• APAC stocks followed suit to the gains stateside despite the lack of major catalysts as markets await US CPI.
• Fed's Williams says more work is needed to bring inflation back to target; can cut rates when confident inflation is moving to 2%.
• European equity futures are indicative of a higher open with Euro Stoxx 50 futures +0.6% after the cash market closed flat yesterday.
• Bitcoin retreated from resistance near USD 47,000 and failed to benefit despite the approval of the first spot Bitcoin ETPs.
• DXY is a touch softer vs. peers but USD/JPY remains on a 145 handle, antipodeans outperform.
• Looking ahead, highlights include Spanish & Italian Industrial Output, US CPI, IJC, Philly Fed Manufacturing Business Outlook Survey, Supply from Italy & US.

US TRADE

EQUITIES

• US stocks gained despite the lack of major news or catalysts ahead of Thursday's key CPI data with the gains led by tech, while the Russell 2k was the relative underperformer which was in part reflective of some hedging/caution ahead of the expected rise in US CPI.
• SPX +0.57% at 4,783, NDX +0.69% at 16,793, DJI +0.45% at 37,696, RUT +0.11% at 1,970.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Williams said the Fed's work to bring inflation back to 2% is not done and that the Fed can cut rates when confident inflation is moving to 2% but added that the Fed will need a restrictive policy stance for some time. Williams said the outlook is still uncertain and rate decisions are to be made meeting-by-meeting and will be driven by the totality of data, while he added that risks to the economy are two-sided. Furthermore, he said the Fed is in a good place and has time to think about what's next for rates, as well as noted that policy is still quite restrictive and Fed eventually needs to get policy back to more neutral levels.
• Reuters/Ipsos poll showed President Biden and former President Trump are tied in the 2024 US Presidential Election contest with 35% support each.

APAC TRADE

EQUITIES

• APAC stocks followed suit to the gains stateside despite the lack of major catalysts as markets await US CPI.
• ASX 200 climbed back above 7,500 with the index led by outperformance in financials, tech and consumer stocks.
• Nikkei 225 continued its stellar rally and broke above 35,000 for the first time since February 1990.
• KOSPI remained afloat after the BoK kept rates unchanged, as expected, while it omitted the reference regarding judging the need to raise the base rate further from its policy statement and Governor Rhee also stated they see less need for rate hikes.
• Hang Seng and Shanghai Comp were firmer as Hong Kong conformed to the positive mood with advances driven by strength in tech and autos, while the mainland somewhat lagged ahead of potential frictions from the upcoming election in Taiwan.
• US equity futures (ES +0.2%) prodded yesterday's highs as all focus now turns to the incoming US inflation data.
• European equity futures are indicative of a higher open with Euro Stoxx 50 futures +0.6% after the cash market closed flat yesterday.

FX

• DXY slightly softened amid the gains in stocks but with price action contained ahead of the incoming US inflation data, while there were also comments from Fed's Williams who expects the Fed to maintain a restrictive policy stance for some time.
• EUR/USD marginally extended on the prior day's advances after Eurozone yields outperformed their US counterparts.
• GBP/USD climbed back above 1.2750 in tandem with the outperformance amongst its cyclical peers.
• USD/JPY took a breather after the recent risk-fuelled momentum but held on to the 145.00 handle.
• Antipodeans were underpinned amid the constructive mood, CNY strength and predominantly firmer Australian trade data.
• PBoC set USD/CNY mid-point at 7.1087 vs exp. 7.1667 (prev. 7.1055).

FIXED INCOME

• 10yr UST futures lacked conviction after the choppy performance during the prior US session where prices oscillated around the 112.00 level ahead of an expected rise in US inflation and with downside cushioned by a decent US 10yr auction.
• Bund futures languished near the prior day's lows after briefly slipping beneath 135.00 amid record weekly supply in Europe.
• 10yr JGB futures rebounded off support at the 147.00 level albeit with gains capped owing to the lack of any tier-1 data releases from Japan and the absence of additional BoJ purchases.

COMMODITIES

• Crude futures attempted to nurse some of the prior day's losses after suffering from bearish inventory data which showed a surprise build in headline crude and chunky builds in product stockpiles, while WTI crude was also helped by support at USD 71/bbl.
• Spot gold gradually edged higher amid a softer dollar and as the US inflation data drew closer.
• Copper futures benefitted in tandem with the overall constructive mood across risk assets.

CRYPTO

• Bitcoin retreated from resistance near USD 47,000 and failed to benefit despite the approval of the first spot Bitcoin ETPs.
• US SEC approved 11 spot Bitcoin ETFs, while the CBOE also approved the listing of spot Bitcoin ETFs from multiple asset managers.
• US SEC Chair Gensler said investors should remain cautious about the myriad of risks associated with Bitcoin and products with values tied to crypto. Furthermore, he said while we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin.

NOTABLE ASIA-PAC HEADLINES

• PBoC approved a total of CNY 100bln (USD 14bln) in group housing leasing loans, supporting eight pilot cities to purchase commercial properties for long-term rental purposes, according to Economic Observer.
• China took measures to facilitate foreign nationals coming to China with the easing of some visa requirements to make it easier for foreigners to travel for business, education and tourism. Furthermore, Global Times reported China's National Immigration Administration officially implemented five new measures to facilitate foreign nationals coming to China and said foreigners with permanent residence permits in China can apply for financial services, including banking, securities, and foreign exchanges.
• US Treasury Secretary Yellen said some tariffs are appropriate to maintain and the Biden administration is focused on a China tariff review, while she added that tariffs could be made more 'strategic'.
• BoJ is fully prepared to put an end to the world’s last negative interest rate and April is the most likely time for when it might do so, according to former BoJ board member Sakurai cited by Bloomberg.
• OECD urged for the BoJ to gradually raise short-term interest rates and continue modifying YCC policy to increase flexibility, while the OECD Secretary-General said Japan's monetary policy can gradually and modestly begin tightening.
• BoK maintained its base rate at 3.5%, as expected, but removed the phrase "To judge the need to raise the base rate further" from its policy statement. BoK Governor Rhee said the rate decision was unanimous and sees less need for rate hikes, while he added that any premature rate cut could adversely affect the economy and it is best to wait until inflation stabilises. Rhee also stated that five board members see the terminal rate at 3.50% and most board members agreed to deploy targeted support measures to help small to medium-sized firms. Furthermore, he stated it is too early to discuss rate cuts, as well as noted that board members see no rate cuts for the next three months and see little chance of rate cuts for the next six months.

DATA RECAP

• Australian Trade Balance (AUD)(Nov) 11.4B vs. Exp. 7.5B (Prev. 7.1B)
• Australian Exports MM (Nov) 1.7% (Prev. 0.4%)
• Australian Imports MM (Nov) -7.9% (Prev. -1.9%)

GEOPOLITICS

• Israeli officials noted the decision Israel has to take is whether to accept a deal that would end the war and withdraw from Gaza but added that Qatar's proposal is not much different from previous proposals, according to Al Jazeera.
• IDF Chief of Staff said after the war in Gaza, the IDF will know how to fight in Lebanon if needed, according to Al Arabiya.
• US intelligence officials warned of increasing risk that Hezbollah militants could strike Americans in the Middle East and even potentially hit inside the US, according to sources cited by Politico.
• White House's Kirby said Houthi attacks in the Red Sea are escalatory and that the US does not seek conflict, while he said they will consult with partners about the next steps if attacks continue and will do everything they can to protect shipping in the Red Sea.
• UN Security Council approved a resolution demanding Yemen's Houthis immediately cease shipping attacks, while a Houthi spokesman said the UN resolution on navigation in the Red Sea is a political game and it is the US that is violating international law.
• An armed drone was shot down over an air base housing US forces in northern Iraq, according to Reuters sources.
• White House threw its support behind legislation that would allow the seizing USD 300bln of frozen Russian assets to help rebuild Ukraine, according to Bloomberg.
• US and China security officials discussed security issues on Wednesday including challenges in the Middle East, Russia's war against Ukraine and cross-Strait issues, according to the White House.
• US President Biden is to send former top officials to Taipei after Taiwan’s election on Saturday in a move that could complicate efforts to stabilise Sino-US relations, according to FT sources.
• China's Taiwan Affairs Office said Taiwan independence is incompatible with peace across the Taiwan Strait and runs counter to the interests and well-being of Taiwanese people. Furthermore, it hopes the majority of Taiwan compatriots would recognise the extreme harm of DPP's Taiwan independence line and the extreme danger of presidential frontrunner Lai's triggering of cross-strait confrontation.

UK/EU

NOTABLE HEADLINES

• ECB's de Cos said future ECB moves will depend on data but uncertainty is high and risks to economic growth are still skewed to the downside. De Cos added that the Euro area economy probably stagnated in Q4 and said the ECB must avoid insufficient and excessive tightening.