• European bourses are mixed whilst US is away amid the National Day of Mourning in honour of President Jimmy Carter.
• Pound under pressure as Cable hangs by a thread; DXY broadly firmer vs peers (ex-JPY).
• Gilts gap lower and hit 89.00 but have since pared into an imminent parliamentary question, hefty European supply well received.
• Subdued trade in energy but base metals tilt higher.
• Looking ahead, Fed's Harker, Collins, Barkin, Schmid, Bowman and BoE's Breeden.

• European bourses began the European morning with a strong negative bias, but sentiment has since improved to display a more mixed picture.
• European sectors are mixed vs initially opening with a negative tilt. Basic Resources is by far the clear outperformer today, benefiting from broad-based strength in underlying metals prices (following Chinese inflation data overnight). Retail bottoms the index and is the clear underperformer today, after a few trading updates from UK retailers, which highlighted future cost pressures as a result of the Autumn Budget.
• US equity futures reside in negative territory, with modest underperformance in the NQ; as a reminder, cash markets are shut on account of the National Day of Mourning in honour of President Jimmy Carter.
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• USD is broadly firmer vs. peers (ex-JPY). Harker, Collins, Barkin, Schmid, Bowman. As it stands, with January widely expected to see an unchanged rate from the FOMC, the March meeting has around 11bps of loosening. Note, today sees no trade for the US stock market and on account of mourning for former President Jimmy Carter - volumes will be lighter than normal.
• EUR is marginally softer vs. the USD. Updates from the Eurozone have seen a better-than-expected outturn for German Industrial Output. However, this appeared to be more of a bounce back from recent softness rather than the start of a noteworthy recovery in German. EUR/USD has just about managed to reclaim the 1.03 level after printing a WTD low yesterday at 1.0273.
• JPY is the only of the majors that is firmer vs. the USD. JPY has been lent a helping hand by firmer-than-expected labour cash earnings which supports the case for the BoJ to resume rate hikes. Elsewhere, the BoJ' Nagoya Branch Manager attempted to jawbone JPY, stating that excess FX volatility is undesirable, important for it to move stably. USD/JPY has been as high as 158.39 but is yet to approach yesterday's multi-month peak at 158.55.
• GBP is once again at the foot of the G10 leaderboard as the ongoing spike in UK yields shows no signs of abating. Accordingly, Cable cracked 1.23 to the downside for the first time since November 2023 (1.2240 is the current low), whilst EUR/GBP briefly took out 0.84 to the upside for the first time since 4th November 2024.
• Antipodeans are both near the foot of the G10 leaderboard vs. the USD as risk sentiment remains soggy and Chinese price data remained lacklustre overnight. AUD/USD was unfazed by mixed data in which the trade balance printed a larger-than-expected surplus, imports and exports improved, although Retail Sales disappointed.
• PBoC set USD/CNY mid-point at 7.1886 vs exp. 7.3159 (prev. 7.1887).
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• No respite at the open with Gilts gapping lower by 78 ticks and then extending to an 89.00 low, which of course marked yet another contract trough. Since, Gilts have pared much of this downside and have at times been back within reach of the 90.00 mark, though still markedly in the red, as such yields are off highs with the 10yr around 4.85%.
• Ahead, an urgent question has been granted in parliament today to discuss the “growing pressure of borrowing costs on public finances”; the question will be heard around 10:30GMT and while Chancellor Reeves should theoretically be there to respond, it remains to be seen if that will be the case.
• USTs are just about in the green, a light data docket on account of the Federal Holiday for former President Carter though we still get December’s Challenger Layoffs. Currently at the mid-point of a 108-05 to 108-11+ band. Ahead, a slew of Fed speakers dotted throughout the day.
• Bunds are pressured having moved in tandem with Gilts in the early morning, and since rebounded off 131.34 lows. EGBs generally, and particularly OATs, heavy into supply with Spain and more pertinently France in the market. The Spanish auction was somewhat mixed with nearly the full amount sold though some of the lines saw weak demand. Following the Spanish results a bout of modest pressure was seen in EGBs, but a decent French outing helped to lift Bunds off worst levels.
• Spain sells EUR 6.22bln vs exp. EUR 5.5-6.5bln 2.40% 2028, 3.10% 2031, 2.90% 2046 Bono & EUR 0.515bln vs. Exp. 0.25-0.75bln 2.05% 2039 I/L.
• France sells EUR 12.997bln vs exp. EUR 11-13bln 3.0% 2034, 1.25% 2036, 2.50% 2043, and 3.25% 2055 OAT Auctions
• PIMCO says it "still likes UK Gilts", says much of the rise in yields has been US-led, changes to spending cuts or tax increases rise if gilt yields continue to climb and slowing growth persists.
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• A subdued session for the crude complex thus far as the dollar holds an upward bias, with broader sentiment also flimsy following this week's hot US data, UK bond market turmoil, and tariffs threats ahead of US President Trump's inauguration. Brent Mar sits in a USD 75.68-76.36/bbl parameter.
• Precious metals hold an upward bias across the board, albeit modestly, with some demand seen given the cautious risk tone across markets, and with little action seen on the FOMC minutes yesterday. Spot gold resides in a current USD 2,655.63-2,666.98/oz range vs yesterday's USD 2,645.37-2,670.15/oz, with the 50 DMA seen at USD 2,650/oz.
• Copper futures remain underpinned following yesterday's advances and after Chinese CPI data printed in line with expectations overnight. Gains were maintained throughout the European morning thus far despite the resilient dollar and cautious risk tone. 3M LME copper remains north of USD 9,000/t in a current USD 9,029.50-9,103.00/t parameter.
• Citi sees US Henry Hub prices likely to be supported by an extended cold wave in the short-term with upside potential for Q2-Q4 2025 and said prices are likely to rise further to mid-USD 4/mmbtu range in Q2-Q4 2025.
• Norway's 2025 Natural Gas output seen at 120.4 BCM (prev. guided 120.6 BCM); crude oil output seen at 10.2MCM (prev. guided 108.7 MCM).
• India is to reportedly sign a prelim mining pact with Mongolia soon, according to Reuters sources.
• Iraq sets Feb Basrah medium crude OSP to Asia at USD + 0.05/bbl (prev. USD -0.60/bbl) to Oman/Dubai average; Feb Basrah medium Crude OSP to Europe at USD -4.0/bbl vs dated brent (prev. USD -5.5/bbl), according to SOMO. Feb Basrah medium crude OSP to North and South America at USD -1.05/bbl vs ASCI.
• Russia's Kremlin says there are still countries in Europe which are interested in "more competitive" Russian gas.
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NOTABLE DATA RECAP

• UK BRC Shop Price Index YY (Dec) -1.0% vs Exp. -0.4% (Prev. -0.6%)
• German Trade Balance, EUR, SA (Nov) 19.7B vs. Exp. 14.8B (Prev. 13.4B); Exports MM 2.1% vs. Exp. 2.0% (Prev. -2.8%); Imports MM -3.3% vs. Exp. 0.7% (Prev. -0.1%)

NOTABLE EUROPEAN HEADLINES

• Reports that an 'urgent question' on the UK market turmoil has been granted, via Sun's Cole.
• BoE Monthly Decision Maker Panel data - December 2024. Expectations for CPI inflation a year ahead rose from 2.7% to 2.8% in the three months to December. The three-year ahead CPI inflation expectations was 2.7% in the three months to December, 0.1 percentage points higher than the three months to November.
• UK Chancellor Reeves will favour fresh cuts to public spending over tax hikes if soaring UK borrowing costs wipe out her fiscal headroom, while Reeves later stated that meeting the government's fiscal rules is non-negotiable and the government will have an iron grip on public finances, according to Sky News.
• ECB's Cipollone said monetary policy should let Euro zone economy run at potential, according to Corriere.
• German engineering orders -6% Y/Y in November (Domestic orders -4%, Foreign -7%), according to VDMA; Sept-Nov orders -7% Y/Y (Domestic orders -5%, Foreign orders -8%).

NOTABLE US HEADLINES

• US President-Elect Trump, during a closed door meeting, backed US House Speaker Johnson's preferred strategy on budget reconciliation - a package covering tax & spending cuts, immigration & energy policy, according to Punchbowl.
• US President Biden declared California wildfires to be a major disaster and he cancelled his upcoming trip to Italy due to the California wildfires, while it was also reported that a mandatory evacuation order was imposed on Hollywood after a new fire erupted, according to AFP.
• US President-elect Trump says after meeting with Republicans in Congress that whether it is one or two bills to pass his agenda, something will be done, while he added that China is running the Panama Canal and "that's not going to happen either".
• US dockworkers and port employers reached an agreement to avert a strike, according to Bloomberg.

• US official says President Biden is set to announce new sanctions targeting Russian economy this week. Likely to also sanction more Chinese entities for supporting Russia. US official says long-range ATACMS missiles, F-16 fighter jets and Abrams tanks have not been a game changer for Ukraine against Russia. US is studying North Korean military operations in Ukraine to "understand lessons for Asia"
• US and Arab mediators have made some progress in Gaza peace talks, no deal yet, according to Reuters sources. Breakthrough when it comes to narrowing old existing gaps, but there is still no deal yet, says a Palestinian official
• Houthi media reported US-British bombing of targets in Sanaa, Amran and Hodeidah with six raids, while the Pentagon later confirmed that Central Command carried out strikes against two Houthi facilities and said that strikes were carried out in Yemen as part of efforts to weaken Houthi capabilities.
• Russia's Kremlin says there have been no contact between US President-elect Trump and Russia President Putin yet

• Bitcoin continues to slip and edges below USD 94k; Ethereum holds around USD 3.3k.
• US President-elect Trump's transition team has interviewed at least a half dozen candidates to fill the role of chairman of the CFTC which will likely be the lead regulator of the USD 3.5tln crypto industry, according to Fox Business's Gasparino.

• APAC stocks were mostly negative following the cautious mood in global counterparts amid the recent UK bond market turmoil and Trump tariff reports.
• ASX 200 was dragged lower amid pressure in industrials, tech and the consumer sectors, while the data was mixed with a larger-than-expected Trade Surplus and an improvement in both monthly Exports and Imports, although Retail Sales disappointed.
• Nikkei 225 underperformed following firmer-than-expected labour cash earnings which supports the case for the BoJ to resume rate hikes, while participants also awaited after-market earnings releases including from index heavyweight Fast Retailing.
• Hang Seng and Shanghai Comp were ultimately subdued but with price action indecisive amid ongoing trade-related concerns, while participants digested the latest Chinese inflation data in which Consumer Prices matched forecasts but printed at a 9-month low and factory gate prices remained in deflation territory albeit at a slightly slower-than-expected pace of decline.

NOTABLE ASIA-PAC HEADLINES

• MOFCOM says it will ask EU to adjust relevant practices in foreign subsidy probes, after it determines EU probes constitute trade and investment barriers, according to the Global Times
• China 2024 passenger car sales: 23.1mln, Dec car sales: 2.66mln (vs 2.45mln sold in Nov, +16.6% Y/Y), according to China's CPCA. Tesla (TSLA) exported 10,839 China-made cars in December (5366 in Nov) (18,334 in 2023).
• China's CPCA says China car sales are estimated to grow 2% in 2025, EV sales estimated to rise 20%, and make up 57% of China's total car sales in 2025. Car export growth estimated to slow to 10% in 2025. Exports for EVs estimated to see no growth.
• US President Biden's administration plans additional curbs on exports of AI chips from Nvidia (NVDA) and AMD (AMD) in the final days of the administration, while it was also reported that the White House is rushing to finish cyber order after China hacks, according to Bloomberg.
• China's MOFCOM said regarding the investigation into unfair EU trade barriers that it concluded EU's measures constitute trade and investment barriers.
• China 2024 passenger car sales: 23.1mln, Dec car sales: 2.66mln (vs 2.45mln sold in Nov, +16.6% Y/Y), according to China's CPCA.
• Fast Retailing (9983 JT) Q1 (JPY): Operating Profit 157.56bln (exp. 157.81bln, prev. 146.69bln), Net 131.9bln (prev. 107.8bln Y/Y), Revenue 895.19bln (prev. 810.83bln); Co. affirms FY25 net, Operating Profit and Revenue guidance.
• BoJ Osaka Branch Manager says compared to the prior year, more large firms in the region are expressing willingness to hike wages earlier than before; significant number of firms are keen to hike pay, so expect solid wage hikes in 2025 wage talks. Rising import costs/commodity prices have moderated, concern over sharp inflation risk has not increased much.
• BoJ's Nagoya Branch Manager says some firms, incl. smaller ones, are considering increasing wages this year at/above last year's pace.

DATA RECAP

• Chinese CPI MM (Dec) 0.0% vs. Exp. 0.0% (Prev. -0.6%); YY 0.1% vs. Exp. 0.1% (Prev. 0.2%)
• Chinese PPI YY (Dec) -2.3% vs. Exp. -2.4% (Prev. -2.5%)
• Japanese Overall Lab Cash Earnings (Nov) 3.0% vs. Exp. 2.7% (Prev. 2.6%, Rev. 2.2%)
• Australian Trade Balance (AUD)(Nov) 7079M vs. Exp. 5750M (Prev. 5953M)
• Australian Goods/Services Exports (Nov) 4.8% (Prev. 3.6%)
• Australian Goods/Services Imports (Nov) 1.7% (Prev. 0.1%)
• Australian Retail Sales MM Final (Nov) 0.8% vs. Exp. 1.0% (Prev. 0.6%)

• APAC stocks were mostly negative following the cautious mood in global counterparts amid the recent UK bond market turmoil and Trump tariff reports.
• FOMC Minutes stated that participants indicated the Fed was at or near a point at which it would be appropriate to slow the pace of easing.
• European equity futures indicate a flat cash market open with Euro Stoxx 50 futures unchanged after the cash market closed with losses of 0.3% on Wednesday.
• USD is firmer vs peers (ex-JPY), GBP remains on the backfoot in the wake of bond market pressure, EUR/USD eyes 1.03 to the upside.
• Looking ahead, highlights include German Industrial Output, BoE DMP, EZ Retail Sales, Fed's Harker, Collins, Barkin, Schmid, Bowman and BoE's Breeden, Supply from Spain & France.
• National Day of Mourning - The desk will close at 19:00GMT/14:00EST on Thursday 9th January, upon which the desk will close and re-open at 22:00GMT/17:00EST the same day due to US market closures.

• US stocks were mixed as were the sectors with Health and Consumer Staples the relative outperformers, while Communication Services, Energy, and Health all sat in the red. Risk sentiment was initially hit in the European morning, on a couple of factors; firstly it was by weakness in the fixed income space, led by Gilts plummeting, before being further weighed on by CNN sources noting President-elect Trump is reportedly considering a national economic emergency declaration to allow for new tariff programme. However, as the US day progressed Treasuries and stocks managed to pare most of the losses in a choppy session.
• SPX +0.16% at 5,918, NDX +0.04% at 21,181, DJIA +0.25% at 42,635, RUT -0.48% at 2,239.
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FOMC MINUTES

• FOMC Minutes stated that participants indicated the Fed was at or near a point at which it would be appropriate to slow the pace of easing and participants indicated if data came in about as expected, it would be appropriate to continue to move gradually toward a more neutral policy stance. The vast majority of participants forecast it as appropriate to lower the target range by 25bps at the December meeting although some participants noted there was merit in keeping rates unchanged at the December meeting, citing a higher risk of persistently elevated inflation. The Minutes also stated that a number of participants indicated they had incorporated 'placeholder assumptions' regarding potential trade and immigration policy changes into their projections, while Fed staff projected slightly lower GDP growth and 'a bit' higher unemployment rate than the previous baseline forecast after incorporating recent data and placeholder assumptions of potential policy changes from the incoming administration.

NOTABLE HEADLINES

• US President Biden declared California wildfires to be a major disaster and he cancelled his upcoming trip to Italy due to the California wildfires, while it was also reported that a mandatory evacuation order was imposed on Hollywood after a new fire erupted, according to AFP.
• US President-elect Trump says after meeting with Republicans in Congress that whether it is one or two bills to pass his agenda, something will be done, while he added that China is running the Panama Canal and "that's not going to happen either".
• US President-elect Trump’s advisers are reportedly considering Kevin Hassett, Larry Lindsey, Marc Sumerlin, Kevin Warsh, David Malpass and Michelle Bowman as potential successors to Fed Chair Powell at the end of Powell's term in 2026, according to Bloomberg citing sources. Furthermore, Cleveland Fed President Beth Hammack is said to be in the mix for a possible seat on the Board during Trump's second term.
• US dockworkers and port employers reached an agreement to avert a strike, according to Bloomberg.

• APAC stocks were mostly negative following the cautious mood in global counterparts amid the recent UK bond market turmoil and Trump tariff reports.
• ASX 200 was dragged lower amid pressure in industrials, tech and the consumer sectors, while the data was mixed with a larger-than-expected Trade Surplus and an improvement in both monthly Exports and Imports, although Retail Sales disappointed.
• Nikkei 225 underperformed following firmer-than-expected labour cash earnings which supports the case for the BoJ to resume rate hikes, while participants also awaited after-market earnings releases including from index heavyweight Fast Retailing.
• Hang Seng and Shanghai Comp were ultimately subdued but with price action indecisive amid ongoing trade-related concerns, while participants digested the latest Chinese inflation data in which Consumer Prices matched forecasts but printed at a 9-month low and factory gate prices remained in deflation territory albeit at a slightly slower-than-expected pace of decline.
• US equity futures (ES -0.2%) marginally weakened amid the risk aversion in Asia and with US stock markets closed on Thursday for a National Day of Mourning.
• European equity futures indicate a flat cash market open with Euro Stoxx 50 futures unchanged after the cash market closed with losses of 0.1% on Wednesday.

• DXY paused overnight around the 109.00 level after gaining yesterday alongside the risk-off tone which was triggered by a sell-off in Gilts and a report that US President-elect Trump is considering a national economic emergency declaration to allow for a new tariff programme. Attention was also on Fed rhetoric as Waller noted he would support further cuts in 2025 but the pace will depend on further inflation progress, and the FOMC Minutes were widely as expected and signalled a January pause, while there are several Fed speakers scheduled today including Barkin, Bowman, Harker, Collins, and Schmid although volumes are expected to be lower owing to the US market closure for the National Day of Mourning for former President Jimmy Carter.
• EUR/USD was contained after a recent brief dip beneath the 1.0300 handle with the single currency not helped by mixed European data and the Trump tariff report.
• GBP/USD remained pressured and is eyeing 1.23 to the downside after underperforming yesterday amid the gilt market turmoil.
• USD/JPY mildly pulled back overnight following the firmer-than-expected labour cash earnings data and just about retained the 158.00 status.
• Antipodeans were confined within a narrow range amid the mostly negative risk appetite and after mixed data from Australia including disappointing Retail Sales.
• PBoC set USD/CNY mid-point at 7.1886 vs exp. 7.3159 (prev. 7.1887).

• 10yr UST futures kept afloat after clawing back yesterday's initial losses with the help of dovish comments from Fed's Waller and a strong 30yr auction.
• Bund futures languished near a six-month low beneath the 132.00 level ahead of German Industrial Production and Trade data.
• 10yr JGB futures were restricted after firmer-than-expected wage data and despite stronger-than-previous results from the 30yr JGB auction.

• Crude futures were subdued after the prior day's losses owing to headwinds from the downbeat risk tone and recent dollar strength.
• Slovak PM Fico secured gas for domestic consumption during talks in Moscow last month.
• Citi sees US Henry Hub prices likely to be supported by an extended cold wave in the short-term with upside potential for Q2-Q4 2025 and said prices are likely to rise further to mid-USD 4/mmbtu range in Q2-Q4 2025.
• Spot gold struggled for direction after yesterday's price swings and with a lack of major fireworks from the FOMC Minutes.
• Copper futures remained underpinned following yesterday's advances and after Chinese CPI data printed in line with expectations.
• Chile's Codelco copper production reached 1.328mln metric tonnes in 2024.

• Bitcoin remained on the back foot and retreated back to beneath the USD 95,000 level.
• US President-elect Trump's transition team has interviewed at least a half dozen candidates to fill the role of chairman of the CFTC which will likely be the lead regulator of the USD 3.5tln crypto industry, according to Fox Business's Gasparino.

NOTABLE ASIA-PAC HEADLINES

• US President Biden's administration plans additional curbs on exports of AI chips from Nvidia (NVDA) and AMD (AMD) in the final days of the administration, while it was also reported that the White House is rushing to finish cyber order after China hacks, according to Bloomberg.
• China's MOFCOM said regarding the investigation into unfair EU trade barriers that it concluded EU's measures constitute trade and investment barriers.

DATA RECAP

• Chinese CPI MM (Dec) 0.0% vs. Exp. 0.0% (Prev. -0.6%)
• Chinese CPI YY (Dec) 0.1% vs. Exp. 0.1% (Prev. 0.2%)
• Chinese PPI YY (Dec) -2.3% vs. Exp. -2.4% (Prev. -2.5%)
• Japanese Overall Lab Cash Earnings (Nov) 3.0% vs. Exp. 2.7% (Prev. 2.6%, Rev. 2.2%)
• Australian Trade Balance (AUD)(Nov) 7079M vs. Exp. 5750M (Prev. 5953M)
• Australian Goods/Services Exports (Nov) 4.8% (Prev. 3.6%)
• Australian Goods/Services Imports (Nov) 1.7% (Prev. 0.1%)
• Australian Retail Sales MM Final (Nov) 0.8% vs. Exp. 1.0% (Prev. 0.6%)

MIDDLE EAST

• Houthi media reported US-British bombing of targets in Sanaa, Amran and Hodeidah with six raids, while the Pentagon later confirmed that Central Command carried out strikes against two Houthi facilities and said that strikes were carried out in Yemen as part of efforts to weaken Houthi capabilities.

NOTABLE HEADLINES

• UK Chancellor Reeves reportedly eyes more spending cuts if the UK bond rout eats up headroom, according to Bloomberg citing sources. Furthermore, Reeves will favour fresh cuts to public spending over tax hikes if soaring UK borrowing costs wipe out her fiscal headroom, while Reeves later stated that meeting the government's fiscal rules is non-negotiable and the government will have an iron grip on public finances, according to Sky News.
• ECB's Cipollone said monetary policy should let Euro zone economy run at potential, according to Corriere.
• ECB's Villeroy said a slight increase in Eurozone inflation in December was expected and does not call into question their victory over inflation, while he added if the inflation pullback is confirmed, ECB rates are to head towards neutral by Summer.

DATA RECAP

• UK BRC Shop Price Index YY (Dec) -1.0% vs Exp. -0.4% (Prev. -0.6%)

• European bourses climb modestly into the green after opening around flat, US futures gain.
• DXY continues its rebound ahead of front-loaded US data, currently eyeing 109.00 to the upside.
• Fixed benchmarks contained into a packed US session and 30yr supply.
• Upside in crude, precious metals, and copper, despite a firmer Dollar.
• Looking ahead, Highlights include US Jobless Claims, Wholesale Inventory and EIA Nat Gas Change (brought forward on account of the US Day of Mourning), ADP National Employment, Comments from Fed's Waller, FOMC Minutes, Supply from the US, Earnings from Jefferies.

• European bourses initially opened with a slight negative bias, taking impetus from a mostly negative APAC session. Soon after the cash open, sentiment improved in Europe, to currently display a modestly firmer picture, with only a couple of indices residing in the red.
• European sectors are mixed, with no clear out/underperformer in the session thus far. Financial Services lead, followed closely by Banks. Energy is found at the foot of the pile, with losses fuelled by Shell after it trimmed its Q4 production guidance.
• US equity futures are modestly firmer across the board, in an attempt to recoup some of the hefty losses seen in the prior session, which were sparked by hotter-than-expected US ISM Services and JOLTS Job Openings figures.
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• USD is continuing the strength from Tuesday which was facilitated by the hot ISM Services PMI data and as JOLTS data topped analysts' forecast range. DXY re-approaches 109.00 to the upside (in a current 108.55-96 range). Attention now turns to the FOMC Minutes, ADP Employment and Initial Jobless Claims data.
• EUR attempted to regain some composure overnight after its slide beneath the 1.0400 level before feeling more pressure from the continued rebound in the USD. German Retail Sales were mixed, whilst Industrial Orders were downbeat, but did have some caveats (details in the data section below). EUR/USD resides in a 1.0311-57 range with downside levels including the 6th Jan low (1.0294).
• JPY traded indecisively overnight with USD/JPY on both sides of the 158.00 level amid a quiet data calendar for Japan and the mixed risk tone. Similar price action in Europe with the current intraday parameter between 157.91-158.32, with the pair eyeing yesterday's highs (158.42).
• GBP is subdued in tandem with G10 counterparts on the back of the stronger USD. GBP/USD resides in a current 1.2441-94 range with the next downside level the 6th Jan low (1.2410).
• Antipodeans are feeling pressure from the firmer greenback and in the absence of major newsflow this morning. AUD/USD was choppy following the latest monthly inflation data from Australia in which the Weighted CPI printed firmer than expected but the annual trimmed mean CPI softened from the previous. AUD/USD trades within 0.6213-42 and NZD/USD within 0.5613-41.
• SEK is modestly weaker after softer-than-expected consumer inflation metrics across the board. Following December's CPIF (cooler than expected) and the Minutes from the December meeting CapEco now expects the Riksbank to cut by 25bps in January (prev. exp. March).
• PBoC set USD/CNY mid-point at 7.1887 vs exp. 7.3435 (prev. 7.1879).
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• USTs are contained into a front-loaded US session on account of the Federal Holiday for Carter on Thursday. As such, we get ADP, Jobless Claims, FOMC Minutes and 30yr supply in today’s session. Into those events, USTs trade within a slim 108-04 to 108-09+ band which is entirely and comfortably within Tuesday’s 108-01 to 108-20 parameters. Ahead, US ADP, Jobless Claims ahead of speak from Fed's Waller and then the release of the FOMC Minutes. Additionally, we await a 30yr supply which follows a tepid 3yr tap on Monday and a relatively soft 10yr outing last night.
• Bunds are similarly contained but with a slightly larger 131.90-132.14 range thus far with modest but ultimately fleeting action spurred by data this morning. A particularly soft Industrial Orders release and a mixed but largely weak Retail Sales report out of Germany sparked upside in Bunds early doors, to a retest of the above overnight peak; however, the move proved fleeting given large-order caveats to the Industrial Orders series. A 2035 outing had limited impact on Bunds.
• BTPs are the relative outperformers today after lagging yesterday on the announcement of two new syndications; this morning, we have seen marketing commence for a new 10yr BTP and a new 20yr Green BTP with orders in excess of EUR 125bln and EUR 110bln respectively.
• Gilts traded off highs in a 91.29-58 range ahead of a new 2030 auction; an outing which was mixed, with the b/c printing bang on 3.0 whilst the avg. yield is relatively high and a modestly wider tail, but ultimately had little impact on Gilts.
• UK sells GBP 4.25bln 4.375% 2030 Gilt Auction: b/c 3.0x, average yield 4.490% & tail 0.5bps.
• Germany sells EUR 3.781bln vs exp. EUR 5bln 2.00% 2035 Bund Auction: b/c 2.1x, average yield 2.51% & retention 24.38%
• Orders for Italy's new 10yr BTP bond over EUR 125bln, for 20yr Green BTP over EUR 110bln, via Reuters citing leads; spread for 10yr +7bps, for 20yr +5bps.
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• Firmer trade in the crude complex despite the stronger Dollar, and extended on the prior day's gains with upside seen after the latest private sector inventory data showed a larger-than-expected draw in headline crude. The complex saw additional upside in the European morning after reports that Ukraine had hit a Russian oil depot which served a military airfield, according to Ukraine's Presidential Advisor. Brent Mar is currently just off highs in a USD 77.23-77.89/bbl parameter.
• Mixed trade across precious metals with spot gold and silver firmer whilst palladium trades flat/subdued. Spot gold trades in a current USD 2,645.40-2,654.90/oz range.
• Copper is on a firmer footing despite the stronger Dollar after the red metal lacked firm direction amid the mixed risk appetite in Asia and the subdued mood in China. 3M LME copper currently resides in a USD 8,983.00-9,056.00/t range.
• Private inventory data (bbls): Crude -4.0mln (exp. -0.2mln), Distillate +3.2mln (exp. +0.6mln), Gasoline +7.3mln (exp. +1.5mln), Cushing -3.1mln.
• Qatar set February Marine Crude OSP at Oman/Dubai + USD 0.45/bbl and Land Crude OSP at Oman/Dubai + USD 0.30/bbl.
• Shell (SHEL LN) Cuts Q4 Integrated Gas Production 880-820k boepd (prev. guided 900-960k boepd), LNG Volumes 6.8-7.2Mt (prev. guided 6.9-7.5Mt); optimisation results are exp. to be significantly lower than Q3'24. Guides Q4 Upstream: Production 1.79-1.89mln boepd, Underlying Opex USD 2.2-2.8bln. Guides Q4 Chemicals and Products: Refining Utilisation 74-78%.
• India has cut November gold imports by USD 5bln in the biggest revision, via Reuters citing sources; revised to USD 9.84bln (prev. estimated 14.86bln)
• China may trim fuel imports amid the 2025 tax hike, according to Reuters sources.
• India are looking at 2 new blocks in Jammu and Kashmir for Lithium exploration, according to Govt. sources.
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NOTABLE DATA RECAP

• German Industrial Orders MM (Nov) -5.4% vs. Exp. 0.0% (Prev. -1.5%); Excluding large orders, incoming orders were 0.2% higher M/M.
• German Retail Sales MM Real (Nov) -0.6% vs. Exp. 0.5% (Prev. -1.5%); YY Real (Nov) 2.5% vs. Exp. 1.9% (Prev. 1.0%)
• Swedish CPIF Flash YY (Dec) 1.5% vs. Exp. 1.7% (Prev. 1.8%); Ex Energy Flash YY (Dec) 2.1% vs. Exp. 2.2% (Prev. 2.4%)
• EU Economic Sentiment (Dec) 93.7 vs. Exp. 95.6 (Prev. 95.8, Rev. 95.6); Services Sentiment (Dec) 5.9 vs. Exp. 5.8 (Prev. 5.3); Consumer Confidence. Final (Dec) -14.5 vs. Exp. -14.5 (Prev. -14.5); Industrial Sentiment (Dec) -14.1 vs. Exp. -11.7 (Prev. -11.1, Rev. -11.4); Selling Price Expec (Dec) 7.6 (Prev. 7.1); Cons Infl Expec (Dec) 21.0 (Prev. 17.7, Rev. 17.8); Producer Prices YY (Nov) -1.2% vs. Exp. -1.3% (Prev. -3.2%, Rev. -3.3%); Producer Prices MM (Nov) 1.6% vs. Exp. 1.5% (Prev. 0.4%)

• Venezuelan President Maduro said two US nationals were arrested as part of a group of seven mercenaries. It was separately reported that the Biden administration is set to roll out new sanctions against Venezuelan President Maduro's regime this week ahead of the Venezuelan Presidential Inauguration, according to an Axios reporter.

• Bitcoin continues to slip and currently holds around the USD 95.5k mark; ETH also moved lower in tandem, currently USD 3.3k.

• APAC stocks traded mixed following the weak handover from Wall St where tech underperformed as yields climbed after the hot ISM Services and strong JOLTS data.
• ASX 200 gained amid strength in mining stocks and the top-weighted financial sector, while participants digested mixed monthly inflation data in which the Weighted CPI reading topped forecasts, but the annual trimmed mean figure softened. Capital Economics suggested would provide greater confidence the RBA is on track to meet its inflation mandate if it the result is replicated in the quarterly figures due later this month.
• Nikkei 225 gradually nursed the majority of its opening losses and reclaimed the key 40,000 level.
• Hang Seng and Shanghai Comp were pressured with market participants underwhelmed by the latest press briefing in Beijing where the NDRC announced to expand the scope of home appliance trade-ins eligible for subsidies, while frictions lingered with China's MOFCOM voicing criticism over recent US restrictions on Chinese companies.

NOTABLE ASIA-PAC HEADLINES

• NDRC Vice Chairman announces loan discounts for equipment upgrades and expansion of trade-in program to include more consumer goods, while the number of types of household appliances eligible for recycling subsidies to increase from 8 to 12 with a maximum subsidy of 20% of the sales price for each item. NDRC said it will allocate special funds to support the recycling and treatment of waste electrical and electronic products, as well as include microwaves, water purifiers, dish-washing machines and rice cookers in the consumer goods trade-in subsidy scope. Furthermore, it will subsidise smartphones for up to 15% of the price and will support equipment upgrades of information technology, safe production and agriculture equipment.
• Chinese Finance Ministry official said the government has allocated CNY 81bln for consumer goods trade-ins so far this year, while a PBoC official stated they will step up financial support for private and small firms in equipment upgrades with the central bank allocating CNY 100bln of loans for select small technology firms.
• China condemned the US military blacklisting of Chinese companies and called on the US to immediately address its misconduct, while it said the US is endangering the stability of the global supply chain.
• China PCA December Prelim Retail Passenger Vehicle Sales +9% M/M (prev. +7.1%); +11% Y/Y (prev. 16.5%)

DATA RECAP

• Australian Weighted CPI YY (Nov) 2.3% vs. Exp. 2.2% (Prev. 2.1%)
• Australian CPI Annual Trimmed Mean YY (Nov) 3.2% (Prev. 3.5%)

• APAC stocks traded mixed following the weak handover from Wall St where tech underperformed as yields climbed after the hot ISM Services and strong JOLTS data.
• Hang Seng and Shanghai Comp were pressured with market participants underwhelmed by the latest NDRC press briefing in Beijing.
• AUD/USD choppy following the latest monthly inflation data from Australia in which the Weighted CPI printed firmer than expected but the annual trimmed mean CPI softened from previous.
• European equity futures indicate a lower cash open with Euro Stoxx 50 futures down 0.2% after the cash market closed with gains of 0.5% on Tuesday.
• Looking ahead, highlights include US Jobless Claims, Wholesale Inventory and EIA Nat Gas Change (brought forward on account of the US Day of Mourning), German Retail Sales, EZ Economic Sentiment, US ADP National Employment, Comments from Fed's Waller, FOMC Minutes, Supply from UK, Germany & US, Earnings from Jefferies.

• Click for the Newsquawk Week Ahead.

• US stocks saw broad-based weakness on Tuesday with underperformance in the Nasdaq 100 (-1.8%) with price action drive in the wake of a hot US ISM Services and JOLTS report in which the former beat expectations and was accompanied by a notable upside in the prices paid subcomponent, while JOLTS data surpassed the top end of analysts' forecast range. The data weighed on treasuries and spurred a resurgence of the dollar which recouped its initial losses and more, to the detriment of all G10 FX peers.
• SPX -1.11% at 5,909, NDX -1.79% at 21,173, DJIA -0.42% at 42,528, RUT -0.74% at 2,250.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President-elect Trump said something will have to be done with Canada and Mexico trade and he flagged very serious tariffs on Mexico and Canada. Trump also said that interest rates are far too high and that he is ok with spending cuts, while he does not want to see a default and just wants to see an extension on the debt ceiling.

• APAC stocks traded mixed following the weak handover from Wall St where tech underperformed as yields climbed after the hot ISM Services and strong JOLTS data.
• ASX 200 gained amid strength in mining stocks and the top-weighted financial sector, while participants digested mixed monthly inflation data in which the Weighted CPI reading topped forecasts, but the annual trimmed mean figure softened. Capital Economics suggested would provide greater confidence the RBA is on track to meet its inflation mandate if it the result is replicated in the quarterly figures due later this month.
• Nikkei 225 gradually nursed the majority of its opening losses and reclaimed the key 40,000 level.
• Hang Seng and Shanghai Comp were pressured with market participants underwhelmed by the latest press briefing in Beijing where the NDRC announced to expand the scope of home appliance trade-ins eligible for subsidies, while frictions lingered with China's MOFCOM voicing criticism over recent US restrictions on Chinese companies.
• US equity futures recouped some of the recent losses albeit with the recovery only modest amid the mixed risk tone in Asia.
• European equity futures indicate a lower cash open with Euro Stoxx 50 futures down 0.2% after the cash market closed with gains of 0.5% on Tuesday.

• DXY took a breather after strengthening yesterday on the back of the hot ISM Services PMI data and as JOLTS data topped analysts' forecast range. There were also prior comments from Fed's Barkin which provided very little new fresh insight, while the attention now turns to the FOMC Minutes, ADP Employment and Initial Jobless Claims data.
• EUR/USD attempted to regain some composure after its slide beneath the 1.0400 level and with the single currency not helped by mixed inflation data.
• GBP/USD struggled for direction after reverting to the sub-1.2500 territory and amid a lack of fresh UK-specific catalysts.
• USD/JPY traded indecisively and on both sides of the 158.00 level amid a quiet data calendar for Japan and the mixed risk tone.
• Antipodeans was ultimately flat with AUD/USD choppy following the latest monthly inflation data from Australia in which the Weighted CPI printed firmer than expected but the annual trimmed mean CPI softened from previous, while Capital Economics noted the data increases the risk that the RBA will begin rate cuts earlier than May.
• PBoC set USD/CNY mid-point at 7.1887 vs exp. 7.3435 (prev. 7.1879).

• 10yr UST futures remained subdued after slipping in the aftermath of the hot ISM Services and JOLTS data, while prices were also not helped by a soft 10yr auction.
• Bund futures languished near the prior day's lows beneath the 132.00 level ahead of supply and following the somewhat mixed EU inflation data.
• 10yr JGB futures tracked the recent losses in global counterparts while the BoJ also reduced the amounts in its rinban purchases as flagged in December.

• Crude futures marginally extended on the prior day's gains with upside seen after the latest private sector inventory data showed a larger-than-expected draw in headline crude and with Cushing stockpiles also at a draw, while gasoline and distillate both showed greater-than-expected builds.
• Private inventory data (bbls): Crude -4.0mln (exp. -0.2mln), Distillate +3.2mln (exp. +0.6mln), Gasoline +7.3mln (exp. +1.5mln), Cushing -3.1mln.
• Qatar set February Marine Crude OSP at Oman/Dubai + USD 0.45/bbl and Land Crude OSP at Oman/Dubai + USD 0.30/bbl.
• Spot gold traded sideways with price action contained around USD 2,650/oz as participants awaited the FOMC Minutes and further employment-related metrics.
• Copper futures lacked firm direction amid the mixed risk appetite in Asia and the subdued mood in China.

• Bitcoin continued on its pullback overnight beneath the USD 97,000 level.

NOTABLE ASIA-PAC HEADLINES

• NDRC Vice Chairman announces loan discounts for equipment upgrades and expansion of trade-in program to include more consumer goods, while the number of types of household appliances eligible for recycling subsidies to increase from 8 to 12 with a maximum subsidy of 20% of the sales price for each item. NDRC said it will allocate special funds to support the recycling and treatment of waste electrical and electronic products, as well as include microwaves, water purifiers, dish-washing machines and rice cookers in the consumer goods trade-in subsidy scope. Furthermore, it will subsidise smartphones for up to 15% of the price and will support equipment upgrades of information technology, safe production and agriculture equipment.
• Chinese Finance Ministry official said the government has allocated CNY 81bln for consumer goods trade-ins so far this year, while a PBoC official stated they will step up financial support for private and small firms in equipment upgrades with the central bank allocating CNY 100bln of loans for select small technology firms.
• China condemned the US military blacklisting of Chinese companies and called on the US to immediately address its misconduct, while it said the US is endangering the stability of the global supply chain.

DATA RECAP

• Australian Weighted CPI YY (Nov) 2.3% vs. Exp. 2.2% (Prev. 2.1%)
• Australian CPI Annual Trimmed Mean YY (Nov) 3.2% (Prev. 3.5%)

MIDDLE EAST

• Israeli Broadcasting Corporation published some details of the document submitted by Israel to negotiate with Hamas which includes a proposal to withdraw from the "Netzarim Corridor", humanitarian aid, and release of prisoners in stages, according to Sky News Arabia. The aim of the agreement is to release all Israeli hostages held in the Gaza Strip and in exchange for the release of the hostages, Israeli forces will withdraw from the Gaza Strip and the Strip will be reconstructed, while an agreed number of Palestinian prisoners held by Israel would be released and sustainable calm will be restored, leading to a permanent ceasefire.
• US President-elect Trump’s Middle East envoy Witkoff said they hope to have good things related to the Gaza hostage talks by the January 20th inauguration.

OTHER

• US President-elect Trump said he can't assure of either of the two when asked for assurance that he will not use military or economic coercion as he tries to get control over Greenland, while he would consider tariffs on Denmark over Greenland and cannot assure not using military or economic coercion on the Panama Canal.
• Venezuelan President Maduro said two US nationals were arrested as part of a group of seven mercenaries. It was separately reported that the Biden administration is set to roll out new sanctions against Venezuelan President Maduro's regime this week ahead of the Venezuelan Presidential Inauguration, according to an Axios reporter.

• European bourses are mixed, US futures gain slightly.
• USD remains soggy vs. peers, EUR digests CPI metrics, Antipodeans lead.
• USTs are contained into data, EGBs lift slightly on HICP, Gilts lag.
• A choppy start for crude while spot gold benefits from the broadly softer Dollar.
• Looking ahead, US ISM Services PMI, JOLTS Job Openings, International Trade, Canadian Imports/Exports, Comments from Fed's Barkin, Supply from the US.

• European bourses opened mostly in the red, but sentiment lifted slowly as the morning progressed to display a more mixed picture in Europe.
• European sectors began the morning with a slight negative bias, but now display a more mixed picture. Financial Services takes the top spot, joined closely by Retail and then by Basic Resources to complete the top 3. The latter is buoyed by gains in underlying metals prices. Banks sit at the foot of the pile, but with losses to a similar magnitude as Insurance and Healthcare.
• US equity futures are incrementally in the green, with the NQ/ES ultimately taking a breather after the tech-led strength seen in the prior session.
• Nvidia (NVDA): At CES 2025, Nvidia CEO unveiled its GeForce RTX 50 series GPU (RTX 5070-5090, priced USD 549-1,999) featuring Blackwell architecture and GDDR7 memory. It also introduced Project Digits, a USD 3,000 AI supercomputer with the GB10 Grace Blackwell Superchip, and announced AI advancements for robotics and self-driving cars.
• Deutsche Bank has turned Overweight on European equities vs the US. Upgrades the European Healthcare sector to Overweight.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
• Click for a detailed summary

• USD is softer vs. all peers with DXY down for a third consecutive session. Recent price action for the Greenback has been dictated by the recent Washington Post report that Trump's tariff plans may not be as bad as initially feared. Whilst Trump did later attempt to downplay this, ING is of the view that "there is no smoke without fire". For today's docket, attention will be on ISM services PMI and JOLTS data ahead of NFP on Friday. DXY has been as low as 107.84 but is holding above yesterday's 107.75.
• EUR remains supported after being catapulted from a 1.0294 base yesterday in the wake of reports that the Trump tariff programme may be less stringent than initially feared. The macro focus has been on the December Eurozone inflation report which showed headline HICP advancing to 2.4% from 2.2% as expected and the super-core rate holding steady at 2.7%. Some minor softness was observed in EUR/USD amid expectations of a potentially hotter figure given the outturn for Germany yesterday; currently 1.0430.
• JPY is flat vs. the USD after USD/JPY reached its highest level since July during APAC trade at 158.41. This subsequently triggered some jawboning from Japan's Finance Minister Kato who noted they are recently seeing one-sided, rapid moves and reiterated to take appropriate action against excessive moves. Elsewhere, Barclays have shifted their BoJ view and now see the Bank hiking in March and October vs. previous forecast of January and July
• GBP has extended on yesterday's tariff-induced gains vs. the USD with major fresh macro drivers for the UK on the light side today. As such, Cable has eclipsed yesterday's peak at 1.2550 but has failed to sustain a move above its 21DMA at 1.2573.
• Antipodeans are both at the top of the G10 leaderboard with markets continuing to deliberate the prospect of a potentially more friendly tariff programme by the Trump regime.
• CHF is a touch softer vs. the EUR post-Swiss CPI metrics. Y/Y headline CPI fell to 0.6% from 0.7% as expected, whilst the core rate fell to 0.7% from 0.9% (expected 0.8%). The 0.6% outturn means that the average across Q4 as a whole came in around 0.63% and is shy of SNB's 0.7% projection for Q4. EUR/CHF moved back onto a 0.94 handle following the data and is eyeing the 30th December peak at 0.9441.
• PBoC set USD/CNY mid-point at 7.1879 vs exp. 7.2994 (prev. 7.1876).
• Click for a detailed summary
• Click for NY OpEx Details

• USTs are flat, in a narrow 108-13+ to 108-20 band. Complex awaits US data incl. JOLTS and ISM Services alongside Fed’s Barkin (expected to reiterate remarks from 3rd Jan.) before 10yr supply. Last night’s 3yr auction was soft overall and weighed on USTs into settlement.
• Bunds pressured in-fitting with the above and the tentatively constructive European risk tone ahead of Flash HICP. Before that, the December HICP Y/Y figure for France came in cooler than newswire consensus though hotter than the prior.
• Thereafter, EGBs saw fleeting upside on the EZ data which came in in-line for the headline though with services and core slightly hot, upside perhaps driven by expectations for a hotter headline post-Germany; though, the Bunds upside proved shortlived.
• Gilts are underperforming. UK specifics light aside from Construction PMI which spurred no move and a strong BRC Retail Sales report for December, the latter perhaps weighing on Gilts. Given the pressure, which has taken Gilts to a 91.68 trough just above last week's 91.65 base and the contract low a tick below at 91.64, yields are firmer across the curve with the 30yr above 5.21% and at its highest since 1998. A slightly soft, but robust overall, UK auction spurred little move in Gilts.
• UK sells GBP 2.25bln 4.375% 2054 Gilt: b/c 2.75x (prev. 3.0x), average yield 5.198% (prev. 4.747%) & tail 0.3bps (prev. 0.4bps).
• Germany sells EUR 3.472bln vs exp. EUR 4.5bln 2.00% 2026 Schatz: b/c 2.30x (prev. 2.30x), average yield 2.18% (prev. 1.94%) & retention 22.8% (prev. 19.84%).
• Click for a detailed summary

• A relatively choppy start to the session for the crude complex, though benchmarks currently resides near the bottom end of the day’s ranges. Macro developments have been light thus far, so focus will likely be on US ISM Services PMI alongside JOLTS Job Openings. Brent'Mar currently towards the lower end of a USD 75.91-76.36/bbl range.
• Gold is firmer but only modestly so. Upside as a result of the soft USD and relatively tepid risk tone thus far. Furthermore, a modest bullish reaction was seen on China’s monthly reserves figures, which showed the second consecutive monthly increase in gold reserves. At the upper-end of USD 2632-2646/oz parameters, which is entirely within but towards the top-end of Monday’s parameters.
• Copper is modestly firmer, taking impetus from the softer USD and perhaps from the European risk tone, though that has been slightly more tentative thus far. 3M LME Copper holding above the USD 9k handle.
• BofA says natgas balances likely to tighten in 2025 as 2.5 BCF/D of demand growth outruns the 2.1 BCF/D of supply growth, supporting the bullish outlook
• Click for a detailed summary

NOTABLE DATA RECAP

• EU HICP Flash YY (Dec) 2.4% vs. Exp. 2.4% (Prev. 2.2%); services inflation 4.0% (prev. 3.9%); EU HICP-X F,E,A&T Flash YY (Dec) 2.7% vs. Exp. 2.7% (Prev. 2.7%); EU HICP-X F&E Flash YY (Dec) 2.8% vs. Exp. 2.7% (Prev. 2.7%); EU HICP-X F, E, A, T Flash MM (Dec) 0.50% (Prev. -0.60%)
• EU Unemployment Rate (Nov) 6.3% vs. Exp. 6.3% (Prev. 6.3%)
• UK BRC Retail Sales YY (Dec) 3.1% (Prev. -3.4%); Total Sales YY 3.2% (Prev. -3.3%)
• UK Halifax House Prices MM (Dec) -0.2% vs. Exp. 0.4% (Prev. 1.3%); YY 3.30% vs Exp. 4.20% (Prev. 4.80%)
• Swiss CPI YY (Dec) 0.6% vs. Exp. 0.6% (Prev. 0.7%); Core 0.7% vs. Exp. 0.8% (prev. 0.9%)
• French CPI (EU Norm) Prelim YY (Dec) 1.8% vs. Exp. 1.9% (Prev. 1.7%)
• German HCOB Construction PMI (Dec) 37.8 (Prev. 38.0)
• French HCOB Construction PMI (Dec) 42.6 (Prev. 43.7)
• Italian HCOB Construction PMI (Dec) 51.2 (Prev. 48.5)
• EU HCOB Construction PMI (Dec) 42.9 (Prev. 42.7)
• UK S&P Global Construction PMI (Dec) 53.3 vs. Exp. 54.4 (Prev. 55.2)
• Italian CPI (EU Norm) Prelim YY (Dec) 1.4% vs. Exp. 1.6% (Prev. 1.5%); CPI (EU Norm) Prelim MM (Dec) 0.1% vs. Exp. 0.3% (Prev. -0.1%); Consumer Price Prelim YY (Dec) 1.3% vs. Exp. 1.5% (Prev. 1.3%); Consumer Price Prelim MM (Dec) 0.1% (Prev. -0.1%)

NOTABLE EUROPEAN HEADLINES

• Barclays UK December consumer spending was flat Y/Y compared to December 2023.
• ECB Consumer Expectations Survey (Nov): See inflation in next 12 months at 2.6% (prev. 2.5%); 3y ahead sees 2.4% (prev. 2.1%). Economic growth expectations for the next 12 months became more negative, to stand at -1.3% in November, compared with -1.1% in October.

NOTABLE US HEADLINES

• Fed Governor Bowman is reportedly the top candidate to replace Fed's Barr as Vice Chair of Supervision, according to Semafor.
• New York judge denied US President-elect Trump's request to delay sentencing in hush money case, according to a court ruling cited by Reuters.
• US President-elect Trump commented on Truth Social that many people in Canada love being the 51st state and the US can no longer suffer the massive trade deficits and subsidies Canada needs to stay afloat. Furthermore, he stated if Canada merged with the US, there would be no tariffs, taxes would go down, and they would be completely secure from the threat of Russian and Chinese ships constantly surrounding them.
• Canada reportedly considers an early release of retaliatory tariffs against the US, according to The Globe and Mail.
• China Foreign Ministry on US President-elect Trump talking to President Xi through aides, about the exchanges between China/US, says China attaches importance to the remarks of Trump.

MIDDLE EAST

• Senior Israeli Foreign Ministry official says Israel is fully committed to conclude a hostage deal; the only way to get a deal is to put pressure on Hamas
• Israeli army said it bombed a cell of militants in the town of Tammun, south of Tubas, in the northern West Bank, according to Al Jazeera.
• Hamas leader said they asked for maps outlining the withdrawal process and the atmosphere pointing to an integrated deal to end the war in Gaza, according to Asharq News.
• "Iranian media report that the first phase of manoeuvres to test the defense systems of the Natanz nuclear facility has begun", according to journalist Elster.

OTHER

• North Korea confirmed Monday's launch of a new hypersonic missile, while it was separately reported that North Korea plans to launch an ICBM before the Trump inauguration, according to Chosun Ilbo. In relevant news, South Korean acting President Choi said they are to respond sternly to North Korean provocation and that North Korea missile test poses a significant security threat.

• Bitcoin continues to remain near the prior day's peaks, holding just shy of the USD 102k mark.
• CFTC's Benham says he is concerned that regulation for digital assets, which include Bitcoin and other crypto's, remain insufficient; is to step down from his position on Jan 20, via the FT.

• APAC stocks were mostly higher following the tech strength stateside where Nvidia briefly reclaimed the largest market cap title and closed at a fresh record.
• ASX 200 eked mild gains as strength in tech and telecoms picked up the slack from the weakness in the utilities, miners and materials sectors, while advances were limited amid disappointing Building Approvals data which showed a wider-than-expected contraction.
• Nikkei 225 outperformed on a break above the 40,000 level with the index propelled by a weaker currency.
• Hang Seng and Shanghai Comp were pressured from early in the session with heavy losses in Hong Kong after the Pentagon added several companies including Tencent (700 HK) and CATL to the US list of firms alleged to help Beijing's military, while the downside in the mainland was gradually cushioned following the announcement that China is to hold a briefing on consumer goods trade-in program on Wednesday involving officials from the PBoC, MoF and NDRC.

NOTABLE ASIA-PAC HEADLINES

• US Treasury Secretary Yellen spoke with Chinese Vice Premier He Lifeng and discussed economic developments, while she raised issues of concern including China's non-market policies and industrial overcapacity, as well as expressed serious concern about 'malicious' cyber activity by Chinese state-sponsored actors. Furthermore, she underscored 'significant consequences' facing Chinese companies for material support to Russia, according to Reuters.
• Japanese Finance Minister Kato said they are seeing one-sided and sudden FX moves. He reiterated that it is important for currencies to move in a stable manner reflecting fundamentals. Kato said he is alarmed over FX moves including those driven by speculators and will take appropriate action against excessive moves, while he also commented that they cannot rule out the chance of Japan going back to deflation.
• Japan's Keizai Doyukai (business lobby) Chief Ninami says wage growth this year at big firms will likely match levels similar to that of last year.
• Japan's Chamber of Commerce and Industry Head says the number of small/medium-sized firms which will raise wages should rise slightly this year.

DATA RECAP

• Australian Building Approvals (Nov) -3.6% vs. Exp. -1.0% (Prev. 4.2%, Rev. 5.2%)
• Chinese FX Reserves (Monthly) (Dec) 3.202Trl vs. Exp. 3.247Trl (Prev. 3.266Trl); Gold reserves USD 191.3bln (prev. 193bln); Gold reserves 73.29mln/oz (prev. 72.9mln)

• APAC stocks were mostly higher following the tech strength stateside where Nvidia briefly reclaimed the largest market cap title and closed at a fresh record.
• DXY felt some slight reprieve from the prior day's selling pressure, EUR/USD held on to most of yesterday's gains, USD/JPY briefly breached the 158.00 level to the upside.
• Canada reportedly considers an early release of retaliatory tariffs against the US, according to The Globe and Mail.
• European equity futures indicate a negative cash open with Euro Stoxx 50 futures down 0.4% after the cash market closed higher by 2.4% on Monday.
• Looking ahead, highlights include Swiss CPI, ECB SCE, EZ HICP & Unemployment, US ISM Services PMI, JOLTS Job Openings, International Trade, Canadian Imports/Exports, Comments from Fed's Barkin, Supply from UK, Germany & US.

• Click for the Newsquawk Week Ahead.

• US stocks were ultimately mixed with outperformance seen in the Nasdaq as large caps gained and semis were bid following commentary from Microsoft (MSFT) which is to spend USD 80bln on AI data centres and as attention turns to CES this week with Nvidia CEO speaking overnight.
• Equity futures were bid early on after a report in The Washington Post that Trump's trade policies are going to focus on certain sectors, essentially a watered-down tariff proposal from what Trump was gunning for during the election, although Trump later refuted the Post's claims in which he stated the story of paring back his tariff policy is wrong and fake news.
• SPX +0.55% at 5,975, NDX +1.09% at 21,559, DJIA -0.06% at 42,707, RUT -0.08% at 2,267.
• Click here for a detailed summary.

NOTABLE HEADLINES

• New York judge denied US President-elect Trump's request to delay sentencing in hush money case, according to a court ruling cited by Reuters.
• US President-elect Trump commented on Truth Social that many people in Canada love being the 51st state and the US can no longer suffer the massive trade deficits and subsidies Canada needs to stay afloat. Furthermore, he stated if Canada merged with the US, there would be no tariffs, taxes would go down, and they would be completely secure from the threat of Russian and Chinese ships constantly surrounding them.
• Canada reportedly considers an early release of retaliatory tariffs against the US, according to The Globe and Mail.

• APAC stocks were mostly higher following the tech strength stateside where Nvidia briefly reclaimed the largest market cap title and closed at a fresh record.
• ASX 200 eked mild gains as strength in tech and telecoms picked up the slack from the weakness in the utilities, miners and materials sectors, while advances were limited amid disappointing Building Approvals data which showed a wider-than-expected contraction.
• Nikkei 225 outperformed on a break above the 40,000 level with the index propelled by a weaker currency.
• Hang Seng and Shanghai Comp were pressured from early in the session with heavy losses in Hong Kong after the Pentagon added several companies including Tencent (700 HK) and CATL to the US list of firms alleged to help Beijing's military, while the downside in the mainland was gradually cushioned following the announcement that China is to hold a briefing on consumer goods trade-in program on Wednesday involving officials from the PBoC, MoF and NDRC.
• US equity futures were rangebound and struggled for direction after the prior day's mixed and choppy performance.
• European equity futures indicate a negative cash open with Euro Stoxx 50 futures down 0.4% after the cash market closed higher by 2.4% on Monday.

• DXY felt some slight reprieve from the prior day's selling pressure that was exacerbated by a Washington Post report suggesting a potential moderation of Trump's aggressive tariff plans which dragged the DXY briefly beneath the 108.00 level before rebounding off intraday lows as Trump later refuted the report. Elsewhere, recent data provided little to spur a recovery as Factory Orders fell more than expected and Final S&P Global PMI data was revised downward on both the composite and services components for December.
• EUR/USD held on to most of yesterday's gains but was off highs after failing to sustain a brief reclaim of the 1.0400 handle, while attention turns to EU inflation.
• GBP/USD took a breather at the 1.2500 territory following its recent outperformance, while overnight data was encouraging as UK BRC Retail Sales returned to growth and Total Sales accelerated at the fastest pace since March last year.
• USD/JPY resumed its advances and briefly breached the 158.00 level to the upside to print its highest in around six months which prompted some jawboning from Japan's Finance Minister Kato who noted they are recently seeing one-sided, rapid moves and reiterated to take appropriate action against excessive moves.
• Antipodeans kept afloat with gains gradual after a firmer-than-expected yuan reference rate and disappointing Australian Building Approvals data.
• PBoC set USD/CNY mid-point at 7.1879 vs exp. 7.2994 (prev. 7.1876).

• 10yr UST futures were little changed after the recent indecisive performance as Trump refuted reports that he is dialling back on his tariff policies, while prices were also not helped in the aftermath of a soft 3yr auction stateside.
• Bund futures attempted to nurse some of their recent losses but with the recovery limited by firmer-than-expected German inflation and as supply looms.
• 10yr JGB futures were constrained as yields continued to gain with the 30yr yield at its highest since 2010, although there was slight support seen after a stronger-than-previous 10yr JGB auction.

• Crude futures were subdued after the prior day's whipsawing as indecision was seen across a wide range of asset classes alongside the Trump tariff reports.
• Bloomberg OPEC Survey for December found crude output fell 120k BPD to 27.05mln BPD with output dipping as UAE improves delivery of cuts.
• Spot gold traded rangebound with only mild support seen despite the recent dollar weakness.
• Copper futures lacked conviction as sentiment in its largest purchaser China lagged behind regional peers amid trade-related frictions.

• Bitcoin marginally eased back overnight following yesterday's resurgence to above the USD 102,000 level.

NOTABLE ASIA-PAC HEADLINES

• US Treasury Secretary Yellen spoke with Chinese Vice Premier He Lifeng and discussed economic developments, while she raised issues of concern including China's non-market policies and industrial overcapacity, as well as expressed serious concern about 'malicious' cyber activity by Chinese state-sponsored actors. Furthermore, she underscored 'significant consequences' facing Chinese companies for material support to Russia, according to Reuters.
• Japanese Finance Minister Kato said they are seeing one-sided and sudden FX moves. He reiterated that it is important for currencies to move in a stable manner reflecting fundamentals. Kato said he is alarmed over FX moves including those driven by speculators and will take appropriate action against excessive moves, while he also commented that they cannot rule out the chance of Japan going back to deflation.

DATA RECAP

• Australian Building Approvals (Nov) -3.6% vs. Exp. -1.0% (Prev. 4.2%, Rev. 5.2%)

MIDDLE EAST

• Israeli army said it bombed a cell of militants in the town of Tammun, south of Tubas, in the northern West Bank, according to Al Jazeera.
• Hamas leader said they asked for maps outlining the withdrawal process and the atmosphere pointing to an integrated deal to end the war in Gaza, according to Asharq News.

RUSSIA-UKRAINE

OTHER

• North Korea confirmed Monday's launch of a new hypersonic missile, while it was separately reported that North Korea plans to launch an ICBM before the Trump inauguration, according to Chosun Ilbo. In relevant news, South Korean acting President Choi said they are to respond sternly to North Korean provocation and that North Korea missile test poses a significant security threat.

NOTABLE HEADLINES

• Barclays UK December consumer spending was flat Y/Y compared to December 2023.

DATA RECAP

• UK BRC Retail Sales YY (Dec) 3.1% (Prev. -3.4%)
• UK BRC Total Sales YY (Dec) 3.2% (Prev. -3.3%)

• European bourses are generally in the green; the NQ outperforms, with Tech lifted after Foxconn reported record Q4 revenue.
• USD is on the backfoot which has helped to lift G10 peers, JPY underperforms.
• USTs are pressured ahead of 3yr supply; Gilts underperform after a survey showed that 55% of UK businesses intend to lift prices in the next three months (prev. 39%).
• Crude and gold are on the backfoot despite the softer Dollar.
• Looking ahead, German Prelim. CPI, US Services & Composite PMI (Final), Factory Orders, Comments from Fed's Daly, Supply from US.

• European bourses are almost entirely in positive territory (ex-FTSE 100), with sentiment lifted by strength in Tech names. Bourses slipped a touch in early morning trade, but managed to stabilise and then head back to best levels where they generally reside.
• European sectors initially opened with a slight positive bias, but now displays a bit more of a mixed picture. Tech is by far the clear outperformer today, for a couple of reasons. Firstly, Foxconn reported strong December sales figures, helping to lift sentiment in the sector. Elsewhere, reports suggest that Microsoft plans to spend USD 80bln to build out AI this FY.
• US equity futures are entirely in the green, with slight outperformance in the tech-heavy NQ, taking impetus from the sectoral strength seen in Europe thus far.
• Microsoft plans to invest USD 80bln in FY25 to construct AI-capable data centres, with over half of this expenditure directed towards the US, CNBC reports. The investment is part of the company’s broader strategy to support AI advancements, including its partnership with OpenAI.
• Foxconn’s Q4 revenue hit a record USD 64.7bln (+15% Y/Y), exceeding estimates, driven by strong AI server demand. While consumer electronics, including iPhones, saw flat growth, Foxconn expects significant year-on-year growth in Q1 2025. NOTE: Foxconn denied reports that its chairman expressed positive outlook, that 2025 sales will trend upwards topping TWD 7tln, and said the company did not make any such financial forecasts.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
• Click for a detailed summary

• A subdued start to the week thus far with DXY continuing the downward action from Friday and falling further under the 109.00 level to print a current range between 108.43-109.06 (vs Friday's 108.89-109.22 parameter). US Services & Composite PMI (Final) due, with Fed speak from Daly thereafter.
• EUR is firmer amid the broader Dollar weakness and clawing back some of last Thursday's losses, with today's range currently between 1.0296-1.0352 (vs Thursday's best at 1.0372). Further support for the EUR was seen after the German state of Hesse reported December CPI at 2.7% Y/Y (prev. 2.0%).
• Weakness in JPY despite the softer Dollar but as a function of higher US yields, with Tokyo traders returning to the markets following their Christmas and New Year break. The pair was also unfazed by overnight comments from BoJ Governor Ueda who stated that he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on the economy and inflation. USD/JPY resides in a 157.14-82 current range and eyes last Thursday's peak at 157.84.
• Sterling is the top G10 performer this morning amid broader USD weakness alongside potential tailwinds from reports that the percentage of UK businesses planning to raise prices in the coming three months rose to about 55% from 39% as tax increases and higher wage costs caused confidence to slump, according to a survey of 5,000 businesses by the British Chambers of Commerce via FT. GBP/USD resides in a USD 1.2408-1.2491 parameter as it eyes last Thursday's high at 1.2535.
• Antipodeans are both firmer amid the broader rise in high-beta FX, with Antipodeans also feeling tailwinds from higher base metals. Overnight, Antipodeans benefitted alongside the early strength in CNH after the PBoC continued to set a much stronger-than-expected yuan reference rate setting although the upside was limited and there was a relatively muted reaction to the varied Caixin PMI data.
• PBoC set USD/CNY mid-point at 7.1876 vs exp. 7.3035 (prev. 7.1878).
• Click for a detailed summary
• Click for NY OpEx Details

• USTs are pressured following the downside seen last week post-data and as the region awaits a hefty and frontloaded supply schedule. Furthermore, JGBs influenced overnight with the contract to a fresh low after remarks from Ueda who stated that he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on the economy and inflation. As it stands, USTs are at lows of 108-12, matching the 30th December base with support from the session’s proceeding at 108-11+ and then the 108-06+ contract trough.
• Bunds are softer in-fitting with the above and as the region counts down to its own supply. Macro focus this morning has been on the Final PMIs, PMIs which were subject to upward revisions across the board sparking some modest pressure in EGBs. Furthermore, while most of the German State CPIs are scheduled for release later in the week after the mainland figure, the metric from Hesse came in much hotter than the prior for December Y/Y; which, if indicative, presents a further upward skew to the mainland numbers later today. Bunds are currently at a 132.22 low, a base which leaves just the contract trough at 132.00 from November as support.
• Gilts underperformed into its own PMI metrics, which saw modest downward revisions and helped to lift Gilts slightly off their base, though the benchmark was unable to reclaim the 92.00 mark or by extension test the opening 92.02 high. The referenced initial pressure stemmed from a British Chambers of Commerce survey which reported that 55% of UK businesses intend to lift prices in the next three months (prev. 39%) amid tax increases and elevated wage costs. Action which has pushed Gilts to a 91.78 base, within reach of the 91.64 contract low from December. As such, the UK’s 10yr yield is back towards highs of 4.65% from end-2024, levels which continue to pressure Chancellor Reeves’s headroom.
• Saudi Arabia mandates USD 3,6,10yr benchmarks, according to IFR. 3yr debt IPT at 120bps over UST. 10yr debt IPT at around 140bps over UST.
• Click for a detailed summary

• WTI and Brent are softer with prices failing to garner much support from the declining Dollar and overall positive risk tone in Europe, although APAC sentiment was mostly subdued. Geopolitical updates include reports that Israel wants to keep some sites outside the northern border in Lebanon indefinitely. Brent Mar sits in a USD 76.11-76.89/bbl parameter.
• Nat Gas is modestly softer intraday in fitting with the broader price action in energy. Some upticks were seen amid reports that European gas storage is depleting at the fastest rate since 2018, according to Bloomberg citing sources. Meanwhile, a major winter storm is reported to have hit the US, producing heavy snow and significant ice which is expected to last days, with some 30 states issuing weather alerts; US Nat Gas futures rose 9% intraday.
• Gold is subdued despite the softer Dollar in the run-up to this week's risk events including the FOMC Minutes and NFP jobs data. Spot gold resides in a narrow USD 2,647.49-2,625.26/oz range after dipping under Friday's USD 2,636.70/oz.
• Copper is on a firmer footing amid the softer dollar, Chinese Caixin Services PMI also has provided some tailwinds. 3M LME copper resides in a USD 8,781.50-8,913.00/t range.
• Saudi Aramco February Crude OSP: Arab light to US at + USD 3.50/bbl vs ASCI; Arab light to NW Europe at + USD 0.05/bbl to ICE Brent, via Aramco.
• Ukraine reportedly attempted to attack Zaporizhzhia nuclear power plant on January 5th with drones, according to Ifx citing Russian defence minister.
• US plans more sanctions on tankers carrying Russian oil, according to a source cited by Reuters.
• LNG tanker Coral Nordic will unload at Belgium’s Zeebrugge terminal on January 9th from Ruvys.
• German energy import Uniper’s (UN01 GY) CEO Mike Lewis said the company is working to protect its fleet of LNG tankers from seizure by nations friendly to Russia after it was hit with a EUR 14bln penalty by a Russian court in March as part of an international dispute with a subsidiary of Russian state-backed gas company Gazprom, according to FT.
• European gas storage depletes at the fastest rate since 2018, according to Bloomberg citing sources. Storage at 70% full on January 4th vs the 5yr seasonal average of 76%.
• Goldman Sachs cut its gold price forecast in which it sees the precious metal to reach USD 2,910/oz by year-end and pushed back its USD 3,000/oz target to mid-2026, citing slower-than-expected Fed easing.
• Click for a detailed summary

NOTABLE DATA RECAP

• German Hesse State CPI YY (Dec) 2.7% (Prev. 2.0%)
• German HCOB Services PMI (Dec) 51.2 vs. Exp. 51.0 (Prev. 51.0); HCOB Composite Final PMI (Dec) 48.0 vs. Exp. 47.8 (Prev. 47.8)
• French HCOB Services PMI (Dec) 49.3 vs. Exp. 48.2 (Prev. 48.2); HCOB Composite PMI (Dec) 47.5 vs. Exp. 46.7 (Prev. 46.7)
• Italian HCOB Services PMI (Dec) 50.7 vs. Exp. 50.3 (Prev. 49.2); HCOB Composite PMI (Dec) 49.7 (Prev. 47.7)
• Spanish Services PMI (Dec) 57.3 (Prev. 53.1)
• UK S&P Global Service PMI (Dec) 51.1 vs. Exp. 51.4 (Prev. 51.4); S&P Global PMI: Composite (Dec) 50.4 vs. Exp. 50.5 (Prev. 50.5)
• EU HCOB Services Final PMI (Dec) 51.6 vs. Exp. 51.4 (Prev. 51.4)
• EU Sentix Index (Jan) -17.7 vs. Exp. -18.0 (Prev. -17.5)

NOTABLE EUROPEAN HEADLINES

• The percentage of UK businesses planning to raise prices in the coming three months rose to about 55% from 39% as tax increases and higher wage costs caused confidence to slump, according to a survey of 5,000 businesses by the British Chambers of Commerce via FT.
• Austrian Chancellor Nehammer said coalition talks between the two largest centrist parties in Austria on forming a government without the far-right Freedom Party have collapsed, while he will stand down as Chancellor and leader of the People’s Party in the coming days. It was later reported that the Austrian President van der Bellen agreed to meet with far-right Freedom Party leader Kickl on Monday and that Conservative People’s Party (OVP) Secretary-General Stocker was named as interim party leader. Furthermore, Stocker expects far-right leader Kickl will be tasked with forming a government and said the OVP will take part in coalition talks with the far-right Freedom Party and take them seriously.
• Many Eurozone economists warned that the ECB has been too slow to cut interest rates to help the economy and 46% of the economists surveyed said the ECB had fallen behind the curve, according to a poll by FT.
• French Budget Minister reiterates there will be a "Special Tax" on the biggest companies; is convinced they can find a majority in parliament to get a budget through. The 2024 deficit will be "around" 6.1%; sees 2025 deficit in a 5-5.5% range

NOTABLE US HEADLINES

• US President-elect Trump urged his fellow Republicans in Congress to combine his priorities into one bill which would cut taxes, bolster border security and increase domestic energy production, writing "it will all be made up with tariffs, and much more, from countries that have taken advantage of the U.S. for years". (Truth Social)
• Biden-Harris administration announces Arizona state University research park as the planned site for third chips for America R&D flagship facility.
• US National Security Advisor Sullivan says the US is finalising steps to remove roadblocks in civil nuclear partnerships with Indian firms.
• Fed's Kugler (voter) said on Friday that the economy ended 2024 in a good place with good growth and the process of disinflation has kept going, while she added that the labour market remains resilient and has been cooling gradually. Furthermore, Kugler said data will drive what the Fed does with policy and that there is a view that the Fed can take time on future rate cuts, according to CNBC. Kugler also commented over the weekend that inflation has been coming down but the job on inflation is not done, while she said they have moved to a more moderate level of restrictiveness and that they are heading towards the 2% inflation target, according to Reuters.
• Fed’s Daly (2027 voter) said inflation remains uncomfortably above their target, according to Reuters.
• New York became the first US city to launch a congestion charge zone on Sunday, according to FT.
• Canadian PM Trudeau is likely to resign prior to the national caucus meeting on Wednesday, according to Canadian press. There were separate comments from a source familiar with Trudeau's that the PM is increasingly likely to announce he intends to step down but has not made a final decision. Furthermore, Polymarket’s odds for Trudeau to resign before February surged to over 70% over the weekend from around 33% on Friday, while Globe & Mail columnist Lawrence Martin commented on X that “Everybody's gearing up for Trudeau's resignation announcement, expected by Monday”.

MIDDLE EAST

• US President Biden notified Congress of USD 8bln arms sale to Israel, according to Axios.
• Hamas said it approved a list of 34 hostages presented by Israel to be exchanged in a ceasefire deal. However, it stated that any deal would depend on an agreement regarding a withdrawal and ceasefire, while it has not seen progress on issues regarding this, and Israeli PM Netanyahu’s office later stated that Hamas had not provided a list of hostage names.
• Saudi Foreign Minister met with US envoy Hochstein in Riyadh and discussed developments in Lebanon and regional issues.
• Syrian Foreign Minister Al-Shibani travelled to Doha to meet with senior Qatari officials.
• US is to ease aid restrictions for Syria in a limited show of support for the new government, according to WSJ.
• Iran will face a difficult year with the Trump administration which plans to increase sanctions on Iran, while the Trump administration sees Iran as still a threat to US allies and the Trump team is considering the option of air strikes to prevent Iran from building a nuclear weapon, according to WSJ.
• Israel wants to keep some sites outside the northern border in Lebanon indefinitely, via AJA Breaking.

RUSSIA-UKRAINE

• IAEA said staff reported hearing loud blasts near Ukraine's Zaporizhzhia Nuclear Power Plant on Sunday which coincided with reports of a drone attack on the plant's training centre, while the IAEA has not been able to confirm any impact and noted that reports stated there were no casualties and no impact on any nuclear power plant equipment, according to Reuters.
• Ukrainian President Zelensky said security guarantees for Ukraine to end Russia's war will only be effective if the US provides them and he needs to sit down with US President-elect Trump to decide how to stop Russian President Putin before Ukraine can enter talks with the Russian side. Zelensky also said Europe must also have a voice in deciding a course of action before Ukraine talks to Russia and that Putin will destroy Europe if the US leaves the NATO military alliance, while he noted that North Korea has provided Russia with 3.7mln artillery shells in the war and that 3,800 North Korean troops fighting Ukraine in Russia's Kursk region have been killed or wounded so far. Furthermore, Zelensky separately commented that there were heavy Russian and North Korean losses in Russia’s Kursk region.
• Ukraine’s air force said on Sunday morning that it had downed 61 drones launched by Russia in an overnight attack.
• Russia’s Defence Ministry said Russian forces took control of the Nadiya settlement in Ukraine’s Luhansk region, while it also announced that Ukraine launched a counter-attack in Russia’s Kursk region.

OTHER

• North Korea fired a suspected ballistic missile which was reported to have fallen shortly after and appeared to have landed outside of Japan's exclusive economic zone, while the South Korea military said North Korea fired what appeared to be one intermediate-range ballistic missile.

• Bitcoin is on a firmer footing and holds just above USD 98k; Ethereum sees gains to a lesser magnitude, and sits comfortably above USD 3.6k.

• APAC stocks traded mostly subdued following the lack of macro catalysts over the weekend and as participants digested the mixed signals from Chinese Caixin PMI data, while Japanese markets underperformed in their first trading session of 2025.
• ASX 200 failed to sustain early gains as strength in real estate and tech was offset by losses in materials and miners.
• Nikkei 225 retreated on return from the New Year holiday closures amid higher yields and after the US blocked Nippon Steel's bid to take over US Steel, while a weaker currency failed to support the risk appetite as participants also braced for weak results from retailers including Fast Retailing and Seven & I Holdings.
• Hang Seng and Shanghai Comp were choppy following the somewhat mixed PMI data in which Chinese Caixin Services PMI data beat expectations, but the Caixin Composite PMI figure slowed, while comments late last week from the PBoC's MPC, which recommended strengthening the intensity of monetary policy adjustments and said it will cut RRR and interest rates at the proper time, did little to spur demand.

NOTABLE ASIA-PAC HEADLINES

• China's stock exchanges asked some mutual funds to restrict stock selling at the start of the year, according to Reuters sources.
• PBoC pledged more financial support for innovation and consumption, while it will encourage foreign capital to invest in domestic tech.
• PBoC is expected to ramp up offshore yuan bill sales in Hong Kong in January and has ample toolkits and experience to react to yuan depreciation, while China has the ability to keep the yuan basically stable at reasonable and balanced levels, according to PBoC-backed Financial News.
• BoJ Governor Ueda said the virtuous cycle strengthened gradually last year and he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on economy and inflation, while Ueda added that momentum for wage increases is key and they must be vigilant to various risks in deciding timing for adjusting degree of monetary support.

DATA RECAP

• Chinese Caixin Services PMI (Dec) 52.2 vs. Exp. 51.4 (Prev. 51.5)
• Chinese Caixin Composite PMI (Dec) 51.4 (Prev. 52.3)

• APAC stocks traded mostly subdued following the lack of macro catalysts over the weekend and as participants digested the mixed signals from Chinese Caixin PMI data, while Japanese markets underperformed in their first trading session of 2025.
• Hang Seng and Shanghai Comp were choppy following the somewhat mixed PMI data in which Chinese Caixin Services PMI data beat expectations, but the Caixin Composite PMI figure slowed.
• US Republican Mike Johnson was re-elected as House Speaker on Friday. Elsewhere, Canadian PM Trudeau is likely to resign prior to the national caucus meeting on Wednesday, according to Canadian press.
• The percentage of UK businesses planning to raise prices in the coming three months rose to about 55% from 39% as tax increases and higher wage costs caused confidence to slump, according to a survey of 5,000 businesses by the British Chambers of Commerce via FT.
• European equity futures indicate a mildly higher cash open with Eurostoxx 50 futures up 0.6% after the cash market closed with losses of 0.9% on Friday.
• Looking ahead, highlights include EZ Sentix Index, German Prelim. CPI, EZ/UK/US Services & Composite PMI (Final), Factory Orders, Comments from Fed's Daly, Supply from US, Earnings from Greggs.

• Click for the Newsquawk Week Ahead.

• US stocks saw strong gains on Friday with outperformance in the tech-heavy Nasdaq 100 (+1.7%) which was supported by advances in Nvidia (NVDA) (+4.5%) and Tesla (TSLA) (+8.3%), while newsflow was sparse to the end the week as participants continued to return from the holidays ahead of risk events picking up in the week ahead with FOMC Minutes and the latest US jobs report scheduled.
• SPX +1.26% at 5,942, NDX +1.67% at 21,326, DJIA +0.80% at 42,732, RUT +1.65% at 2,268.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kugler (voter) said on Friday that the economy ended 2024 in a good place with good growth and the process of disinflation has kept going, while she added that the labour market remains resilient and has been cooling gradually. Furthermore, Kugler said data will drive what the Fed does with policy and that there is a view that the Fed can take time on future rate cuts, according to CNBC. Kugler also commented over the weekend that inflation has been coming down but the job on inflation is not done, while she said they have moved to a more moderate level of restrictiveness and that they are heading towards the 2% inflation target, according to Reuters.
• Fed's Barkin (2027 voter) said on Friday that he still perceives core underlying inflation is coming down nicely, while he added the message from businesses is loud and clear that consumers are becoming more price sensitive. Barkin said he is in the camp of staying restrictive for longer given possible upside inflation risks and noted that conditions for cutting rates again include confidence in inflation's return to 2% or weakening of demand.
• Fed’s Daly (2027 voter) said inflation remains uncomfortably above their target, according to Reuters.
• US Republican Mike Johnson was re-elected as House Speaker on Friday.
• New York became the first US city to launch a congestion charge zone on Sunday, according to FT.
• Canadian PM Trudeau is likely to resign prior to the national caucus meeting on Wednesday, according to Canadian press. There were separate comments from a source familiar with Trudeau's that the PM is increasingly likely to announce he intends to step down but has not made a final decision. Furthermore, Polymarket’s odds for Trudeau to resign before February surged to over 70% over the weekend from around 33% on Friday, while Globe & Mail columnist Lawrence Martin commented on X that “Everybody's gearing up for Trudeau's resignation announcement, expected by Monday”.

• APAC stocks traded mostly subdued following the lack of macro catalysts over the weekend and as participants digested the mixed signals from Chinese Caixin PMI data, while Japanese markets underperformed in their first trading session of 2025.
• ASX 200 failed to sustain early gains as strength in real estate and tech was offset by losses in materials and miners.
• Nikkei 225 retreated on return from the New Year holiday closures amid higher yields and after the US blocked Nippon Steel's bid to take over US Steel, while a weaker currency failed to support the risk appetite as participants also braced for weak results from retailers including Fast Retailing and Seven & I Holdings.
• Hang Seng and Shanghai Comp were choppy following the somewhat mixed PMI data in which Chinese Caixin Services PMI data beat expectations, but the Caixin Composite PMI figure slowed, while comments late last week from the PBoC's MPC, which recommended strengthening the intensity of monetary policy adjustments and said it will cut RRR and interest rates at the proper time, did little to spur demand.
• US equity futures were little changed and took a breather after last Friday's consumer and tech-led advances.
• European equity futures indicate a mildly higher cash open with Eurostoxx 50 futures up 0.6% after the cash market closed with losses of 0.9% on Friday.

• DXY traded little changed following the lack of major catalysts from over the weekend and after comments from Fed's Kugler provided little to shift the dial in which she reiterated the US economy ended 2024 in a good place and noted inflation has been coming down but the job on inflation is not done, while participants await this week's key events including FOMC Minutes and the latest NFP report.
• EUR/USD eked marginal gains against the dollar but with upside capped by quiet newsflow from the bloc and with political uncertainty in Austria, where talks between the two largest centrist parties on forming a government without the far-right Freedom Party collapsed, and far-right leader Kickl is now expected to be tasked with forming a government. Furthermore, a recent poll by FT noted Eurozone economists warned that the ECB has been too slow to cut interest rates to help the economy and 46% of the economists surveyed said the ECB had fallen behind the curve.
• GBP/USD remained afloat following its recent reclaim of the 1.2400 handle, while a survey by the British Chambers of Commerce showed the number of UK businesses planning to raise prices in the coming three months surged to about 55% from 39% as tax increases and higher wage costs caused confidence to slump.
• USD/JPY gained a firmer grip of the 157.00 handle as Japanese participants returned to the market despite the negative risk sentiment in Tokyo and the higher yield environment, while the pair was also unfazed by comments from BoJ Governor Ueda who stated that he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on economy and inflation.
• Antipodeans benefitted alongside the early strength in CNH after the PBoC continued to set a much stronger-than-expected yuan reference rate setting although the upside was limited and there was a relatively muted reaction to the varied Caixin PMI data.
• PBoC set USD/CNY mid-point at 7.1876 vs exp. 7.3035 (prev. 7.1878).

• 10yr UST futures were lacklustre following last Friday's retreat in the aftermath of the ISM Manufacturing data in which the headline topped analysts' forecast range and prices paid accelerated, while demand was also subdued ahead of this week's supply.
• Bund futures languished near a two-month low after its recent slide beneath the 133.00 level and with German CPI data due later.
• 10yr JGB futures tracked weakness in global counterparts with the Japanese 10yr yield printing its highest since July 2011.

• Crude futures held on to the majority of the prior week's gains but with further upside restricted amid a lack of energy-specific drivers and somewhat varied geopolitical commentary regarding Israel-Hamas negotiations.
• Saudi Arabia set February Arab light crude OSP to Asia at Oman/Dubai + USD 1.50/bbl, according to Reuters.
• US plans more sanctions on tankers carrying Russian oil, according to a source cited by Reuters.
• LNG tanker Coral Nordic will unload at Belgium’s Zeebrugge terminal on January 9th from Ruvys.
• German energy import Uniper’s (UN01 GY) CEO Mike Lewis said the company is working to protect its fleet of LNG tankers from seizure by nations friendly to Russia after it was hit with a EUR 14bln penalty by a Russian court in March as part of an international dispute with a subsidiary of Russian state-backed gas company Gazprom, according to FT.
• Spot gold attempted to nurse some of last Friday's losses but then faltered amid a rangebound dollar and ahead of the key events from the US later this week, while Goldman Sachs also recently pushed back its USD 3,000/oz target to mid-2026.
• Goldman Sachs cut its gold price forecast in which it sees the precious metal to reach USD 2,910/oz by year-end and pushed back its USD 3,000/oz target to mid-2026, citing slower-than-expected Fed easing.
• Copper futures lacked conviction amid the mixed risk appetite in Asia and conflicting signals from the latest Chinese Caixin Services and Composite PMI data.

• Bitcoin gradually extended on recent gains and climbed back above the USD 99,000 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC pledged more financial support for innovation and consumption, while it will encourage foreign capital to invest in domestic tech.
• PBoC is expected to ramp up offshore yuan bill sales in Hong Kong in January and has ample toolkits and experience to react to yuan depreciation, while China has the ability to keep the yuan basically stable at reasonable and balanced levels, according to PBoC-backed Financial News.
• BoJ Governor Ueda said the virtuous cycle strengthened gradually last year and he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on economy and inflation, while Ueda added that momentum for wage increases is key and they must be vigilant to various risks in deciding timing for adjusting degree of monetary support.

DATA RECAP

• Chinese Caixin Services PMI (Dec) 52.2 vs. Exp. 51.4 (Prev. 51.5)
• Chinese Caixin Composite PMI (Dec) 51.4 (Prev. 52.3)

MIDDLE EAST

• US President Biden notified Congress of USD 8bln arms sale to Israel, according to Axios.
• Hamas said it approved a list of 34 hostages presented by Israel to be exchanged in a ceasefire deal. However, it stated that any deal would depend on an agreement regarding a withdrawal and ceasefire, while it has not seen progress on issues regarding this, and Israeli PM Netanyahu’s office later stated that Hamas had not provided a list of hostage names.
• Saudi Foreign Minister met with US envoy Hochstein in Riyadh and discussed developments in Lebanon and regional issues.
• Syrian Foreign Minister Al-Shibani travelled to Doha to meet with senior Qatari officials.
• US is to ease aid restrictions for Syria in a limited show of support for the new government, according to WSJ.
• Iran will face a difficult year with the Trump administration which plans to increase sanctions on Iran, while the Trump administration sees Iran as still a threat to US allies and the Trump team is considering the option of air strikes to prevent Iran from building a nuclear weapon, according to WSJ.

RUSSIA-UKRAINE

• IAEA said staff reported hearing loud blasts near Ukraine's Zaporizhzhia Nuclear Power Plant on Sunday which coincided with reports of a drone attack on the plant's training centre, while the IAEA has not been able to confirm any impact and noted that reports stated there were no casualties and no impact on any nuclear power plant equipment, according to Reuters.
• Ukrainian President Zelensky said security guarantees for Ukraine to end Russia's war will only be effective if the US provides them and he needs to sit down with US President-elect Trump to decide how to stop Russian President Putin before Ukraine can enter talks with the Russian side. Zelensky also said Europe must also have a voice in deciding a course of action before Ukraine talks to Russia and that Putin will destroy Europe if the US leaves the NATO military alliance, while he noted that North Korea has provided Russia with 3.7mln artillery shells in the war and that 3,800 North Korean troops fighting Ukraine in Russia's Kursk region have been killed or wounded so far. Furthermore, Zelensky separately commented that there were heavy Russian and North Korean losses in Russia’s Kursk region.
• Ukraine’s air force said on Sunday morning that it had downed 61 drones launched by Russia in an overnight attack.
• Russia’s Defence Ministry said Russian forces took control of the Nadiya settlement in Ukraine’s Luhansk region, while it also announced that Ukraine launched a counter-attack in Russia’s Kursk region.

OTHER

• North Korea fired a suspected ballistic missile which was reported to have fallen shortly after and appeared to have landed outside of Japan's exclusive economic zone, while the South Korea military said North Korea fired what appeared to be one intermediate-range ballistic missile.

NOTABLE HEADLINES

• The percentage of UK businesses planning to raise prices in the coming three months rose to about 55% from 39% as tax increases and higher wage costs caused confidence to slump, according to a survey of 5,000 businesses by the British Chambers of Commerce via FT.
• Austrian Chancellor Nehammer said coalition talks between the two largest centrist parties in Austria on forming a government without the far-right Freedom Party have collapsed, while he will stand down as Chancellor and leader of the People’s Party in the coming days. It was later reported that the Austrian President van der Bellen agreed to meet with far-right Freedom Party leader Kickl on Monday and that Conservative People’s Party (OVP) Secretary-General Stocker was named as interim party leader. Furthermore, Stocker expects far-right leader Kickl will be tasked with forming a government and said the OVP will take part in coalition talks with the far-right Freedom Party and take them seriously.
• Many Eurozone economists warned that the ECB has been too slow to cut interest rates to help the economy and 46% of the economists surveyed said the ECB had fallen behind the curve, according to a poll by FT.

• European bourses are generally lower whilst US futures gain modestly.
• USD is a little lower, holding around the 109.00 mark.
• Mild divergence in fixed income, USTs a little higher whilst EGBs are pressured
• Commodities fail to benefit from a softer Dollar as crude gives back recent strength.
• Looking ahead, US ISM Manufacturing PMI, US House Speaker Vote, Fed’s Barkin & ECB's Lane.

• European bourses opened modestly mixed, but quickly succumbed to some selling pressure to display a negative picture in Europe thus far.
• European sectors opened mixed, but now hold a slight negative bias. A broker upgrade for UBS has helped to prop up Financial Services; Consumer Products once again is towards the foot of the sector list, with Luxury names doing much of the dragging.
• US equity futures are modestly firmer, with modest outperformance in the NQ after trading lower in the prior session.
• Phone shipments within China -5.1% Y/Y at 29.61mln handsets in November (vs +1.8% Y/Y to 29.67mln units in October), according to CAICT; shipments of foreign branded phones including Apple (AAPL) iPhone within China -47.4% Y/Y at 3.04mln handsets in November (vs -44.3% Y/Y in October), according to Reuters calculations based on CAICT data.
• China Auto Industry Body CPCA says Tesla (TSLA) sold 93,766 in December (prev. 78,856 in November)
• Click for the sessions European pre-market equity newsflow
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• USD is giving back some of yesterday's gains vs. peers with DXY returning to a 108 handle after topping out at 109 yesterday (highest since November 2022); currently around the 109.00 mark. For today's data docket, focus will be on the December ISM manufacturing print which is expected to remain in contractionary territory at 48.4. Elsewhere, markets will be awaiting the outcome of the US House speaker vote (from around 17:00GMT, according to NBC).
• EUR has managed to claw back some lost ground vs. the broadly softer USD but is yet to undo a bulk of the damage yesterday which saw the pair slip from a 1.0375 peak to a 1.0224 low (lowest since November 2022).
• Japanese-specific newsflow remains on the light side with Japan way from market overnight. As such, the USD leg of the USD/JPY pair has been doing a bulk of the heavy lifting and therefore the broadly softer USD has dragged the pair lower. That being said, the pair has been unable to return to a 157 handle after delving as low as 156.44 yesterday.
• GBP is attempting to reverse some of yesterday's heavy selling pressure which dragged the pair from a 1.2540 peak to a 1.2353 low. Whilst there was no specific catalyst for yesterday's price action, desks pointed to a reversal of last year's relative outperformance of the GBP vs. peers (ex-USD).
• Antipodeans are both firmer vs. the broadly weaker USD with AUD managing to overlook losses in iron ore. Newsflow for both has been light, however, attention was on events in China overnight amid reports of support measures from China's state planner.
• RBI likely selling USD around 85.77-79 levels to support the INR, according to traders cited by Reuters.
• PBoC set USD/CNY mid-point at 7.1878 vs exp. 7.2868 (prev. 7.1879).
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• A relatively contained start for benchmarks, with USTs in a narrow 108-27+ to 109-01 band with the docket light until we get to the US morning when ISM Manufacturing PMI is due before the expected commencement of the vote concerning House Speaker Johnson at around 17:00GMT.
• Bunds hold a bearish bias as the benchmark pares some of the upside seen late-doors on Thursday. Currently, at the low-end of a 132.95-133.48 band, which remains entirely within but approaching the trough of Thursday’s 132.90-133.86 range.
• OATs are the EGB laggard, with pressure stemming from reports in Le Monde that French PM Bayrou is aiming for a 2025 budget deficit as a % of GDP of 5.4%, higher than the 5.0% targeted by Barnier’s failed administration.
• Gilts stand as the marginal outperformer, initially gapped higher at the open, but has since succumbed to the broader fixed income pressure; currently near the day's trough at 92.24. Specifics include mortgage and money supply data for November from the BoE, metrics which came in below forecast across the board but spurred no real Gilt follow through.
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• Subdued trade in the crude complex as prices take a breather from the prior day's surge, and amid a generally cautious risk tone. Brent sits in a USD 75.53-76.26/bbl parameter.
• Nat gas is slightly softer intraday in tandem with broader energy markets, with Dutch TTF front-month oscillating on either side of EUR 50/MWh.
• Mixed trade across precious metals with Palladium clearly benefitting from the softer Dollar, whilst silver ekes mild gains and gold trades subdued. Spot gold resides towards the middle of a current USD 2,649.95-2,665.40/oz range.
• Base metals are modestly higher but with price action contained to a tight range between 8,781.50-8,852.00/t awaiting the next catalyst.
• Goldman Sachs sees significant risks that TTF gas prices rally towards oil-switching economics in a EUR 63-84/MWh range in the coming months.
• Russian oil product exports from the Black Sea port of Tuapse are reportedly planned at 0.798mln/T in January (0.885mln/T scheduled in Dec.), via Reuters citing sources.
• Austria's Grid Manager says other NatGas sources are compensating for the loss of Russian fuel via Ukraine, gas imports via Germany and Italy are sufficient, according to Bloomberg's Stapczynski.
• Indonesia Minister says Indonesia is reviewing nickel ore mining quote, seeking to prevent further price falls.
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NOTABLE DATA RECAP

• German Unemployment Chg SA (Dec) 10.0k vs. Exp. 15.0k (Prev. 6.0k); Unemployment Rate SA (Dec) 6.1% vs. Exp. 6.2% (Prev. 6.1%); Unemployment Total SA (Dec) 2.869M (Prev. 2.86M); Unemployment Total NSA (Dec) 2.807M (Prev. 2.774M)
• Swiss Manufacturing PMI (Dec) 48.4 vs. Exp. 48.3 (Prev. 48.5)
• UK Mortgage Approvals (Nov) 65.72k vs. Exp. 68.5k (Prev. 68.303k, Rev. 68.129k); Mortgage Lending (Nov) 2.474B GB vs. Exp. 3.2B GB (Prev. 3.435B GB, Rev. 3.466B GB); BOE Consumer Credit (Nov) 0.878B GB vs. Exp. 1.2B GB (Prev. 1.098B GB, Rev. 0.995B GB)

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Reeves warned ministers to consider cuts to frontline services to fund above-inflation pay increases for public sector workers, according to The Times.

NOTABLE US HEADLINES

• US President Biden decided to block the sale of US Steel (X) to Nippon Steel (5401 JT), according to The Washington Post.
• US President-elect Trump named a team to work in conjunction with US Treasury Secretary nominee Scott Bessent with Ken Kies to be Assistant Secretary for Tax Policy and he named Cora Alvi as Deputy Chief of Staff.
• US House Speaker vote is scheduled for today, NBC reports that the first call should begin at around 17:00GMT/12:00EST.

• Israeli PM Netanyahu will convene a meeting today to discuss the mandate of the Israeli delegation that will leave for Qatar, according to Journalist Stein.
• Israeli army noted sirens sounded in several areas of central Israel after a rocket was fired from Yemen, according to Sky News Arabia.
• Sky News Arabia correspondent reported huge explosions in Syria's Aleppo amid Israeli raids.

• Bitcoin is essentially flat and holds around the USD 96k mark; Ethereum attempts to climb back above USD 3.5k.

• APAC stocks were ultimately mixed with most major indices higher although the gains were capped amid the holiday closure in Japan and after the negative handover from the US where the dollar strengthened and Tesla deliveries disappointed.
• ASX 200 was underpinned with energy and gold miners leading the advances after recent gains in underlying commodity prices.
• KOSPI outperformed despite reports of a standoff between a military unit and South Korean investigative authorities attempting to arrest impeached President Yoon, while acting President Choi ordered to deploy market stabilising measures swiftly and boldly if volatility heightens.
• Hang Seng and Shanghai Comp traded mixed despite falling yields amid a report the PBoC is said to plan a policy overhaul as pressure mounts on the economy and would likely cut interest rates from the current level of 1.5% at an appropriate time. Nonetheless, some support was seen for Hong Kong tech stocks after an NDRC official said they will sharply increase funding from ultra-long treasury bonds this year to support "two new" programmes and will broaden the consumer trade-in initiative to include smartphones, while the mainland failed to benefit amid the ongoing US-China trade-related frictions.

NOTABLE ASIA-PAC HEADLINES

• PBoC is reportedly to plan a policy overhaul as pressure mounts on the economy and said it was likely it would cut interest rates from the current level of 1.5% at an appropriate time, while the report noted it would prioritise “the role of interest rate adjustments” and move away from “quantitative objectives” for loan growth in what would amount to a transformation of Chinese monetary policy, according to FT.
• China's NDRC held a briefing regarding high-quality growth and announced it will sharply increase funding from ultra-long treasury bonds this year to support "two new" programmes, while it is to broaden the consumer trade-in initiative to include smartphones. NDRC expects consumption to maintain steady growth in 2025 and noted China's economy is facing many new difficulties and challenges in 2025 but added there is ample room for macro policies in 2025. Furthermore, the NDRC deputy head announced an allocation of CNY 100bln in 2025 for two new and two major projects in advance, while it will push major reforms in 2025 to stabilise expectations, boost confidence and promote development, as well as step up efforts surrounding employment.
• South Korean investigative authorities visited President Yoon's residence to attempt to carry out an arrest warrant but were prevented from carrying out the arrest amid a standoff with a military unit, while two South Korean military officials including the martial law commander were indicted and detained by prosecutors. Furthermore, South Korean acting President Choi ordered to deploy market stabilising measures swiftly and boldly if volatility heightens, as well as announced to prepare tax support measures for small and medium-sized firms to boost corporate investment.

• APAC stocks were ultimately mixed with most major indices higher although the gains were capped following the negative handover from the US.
• PBoC is reportedly to plan a policy overhaul as pressure mounts on the economy; likely it would cut interest rates at an appropriate time.
• European equity futures indicate a slightly softer cash open with Euro Stoxx 50 futures down 0.1% after the cash market closed higher by 0.5% on Thursday.
• USD is a touch softer, EUR/USD remains on a 1.02 handle, and Cable is sub-1.24.
• Looking ahead, highlights include German Unemployment Rate, US ISM Manufacturing PMI, US House Speaker Vote, Fed’s Barkin & ECB's Lane.

• US stocks were marginally sold on the first trading session of 2025 with relative outperformance in the Russell, while sectors were predominantly lower with notable weakness in Consumer Discretionary, which was weighed on by Tesla's (TSLA) downside after it reported disappointing Q4 delivery numbers. Real Estate and Materials also lagged, while Energy, Utilities, and Communication Services outperformed with Energy stocks buoyed by the upside in crude and natgas prices.
• SPX -0.22% at 5,869, NDX -0.17% at 20,976, DJIA -0.36% at 42,392, RUT +0.07% at 2,232.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden decided to block the sale of US Steel (X) to Nippon Steel (5401 JT), according to The Washington Post.
• US President-elect Trump named a team to work in conjunction with US Treasury Secretary nominee Scott Bessent with Ken Kies to be Assistant Secretary for Tax Policy and he named Cora Alvi as Deputy Chief of Staff.

• APAC stocks were ultimately mixed with most major indices higher although the gains were capped amid the holiday closure in Japan and after the negative handover from the US where the dollar strengthened and Tesla deliveries disappointed.
• ASX 200 was underpinned with energy and gold miners leading the advances after recent gains in underlying commodity prices.
• KOSPI outperformed despite reports of a standoff between a military unit and South Korean investigative authorities attempting to arrest impeached President Yoon, while acting President Choi ordered to deploy market stabilising measures swiftly and boldly if volatility heightens.
• Hang Seng and Shanghai Comp traded mixed despite falling yields amid a report the PBoC is said to plan a policy overhaul as pressure mounts on the economy and would likely cut interest rates from the current level of 1.5% at an appropriate time. Nonetheless, some support was seen for Hong Kong tech stocks after an NDRC official said they will sharply increase funding from ultra-long treasury bonds this year to support "two new" programmes and will broaden the consumer trade-in initiative to include smartphones, while the mainland failed to benefit amid the ongoing US-China trade-related frictions.
• US equity futures (ES +0.2%) nursed some of the prior session's losses alongside the mostly constructive mood in the major Asia-Pac indices.
• European equity futures indicate a slightly softer cash open with Euro Stoxx 50 futures down 0.1% after the cash market closed higher by 0.5% on Thursday.

• DXY took a breather after opening 2025 with broad-based gains despite relatively thin newsflow, while participants now look ahead to ISM Manufacturing PMI due later today and with Fed's Barkin (2027 voter) also scheduled to speak at a Maryland Bankers event.
• EUR/USD was off lows but remained beneath the 1.03 handle after slipping to its weakest level since late 2022 owing to the recent dollar strength, while the single currency was also not helped by mixed PMI releases and rhetoric from ECB's Stournaras who sees rates falling to about 2% around Autumn.
• GBP/USD attempted to regain some composure following yesterday's underperformance and retreat to sub-1.2400 territory, while reports noted that UK Chancellor Reeves warned ministers to consider cuts to frontline services to fund above-inflation pay increases for public sector workers.
• USD/JPY marginally eased back overnight but retained the recently reclaimed 157.00 status with trade muted amid the market closure in Japan.
• Antipodeans eked slight gains alongside a firmer CNY and reports of support measures from China's state planner.
• PBoC set USD/CNY mid-point at 7.1878 vs exp. 7.2868 (prev. 7.1879).

• 10yr UST futures kept afloat but with the upside limited after recent whipsawing and data releases which showed a surprise fall in initial jobless claims, while overnight cash trade was shut owing to the market holiday closure in Tokyo.
• Bund futures were rangebound following yesterday's fluctuations and somewhat mixed PMI figures from Europe, while the attention turns to Germany's Unemployment Rate.

• Crude futures were little changed overnight but held on to the prior day's gains after climbing alongside the advances in natgas prices in the wake of the Ukraine/Gazprom transit deal expiring without a renewal.
• US President Biden is reportedly planning to permanently ban new offshore oil and gas development in portions of the country's outer continental shelf during his final weeks in the White House, according to Bloomberg.
• Slovak PM Fico said the Slovak coalition and government are to discuss in the coming days reciprocal measures for the end of the Ukraine gas transit and an alternative for Slovakia would be restarting gas transit through Ukraine, or compensation mechanisms, while the Slovak government delegation is to discuss the gas situation in Brussels on Tuesday.
• Goldman Sachs sees significant risks that TTF gas prices rally towards oil-switching economics in a EUR 63-84/MWh range in the coming months.
• Spot gold plateaued after steadily climbing yesterday with the precious metal unfazed by the recent dollar strength.
• Copper futures lacked conviction amid the mixed risk appetite in Asia and were only briefly underpinned after China's state planner announced support efforts.

• Bitcoin was choppy and briefly reclaimed the USD 97,000 level before returning to flat territory.

NOTABLE ASIA-PAC HEADLINES

• PBoC is reportedly to plan a policy overhaul as pressure mounts on the economy and said it was likely it would cut interest rates from the current level of 1.5% at an appropriate time, while the report noted it would prioritise “the role of interest rate adjustments” and move away from “quantitative objectives” for loan growth in what would amount to a transformation of Chinese monetary policy, according to FT.
• China's NDRC held a briefing regarding high-quality growth and announced it will sharply increase funding from ultra-long treasury bonds this year to support "two new" programmes, while it is to broaden the consumer trade-in initiative to include smartphones. NDRC expects consumption to maintain steady growth in 2025 and noted China's economy is facing many new difficulties and challenges in 2025 but added there is ample room for macro policies in 2025. Furthermore, the NDRC deputy head announced an allocation of CNY 100bln in 2025 for two new and two major projects in advance, while it will push major reforms in 2025 to stabilise expectations, boost confidence and promote development, as well as step up efforts surrounding employment.
• South Korean investigative authorities visited President Yoon's residence to attempt to carry out an arrest warrant but were prevented from carrying out the arrest amid a standoff with a military unit, while two South Korean military officials including the martial law commander were indicted and detained by prosecutors. Furthermore, South Korean acting President Choi ordered to deploy market stabilising measures swiftly and boldly if volatility heightens, as well as announced to prepare tax support measures for small and medium-sized firms to boost corporate investment.

MIDDLE EAST

• Israeli military said it attacked and destroyed medium-range rocket launchers at a Hezbollah military site in southern Lebanon.
• Israeli army noted sirens sounded in several areas of central Israel after a rocket was fired from Yemen, according to Sky News Arabia.
• Israeli PM Netanyahu approved of the delegation to resume ceasefire negotiations in Qatar's Doha, according to the PM’s office cited by Reuters.
• Israeli negotiators will travel to Doha on Friday for a last-ditch effort to reach a breakthrough in the negotiations over the Gaza hostage and ceasefire deal before Trump assumes office, according to Axios citing Israeli officials.
• Hostage negotiations are reportedly not stuck and there has been progress, via The Jerusalem Post citing sources familiar with the matter.
• Sky News Arabia correspondent reported huge explosions in Syria's Aleppo amid Israeli raids.
• US President Biden reportedly discussed plans to strike Iran's nuclear sites if Tehran speeds towards a nuclear bomb, according to Axios. White House national security adviser Sullivan presented Biden with options for a potential US attack on Iran's nuclear facilities if the Iranians move towards a nuclear weapon before January 20 in a meeting several weeks ago that remained secret until now. Biden and his national security team discussed various options and scenarios during the meeting, which took place roughly one month ago, but the president did not make any final decision, while a US official with knowledge of the issue said the White House meeting was not prompted by new intelligence or intended to end in a yes or no decision from Biden. Instead, it was part of a discussion on "prudent scenario planning" of how the US should respond if Iran were to take steps like enriching Uranium to 90% purity before January 20. Furthermore, another source said "There are currently no active discussions inside the White House about possible military action against Iran's nuclear facilities".

RUSSIA-UKRAINE

• Ukrainian President Zelensky said US President-elect Trump can be decisive in the war and can help Ukraine stop Russian President Putin.

NOTABLE HEADLINES

• UK Chancellor Reeves warned ministers to consider cuts to frontline services to fund above-inflation pay increases for public sector workers, according to The Times.