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Hot Reuters Morning Benchmark \ Dow Jones Morning Briefing

Discussion in 'World Economy' started by Tadhg Gaelach, Oct 17, 2016.

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    Tadhg Gaelach

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    Dow Jones Symphony - Home
    Dow Jones Newswires, 27 Nov 2017 03:46 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0845 GMT - EUR/USD could rise to 1.2000 or 1.2020 as investors' worries regarding eurozone political uncertainty fade and with incoming economic data expected to be healthy again, ING says. EUR/USD is at 1.1957 after reaching a two-month high of 1.1957. The first estimate of the eurozone consumer price index, due Thursday, is set to come in strong and ING says that eurozone markets are relatively underpricing inflation. Meanwhile, the political deadlock in the eurozone's key economy is likely to be settled after Germany's Social Democrat party agreed to discuss forming a "grand coalition" with Chancellor Angela Merkel and her Christian Democratic party. (olga.cotaga@wsj.com; @OlgaCotaga)


    0840 GMT - EUR/USD benefits Monday not only from political clouds dispersing across Europe, but also from U.S. dollar weakness. According to UniCredit, the dollar experienced its third consecutive weekly decline last week, which is nearly a fall of 1% on a trade-weighted basis. EUR/USD is likely to rise to 1.20, or above, as we head towards year-end, says UniCredit. EUR/USD rises to a two-month high of 1.1957. A weak U.S. dollar could benefit the Australian dollar and the Canadian dollar, since "both have lagged other major FX considerably," UniCredit says.(olga.cotaga@wsj.com; @OlgaCotaga)

    0830 GMT - As the dollar hits session lows with European trading picking up, the yen is getting some risk-off sentiment. "Tightening financial conditions in China, characterised by rising bond yields and the biggest 3-day decline in the Shanghai Composite equity index since June 2016, has instilled a sense of nervousness within global markets," says Viraj Patel, a forex strategist at ING in London. That could make the yen doubly sought this week amid a looming US Senate vote on tax reform that's far from a sure thing. There's also Powell's confirmation hearing. The dollar is fallen to Y111.20 from Y111.70 in early Asian trading. (kenan.machado@wsj.com)

    0805 GMT - Cyprus's credit profile--rated Ba3 with a positive outlook--reflects recent improvements in the country's economic resilience, robust growth momentum and strong fiscal performance, says Moody's Investors Service in a report. The report is a market update and doesn't constitute a ratings action. The agency says that Cyprus's credit challenges arise from its small and relatively undiversified economy, as well as its high levels of government, banking and household debt. Moody's adds that the country's debt metrics remain vulnerable to a negative growth, fiscal or a combined shock scenario. (emese.bartha@wsj.com, @EmeseBartha)

    0804 GMT - There's been much said in recent days about the weakness in Chinese stocks. But OCBC Bank's Xie Dongming says attention needs to be given to the end-of-week announcement of import-tariff reductions on a host of consumer products. The move will help give China the semblance of a more-global-markets-oriented economy, Xie adds. It's part of a sign that the country is opening the domestic market to foreigners, says ING's Iris Pang. (kenan.machado@wsj.com)

    0802 GMT - Greece is outperforming fiscal targets and improving relations with its creditors, says BMI Research, a Fitch Group company. This bodes well for the conclusion of the country's third bailout program in August 2018, BMI says, adding that the probability of Greece avoiding a fourth bailout has risen "significantly." Despite these positive signs, Greece's long-term fiscal situation remains unsustainable, mainly due to the low economic-growth potential, BMI says. Thus, it reckons, Greece will continue to need some form of official funding line and a write down of debt to make the long-term fiscal trajectory sustainable. ( emese.bartha@wsj.com, @EmeseBartha)

    0801 GMT - The euro continues to rally on Monday, benefiting from healthy eurozone economic growth and calm political waters, after German Chancellor Angela Merkel agreed on Sunday to form a grand coalition with the Social Democrats. EUR/USD rises to a two-month high of 1.1945 and EUR/JPY is up at a more than one-week high of 133.23. The eurozone's key economy had been facing political issues after Ms. Merkel failed to form a coalition with the Free Democrats and the Greens, which could have led to a minority government or fresh elections, causing more uncertainty. (olga.cotaga@wsj.com; @OlgaCotaga)

    0629 GMT - There's been a downward bias for most Asian stock markets today, but Japan's has held up better than other majors even with a stronger yen. The Nikkei fell 0.2% to 22495.99 in the face of near-or-above 1% drops in China, Korea, Taiwan and Hong Kong. The dollar has eased to Y111.35 from Y111.70 this morning. Still, Thanksgiving sales in the US helped spur Nintendo shares to fresh 9-year highs while rising 2.4%. Some risk-on movement was also still seen in the bond market today, with the benchmark 10-year JGB yield up a basis point at 0.035%. (suryatapa.bhattacharya@wsj.com; @SuryatapaB)

    0600 GMT - South Korea's economy is certain to grow at a faster pace than the government's 3% forecast in 2017, says Finance Minister Kim Dong-yeon. Kim gives no concrete estimate for the full year, but says the economy is "relatively in good shape" with robust exports and fiscal stimulus largely fueling growth. He says the government is pushing for "quality growth" by spreading the benefit of economic gains more evenly and narrowing income gaps in society. Gross domestic product grew a better-than-expected 1.4% sequentially in 3Q--the fastest pace in over 7 years--after a 0.6% gain in 2Q. (kwanwoo.jun@wsj.com; @kwanwoo)

    (END) Dow Jones Newswires
     
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    Tadhg Gaelach

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    MONDAY, NOVEMBER 27, 2017
    TOP NEWS

    China's industrial profits surge in Oct, take sting off gov't debt crackdown
    China's industrial firms weathered a broad government crackdown on financial risks as profits continued to surge last month in a stabilising force for the economy, which has started to cool slightly in recent months. Mining and heavy industry contributed the biggest gains in October, propelling overall industrial profits by 25.1 percent year-on-year to 745.4 billion yuan, compared with a 27.7 percent jump in September, the National Bureau of Statistics said. Despite the modest slowdown, October's growth rate was still the second-highest for a single month this year, and overall profits are on pace to easily top 2016's record 6.88 trillion yuan.

    ESM chief says Greek aid loan needs may be smaller than previously expected
    Klaus Regling, head of the euro zone's European Stability Mechanism (ESM) bailout fund has told a German newspaper that Greece was making good progress with its reform drive and it may not need as much credit as previously planned. The issue of debt relief is expected to be part of negotations over Greece's bailout exit in the coming months but Regling said any debt relief was conditional on Greece fully implementing its reforms and on all euro zone states agreeing. Greece is gradually returning to growth after a deep recession and has exceeded targets of returning to a small primary budget surplus from 2016 onwards.

    BOJ Suzuki signals room to fine-tune yield curve control - media
    Bank of Japan (BOJ) member Hitoshi Suzuki said there is room to debate a fine-tuning of the central bank's yield curve control policy, the Mainichi paper reported, signaling the chance it may raise interest rates before inflation hits its target. Suzuki also said in a separate interview that the BOJ could slow its purchases of exchange-traded funds or change the way it buys them in the future. Suzuki's remarks are the strongest signal to date that the BOJ could move up its interest rate targets before 2 percent inflation is achieved, to ease the hit to bank margins from years of ultra-low borrowing costs.


    No Irish border deal before EU trade agreement-British minister
    Britain will not resolve the question of the Irish border after Brexit until it has also agreed the outline of a trade deal with the European Union, the country's International Trade Minister Liam Fox said. Dublin wants a written guarantee that there will be no hard border between the Republic of Ireland and Northern Ireland. Irish and EU officials say the best way to avoid a "hard border" - which could include passport and customs controls - is to keep regulations the same north and south, but the Northern Irish party that is propping up May's government will oppose any deal that sees the province operate under different regulations to the rest of the UK.


    BREAKINGVIEWS

    Kuroda deserves second term at the Bank of Japan
    Giving Haruhiko Kuroda another term as Bank of Japan governor should be one of the easiest decisions Shinzo Abe makes in his entire premiership. If he’d only make it.



    CHART OF THE DAY
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    MORNING MEETING

    JGB'S OFF ON WEAK BOJ OP RESULTS


    BONDS, EQUITIES, OTHER ASSET MARKETS
    US Treasury 10s indicated 2.346%, JGB 10s 0.033%, Bund 10s 0.363%
    • US-Japan-Germany respective 2s indicated 1.759%, -0.178%, -0.716%
    • JGBs soften in quiet trade, initially by weaker USTs
    • BoJ offers to buy up to 5yr JGBs, but size of -1yr JGB purchase cut by ¥20bn
    • JGBs extend earlier losses as results of BoJ ops weak
    • Long-end bonds weak too ahead of tomorrow's 40yr auction
    • JGB futures off 10 ticks at 150.92, range 151.02/150.90
    • Nikkei up early, gap up 22,657 open, to 22,659, off thereafter to 22,423
    • At 22,495, index off 54 points or 0.24% on day
    • Asia risk off - SSEC -0.8%, KOSPI -1.4%, HSI -0.4%, STI -0.2%, TWI -0.7%
    • Antipodean bourses up - ASX above par, NZX50 +0.6%

    Currency Summaries
    JPY
    • USD/JPY, JPY complex off after early gains, risk on then off, Nikkei falls
    • From early 111.69 high, USD/JPY down to 111.34, bids-support still below
    • 55-HMA 111.37, base of hourly Ichi cloud 111.36 just below
    • Initial push up early to 111.69 rejected just shy of 200-DMA at 111.71
    • Resistance now from 100-DMA below at 111.63, both 100/200-DMAs descending
    • No large nearby option expiries today, tomorrow 112.00 USD1.1 bln
    • EUR/JPY up from 131.81 to 133.23 Friday, early Asia high 133.24, then down
    • To 132.73 and area of ascending 55-DMA at 132.64, Ichi cloud top 132.96
    • GBP/JPY 148.85 to 148.23 in sympathy, deeper into 146.06-149.36 Ichi cloud
    • AUD/JPY steady at recent lows, 84.57-85.00, plenty negative AUD forecasts
    • Ditto for NZD/JPY, 76.33-77, support ahead of 76.00 still, 76.10 low 11/20
    • BoJ trims purchases of up to 1yr JGBs to ¥50bn from ¥70 bn
    • BoJ maintains 1-3 year JGB buys at ¥250 bn
    • Toyota tops list of Japanese companies sitting on record cash -Nikkei

    EUR
    • EUR/USD opened 1.1920 after gains due to record IFO & German political clarity
    • Weekend reports Merkel open to "grand coalition" gave early support
    • EUR/USD traded o 1.1946 before sellers ahead of 1.1950 capped
    • Broad USD strength pushed the EUR/USD down to 1.1912 at one stage
    • Heading into the afternoon the EUR/USD was trading around 1.1920
    • Friday's break above 61.8 fibo of the 1.2092/1.1553 move at 1.1888 was bullish
    • There isn't a lot in the way of resistance ahead of 1.2000
    • Break below the ascending 10-day MA at 1.1814 would warn of waning momentum
    • Fed expectations likely to dominate this week with Yellen & Powell testifying

    GBP
    • Cable touch heavy on GBP/JPY sales, risk-off sentiment in region, EUR/GBP buys
    • Nikkei and other regional stocks off, Nikkei after early gains, SSEC -0.8%
    • GBP/USD edges down from 1.3340 to 1.3315, to now flat 55-HMA at 1.3316
    • GBP still relatively bid though, holding on 1.33 below 1.3360 high Friday
    • Well above ascending 55-DMA at 1.3263
    • EUR/GBP bid, 0.8945 to 0.8978, EUR/AUD bid too as per Morgan Stanley call
    • Morgan Stanley bearish AUD, calls for buys vs EUR, some Asia units

    CHF
    • USD/CHF heavy with USD/JPY, Asia 0.9787-0.9810, off early lows however
    • Resistance from descending 55-HMA at 0.9809, 200-DMA at 0.9806
    • Steady to higher US yields supportive, Tsy 10s @2.346%
    • That said, risk sentiment not good, number of regional bourses down
    • EUR/CHF bid, Asia 1.1681-97, trend up? Trend high 11/17 1.1723

    Market Briefs
    • Merkel's CDU agrees to pursue grand coalition in Germany
    • No Irish border deal before EU trade agreement-British minister
    • Irish PM "doing everything he can" to avoid election -spokesman
    • China's new rules may bring sea change for millions of small investors
    • China's Oct industrial profits surge on boost from higher commodities
    • Japan plans extra budget of $24-26 bln for fiscal 2017 -sources
    • JP Oct corporate service prices +0.2% m/m, +0.8% y/y, Sept +0.1%, +0.9%
    • BoJ Policy Board Suzuki -Room to debate fine-tuning of YCC when CPI up
    • Negative rate policy having significant impacting on bank profits -Mainichi
    • Nationalists facing wipe out in Australian state election
    • U.S. consumer watchdog agency official sues to block Trump's pick
    • U.S. Rep. Conyers steps down from committee while lawmakers probe harassment allegations
    • S&P downgrades South Africa's local currency debt to "junk" status
    • Efforts to hurt Qatar's riyal may backfire on region, c.banker says

    Looking Ahead - Economic Data (GMT)
    • No significant data

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A EU Foreign Affairs Council meeting
    • 11:15 ECB's Constancio participates in a discussion -Frankfurt
    • 14:30 BoE's Haldane speaks in Brimingham
    • 22:30 Fed's Kashkari participates in a Q&A - Wiona
    See North American Open for a detailed listing of US/NorAm releases, events

    Week Ahead-Powell, Yellen; US, Europe politics; OPEC
    Fed expectations will be a major focus in the week ahead as Trump's choice to assume the Fed Chair in Feb, Jerome Powell, appears before the Senate Banking Committee Tues while outgoing Chair Yellen appears before the Joint Economic Committee Weds. The market is assuming Powell will pursue the same monetary policy stance as his predecessor, so their comments will be scrutinised for any differences. Politics will also be in focus, with Trump expected to meet Senate Republicans to discuss their efforts to pass tax reform legislation by end-Dec. The tax bill still faces many hurdles in the Senate and the Republicans are at risk of losing the senate race in Alabama in mid-Dec, which would further reduce their slim majority. Developments in Germany and the UK will also be eyed after the EUR and GBP rallied last week on hopes Merkel will eventually form a government without Germany having to stage another election and progress appeared to be made on UK Brexit negotiations. OPEC meets Thurs after a period of strength in the oil price; a failure to agree to extend production caps could result in volatility in energy markets. Markets will also be impacted by month-end flows as liquidity thins out ahead of year-end holidays.

    Week Ahead-Plenty of PMIs, US GDP & PCE, Japan data
    It will be a fairly busy week for US data starting with new home sales Mon, followed by S&P/Case Shiller home prices, FHFA home prices and consumer confidence Tues. Real Q3 GDP, pending home sales and the Fed's Beige book are due Weds; the market will pay close attention to the inflation components of the GDP as future Fed tightening will depend more on inflation than growth. The Fed's favoured inflation gauge, the core PCE index, will be released Thurs, along with weekly jobless claims and Chicago PMI. Friday's data includes monthly motor vehicle sales, construction spending and the important ISM manufacturing release. It will be a fairly quiet week for European data, with euro zone consumer confidence and economic sentiment data on Weds, EZ and German inflation data Thurs, and the key event, manufacturing PMI Fri. The UK also has manufacturing PMI Fri. Japan's month-end data dump includes retail sales, household spending, IP, unemployment and the key CPI. Australia has building approvals and Q3 capex on Thurs. China's official Nov mfg and services PMIs are due Thurs, with the market expecting the mfg PMI to dip to 51.5 from 51.6 in Oct. The Caixin mfg PMI will be released Fri.

    China's financial risk crackdown a long-term positive
    China has clearly stepped up its drive to curb financial/debt risks and rebalance its economy since President Xi cemented his grip on power at the 19th Communist Party Congress last month. New rules announced since the CPC show greater coordination among regulators & policymakers, widening the crackdown on debt risks to the asset management industry, online lending and public-private partnerships. At the same time, China has just slashed import tariffs on 187 consumer products to an average 7.7% from 17.3% from Dec 1 as it builds on efforts to shift growth towards domestic spending and away from a manufacturing and investment-driven model. The PBOC continues to closely manage domestic liquidity conditions to maintain a balance between ensuring adequate funding without sending a loosening signal that could fuel debt risks. Morgan Stanley notes that while China's growth is likely to moderate into 2018-19 amid tighter financial conditions, the quality of growth will improve and the debt-to-GDP ratio should achieve near stabilisation by H2 2019. The tricky bit could be convincing China's increasingly edgy financial markets that Beijing will ensure a smooth landing.

    Chart Focus - Bullish WTI outlook to weigh on USD/CAD
    The WTI oil price closed Friday above the 200-week moving average for the first time since August 2014. If it breaks above the 38.2 Fibo of the 114.83 (9-year high) to 26.05 (14-year low) move at 59.96, it would confirm the trend higher is gaining in intensity. Allowing for leads and lags, there has been a strong correlation between the WTI price and the CAD due to Canada's role as a major energy producer. There is decent support for USD/CAD between 1.2565/1.2590 where the 55-day & 100-day moving averages and 38.2 Fibo of the 1.2063-1.2915 rally converge. This support window will likely be tested if the WTI price has a sustained move above 60.00. Charts: 1) http://reut.rs/2AauDwY 2) http://reut.rs/2A97tHb


     
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    Tadhg Gaelach

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    Dow Jones Symphony - Home
    Dow Jones Newswires, 28 Nov 2017 02:47 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0747 GMT - The BoJ's unrealized F1H earnings from its ETF holdings hit a record Y4.271 trillion ($38.4 billion), surging from Y2.769 trillion as of March 31. That in the wake of the stock start which started in September and carried through last month--the start of 2H. There's been some criticism from investors and analysts that the BoJ is distorting market functioning with its stock buying. The central bank also said earnings from its JGB holdings declined to Y9.179 trillion from Y9.632 trillion. (megumi.fujikawa@wsj.com)

    0742 GMT - German bunds and futures trade marginally firmer in early trade. Commerzbank rates strategist Michael Leister says investors appear reluctant to go short with the persistent euro strength and global disinflation backdrop providing compelling arguments. The 10-year bund yield trades at 0.34%, down 0.8 basis point, according to Tradeweb. The bund futures trade at 163.19, up 0.08. (emese.bartha@wsj.com; @EmeseBartha)

    0741 GMT - J.P. Morgan expects a negative return of around 2.5% on developed markets' bonds in 2018, with rising yields across the G4 economies. JPM forecasts that U.S. yields will rise relative to Europe and Japan. For the eurozone, JPM looks for higher yields on the back of an upbeat economic backdrop, only modest political uncertainty, and the slowing pace and eventual end of the European Central Bank's asset purchases. JPM expects the spreads of eurozone periphery states to be range-bound, with Spain outperforming and Italy underperforming. (emese.bartha@wsj.com; @EmeseBartha)

    0708 GMT - In their biannual Financial Stability Report, officials at the Bank of England urged lawmakers in the UK and EU to legislate to ensure holders of insurance policies and counterparties in derivative contracts aren't left high and dry by a disorderly Brexit. The central bank says new laws are needed to ensure such contracts are watertight after the UK leaves the EU, due March 2019. Some 36 million policy holders could be affected, along with GBP26 trillion ($34.6 trillion) of derivatives, the central bank notes. (jason.douglas@wsj.com)

    0706 GMT - The Bank of England's annual stress test of 7 UK banks revealed all of them could withstand a severe downturn in the domestic economy, a scenario officials said encompasses a disorderly Brexit. Nationwide, Lloyds, Santander, Standard Chartered and HSBC passed the test outright while Royal Bank of Scotland and Barclays passed after raising capital this year. The BoE also says it's raising banks' countercyclical capital buffer to 1% by the end of 2018 from 0.5% to guard against economic shocks. (jason.douglas@wsj.com)

    0653 GMT - Fueling this week's jump to 2 1/2-year highs for the Korean won versus the dollar is exporters selling greenbacks earnined overseas, says Gao Qi, a forex analyst at Scotiabank. The dollar was as KRW1,120 just 2 1/2 weeks ago but is now down to KRW1,084--falling 0.7% today--putting exporters' margins at risk. Many of Korea's big companies generate significant amounts of revenue in dollars. (kenan.machado@wsj.com)

    0632 GMT - South Korean stocks ended modestly higher, outperforming much of the region, after the Kospi's Monday beatdown courtesy of Samsung's 5% slump. The index rose 0.3% to 2514.19 as the index giant rebounded 1.2%. But smaller peer Hynix shed a further 0.6% and Hyundai Motor dropped 1%. The auto maker's slide came amid further gains in the won versus the dollar ahead of Thursday's central-bank meeting. Many are anticipating the start of a rate-hike cycle then. The dollar is down 0.7% and at session lows of KRW1,084 as it hits fresh 2 1/2-year lows. (kevin.kingsbury@wsj.com; @kevinkingsbury)

    0622 GMT - The value of Japanese government bonds held by the Bank of Japan would decline Y24.6 trillion if interest rates rise 1% across the yield curve, BOJ Gov. Haruhiko Kuroda tells parliament. While Kuroda says any losses won't be booked because of the accounting approach the bank uses, lawmakers and analysts have said that a loss of this scale would raise concerns over the BOJ's financial health and undermine the bank's credibility.(megumi.fujikawa@wsj.com)

    0619 GMT - After getting to positive territory by the midday break amid a weakened yen, the moves reversed after lunch to leave the Nikkei down 9.75 points for the day at 22486.24. Amid a relative lack of fresh buying cues, trading volume subdued with only 1.5 billion shares changing hands. But fiber maker Toray was busy, logging its biggest drop in a year at 5.3%. That after the company said a subsidiary faked auto-parts quality data, the latest in a series among Japanese manufactures. In back-and-forth trading, the dollar was recently around Y111.15, compared with Y111.09 late Monday in New York and trips during Asian trading to both below Y111 and above Y111.30. Meanwhile, 10-year JGB yields have risen a half-basis point to 0.035%. (kosaku.narioka@wsj.com)

    0559 GMT - The Aussie dollar barely budget during Tuesday's Asian trading, with the consumer-sentiment survey not making away waves in the market. Maybe Thursday's 3Q business-investment data (expected to be positive) might. (james.glynn@wsj.com; @JamesGlynnWSJ)

    (END) Dow Jones Newswires
     
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    Tadhg Gaelach

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    TUESDAY, NOVEMBER 28, 2017
    TOP NEWS

    BOJ's Kuroda: "Reversal rate" helps clarify appropriate yield curve
    Bank of Japan Governor Haruhiko Kuroda said that a "reversal rate," or the level where interest rate cuts by a central bank could hurt the economy, helps the BOJ understand the appropriate shape of the yield curve. "It's a theory that helps us understand the appropriate shape of the yield curve," Kuroda told parliament, though adding that he did not see any sign now that the BOJ's ultra-loose policy was causing serious damage to Japan's banking system. Meanwhile, BoJ board member Goushi Kataoka said the central bank must expand stimulus further to achieve its price target early, so that prolonged monetary easing does not hurt the country's banking system.

    As Brexit looms, UK pitches new industry plan, wins support from Merck, Qiagen
    Britain pitched a new strategy for industry, pledging greater state intervention to tackle weak productivity and to help the economy cope with the upheaval of leaving the European Union. The document aims to reposition Britain so it can profit from the technological revolution by increasing research and development investment, improving technical education and building better infrastructure. In an attempt to underscore the importance of the new strategy, Britain said it had secured major investments from both Merck & Co and Qiagen. Brexit remains by far the biggest concern for British companies and multinationals with operations in Britain. However, talks with the European Union have made slow progress, and the government has only been able to reiterate its plan to seek a transition deal as soon as possible.

    Germany wants to avert trade war with G20 steel summit - Zypries
    Germany hopes that a G20 steel summit in Berlin this week can help to avert a trade war, Economy Minister Brigitte Zypries told Reuters, warning that the EU would impose countermeasures if the United States opted for new tariffs. U.S. President Donald Trump has threatened to impose punitive tariffs on steel imports as part of his "America First" agenda, prompting fears that such a move could trigger a trade war with China and hurt growth prospects for the world economy. The threat of a trade war on steel has not been averted yet and the G20 summit should help to reach common ground on how to reduce excess capacity, Zypries said.


    Fed chair nominee Powell pledges 'decisive' response to any economic crisis
    Jerome Powell defended the Fed's use of broad crisis-fighting powers in remarks prepared for his Senate confirmation hearing, positioning himself as an extension of the central bank policies of Janet Yellen and her predecessor Ben Bernanke. Powell endorsed the core ideas that have defined U.S. central banking since the financial crisis of 2007 to 2009 - a willingness to move aggressively against a downturn, and an insistence on flexibility and independence from political influence in setting policy. Separately, the Fed's William Dudley stated that weak U.S. inflation is not troubling even in the face of full employment reinforcing the central bank's mantra that it is gradually raising interest rates.

    China Nov factory growth seen slowing slightly
    Activity in China's manufacturing sector likely grew at a slightly slower pace in November, a Reuters poll showed, as export orders softened and tough pollution measures forced many northern steel mills and factories to curb production. The official manufacturing PMI on Thursday is expected to come in at 51.4 for November, down marginally from 51.6 in October, according to a median forecast of 28 economists. A recovery for China's manufacturing and industrial firms - boosted by government spending, a resilient property market and unexpected strength in exports - has helped the economy post better-than-expected growth of nearly 6.9 percent through the first nine months of this year.


    BREAKINGVIEWS

    UK's post-Brexit industrial plan lacks ambition

    Britain’s post-Brexit industrial plan is short of ambition. The government has promised to boost research spending, improve teaching of mathematics, and upgrade infrastructure. Even if the country was not breaking from its largest partner, however, the goals would lack oomph.




    CHART OF THE DAY
    [​IMG]


    MORNING MEETING

    JGB'S MIXED, FUT SOLID, LONG-END HEAVY


    BONDS, EQUITIES, OTHER ASSET MARKETS
    US Treasury 10s indicated 2.332%, JGB 10s 0.033%, Bund 10s 0.339%
    • US-Japan-Germany respective 2s indicated 1.748%, -0.178%, -0.738%
    • JGBs trade mixed; futures solid, 2s, 30s, 40s weaken
    • 40yr auction slightly weaker than eyed, stop @1.021% (or compound 1.005%)
    • Before auction, 40s at 1.01%
    • 30s also weaken post-auction
    • 2s weighed down by T-bill weakness
    • At 150.98, futures up 5 ticks on day, range 151.05/150.92
    • Nikkei see-saws between 22,363-580, off early, up, then down again
    • At 22,432, index off 63 points or 0.3% on day
    • AXJ mosly in red now - SSEC 0.5%, HSI 0.9%, STI 0.2%, TWI 0.5%, NZX50 0.4%
    • ASX just below par on day but KOSPI up 0.2%
    • Spot gold 1292.50-1296.64 in Asia after rally to 1299.13 yesterday

    Currency Summaries
    JPY
    • USD/JPY bounces from 110.85 low o/n, Asia dip to 110.94 quickly reversed
    • Japanese importers, some investors amongst buyers sub-111.00
    • Upside limited however, limited to 111.34 early, market still net long
    • Option expiries to help cap - 111.50-90 USD776 mln+, 112.00-04 1.53 bln
    • 55-HMA 111.33, initial resistance, descending 100-DMA 111.60, 200 at 111.69
    • Good tech support at base of daily Ichi cloud at 110.78
    • Some to-fro action on Nikkei flip-flopping
    • EUR/JPY near middle of 130.98-132.98 daily Ichi cloud, Asia 132.10-47
    • Heavy from 55-DMA at 132.64, daily kijun 132.83, at top of daily cloud
    • GBP/JPY showing some buoyancy, Asia 147.80 to 148.25, 100-HMA 148.27
    • Resistance from daily Ichi tankan at 148.51, deeper into daily Ichi cloud
    • AUD/JPY 84.39-66, holding above 84.33 trend low yesterday, 83.72 low 6/22
    • NZD/JPY showing more spunk, 76.71 to 77.12, moving off 76.10 11/20 low?

    EUR
    • EUR/USD opened 0.29% lower 1.1898 after dipping in US session on EUR/JPY sales
    • The Asian session was deadly quiet for the EUR/USD with very light flows
    • It traded in a 1.1890/1.1909 range and was 1.1900 into the afternoon
    • Fed expectations likely to dictate direction in the sessions ahead
    • Incoming Fed Chair Powell before Senate today; Yellen before Congress tomorrow
    • EUR/USD trending higher with little in resistance ahead of 1.2000
    • Break/close below 10-day MA at 1.1822 would warn upward momentum waning

    GBP
    • Cable does little in Asia, out of focus, range 1.3311-30
    • Pair off hard after brief rally to 1.3383 late London/in New York
    • Resistance-offers still pre-1.3400, 1.3264 55-DMA underlying support
    • EUR/GBP 0.8933-36 in Asia, quiet after rally to 0.8978 o/n, fall later
    • Heavy still above ascending 100-DMA at 0.8957? Fly-time above short
    • Some option expiries above - E405 mln 0.9000, also 0.8750-65 1.1 bln below

    CHF
    • USD/CHF quiet in Asia, out of focus, range 0.9804-16
    • On hold just above gradually descending 200-DMA at 0.9805
    • Still ascending 55-DMA just above at 0.9820, 100-HMA 0.9825, descending
    • EUR/CHF unmoving after fall from 1.1722 overnight, Asia 1.1677 quoted
    • Sales still on moves above 1.1700 but bias still up

    Market Briefs
    • Fed chair nominee Powell pledges 'decisive' response to any economic crisis
    • Fed's Dudley says not concerned U.S. inflation is 'a little' low
    • Fed's Dudley opposes U.S. tax stimulus at current time 'Because The Economy Doesn't Really Need It'
    • Trump's tax bill faces potential Senate Republican opposition
    • Fed's Kashkari: If Congress passes a tax bill, Fed will update economic models, which may change the path of interest rates
    • BoJ's Kuroda - Developing local ccy bond markets in Asia to help recycle savings
    • BoJ's Kataoka - For more ease, counters call for exit - Sankei
    • JP Inflation likely won't reach 2% in FY '19, for 15-yr JGB yields sub-0.2% - Kataoka
    • Japan detects radio signals pointing to possible N.Korea missile test -source
    • China Nov factory growth seen slowing slightly -Rtrs Preview
    • OPEC sees market rebalancing after June as it mulls oil cut extension
    • S.Africa's Zuma calls for action after S&P downgrade, rand up on Moody's reprieve

    Looking Ahead - Economic Data (GMT)
    • 07:00 DE Oct Import Price m/m, y/y, 0.6%, 2.6% f' cast, 0.9%, 3.0% last
    • 07:45 FR Nov Consumer Confidence f' cast 101, 100 last
    • 09:00 EZ Oct Money-M3 Annual Growth f' cast 5.1%, 5.1% last
    • 12:00 DE Dec Gfk Consumer Sentiment f' cast 10.8, 10.7 last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 07:00 BoE to publish Financial Stability Report -London
    • 14:15 Fed's Dudley participates in a Q & A -New York
    • 14:30 Ireland's Lane to announce review of mortgage rules -Dublin
    • 15:00 Senate hearing on Powell's chairmanship -Washington
    • 15:15 Fed's Harker speaks at a conference -Philadelphia
    • 16:30 BoC's Poloz and Wilkins hold a press conference -Ottawa
    • 20:00 RBNZ publishes Financial Stability Report -Wellington
    See North American Open for a detailed listing of US/NorAm releases, events


     
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    Dow Jones Newswires, 29 Nov 2017 03:53 EST
    Global Forex and Fixed Income Roundup: Market Talk


    0852 GMT - A day after Kuroda rejected a view that the BoJ may ease up on its accommodative policy, one of the central bank's deputy governors made comments that could revive speculation about a shift toward tightening. Hiroshi Nakaso said the BoJ already has tools to exit from current monetary easing--without mentioning how close is to unwinding. He added that continued easing could intensify competition among banks and weigh on their profits. (megumi.fujikawa@wsj.com)

    0847 GMT - After a steady reading for October, this month's reading on Thai inflation should show an uptick thanks to rising fuel prices. The median forecast of economists polled by WSJ is for CPI to be 1% higher than a year earlier, and 0.2% up from last month. Excluding energy and fresh food, on-year growth of 0.6% is seen while the reading is projected to be flat sequentially. Further gains loom amid higher oil prices and some improvement in local demand, says Standard Chartered economist Tim Leelahaphan. The data are due Friday.(saurabh.chaturvedi@wsj.com; @journosaurabh)'Sterling rises 0.4% to 1.3422 against the U.S. dollar on reports that the U.K. has agreed to pay Brussels some EUR50 billion to leave the EU'. "Pound Gains on Reports of Brexit Divorce Bill Deal -- Market Talk," at 0803 GMT, misstated the sterling/dollar price. The level was 1.3412, not 1.2298)

    0837 GMT - Commerzbank forecasts Germany's issuance of inflation-linked bonds at EUR6.5 billion in 2018, with which it should place the smallest linker volume across eurozone sovereigns for the third year in a row, says rates strategist Michael Leister. In 2017 the German Finance Agency sold EUR6.5 billion in linkers. Germany's net linker issuance will be deeply negative in 2018 as the maturing 0.75% April 2018-dated linker bobl is unlikely to be replaced by a new benchmark, Mr. Leister says. This linker bobl has an outstanding volume of EUR15 billon, according to German Finance Agency data. The German Finance Agency is expected to publish its 2018 funding plan in December. (emese.bartha@wsj.com; @EmeseBartha)

    0818 GMT - UniCredit says to keep sterling "long exposure fairly low for now." Though it seems that--based on reports that the U.K. has offered EUR50 billion to the EU--progress is now being made on the Brexit "divorce" payment, sterling's reaction to the news is an example of how vulnerable it is to media headlines. GBP/USD is up 0.6% at 1.3426 and EUR/GBP is down 0.3% at 0.8845. "The currency is likely to remain exposed to the flow of news headlines, especially because negotiations on the Irish border remain challenging," UniCredit says. (olga.cotaga@wsj.com; @OlgaCotaga)

    0809 GMT - Nordic markets open slightly higher Wednesday. The OMXS30 gains 0.5% to around 1628.5. "The S&P 500 closed 1% higher yesterday as the Senate budget committee advanced the Republican tax bill and the greenback gained in process," says SEB. "But the latest move from North Korea offsets the optimism and Asian stocks are mixed this morning." After firing an inter-continental ballistic missile that put the entire U.S. in range, North Korean leader Kim Jong-Un reportedly said his regime has completed its nuclear program, SEB adds. Fed chairman nominee Jerome Powell said before Congress that the case for a December rate hike "is coming together". Swedish confidence and GDP, eurozone confidence and the second estimate of U.S. GDP are due today. OMXS30 closed at 1620.81, OMXN40 at 1575.87 and OBX at 727.18. (dominic.chopping@wsj.com)

    0807 GMT - Economic data released in the eurozone Wednesday includes Spanish and German inflation and eurozone economic sentiment. KBC analysts say that German inflation data have market-moving potential, especially in the case of higher-than-expected readings. Economists in The Wall Street Journal's poll forecast the EU-harmonized consumer price index to rise by 1.7% year-on-year in November, accelerating from 1.5% in October. Six German states publish their inflation figures in the morning, followed by the pan-German data at 1300 GMT. (emese.bartha@wsj.com; @EmeseBartha)

    0803 GMT - Sterling rises 0.4% to 1.2298 against the U.S. dollar on reports that the U.K. has agreed to pay Brussels some EUR50 billion to leave the EU. EUR/GBP is down 0.3% at 0.8847. The payment is one of three issues that need to be resolved before the U.K. can begin negotiating future trade relations with the bloc. "Though Ireland's political troubles and their border issue could remain a problem, the Brexit bill agreement should be enough to unlock the talks," BK Asset Management says. (olga.cotaga@wsj.com; @OlgaCotaga)

    0755 GMT - London shares are set to fall as the pound rises on speculation that the U.K. has agreed a financial settlement with Brussels to leave the EU, though doubts remain. The FTSE 100 Index is tipped to drop 25 points to 7435 as sterling gains 0.4% to $1.3404. Reports suggested London had agreed to pay the EU up to EUR55 billion ($74 billion) and could assume liabilities up to EUR100 billion. "While one obstacle looks to have been cleared, it remains to be seen whether the Irish government will follow through on their threats to veto further progress unless certain guarantees are met with respect to the border issue," says Michael Hewson at CMC Markets. In corporate news, London Stock Exchange Group PLC said Chief Executive Xavier Rolet has agreed to step down immediately. (philip.waller@wsj.com)

    0752 GMT - The rally and the tightening in Italian government bond spreads is a positive backdrop for the Italian Treasury's upcoming BTP auction on Wednesday as they may have left dealers short in the bonds, Mizuho says. Besides this strengthening, the fading supply into the year-end is likely to be helpful. Italy's treasury canceled the five-year tap at the upcoming auction and will only reopen its 10-year BTP while it has also canceled its mid-December BTP auction, due to reduced funding needs. At Wednesday's auction, the treasury will offer EUR1.25 billion to EUR1.75 billion in August 2027 BTP, and a similar amount in April 2025 CCTeu, a floating rate note. (emese.barhta@wsj.com; @EmeseBartha)

    0725 GMT - Bond markets watch out for German inflation data on Wednesday for clues. Commerzbank rates strategist Michael Leister says the inflation data should dispel disinflation concerns, but leave the bund strength intact as a more lasting uptrend in core inflation remains distant for now. Commerzbank continues to recommend buying bunds into dips--at moments of weakness. The 10-year bund yield is trading at 0.35%, up 0.8 basis points, according to Tradeweb. The bund futures trade at 163.04, down 0.13, shortly after opening. Six German states release November inflation data before the pan-German data is due at 1300 GMT.(emese.bartha@wsj.com; @EmeseBartha)

    0719 GMT - The won has rallied sharply in late Asian trading, with the dollar now off 0.8% on the day at KRW1,076 ahead of tomorrow central-bank meeting. The Bank of Korea is widely expected to start a rate-hike cycle tomorrow, sentiment which has sent the currency from nearly KRW1,150 in early October. Short-covering is helping fuel the late move, says Samsung Futures' SeungJi Jeon. She said some are liable to be hedge funds which turned bearish after the overnight North Korea missile launch. But that test didn't impact the currency pair, perhaps setting the stage for this afternoon's fresh rally. (kenan.machado@wsj.com)

    (END) Dow Jones Newswires
     
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    WEDNESDAY, NOVEMBER 29, 2017
    TOP NEWS

    Britain close to deal on Brexit bill with EU -sources
    Britain has offered to pay much of what the EU was demanding to settle a Brexit "divorce bill", bringing the two sides close to agreement on a key obstacle to opening talks on a future free trade pact, EU sources said. The offer, which British newspapers valued at around 50 billion euros, reflected the bulk of outstanding EU demands that include London paying a share of post-Brexit EU spending on commitments made before Britain leaves in March 2019 as well as funding of EU staff pensions for decades to come. If the financial settlement, which many British businesses have argued May should make in order to avoid a disruptive "cliff edge" departure from the single market, is forthcoming, the thorniest outstanding issue is that of the Irish border.

    Japan retail sales suffer first annual fall in a year
    Annual Japanese retail sales fell for the first time in a year last month, government data showed, as poor weather including two typhoons kept consumers away from stores and restaurants. Retail sales edged down 0.2 percent in October compared with the same month last year, led by weak sales of food and beverages, the Ministry of Economy, Trade, and Industry said. October's fall in retail sales follows a rare decline in overall private consumption in the July-September quarter, but economists see the downturn as temporary due to one-off factors.

    EU Commission to propose freezing of funds for tax havens- Moscovici
    The EU's tax commissioner Pierre Moscovici called on the bloc's governments to be ambitious when they decide on a common blacklist of tax havens next week and said European funding to countries on the list should be frozen. It remains unclear how many countries will end up in the EU blacklist, as those who are not compliant but have committed to change their tax rules are likely to be included in a separate, "grey list" which might not be made public. Moscovici also said that some EU states still applied "harmful tax practices which lead to aggressive tax planning", and cited cases in Britain, Malta and the Netherlands.


    Bitcoin tops $10,000, marks 10-fold increase in 2017
    Bitcoin soared to an all-time high above $10,000 on major exchanges and digital currency indexes, including the widely followed Luxembourg-based trading platform BitStamp. It has increased more than 10-fold in value so far this year, posting the largest gain of all asset classes, amid increased institutional demand for crypto-currencies as financial and mainstream use has expanded. But sceptics say it is a classic speculative bubble with no relation to real financial market activity or the economy, most famously JP Morgan boss Jamie Dimon who labelled it a fraud.

    U.S. Senate Republicans shove tax bill ahead as Democrats fume
    U.S. Senate Republicans rammed forward President Donald Trump's tax-cut bill in an abrupt, partisan committee vote that set up a full vote by the Senate as soon as Thursday, although some details of the measure remained unsettled. If the Senate approves its tax measure later this week, it would need to be reconciled with a version already approved by the House of Representatives before anything could be sent to the White House for Trump to sign into law. Separately, Democratic leaders in Congress skipped a meeting with President Donald Trump on Tuesday that was to have focused on the budget, raising the risk of a government shutdown next month with both sides far apart on the terms of an agreement.


    BREAKINGVIEWS

    Britain’s Brexit-ready banks a boon for government

    The Bank of England has given an unwitting boost to UK Chancellor Philip Hammond. Last week, Hammond said he wanted to raise 15 billion pounds to meet fiscal targets by selling the state’s 71 percent holding in Royal Bank of Scotland. His job has been made easier by the fact that the BoE awarded the bank a clean bill of health in its stress tests.

    Trump gives Xi first taste of trade acrimony ahead
    U.S. President Donald Trump is back from his China visit, but the afterglow of his bromance with Xi Jinping has faded fast. Unimpressed with progress on North Korea and market opening, the White House has moved aggressively to target aluminium dumping. This is just an opening salvo in what looks set to be an acrimonious renegotiation of the world’s most important trade relationship.



    CHART OF THE DAY
    [​IMG]


    MORNING MEETING

    BITCOIN STEALS THE SHOW AS N.KOREA TESTS MISSILE


    BONDS, EQUITIES, OTHER ASSET MARKETS
    US Tsy 10s indicated 2.325%, tad easy, JGB 10s 0.028%, Bund 10s 0.347%
    • US-Japan-Germany respective 2s indicated 1.748%, -0.174%, -0.724%
    • JGBs gain, led by long-end bonds; recent steepening move stalls
    • Strong results of BoJ 5-40yr JGB buy op support long-end bonds
    • Expectations for month-end extension also help
    • At 151.05, futures up 8 ticks on day; range 151.08/151.02
    • Focus on BoJ Nakaso's speech to see if he talks about side-effects of policy
    • Nikkei buoyant despite NoKorea missile test, 22,540-643 range
    • At 22,554, index up 68 points or 0.3% on day
    • AXJ mixed, SSEC off 0.5%, HSI 0.4% and KOSPI and STI below par
    • TWI and NZX50 above par on day, ASX +0.5%
    • Dalian iron ore +1.3%, Shanghai rubber +2.6%, Tokyo rubber +1.5%

    Currency Summaries
    JPY

    • Risk not off despite NoKorea missile test, USD/JPY, JPY complex buoyant
    • USD/JPY 113.38-67, heavy above 113.60 but sentiment less bearish
    • Feeling those that needed to pare weak longs finished, quiet till year-end?
    • Option expiries more supportive than not, 111.00 USD1.3 bln today
    • Also today 111.50 USD580 mln, tomorrow 111.00 USD907 mln
    • USD/JPY move up early pierces descending 100-DMA at 111.58, 200-DMA 111.69
    • Break above 200-DMA/111.75 200-HMA bullish, stops likely 111.75+, 112.00+
    • Japanese better buyers on dips still with option players, from pre-111.00
    • EUR/JPY in middle of 131.03-133.09 daily Ichi cloud, Asia 132.04-30, quiet
    • GBP/JPY buoyant on Telegraph new of Brexit deal, Asia 148.63-149.34
    • Heavy from 149.41 55-DMA, daily Ichi cloud top 149.70 above
    • AUD/JPY heavy, Asia 84.91 to 84.51, 84.33 trend low Monday
    • NZD/JPY 77.06 to 76.76, heavy, Antipodeans still not faring well in Tokyo

    EUR

    • EUR/USD opened Asia 0.50% lower at 1.1837 after USD rallied late in US session
    • Hopes the Senate will vote in favour of tax cut Thursday supported USD
    • EUR/USD was bid through Asian morning and traded to 1.1855
    • Heading into the afternoon the EUR/USD was trading around 1.1850
    • Support at 10-day MA at 1.1822 and 38.2 of 1.1553/1.1961 move at 1.1805
    • Hourly resistance at 1.1920 and break would ease downward pressure

    GBP

    • Cable buoyant in Asia after reports o/n Brexit agreement, Asia 1.3341-82
    • On hold just below 1.3388 high o/n, resistance pre-1.3400 but stops above
    • Decisive break above 1.3400 projects test back towards 1.3659 high 9/20
    • Option expiries below supportive - 1.3265 GBP603 mln
    • EUR/GBP heavy after fall to 0.8848 overnight, Asia 0.8857-76
    • Support @0.8840 and ahead of 0.8800, ascending 200-DMA at 0.8793

    CHF
    • USD/CHF steady, Asia 0.9836-50, quiet, descending 200-HMA 0.9860 above
    • Pair on hold above 0.9824 ascending 55-DMA, Ichi cloud top at 0.9793
    • EUR/CHF quiet in Asia after fall to 1.1648 overnight, range 1.1655-63

    Market Briefs

    • Bitcoin tops $10,000, taking 2017 gains to 940 pct
    • JP Oct Retail Sales y/y, -0.2%, 2.2% last, -0.2% f' cast, 2.3% rvsd
    • NZ central bank to undertake 'modest easing' of home loan restrictions
    • North Korea tests suspected ICBM, splashes down near Japan
    • U.S. Senate Republicans shove tax bill ahead as Democrats fume
    • U.S. court backs Trump in battle over interim consumer watchdog head
    • Democrats skip Trump meeting, raising risk of government shutdown
    • Britain close to deal on Brexit bill with EU -sources
    • Irish deputy PM resigns, averting election threat
    • UK shop prices slip 0.1 pct in November for third month running -BRC
    • Merkel scolds ally to shield coalition talks from weedkiller row
    • China's economy still facing relatively large downward pressure -banking regulator
    • OPEC heading for oil cut extension with a caveat

    Looking Ahead - Economic Data (GMT)

    • 07:45 FR Oct Consumer Spending m/m, f'cast -0.1%, 0.9% last
    • 07:45 FR Q3 GDP Detailed q/q, f'cast 0.50%, 0.50% last
    • 09:30 GB Oct BoE Consumer Credit f' cast 1.500 bln, 1.606 bln last
    • 09:30 GB Oct Mortgage Lending f'cast 3.600 bln, 3.848 bln last
    • 09:30 GB Oct Mortgage Approvals f'cast 65.000k, 66.232k last
    • 10:00 EZ Nov Consumer Confid. Final f'cast 0.1, -1.1 last
    • 10:00 EZ Nov Business Climate f'cast 1.53, 1.44 last
    • 10:00 EZ Nov Economic Sentiment 114.6 f'cast, 114.0 last
    • 10:00 EZ Nov Industrial Sentiment f'cast 8.7, 7.9 last
    • 10:00 EZ Nov Services Sentiment f'cast 16.8, 16.2 last

    Looking Ahead - Events, Auctions, Other Releases (GMT)

    • 07:00 BoJ's Nakaso speaks in a press meet -Tokyo
    • 13:30 Fed's Dudley participates in a discussion -New Brunswick
    • 14:00 BoE's Carney speaks at a discussion -London
    • 14:45 BoE's Ramsden speaks at a discussion -London
    • 15:00 Fed's Yellen speaks at Congressional committee -Washington
    • 17:00 Bundesbank's Weidmann speaks at an event -Essen
    • 18:50 Fed's Williams speaks at Arizona State University -Phoenix
    • 19:00 Fed issues Beige book on economic condition -Washington
    • 20:00 Dutch cen bank's Knot speaks at a conference -London
    See North American Open for a detailed listing of US/NorAm releases, events
     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 30 Nov 2017 02:42 EST
    Global Forex and Fixed Income Roundup: Market Talk



    0742 GMT - There's multiple reasons that the Bank of Korea won't quickly back up today's rate hike, the first by a major Asia central bank since the Fed's tightening began 2 years ago, says Capital Economics. They include benign inflationary pressures and aggressive tightening possibly causing problems for South Korea's indebted households, who have borrowings equivalent to 90% of GDP. The firm also says repeated hikes could further boost the won, which is already up some 12% versus the dollar in 2017 and at 2 1/2-year highs. Contrary to market expectations of 2 more hikes, CapEcon predicts just 1 over the next year. (chester.yung@wsj.com; @chester_yung)

    0733 GMT - A higher-than-expected eurozone inflation data on Thursday could point to weakness in bunds after some sell-off on Wednesday. "We feel bund futures would be most affected by a strong inflation reading today[Thursday] and so we expect some weakness in the morning," say Mizuho rates strategists. However, they keep a bullish longer-term outlook assuming that subdued underlying inflation is likely to force the European Central Bank to manage rates expectations down, they say. The 10-year bund yield is trading at 0.39%, up 0.4 basis point from Wednesday's close, according to Tradeweb. Bund futures trade at 162.49, up 0.01. (emese.bartha@wsj.com; @EmeseBartha)

    0724 GMT - Malaysia's central bank or even Singapore's could be the next Asian monetary authority to tighten policy, says Selena Ling, OCBC's head of treasury research, following the Bank of Korea's decision to raise rates for the first time in over 6 years. "It looks like the tide for Asian central banks has started to turn after the G4 banks (the Fed, BOC, BOE and ECB) took the lead earlier," Ling says. (gaurav.raghuvanshi@wsj.com)

    0716 GMT - India kickstarts preparations for the government's final full-term budget due to be unveiled in February, and expectations are that it will a populist one in order to appease the masses ahead of 2019 elections. In India, the government presents an interim budget during an election year, so the one for the coming FY will be the last full blueprint of Modi's 5-year-term. "It has to be a people-friendly budget," says a finance-ministry official. That could include income-tax rationalization and rural- and infrastructure-spending increases, the official added. (rajesh.roy@wsj.com)

    0609 GMT - The Nikkei ended November strongly, finishing up in 7 of its last 10 days while seeing an afternoon rally today as investors caught up to the overnight yen decline. The Nikkei rose 0.6% today to 22724.96, putting the month's gain at 2.6%. The Thursday advance came despite fresh weakness in chip-related stocks. Meanwhile, dollar-yen remains around Y112.10, same as the start of local stock trading, and 10-year JGB yields rose a basis point to 0.035%. (suryatapa.bhattacharya@wsj.com; @SuryatapaB)

    0555 GMT - The Aussie dollar is finishing Asian trading right around its best levels of the day, helped by a solid business-investment report. That bolstered the outlook for GDP growth. Meanwhile, investment intentions for the year ahead were revised higher. The currency is around US$0.7590 versus US$0.7560 at morning lows ahead of the report. (james.glynn@wsj.com; @JamesGlynnWSJ)

    0542 GMT - There is a huge demand from investors for Indian corporate bonds, but Capital Economics says further reforms are needed to make it a more-important financing source. The corporate bond market is 15% of India's GDP, versus 20-40% in Brazil, Russia and South Africa. Meanwhile, Indian corporate bonds normally don't have longer than a 3-year term. Authorities have introduced various measures to open up the market the past year, but with only limited success. CapEcon suggests a gradual scaleback of credit-rating restrictions to issue rupee-denominated, or masala, bonds. It says there's also a need to inform smaller firms of the value of corporate bonds. Those firms are still highly dependent on bank loans. (debiprasad.nayak@wsj.com)

    0504 GMT - Expect central banks in Asia to increase rates at a glacial pace in the year ahead, says Tai Hui, chief market strategist for Asia at J.P. Morgan Funds in Hong Kong. "My impression is that next year it will be one-and-done, or maybe two-and-done," he says. Asia is not under any serious inflation pressure despite tight labour markets in places like Japan, Hong Kong, Taiwan and Singapore, he says. With Asian currencies strengthening against the US dollar, inflation should also be kept tame, Hui adds. (gregor.hunter@wsj.com; @gregorhunter)

    (END) Dow Jones Newswires
     
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    THURSDAY, NOVEMBER 30, 2017
    TOP NEWS

    ECB to shut the door on easy money by end-2018 - economists
    The ECB should shut the door on its monthly asset purchases next September, according to a majority of economists in a Reuters poll, but they were split on whether it would. A shutdown would be in step with other major central banks turning up the heat on monetary policy despite inflation well below their targets and generally expected to stay that way in the year ahead. While the latest expectations are in line with other major central banks trying to move away from ultra-easy monetary policy or in some cases take interest rates higher, the ECB is unanimously expected to keep rates on hold when it meets on Dec. 14.

    China Nov factory growth unexpectedly picks up despite pollution crackdown
    Growth in China's manufacturing sector unexpectedly picked up in November, despite a crackdown on air pollution and a cooling property market that have been widely expected to weigh on the economy. The official PMI released on Thursday stood at 51.8 in November, compared with 51.6 in October. oosted by hefty government infrastructure spending, a resilient property market and unexpected strength in exports, China's manufacturing and industrial firms have been a major driver behind the economy's forecast-beating growth of nearly 6.9 percent so far this year.

    UK consumer sentiment sinks to 16-month low, business mixed
    Britain's Gfk consumer confidence index fell this month to its lowest since just after last year's Brexit vote, and business morale also softened, as households and firms took a darker view of the economic outlook. The index dropped by 2 points to -12 in November, its lowest since July 2016 and below the average forecast of a decline to -11 in a Reuters poll. Separately, the Bank of England's Mark Carney said that Britain's regulators will tweak banking and insurance rules inherited from the EU after Brexit to make them more tailored to the British market.


    Japan Oct industrial output rebounds, manufacturers see good times ahead
    Japan's industrial output rose less than expected in October, but companies forecast production to rise strongly in November and December as robust overseas demand continues to support factory activity and broader economic growth. The 0.5 percent increase in October was less than the median market projection for a 1.9 percent increase and followed a revised 1.0 percent decline in September. Additionally, the Bank of Japan's Yutaka Harada said that the central bank had no reason to wind back its ultra-easy monetary policy as inflation remained well below its 2 percent target.

    U.S. third-quarter economic growth fastest in three years
    The U.S. economy grew faster than initially thought in the third quarter, notching its quickest pace in three years, buoyed by robust business spending on equipment and an accumulation of inventories. GDP expanded at a 3.3 percent annual rate last quarter also boosted by a rebound in government investment, the Commerce Department said. That was the fastest pace since the third quarter of 2014 and a pickup from the second quarter's 3.1 percent rate. Separately, the Fed's Janet Yellen told lawmakers "the economic expansion is increasingly broad based across sectors," and that she expected that "the economy will continue to expand."


    BREAKINGVIEWS

    Yellen gives Congress parting shot on growth, debt
    Janet Yellen gave Congress a parting shot on economic growth and debt. The soon-to-depart Federal Reserve chair warned of rising risks from the deficit just as lawmakers weigh a Republican tax cut plan that would exacerbate it.

    COLUMN
    Modest Bank of Japan move could spark major market flows
    The era of super-cheap money is ending, and stocks' remarkable run to new highs and bond yields' refusal to shoot higher suggest world markets are taking this seismic monetary policy shift in their stride.



    CHART OF THE DAY
    [​IMG]


    MORNING MEETING

    JGB'S WEAKEN, LED BY 2S, 5S


    BONDS, EQUITIES, OTHER ASSET MARKETS
    US Treasury 10s indicated 2.386%, JGB 10s 0.036%, Bund 10s 0.386%
    • US-Japan-Germany respective 2s indicated 1.768%, -0.162%, -0.713%
    • JGBs weaken, initially on UST losses overnight
    • Short-end weaken after yesterday selling
    • Short-end extend losses after two auctions
    • 2yr auction stops at -0.164%, BTC 4.76, tail 0.2bp; last 5.93, 0.2bp
    • 2yr yields up 1.5bp on day
    • 3mo auction stops at -0.1712%, weakest since early Oct, vs -0.21% WI level
    • Long-end steady, both 30s, 40s unch at 0.825%, 1.000% respectively
    • At 150.91, futures down 15 ticks on day, range 151.01/150.85
    • Nikkei steady at month-end, range 22,502-748 and, at 22,724 +127 pts, 0.57%
    • AXJ mostly in red - SSEC 0.3%, HSI 1.3%, KOSPI 0.7%, STI 0.4%, TWI 1.15%
    • ASX off 0.6% too but NZX50 +0.55%
    • Dalian iron ore +2.4%

    Currency Summaries
    JPY
    • USD/JPY, JPY crosses mostly buoyant on big rises in yields overseas o/n
    • USD/JPY to 112.15 o/n, stops 111.75+, 112.00+ tripped on way
    • 111.89-112.11, buoyant but capped by option expiries, USD2.2 bln 112.15-80
    • Japanese still in dip-buy mode, investors eyeing higher yields abroad
    • Both descending 100/200-DMAs pierced to upside, now support 111.58/68
    • EUR/JPY on up-up, Asia 132.67 to 132.95, threatening Ichi cloud break
    • Top of daily Ichi cloud 133.09, stops eyed 113.00-10+, 55-DMA132.68 support
    • GBP/JPY up more on Brexit deal hopes, rise in yields, Asia 149.95 to 150.93
    • AUD/JPY buoyant post-good China PMI data, 84.67-85.04, still at recent lows
    • NZD/JPY, outlier, off from 77.16 to 76.59 on poor data, business outlook
    • Ease will be scaled back if inflation momentum big enough, USD stable @110
    • MoF flow data week-ended 11/25 - Japanese buy net Y135.6 bln foreign bonds
    • Net Y136.3 bln stocks, Y44.1 bln bills bought too
    • JP Oct industrial output +0.5% m/m, +1.9% eyed, Nov eyed at +2.8%, Dec +3.5%
    • Foreigners sell Y156.2bln Japan stocks, buy Y543.5bln JGBs, Y60.9bln bills
    • Reuters POLL - Japan fund managers up stock exposure some in November

    EUR
    • Opened slightly higher at 1.1846 despite higher US yields and hawkish Yellen
    • EUR/USD was quiet in Asia, but edged higher as USD and JPY eased vs most CCYs
    • EUR/USD traded as high as 1.1871 and was around 1.1865 into the afternoon
    • The 5, 10 & 20-day moving averages in bullish alignment & pointing higher
    • Support at 38.2 of 1.1553/1.1961 move at 1.1805 key in the short-term
    • Sellers tipped ahead of 1.1900 - but break above should confirm trend higher
    • German Retail Sales and EZ inflation data out today

    GBP
    • Cable bid on hopes Brexit deal now in place, Asia 1.3406 to 1.3480
    • GBP/JPY buys help as does EUR/GBP sales, other cross flows
    • Higher Gilt yields help, could rise more as Brexit uncertainty dissipates
    • GBP/USD highest since September 26, high then 1.3514
    • Talk of stops above 1.3500, more likely 1.3515+
    • EUR/GBP off in Asia, from 0.8837 to 0.8805, stops sub-0.8800?
    • Cross lowest since November 11, low then 0.8792 before rise
    • Ascending 200-DMA in vicinity at 0.8795

    CHF
    • USD/CHF steady in Asia, out of focus, range 0.9835-51
    • On hold below descending 200-HMA at 0.9851, above rising 55-HMA at 0.9835
    • Also at top of daily Ichi cloud, top 0.9833, ascending 55-DMA 0.9828
    • EUR/CHF quiet, Asia 1.1659-78, uptrend likely intact, Bund yields up
    • Underlying support at ascending 55-DMA at 1.1572, Ichi cloud top 1.1575

    Market Briefs
    • CN Nov NBS Manufacturing PMI 51.8, 51.6 last, f'cast 51.4
    • Britain nears deal with EU in Irish border Brexit talks -The Times
    • BoE's Carney sees changes to UK financial rules after Brexit
    • UK consumer sentiment sinks to 16-month low, business mixed
    • Brexit supporters say PM May selling UK short over divorce bill
    • Yellen: Recovery "increasingly broad based" in both U.S. and worldwide
    • Fed's Williams sees four rate hikes between now and end of 2018
    • Amid bitcoin surge, Dudley says offering digital currency on Fed's radar
    • Trump nominates Marvin Goodfriend for Fed governor post
    • U.S. Senate takes step toward passage of tax bill, vote likely this week
    • U.S. warns North Korean leadership will be 'utterly destroyed' in case of war
    • BoJ PB Harada - No reason for BoJ to end easy policy now, good for economy.
    • JP Oct Housing Starts YY, -3.1, -2.9% last, -3.1% f'cast
    • NZ business confidence sinks to eight-year low on jitters towards new government
    • NZ Q3 Capital Expenditure 1%, 0.8% last, f'cast 1%, r'vsd 1.1%

    Looking Ahead - Economic Data (GMT)
    • 07:00 DE Oct Retail Sales m/m, y/y, f'cast 0.3%, 2.8%, 0.5%, 4.1% last
    • 07:00 GB Nov Nationwide house price mm, yy, f'cast 0.2%, 2.7%, 0.2%, 2.5% last
    • 07:45 FR Nov CPI (EU Norm) Prelim YY, f'cast 1.3%, 1.2% last
    • 09:00 DE Nov Unemployment Chg SA, f'cast -10k, -11k last
    • 10:00 EZ Nov Inflation, Flash YY, f'cast 1.6%, 1.4% last
    • 10:00 EZ Nov Infl Ex Food & Enr Flash, f'cast 1.0%, 1.1% last
    • 10:00 EZ Oct Unemployment Rate, f'cast 8.9%, 8.9% last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 08:00 ECB's Yves Mersch to give introductory speech at joint ECB/Banca d'Italia conference - Rome
    • 08:45 ECB's Yves Mersch is part of the chairing panel at joint ECB/Banca d'Italia conference - Rome
    • 10:00 ECB's Peter Praet delivers the Ludwig Erhard Lecture, organised by the Lisbon Council - Brussels
    • 11:40 ECB's Pentti Hakkarainen speaks at Financial Times Banking Summit 2017 - London
    • 13:30 Fed's Mester to chair panel before the Financial Stability and Fintech Conference - Washington
    • 17:30 Fed's Randal Quarles speaks before the Financial Stability and Fintech Conference - Washington
    • 17:30 Eurogroup President Jeroen Dijsselbloem and Central Bank of Luxembourg Governor Gaston Reinesch attend a conference - Luxembourg
    • 18:00 Fed's Dallas President Robert Kaplan participates in a moderated question-and-answer session before the Real Estate Council Speaking Series - Dallas
    See North American Open for a detailed listing of US/NorAm releases, events

    EUR/GBP-Brexit optimism, but plenty of issues remain
    There has been a significant positive shift in Brexit expectations this week, based on UK newspaper reports - yesterday in the UK Telegraph on the Brexit divorce bill and this morning The Times reported on a possible Irish border compromise. Notably the shift appears to be coming from a UK perspective, with the EU still cautious. EUR/GBP has fallen nearly 2% this week, as short GBP positions were squeezed & GBP bargain hunters resurfaced. The cross is trading at familiar levels above major 0.8795/97 support, 76.4% of the November rise and 200 DMA; a close below would target the 0.8733 November low, followed by 0.8693, 61.8% of the 2017 rise and pivotal support. There appears to be progress on Brexit behind the scenes, but grey areas abound, while fundamental data remains EUR-supportive, so GBP bulls should not get carried away at these levels until the mist clears.

    AUD/USD-Bearish consensus building for 2018
    A number of investment banks are building a bearish case for the AUD/USD to play out in 2018. Most of the bears are focused on central bank expectations and interest rate differentials, but there is also some concern over China's ability to manage its debt bubble. The RBA is widely expected to remain on hold for at least another 12 months while expectations for Fed tightening in the investment bank community range from two to four rate hikes in 2018. The US 2-year yield (1.76%) is now higher than Australia's 2-year yield (1.74%) while the Aus 10-year yield is still 13bps higher than the US 10-year yield, which is 2.38%. If RBA & Fed projections prove accurate, there may end up being a significant USD-favourable yield spread between the two currencies. If key commodities rise in 2018, it could somewhat negate the bearish AUD/USD case, but at this stage the consensus is that while oil may move higher, iron ore prices will stay pressured by growing supply. Don't be surprised to see a number of sub-70 cent calls for AUD/USD when the major banks release their 2018 forecasts before year-end.


     
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    Dow Jones Symphony - Home
    Dow Jones Newswires, 01 Dec 2017 02:04 EST
    Global Forex and Fixed Income Roundup: Market Talk


    0704 GMT - The Bank of Thailand will leave benchmark rates unchanged through 2018, says Nomura, following data showing core inflation at 0.6%, and headline inflation ticking up only a fraction to 1.0%. "We expect [CPI] inflation to remain at the low end of the 1%-4% target next year, with still-limited demand-side pressures," Nomura says. After South Korea became the first major Asian central bank to raise its main policy rate, economists say others in the region will follow. (gaurav.raghuvanshi@wsj.com)

    0655 GMT - Has the Indian economy weathered the transitional challenges experienced after demonetization and GST? Probably, says Finance Minister Arun Jaitley. The "deceleration trend in overall growth has reversed and the economy appears for a durable recovery going forward," he adds after late Thursday's GDP report. Manufacturing growth jumped to 7% from 2Q's 1.2%. Other data have also been strengthening. (rajesh.roy@wsj.com)

    0628 GMT - Yesterday's 3Q GDP report should brighten the electoral prospects in Modi's home state of Gujarat later this month for the PM's party. The western state, a destination for businesses and industrial activity, has seen protests amid GST procedural problems. However, the surge in manufacturing activities and overall economic growth means the adverse impact of the new taxation was fading. "It will repose people's confidence in Modi," says a finance ministry official. (rajesh.roy@wsj.com)

    0626 GMT - Japanese stocks saw some buying in afternoon trading, but the gains weren't enough to get the Nikkei toward the session's highest level shortly after the open. It finished up 0.4% at 22819.03 after earlier jumping as much as 1.2%. Among individual stocks, Nippon Paint bounced 8.3% as talks regarding a potential buyout of US rival Axalta have ended. Dollar-yen is steady with late-Thursday levels in New York and 10-year JGB yields have given up earlier gains to end flat at 0.03%. (kosaku.narioka@wsj.com)

    0604 GMT - It was another downbeat week for Aussie dollar bulls, most recently feeling pressure from narrowed interest-rate spreads. It's the first time in more than 15 years that Aussie 2-year bond yields are the same as Treasurys; the US yield has been the one below. Parity in the past has been a trigger for Aussie-dollar selling. It approached US$0.7650 early in the week but fell steadily as the days passed, currently sitting US$0.7565. A month ago, it was above US$0.77. Critical support is at US$0.75. (james.glynn@wsj.com; @JamesGlynnWSJ)

    0542 GMT - An early move by the Bank of Japan to raise interest rates would send the wrong signal to foreign-exchange markets, risking a sharp rise in the yen while undermining the experiment of changing inflation expectations, says Frederic Neumann, co-head of Asian economic research at HSBC. Instead, he thinks the Kuroda-led central bank will likely keep its foot firmly on the gas. "Like Kuroda himself said, you almost need to border on the irresponsible to show that you are serious about raising inflation, and an overshoot of inflation above the target is justified." (paul.jackson@wsj.com)

    0538 GMT - Economists Down Under shouldn't throw away the Phillips curve just yet, according to Frederic Neumann, co-head of Asian economic research at HSBC. Many analysts in Australia have pushed back their forecasts for a rate increase into 2019 after recent comments by RBA Gov. Philip Lowe, but HSBC still sees the central bank moving next year. "One contention that we make is the Phillips curve in Australia is still in better shape than it is in other OECD countries, partly because Australia never experienced the dislocation of the global financial crisis." Australia hasn't seen a recession in a quarter-century, and folks there are therefore more likely to ask for higher pay. He thinks wage pressure should come back relatively swiftly next year. (paul.jackson@wsj.com)

    (END) Dow Jones Newswires
     
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    FRIDAY, DECEMBER 1, 2017
    TOP NEWS

    Progress in Brexit talks has lessened chance of disorderly exit-Reuters Poll
    Signs of progress in Brexit negotiations to leave the EU mean the chance of a disorderly Brexit declined in the past month, a Reuters poll found, and the talks will probably end with a free trade deal. Potentially heralding a breakthrough in the talks, Britain and the EU have reached agreement on a divorce bill and are close to agreement over the Northern Ireland border, newspapers reported. So the chance of a disorderly Brexit - where no deal has been reached when the two years of talks are scheduled to close in March 2019 - has fallen to 25 percent from the 30 percent chance given in an October poll.

    ESM could be used as stabilisation fund, Eurogroup head says
    The role of the European Stability Mechanism (ESM) could be expanded to provide a revolving stabilisation fund that could help governments hit by economic shocks, the chairman of euro zone finance ministers Jeroen Dijsselbloem said. The idea is part of a broader debate on whether the 19 countries that share the euro would benefit from a dedicated budget. ESM Managing Director Klaus Regling has been pushing for a limited euro area budget to deal with asymmetric economic shocks -- economic misfortunes that befall one country rather than the whole bloc.

    Japan consumer prices, household spending raise doubts about inflation
    Japan's core consumer prices rose in October from a year earlier, marking the 10th straight month of gains, but a narrower measure that excludes energy showed inflation has not accelerated for three consecutive months. The nationwide core CPI index rose 0.8 percent in October from a year ago, due to gains in gasoline, kerosene, and healthcare costs, data showed. Japan's jobless rate held steady at 2.8 percent in October and the availability of jobs reached the highest in almost 44 years, separate data showed. Another report from the finance ministry showed capital expenditure rose 4.2 percent in July-September, faster than a 1.5 percent gain in April-June.


    China Nov factory growth slows to 5-month low, confidence sags-Caixin PMI
    China's manufacturing activity grew at the weakest pace in five months in November as input costs remained high and tougher pollution measures weighed on business confidence, the Caixin/Markit Manufacturing PMI showed.The index dipped to 50.8 from 51.0 in October, but was roughly in line with economists' expectations for a slight drop to 50.9. Separately, the US formally told the World Trade Organization that it opposes granting China market economy status, supporting the EU in a dispute with China that could have major repercussions for the trade body's future.

    U.S. Senate tax bill stalls on deficit-focused 'trigger'
    The U.S. Senate on Thursday delayed voting on a Republican tax overhaul as the bill was tripped up by problems with an amendment sought by fiscal hawks to address a large expansion of the federal budget deficit projected to result from the measure. That set up the possibility that its deep tax cuts might have to be moderated, that future tax increases might be built in, and that some conservatives might seek to attach spending cuts, all approaches that could throw up new political problems. Republican Senator Bob Corker and others had tried to add a provision to the bill to trigger automatic future tax increases if the tax cuts in the bill did not boost the economy and generate revenues sufficient to offset the deficit expansion, but the proposal was barred on procedural grounds.


    BREAKINGVIEWS

    Botched process leads to Frankenstein tax plan

    The U.S. Congress is creating a Frankenstein tax plan. Senate Republicans are rushing into a vote on their tax-cut effort. Changes to appease critics in their own party have yet to be settled, including a trigger to raise taxes if growth falls short of projections. To make matters worse, lower-income Americans will also face higher bills.



    CHART OF THE DAY
    [​IMG]


    MORNING MEETING

    JGB FUTURES' RALLY RESUMES


    BONDS, EQUITIES, OTHER ASSET MARKETS
    US Treasury 10s indicated 2.405%, JGB 10s 0.032%, Bund 10s 0.373%
    • US-Japan-Germany respective 2s indicated 1.788%, -0.157%, -0.711%
    • JGB futures rally, brushing aside weaker USTs, firmer stocks, USD/JPY
    • At 151.02, futures up 9 ticks on day, up from early low of 150.85
    • Long-end bonds heavy on yesterday's announcement on BoJ op plan for Dec
    • Op plan for Dec shows no long-end buy ops until after 30yr auction on Dec 7
    • Nikkei gap up open on big Wall St rally, down later however
    • From 22,994 early high to 22,675 before steadying
    • At 22,817, index up 92 points or 0.4% on day
    • AXJ mostly up - KOSPI 0.3%, STI and TWI 0.8%, ASX 0.3%, NZX50 above par
    • Shanghai and HSI outliers, -0.35% and -0.1%, respectively
    • Dalian iron ore +1.8%, Shanghai rubber +1.95%, Tokyo rubber +1.8%

    Currency Summaries
    JPY
    • USD/JPY, major JPY crosses buoyant on recent rises in yields
    • USD/JPY at two-week highs, Asia range 112.32-69, bias up
    • Option expiries again help cap - USD1 bln 112.65-70 today, 113.00 605 mln
    • More above on 113-handle, size below too however, 112.20-55 USD723 mln
    • Total USD2.7 bln between 111.00-112.00 too
    • Higher US yields supportive, US Treasury 10s as high as 2.437%, Asia @2.41%
    • Nikkei lagging despite big Wall St rally o/n but not down
    • EUR/JPY buoyant, Asia 133.83-134.06, yesterday 132.67 to 134.15 rally
    • Bias still up despite slump in EZ yields after CPI up less than eyed
    • 134.49-50 double top 10/25-26 in spec sights
    • GBP/JPY on up-up, Asia 152.00-40, 152.80-85 highs 9/21/22 in spec sights
    • Move up from 146.94 Tuesday massive but may have more legs
    • AUD/JPY and NZD/JPY outliers, demand low, 84.97-85.20 and 76.74-98 ranges
    • Dollar-bloc in less Japanese investor demand

    EUR
    • EUR/USD, EUR complex buoyant despite small slump in EZ yields post EZ-CPI
    • CPI up less than eyed, but EUR bias still up, buy recommendations galore
    • EUR/USD 1.1887-1.1916 in Asia, high yesterday 1.1931, 11/27 1.1961
    • Option expiries help tether-bracket spot so far, lack of other news/flows
    • 1.1875 E596 mln, 1.1900 763 mln, 1.1925-30 999 mln
    • EUR/JPY Tokyo buy-interest, EUR/USD also well above 1.1833 Ichi cloud top

    GBP
    • Cable remain bid in Asia, 1.3510-50, 1.3549 high overnight
    • Rally may have more legs, no signs of long liquidation in Asia
    • Could be some in market still caught short? Or late in buying?
    • Specs eyeing moves towards 1.3659 spike high September 20
    • Some resistance still from 1.3550, ahead of 1.3600, stops tipped above
    • GBP/JPY demand from Japanese investors supportive
    • EUR/GBP on back foot, Asia 0.8789-0.8803, quiet, low yesterday 0.8777
    • Some support from around ascending 200-DMA at 0.8796, 55-WMA 0.8725

    CHF
    • USD/CHF down from 0.9882 high yesterday, Asia 0.9829-48
    • Spot back in ascending daily Ichi cloud, top 0.9865, 55-DMA 0.9832
    • 55-DMA ascending, descending 200-DMA below at 0.9802
    • EUR/CHF buoyant, Asia 1.1705-20, at recent highs
    • More upside likely if 1.1720 cleared decisively
    • 1.1723 high November 17, 1.1722 high November 27

    Market Briefs
    • U.S. Senate tax bill stalls on deficit-focused 'trigger'
    • Trump considers plan to replace Tillerson with CIA chief - U.S. officials
    • U.S. Senate Ethics Committee opens probe of Senator Franken
    • U.S. attorney general Sessions evasive on Russia probe -congressmen
    • Trump: China's N.Korea diplomacy appears to have 'no impact on Little Rocket Man'
    • North Korea images suggest missile capable of hitting all America - U.S. experts
    • U.S. formally opposes China market economy status at WTO
    • CN Nov Caixin Mfg PMI Final 50.8, 51.0 last, 50.9 f' cast
    • JP Oct core CPI +0.8% y/y, Tokyo Nov core +0.6%, both as eyed
    • JP Oct unemployment unch, 2.8% as eyed, jobs-applicants ratio 1.55, 1.53 eyed
    • JP Oct household spending -2.0% m/m, unch y/y, -1.4%, -0.4% eyed
    • JP MoF survey - Japan Inc Q3 CAPEX +4.2% y/y, profits +5.5%, sales +4.8%
    • NZ finance minister promises to maintain fiscal prudence, spread prosperity
    • NZ Q3 Terms of Trade q/q, 0.7%, 1.5% last, 0.9% f' cast
    • Australia home prices stall as Sydney hits an air-pocket
    • UK lawmakers cast doubt on plan to avoid Ireland border after Brexit
    • No north-south Ireland border despite leaving customs union, British minister pledges
    • As OPEC extends output cuts, Asia turns to North America for more oil
    • U.S.-based money market funds post $33 bln inflows, largest of 2017 -Lipper
    • Foreign CB US debt holdings +15.03 bln to $3.39 trln Nov 29 week
    • Treasuries +4.88 bln to $3.05 trln, agencies +1.79 mln to +$263.79 bln

    Looking Ahead - Economic Data (GMT)
    • 08:50 FR Nov Markit Mfg PMI f' cast 57.5, 57.5 last
    • 08:55 DE Nov Markit/BME Mfg PMI f' cast 62.5, last 62.5
    • 09:00 EZ Nov Markit Mfg Final PMI f' cast 60.0, last 60.0
    • 09:30 GB Nov Markit/CIPS Mfg PMI f' cast 56.5, last 56.3

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A Riksbank's Floden talks at a meeting - Stockholm
    • 13:30 Fed's Yellen participates in Fed Challenge Finals - Washington
    • 14:05 Fed's Bullard presents on US economy - Little Rock
    • 14:30 Fed's Kaplan participates in a discussion - McAllen
    • 15:15 Fed's Harker speaks at a conference - Philadelphia
    See North American Open for a detailed listing of US/NorAm releases, events

    Japanese investors, carry players dominate JPY flows
    With hedge funds all but done for this year (fiscal year effectively over as of November), Japanese investors have stepped up to the plate as the major influence in JPY markets. Granted they have been good players in the recent past but flows emanating from this bloc now look to be dominating. This is especially the case with commercial and investment banks also winding down for year-end. The effect of this investor bloc has been felt this week, with most good buyers of major currencies such as USD, EUR and even GBP. Of course higher yields in the US, EZ and UK have helped, especially among the carry crowd. Abating concerns over Brexit in particular have seen GBP/JPY surge from a low of 146.94 on Tuesday to a 152.40 high this morning. Higher rates and fading Brexit concerns saw EUR/JPY from 131.16 on Nov 20 to 134.15 overnight and the most sought-after USD/JPY is up from 110.85 Monday to a 112.69 high so far today.
     
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    THURSDAY, NOVEMBER 30, 2017


    TOP NEWS


    McCain backs U.S. Senate tax bill, boosting chances of approval
    A sweeping Republican-sponsored tax overhaul gained momentum in the U.S. Senate with the backing of Senator John McCain, as party leaders held behind-the-scenes negotiations to try to secure enough votes for passage. McCain, a key player in July's collapse of a Republican effort to dismantle Obamacare, said the tax bill was "far from perfect." But the war hero and former presidential candidate said the bill would boost the economy and give tax relief to all Americans.

    U.S. consumer spending cools in October, inflation firming
    U.S. consumer spending slowed in October as the hurricane-related boost to motor vehicle purchases faded, while a sustained increase in underlying price pressures suggested that a recent disinflationary trend had probably run its course. The Commerce Department said consumer spending rose 0.3 percent last month after surging 0.9 percent in September. In a separate report, the Labor Department said initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 238,000 for the week ended Nov. 25.

    Small euro zone inflation rise matches ECB expectations of coming dip
    Euro zone inflation rose less than expected in November, indicating that price growth remains weak and reinforcing ECB expectations for a dip around the turn of the year. Inflation rose to 1.5 percent in November from 1.4 percent a month earlier, missing expectations for 1.6 percent, despite a surge in oil price that increased energy costs, data from Eurostat showed. Separately, Germany’s seasonally adjusted jobless total fell by 18,000 to 2.476 million, a far bigger drop than the 10,000 forecast in a Reuters poll, data published by the Federal Labour Office showed.

    OPEC, Russia agree oil cut extension to end of 2018
    OPEC and non-OPEC producers led by Russia agreed to extend oil output cuts until the end of 2018 as they try to finish clearing a global glut of crude while signalling a possible early exit from the deal if the market overheats. Russia needs much lower oil prices to balance its budget than OPEC's leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude. The producers' current deal, under which they are cutting supply by about 1.8 million barrels per day in an effort to boost oil prices, expires in March.

    Rising risks suggest Bank of Canada now in no rush to raise rates
    The Bank of Canada (BoC) will leave rates unchanged until April, held back by the uncertainty over how highly indebted consumers will handle increasing borrowing costs and the unknown fate of the NAFTA, a Reuters poll found. Having increased interest rates in July and September, the consensus in this week's poll of over 30 economists was for the BoC to hold fire at its upcoming rate-setting meeting on Dec. 6. Meanwhile, Statistics Canada said, Canada's current account deficit in the third quarter swelled to C$19.35 billion as the country's international trade gap in goods continued to expand.


    BREAKINGVIEWS-Botched process leads to Frankenstein tax plan
    The U.S. Congress is creating a Frankenstein tax plan. Senate Republicans are rushing into a vote on their tax-cut effort. Changes to appease critics in their own party have yet to be settled, including a trigger to raise taxes if growth falls short of projections. To make matters worse, lower-income Americans will also face higher bills.


    CHART OF THE DAY

    [​IMG]


    MARKETS TODAY


    TREASURIES: Treasury yields rose sharply, in line with the steep rally on Wall Street, on news that Senator John McCain had endorsed the U.S. Senate tax bill, potentially easing challenges to its eventual passage in Congress. Benchmark 10-year notes were down 12/32, yielding 2.42 pct. 2-year notes slipped 2/32 to yield 1.79 pct. 5-year notes fell 8/32 to yield 2.14 pct. 30-year bonds lost 13/32 to yield 2.84 pct.

    [font=arial]• [b]FOREX:[/b] [/font]The dollar slipped to a four-day low against the euro, hurt by selling pressure due to month-end adjustments, but rallied against the Japanese yen as U.S. Treasury yields rose on optimism about U.S. tax overhaul efforts. The euro added 0.46 pct at $1.1902. Against the yen, the dollar gained 0.55 pct at 112.54 yen. Sterling was up 0.87 pct at $1.3522. The dollar index was down 0.15 pct at 93.022.

    [font=arial]• [b]CORPORATES:[/b] [/font]Corporate bond spreads tightened as chances of passage of a Senate tax overhaul bill rose with the endorsement of Senator John McCain. The CDX-IG.29 index tightened by 1 bps to 52 bps.

    [font=arial]• [b]STOCKS:[/b] [/font]The S&P 500 hit a record closing high and the Dow broke above the 24,000 mark for the first time as investor bet that U.S. Republicans would pass a U.S. tax overhaul. Goldman Sachs rose 2.63 pct. JP Morgan added 0.76 pct. Bank of America gained 0.03 pct. The S&P Financials sector was up 0.54 pct. The Dow rose 331.53 points, or 1.38 pct, to 24,272.21, the S&P 500 gained 21.51 points, or 0.82 pct, to 2,647.58 and the Nasdaq added 49.63 points, or 0.73 pct, to 6,873.97. For the month, Dow was up 3.8 pct, S&P 500 added 2.8 pct, Nasdaq gained 2.2 pct.

    [font=arial]• [b]C&E:[/b] [/font]Oil rose after OPEC and non-OPEC producers led by Russia agreed to extend output cuts until the end of 2018, while also signalling a possible early exit from the deal if the market overheats. U.S. crude was up 0.07 pct at $57.34 a barrel. Brent added 0.73 pct to $63.57 a barrel. Gold lost 0.65 pct at $1275.17 an ounce. Reuters-Jefferies index slipped 0.90 pct to 191.98.



    [​IMG]



    LATAM NEWS

    Argentina to defend ag exports, boost Latin America with G20 presidency
    Argentina will use its role as the first South American country to chair the G20 group of major economies to combat protectionism, as the agricultural-exporting region seeks to secure market access for its goods, officials said. Both Argentina and Brazil have transitioned to market-friendly governments in recent years. President Mauricio Macri cast Argentina's presidency as a chance to mark the country's rise as an "important place" in the world, and boost Latin America's profile.


    Off-the-books job gains push Brazil unemployment rate to 2017 low
    Rising off-the-books employment push Brazil's jobless rate to a 10-month low in the three months through October, suggesting a gradual labor market recovery that is unlikely to lift inflation. The unemployment rate fell to 12.2 percent, in line with the median forecast in a Reuters poll of economists, state statistics agency IBGE said, based on a household survey.


    LATAM MARKETS

    [​IMG]


    EYE ON ASIA


    India sees growth rebound as businesses adjust to new tax
    India's economic growth rebounded in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of a national sales tax. GDP grew 6.3 percent in July-September, its fastest pace in three quarters, compared with 7.5 percent a year earlier, the data showed. Data released showing faster growth could help Prime Minister Narendra Modi, who has been facing criticism over the hasty July launch of a goods and services tax.

    Singapore c.bank warns of 'excessive exuberance' in property market
    Singapore's central bank warned of "excessive exuberance" in the city-state's private housing market, adding that it would take action, if needed, to maintain market stability. Developers have actively taken part in collective sales tenders for multiple properties and the government land sale programme to replenish their land banks alongside a pick up in market activity, the Monetary Authority of Singapore said in its annual financial stability review.



    ASIA ECON WATCH
    (Dec 1
    )
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]China Caixin Services PMI for Nov: Expected 50.9; Prior 51.0 .
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]Japan All Household spending (mm) for Oct: Expected -1.4 pct; Prior 0.4 pct
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]Japan CPI, Core Nationwide (yy) for Oct: Expected 0.8 pct; Prior 0.7 pct
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]Japan Unemployment rate for Oct: Expected 2.8 pct; Prior 2.8 pct
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]S.Korea CPI Growth for Nov: Expected -0.10 pct; Prior -0.20 pct
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]S.Korea CPI Growth (yy) for Nov: Expected 1.80 pct; Prior 1.80 pct
    [font=arial][color=#333333][size=2][font=arial][size=3][font=arial]• [/font][/size][/font][/size][/color][/font]Thailand CPI Core Inflation (yy) for Nov: Expected 0.63 pct; Prior 0.58 pct
     
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    MONDAY, DECEMBER 4, 2017
    TOP NEWS

    Key meeting for PM May as Brexit talks enter decisive phase
    Theresa May hopes to break the Brexit talks deadlock with a new offer on divorce settlements at a crunch meeting with EU officials, as some of her party members urge her to walk away unless there is progress. The EU wants a pledge that Britain will pay what it owes the bloc when leaving, protect the rights of EU citizens living in Britain and ensure there is no hard border between the north and south of Ireland, which appears to be the main hurdle in the talks. However, it is not yet clear if Britain and the EU can agree on written assurances to avoid a hard Northern Ireland border by today's deadline, Irish Foreign Minister Simon Coveney said.

    UK factories plan to ramp up investment - EEF
    British factories intend to increase investment at the strongest pace in four years, adding to signs that manufacturing will help support an otherwise sluggish economy in 2018, an industry survey showed. Manufacturers' investment intentions rose to their highest since the second quarter of 2014, a good omen for Bank of England officials who expect business investment will improve next year. But EEF said there was some evidence that much of the investment was to help cope with short-term demand, with Brexit uncertainty dampening plans for larger-scale projects.

    China says 2018 growth target to reflect new changes in economy
    China's economic growth target for 2018 will reflect new changes in the economy as the government put more emphasis on higher quality development, the State Council Information Office said. Policy sources have told Reuters that China's leaders are likely to maintain this year's growth target of "around 6.5 percent" in 2018, even as they ratchet up efforts to control systemic risks from a rapid build-up of debt in the economy. China will strive for higher quality, more efficient and fair growth, the information office said, reiterating a pledge made by President Xi Jinping at a party congress in October.
    Central banks need to ensure tightening cools froth in financial markets -BIS
    Major central banks must ensure their efforts to gradually lift interest rates prove effective enough to cool some already "frothy" financial markets, the Bank for International Settlements (BIS) said in its latest report. The organisation gave the warning as investors continue to bask in what it called the "light and warmth" of improving global growth, subdued inflation and soaring stock markets. One concern is that the continued low bond yields and low market volatility, particularly in the United States, are reminiscent of the bond market "conundrum" referred to by former Fed Chair Alan Greenspan in 2005 before the financial crisis.
    BOJ's Kuroda calls for reforms to better use fintech
    The Bank of Japan's Haruhiko Kuroda urged financial institutions to reform their business structures to make effective use of financial technology, which is triggering big changes to global financial markets. Fintech can contribute to raising growth potential and addressing social challenges not only in emerging but developed nations, Kuroda said in a speech. "Financial institutions are required to take forward-looking measures to reform their own structures in order to make effective use of fintech. Without such efforts, the countries where traditional financial services already prevail might lag behind in the field of fintech," Kuroda said.

    CHART OF THE DAY
    [​IMG]

    MORNING MEETING

    JGB'S OFF ON SENATE TAX PASSAGE


    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.402%, JGB 10s 0.036%, Bund 10s 0.330%
    • US-Japan-Germany respective 2s indicated 1.804%, -0.148%, -0.737%
    • JGBs off on US Senate tax passage, caution ahead of 10yr auction
    • MoF to sell ¥2.3trn of 10-year bonds tomorrow
    • But intraday price moves very limited
    • Futures in a 151.00/150.95 range in AM, 150.96/150.92 in PM
    • At 150.92, futures off 10 ticks on day
    • JGB cash yields up only 0.5-1.0bp across most sectors
    • Nikkei tad soggy, range 22,739-864, Friday close 22,819
    • At 22,743, index off 75 points or 0.3% on day
    • AXJ mixed - SSEC +0.1%, HSI +0.7%, KOSPI +0.65%, TWI +0.5%
    • STI -0.3%, ASX and NZX50 just below par on day
    • Dalian iron ore +4.4%, Shanghai rubber +3.4%, Tokyo rubber +2.95%

    Currency Summaries
    JPY
    • USD/JPY, JPY crosses buoyant after slips down Friday on Flynn to-do
    • USD/JPY to as low as 111.40 Friday before bouncing, Asia 112.36 to 112.98
    • Offers good ahead of 113.00 still, pair backs off to 112.65, steadies
    • Stops 113.00+ but resistance strong, USD405 mln option expiries at strike
    • Downside supported by 112.50-55 option expiries, total USD914 mln
    • US yields also supportive, back up after swoon Friday, Tsy 10s @2.404%
    • USD/JPY on hold around rising 55-DMA at 112.75, daily Ichi cloud top 113.17
    • EUR/JPY buoyant too after swoon to 132.92 Friday, Asia 133.71-134.01
    • Cross again well-clear of daily Ichi cloud top at 132.98
    • GBP/JPY 151.09 to 152.39 in Asia, backs off some and steadies
    • Bias again up after outlier down Friday
    • 152.80-85 September 21/22 double top break eyed
    • AUD/JPY, NZD/JPY see decent gains Friday, bouncing from recent lows
    • AUD/JPY 85.52-75, low Nov 27 84.33, NZD/JPY 77.29-44, low Nov 20 76.10

    EUR
    • EUR/USD fell to 1.1850 from 1.1900 in the first few hours in early Asia
    • USD broadly gained in reaction to Senate passing their tax plan on weekend
    • EUR/USD buyers around 1.1850 and EUR/JPY buying underpinned after early dip
    • EUR/USD traded back to 1.1876 and was around 1.1870 into the afternoon
    • Asia didn't seem to react to White House drama related to Mueller probe
    • The key mo moves later today will be moves in US Treasury yields
    • The 10-year Treasury yield opened Asia 5 BPs higher at 2.41%

    GBP
    • Cable buoyant after trades up to 1.3548/49 last Thursday/Friday
    • Good resistance still @1.3550 but re-tests maybe soon, Asia 1.3432-1.3514
    • Support from around ascending 100-HMA at 1.3431, 200-HMA 1.3372
    • Flattening daily Ichi tenkan in area too at 1.3380
    • Brexit deal to remain focus, EU Summit next week
    • EUR/GBP remains soggy in Asia, 0.8784-0.8830
    • Support still from around ascending 200-DMA at 0.8798

    CHF
    • USD/CHF 0.9780-0.9829 in Asia after wild swings Friday post-Flynn news
    • Action around descending 200-DMA at 0.9800, 55-DMA 0.9835 above
    • Underlying support from ascending 100-DMA at 0.9734, Ichi cloud base 0.9730
    • EUR/CHF 1.1615-67 in Asia, ascending 55-DMA below at 1.1578, support

    Market Briefs
    • Australia workers earn income boost amid hiring rush
    • NZ Q3 Business Inventories 0.2%, -0.4% last f' cast 0.1%, -0.5% rvsd
    • AU Nov ANZ Internet & Newspaper job 1.5%, 1.4% last
    • Bounce for Australian PM as voters tire of leadership roundabout
    • Central banks need to ensure tightening cools froth in financial markets -BIS
    • JP Nov Consumer Confid. Index 44.9, 44.5 last
    • Japan may cut corporate tax rate to 20% through incentives - Nikkei
    • Japan firms end years-long price freezes - Wall Street Journal
    • Enter the 'petro': Venezuela to launch oil-backed cryptocurrency
    • Key meeting for PM May as Brexit talks enter decisive phase
    • UK factories plan to ramp up investment - EEF
    • China should maintain budget deficit ratio around 3 pct - official think tank
    • Fed officials fret over yield curve, warn on pace of hikes
    • Trump tweets about Russia probe spark warnings from lawmakers
    • S.Korea, U.S. kick off largest air exercise amid N.Korean warnings
    • Pentagon evaluating U.S. West Coast missile defense sites - officials
    • McConnell says U.S. government shutdown over DACA 'ridiculous'
    • Speculators raise short U.S. dollar bets to largest since late Oct -CFTC

    Looking Ahead - Economic Data (GMT)
    • 09:30 GB Nov Markit/CIPS Cons PMI f' cast 51.0, 50.8 last
    • 09:30 EZ Dec Sentix Index f' cast 33.6, 34.0 last
    • 10:00 EZ Oct Producer Prices m/m, y/y, f' cast 0.3%, 2.6%, 0.6%, 2.9% last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A ECB's Draghi and Coeure participate in a Eurogroup meeting - Brussels
    • 06:30 ECB's Galhau speaks at a seminar - Tokyo
    • 12:00 Riksbank executive board meeting
    Stockholm
    See North American Open for a detailed listing of US/NorAm releases, events

    RBA decision to be a non-event for markets
    The RBA decision and statement tomorrow should be a non-event, as they have clearly signalled they are on hold for the foreseeable future. Following Tuesday's meeting, the RBA won't be meeting again until February so they are unlikely going to significantly change their statement and risk market misinterpretation. The statement may come across as upbeat on business investment following the solid capex data last week, but that will be balanced by their concerns over the high levels of household debt and stubbornly slow wage growth. The decision and statement should have limited or no impact on the AUD and is unlikely going to alter RBA expectations heading into 2018.
     
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    TUESDAY, DECEMBER 5, 2017
    TOP NEWS

    Irish border row thwarts May bid to clinch Brexit trade deal
    Prime Minister Theresa May failed to clinch a deal on Monday to open talks on post-Brexit free trade with the European Union after a tentative deal with Dublin to keep EU rules in Northern Ireland angered her allies in Belfast. Yet as May and European Commission President Jean-Claude Juncker spoke in Brussels and the pound rose on prospects of free trade and perhaps a very "soft Brexit", Northern Ireland's Democratic Unionist Party issued an uncompromising reiteration of its refusal to accept any "divergence" from rules on the British mainland. May agreed with Juncker that a deal could be reached in a few days before the EU summit on Dec. 14-15, but that promise did little to stem recriminations at home, where Brexit campaigners want Britain to become what one called a "free agent" and set its own rules.

    Deeper euro zone integration must unite EU - Commission
    European Commission proposals to deepen the integration of the euro zone will seek to make the whole of the European Union more united and improve the democratic accountability of euro zone institutions, Economics Commissioner Pierre Moscovici said. The Commission package will address ideas floated by French President Emmanuel Macron on creating a euro zone budget, a euro zone finance minister and a euro zone parliament. Other ideas include transforming the euro zone bailout fund into a European Monetary Fund and setting up a sovereign insolvency mechanism -- a German-supported project.

    U.S. Congress moves closer to final tax bill with House vote
    The Republican-controlled U.S. House of Representatives voted on Monday to go to conference on tax legislation with the Senate, moving Congress another step closer to a final bill. The House voted 222-192 to go to conference with the Senate, setting up formal negotiations on the legislation that could take weeks to complete.The overhaul would be the largest change to U.S. tax laws since the 1980s. Republicans want to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would boost an already growing economy.


    Inflation-hit UK shoppers hunt Black Friday bargains, spend more on food - BRC
    British shoppers snapped up Black Friday bargains last month but an increasing share of their budgets was taken up by the rising cost of food, retailers said. The amount of money spent with retailers last month rose by 0.6 percent compared with a year earlier on a like-for-like basis, stripping out changes in store size, the British Retail Consortium (BRC) said. In a sign of how rising prices for many everyday staples are affecting consumers, BRC said the amount of money spent on food over the 12 months to November rose by an average 3.4 percent, the biggest increase since March 2013.

    China's services sector grows at stronger pace in Nov - Caixin PMI
    Growth in China's services sector activity picked up to a three-month high in November, buoyed by a solid rise in new business, though the rate of expansion remained moderate and weaker than the long-run trend, a survey showed. The Caixin/Markit services PMI rose to 51.9 in November, up from 51.2 in October and the highest reading since August. China's leaders are counting on growth in services and consumption to rebalance their economic growth model from its heavy reliance on investment and exports.

    Japan Nov services growth slows but business confidence picks up-PMI
    Japan's service sector activity grew at a slower pace in November due to a slowdown in outstanding business, but new orders remained relatively strong and business sentiment improved, suggesting the economy will continue to expand in coming months. The Markit/Nikkei survey showed its Japan Services PMI fell to 51.2 on a seasonally adjusted from 53.4 in October, which was the highest in 26 months. Separately, the Bank of Japan's Haruhiko Kuroda said that the central bank would continue with bold monetary easing under the current policy framework as there was still a distance to reach its 2 percent inflation target.


    ANALYSIS

    U.S. tax bill adds to debt need as interest costs weigh

    A U.S. tax overhaul will increase the government's need to issue more Treasuries as interest costs on the country's debt become a larger drain on the budget.



    CHART OF THE DAY
    [​IMG]


    MORNING MEETING

    SHORT END JGB'S SOLD OFF


    BONDS, EQUITIES, OTHER ASSET MARKETS
    US Treasury 10s indicated 2.389%, JGB 10s 0.045%, Bund 10s 0.341%
    • US-Japan-Germany respective 2s indicated 1.816%, -0.133%, -0.747%
    • JGBs off, led by short-end
    • T-bills weak since last week's auction, 3mo yields +4.2bp at -0.13%
    • T-bill weakness spills into 2s, 5s, both yields up 1.5bp
    • 10yr auction weak too; BTC 3.70, tail 0.5bp; 4.55/0.0bp last
    • But losses limited overall, 10yr yields up 1bp at most
    • At 150.84, JGB futures off 9 ticks, range 150.97/150.75
    • Nikkei gap down at open, up later from 22,522 to 22,682
    • At 22,654, index still off 52 points or 0.2% on day, close yesterday 22,707
    • AXJ mixed again - Shanghai above par, KOSPI +0.2%, STI +0.4%
    • HSI -0.3%, TWI -0.7%, ASX -0.2% and NZX50 -0.1%
    • Dalian iron ore +1.1%

    Currency Summaries
    JPY
    • USD/JPY, JPY crosses off into Asia open, offshore yields soggy
    • Some Gotobi demand but upside for most pairs limited, trading lackluster
    • USD/JPY from early 112.36 low to 112.58, steady thereafter
    • Tracking top of hourly Ichi cloud up, currently 112.50
    • Tech support from ascending 100-HMA at 112.37
    • Option expiries today - 112.00 USD1.17 bln, 112.25-35 430 mln, 113.00 816
    • EUR/JPY off to 133.27 early Asia, up since to 133.64
    • Cross on bounce from ascending 100-HMA, then 133.26, now 133.34
    • Top of hourly Ichi cloud 133.65, 55-HMA above at 133.74
    • GBP/JPY steady in Asia, 1051.36-63, down from 152.94 o/n on no Brexit deal
    • Relatively buoyant, many still optimistic? Rising 100-HMA support at 151.31
    • AUD/JPY and NZD/JPY outlier, up on toshin demand, good Aussie/China data
    • AUD/JPY 85.37 to 86.04, NZD/JPY 77.08 to 77.66 despite dovish RBNZ stance

    EUR
    • EUR/USD opened Asia 1.1866 after recovering from 1.1830 when US yields eased
    • Late day fall in US yields gave USD offered tone into Asia and it continued
    • USD eased across the board with most of the weakness against AUD and NZD
    • The EUR/USD drifted up to 1.1876 and was there into the afternoon session
    • The key to direction will be the moves in US Treasury yields
    • Repeated fails above 2.40% in 10-year US Treasury yield frustrating USD bulls
    • Key support at 1.1805/10 where Nov 30 low and 38.2 of 1.1553/1.1661 converge
    • A break above Nov 21 high at 1.1961 would see trend higher resume

    GBP
    • Cable down from 1.3538 high yesterday on 11th hour Brexit no-deal
    • Down to 1.3415 but since up, steady in Asia, range 1.3462-82, quiet
    • Buoyancy on optimism still by many market players, UK yields also high
    • Though pierced, spot inevitably returns to area of 100-HMA, now 1.3468
    • Underlying support at also ascending 200-HMA currently at 1.3395
    • EUR/GBP sees few trades in Asia but buoyant, 0.8815-19
    • Cross well off 0.8757 low yesterday ahead of Brexit no-deal news
    • UK Nov BRC like-for-like retail sales +0.6% y/y, Oct -1.0%
    • Nov BRC total sales +1.5%, Nov Barclaycard retail spending +2.8% y/y

    CHF
    • USD/CHF quiet in Asia, range 0.9843-53, high o/n 0.9867
    • Holding above ascending 55-DMA at 0.9839, top of daily Ichi cloud 0.9876
    • EUR/CHF quiet too, Asia 1.1685-95, just below 1.1737 trend high 12/1

    Market Briefs
    • Irish border row thwarts May bid to clinch Brexit trade deal
    • GB Nov BRC retail sales y/y, 0.60%, -1.00% last
    • German SPD to start talks with Merkel next week if members agree
    • US top court lets Trump's latest travel ban go into full effect
    • US Congress moves closer to final tax bill with House vote
    • RBNZ says may ease policy if inflation does not pick up from late 2018
    • RBA holds rates as expected
    • AU Oct retail sales m/m, 0.5%, 0.0% last, 0.3% f'cast, 0.1% rvsd
    • AU Q3 current account balance -9.10 bln, -9.60 bln last, -9.20 bln f'cast, -9.70 bln rvsd
    • AU Q3 net exports contribution 0.00%, 0.30 last, 0.25% f'cast
    • CN Nov Caixin Services PMI 51.9, 51.2 last
    • China launches new government yield curve benchmark
    • JP Nov services PMI 51.2, composite PMI 52.2, Oct both 53.4

    Looking Ahead - Economic Data (GMT)
    • 08:50 FR Nov Markit Serv PMI f'cast 60.2, 60.2 last
    • 08:50 FR Nov Markit Comp PMI f'cast 60.1, 60.1 last
    • 08:55 DE Nov Markit Services PMI f'cast 54.9, 54.9 last
    • 08:55 DE Nov Markit Comp Final PMI f'cast 57.6, 57.6 last
    • 09:00 EZ Nov Markit Serv Final PMI f'cast 56.2, 56.2 last
    • 09:00 EZ Nov Markit Comp Final PMI f'cast 57.5, 57.5 last
    • 09:30 GB Nov Markit/CIPS Serv PMI f'cast 55.0, 55.6 last
    • 09:30 EZ Oct Retail Sales m/m, y/y, f'cast -0.7%, 1.5%, 0.7%, 3.7% last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • N/A ECB's Constancio participates in a meeting - Brussels
    • N/A EU Economic and Financial Affairs meeting - Brussels
    • 09:30 Record of financial policy meeting held on Nov 22 - London
    • 14:00 Riksbank's Stefan will speak at a conference - Stockholm
    • 15:00 Senate banking committee vote meetinG for Fed chair - Washington
    See North American Open for a detailed listing of US/NorAm releases, events


     
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