Trump pick of Bessent for treasury sec viewed as an antidote

EU Mid-Market Update: Trump pick of Bessent for Treasury Sec viewed as an antidote to President-elect's most extreme economic views.

Notes/observations

- President-elect Trump pick of Bessent for Treasury Sec seen calming US bond market worries and set the stage for more fiscal discipline; Markets find it reassuring that Bessent was previously advocating for gradual tariffs to allow for U.S.-China negotiations, but he also recently defended them as essential economic and foreign policy tools, rejecting claims they act merely as a "sales tax".

-Other Trump’s picks, such as Reps. Elise Stefanik and Mike Waltz, could leave key GOP seats vacant for months due to lengthy special election processes, complicating legislative efforts for a Republican majority. With the GOP holding only a slim margin in the House (3 House races still to be called), concerns are starting to rise about the party's ability to pass critical measures like a spending bill in early 2025.

-French PM Barnier faces mounting pressure as far-right leader Le Pen signals her party may back a no-confidence motion from leftist lawmakers to topple the government over budget disagreements; With the budget deadline looming and left-wing MPs drastically amending proposals, Barnier may invoke Article 49.3 to pass the budget and risk triggering a financial and political crisis, including a potential credit rating downgrade by S&P later this week.

- Israel and Lebanon are nearing a ceasefire agreement, according to press reports; The draft deal would include a 60-day transition period.

Asia

- China PBoC conducted the 1-year Medium-term Lending Facility (MLF) and left rate unchanged at 2.00% (as expected).

- China cabinet said to be studying promoting platform economy; To increase guidance and policy support for healthy development of platform economy.

- China's richest man Zhong Shanshan accused online shopping platforms of starting price wars that had damaged a wide range of companies and industries as the country tackles an economic slump.

Global conflict/tensions

- Israel said to be moving towards a ceasefire agreement in Lebanon with the Hezbollah militant group.

Europe

- ECB's Villeroy (France) stated that ECB could cut independent of Fed's moves.

- Far-right candidate Georgescu took lead in Romanian presidential election first round voting.

Americas

- Fed semi-annual financial stability report: Asset valuation pressures remained elevated; Auto and credit card loan delinquencies are above pre-pandemic levels; Hedge fund leverage near highest level since 2013.

- Newly nominated US Treas Sec Scott Bessent: Will focus on keeping USD as world's reserve currency and delivering on Trump's various tax cut pledges.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.19% at 509.46, FTSE +0.37% at 8,292.55, DAX +0.60% at 19,422.05, CAC-40 +0.38% at 7,282.40, IBEX-35 +0.81% at 11,751.04, FTSE MIB -0.13% at 33,451.00, SMI +0.03% at 11,727.53, S&P 500 Futures +0.48%].

Market Focal Points/Key Themes: European indices open generally higher, but lost some of the gains in early trading; risk-on attitude attributed to expected rate easing and easing geopolitical tensions; all sectors start the day in the green; among sectors leading the way higher are consumer discretionary and industrials; while financials and communication service sectors lag; Unicredit launches takeover of Banco BPM; Anglo American to sell its steelmaking coal unit to Peabody Energy; Atos receives proposal from the French state to acquire it AC unit; reportedly there is interest in acquiring ITV; earnings expected in the upcoming US session include Agilent and Zoom.

Equities

- Consumer discretionary: ITV plc [ITV.UK] +5.0% (reportedly industry players are evaluating offers for ITV, which could lead to a break up of the company), JD Sports Fashion [JD.UK] +4.0% (analyst action).

- Consumer staples: Carrefour [CA.FR] -0.5% (threatened with boycott in Brazil following the Co's announcement that it will not sell meat from Mercosur countries in France).

- Financials: Banco BPM [BAMI.IT] +3.5% (Unicredit launches takeover bid for Banco BPM), Unicredit [UCG.IT] -4.5%, Commerzbank [CBK.DE] -6.5% (Unicredit launches takeover bid for Banco BPM and notes offer for Banco BPM is autonomous and independent of investment made in Germany's Commerzbank).

- Industrials: Kingfisher [KGF.UK] -13.0% (trading update).

-Materials: Anglo American [AAL.UK] +1.5% (sells Steelmaking Coal unit to Peabody Energy).

Speakers

- ECB's Lane (Ireland, chief economist) noted that monetary policy should not remain restrictive for too long and such a stance might no longer be needed in 2025. Still had some way to go in rate adjustments before inflation returned to the desired level on a more sustainable basis.

- ECB's Kazaks (Latvia, voter) noted that interest rates had to continue to decrease and need have a cut at the Dec meeting.

- BOE’s Lombardelli stated that had made good progress on disinflation; recent PMI readings suggested slowing in economy.

- India Monthly Economic Review noted that a bumper summer harvest expected to help lower food prices in the coming months.

- French PM Barnier and and far-right leader Le Pen were scheduled to meet on Monday. Le Pen noted that the budget bill in current form would not have party support PM.

- Iran Oil Min commented that Iran would strive not to accept limits on oil production quota.

- G7 Foreign Ministers draft statement said to plan to increase pressure on China over its Russia support.

Currencies/fixed income

- USD consolidated some of its recent gains. President-elect Trump pick of Bessent for Treasury Sec seen calming US bond market worries and set the stage for more fiscal discipline. Bessent was seen as an antidote to Trump's most extreme economic views.

- EUR/USD back probing the 1.05 area after the decline the pair saw last week. Dealers noted that a recent round of soft economic data from the region would prompt the ECB to cut rates more quickly than usual, Market to focus on speeches from ECB members this week to gauge pricing over whether the ECB would cut rates by 25 basis points or 50bp in December. ECB "insiders" reportedly believe markets were too quick to price 50bps cut in December.

- GBP/USD at 1.2575 by mid-session.

- USD/JPY at 154.40 by mid-session.

Economic data

- (FI) Finland Oct PPI M/M: -0.2% v 0.0% prior; Y/Y: -2.3% v -2.3% prior.

- (TR) Turkey Nov Real Sector (Manufacturing) Confidence: 103.4 v 102.2 prior; Real Sector Confidence (unadj): 100.4 v 100.9 prior.

- (TR) Turkey Nov Capacity Utilization: 76.1% v 74.9% prior.

- (ES) Spain Oct PPI M/M: -0.1% v -2.4% prior; Y/Y: -3.9% v -5.2% prior.

- (CZ) Czech Nov Consumer Confidence: 101.6 v 100.4e; Business Confidence: 97.3 v 95.6e; Composite Confidence: 98.0 v 96.6e.

- (TW) Taiwan Oct Industrial Production Y/Y: 8.9% v 9.2%e.

- (TW) Taiwan Oct M2 Money Supply Y/Y: 5.8% v 5.6% prior; M1 Money Supply Y/Y: 4.9% v 4.1% prior.

- (DE) Germany Nov IFO Business Climate Survey: 85.7 v 86.0e; Current Assessment: 84.3 v 85.5e; Expectations: 87.2 v 87.0e.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 459.4B v 463.5B prior; Domestic Sight Deposits: 451.0B v 455.0B prior.

- (PL) Poland Oct Sold Industrial Output M/M: 10.0% v 6.6%e; Y/Y: 4.7% v 1.8%e.

- (PL) Poland Oct Employment M/M: -0.5% v 0.0%e; Y/Y: -0.5% v -0.5%e.

- (PL) Poland Oct Average Gross Wages M/M: 2.2% v 2.3%e; Y/Y: 10.2% v 10.4%e.

- (PL) Poland Oct PPI M/M: 0.4% v 0.1%e; Y/Y: -5.2% v -5.6%e.

Fixed income issuance

- None seen.

Looking ahead

- (CO) Colombia Oct Industrial Confidence: No est v +1.3 prior; Retail Confidence: No est v 12.2 prior.

- (NG) Nigeria Q3 GDP Y/Y: 2.9%e v 3.2% prior.

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

- 05:30 (UK) BOE’s Dhingra on panel.

- 05:30 (DE) Germany to sell combined €4.0B in 3-month and 9-month BuBills.

- 05:30 (EU) European Union to sell combined €4.0B in 2027 and 2034 NGEU Bonds.

- 06:00 (BR) Brazil Nov FGV Consumer Confidence: No est v 93.0 prior.

- 06:00 (IL) Israel to sell combined ILS3.45B in 2027, 2028, 2029, 2035, 2042 and 2051 bonds on Mon, Nov 25th (7 tranches).

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

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

- 06:30 (BR) Brazil Oct Current Account Balance: -$6.2Be v -$6.5B prior; Foreign Direct Investment (FDI): $5.0Be v $5.2B prior.

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

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

- 08:30 (US) Oct Chicago Fed National Activity Index: -0.20e v -0.28 prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.8-8.4B in 3-month, 6-month and 12-month bills.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.50%.

- 09:00 (BE) Belgium Nov Business Confidence: -12.6e v -12.8 prior.

- 10:00 (MX) Mexico Q3 Current Account Balance: -$0.9Be v $3.6B prior.

- 10:30 (US) Nov Dallas Fed Manufacturing Activity: -2.4e v -3.0 prior.

- 11:00 (PT) ECB’s Centeno (Portugal).

- 11:30 (IE)) ECB's Lane (Ireland, chief economist) in London.

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

- 12:30 (DE) ECB’s Nagel (Germany).

- 13:00 (US) Treasury to sell 2-year Notes.

- 14:00 (IE) ECB's Makhlouf (Ireland).

- 16:00 (US) Weekly Crop Progress Report.

- 16:00 (KR) South Korea Nov Consumer Confidence: No est v 101.7 prior.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.8 prior.

- 18:50 (JP) Japan Oct PPI Services Y/Y: 2.5%e v 2.6% prior.

- 19:01 (UK) Nov BRC Shop Price Index Y/Y: -0.6%e v -0.8% prior.

- 21:00 (KR) South Korea Oct Retail Sales Y/Y: No est v 6.7% prior; Department Store Sales Y/Y: No est v 0.3% prior; Discount Store Sales Y/Y: No est v -6.5% prior.

- 22:00 (TH) Thailand Central Bank to sell THB55B in 3-month bills.

- 23:00 (TH) Thailand Oct Customs Trade Balance: -$0.4Be v +0.4B prior; Exports Y/Y: 5.1%e v 1.1% prior; Imports Y/Y: 6.4%e v 9.9% prior.