MNI US OPEN - Trump’s Envoy Says Hostage Deal With Hamas Close

EXECUTIVE SUMMARY

• MNI FOMC MINUTES PREVIEW: DECEMBER 2024
• TRUMP’S MIDEAST ENVOY SAYS HOSTAGE DEAL WITH HAMAS IS CLOSE
• CHINA BOOSTS FX SUPPORT AS YUAN HEADS TOWARD POLICY RED LINE
• EUROZONE PPI SLIGHTLY ABOVE EXPECTATIONS IN NOVEMBER

Figure 1: Eurozone PPI slightly higher than expected but Y/Y remains in deflation

Source: MNI/Eurostat

NEWS

DATA

EUROZONE DATA (MNI): PPI Slightly Higher Than Expected Though Y/Y Remains in Deflation

• EUROZONE NOV PPI +1.6% M/M, -1.2% Y/Y

Eurozone PPI in November printed slightly above expectations at -1.2% Y/Y (vs -1.4% consensus, -3.3% revised prior) and 1.6% M/M (vs 1.5% consensus, 0.4% prior). This is the nineteenth consecutive month of Y/Y deflation, though the highest reading since mid 2023 as energy base effects still work their way out of the Y/Y comparison. Note that excluding energy the PPI index level has been broadly unchanged since April whereas including energy it has been increasing since May.

EUROZONE DATA (MNI): Economic Sentiment Slips, Downside Risk to Growth

Eurozone economic sentiment softened more than expected in December to 93.7 (cons 95.6) after a marginally downward revised 95.6 (initial 95.8). It's a notable miss and decline just a month after the US presidential election, pushing through late 2023 lows for its lowest since late 2020. Historically, this level would suggest downside risk to Eurozone real GDP growth of 0.9% Y/Y back in Q3 (which was helped by a solid 0.4% Q/Q non-annualised in Q3)

GERMANY NOV RETAIL SALES -0.6% M/M (FCST: 0.5%) (MNI)
GERMANY NOV RETAIL SALES 2.5% Y/Y (MNI)
GERMANY NOV FACTORY ORDERS -5.4% M/M (MNI)

FRANCE DEC CONSUMER SENTIMENT 89 (MNI)

SWEDEN DATA (MNI): Swedish Flash Inflation a Little Softer - But No MonPol Impacts

• SWEDEN FLASH DEC CPIF +1.5% Y/Y

The Riksbank had forecast CPIF at 1.9% Y/Y (consensus 1.7%Y/Y, actual 1.5% Y/Y). So 0.4ppt below the stale Riksbank forecast and 0.2ppt below consensus. For CPIF ex energy the Riksbank forecast was 2.2% Y/Y (consensus was also 2.2% Y/Y). That came in at 2.1% Y/Y so only 0.1ppt below both the Riksbank and consensus. 

AUSTRALIA DATA (MNI): Aussie Trimmed Mean Falls to 3.2% in Nov

Australian monthly trimmed mean inflation fell 20 basis points over November to 3.2% y/y, while headline CPI grew 2.3% y/y, up from October’s 2.1%, data from the Australian Bureau of Statistics showed Wednesday. Trimmed mean is the Reserve Bank of Australia’s preferred measure of inflation. (See MNI: RBA Rate On Track For Cuts, Trump Adds To Risk-Ex Staff) The RBA expects the metric to print at 3.4% y/y by Q4 and be back within the top of its 2-3% target band by June 2025. 

JAPAN DATA (MNI): Japan Dec Consumer Confidence Index Drops

Japan's consumer confidence index fell in December to 36.2, down from November's 36.4, as two out of four components dropped from the previous month but the government left its assessment, data released by the Cabinet Office on Wednesday showed. The indexes linked to overall economic well-being and the willingness to buy durable goods buy fell but the the indexes linked to income conditions and the labour market rose. 

JAPAN DATA (MNI): Q3 Output Gap Hits 18th Negative Result - BOJ

The Bank of Japan estimated the country's output gap at -0.53% in Q3, its 18th consecutive negative result following -0.58% in Q2, indicating upward pressure on prices continued with a time lag, data released by the BOJ showed on Wednesday. The BOJ's estimate of the output gap, based on capital and labour stocks, is smaller than the Cabinet Office's last estimate of -0.4% in Q3 (vs. -0.6% in Q2), which is based on revised second preliminary Q3 GDP data showing a 0.3% q/q rise, or an annualised rate of 1.2%.

FOREX: Greenback Firmer Ahead of FOMC Minutes, Underlying Trend Prevailing

• Aggregate G10 FX moves have been relatively muted in early Wednesday trade, with the US dollar slightly firmer (DXY approaching 109.00 once more) as we approach the FOMC minutes later in the session.
• EURUSD has been slowly eroding the rally from earlier in the week, that was underpinned by higher-than-expected German inflation and hints that US tariffs could be more selective than first thought. With the underlying bullish dollar trend prevailing, EURUSD is now ~120 pips off the week’s highs and notably back below the prior breakdown point of 1.0335.
• The bullish trend for USDCHF since the US election remains firmly intact, and yesterday’s Swiss CPI data has assisted the pair back above the 0.91 handle during this morning’s session. Cycle highs reside at 0.9137, and above here, the medium-term targets at 0.9158 and 0.9224 appear well defined. Prior pullbacks have been well supported by the 20-day exponential moving average, which now intersects at 0.9015.
• Notably, EURCHF has been consolidating back above 0.9400 and a resumption of strength would place the technical focus on a cluster of September highs around the 0.95 handle.
• AUDUSD sits a little softer on the session as the trimmed mean measure of Australia CPI eased 0.3pp to 3.2%. However, given the RBA continues to focus on quarterly CPI data and it wants to be confident that inflation will return sustainably to the band, downside AUD momentum failed to materialise given it may be too early to tell if monthly inflation is trending lower again.
• US ADP employment and jobless claims headline the Wednesday data calendar before the FOMC minutes. FOMC Member Waller is on the speaker schedule, while ECB’s Villeroy speaks in Paris.

BONDS: Off Lows, Supply Caps Recovery, Bearish Techs Intact

A narrow session for core global FI markets, with TY, Bund & gilt futures all trading above yesterday’s lows.

• Continued heavy IG supply limits any recoveries at this stage.
• The initial EGB syndications of ’25 have generated strong demand.
• Little reaction to fresh multi-month highs in crude futures.
• Bearish technicals intact.
• Bund futures flat around 132.00, German yields -0.5bp to +0.5bp, light steepening.
• EGB spreads to Bunds -2bp to +0.5bp.
• European equity rally promotes some outperformance for the likes of GGBs and BTPs.
• GGBs continue early ’25 outperformance, aided by fiscal/ratings trajectory and the PDMA’s conservative ’25 issuance target. Spread to Bunds further below 75bp, on track for another cycle closing low.
• BTPs have tightened by ~1.5bp vs. Bunds, aided by solid demand at today’s syndication (orderbooks have hit a record level for a dual tranche offering). Spread to Bunds nearing 110bp, a level not closed below since December 11.
• PGBs the laggard this morning, perhaps driven by expectations for a PGB syndication announcement.
• Gilts saw some light concession into this morning’s ’30 gilt auction, although have stabilised since, aided by solid enough demand (which was notable given the bearish backdrop).
• Futures last little changed at ~91.40. Yields little changed across the curve.
• ECB & BoE pricing little changed on the day, showing 102bp and 55.5bp of cuts through ’25, respectively.
• U.S. ADP employment and weekly jobless claims data due later.
• Comments from Fed’s Waller & ECB’s Villeroy also scheduled.
• Bund supply due shortly, with U.S. 30-Year supply on deck later.

EQUITIES: Bull Cycle in Eurostoxx 50 Futures Intact Following This Week's Rally

A bull cycle in the Eurostoxx 50 futures contract remains intact. This week’s strong rally highlights a reversal of the recent corrective pullback. Resistance at 5040.00, the Dec 9 high, has been pierced. A clear break of this level would confirm a resumption of the bull cycle that started on Nov 21 last year and open 5068.13, a Fibonacci projection. On the downside, initial firm support lies at 4925.88, the 50-day EMA. A bear threat in the S&P E-Minis contract remains present despite the most recent move higher. The reversal lower from the Dec 26 high, highlights the end of the Dec 20 - 26 correction. Attention is on 5866.00, Dec 20 low and a key S/T support. Clearance of this level would strengthen a bearish theme. Initial firm resistance is 6107.50, Dec 26 high. A breach of this hurdle would highlight a bull reversal and open key resistance at 6178.75, the Dec 6 high.

• Japan's NIKKEI closed lower by 102.24 pts or -0.26% at 39981.06 and the TOPIX ended 16.57 pts lower or -0.59% at 2770.
• Elsewhere, in China the SHANGHAI closed higher by 0.524 pts or +0.02% at 3230.168 and the HANG SENG ended 167.74 pts lower or -0.86% at 19279.84.
• Across Europe, Germany's DAX trades higher by 50.56 pts or +0.25% at 20391.34, FTSE 100 higher by 1.67 pts or +0.02% at 8247.05, CAC 40 down 9.86 pts or -0.13% at 7478.23 and Euro Stoxx 50 up 4.54 pts or +0.09% at 5016.36.
• Dow Jones mini up 89 pts or +0.21% at 42893, S&P 500 mini up 15 pts or +0.25% at 5969.25, NASDAQ mini up 57.75 pts or +0.27% at 21417.5.

Time: 09:50 GMT

COMMODITIES: Bear Threat in Gold Remains Present Despite Latest Recovery

The trend structure in WTI futures remains bullish and the contract is holding on to its recent gains. A stronger reversal to the upside has exposed key short-term resistance at $76.41, the Oct 8 high. A firm resistance at $71.97, the Nov 7 high, has been breached, strengthening a bullish theme. On the downside, a reversal lower would expose support at the 20-day EMA, at $71.11. This average is seen as a key short-term support. A bear threat in Gold remains present despite the latest recovery. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low. The first firm support to watch is $2583.6, the Dec 19 low. On the upside, a strong climb would instead signal scope for a climb towards resistance at $2726.2, the Dec 12 high.

• WTI Crude up $0.83 or +1.12% at $75.06
• Natural Gas up $0.15 or +4.41% at $3.597
• Gold spot up $4.45 or +0.17% at $2652.93
• Copper up $2.05 or +0.49% at $421.5
• Silver up $0.15 or +0.5% at $30.2022
• Platinum up $8.24 or +0.87% at $958.88

Time: 09:50 GMT

Date	GMT/Local	Impact	Country	Event
08/01/2025	1200/0700	**	US	MBA Weekly Applications Index
08/01/2025	1300/0800		US	Fed Gov Waller
08/01/2025	1315/0815	***	US	ADP Employment Report
08/01/2025	1330/0830	***	US	Jobless Claims
08/01/2025	1500/1000	**	US	Wholesale Trade
08/01/2025	1530/1030	**	US	DOE Weekly Crude Oil Stocks
08/01/2025	1700/1200	**	US	Natural Gas Stocks
08/01/2025	1800/1300	***	US	US Treasury Auction Result for 30 Year Bond
08/01/2025	1900/1400	***	US	FOMC Minutes
08/01/2025	2000/1500	*	US	Consumer Credit
09/01/2025	2330/0830	**	JP	average wages (p)
09/01/2025	0001/0001	**	GB	KPMG/REC Jobs Report
09/01/2025	0001/0001	*	GB	BRC Monthly Shop Price Index
09/01/2025	0030/1130	**	AU	Retail Trade
09/01/2025	0030/1130	**	AU	Trade Balance
09/01/2025	0130/0930	***	CN	CPI
09/01/2025	0130/0930	***	CN	Producer Price Index
09/01/2025	0700/0800	**	DE	Trade Balance
09/01/2025	0700/0800	**	DE	Industrial Production
09/01/2025	0900/1000	***	DE	North Rhine Westphalia CPI
09/01/2025	0930/0930		GB	Decision Maker Panel data
09/01/2025	1000/1100	**	EU	Retail Sales
09/01/2025	1400/0900		US	Philly Fed's Pat Hrker
09/01/2025	1600/1600		GB	BOE's Breeden Speech at University of Edinburgh
09/01/2025	1630/1130	**	US	US Bill 04 Week Treasury Auction Result
09/01/2025	1630/1130	*	US	US Bill 08 Week Treasury Auction Result
09/01/2025	1745/1245		US	Fed's Barkin
09/01/2025	1835/1335		US	Fed Gov Bowman
10/01/2025	2330/0830	**	JP	Household spending