• European bourses post significant losses despite limited fresh newsflow, whilst US Futures are negative albeit to a lower magnitude awaiting key US data
• Dollar is firmer and JPY continues to underperform; Antipodeans diverge as the AUD/NZD cross dips below 1.08.
• Bonds are pressured with overall specifics light as markets await key US events
• Crude continues to pullback along with Gold, suffering from recent strength in the Dollar and the souring tone generally
• Looking ahead, US MBAs, ISM Manufacturing PMI, JOLTs, Australian Services & Composite Final, FOMC Minutes, Fed's Barkin

EUROPEAN TRADE

EQUITIES

• European equites, Eurostoxx50 (-0.8%), extend losses in-fitting with the negative risk tone and subdued APAC trade overnight. Pressure which has increased throughout the session despite limited newsflow, though US Futures remain around the APAC low pre-data/minutes.
• European sectors hold a negative bias; Optimised Personal Care Drug and Grocery is generally lifted by UK supermarkets following a positive Kantar update. Basic Resources suffers from weaker commodity prices.
• US Equity Futures are lower across the board, though with losses comparably more contained ahead of key US data; RTY (-0.6%) continues yesterday's underperformance; NQ & ES -0.2%.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• DXY is firmer and trades towards the upper end of a 102.07-40 range; traders will await key US data. Thus far, the index has eclipsed the 21-DMA and approaches 21st Dec high (102.45), 102.50, 20th Dec high (102.54), and the 19th, 18th and 15th Dec highs (at 102.63, 102.63 and 102.64 respectively).
• EUR holds around the unchanged mark and trades on either side of 1.0950 after finding support near its 21 DMA at 1.0937.
• The Yen is the G10 underperformer continuing yesterday's losses as USD/JPY advances to a high of 142.79.
• The Antipodeans are once again divergent, with the Kiwi holding around flat, whilst the Aussie slips; in a reversal of yesterday's price action, AUD/NZD falls back below 1.08.
• PBoC set USD/CNY mid-point at 7.1002 vs exp. 7.1512 (prev. 7.0770)
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FIXED INCOME

• USTs are pressured, in-fitting with the broader risk tone with yields bid across the curve as attention turns to FOMC Minutes and speak from Fed's 2024 voter Barkin.
• Bunds continues yesterday's losses and overall unreactive to the German unemployment data; though, as the risk tone sours more broadly EGBs have bounced from lows, but Bunds remain shy of 137.00 and Tuesday's best above that.
• Gilts follow EGB and UST price action with the docket sparse on the UK front; session trough at 101.23 remains comfortably above the prior day's worst at 101.08.
• Germany sells EUR 3.56bln vs exp. EUR 4.5bln 3.1% 2025 Schatz: b/c 1.82 (prev. 2.48x), average yield 2.44% (prev. 2.64%), retention 20.9% (prev. 18.67%)
• Mexico has placed USD 7.5bln in 5-year, 12-year, and 30-year bonds, according to the Finance Ministry cited by Reuters. Demand for the bond offering reached USD 21.3bln.
• Indonesia has launched 5-year, 10-year, and 30-year Dollar bonds at 4.9%, 5.05%, and 5.45%, respectively, according to the term sheet cited by Reuters.
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COMMODITIES

• WTI and Brent continue to pullback with the complex taking cues for recent Dollar strength and the overall sour risk tone.
• Spot Gold price action is contained though has tilted slightly lower amid firmer Dollar; Base Metals are lower amid negative sentiment in APAC trade overnight.
• UBS forecasts higher spot crude prices this year. Forecasts Brent recovering to USD 80-90bbl and WTI in the USD 75-85bbl range.
• Indian Oil Minister says domestic firms will invest USD 67bln to bolster nat gas infrastructure by the next 5-6yrs; Says they are purchasing 1.5mln BPD of Russian oil.
• Iraq's oil exports averaged 3.5mln BPD in December, average price of USD 76.96/bbl, via the Oil Ministry.
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NOTABLE EUROPEAN HEADLINES

• Kantar UK Supermarket Update (Dec): Supermarkets saw their highest level of transactions in December since 2019. Grocery price inflation fell to 6.7% in December, its lowest level since April 2022.

DATA RECAP

• German Unemployment Total NSA (Dec) 2.637M (Prev. 2.606M); Unemployment Total 2.703M (Prev. 2.702M); Unemployment Rate 5.9% vs. Exp. 5.9% (Prev. 5.9%); German Unemployment Change 5.0k vs. Exp. 20.0k (Prev. 22.0k)
• Turkish CPI YY (Dec) 64.77% vs. Exp. 65.1% (Prev. 61.98%); Turkish CPI MM (Dec) 2.93% vs. Exp. 3.13% (Prev. 3.28%)
• Swiss Manufacturing PMI (Dec) 43.0 (Prev. 42.1)

NOTABLE US HEADLINES

• CPCA says Tesla (TSLA) sold 94,139 (prev. 82,432) China-made vehicles in December; Tesla (TSLA) sold 947,742 China-made vehicles in 2023, via Reuters calculations using CPCA data
• Ford (F) is recalling 112,965 vehicles, according to the NHTSA
• Rivian (RIVN) is recalling 7873 2022 R1T and R1S vehicles, via NHTSA
• Click here for the US Early Morning Note.

GEOPOLITICS

• The US has reportedly reached an agreement with Qatar that extends the American military presence at the biggest base in the Middle East - al Udeid - for another 10 years, sources told CNN's Marqu.
• US CENTCOM said on January 2, Iranian-backed Houthis fired two anti-ship ballistic missiles from Houthi-controlled areas in Yemen into the southern Red Sea, according to Reuters. Multiple commercial ships in the area reported the impact of the anti-ship ballistic missiles (ASBMs) into the surrounding water, although none have reported any damage.
• A senior Chinese official has stated that the upcoming elections in Taiwan (13th Jan) are an important choice between peace and war, prosperity and recession, according to state media.
• Iranian president is set to visit Turkey on Thursday, according to journalist Aslani.

CRYPTO

• Bitcoin, U/C, consolidates around USD 45.1k with Ethereum, USD 2.3k, also taking a breather.

APAC TRADE

• APAC stocks were mostly lower as sentiment reverberated from Wall Street's downbeat performance despite the lack of a clear driver, while Japanese markets were away on a market holiday.
• ASX 200 saw the deepest losses in gold names following the recent surge in the Dollar, while Tech also lagged, mimicking the sectoral performance on Wall Street.
• KOSPI extended its downside with semiconductor names among the biggest losers - Samsung Electronics tumbled 3% at one point.
• Hang Seng and Shanghai Comp were mixed with the former's losses led by large-cap Hong Kong stocks also listed in the US (JD.com -4.2%, Baidu -3.0%, Alibaba -2.7%), while Mainland China fluctuated between modest gains and losses, but was ultimately cushioned by stimulus speculation in Chinese press.
• US equity futures traded sideways with a downside bias but ultimately took a breather from yesterday's tech-led losses (ES -0.1%).
• European equity futures are indicative of a slightly lower open, with the Euro Stoxx 50 future -0.2% after cash markets closed -0.2% on Tuesday.

NOTABLE HEADLINES

• China is expected to persist in reducing interest rates and the reserve requirement ratio (RRR) throughout 2024, according to the China Securities Journal. Economic Daily reported that additional policies aimed at stabilizing the economy are anticipated to be implemented in China.
• PBoC injected CNY 14bln through 7-day reverse repos at a maintained rate of 1.80% for a net drain of CNY 558bln, according to Reuters.
• Japan reported an earthquake with prelim. magnitude of 5.5, no tsunami warning has been issued after the earthquake, according to NHK.
• Australia PM Albanese said his government would consider new cost-of-living relief measures ahead of the May budget without stoking inflation, according to Reuters.
• Some of China's large banks tighten interbank lending standard for smaller peers to mitigate credit risk, via Reuters citing sources

DATA RECAP

• Indian Nikkei Manufacturing PMI (Dec) 54.9 (Prev. 56.0).