- US stocks were primarily sold heading into the Thanksgiving holiday and on the last full trading day of the month with notable underperformance in the Nasdaq after some tech and software names stumbled post-earnings, while small caps initially outperformed but then wiped out nearly all of the gains by the US close, likely on month-end related flows. T-notes rallied throughout the session in the wake of a plethora of US data and a strong 7yr auction in which the data showed US Q3 GDP was left unchanged, but the quarterly Core PCE was revised lower and the monthly PCE was in line with expectations for both the headline and core. Furthermore, Jobless Claims were relatively in line with estimates and Durable Goods missed on the headline.
- USD suffered broad-based selling across the FX space heading into the Thanksgiving holiday closure with further yen upside adding to the pressure for the greenback. There was a slew of US data releases including the monthly PCE prices which matched estimates, as did the 2nd estimate for Q3 GDP, although a slight downward revision in Q3 Core PCE prices provided headwinds for the greenback and ING also noted that portfolio rebalancing is likely to influence downside moves.
- Looking ahead, highlights include New Zealand ANZ Business Surveys, Australian Private Capex, BoK Rate Decision, US Thanksgiving Day Holiday.
- The desk will operate a normal service on Thursday 28th November until 18:00GMT/13:00EST, upon which the desk will close and then re-open later at 22:00GMT/17:00EST for the beginning of the Asia-Pacific session.
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LOOKING AHEAD
- The desk will operate a normal service on Thursday 28th November until 18:00GMT/13:00EST, upon which the desk will close and then re-open later at 22:00GMT/17:00EST for the beginning of the Asia-Pacific session.
- Highlights include New Zealand ANZ Business Surveys, Australian Private Capex, BoK Rate Decision, US Thanksgiving Day Holiday.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were primarily sold heading into the Thanksgiving holiday and on the last full trading day of the month with notable underperformance in the Nasdaq after some tech and software names stumbled post-earnings, while small caps initially outperformed but then wiped out nearly all of the gains by the US close, likely on month-end related flows. T-notes rallied throughout the session in the wake of a plethora of US data and a strong 7yr auction in which the data showed US Q3 GDP was left unchanged, but the quarterly Core PCE was revised lower and the monthly PCE was in line with expectations for both the headline and core. Furthermore, Jobless Claims were relatively in line with estimates and Durable Goods missed on the headline.
- SPX -0.38% at 5,999, NDX -0.85% at 20,744, DJIA -0.31% at 42,722, RUT +0.08% at 2,426.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US President-elect Trump picked Keith Kellogg to serve as assistant to the President and special envoy for Ukraine and Russia, while Trump reportedly eyes former SEC commissioner Atkins to succeed Gensler as SEC Chair, according to Bloomberg.
DATA RECAP
- US PCE Price Index MM (Oct) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
- US PCE Price Index YY (Oct) 2.3% vs. Exp. 2.3% (Prev. 2.1%)
- US Core PCE Price Index MM (Oct) 0.3% vs. Exp. 0.3% (Prev. 0.3%)
- US Core PCE Price Index YY (Oct) 2.8% vs. Exp. 2.8% (Prev. 2.7%)
- US GDP 2nd Estimate (Q3) 2.8% vs. Exp. 2.8% (Prev. 2.8%)
- US Core PCE Prices (Q3) 2.1% vs. Exp. 2.2% (Prev. 2.2%)
- US PCE Prices (Q3) 1.5% (Prev. 1.5%)
- US Consumption, Adjusted MM (Oct) 0.4% vs. Exp. 0.3% (Prev. 0.5%, Rev. 0.6%)
- US Personal Income MM (Oct) 0.6% vs. Exp. 0.3% (Prev. 0.3%)
- US Pending Sales Change MM (Oct) 2.0% vs. Exp. -2.0% (Prev. 7.4%, Rev. 7.5%)
- US Durable Goods (Oct) 0.2% vs. Exp. 0.5% (Prev. -0.7%, Rev. -0.4%)
- US Chicago PMI (Nov) 40.2 vs Exp. 45 (Prev. 41.6)
- US Initial Jobless Claims 213.0k vs. Exp. 216.0k (Prev. 213.0k, Rev. 215k)
- US Continued Jobless Claims 1.907M vs. Exp. 1.908M (Prev. 1.908M, Rev. 1.898M)
FX
- USD suffered broad-based selling across the FX space heading into the Thanksgiving holiday closure with further yen upside adding to the pressure for the greenback. There was a slew of US data releases including the monthly PCE prices which matched estimates, as did the 2nd estimate for Q3 GDP, although a slight downward revision in Q3 Core PCE prices provided headwinds for the greenback and ING also recently noted that portfolio rebalancing is likely to influence downside moves.
- EUR took advantage of the dollar selling and regained a firm footing at the 1.0500 handle with the single currency also underpinned by hawkish comments from ECB's Schnabel.
- GBP steadily edged higher throughout the session and approached just shy of the 1.2700 territory as it benefitted from the weaker buck amid light UK-specific catalysts.
- JPY extended on its recent strengthening trend which dragged USD/JPY briefly beneath the 151.00 level amid bets for the BoJ to resume hiking rates next month.
- Brazilian Finance Minister Haddad will announce an income tax exemption for those earning up to BRL 5,000 with the measure to be included in a fiscal package initially focused on cutting expenses, while Labour Minister Marinho said the details over the fiscal package are expected to be disclosed on Thursday morning which will include taxes on the super-rich and broader range for income tax exemption. Furthermore, it was later reported that Finance Minister Haddad approached President Lula to try to postpone the announcement of the income tax exemption for those earning up to BRL 5,000, according to O Globo.
FIXED INCOME
- T-notes rallied throughout the session in the wake of a plethora of US data and a strong 7yr auction heading into Thanksgiving.
COMMODITIES
- Oil prices settled flat on day one of the ceasefire between Israel and Lebanon's Hezbollah after fading the initial gains seen during the European morning and with prices also not helped by the weekly EIA report which posted a smaller crude draw than Tuesday's API report.
- US EIA Weekly Crude Stocks w/e -1.844M vs. Exp. -1.05M (Prev. 0.545M).
- Baker Hughes Rig Count: Oil -2 at 477, Nat Gas +1 at 100, Total -1 at 582.
- Saudi Energy Minister reportedly held a meeting with Russia's Deputy PM Novak and the Kazakh Energy Minister, while the three stressed full commitment to OPEC+ voluntary cuts, according to SPA.
GEOPOLITICAL
MIDDLE EAST
- Israeli army spokesperson said Israel set a curfew for southern Lebanon residents moving south of the Litani River.
- Israel's Home Front Command decided not to change restrictions in the north despite the ceasefire agreement in Lebanon, according to Sky News Arabia.
- Lebanon's Hezbollah said it is ready to deal with Israel's assaults and will continue to follow up with the withdrawal of Israeli forces beyond borders.
- Egyptian security delegation is to travel to Israel on Thursday in an effort to reach a Gaza ceasefire deal, according to two Egyptian security sources cited by Reuters.
- Hamas said it is committed to cooperate with any ceasefire efforts in Gaza.
- Iranian Foreign Minister said they reserve their right to react to recent Israeli aggression, but they do consider all developments in the region and hope a Lebanon ceasefire will last and become permanent.
RUSSIA-UKRAINE
- Russian Defence Ministry said they attacked the Zaporizhzia nuclear power plant with drones and artillery, according to TASS.
- Russian Foreign Ministry deputy head said Russia is committed to agreements with the US on notification of missile test launches, according to Reuters citing local press. The official also stated that the nation does not believe that the time for negotiations has passed but now it needs stronger means to get its point across, according to RIA.
- US President Biden’s administration doesn’t have enough time left to use the billions of dollars lawmakers have authorised to arm Ukraine, leaving it in President-elect Trump’s hands what to do with the remaining money, according to WSJ citing officials.
- German foreign intelligence service head said the Kremlin sees Germany as an adversary and that they are in direct confrontation with Moscow, while he added that Russia has started to use kinetic measures against the West including acts of sabotage against infrastructure. Furthermore, he expects further escalation of the situation and said there is a rising risk this will raise the question of invoking NATO Article 5.
OTHER
- NATO warships were in the vicinity of the Yi Peng 3 which is the Chinese carrier suspected of severing Baltic cables, according to WSJ.
- US exchanged Chinese detainees for three imprisoned Americans, according to Politico.
ASIA-PAC
NOTABLE HEADLINES
- China's State Council issued an action plan to lower logistics costs, according to Xinhua.
- PBoC will establish a digital public service platform for the securities and futures industry to provide data and technical support for the transformation of financial institutions.
- US State Department shifted its China travel advisory to level 2 "Exercise increased caution” when travelling to mainland China due to arbitrary enforcement of local laws, including in relation to exit bans.
- RBNZ Assistant Governor Silk said residential investment, manufacturing, retail trade and construction in New Zealand will start to see more recovery in early 2025, while RBNZ Chief Economist Conway said they have not formally modelled any potential impact from Trump's potential policies and expect a 6.8% increase in New Zealand house prices next year.
EU/UK
NOTABLE HEADLINES
- ECB's Schnabel said she sees only limited room for further rate cuts and the estimated range for the neutral rate is 2-3%, while she added they can gradually move rates to neutral, not lower. Schnabel also said that they shouldn't go accommodative on rates and noted a strong preference for a gradual approach.
DATA RECAP
- German GfK Consumer Sentiment (Dec) -23.3 vs. Exp. -18.6 (Prev. -18.3, Rev. -18.4)
