading for the first two crude cargoes bound for India following sanctions relief, which were sold by Eni (ENI IM) and Chevron (CVX) to Indian refiners.
• First Quantum (FM CA) Panama workers agreed to a severance package with the copper mine remaining halted with 10-20% of staff working, according to the union.
• Russian Kremlin: President Putin confirmed with Saudi's MBS the specific agreements reached at OPEC+
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NOTABLE EUROPEAN HEADLINES

• ECB's Villeroy reiterated that the issue of possible rate cuts could be raised in 2024 but not right now, while he also repeated that disinflation is happening quicker than expected.
• Reuters poll showed all 90 economists unanimously expect the ECB to keep the Deposit Rate at 4.00% at next week's meeting, while 51 out of 90 expect a rate cut by end-Q2 2024 and the rest forecast a cut in Q3 2024 or later.
• Reuters Poll, BoE: to hold the Bank Rate at 5.25% through Q2-2024 (same as the November poll); UK economy to expand 0.4% in 2024 and 1.2% in 2025 (same as November)
• Norges Bank Regional Network Report: enterprises expect annual wage growth of 5.45 (prev. 5.4%) in 2023 and 4.5% (prev. 4.6%) in 2024.
• French Finance Minister Le Maire says we are 90% in agreement with Germany on reform of the EU's stability and growth pact, but our red line is that incentive to invest and reform must be kept.
• EU Commission approves France's EUR 4.12bln scheme to develop additional offshore wind energy
• EU AI Act could exclude open-source models from regulation, via Reuters citing a proposal

DATA RECAP

• German Industrial Output MM (Oct) -0.4% vs. Exp. 0.2% (Prev. -1.4%); 3M/3M -1.9%
• EU GDP Revised QQ (Q3) -0.1% vs. Exp. -0.1% (Prev. -0.1%); YY (Q3) 0.0% vs. Exp. 0.1% (Prev. 0.1%)
• Italian Retail Sales SA MM (Oct) 0.4% (Prev. -0.3%); YY (Oct) 0.3% (Prev. 1.3%)
• EU Employment Final QQ (Q3) 0.2% vs. Exp. 0.3% (Prev. 0.3%, Rev. 0.1%); Final YY (Q3) 1.3% vs. Exp. 1.4% (Prev. 1.4%)
• French Trade Balance, EUR, SA (Oct) -8.597B (Prev. -8.917B, Rev. -8.867B); French Exports 49.671B (Prev. 49.132B, Rev. 49.077B); French Imports 58.268B (Prev. 58.048B, Rev. 57.944B)
• Italian Industrial Output YY WDA (Oct) -1.1% (Prev. -2.0%); MM SA (Oct) -0.2% vs. Exp. -0.3% (Rev. 0.1%)
• UK Halifax House Prices MM (Nov) 0.5% (Prev. 1.1%); YY -1.00% (Prev. -3.20%, Rev. -3.1%)

NOTABLE US HEADLINES

• GameStop Corp (GME) Q3 2023 (USD): EPS -0.01 (exp. -0.08), Revenue 1.08bln (exp. 1.18bln) Shares seen -7.7% in pre-market trade
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GEOPOLITICS

• G7 leaders' statement noted commitment remains to restrict exports of all items critical to Russia's military and industrial base and they will work to further curtail Russia's use of the international financial system to further its war with Ukraine. Furthermore, G7 leaders are committed to tightening compliance and enforcement of the price cap policy on Russian oil, including by imposing sanctions on those engaged in deceptive practices.
• Senior Biden administration officials agreed that striking Houthis is the wrong course of action for now, according to Politico.
• White House's Kirby said they are watching the "worrisome" burgeoning defence relationship between Iran and Russia.
• US Secretary of State Blinken spoke with Guyanese President Ali and reaffirmed US unwavering support for Guyana's sovereignty, while it was separately reported that a Guyanese army helicopter reportedly went missing near the border with Venezuela, according to AFP News Agency.

CRYPTO

• Bitcoin (-1.6%) is trending lower giving back some of this week's recent advances.

APAC TRADE

• APAC stocks declined following the weak lead from Wall St where risk sentiment soured after more soft labour data, while markets digested mixed Chinese trade data which showed the first expansion in exports since April although imports surprisingly contracted.
• ASX 200 was subdued amid notable underperformance in energy following the recent drop in oil prices to multi-month lows and with mixed trade data from both Australia and its largest trading partner.
• Nikkei 225 was the worst hit and slipped back beneath the 33,000 level amid headwinds from a firmer currency and higher yields.
• Hang Seng and Shanghai Comp were varied with the mainland choppy amid mixed Chinese trade data in which exports expanded but the surprise contraction in imports suggested weaker domestic demand, while the Hong Kong benchmark suffered after Moody’s revised its credit outlook for the special administrative region to negative.

NOTABLE HEADLINES

• Chinese President Xi met with European Council President Michel and European Commission President von der Leyen and said that both sides should maintain development momentum between China and the EU. Xi added that China and the EU have the responsibility to work together to provide more stability for the world and should be partners in mutually beneficial cooperation, as well as continuously enhance political mutual trust.
• BoJ Governor Ueda suggested that “handling of monetary policy would get tougher from the end of the year”; Japan's economy is to continue recovering moderately, supported mainly by accommodative financial conditions and effects of economic stimulus measures but noted that uncertainty over Japan's economy is extremely high. Ueda reiterated they will patiently continue monetary easing under YCC to support economic activity and the cycle of wage growth, while they have not yet reached a situation in which they can achieve the price target sustainably and stably with sufficient certainty. Furthermore, Ueda said they have not made a decision on which interest rate to target and don't have any specific idea in mind on how much they will raise rates once they end NIRP.
• ASEAN Plus Three deputy financial chiefs agreed on a system framework for a new regional emergency lending facility, according to a joint statement cited by Reuters.
• BoJ Governor Ueda said no specific discussion on FX with Japanese PM Kishida and there were no special demands from PM Kishida
• China's State Council has published a document to support further development of Shanghai Free Trade Zone
• Chinese Foreign Minister Wang Yi says expressed concerns about EV subsidy probe

DATA RECAP

• Chinese Trade Balance (USD)(Nov) 68.4B vs. Exp. 58.0B (Prev. 56.5B); Chinese Trade Balance (CNY) 490.8B (Prev. 405.5B)
• Chinese Exports YY (USD)(Nov) 0.5% vs. Exp. -1.1% (Prev. -6.4%); Chinese Imports YY (USD) -0.6% vs. Exp. 3.3% (Prev. 3.0%)
• Chinese Exports YY (CNY)(Nov) 1.7% (Prev. -3.1%); Chinese Imports YY (CNY) -0.6% (Prev. 6.4%)
• China FX Reserves (Nov): USD 3.1718tln (exp. 3.1395tln); Gold USD 145.7bln (prev. 142.2bln) or 71.6mln/oz (prev. 71.2mln/oz); Chinese FX Reserves (Monthly) (Nov) 3.172Trl vs. Exp. 3.12Trl (Prev. 3.101Trl)
• Australian Trade Balance (AUD)(Oct) 7.1B vs. Exp. 7.5B (Prev. 6.8B); Exports MM0.4% (Prev. -1.0%); Imports MM -1.9% (Prev. 8.0%)