• European bourses are marginally firmer, Euro Stoxx 50 +0.2%, with the Stoxx 600 on track to end the week with upside of circa. 0.6%.
• Stateside, futures are similarly supported, ES +0.3%, though we await US monthly PCE metrics for another factor into the Fed's deliberations.
• Dollar has waned with peers taking advantage with debt continuing to decline and curves re-steepening
• Crude benchmarks are firmer and eclipsing other assets following the latest updates from Russia and N. Korea
• Looking ahead, highlights include US monthly PCE, Canadian GDP, US University of Michigan Survey.

EUROPEAN TRADE

EQUITIES

• European bourses are marginally firmer, Euro Stoxx 50 +0.2%, with the Stoxx 600 on track to end the week with upside of circa. 0.6%.
• Sectors are, after a mixed open, mostly in the green though Utilities and Travel & Leisure remain incrementally softer.
• Stateside, futures are similarly supported, ES +0.3%, though we await US monthly PCE metrics for another factor into the Fed's deliberations.
• TSMC (TSM/2330 TT) is said to be in talks with suppliers over its first European plant, according to FT sources; Senior executives are heading to Germany early next year for discussions.
• Click here for more detail.

FX

• Dollar wanes after GDP and IJC boost as the focus switches to PCE amidst a partial recovery in risk appetite, DXY roams from 104.160 to 104.510.
• Kiwi claws back losses vs Aussie and Buck as AUD/NZD retreats through 1.0650, NZD/USD breaches 200 DMA and AUD/USD scales 100 DMA with a slight lag.
• Pound, Euro and Loonie take advantage of softer Greenback, but Yen hampered by high yields, Cable firmer on 1.2000 handle, EUR/USD resilient around 1.0600, USD/CAD probing 1.3600 and USD/JPY hovering above 132.50.
• PBoC sets USD/CNY mid-point at 6.9810 vs exp. 6.9885 (prev. 6.9713)
• Click here for more detail.

Notable FX Expiries, NY Cut:

• Click here

FIXED INCOME

• Debt remains in virtual freefall, with Bunds extending losses sub-135.00, Gilts towards 100.00 and the T-note rooted within a 113-09+/15+ range
• Curves re-steepen marginally as the spotlight turns to US PCE data as the last potential macro market mover before the Xmas break
• Click here for more detail.

COMMODITIES

• Crude benchmarks are firmer on the session with magnitudes more pronounced than across other asset classes; currently, WTI & Brent Fed’23 are firmer by just shy of USD 2.0/bbl, with WTI needing another USD 1.00/bbl of upside to test Thursday’s WTD peak of USD 79.90/bbl.
• Spot gold/silver are incrementally firmer given the Dollar continues to languish, though the yellow metal remains capped by USD 1800/oz and as such is well within recent ranges.
• Russia could cut oil output by 5-7% early next year as a response to the Western price caps, according to RIA citing Deputy PM Novak; Russia may cut oil output by 500-700k BPD, according to Tass citing Deputy PM Novak
• Colorado Interstate Gas Co. declared force majeure at CIG Wamsutter compressor station, according to Reuters.
• Phillips 66 (PSX) Wood River, Illinois (380k BPD) refinery reports a unit upset.
• Click here for more detail.

NOTABLE HEADLINES

• US President Biden said it will take time to get inflation back to normal levels, according to Yahoo News.
• Tesla (TSLA) CEO Musk said he will not sell any more Tesla stock for at least 18-24 months; waiting to see the extent of a recession before share buybacks, via Twitter Space. Musk said the economy will be in a "serious recession" in 2023, and demand will be lower.

CRYPTO

• Bitcoin is marginally firmer, perhaps taking cues from the USD's pressure, though remains within limited sub-USD 200 parameters.

GEOPOLITICAL

• Senior Chinese Diplomat Wang Yi spoke to US Secretary of State Blinken and said US must stop supressing China's development and should not challenge China's red lines, according to Reuters.
• Chinese Foreign Ministry announced sanctions on Yu Maochun and Todd Stein as countermeasures to US’ sanction on two Chinese officials, citing human rights issues in Xizang (Tibet), according to Global Times.
• N. Korea has fired what could be a ballistic missile, via Japanese Coast Guard; Yonhap reports this as being a ballistic missile; landed outside of Japan's EEZ.

APAC TRADE

EQUITIES

• APAC stocks traded mostly lower but drifted off worst levels following a similar session stateside.
• ASX 200 saw all of its sectors in the red with losses led by Tech, Energy and gold miners.
• Nikkei 225 was dragged lower by its industrial sector, whilst Japanese Core CPI in November rose at the fastest annual pace since 1981.
• Hang Seng and Shanghai Comp were mixed in which the former succumbed to the regional losses and the latter briefly moved into the green, whilst the PBoC injected a net CNY 704bln in the week via OMO - the largest weekly cash in nearly two months, according to Reuters calculations.

NOTABLE ASIA-PAC HEADLINES

• China reported zero new COVID deaths in the mainland on Dec 22nd vs zero a day earlier, according to Reuters.
• PBoC injected CNY 2bln via 7-day reverse repos with the rate maintained at 2.00%; injects CNY 203bln via 14-day reverse repos with the rate maintained at 2.15%; daily net injection CNY 164bln.
• PBoC injected a net CNY 704bln in the week via OMO; the largest weekly cash in nearly two months, according to Reuters calculations.
• Japanese PM Kishida could conduct a cabinet reshuffle as early as January 10th, according to ANN.
• Japanese government official said the next wave of food inflation is likely to come in February 2023; effects of government subsidies to cushion energy bills will likely start affecting CPI from February 2023, according to Reuters.
• BoJ October meeting minutes (two meetings ago): One member said the effects of BoJ's easing may be heightening as a moderate increase in inflation expectations push down real interest rates.
• China reportedly estimates the COVID surge is affecting 37mln people per day, via Bloomberg.
• Indian Health Minister says in the next week, planning to make COVID-19 negative test report compulsory for passengers from nations with a high case load.

DATA RECAP

• Japanese CPI, Core Nationwide YY (Nov) 3.7% vs. Exp. 3.7% (Prev. 3.6%); fastest annual pace since 1981
• Japanese CPI, Overall Nationwide (Nov) 3.8% (Prev. 3.7%)
• Australian Housing Credit (Nov) 0.4% (Prev. 0.4%); Private Sector Credit (Nov) 0.5% (Prev. 0.6%)