• European bourses are firmer across the board Euro Stoxx 50 +0.8%, though action has been choppy with fresh drivers limited.
• US futures are similarly bid, though comparably more contained ahead of CPI and 30yr supply
• DXY is bid, but has been unable to convincingly breach the 105.00 mark despite a brief foray to 105.09, with peers generally contained vs USD.
• EGBs have been pressured throughout the morning, with Bunds initially lagging though they have staged a marked rebound to downside of just 20 ticks.
• Overall, the crude benchmarks have been relatively steady throughout the European morning posting upside in excess of 1.0% and remain towards the top-end of yesterday’s parameters.
• Looking ahead, highlights include US CPI, Japanese Tankan & supply from the US.
• Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board Euro Stoxx 50 +0.8%, though action has been choppy with fresh drivers limited.
• Sectors were initially mixed, but have since moved more convincingly into the green, with Tech outpacing.
• Stateside, US futures are firmer across the board, though have been choppy alongside European peers but the magnitudes less pronounced pre-CPI, ES +0.5%.
• Click here for more detail.

FX

• DXY is bid, but has been unable to convincingly breach the 105.00 mark despite a brief foray to 105.09, with peers generally contained vs USD.
• At the top of the pile is the AUD despite NAB data with Westpac consumer metrics assisting ahead of RBA's Lowe, lifting to 0.6800.
• CAD & NOK have seen a modest rebound given benchmark pricing and in wake of recent pressure, particularly in the CAD.
• EUR is modestly softer despite constructive ZEW data, albeit mixed vs exp., while USD/JPY has slipped after a failed test of 138.00.
• PBoC set USD/CNY mid-point at 6.9746vs exp. 6.9758 (prev. 6.9565)
• Click here for more detail.

Notable FX Expiries, NY Cut:

• Click here

FIXED INCOME

• EGBs have been pressured throughout the morning, with Bunds initially lagging though they have staged a marked rebound to downside of just 20 ticks.
• Amidst this, Gilts were dented by relatively soft UK supply, though have since reverted to pre-auction levels while BTPs were bid on their own outing.
• USTs buck the trend and remain modestly firmer ahead of 30yr supply and US CPI.
• Click here for more detail.

COMMODITIES

• Overall, the crude benchmarks have been relatively steady throughout the European morning posting upside in excess of 1.0% and remain towards the top-end of yesterday’s parameters.
• Spot gold and silver are modestly firmer despite the choppy, but ultimately modestly constructive, risk tone. Though, the yellow metal is capped by USD 1790/oz and the 200-DMA a dollar below.
• Ecuador's state oil firm Petroecuador said a weather power outage affected hundreds of wells in its most productive blocks, according to Reuters.
• Italy PM Meloni says the majority of EU member states back a dynamic gas price cap; EU Commission's energy proposal is still in adequate.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• EU lawmakers agreed to tougher draft labour rules for the gig economy ahead of negotiations with EU countries to work out the details, according to Reuters.
• Swiss SECO Forecasts: confirms its previous assessment. The Swiss economy is expected to grow at a significantly below-average rate of 1.0% in 2023, followed by 1.6% in 2024.
• Germany VDMA engineering group confirmed 2022 and 2023 forecasts for German engineering production; sees +1% real production growth in 2022, and a 2% decline in 2023.
• BoE Financial Stability Report: Urgent and robust measures needed to fill gaps in LDI fund regulation; must remain resilient to higher level of rates than they can now withstand.

NOTABLE DATA

• UK ILO Unemployment Rate (Oct) 3.7% vs. Exp. 3.7% (Prev. 3.6%); Employment Change (Oct) 27k vs. Exp. -17k (Prev. -52k)
• UK Average Week Earnings 3M YY (Oct) 6.1% vs. Exp. 6.2% (Prev. 6.0%); Ex-Bonus (Oct) 6.1% vs. Exp. 5.9% (Prev. 5.7%, Rev. 5.8%)
• German ZEW Economic Sentiment (Dec) -23.3 vs. Exp. -26.4 (Prev. -36.7); Current Conditions (Dec) -61.4 vs. Exp. -57.0 (Prev. -64.5)
• EU ZEW Survey Expectations (Dec) -23.6 (Prev. -38.7)

NOTABLE US HEADLINES

• White House said it believes there is enough time to get a government spending bill done and said 'so be it' if lawmakers need extra days for the funding bill, according to Reuters.
• Click here for the US Early Morning Note.

CRYPTO

• Bahamas police arrested FTX founder Sam Bankman-Fried at the request of the US government and he faces charges including fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, while the SEC is to separately file charges against the FTX founder, according to Reuters and NYT.

GEOPOLITICS

RUSSIA-UKRAINE

• US shipped the first portion of its grid equipment aid to Ukraine, according to US officials.
• EU ambassadors unanimously approved in principle a financial support package to provide Ukraine with EUR 18bln in 2023, according to the Czech Republic.

OTHER

• South Korean envoy for Korean peninsula peace said North Korea is becoming more aggressive and blatant in its nuclear threat, while South Korea, Japan and the US will coordinate sanctions and close gaps in the international sanctions regime. Furthermore, the US envoy for North Korea said Pyongyang's behaviour presents one of the most serious security challenges in the region and beyond, while the Japanese envoy for North Korea said the three countries have elevated their security cooperation to an unprecedented level and they will examine all options including counter-strike capabilities and will be more vigilant against North Korea's cyber threat, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mostly kept afloat following the gains on Wall St where the major indices unwound recent losses although the upside was capped in Asia ahead of US CPI data and a slew of central bank rate decisions.
• ASX 200 was underpinned by strength in tech, industrials and financials, albeit with gains limited by weakness in miners and after an improvement in consumer confidence was offset by a deterioration in business surveys.
• Nikkei 225 briefly reclaimed the 28,000 level which it failed to sustain amid tentativeness before the risk events.
• Hang Seng and Shanghai Comp were varied as Hong Kong benefitted from reopening optimism amid reports that quarantine-free travel is to begin in January and with Chief Executive Lee announcing an easing of restrictions, while the mainland lacked conviction after weaker-than-expected financing data and with Japan and the Netherlands agreeing in principle to join the US in controlling exports of chipmaking equipment to China.

NOTABLE ASIA-PAC HEADLINES

• China's ambassador to the US Qin Gang said he believes China's COVID-19 measures will be further relaxed in the near future and international travel to China will become easier, according to Reuters.
• China-Hong Kong quarantine-free travel is to begin in January, according to a report citing local press. Hong Kong Chief Executive Lee later announced an end to the COVID contact tracing app requirement and will eliminate the three-day arrival monitoring period, while the Amber code on international arrivals is to be lifted on Wednesday.
• Japan and Netherlands have agreed in principle to join the US in tightening controls on exports of advanced chipmaking equipment to China, according to people familiar with the matter cited by SCMP. Japanese Trade and Industry Minister Nishimura stated that they will take appropriate measures on chip-related export curbs to China taking into consideration each country's regulations, while they are checking with Japanese companies on the impact of chip curbs to China and are not hearing of any major impact.
• Japan's government is to use construction bonds for part of SDF facilities as part of efforts to boost spending, according to Kyodo. However, Japanese Finance Minister Suzuki later stated there was no decision yet on whether to issue construction bonds to pay for developing self-defence forces facilities and that generally speaking, it is difficult to regard bonds as a stable funding source, according to Reuters.
• China intends to allocate over CNY 1tln as a support package to bolster the domestic semiconductor industry, via Reuters citing sources.
• China will delay its economic policy meeting amid a surge in COVID cases in Beijing, Bloomberg reports.

DATA RECAP

• Australian Westpac Consumer Sentiment Index (Nov) 80.3 (Prev. 78.0); MM (Dec) 3.0% (Prev. -6.9%)
• Australian NAB Business Confidence (Nov) -4 (Prev. 0); Conditions (Nov) 20 (Prev. 22)