• European equities gain with outperformance in the CAC 40; US Futures meander around the unchanged mark ahead of NFP
• Dollar remains within a tight range whilst the Kiwi lags on cross-related flows, JPY off recent highs
• Fixed income retreats modestly ahead of payrolls, Gilts continue to modestly underperform
• Crude posts notable gains making back some of this week’s losses whilst spot Gold is around flat
• Looking ahead, US NFP, UoM Inflation Expectations Survey

EUROPEAN TRADE

EQUITIES

• European equities (Eurostoxx50 +0.5%) are on firmer footing with outperformance in the CAC 40 (+1.1%) with Luxury propping the index.
• European sectors are generally in the Green; Consumer Products & Services is the top performer, with Luxury names the main beneficiaries whilst Basic Resources lags following a trading update at Anglo American (-6.7%).
• US equity futures hold around the unchanged mark awaiting direction from the US NFP Report; though the Russell (+0.3%) is slightly firmer, following price action in Europe.
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FX

• The Dollar remains within a tight range in the run-up to the day’s highlight, the US jobs report ahead of next week’s FOMC confab.
• The Yen has come off recent highs with USD/JPY back on a 144.00 handle at the time of writing (vs yesterday’s 141.70 trough).
• Antipodeans are mixed with the AUD and CAD narrowly outperforming amid the strength in oil and base metals whilst the NZD sits as the G10 laggard, although with no obvious catalyst aside from AUD/NZD flows.
• PBoC set USD/CNY mid-point at 7.1123 vs exp. 7.1427 (prev. 7.1176)
• Recent softness in consumption has presented itself as a source of concern for BoJ policymakers who are "eyeing" an exit from easy policy, according to Reuters sources
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FIXED INCOME

• USTs are currently lower by 11 ticks with fresh macro drivers non-existent as participants position themselves for the November NFP report, ahead of Tuesday’s CPI and thereafter the FOMC meeting begins.
• Bunds fell to a 134.91 low which brings into play the 134.55 trough from Wednesday; a move without fresh catalysts.
• Gilt action is relatively pronounced, it remains well within recent bounds and as such the accompanying pressure to the SONIA strip has thus far only managed to bring December back to unchanged being fully priced.
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COMMODITIES

• WTI and Brent (+1.5%) futures are posting notable gains making back some of the losses seen this week; though the complex has come off best levels in recent trade with catalysts limited.
• Metals are mixed with precious metals flat pre-NFP with spot Gold around the USD 2,030/oz level; Base metals are firmer across the board amid improving demand from China following the recent PMI and trade data.
• Iraq’s oil minister said the country renewed its support for the OPEC+ agreement and commitment to voluntary cuts.
• EU is to give member states the power to block Russian gas imports, according to FT.
• Sanctions on ships with Russian oil will not affect Indian purchases; adequate vessel available to import Russian crude; dip in oil prices will help India buy more oil from Russia, according to an Indian government source.
• EU is said to be considering restarting the WTO case against the US over steel tariffs, according to Bloomberg sources; final decision yet to be taken.
• Russia's Kremlin says Russian President Putin and Iranian President Raisi discussed integration and cooperation within OPEC+ on Thursday
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NOTABLE EUROPEAN HEADLINES

• Fitch said major UK banks are resilient to the economic backdrop and underpinned by strong buffers, while it added that the performance of major domestically focused UK banks will remain sound over the next two years.
• Italy's Treasury said it is to sell up to EUR 6bln in BTP bonds at auction on Dec 13th.
• EU Economic Commissioner Gentiloni says there is not fiscal deal despite progress, as some legal aspects need to be clarified. Confident an agreement can be reached.
• Spanish Finance Minister Calvino says they will convene an extraordinary EcoFin meeting to conclude a deal on EU fiscal rules
• French Finance Minister Le Maire says they now have an agreement rate of 95% on fiscal rules; on Thursday said they were around 90%
• Spain's Economy Minister Calvino has been appointed as head of the EIB, via El Pais
• Bank of England/Ipsos Inflation Attitudes Survey - November 2023: Median expectations of the rate of inflation over the coming year were 3.3%, down from 3.6% in August 2023.

DATA RECAP

• German CPI Final MM (Nov) -0.4% vs. Exp. -0.4% (Prev. -0.4%); YY 3.2% vs. Exp. 3.2% (Prev. 3.2%)
• German HICP Final MM (Nov) -0.7% vs. Exp. -0.7% (Prev. -0.7%); YY 2.3% vs. Exp. 2.3% (Prev. 2.3%)
• Hungarian Core CPI YY (Nov) 9.1% vs. Exp. 9.1% (Prev. 10.9%); YY 7.9% vs. Exp. 8.1% (Prev. 9.9%)

NOTABLE US HEADLINES

• Nvidia (NVDA) CEO says not concerned over move to block US measures to speed up chip projects and is confidence chips supply chain will be important and safe.
• China's CPCA says Tesla (TSLA) exported 16,928 China-made vehicles in November (prev. 43,489 in October)
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GEOPOLITICS

• Israel agreed to a US request to open the Kerem Shalom border crossing for screening and inspection of humanitarian aid into Gaza, according to a US official cited by Reuters.
• UAE asked the UN Security Council to vote on Friday morning on a draft resolution demanding an immediate humanitarian ceasefire in Gaza, according to diplomats cited by Reuters.
• White House said they are not close to another deal for a pause in the Israel-Hamas conflict and the US is still trying to get more information on Hamas hostages.
• US Secretary of State Blinken said attacks in the Red Sea are unacceptable and they believe attacks are being carried out with the support of Iran, according to Al Jazeera via social media platform X.
• US State Department said it welcomes the release of Armenian and Azerbaijani soldiers, while it added that Secretary of State Blinken looks forward to hosting Azerbaijani and Armenian foreign ministers in Washington for the next round of peace talks soon.
• At least three rockets targeting the US embassy in Baghdad's Green Zone were fired at dawn on Friday, landing on the outskirts of the district housing government and diplomatic buildings, according to an Iraqi security official cited by AFP
• "Israeli army: We hit several targets inside Syria after firing shells towards the Golan Heights", according to Al Arabiya
• Kremlin when asked about idea US wants Russia to engage in peace talks with Ukraine on Kyiv's terms in 2024, says it is "absolutely unrealistic"

CRYPTO

• Bitcoin (-0.2%) trades marginally lower, whilst Ethereum (-0.4%) posts losses to a slightly higher degree.

APAC TRADE

• APAC stocks eventually traded mostly higher but with gains limited as sentiment remained cautious heading into the incoming US NFP jobs report and after the recent BoJ speculation.
• ASX 200 finished marginally higher in choppy trade as weakness in financials and tech was offset by resilience in the commodity-related sectors including energy after confirmation of early merger talks between Woodside Energy and Santos to form an AUD 80bln Australian gas giant.
• Nikkei 225 underperformed amid pressure from a firmer currency after speculation that the BoJ could exit NIRP sooner than thought with markets pricing around a 20% chance they could lift rates at the December meeting, while a downward revision in Japan’s Q3 GDP to a deeper annualised contraction of -2.9% also clouded over the risk tone.
• Hang Seng and Shanghai Comp just about shrugged off the early indecision amid a lack of fresh drivers with the downside cushioned after the PBoC conducted a net liquidity injection for the first time this week.

NOTABLE HEADLINES

• Australia's Treasurer announced a new policy statement with the RBA in which the RBA board and the government agreed that a flexible inflation target is an appropriate framework for achieving price stability with the goal for consumer price inflation kept between 2%-3%. RBA board will set monetary policy so that inflation is expected to return to the mid-point of the target with the appropriate timeframe for this to depend on economic circumstances, while the RBA will publish detailed forecast data and assumptions including the Cash Rate. Furthermore, once the new monetary policy board is operational, it will publish an unattributed record of votes and will convene and engage with an expert advisory group on monetary policy to provide the board with a wide range of external views.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained its stance of remaining focused on the withdrawal of accommodation in which 5 out of 6 members voted in favour of the policy stance. RBI Governor Das said the Indian economy is resilient and has momentum, while he noted broad-based easing in core inflation but added that inflation could see an uptick in November and December. Furthermore, he stated that the target of 4% CPI has yet to be reached and they have to stay the course on inflation, as well as noted that monetary policy has to stay alert about shocks getting generalised and has to remain actively disinflationary with the need to remain vigilant and ready to act.
• RBI's Das says the MPC will be highly alter to any signs of derailing in the ongoing disinflation process, will take appropriate action to get inflation to target
• China's Politburo says it will continue to implement proactive fiscal policy in 2024, and prudent monetary policy; will improve resilience and security of industrial supply chains, will expand domestic demand.
• China says monetary policy is to be flexible; drops the "forceful" wording, according to Bloomberg
• Fitch has upgraded Vietnam to BB+; outlook stable

DATA RECAP

• Japanese GDP Revised QQ (Q3) -0.7% vs. Exp. -0.5% (Prev. -0.5%); Annualised -2.9% vs. Exp. -2.0% (Prev. -2.1%)
• Japanese All Household Spending MM (Oct) -0.1% vs. Exp. -0.2% (Prev. 0.3%); YY -2.5% vs. Exp. -3.0% (Prev. -2.8%)
• Japanese Overall Labour Cash Earnings YY (Oct) 1.50% vs. Exp. 1.00% (Prev. 1.20%)