King Dollar lifted by Trump threats while French PM barnier has last ditch budget attempt

EU Mid-Market Update: King dollar lifted by Trump threats while French PM Barnier has last ditch budget attempt to avoid no-confidence vote; European PMIs revised lower.

Notes/observations

- Strong start to the week for US dollar after Pres-Elect Trump demands BRICS nations commit to US dollar as global reserve currency and abandon efforts for a new currency, or face 100% tariffs.

- Europe is laser focused on French budget, with a soft deadline issued by Le Pen on PM Barnier to amend the 2025 budget before end of today and not use the constitutional ruling 49.3 to push it through parliament without a vote, or else she will call a no-confidence vote. CAC40 underperforms.

- Major European Final PMI Manufacturing readings all revised lower and remaining in contraction territory; Manufacturing PMIs from Spain, Italy, France, Germany and UK all miss estimates.

- Only one outstanding House race yet to be called, with Dem Gray leads GOP Rep. Duarte by 227 votes in California's 13th Congressional District; Results set to be certified in coming days, which could leave GOP with the smallest majority after any House election since 1930.

- Big catalysts in near term horizon with Fed Chair Powell to speak mid-week and US Non-Farm Payrolls on Friday.

- Asia closed higher with Shanghai outperforming +1.1%. EU indices are -1.0% to flat. US futures are -0.2%. Gold -0.6%, DXY +0.5%; Commodity: Brent +0.9%, WTI +0.9%; Crypto: BTC -1.7%, ETH -2.4%.

Asia

- China Nov Manufacturing PMI (Govt Official): 50.3 v 50.2e (2nd month of expansion).

- China Nov Caixin PMI Manufacturing: 51.5 v 50.6e (2nd month of expansion).

- South Korea Nov PMI Manufacturing: 50.6 v 48.3 prior (1st expansion in 3 months).

- Japan Nov Final Manufacturing PMI: 49.0 v 49.0 prelim (confirmed 5th straight contraction).

- Australia Nov Final Manufacturing PMI: 49.4 v 49.4 prelim (confirmed 10th month of contraction).

- Australia Q3 Inventories Q/Q: -0.9% v -0.1%e.

- Australia Oct Building Approvals M/M: 4.2% v 1.5%e.

- Australia Oct Retail Sales M/M: 0.6% v 0.4%e.

- Japan Q3 Capital Spending (Capex) Y/Y: 8.1% v 6.7%e.

- BOJ Gov Ueda noted that further JPY currency (Yen) weakness was a big risk; BOJ to focus on wage and other areas when deciding whether to hike rates.

- China said to have studied the impact of sanctions and produced reports regularly for the country’s leadership. The goal is to draw lessons about how to mitigate them, particularly in case a conflict over Taiwan prompts the U.S. and its allies to impose similar penalties on China.

Taiwan

- US State Dept approved potential sale of spare parts for F-16 jets and radars to Taiwan for an ~$320M.

- China Foreign Ministry noted that US decision was an infringement of China’s sovereignty and would harm relations between the two countries.

Europe

- France Fin Min Armand stated that govt would not be blackmailed over budget with artificial deadlines from Le Pen; a no confidence vote could come as early as Wednesday.

- S&P affirmed France sovereign rating at AA-; Outlook Stable.

- SNB Chairman Schlegel stated that when Germany has a cold, Switzerland has the flu; Face pressure from strong currency.

- UK Nov Lloyds Business Barometer: 41 v 40e.

Americas

- Trump demanded that BRICS nations commit to not creating a new currency to challenge the USD or they would face 100% tariffs.

- Mastercard SpendingPulse: US Black Friday retail sales (ex-autos) +3.4% y/y (Online sales +14.6% y/y, while in store sales +0.7% y/y).

Tensions

-Syrian opposition forces said to have taken control of much of the country’s second-largest city Aleppo [**Note: the first time Syrian rebels have set foot in Aleppo since govt forces regained control during the civil war in 2016].

-Sen. Graham (R-SC) said that Pres-elect Trump wants to see a ceasefire and hostage deal in Gaza before he assumes office on Jan 20th.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.04% at 510.42, FTSE -0.11% at 8,278.26, DAX +0.06% at 19,641.05, CAC-40 -0.69% at 7,185.09, IBEX-35 +0.37% at 11,684.00, FTSE MIB -0.65% at 33,191.00, SMI +0.37% at 11,788.30, S&P 500 Futures -0.21%].

Market Focal Points/Key Themes: European indices open generally lower, but managed to stage something of a recovery in early trading; French equities leading to the downside over potential imminent no-confidence vote in PM; among better performing sectors are materials and health care; among sectors trending lower are financials and industrials; automotive sector dragged by Stellantis following resignation of CEO; Calibre Mining confirms it will not make an offer for Condor Gold; Ipsos confirms in talks to acquire Kantar; reportedly Inditex to take a stake in Telefonica/Vodafone JV; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] -7.5% (Glovo decides to move to employment based model for delivery riders in Spain), Carrefour [CA.FR] -5.0% (refinances €4.0B of revolving credit lines).

- Energy: GALP Energia [GALP.PT] +4.0% (drilling results) - Healthcare: NicOx [COX.FR] -2.5% (Denali Phase 3 trial of NCX 470 fully enrolled in China earlier than expected; Confirms topline results expected to be reported Q3 2025).

- Materials: Akzo Nobel [AKZA.NL] +4.0% (JPMorgan raised to overweight) - Industrials: Stellantis [STLA.FR] -8.5% (CEO resigns immediately).

- Technology: Spirent Communications [SPT.UK] +5.5% (Keysight updates on deal approvals), ASML [ASML.NL] -1.5% (reports on new round of US export curbs), Prosus [PRX.NL] -0.5% (H1 results and unit guidance, CFO retires), Atos [ATO.FR] -6.5% (completes rights issue).

- Real Estate: Persimmon [PSN.UK] -3.5%, Vistry [VTY.UK] -3.5% (RBC cuts following UK Nationwide House Prices).

Speakers

- ECB's Stournaras (Greece) reiterated view that it appeared that rates would be cut in Dec.

- ECB's Kazaks (Latvia, voter, hawk) reiterated stance that rate cuts must continue. Likely to discuss a bigger Dec rate cut but outlook is uncertain

- ECB's Lane (Ireland, chief economist) noted that current monetary policy stance remained restrictive. Inflation was close to 2% target but there was a little distance to go as services inflation needed to fall further.

- France's Le Pen Party Chief (far-right): Will topple PM Barnier unless there is a miracle on budget.

- Russia Govt Spokesperson commented on Trump’s BRIC tariff threat noting that the USD was losing its appeal as a reserve currency for many countries.
US confirmed it tightened China curbs on AI memory and semiconductor tools; New rules affect 27 types of chip design and fabrication tools; US to sanction 140 Chinese entities; curb US, foreign-made HBM.

Currencies/fixed income

- USD was firmer as President-elect Trump issued a warning to BRICS members of 100% tariffs if they created a new currency to rival the USD. Russia and Brazil had suggested creating a BRICS currency to reduce the dollar's dominance in global trade. South Africa govt stated that BRICS had no plans to create a new currency. Greenback also aid by speculation that the Fed could skip a rate cut at the Dec policy decision (odds approx. 37% of pause).

- EUR/USD hovered around the 1.05 level as ECB members continued to stress the need for lower rates. Focus remained on the political situation in France over the budget impasse. The 10-year Oat/Bund spread was at 85 bps and just below recent 12-year highs. S&P Global Ratings affirmed France's AA- rating and stable outlook

- USD/JPY back above the 150 level despite BOJ Gov recent commentary that further JPY currency (Yen) weakness was a big risk; He stressed that BOJ to focus on wage and other areas when deciding whether to hike rates.

Economic data

- (NL) Netherlands Oct Retail Sales Y/Y: 2.0% v 2.6% prior.

- (RU) Russia Nov Manufacturing PMI: 51.3 v 50.6 prior (2nd month of expansion).

- (NL) Netherlands Nov Manufacturing PMI: 46.6 v 47.0 prior (5th month of contraction).

- (UK) Nov Nationwide House Price Index M/M: 1.2% v 0.2%e; Y/Y: 3.7% v 2.4%e (strongest rise since Mar 2022).

- (TR) Turkey Nov Manufacturing PMI: 48.3 v 45.8 prior (8th month of contraction).

- (CH) Swiss Oct Real Retail Sales Y/Y: 1.4% v 1.8% prior.

- (SE) Sweden Nov PMI Manufacturing: 53.8 v 53.2 prior (4th month of expansion).

- (HU) Hungary Sept Final Trade Balance: €1.0B v €1.2B prelim.

- (TH) Thailand Nov Business Sentiment Index: 49.3 v 47.0 prior.

- (HU) Hungary Nov Manufacturing PMI: 50.3 v 47.5e (1st expansion in 6 months).

- (PL) Poland Nov Manufacturing PMI: 48.9 v 49.1e (31st month of contraction).

- (ES) Spain Nov Manufacturing PMI: 53.1 v 54.0e (10th month of expansion).

- (CH) Swiss Nov PMI Manufacturing: 48.5 v 49.5e (23rd month of contraction); PMI Services: 51.8 v 51.8 prior.

- (CZ) Czech Nov Manufacturing PMI: 46.0 v 47.0e (30th month of contraction).

- (TR) Turkey Nov Preliminary Trade Balance: -$7.4B v -$5.9B prior.

- (NG) Nigeria Nov Manufacturing PMI: 49.6 v 46.9 prior.

- (IT) Italy Nov Manufacturing PMI: 44.5v 46.0e (8th month of contraction).

- (FR) France Nov Final Manufacturing PMI: 43.1 v 43.2 prelim (confirmed 22nd month of contraction).

- (DE) Germany Nov Final Manufacturing PMI: 43.0 v 43.2 prelim (confirmed 29th month of contraction).

- (EU) Euro Zone Nov Final Manufacturing PMI: 45.2 v 45.2 prelim (confirmed 29th month of contraction).

- (GR) Greece Nov Manufacturing PMI: 50.9 v 51.2 prior (21st month of expansion).

- (NO) Norway Nov PMI Manufacturing: 50.7 v 52.0 prior (5th month of expansion).

- (ZA) South Africa Nov Manufacturing PMI: 48.1 v 52.6 prior (1st contraction in 3 months).

- (IT) Italy Oct Unemployment Rate: 5.8% v 6.1%e.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 459.0B v 459.4B prior; Domestic Sight Deposits: 450.9B v 451.0B prior.

- (UK) Nov Final Manufacturing PMI: 48.0 v 48.6e (confirmed 2nd month of contraction).

- (EU) Euro Zone Oct Unemployment Rate: 6.3% v 6.3%e.

- (BE) Belgium Oct Unemployment Rate: 5.8% v 5.8% prior.

- (IT) Italy Q3 Final GDP Q/Q: 0.0%e v 0.0% prelim; Y/Y: 0.4%e v 0.4% prelim.

- (CY) Cyprus Q3 Final GDP Q/Q: 1.0% v 1.0% prelim; Y/Y: 3.9% v 3.9% prelim.

Fixed income issuance

- None seen.

Looking ahead

- (IL) Israel Central Bank (BOI) Nov Minutes.

- (IT) Italy Nov Budget Balance: No est v -€17B prior.

- (RO) Romania Nov International Reserves: No est v $71.4B prior.

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

- 05:30 (DE) Germany to sell combined €4.0B in 3-month and 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell Bills.

- 06:00 (PT) Portugal Oct Industrial Production M/M: No est v 2.6% prior; Y/Y: No est v 2.7% prior.

- 06:00 (IL) Israel to sell bonds.

- 06:00 Norway announcement on upcoming Bond issuance (held on Wed).

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 06:30 (CL) Chile Oct Economic Activity Index (Monthly GDP) M/M: +0.2%e v -0.8% prior; Y/Y: 2.5%e v 0.0% prior.

- 08:00 (BR) Brazil Nov Manufacturing PMI: No est v 52.9 prior.

- 08:00 (SG) Singapore Nov Purchasing Managers Index (PMI): No est v 51.0 prior; Electronics Sector Index: No est v 51.5 prior.

- 08:00 (CZ) Czech Nov Budget Balance (CZK): No est v -200.7B prior.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.6-7.2B in 3-month, 6-month and 12-month bills.

- 09:30 (CA) Canada Nov Manufacturing PMI: No est v 51.1 prior.

- 09:45 (US) Nov Final S&P Manufacturing PMI: 49.0e v 48.8 prelim.

- 10:00 (US) Nov ISM Manufacturing: 47.6e v 46.5 prior; Prices Paid: 56.0e v 54.8 prior.

- 10:00 (US) Oct Construction Spending M/M: 0.2%e v 0.1% prior.

- 10:00 (MX) Mexico Nov Manufacturing PMI: No est v 47.3 prior.

- 10:00 (MX) Mexico Oct Total Remittances: $5.8Be v $5.4B prior.

- 10:00 (MX) Mexico Central Bank Economist Survey.

- 10:00 (CO) Colombia Nov PMI Manufacturing: No est v 52.3 prior.

-10:00 (SE) Sweden Central Bank (Riksbank) Breman.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:00 (IT) Italy Nov New Car Registrations Y/Y: No est v -9.1% prior.

- 13:00 (MX) Mexico Nov IMEF Manufacturing Index: 47.9e v 47.1 prior; Non-Manufacturing Index: 49.0e v 49.2 prior.

- 15:15 (US) Fed’s Waller.

- 16:30 (US) Fed’s Williams.

- 16:45 (NZ) New Zealand Q3 Terms of Trade Index Q/Q: 1.3%e v 2.0% prior.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 85.7 prior.

- 18:00 (KR) South Korea Nov CPI M/M: 0.0%e v 0.0% prior; Y/Y: 1.7%e v 1.3% prior; CPI Core Y/Y: 1.9%e v 1.8% prior

- 18:50 (JP) Japan Nov Monetary Base Y/Y: No est v -0.3% prior.

- 19:01 (UK) Nov BRC LFL Sales Y/Y: 0.6%e v 1.7% prior.

- 19:30 (AU) Australia Q3 Current Account Balance (A$): -10.9Be v -10.7B prior; Net Exports of GDP: No est v 0.2% prior.

- 22:35 (JP) Japan to sell 10-Year JGB Bonds.