• European equities and US futures continue to gain; the FTSE 100 outperforms lifted by upside in Basic Resources
• DXY is weaker post-FOMC; Antipodeans bid on positive risk sentiment; JPY benefits from converging yield spreads
• SNB unchanged at 1.75%, cuts not part of the discussion, dropped FX ‘selling’ reference; Norges Bank hiked to 4.50%
• Fixed bid awaiting fresh impetus from the ECB and BoE
• Commodities extend post-Fed gains as BoE and ECB loom; Base metals surged although gains overnight were capped by the mixed APAC mood.
• Looking ahead, US Export & Import Prices, IJCs, Retail Sales, Australian PMI (Flash), BoE, ECB & Banxico Policy Announcements, ECB’s Lagarde Press Conference, Supply from the US.

EUROPEAN TRADE

CENTRAL BANKS

SNB:

• Maintains its Policy Rate at 1.75% as expected; prepared to be active in the FX market as necessary (removed reference to “selling”)
• Will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term. (Prev. “it cannot be ruled out that a further tightening of monetary policy may become necessary to ensure price stability over the medium term.”)
• Click here for more details.
• SNB Chairman Press Conference: SNB is no longer focussed on selling FX. This reflects that monetary conditions are currently appropriate; does not forecast any tightening given the forecasts so far; rate cuts were not part of the discussion today.

Norges Bank:

• Unexpectedly hikes its Key Policy Rate to 4.50% from 4.25% (exp. a hold at 4.25%); The forecast indicates that the policy rate will lie around 4.5% until autumn 2024 before gradually moving down
• The policy rate is likely close to the level required to return inflation to target within a reasonable time horizon. On the other hand, inflation is high, and the krone depreciation makes it more challenging to bring down inflation.
• If cost inflation remains elevated or the krone turns out to be weaker than projected, price inflation may remain higher for longer than currently projected. In that case, the Committee is prepared to raise the policy rate again.
• If there is a more pronounced slowdown in the Norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged.
• Click here for more details.

ECB: rate decision at 13:15GMT/08:15EST, press conference from 13:45GMT/08:45EST.

• Consensus and market pricing look for no changes to the ECB's three key rates
• Focus will be on accompanying projections and how they align with the markets aggressive bets for 2024 rate cuts.
• Click here for the ECB Newsquawk Preview.

BoE: rate decision at at 12:00GMT/07:00EST.

• The MPC is expected to keep rates on hold via a 6-3 vote split.
• Markets currently price the first 25bps reduction by June 2024 with a total of 92bps of cuts priced by yearend.
• Click here for the BoE Newsquawk Preview.

EQUITIES

• European equities, Eurostoxx50 (+0.7%), are firmer with clear outperformance in the FTSE 100 (+2.0%) benefitting from gains in Basic Resources.
• European sectors are entirely in the green with the exception of Insurance; sectoral performance today is guided by lower interest rate expectations, which has led Real Estate to the top of the pile.
• US equity futures are trading higher after a dovish FOMC policy announcement on Wednesday, where the US central bank signalled that three 25bps rate cuts were coming in 2024; the RTY (+0.9%) outperforms after soaring 3.5% yesterday.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
• Click here for more details.

FX

• A subdued morning for the broader Dollar and index in a continuation of the losses seen after markets were surprised by the extent of the Powell pivot.
• The Sterling and EUR modestly gain against the USD compared to some G10 peers are participants look ahead to the BoE and EUR confabs.
• JPY is the top gainer in the European morning amid the hefty fall in the Dollar and US yields.
• AUD, NZD, CAD are among the top gainers following the boost to risk sentiment and the Fed-induced surge in commodity prices.
• EUR/CHF initially immediately moved lower (following the SNB) from 0.9499 to 0.9460 before recoiling back to highs of 0.9518 and then stabilising just under pre-announcement levels around 0.9492.
• A hike at the Norges Bank sparked marked NOK appreciation against both the EUR and USD. USD/NOK fell from 10.70 to 10.60 before falling to a 10.5860 trough.
• PBoC set USD/CNY mid-point at 7.1090 vs exp. 7.1566 (prev. 7.1126).
• Click here for more details.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• USTs are comparably contained, given US-specific risk events have now passed, with upside of around 20 ticks having extended marginally above Wednesday’s best; 10yr yield still sub-4.0%.
• Gilts have similarly trimmed from a 101.69 best but still hang on to upside in excess of 100ticks, likely given recent relative underperformance in Gilts.
• Bunds are holding just below the 137.00 mark having trimmed incrementally from the initial 137.28 high as newsflow slows slightly and attention turns to Lagarde.
• Click here for more details.

COMMODITIES

• WTI Jan and Brent (+2.0%) Feb futures remain on a firmer footing in a continuation of the fallout from the FOMC policy announcement and press conference, which ultimately was more dovish than expected.
• Spot gold was catapulted by the demised in the Dollar and yields following the Fed statement and press conference, with the opening candle at the time at USD 1,982.35/oz; Base metals similarly surged although gains overnight were capped by the mixed APAC mood.
• IEA OMR: trims 2023 global oil demand growth forecast by 90k to 2.3mln BPD; 2024 demand forecast raised by 130k to 1.1mln BPD citing improved GDP outlook
• BofA expects ULSD to Brent cracks to average USD 26/bbl in 2024 (vs average USD 36/bbl this year)
• Citi (C) says "COP28 momentum for renewables is super-bullish for metals demand and fossil fuel aspirations more challenging"
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• German DIW lowers domestic growth forecasts. 2024: 0.6% (prev. 1.2%), 2025 1.0% (prev. 1.2%)
• Germany's IFO lowers its 2024 GDP growth forecast to 0.9% from +1.4% previously; upgrades 2025 to +1.3% from +1.2%
• Around 65% of EV cars sold in France will be eligible for a new state bonus scheme, via Reuters citing sources

DATA RECAP

• UK RICS Housing Survey (Nov) -43 vs. Exp. -57 (Prev. -63, Rev. -61)
• Spanish CPI MM Final NSA (Nov) -0.3% vs. Exp. -0.4% (Prev. -0.4%); YY Final NSA (Nov) 3.2% vs. Exp. 3.2% (Prev. 3.2%)
• Spanish HICP Final YY (Nov) 3.3% vs. Exp. 3.2% (Prev. 3.2%); HICP Final MM (Nov) -0.5% vs. Exp. -0.6% (Prev. -0.6%)
• Swedish CPI YY (Nov) 5.8% vs. Exp. 6.0% (Prev. 6.5%); MM 0.3% vs. Exp. 0.6% (Prev. 0.2%); CPIF Ex Energy YY (Nov) 5.4% vs. Exp. 5.9% (Prev. 6.1%); M/M -0.5% vs Exp. 0.1% (prev. 0.1%)

NOTABLE US HEADLINES

• Adobe Inc (ADBE) - Adobe slipped 5% afterhours following light outlook. It reported Q3 adj. EPS of 4.27 (exp. 4.14), Q3 revenue USD 5.05bln (exp. 5.02bln). Q3 subscription revenue USD 4.76bln (exp. 4.74bln), Q3 product sales USD 114mln (exp. 103.4mln). On trends, Adobe expects normal seasonality throughout the year, with a seasonal step down for new business into Q1, and sees sequential growth from Q1 to Q2, typical Q3 summer seasonality, and a strong finish to the year in Q4 2024.
• Click here for the US Early Morning Note.

GEOPOLITICS

• US National Security Adviser Sullivan met with Saudi's Crown Prince MBS and discussed the humanitarian response in Gaza including efforts to increase the flow of critical aid, according to the White House.
• US is reportedly holding up the licences for selling over 20k rifles to Israel due to concerns about attacks by extremist Israeli settlers against Palestinian civilians in the West Bank, according to sources cited by Axios.
• US, Japan and Philippines national security advisers held a call and expressed concerns about China's recent dangerous and unlawful conduct in the South China Sea, according to Reuters.
• Chinese Embassy in Canada said China condemns Canada's support for the Philippines in violating China's sovereignty in the South China Sea, according to Reuters.
• Iranian Defense Minister says the US "will face major problems if it wants to form an international force in the Red Sea", according to Al Jazeera; adds "We have control in the Red Sea and all countries are present in it and no one can manoeuvre there"

CRYPTO

• Bitcoin (-0.2%) is lower and resides just below the USD 43k level, whilst Ethereum (+0.3%) gains marginally.

APAC TRADE

• APAC stocks were mostly higher with sentiment underpinned in reaction to the FOMC.
• ASX 200 was lifted with gains led by the rate-sensitive sectors after a fall in yields and with participants also digesting the latest jobs data which showed a much larger-than-expected increase in headline employment change.
• Nikkei 225 bucked the trend and was initially boosted at the open but then failed to sustain the 33,000 level and wiped out all its gains amid selling in the banking sector and headwinds from a stronger currency.
• Hang Seng and Shanghai Comp were initially positive with the former underpinned after the HKMA kept rates unchanged in lockstep with the Fed, while gains in the mainland were limited following the latest Chinese loans and aggregate financing data which missed estimates.

NOTABLE HEADLINES

• HKMA kept its base rate unchanged at 5.75%, as expected.
• Japan's negative rate exit scenario is said to be muddled by the Fed outlook with the BoJ preparing to tighten monetary policy as other central banks signal loosening, according to Nikkei.
• Japan's ruling LDP tax reform panel agreed on income tax breaks aimed at offsetting the impact of price increases on households, according to Reuters.
• Chinese Commerce Ministry says external demand shows signs of warming up
• Fitch Ratings says "Australia’s continued revenue outperformance and prudent fiscal management, with the government saving most of its revenue windfall, remain supportive of its ‘AAA’/Stable sovereign rating"
• China's Beijing government says it is to reduce the minimum down payment for new mortgages; payment ratio will be lowered to 30%

DATA RECAP

• Japanese Machinery Orders MM (Oct) 0.7% vs. Exp. -0.5% (Prev. 1.4%); YY -2.2% vs. Exp. -5.1% (Prev. -2.2%)
• Australian Employment Change (Nov) 61.5k vs. Exp. 11.0k (Prev. 55.0k); Full-Time Employment Change 57.0k (Prev. 17.0k)
• Australian Unemployment Rate (Nov) 3.9% vs. Exp. 3.8% (Prev. 3.7%); Participation Rate 67.2% vs. Exp. 66.9% (Prev. 67.0%)
• New Zealand GDP QQ (Q3) -0.3% vs. Exp. 0.2% (Prev. 0.9%, Rev. 0.5%); YY -0.6% vs. Exp. 0.5% (Prev. 1.8%, Rev. 1.5%)