US Thanksgiving followed by Black Friday

EU mid-market update: French govt willing to adjust budget to calm market hysteria; US Thanksgiving followed by Black Friday.

Notes/observations

- European indices are higher amid thinner liquidity as US traders are off for Thanksgiving. US futures remain active while cash trading is closed. Tomorrow (Black Friday in retail space) has reduced trading hours.

- French assets rebound modestly, lifting CAC40 +0.8% and closing the spread to Germany 10-year to <85bps. French 10-year still approximately on par with Greece 10-year. Reversal attributed to comments from French Fin Min, who suggested flexibility to amend parts of the budget to ensure it passed, calming fears after PM Barnier said earlier in week that a fiscal storm would ensue if it failed to be approved. Risk premium unwinding on the positive basis that govt is willing to give concessions, from a previously stubborn position.

- German State CPIs were mixed ahead of national reading at 08:00 ET; Consensus for YoY at 2.3%.

- Global chips names trade mostly higher following press report that US readies China chip curbs that stop short of early proposals.

- Asia closed mixed with Hang Seng underperforming -1.2%. EU indices are +0.2-0.9%. US futures are +0.1-0.2%. Gold +0.4%, DXY +0.3%; Commodity: Brent +0.5%, WTI +0.5%; Crypto: BTC +1.4%, ETH +5.1%.

Asia

- Bank of Korea (BOK) cut its 7-Day Repo Rate by 25bps to 3.00% (not expected).

- BOK Policy Statement noted that inflation had maintained stabilization trend while consumption would continue a moderate recovery. To thoroughly assess impact of the base rate cut on inflation, growth, and financial stability. Pace of further cuts would be affected by FX movements, oil prices, and economic growth.

- BOK Gov Rhee post rate decision press conference noted that the decision to cut rate was not unanimous (4-2); move signaled a faster easing pace. Three members saw rates being held at 3.00% over the next three months while three other members saw another rate cut.

- New Zealand Nov ANZ Business Confidence: 64.9 v 65.7 prior.

- Australia Q3 Private Capex: 1.1% v 1.0%e.

- Japan likely to see current FY tax revenues hit fresh record high ~¥73.4T; Govt said to issue more than ¥6T in JGBs to fund extra budget.

- RBNZ Assistant Gov Silk noted that rapid pace of easing did not suggest RBNZ over-tightened; Policy needed to remain mildly restrictive in 2025.

Europe

- ECB Pres Lagarde commented that trade war might be a little net inflationary; tariffs negative for global growth long-term.

- France PM Barnier said to be seeking to pass a budget with €60B of spending cuts and tax increases (**Insight: Concerns intensified among investors that a dispute over a belt-tightening draft budget could bring down PM Barnier’s government. The 10-year French/German Gov't bond spread at approx. +86bps).

Americas

- US Pres Elect Trump posted on social media that he had conversation with Mexico Pres Sheinbaum, in which she agreed to stop migration through Mexico and into the US, effectively closing the Southern Border.

- US markets closed for Thanksgiving holiday.

Tensions

- Russia Pres Putin announced Russia to increase missile production 25-30% next year; Russia will possibly continue to response to Ukraine with IRBM (Intermediate Range Ballistic Missile) and decision-making centers in Kyiv could become a target.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.72% at 508.58, FTSE +0.21% at 8,291.75, DAX +0.97% at 19,448.25, CAC-40 +0.82% at 7,201.80, IBEX-35 +0.53% at 11,650.78, FTSE MIB +0.59% at 33,285.00, SMI +0.81% at 11,718.80, S&P 500 Futures +0.13%].

Market focal points/key themes: European indices open generally higher and stayed upbeat through the early part of the session; improving fiscal situation and comments from Lagarde seen supporting modest risk appetite; among sectors leading the way higher are technology and industrials; lagging sectors include real estate and utilities; Heidelberg Materials to acquire Giant Cement; Aviva confirms potential offer for Direct Line; reportedly ABC close to making offer for Ti Fluid Systems; focus on German CPI to be released later in the day; US closed for holiday; no major earnings events expected during the session.

Equities

- Consumer discretionary: Remy Cointreau [RCO.FR] +4.5% (H1 results, cost cutting plan, guidance adjusted), Dr Martens [DOCS.UK] +12.0% (H1 results, cost savings plan, new CEO start date), Tesco [TSCO.UK] +2.5% (JPMorgan raised to overweight).

- Energy: Tullow Oil [TLW.UK] -10.5% (trading update), Uniper [UN01.DE] +4.0% (raised outlook).

- Financials: Direct Line Insurance [DLG.UK] +41.5% (Aviva confirmed offer).

- Industrials: Stellantis [STLA.NL] +1.5% (US Pres Elect Trump had conversation with Mexico Pres Sheinbaum), Energean [ENOG.UK] -3.5% (trading update).

- Technology: ASML Holding [ASML.NL] +4.0% (US said to ready China chip curbs that stop short of early proposals) - Real Estate: Adler Group [ADJ.DE] +10.0% (9M results, affirms guidance).

Speakers

- France Fin Min Armand stated that could not compare France to Greece (follows French 10-year Bond Yield matching Greece's for first time). Noted that country was at risk of losing control if budget was not passed and prepared to make concessions on electricity taxes to ensure budget passed. Added that a modified budget was better than no budget at all.

- Russia Pres Putin stated that Russia to increase missile production 25-30% next year.

- RBA Gov Bullock reiterated that saw no near-term rate cut with core inflation above 2-3%. Policy to stay restrictive until confident on inflation; Forecasts suggested return to target in 2026. Cautions that if data suggested inflation picking up again, that would be a big red flag.

- China Commerce Ministry (MOFCOM) stated that imposing tariffs would not solve US trade issues. Stressed that US should comply with WTO rules.

- OPEC+ delayed its online meeting from Dec 1st to Dec 5th.

Currencies/fixed income

- USD maintained a steady tone during the EU session as a plethora of data failed to inspire any fresh position taking.

- EUR/USD steady at 1.0540 area despite an uptick in various EU inflation readings for Nov. ECB did foreshadow that inflation could pick-up into year end and markets had recently dialed back expectations of a more aggressive rate cut by the ECB in December.

- USD/JPY stayed below the 152 level during the session.

- Dealers noted that the The 10-year French/German Gov't bond spread improved a tad to +84bps after the French Fin Min stated that govt was ready to make concessions on electricity taxes to ensure budget passed.

Economic data

- (NL) Netherlands Nov Producer Confidence Index: -1.8 v -3.2 prior.

- (FI) Finland Oct House Price Index M/M: +0.9% v -0.5% prior; Y/Y: +0.4% v -1.3% prior.

- (SE) Sweden Oct Trade Balance (SEK): +0.6B v -0.1B prior.

- (FI) Finland Sept Final Trade Balance: €0.3B v €0.3B prelim.

- (DK) Denmark Oct Retail Sales M/M: 0.3% v 0.5% prior; Y/Y:3.3% v 1.1% prior.

- (TR) Turkey Nov Economic Confidence: 97.1 v 98.0 prior.

- (TR) Turkey Oct Trade Balance: -$5.9B v -$5.7Be.

- (ES) Spain Nov Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 2.4% v 2.3%e; CPI Core Y/Y: 2.4% v 2.6%e.

- (ES) Spain Nov Preliminary CPI EU Harmonized M/M: 0.0% v 0.1%e; Y/Y: 2.4% v 2.4%e.

- (ES) Spain Sep Total Mortgage Lending Y/Y: +23.4% v -3.5% prior; Mortgage Approvals Y/Y: 33.9% v 8.8% prior.

- (SE) Sweden Nov Consumer Confidence: 102.0 v 101.2 prior; Manufacturing Confidence: 95.8 v 91.6 prior; Economic Tendency Survey: 97.2 v 93.6 prior.

- (EU) Euro Zone Oct M3 Money Supply Y/Y: 3.4% v 3.4%e.

- (DE) Germany Nov CPI North Rhine Westphalia M/M: -0.3% v +0.3% prior; Y/Y: 1.9% v 2.0% prior.

- (DE) Germany Nov CPI Hesse M/M: -0.3% v +0.5% prior; Y/Y: 2.0% v 1.8% prior.

- (DE) Germany Nov CPI Bavaria M/M: -0.2% v +0.5% prior; Y/Y: 2.6% v 2.4% prior.

- (DE) Germany Nov CPI Brandenburg M/M: -0.2% v +0.3% prior; Y/Y: 1.9% v 1.8% prior.

- (DE) Germany Nov CPI Saxony M/M: -0.2% v +0.4% prior; Y/Y: 2.9% v 2.8% prior.

- (DE) Germany Nov CPI Baden Wuerttemberg M/M: -0.3% v +0.7% prior; Y/Y: 2.2% v 2.1% prior.

- (IT) Italy Nov Consumer Confidence: 96.6 v 97.4e; Manufacturing Confidence: 86.5 v 85.0e; Economic Sentiment: 93.1 v 93.4 prior.

- (IS) Iceland Nov CPI M/M: 0.1% v 0.3% prior; Y/Y: 4.8% v 5.1% prior.

- (PL) Poland Q3 Final GDP Q/Q: -0.1% v -0.2% prelim; Y/Y: 2.7% v 2.7% prelim.

- (ZA) South Africa Oct PPI M/M: -0.7% v -0.3%e; Y/Y: -0.7% v -0.2%e.

- (PT) Portugal Nov Consumer Confidence: -14.0 v -13.9 prior; Economic Climate Indicator: 2.5 v 2.1 prior.

- (EU) Euro Zone Nov Economic Confidence: 95.8 v 95.2e; Industrial Confidence: -11.1 v -13.0e; Services Confidence: 5.3 v 6.5e; Consumer Confidence (final): -13.7 v -13.7 prelim.

- (IT) Italy Oct PPI M/M: +1.0% v -0.8% prior; Y/Y: -3.8% v -2.7% prior.

Fixed income issuance

- (DK) Denmark sold total DKK1.8B in 3-month and 6-month bills.

- (SE) Sweden sold total SEK500M vs. SEK500M indicated in 2030 and 2039 I/L Bonds.

- (IT) Italy Debt Agency (Tesoro) sold total €B vs. €5.5-6.75B indicated range in 5-year and 10-year BTP Bonds (3 tranches).

- Sold €3.25B vs. €2.75-3.25B indicated range in 3.00% Oct 2029 BTP bonds; Avg Yield: 2.79% v 2.96% prior; Bid-to-cover: 1.58x v 1.91x prior.

- Sold €1.5B vs. €1.0-1.5B indicated range in 2.45% Sept 2033 BTP; Avg Yield: 3.16% v 3.66% prior; Bid-to-cover: 1.68x v 1.41x prior.

- Sold €2.0B vs. €1.75-2.0B indicated range in 3.85% Feb 2035 BTP bonds; Avg Yield: 3.39% v 3.57% prior; bid-to-cover: 1.63x v 1.55x prior.

- (IT) Italy Debt Agency (Tesoro) sold €1..5B vs. €1.0-1.5B indicated range in Apr 2032 Floating Rate Note (CCTeu); Real Yield: 4.08% v 4.94% prior; Bid-to-cover: 1.76x v 1.92x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Nov CPI M/M: No est v 0.5% prior; Y/Y: No est v 3.2% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IL) Israel Sept Manufacturing Production M/M: No est v -0.8% prior.

- 06:00 (IE) Ireland Nov Preliminary CPI EU Harmonized Y/Y: No est v 0.1% prior.

- 06:00 (IE) Ireland Oct PPI M/M: No est v 0.2% prior; Y/Y: No est v -1.6% prior.

- 06:00 (IE) Ireland Oct Retail Sales Volume M/M: No est v 0.5% prior; Y/Y: No est v 0.2% prior.

- 06:00 (BR) Brazil Nov FGV Inflation IGPM M/M: 1.2%e v 1.5% prior; Y/Y: 6.2%e v 5.6% prior.

- 06:00 (FI) Finland to sell Bonds via ORI auction.

- 06:30 (BR) Brazil Oct Total Outstanding Loans (BRL): No est v 6.180T prior; M/M: No est v 1.2% prior; Personal Loan Default Rate: No est v 5.6% prior.

- 07:00 (CA) Canada Nov CFIB Business Barometer: No est v 55.8 prior.

- 08:00 (DE) Germany Nov Preliminary CPI M/M: -0.2%e v +0.4% prior; Y/Y: 2.3%e v 2.0% prior.

- 08:00 (DE) Germany Nov Preliminary CPI EU Harmonized M/M: -0.5%e v +0.4% prior; Y/Y: 2.6%e v 2.4% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 22nd: No est v $611.6B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CA) Canada Q3 Current Account Balance: -$8.7Be v -$8.5B prior.

- 08:30 (SE) Sweden Central Bank (Riksbank) Bunge.

- 10:00 (MX) Mexico Central Bank (Banxiico) Nov Minutes.

- 12:00 (IE) ECB’s Lane (Ireland, chief economist).

- 16:00 (NZ) New Zealand Nov ANZ Consumer Confidence: No est v 91.2 prior.

- 18:00 (KR) South Korea Oct Industrial Production M/M: +0.3%e v -0.2% prior; Y/Y: +2.0%e v -1.3% prior; Cyclical Leading Index Change: No est v 0.0% prior.

- 18:30 (JP) Japan Oct Jobless Rate: 2.5%e v 2.4% prior; Job-To-Applicant Ratio: 1.24x v 1.24x prior.

- 18:30 (JP) Japan Nov Tokyo CPI Y/Y: 2.2%e v 1.8% prior; CPI (ex-fresh food) Y/Y: 2.0%e v 1.8% prior; CPI (ex-fresh food and energy) Y/Y: 1.9%e v 1.8% prior.

- 18:50 (JP) Japan Oct Retail Sales M/M: +0.4%e v -2.2% prior (revised from -2.3%); Y/Y: 2.0%e v 0.7% prior (revised from 0.5%); Dept Store, Supermarket Sales Y/Y: No est v 1.8% prior.

- 18:50 (JP) Japan Oct Preliminary Industrial Production M/M: 4.0%e v 1.6% prior; Y/Y: +2.0%e v -2.6% prior; Capacity Utilization M/M: No est v 4.4% prior.

- 19:01 (UK) Nov Lloyds Business Barometer: 40e v 44 prior; Own Price Expectations: No est v 61 prior.

- 19:30 (AU) Australia Oct Private Sector Credit M/M: 0.5%e v 0.5% prior; Y/Y: No est v 5.8% prior.

- 21:00 (SG) Singapore Oct M2 Money Supply Y/Y: No est v 3.0% prior; M1 Y/Y: No est v 6.5% prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 22:35 (JP) Japan to sell 2-year JGB Bonds.