US Nov ISM Manufacturing PMI tonight

 Asia market update: Asian equities start new month modestly higher amid mostly lower Asian yields with higher USTs and USD after strong Black Friday sales; Eyes on French budget outcome; US Nov ISM Manufacturing PMI tonight.

General trend

- Asian indices started the week modestly higher. USD/JPY retook the 150 handle and beyond, with USD/INR Rupee trading at a fresh record low amid Trump comments on BRICS as India 5-yr bond yields dropped to their lowest since Apr 2022. China 10-year government bond yield also declined to a record low below 2.00%. Japan was the exception, with yields +2-3bps [2-Year JGB >+2bps to highest since Oct, 2008], also AU 3-yr yields +2bps.

- On Friday USD/JPY took a final tumble for the week down to below 149.50 in the fading hours of Friday trading when BOJ Gov Ueda said that further Yen weakness is a big risk. It capped off a continued slide for the Dollar from a little below 155 at the start last week (and down a high point of nearly 157 in mid-November following general USD strength post Trump’s election win on Nov 5th). The move mirrored a slide in UST yields from their high point in mid-November.

- UST yields reversed course, starting the new week moving higher, in tandem with a recovery in USD.

- Today’s Japan Q3 Capex was higher than expected, implying an upward revision to Japan Q3 GDP.

- China Nov Manufacturing PMI and Caixin Manufacturing PMI both logged a 2nd month of slight expansion, with Caixin demand for consumer goods particularly strong. Caixin also reported that external demand also bounced back, due partly to some overseas clients upping purchases after the US election, pushing the indicator into positive territory for the first time in four months.

- Korean exports grew for a 14th month in November, again on record shipments of chips.

- Asia Final PMIs saw figures mainly in line with prior and prelim numbers, with Philippines 15th month of expansion and highest since Jun 2022.

- While the BoJ JGB bond buying schedule for Dec will remain at the same level as the prior two months, MOF to increase the issuance of six-month T-bills [¥3.5T per month in Oct-Dec] this FY through March 2025 to help fund the government’s extra budget.

- US economy showed robust Black Friday spending on Nov 29th, with Retail and online sales up healthily for Mastercard while Adobe Analytics reported a record $10.8B spent on Black Friday e-commerce.

- Euro slid -0.5% amid further dovish talk out of ECB officials on Friday, while French political pressure comes to a head this week with left-wing PM Barnier’s budget due today; A significant chance that right-wing Le Pen’s National Rally will reject it, ending Barnier’s 3-month reign as PM – particularly if Barnier attempts to ram the budget through by invoking Article 49.3.

- Against earlier White House statements, including from the President himself, US Pres Biden said to be set to issue a pardon for son Hunter Biden
** Late in the session, US announced further trade restrictions against a host of China and China-related semi-conductor equipment making companies.

- US equity FUTs -0.1% to -0.2% during the Asia session.

Looking ahead (Asian time zone)

- Mon Dec 2nd (Mon night US Nov ISM Manufacturing PMI).

- Tue Dec 3rd KR Nov Inflation (Tue night US Oct JOLTs).

- Wed Dec 4th AU Q3 GDP, CN Caixin Nov Services PMI, (Wed night US Nov ISM Services PMI, Fed Chair Powell).

- Thu Dec 5th AU Trade Balance, KR Q3 GDP Final, BOJ Nakamura, (Thu night US Oct Trade Balance).

- Fri Dec 6th AU Home Loans, RBI Rate Decision, (Fri eve EU Q3 GDP, Fri night US Nov NFP, US Dec Michigan Consumer Sentiment).

- Sat Dec 7th CN Trade Balance.

Holidays in Asia this week

- Thu Dec 5th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,438.

- Australia Oct Retail Sales M/M: 0.6% V 0.4%E.

- Australia Q3 Inventories Q/Q: -0.9% v -0.2%e.

- Australia Oct Building Approvals M/M: 4.2% v 1.3%e.

- Australia Nov ANZ-Indeed Job Advertisements M/M: -1.3% v 0.3% prior.

- Australia Nov Melbourne Institute Inflation M/M: 0.2% v 0.3% prior; Y/Y: 2.9% v 3.0% prior.

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

- Australia Nov CoreLogic Home Value M/M: 0.1% v 0.2% prior (weakest since Jan 2023).

- Australia RBA David Jacobs, Head of Domestic Markets: "A Stocktake of Securitisation in Australia" - speech.

- Australia sells A$300M vs. A$300M indicated in new 4.25% Jun 2034 bonds; Avg Yield: 4.2766% v 4.3965% prior; bid-to-cover: 4.27x v 4.53x prior.

- AOFM [Australia debt agency] said to consider auction changes to debt sale pricing after ANZ scandal – US financial press [weekend update].

- New Zealand Oct Building Permits M/M: -5.2% v 2.6% prior.

- New Zealand BioSecurity Dept: Testing has found high pathogenic avian influenza on a chicken farm - financial press.

China/Hong Kong

- Hang Seng opens +0.1% at 19,442; Shanghai Composite opens +0.1% at 3,328.

- *(CN) Follow up: US reportedly to expand its powers to curb exports of certain advanced chip-making equipment made in places such as Malaysia, Singapore, Taiwan, Israel - Financial press, citing sources.

- China Nov CAIXIN PMI Manufacturing: 51.5 V 50.6E (2nd month of expansion and highest since Jun).

- China Nov top 100 developers see sales -6.9% y/y - China Real Estate Information Corp (CRIC) – update.

- China 10-year government bond yield dip below 2.00%.

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

- Hong Kong Oct Retail Sales Volume Y/Y: -4.9% v -7.7%e; Retail Sales Value Y/Y: -2.9% v -5.5%e [weekend update].

- China raises value limit for inbound goods via mail – press [weekend update].

- China reportedly to strengthen evaluation of state-owned financial assets – press [weekend update].

- China PBOC sets Yuan reference rate: 7.1865 v 7.1877 prior.

- China PBOC Open Market Operation (OMO): Injects CNY33B in 7-day reverse repos; Net drains CNY216B v net drains CNY156B prior.

Japan

- Nikkei 225 opens flat at 38,216.

- Japan Q3 capital spending (CAPEX) Y/Y: 8.1% V 6.7%E.

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

- Japan FSA to encourage SME non-life insurance entrants to market – Nikkei.

- Japan Chief Cabinet Sec Hayashi: PM Ishiba sustained no injuries from car crash - financial press.

- Bank of Japan (BOJ) Gov Ueda: Further Yen weakness is a big risk; BOJ to focus on wage and other areas when deciding whether to hike rates - Nikkei interview [weekend update].

- BoJ JGB bond buying schedule for Dec; same level as month before; Japan Finance Ministry (MOF) to increase the issuance of six-month T-bills this FY through March 2025 to help fund the government’s extra budget [weekend update].

- Bank of Japan (BOJ): Relaxation of the Terms and Conditions for the Securities Lending Facility for the Cheapest-to-Deliver Issues [weekend update].

Korea

- Kospi opens +0.9% at 2,479.

- South Korea Nov PMI Manufacturing: 50.6 v 48.3 prior (moves back into expansion after 4 months).

- South Korea to extend tariff quota on energy and food imports to support households- Local press [update].

- South Korea Nov Trade Balance: $5.6B v $4.9Be; Chip exports: +30.8% y/y [weekend update].

Other Asia

- USD/INR Rupee trades at fresh record low amid Trump comments on BRICS.

- Taiwan Nov PMI Manufacturing: 51.5 v 50.2 prior [8th month of expansion].

- Vietnam Nov PMI Manufacturing: 50.8 v 51.2 prior [2nd month of expansion].

- Thailand Nov PMI Manufacturing: 50.2 v 50.0 prior [moves into expansion].

- Philippines Nov PMI Manufacturing: 53.8 v 52.9 prior (15th month of expansion and highest since Jun 2022).

- Malaysia Nov PMI Manufacturing: 49.2 v 49.5 prior [6th month of contraction].

- Indonesia Nov PMI Manufacturing: 49.6 v 49.2 prior [5th month of contraction].

- (TW) US State Dept approves potential sale of spare parts for F-16 jets and radars to Taiwan for an ~$320M - update.

- Taiwan Q3 Preliminary GDP (2nd of 3 readings) Y/Y: 4.2% v 4.0%e [weekend update].

- Indonesia Central Bank (BI) Gov Warjiyo: Continue to look for opportunities to lower BI rate further [weekend update].

North America

- (US) US Pres Biden said to be set to issue a pardon for son Hunter Biden - NBC.

- 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 [weekend update].

- (US) Adobe Analytics: consumers spent record $10.8B on Black Friday e-commerce, +10.2% y/y (as forecast) [weekend update].

- (US) Trump demands that BRICS nations commit to not creating a new currency to challenge the USD or they will face 100% tariffs - X post [weekend update].

- (US) Sen. Graham (R-SC): Pres-elect Trump wants to see a ceasefire and hostage deal in Gaza before he assumes office on Jan 20th – Axios [weekend update].

Europe

- Ireland center-right ruling parties likely hang onto power in 2024 General Election (update).

- Ireland Nov PMI Manufacturing: 49.9 v 51.5 prior (moves back into contraction).

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

- (FR) Follow Up: Le Pen said France government has ‘put an end’ to budget talks and discussions on possible changes to social security bill [paving the way for possible no-confidence vote on Mon]– French Press [update].

- (FR) Follow up: France Fin Min Armand: "We will not be blackmailed" over budget" - financial press.

- (UR) Ukraine Pres Zelenskiy: Suggests ceasefire deal could be struck if Ukrainian territory he controls could be taken "under the NATO umbrella", allowing him to negotiate the return of the rest later "in a diplomatic way" - Sky News [weekend update].

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

- (DE) German Chancellor Scholz: Proposes €100B investment fund for Germany, using a mix of public and private money [weekend update].

- (FR) Eurasia Group's Rahman: No French Govt has been overturned by parliament for 62 years. Will Le Pen push Barnier back into retirement on Weds by bringing down his 3-month old, minority Centre-Centre-right coalition? Probably, says part of the French media this weekend [weekend update].

- (FR) France PM Barnier: Regarding possible ultimatum from Le Pen's National Rally party, 'we need stability' in France; We continue to work on trying to improve the French budget [weekend update].

- (FR) French far-right leader Le Pen: There are still difficulties with budget; PM Barnier has time until Monday, Dec 2nd; Maintain intention to vote for censure of the govt as early as next week in the event Article 49.3 invoked (update) [**Note: Dec 2-4th is the first hurdle to pass 2025 budget with vote on the Social Security budget (PLFSS) could occur] [weekend update].

- (EU) ECB's Kazaks (Latvia, voter, hawk): Rate cuts to continue, starting with December - press interview [weekend update].

- (EU) ECB's Villeroy (France): Inflation has slowed and is going towards our target; We will probably be able to continue to lower rates - speech text [weekend update].

Levels as of 00:20 ET

- Nikkei 225 +0.8%, ASX 200 +0.1%, Hang Seng flat; Shanghai Composite +0.9%; Kospi +0.5%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.1%; Dax -0.2; FTSE100 +0.1%.

- EUR 1.0515-1.0574; JPY 149.50 -150.75; AUD 0.6491-0.6515; NZD 0.5890-0.5918.

- Gold -1.3% at $2,646/oz; Crude Oil +0.5% at $68.33/brl; Copper -0.8% at $4.1111/lb.