Futures Flat Ahead Of CPI, Dollar Surges On China Devaluation Speculation

US equity futures are flat ahead of the CPI report that will determine if the Fed cuts rates next week. As of 8:00am, S&P and Nasdaq futures are up 0.1%, with the Mag 7 mostly higher led by NVDA, GOOG and TSLA. Bond yields and the dollar are also higher after a Reuters report that Chinese leaders are considering allowing their currency to weaken as they brace for higher tariffs under a second Donald Trump presidency. In commodities oil is up +1.0%, and gold is trading just shy of $2700. The main macro focus will be CPI at 8.30am ET (see our preview here). We will also have 10y auction at 1pm ET and ADBE earnings after the close.

Among individual stock movers, Walgreens Boots Alliance slipped 3.5% in US premarket trading, ceding some of the previous day’s 28% surge, as analysts questioned the probability of Sycamore Partners acquiring the pharmacy chain. Videogame retailer GameStop was flat after posting a surprise profit. Here are some other notable premarket movers:

• Acelyrin (SLRN) tumbles 16% after the biotech company said its Phase 2b/3 trial of izokibep to treat a form of eye inflammation failed to meet targets.
• Dave & Buster’s (PLAY) drops 14% after the entertainment and dining chain reported weaker-than-expected 3Q results and said CEO Chris Morris is resigning.
• General Motors (GM) gains 1% after the automaker said it will stop funding the robotaxi development of its Cruise unit and combine both Cruise and GM technical teams into a single effort for autonomous driving.
• Joby Aviation (JOBY) declines 7% after the air-taxi startup entered into an equity distribution agreement.
• Macy’s (M) falls 8% after trimming its profit outlook after concluding its investigation into an employee plot to hide millions of dollars in expenses.
• Patterson Cos. (PDCO) soars 33% as Patient Square Capital agreed to buy the dental and animal health firm for $31.35 a share in cash.
• Stitch Fix (SFIX) climbs 21% after the online personal-styling service raised its year revenue outlook.

One day after we reminded readers that a yuan devaluation is looming...

... Reuters reported that Chinese leaders are considering allowing their currency to weaken as they brace for higher tariffs under a second Donald Trump presidency, sending the dollar higher.  The report saying Beijing could let the yuan depreciate, jolted markets that were in a lull ahead of Wednesday’s US inflation data print and next week’s Federal Reserve meeting. It sent the the offshore yuan as much as 0.5% lower, while Bloomberg’s dollar index gained 0.3% to touch a two-week high. The move spilled over globally, triggering drops in China proxies such as the Australian and New Zealand dollars, as well as in key emerging-market currencies like the South African rand.

“Last time we had the trade war, we saw a big weakening in the yuan,” said Karsten Junius, chief economist at Bank J Safra Sarasin Ltd. “That made sense at the time, it would make sense again if Trump comes up with tariffs again.”

Hetal Mehta, head of economic research at St James Place Management, said the dollar’s strength - it has risen 5% already this quarter - is unsurprising, given the “anticipation of tariffs, or just the pricing out of some of the rate cuts that people thought the Fed would implement.”

Meanwhile, while swap markets almost fully expect a quarter-point US rate reduction next week, they have trimmed bets on easing by the Fed over this cycle. Mehta also said that after a series of record highs on the S&P 500, traders will likely wait for details of Trump’s agenda before embarking on more significant moves. “Some of the recent strength is related to forthcoming tax cuts and what that would mean for corporate profits, so markets now want to wait and see that delivered,” she said.

European stocks are little changed as retail shares provide a drag after Inditex reported slower sales growth at the outset of the crucial holiday shopping season. US equity futures edge higher. Zalando SE slumped after the German retailer agreed to buy rival About You Holding SE, offering a premium of about 67% to Tuesday’s closing price. Inditex SA, the owner of the Zara fashion brand, fell on slower sales growth. Here are the biggest movers Wednesday:

• Publicis and RTL shares rise as JPMorgan upgrades both to overweight. Broker suggests a “pick and mix” approach to the European media sector to navigate an uneven macro picture heading into 2025
• Saipem gains as much as 4.5% after JPMorgan names the European oil services company its pick for 2025
• Man Group gains as much as 4.5% as Canaccord double-upgrades the hedge fund firm to buy from sell, removing the only negative analyst view, with retreat since the stock’s year-to-date high in April seen as an opportunity
• Inditex shares dropped as much as 7.7% in Madrid trading after Zara owner reported nine-month Ebit that missed estimates, with analysts noting trading update for the 4Q was also lighter than expected
• Siemens Energy shares drop as much as 8.7%, the biggest intraday fall since August, after competitor GE Vernova hosted an investor day that Morgan Stanley said created a negative read-across
• TUI shares drop as much as 8.5%, the biggest intraday decline since Aug. 5, after the travel company reported full-year results. Analysts flagged the slowdown in winter bookings from the pre-close update in September
• Zalando shares fall as much as 9.2% in early trading, the steepest drop since June, as analysts flagged the About You takeover deal will weigh on the balance sheet and reduce the chances of cash being returned to shareholders
• Carl Zeiss Meditec shares fall as much as 14%, after the German health-care supplier reported lower-than-expected earnings for the year and provided FY25 guidance which suggests downgrades to consensus estimates, according to analysts
• CVC Capital shares drop as much as 3.8% after shareholders in the investment management firm sold shares at a discount to yesterday’s closing price. The stock slipped to as low as €21.32 this morning, below the €21.54 price the shares were offloaded at
• Alzchem shares fall as much as 9.4% to €53 after LIVIA Corporate Development SE and HDI Vier CE informed the German specialty chemicals firm that they intend to sell a total of as many as 250,000 shares in a private placement

Earlier in the session, Asian stocks declined, weighed by a slump in Hong Kong and Chinese shares as traders tempered expectations for further stimulus from a key policy meeting. The MSCI Asia Pacific Index fell as much as 0.3%, with TSMC, Meituan and Tencent among the biggest drags on the gauge. The regional benchmark has moved in a tight range of less than 0.5% for the past five sessions. Shares in Hong Kong and mainland China ended the day lower after fluctuations. The moves suggest investors are bracing for potential disappointment from the Central Economic Work Conference, expected this week, despite vows of support made by the Politburo earlier. A major bright spot in the region was South Korea, where stocks extended gains to a second day following a selloff sparked by political turmoil. The impeachment case against President Yoon Suk Yeol could have “a little bit more serious impact to the overall economy” than previous impeachments given current macro weakness, said Ethan Seo, head of global markets at BNP Paribas in Seoul. Still, the South Korean stock market should stabilize if lawmakers pass the impeachment bill this weekend, while a delay would mean the turmoil “even getting worse.”

In FX, the Bloomberg Dollar Spot Index rose 0.2%, gaining for a fourth session to its highest level in two weeks ahead of US inflation data, boosted by weakness in the Japanese yen and Chinese yuan. The USD/JPY pair climbs 0.5% to 152.65, pushing the yen to a two-week low, after Bloomberg reported BOJ officials see little cost to waiting before raising interest rates. The report also suggested some officials are not against a rate hike at the December meeting if it is proposed. The yuan falls 0.4% on a report that Beijing is considering allowing the currency to weaken next year in response to the threat of a trade war with the US. The USD/CNH gains 0.2% to 7.2733 and Aussie, kiwi dollars follow yuan lower. USD/JPY rallies 0.5% to 152.79 after whipsawing on BOJ report. The loonie was little changed ahead of Bank of Canada decision, USD/CAD steady at 1.4182. Swaps markets pricing some 44bp — or around 80% of a half-point cut — from BOC. The EUR/USD falls 0.2% to 1.0508; GBP/USD down 0.2% to 1.2741

In rates, treasuries are slightly cheaper across the curve, lagging slightly vs core European rates, which are mostly little changed. WTI crude oil futures are up more than 1%, supporting higher Treasury yields ahead of the $39 billion 10-year reopening during US afternoon. US yields are higher by 1bp to 2bp across maturities with curve slightly flatter. 10-year around 4.24% is higher by ~1.5bp, trailing bunds and gilts in the sector by 1.7bp and 0.5bp. The treasury auction cycle continues with 10-year reopening, second of this week’s three coupon sales; Tuesday’s 3-year note tailed slightly, by 0.1bp

In commodities, Brent crude futures rose after a Bloomberg News report that the Biden administration is considering new sanctions on Russia’s oil trade, a move that could tighten the market. WTI oil is up 1% to $69.30 a barrel. Spot gold adds $5. Bitcoin climbs back above $98,000.

The US economic data calendar includes November CPI (8:30am) and Federal budget balance (2pm). Fed officials are in self-imposed quiet period ahead of their Dec. 18 Fed policy announcement

Market Snapshot

• S&P 500 futures little changed at 6,051.75
  Brent Futures up 1.0% to $72.91/bbl
  Gold spot down 0.1% to $2,692.86
  US Dollar Index up 0.23% to 106.65

Top Overnight News

• China's top leaders and policymakers are considering allowing the yuan to weaken in 2025 as they brace for higher U.S. trade tariffs as Donald Trump returns to the White House. The contemplated move reflects China's recognition that it needs bigger economic stimulus to combat Trump's threats of punitive trade measures. RTRS
• Bank of Japan officials see only a small cost to waiting before raising interest rates while still being open to a hike next week depending on data and market developments. Even if the BOJ decides to wait until January, authorities see it as not entailing a huge cost because signs point to little risk that inflation might overshoot. BBG
• US President-elect Trump's Treasury pick Bessent said Fed Chair Powell can serve the remainder of his term, via CNBC. Trump said he picked FTC Commissioner Andrew Ferguson to chair the FTC. Trump said he picked Ron Johnson to serve as the United States Ambassador to Mexico.
• US President Biden is to hit Chinese cleantech imports with more tariffs, in an effort to protect US manufacturing, according to the FT.
• Biden will dramatically increase the US tariffs on cleantech imports from China (Chinese polysilicon and solar wafers will see their tariff double to 50%). FT
• Japan’s PPI for Nov overshoots the Street, coming in at +3.7% (vs. the consensus of +3.4% and up from +3.6% in Oct), providing fresh momentum for the BOJ to hike rates ahead of its meeting next week. BBG
• Biden considering a fresh round of sanctions and restrictions on Russia’s oil industry in an effort to weaken Putin’s war on Ukraine ahead of Trump taking power. BBG
• South Korea’s opposition Democratic Party is preparing to file another impeachment motion that has a better chance of passing. President Yoon Suk Yeol will probably fight any impeachment bid and appears to have rejected stepping down. BBG
• Trump selected Andrew Ferguson to replace Lina Khan as head of the FTC. While a second Trump administration may be friendlier to mergers and acquisitions, it is likely to keep up the aggressive pursuit of antitrust cases targeting tech giants. BBG
• CPI Preview: We expect a 0.28% increase in November core CPI (vs. 0.3% consensus), corresponding to a year-over-year rate of 3.27% (vs. 3.3% consensus). We expect a 0.28% increase in November headline CPI (vs. 0.3% consensus), reflecting 0.25% higher food prices and 0.3% higher energy prices. Our forecast is consistent with a 0.20% increase in CPI core services excluding rent and owners’ equivalent rent and with a 0.20% increase in core PCE in November. GIR
• New hedge fund launches are on track to log one of its toughest years in over 20 years. A total of 123 firms opened up shop this year through September — poised for the smallest annual tally of new entrants since at least 2000. BBG

APAC stocks traded mixed following a soft US handover as participants brace for the US CPI data, although Chinese markets continued to benefit from the easing in China's overall monetary policy stance. ASX 200 was on a softer footing with almost all of its sectors in the red, whilst IT lagged following a similar sectoral performance stateside. Nikkei 225 was subdued but within narrow parameters whilst Japanese PPI topped expectations, with eyes on next week's BoJ. Hang Seng and Shanghai Comp both initially traded firmer in a continuation of the optimism from Politburo on Monday revising its overall monetary policy stance. Upside for the indices however were modest and capped ahead of the Central Economic Work Conference, whilst the China A50 faded earlier gains and dipped into the red and was later joined by the Hang Seng.

Top Asian News

• China's watchdog orders PDD (PDD) to fix controversial refunds policy, according to Bloomberg
• RBA's Hauser says Australian inflation could move in either direction. The data needs to come in line with forecasts for the central bank to change policySays there is no particular trigger figure for inflation for the RBA to ease policy.
• Japan auto worker's union calls for monthly pay increase of more than JPY 12,000 in annual labour talks next year.
• China's top policymakers are considering allowing the Yuan to weaken in 2025 as Trump tariff looms, via Reuters citing sources.
• South Korea Finance Ministry said will make ample responses to curb any excessive volatility in the FX market, according to Reuters.
• South Korea's economy and finance minister spoke to US Treasury Secretary Yellen, according to Reuters.
• South Korean police raid presidential office over martial law, according to Yonhap.
• Japan reportedly plans a 4% corporate tax surtax from 2026 to fund defence, according to Kyodo.
• Monetary Authority of Singapore survey: Singapore 2024 GDP growth at 3.6% (vs prev. 2.6%); 2024 core inflation seen at 2.9% (vs prev. 3.0%).
• ADB trimmed developing Asia 2024 growth forecast to 4.9% (prev. 5.0%), trimmed 2025 to 4.8% (prev. 4.9%); says growth outlook faces downside risks from the magnitude and speed of expected US policy shifts under Trump.

European bourses opened almost entirely in the red, but now display more of a mixed picture as sentiment gradually improves in the complex. Price action has been modest in nature, with traders mindful of the looming US CPI. European sectors opened with a strong negative bias, but sentiment has improved a touch as the morning progressed to display a mixed picture. Optimised Personal Care tops the pile alongside Media. Retail is by far and away the clear underperformer in Europe, hit by a double whammy of losses from Inditex and Zalando. US equity futures are mixed, with the NQ outperforming slightly, attempting to pare back some of the losses seen in the prior session.

Top European News

• Scholz to Request Confidence Vote Triggering Snap Election
• Mizuho Boosts European Bond Trading Team With New Hires
• Danske Bank Markets Hires Head of Fixed Income from SEB
• Russia’s Africa Strategy at Risk After Syria Regime Collapse
• Publicis Gains; JPMorgan Says ‘Pick and Mix’ in Europe Media
• HSBC’s CEO Eyes $3 Billion in Potential Savings From Overhaul

FX

• The USD was lent a helping hand in early trade following a Reuters sources report that China's top policymakers are considering allowing the Yuan to weaken in 2025 as Trump tariff looms. This sent DXY to a new high for the week at 106.68, stopping shy of last week's MTD high at 106.73 (which has since been breached in recent trade). Today's sees the release of November CPI data which is expected to see a +0.3% M/M outturn for core CPI.
• EUR/USD briefly dipped below 1.05 following a pick-up in the USD after reports of China looking to devalue the yuan next year. EUR/USD went as low as 1.0489 but stopped shy of the December low at 1.0460.
• JPY was firmer vs. the USD during APAC hours following two consecutive sessions of losses as markets digested above forecast Japanese PPI data; the Yuan reporting also supported. Thereafter, JPY gained further ground vs. the USD after a Bloomberg sources piece noted that the BoJ sees little cost in waiting for the next rate hike. This move was then subsequently reversed after markets digested another aspect of the report which noted that the BoJ sees less risk of a softer JPY boosting inflation (i.e less pressure to intervene). USD/JPY is back above its 200DMA at 152.00 with a session peak at 152.65.
• GBP is softer vs. the USD with UK catalysts on the light side. Friday's monthly GDP print unlikely to be a gamechanger for the BoE. Cable went as high as 1.2781 overnight before returning to within yesterday's 1.2724-1.2778 range.
• CNH was knocked lower in early European trade after source reporting via Reuters noted that China's top policymakers are considering allowing the Yuan to weaken in 2025 as Trump tariff looms.
• CAD is steady vs. the USD ahead of today's BoC rate decision. The BoC is widely expected to cut rates with the consensus looking for another 50bps reduction, but with a risk of a smaller 25bp move.
• PBoC set USD/CNY mid-point at 7.1843 vs exp. 7. 2379 (prev. 7.1876)
• RBI likely selling USD to limit INR fall, according to Reuters citing traders.
• BoJ reportedly sees little cost in waiting for the next rate hike, according to Bloomberg; cites current prices. Next rate increase is seen as a "matter of time". View is that there is less risk of a soft JPY boosting inflation.

Fixed Income

• USTs are back in negative territory after support from a Reuters report noting that China could be willing to let the Yuan devalue next year, proved to be short-lived. Mar'25 contract is currently tucked within yesterday's 110.26-111.09 range, ahead of US CPI.
• Today is seeing a minor reversal of the recent outperformance of French paper over its German counterpart. European paper was dealt some minor support in early trade following the aforementioned Reuters source report on China. Bunds are back above 136 and towards the top end of yesterday's 135.75-136.26 trading range.
• Gilts are reversing some of yesterday's selling which didn't appear to be driven by an obvious catalyst at the time. Mar'25 Gilt is currently towards the bottom end of yesterday's 95.13-73 trading range. Modest pressure was seen in Gilt prices following the 2034 auction, given the relatively wider tail.
• UK sells GBP 4bln 4.25% 2034 Gilt: b/c 2.87x (prev. 2.81x), avg yield 4.332% (prev. 4.475%) & tail 1.3bps (prev. 0.8bps).

Commodities

• WTI and Brent are on a firmer footing, and has pared initial pressure which was sparked by Reuters reporting, which noted that China's top policymakers are considering allowing the Yuan to weaken in 2025 as Trump tariff looms. Overnight trade saw oil prices propped up as traders digested reports that the US is weighing harsher oil sanctions against Russia weeks before Trump returns to office.
• Spot gold spent most of the European morning in modest negative territory, but has since climbed into the green. XAU has traded in a tight range of USD 2675.89-2704.35/oz range.
• Base metals traded on a firmer footing throughout overnight trade, with gains driven by the ongoing optimism surrounding China's easing of overall monetary policy stance. Into the European morning, prices began to dive lower on the aforementioned Yuan-related reports.
• Private inventory data (bbls): Crude +0.499mln (exp. -0.9mln), Distillate +2.452mln (exp. +1.4mln), Gasoline +2.852mln (exp. +1.7mln), Cushing -1.517mln (prev. +0.1mln).
• El Paso Natural Gas Co. declares initial force majeure – Line 1200, according to Reuters.
• Goldman Sachs pushes back on the argument that gold cannot rally to USD 3,000/oz by end-2025 "in a world where the dollar stays stronger for longer." "Fewer Fed cuts are a key downside risk to our USD 3,000 end-2025 gold price forecast (not a stronger dollar).".
• UBS forecasts Brent rising to USD 80/bbl and WTI rising to USD 75/bbl in 2025. UBS says for 2025, it holds a constructive natgas price outlook (see NatGas at USD 3.50/mmbtu in June 2025, rising to USD 3.60/mmbtu by September).
• Ukraine's military says it struck an oil depot in Russia's Bryansk region; military says the attack caused a 'massive fire'. Attack on an oil depot in Russia's Bryansk region did not affect oil transit to Europe via Ukraine, according to Reuters citing a industry source. Kazakhstan says Druzhba oil pipeline in Russia is not damaged by Ukrainian overnight strikes.

Geopolitics: Middle-East

• Sky News Arabia reports that it is monitoring the advance of Israeli tanks in the Golan.
• Two US Navy destroyers successfully defeated Houthi-launched weapons while transiting the Gulf of Aden, according to the US military.

Geopolitics: Ukraine

• US is weighing harsher oil sanctions against Russia weeks before Trump returns to office, according to Bloomberg.
• Russian Deputy Foreign Minister says Russia will "definitely be prepared to consider" another prisoner swap with the US, according to NBC.

US Event Calendar

• 07:00: Dec. MBA Mortgage Applications 5.4%, prior 2.8%
• 08:30: Nov. CPI MoM, est. 0.3%, prior 0.2%
  • Nov. CPI YoY, est. 2.7%, prior 2.6%
  • Nov. CPI Ex Food and Energy MoM, est. 0.3%, prior 0.3%
  • Nov. CPI Ex Food and Energy YoY, est. 3.3%, prior 3.3%
  • Nov. Real Avg Hourly Earning YoY, prior 1.4%
  • Nov. Real Avg Weekly Earnings YoY, prior 1.4%, revised 1.1%
• 14:00: Nov. Federal Budget Balance, est. -$356b, prior -$314b

DB's Jim Reid concludes the overnight wrap

Today's EMR contains the largest number I think I've ever used in this document. See if you can spot it and try to work out how many zeros in this number without looking it up. That's in a story covering AI which was a potential curveball in both directions in our “Curveballs for 2025” pack earlier this week (link here). Another was that inflation refuses to behave relative to expectations, particularly in the US. Today we’ll see the next installment in this saga with US CPI ahead of an interesting FOMC next week.

If inflation does make a comeback in 2025 and 2026 it may be centred around tax cuts and tariffs so today’s number is well before any of that might happen, but US inflation has been on the stubborn side in recent months in what has been the better half of the year for seasonals.

In terms of what to expect, the general consensus is it’s going to be a stronger one again, and our US economists are looking for a +0.30% monthly print on the headline measure. If realised, that would actually be the highest number in 7 months, and would lift the year-on-year CPI rate up to +2.8%. Moreover, they expect core CPI to come in at a monthly +0.27%, which would be the fourth consecutive month with a core CPI print rounding to +0.3%. So that’s a bit too fast for the Fed to be completely comfortable, although our economists think that the rise in the unemployment rate in last week’s jobs report should still allow them to proceed with a 25bp cut next week. See their full preview here, along with how to sign up for their subsequent webinar.

Markets have lost some ground over the last 24 hours, with the S&P 500 (-0.30%) extending its losses at the start of the week as we await the CPI report. Futures are pricing in a 86% probability that the Fed will cut rates this week but at the same point before the November meeting, a cut was priced as a 95% chance, so there’s more doubt than there was last time, and a strong print today would definitely raise the uncertainty into year-end. And given President-elect Trump’s pledge to introduce more aggressive tariffs, there’s also plenty of potential inflationary pressures still in the pipeline.

Ahead of the CPI, Treasury yields ticked up, with the 2yr yield (+1.9bps) up to 4.15%, whilst the 10yr yield (+2.5bps) rose to 4.23%. That got support from the NFIB’s small business optimism index, which surged to 101.7 in November (vs. 95.3 expected). Indeed, it was the biggest monthly jump in the index since it began as a monthly series in 1986, and it takes it up to its highest level since June 2021. So it speaks to a big shift in sentiment that we also saw in the NY Fed’s survey yesterday, where the share expecting their household financial situation to improve reached its highest since February 2020. That said, it remains to be seen to what extent this post-election jump in the surveys, many of which have been historically subdued over the past couple of years, will translate into hard activity gains.

Indeed, that positive data didn’t help equities much, with the S&P 500 (-0.30%) retreating for a second session in a row for the first time in three weeks. That was despite a strong gain for the Magnificent 7 (+0.99%), which hit an all-time high that took its YTD gain up to +68.80%. Those gains were led by Alphabet (+5.59%) after Google unveiled its new quantum computing chip, Willow, which is seen as delivering important progress towards building quantum computers with practical applications. According to the company, the chip “performed a computation in under five minutes that would take one of today's fastest supercomputers 10 septillion years” and can reduce errors while scaling up the number of qubits, which is a long-standing challenge in the field. I understand about half of what I've just typed I think.

Several more trade-exposed areas didn’t do so well however, with some putting it down to Trump’s description of Canadian PM Trudeau as “Governor Justin Trudeau of the Great State of Canada.” So investors interpreted that by suggesting Trump was less likely to back down on his tariff threats. And in light of that, the Philadelphia Semiconductor Index (-2.47%) and the NASDAQ Golden Dragon China Index (-4.34%) both had their worst daily performances in nearly a month, with the latter correcting from the +8.54% surge the day before. Equity losses were also seen in Europe, with the Stoxx 600 down -0.52%.

Over in Europe, attention is now turning to the ECB’s policy decision tomorrow, where they’re widely expected to deliver another 25bp rate cut. And ahead of that, bond yields saw modest moves across the Euro Area, with those on 10yr bunds (-0.1bps) essentially unchanged, while OAT (+0.8bps) and BTP (+1.0bps) yields edged slightly higher. The outlier was 10yr gilt yields (+5.3bps), which pushed the UK-German 10yr spread up to 220bps, which is the widest it’s been since September 2022 when Liz Truss was still PM. Bear in mind that the closing peak in the spread was 228bps under Liz Truss, and that hasn’t been exceeded in Bloomberg’s data series back to 1992. So we’re pretty close to a multi-decade record, and the widening interest differential also meant that sterling closed at its strongest level against the Euro since June 2016, the month of the Brexit referendum.

In European political news, French President Macron said that he plans to appoint a new prime minister in the next 48 hours in a meeting with French political leaders. That follows last week’s collapse of the government led by PM Barnier. According to reporting by Bloomberg and others, Macron is seeking to build a coalition of moderates that could last through to the end of his Presidential term in 2027.

Asian equity markets are struggling for direction this morning. As I check my screens, the Nikkei (-0.14%) is losing ground with the S&P/ASX 200 (-0.47%), the CSI (-0.29%) and the Hang Seng (-0.29%) are also lower as a two-day annual economic meeting begins in Beijing today. The meeting comes after China's Politburo on Monday offered its most dovish signals yet on plans to unlock more stimulus and support growth. Elsewhere, the KOSPI (+0.73%) continues to gain ground for the second consecutive session following last week’s short lived martial law event. US futures are fairly flat.

Early morning data showed that Japan’s wholesale inflation rose +3.7% y/y in November (v/s +3.4% expected), accelerating at the fastest pace in 16 months and compared to an upwardly revised gain of +3.6%. Following the stronger data release, the Japanese yen (+0.27%) is gaining ground, trading at 151.57 against the dollar amid growing inflationary pressure in the economy - thus keeping the door open for a possible interest rate hike by the BOJ next week.

There wasn’t too much other data yesterday, although US unit labour cost growth was revised down in Q3. So the previous reading had suggested unit labour costs were up by an annualised +1.9% rate, but the latest print lowered that to +0.8%. So that pointed to weaker inflationary pressures than previously thought. Otherwise in Italy, industrial production was flat in October, in line with expectations.

To the day ahead now, and the main data highlight will be the US CPI report for November. Otherwise, the Bank of Canada will announce their latest policy decision.