- US stocks finished mixed with price action in futures choppy as there was initial pressure in the US morning and T-notes caught a bid after South Korean President Yoon implemented martial law to clear out pro-North Korean elements, although the moves in both stocks and bonds were later pared as South Korea's President and Cabinet ultimately reversed the decision.
- USD was ultimately flat on the day but had softened earlier in the session despite higher-than-expected JOLTS data and as comments from Fed officials continued to allude to further cuts ahead, while attention turns to a slew of data releases (ADP, ISM Services, Factory Orders) and with comments from Fed chair Powell also scheduled.
- Looking ahead, highlights include New Zealand ANZ Commodity Prices, Australian GDP, Chinese Caixin Services & Composite PMIs, Supply from Australia.
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LOOKING AHEAD
- Highlights include New Zealand ANZ Commodity Prices, Australian GDP, Chinese Caixin Services & Composite PMIs, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks finished mixed with price action in futures choppy as there was initial pressure in the US morning and T-notes caught a bid after South Korean President Yoon implemented martial law to clear out pro-North Korean elements, although the moves in both stocks and bonds were later pared as South Korea's President and Cabinet ultimately reversed the decision.
- SPX +0.05% at 6,050, NDX +0.31% at 21,229, DJIA -0.17% at 44,706, RUT -0.73% at 2,416.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Daly (2024 voter) said the US economy is in a really good place and a December rate cut is absolutely not off the table, while she added the timing of a rate cut is up for debate and they need to keep moving the policy rate down, as well as keep an open mind. Daly said they knew inflation would be a bumpy ride and it is moving down gradually, but there is more work to do. Furthermore, she said even if the Fed does another rate cut, policy will remain restrictive.
- Fed’s Kugler (voter) said current Fed policy is well-positioned to deal with uncertainties and will vigilantly monitor for risks and negative supply shocks that may undo progress in reducing inflation. Furthermore, she said policy is not on a pre-set course and will make decisions meeting by meeting.
- Fed's Goolsbee (2025 voter) said inflation data is a noisy series, over the next year, and rates should come down a fair amount from where they are now, while his belief that rates will and should come down is rooted in the read that inflation is coming down.
- US Senate Majority Leader Schumer said he is confident funding will be done by the deadline.
- US President-elect Trump picked Paul Atkins for SEC Chair.
DATA RECAP
- US JOLTS Job Openings (Oct) 7.744M vs. Exp. 7.475M (Prev. 7.443M, Rev. 7.372M)
FX
- USD was ultimately flat on the day but had softened earlier in the session despite higher-than-expected JOLTS data and as comments from Fed officials continued to allude to further cuts ahead, while attention turns to a slew of data releases including ISM Non-manufacturing and with comments from Fed chair Powell also scheduled.
- EUR saw some mild respite from recent French political woes and returned above 1.0500 but with upside capped as French PM Barnier faces a no-confidence vote on Wednesday.
- GBP marginally strengthened against the dollar albeit with upside capped after hitting resistance just shy of the 1.2700 handle.
- JPY was initially firmer as USD/JPY traded sub-150.00 but was off today's lows after re-emerging from an early dip beneath the 149.00 level.
FIXED INCOME
- T-notes were choppy in the wake of comments from Fed's Waller and South Korea implementing Martial Law but later reversing it, while JOLTS data topped forecasts.
COMMODITIES
- Oil prices gained amid concerns surrounding the Israel/Hezbollah truce, expectations of OPEC+ extending supply cuts, refinery outages and fresh Iranian sanctions.
- US Private Inventory Data: Crude +1.2mln (exp. -0.7mln), Distillates +1.0mln (exp. +0.9mln), Gasoline +4.6mln (exp. +0.6mln), Cushing +0.1mln.
- OPEC+ is reportedly firming up a deal for a 3-month output hike delay, according to Bloomberg citing delegates.
- OPEC November oil output rose by 180k BPD from October to 26.51mln BPD, led by Libya and other increases of 50k BPD each came from Nigeria and Iran.
- Iraq's Oil Ministry said total oil exports averaged 3.287mln bpd in November (prev. 3.327mln bpd in October).
GEOPOLITICAL
MIDDLE EAST
- Israel’s Defence Minister said if the ceasefire collapses, they will no longer differentiate between Lebanon and Hezbollah, while he added the Lebanese army must enforce the ceasefire.
- Israel is waiting to see Hamas’s answer to Egypt on whether they are willing to re-enter negotiations and a positive answer may lead to the departure of an Israeli delegation, according to Kann News.
- Israeli strike on a car near Damascus killed a Hezbollah liaison with the Syrian army, according to Reuters citing a security source.
- Iran Foreign Minister Araqchi said Iranian troop deployment to Syria is possible if Damascus requests it and he will visit Russia to discuss the Syrian crisis.
- US President Biden’s administration ramped up its sanctions on Iran, targeting 35 entities and vessels that it said transported Iranian petroleum to foreign markets.
- US State Department said the US last month renewed a 120-day waiver allowing Iraq to purchase Iranian electricity.
UKRAINE-RUSSIA
- Ukrainian President Zelensky said Ukraine is speeding up domestic missile production.
- Russian Defence Ministry said Russia conducted military drills in the Mediterranean Sea.
OTHER
- Japan reported that a Russian navy submarine has sailed through the waters between southwestern Yonaguni island and the Iriomote island for the first time.
ASIA-PAC
NOTABLE HEADLINES
- White House said the US is assessing new China export controls and will take steps to mitigate Chinese "coercive actions".
- China's semiconductor association said US chips are no longer "safe and reliable", while relevant industries will have to be cautious about procuring these US chips.
- China's MOFCOM banned the export of "dual-use items" relating to gallium, germanium, antimony and super-hard materials to the US, while it announced tighter end-user and end-use vetting for graphite dual-use items which are exported to the US, effective December 3rd.Furthermore, it stated that export of dual-use items to US military users or for military reasons is prohibited.
- South Korean President Yoon declared martial law and said the government has been paralyzed because of opposition party conduct. Furthermore, it was stated that through martial law, he will rebuild a free and democratic country, while he declared martial law to clear out pro-North Korea elements. However, South Korea’s parliament voted to block President Yoon’s martial law declaration and President Yoon later said he will lift martial law after the parliamentary vote to block it.
- South Korean opposition party called on President Yoon to step down after his efforts to impose martial law, according to Yonhap.
- Bank of Korea's monetary policy board is to meet early on Wednesday morning to discuss market stabilising measures.
EU/UK
NOTABLE HEADLINES
- French President Macron said he will not resign before his mandate ends in 2027 and believes Le Pen will not join the left to topple the government.
- ECB's Kazaks said a data-dependent and gradual approach is still appropriate, while the pace and depth of easing will be determined by data and judgement.
- ECB's Holzmann sees the likelihood of a moderate rate cut in December.
