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• The extension lower for major equity benchmarks has prompted a solid reversal for the greenback over the past 15 minutes, with EURUSD reversing the entirety of the day’s range to plumb new lows below the 1.04 handle.  A bearish condition continues to highlight scope for a test of key support at 1.0335, the Nov 22 low and a bear trigger.
• Price action most impactful for EURJPY, as the Japanese yen benefits from the lower core yields, helping the cross to slide around 130 pips off the earlier session highs. Initial firm support for the cross lies at 162.34, the 20-day EMA. The pullback is considered technically corrective at this juncture.

The Croatian presidential election is set to go to a runoff on January 12, with former Prime Minister Zoran Milanović poised to win re-election. Although the position is largely ceremonial, Milanović's likely re-election is another signal that voters in Europe are softening in their support for Ukraine. 

• Politico notes that Milanović and Croatian Prime Minister Andrej Plenković, "are deeply divided on support for Ukraine. Plenković supports military aid to Kyiv. Milanović, a member of the Social Democratic Party (SDP), has spoken out against it and criticized Western sanctions on Russia. In October, he blocked the participation of Croatian soldiers in NATO’s mission to support Ukraine."
• Semafor writes that Milanović's success, "is the latest sign of Europe’s eroding support for Ukraine ahead of US President-elect Donald Trump’s return to office: Europeans’ willingness to countenance peace negotiations has risen markedly, and the numbers who say they care about Kyiv has dropped, according to YouGov."
• Le Monde writes: "Europe has promised to stand by Ukraine against Russia in 2025. But, in reality, it is more than ever caught between Vladimir Putin and Donald Trump... With less than four weeks to go before [Trump] takes office on January 20, 2025, there is nothing to suggest that European capitals will be able to contain the impact of the populist's return to power."

Figure 1: Should Your Country Increase, Maintain, or Reduce Support for Ukraine?

Source: YouGov, Semafor

• Treasury futures continue to march higher, mirroring support in EGBs (see 0754ET bullet), otherwise no substantive headline or Block driver.
• Tsy Mar'25 10Y contract trades 108-25 last (+11) puts it back to last Monday's early range, 10y yield declining .0545 at 4.5709%.
• Curves remain mixed, 2s10s -.050 at 28.792, 5s30s +1.967 at 37.374.