- US stocks were positive in which the S&P 500, Dow and Russell 2000 all made fresh ATHs, while Treasuries bull flattened with the upside in both stocks and bonds primarily a response to the market-friendly pick of Scott Bessent as US President-elect Trump's Treasury Secretary as Bessent is seen as a fiscal conservative and has urged for a phased approach to the implementation of tariffs. Meanwhile, the dollar sold off initially on the news but then gradually nursed some of the losses ahead of this week's key events.
- USD declined as US yields took a dive following President-elect Trump's nomination of Scott Bessent as Treasury Secretary with Bessent seen as more fiscally conservative than Trump given his hedge fund and finance background and would also like a more gradualist approach to implementing Trump tariffs.
- Looking ahead, highlights include Japanese Services PPI & BoJ Core CPI, Thailand Trade Data & Singapore CPI.
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LOOKING AHEAD
- Highlights include Japanese Services PPI & BoJ Core CPI, Thailand Trade Data & Singapore CPI.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were positive in which the S&P 500, Dow and Russell 2000 all made fresh ATHs, while Treasuries bull flattened with the upside in both stocks and bonds primarily a response to the market-friendly pick of Scott Bessent as US President-elect Trump's Treasury Secretary as Bessent is seen as a fiscal conservative and has urged for a phased approach to the implementation of tariffs. Meanwhile, the dollar initially sold off on the news but then gradually nursed some of the losses ahead of this week's key events.
- SPX +0.30% at 5,987, NDX +0.14% at 20,805, DJIA +0.99% at 44,737, RUT +1.47% at 2,442.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Goolsbee (2025 voter) said he is closer to the median on the neutral rate estimate and noted rates have a fair way to go before they go to neutral, while he reiterated that interest rates will be lower by the end of 2025, according to Fox Business.
DATA RECAP
- US Dallas Fed Manufacturing Index (Nov) -2.7 (Prev. -3.0)
- US National Activity Index (Oct) -0.4 (Prev. -0.28, Rev. -0.27)
FX
- USD declined as US yields took a dive following President-elect Trump's nomination of Scott Bessent as Treasury Secretary with Bessent seen as more fiscally conservative than Trump given his hedge fund and finance background and would also like a more gradualist approach to implementing Trump tariffs.
- EUR was boosted and briefly returned to above the 1.0500 level as it benefitted against the weaker dollar, while there were several comments from ECB officials including from Lane who noted benefits of a careful, step-by-step strategy and Nagel said he is increasingly confident over disinflation but rate cuts must be gradual as risks remain.
- GBP traded firmer but moved off today's best levels with price action choppy after failing to sustain a brief reclaim of the 1.2600 status.
- JPY strengthened amid downside in US yields but with gains capped with USD/JPY oscillating through the 154.00 level.
FIXED INCOME
- T-notes bull flattened in response to US President-elect Trump nominating fiscal hawk Bessent as US Treasury Secretary.
COMMODITIES
- Oil prices declined as a ceasefire between Israel and Lebanon comes into view which is said to be announced within 36 hours.
- Azerbaijan's Energy Minister said OPEC+ could discuss maintaining oil output cuts in place at its December 1st meeting.
- Iran's Oil Minister said Iran will strive not to accept limits on oil production quota.
- US President-elect Trump’s team is preparing early action to end Biden's LNG pause, according to Bloomberg. It was separately reported that Trump is to confront IEA over focus on green energy, while he plans to lift the pause on new LNG export permits and move swiftly to approve pending permits.
GEOPOLITICAL
MIDDLE EAST
- Israel and Lebanon have reportedly agreed to the terms of an agreement to conclude the Israel-Hezbollah conflict, according to Axios citing a US official.
- Israel PM Netanyahu reportedly approved an emerging ceasefire deal with Hezbollah "in principle", according to CNN citing sources.
- Israeli security cabinet will convene on Tuesday at 17:30 local time (10:30EST/15:30GMT) at the IDF headquarters in Tel Aviv to approve the Lebanon ceasefire deal.
- Israel’s government was earlier reported to still have reservations about some details of the agreement regarding the Lebanon-Israel ceasefire, according to Al Jazeera.
- Four Senior Lebanese sources said there is a plan for US President Biden and French President Macron to announce a Hezbollah-Israel ceasefire deal within 36 hours, while the French Presidency said discussions on a ceasefire in Lebanon have made significant progress.
- US President Biden and French President Macron will announce a ceasefire in Lebanon on Tuesday morning for about two months, according to Sky News Arabia citing the Israeli Broadcasting Authority.
- US State Department believes that the gaps in the ceasefire agreement have been narrowed significantly but there are still steps that need to be taken, while it doesn't believe it has an agreement yet on Lebanon.
- White House said discussions Hochstein had on a Lebanon-Israel ceasefire were positive and going in the right direction, while National Security spokesman Kirby said they are close' on a Lebanon ceasefire.
ASIA-PAC
NOTABLE HEADLINES
- PBoC will hold a meeting to promote tech, innovation and technical transformation loans, while it will prioritise policy support for private, small and medium firms. PBoC will develop loan products that better match the financing needs of early-stage tech enterprises and will broaden the range of eligible collateral, as well as accelerate loan signing and disbursement.
- Chinese Premier Li said China's economic operation has been generally stable with progress amid stability, while he added that China will continue to strengthen counter-cyclical adjustments. Li also said that China will promote a high-level opening up and will make greater efforts to deepen global supply chain integrations.
- China's Vice Commerce Minister said they are willing to strengthen cooperation with the US and welcome NVIDIA (NVDA) to continue its presence in China.
- EU is not close to a deal with China on EV tariffs, according to EU officials who noted they are discussing alternatives to the current tariffs on Chinese EVs.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves said the UK budget measures will be good for growth and jobs.
- BoE's Dhingra said recent CPI outturns show no asymmetry in inflation unwinding said there is a disinflationary risk within the UK.
- BoE's Lombardelli said the BoE should not focus on one set of data, when asked about PMIs and will remain focused more on services prices and wages.
- ECB's Lane said it is essential that they are agile in responding to risks that might crystalise and noted that a careful, step-by-step strategy enables the ECB to observe the responses of the economy to their decisions and continuously refine their understanding of their impacts. Furthermore, he said a flexible, meeting-by-meeting approach ensures that the ECB remain responsive to the ever-changing economic landscape and they must remain open-minded about the speed and the scale of rate moves.
- ECB's Nagel said he is increasingly confident over disinflation but rate cuts must be gradual as risks remain, while he commented that Germany's growth is likely to stagnate in Q4 and Germany is falling behind the Eurozone average. Furthermore, he said the inflation goal is ‘soon’ to be met, but noted that risks remain and rates are still restrictive.
- ECB's Makhlouf said rates are on a downward trajectory, while he is confident about inflation hitting the 2% target in 2025 and is open-minded on the slope of this downward trajectory. Makhlouf also noted that there is substantial uncertainty over policy of trade partners.
- ECB's Centeno said interest rates must now normalise and the neutral level of rates is around 2%, while he prefers steadily bringing rates to 2% or thereabouts.
DATA RECAP
- German Ifo Business Climate New (Nov) 85.7 vs. Exp. 86.0 (Prev. 86.5)
- German Ifo Expectations New (Nov) 87.2 vs. Exp. 87.0 (Prev. 87.3)
- German Ifo Current Conditions New (Nov) 84.3 vs. Exp. 85.4 (Prev. 85.7)
