• APAC stocks traded mostly positively following the tailwinds from Wall Street, although newsflow overnight was on the quieter side amid the pre-Christmas lull.
• Nikkei 225 and JGB futures surged as APAC traders reacted to BoJ Governor Ueda's dovish press conference.
• European equity futures are indicative of a firmer cash open, with Euro Stoxx 50 future +0.2% after cash markets closed +0.3% on Tuesday.
• The US reportedly weighs whether to attack Houthis beyond the defensive task force with possible strikes on Houthis in Yemen considered, according to Bloomberg sources.
• Looking ahead, highlights include German GfK, UK CPI, PPI, EZ Consumer Confidence (Flash), US Consumer Confidence, BoC Minutes (Dec), ECB's Lane; Fed's Goolsbee, and Supply from the US.

US TRADE

EQUITIES

• US stocks continued to rise on Tuesday but this time the Russell 2k and equal-weighted S&P led the charge, with the post-BoJ yield environment providing tailwinds.
• SPX +0.59% at 4,768, NDX +0.49% at 16,811, DJIA +0.68% at 37,557, RUT +1.94% at 2,020.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bostic (2024 voter) said there is "still a ways to go" on inflation even though the Fed has made tremendous progress. He expects inflation to come down slowly and unevenly. Bostic noted policy will need to be resolute and patient, and the market's response to the Fed has been "interesting", will have to watch how it plays out. Bostic said the Fed cannot wait to get to 2% inflation to cut rates or it will "overshoot", that is the strategy behind rate cuts, and he reiterated his view of two rate cuts in 2024. Bostic noted there "is not going to be urgency" to back away from a restrictive policy stance. Click here for the full headlines.
• Fed's Goolsbee (2023 voter) said the market has gotten ahead of itself on euphoria, and if inflation keeps coming down, the Fed can reconsider how restrictive it is, according to Fox News. He added what determines whether the Fed can be less restrictive is inflation, and the Fed should not be bullied by what the market wants.
• Colorado Supreme Court has disqualified Former US President Trump from the state’s 2024 election ballot over the Capitol insurrection, according to CNN.
• FedEx Corp (FDX) Q2 2024 (USD): Adj. EPS 3.99 (exp. 4.20), Revenue 22.2bln (exp. 22.41bln); expects to buyback added 1bln of stock during FY24. Shares fell 9.8% after hours.
• Fitch affirms Canada at 'AA+'; outlook stable.

DATA RECAP

• US Net L-T Flows, Incl. Swaps (Oct) 3.3B (Prev. -1.7B, Rev. 0.9B)
• US Overall Net Capital Flows (Oct) -83.8B (Prev. -67.4B, Rev. -64.8B)
• US Net L-T Flows, Ex-swaps (Oct) 3.3B (Prev. -1.7B, Rev. 0.9B)
• US Foreign Buying, T-Bonds (Oct) 54.0B (Prev. -17.5B, Rev. -15.5B)

APAC TRADE

EQUITIES

• APAC stocks traded mostly positively following the tailwinds from Wall Street, although newsflow overnight was on the quieter side amid the pre-Christmas lull.
• ASX 200 saw its upside supported by the Energy and Metals sectors, whilst Tech lagged with shallower gains.
• Nikkei 225 surged as the index reacted to BoJ Governor Ueda's dovish press conference following the unchanged announcement yesterday.
• Hang Seng and Shanghai Comp traded mixed with the former's gains spearheaded by large caps with US listings, including Alibaba, JD.com, and Baidu. Mainland China was subdued after PBoC maintained its Loan Prime Rates as expected and despite more liquidity injections by the central bank.
• US equity futures were initially flat but tilted to the upside throughout the session, albeit with gains minimal (ES +0.1%).
• European equity futures are indicative of a firmer cash open, with Euro Stoxx 50 future +0.2% after cash markets closed +0.3% on Tuesday.

FX

• DXY traded within a tight range between 102.14-24 with newsflow in APAC hours light as traders look ahead to US PCE before the Christmas break.
• EUR/USD waned from overnight highs of 1.0984 and languished around session lows for most of the night, although the pair held onto a bulk of yesterday's gains.
• GBP/USD moved in tandem with the Dollar in a tight APAC range ahead of UK inflation data.
• USD/JPY was subdued and remained under 144.00 following yesterday's BoJ-induced gains, which saw the pair test levels near 145.00 at one point.
• Antipodeans held a mild upward bias amid the broader risk tone, whilst the Kiwi saw no reaction to its DMO and fiscal update, although the New Zealand Treasury sees GDP growth in Q4 23 and through 2024.
• PBoC sets USD/CNY mid-point at 7.0966 vs exp. 7.1300 (prev. 7.0982)

FIXED INCOME

• 10-year UST futures were uneventful but held a positive bias after catching a mild bid on Tuesday, with traders looking ahead to today's 20-year auction.
• Bund futures traded sideways overnight before ebbing marginally higher with an APAC range between 137.33-54.
• 10-year JGB futures surged as APAC traders reacted to BoJ Governor Ueda's press conference - the 10-year JGB yield slipped from 60bps to under 57bps at one point.

COMMODITIES

• Crude futures were indecisive following the surprise build in private crude inventories, continued Red Sea transit disruptions and a softer Dollar.
• Spot gold traded flat on either side of the USD 2,040/oz level, with potential resistance in the USD 2,047-48 area (coinciding with highs from 14th and 19th Dec.)
• Copper futures were underpinned by the broader positive sentiment but gains were capped by losses in Mainland China.
• US Energy Inventory Data (bbls): Crude +0.9mln (exp. -2.3mln), Gasoline +0.7mln (exp. +1.2mln), Distillate +2.7mln (exp. +0.5mln), Cushing +1.9mln.

CRYPTO

• Bitcoin traded with mild gains above the USD 42,000 mark.

NOTABLE ASIA-PAC HEADLINES

• PBoC maintained its 1-year and 5-year LPRs at 3.45% and 4.20% respectively, as expected.
• PBoC injected CNY 134bln through 7-day reverse repos at 1.80% and CNY 151bln via 14-day reverse repos at 1.95%; both rates maintained
• The Japanese government is to raise its long-term interest rate estimate to 1.9% for FY24 from 1.1% in FY23, according to Nikkei.
• Japanese Cabinet projects that income will increase more than prices in FY24, according to Nikkei.
• State-backed developer China South City averts default on July 2024 note after consent from bondholders, according to SCMP.
• RBNZ Governor Orr said interest rates are restricting spending and levels of core inflation remain too high, according to the Parliamentary hearing. He noted that Q3 GDP was surprisingly subdued, and inflation remains too high and the committee remains wary of ongoing inflationary surprises. He said the neutral interest rate is now 2.5%.
• New Zealand DMO and fiscal update: gross bond issuance for four years to June 2027 now totals NZD 136bln, up from NZD 129bln in the budget. 2023/24 gross bond issuance increases to NZD 38bln from NZD 36bln in budget. Treasury sees GDP growth in Q4 23 and through 2024.

DATA RECAP

• Japanese Trade Balance Total Yen (Nov) -776.9B vs. Exp. -962.4B (Prev. -662.5B, Rev. -661.0B)
• Japanese Imports YY (Nov) -11.9% vs. Exp. -8.6% (Prev. -12.5%)
• Japanese Exports YY (Nov) -0.2% vs. Exp. 1.5% (Prev. 1.6%); fell for the first time in three months
• Australian MI Leading Index MM (Nov) 0.1% (Prev. 0.0%)

GEOPOLITICS

• US reportedly weighs whether to attack Houthis beyond defensive task force and possible strikes on Houthis in Yemen considered, according to Bloomberg sources; no decision made yet on striking Houthis. The US and its allies are considering possible military strikes against Houthi rebels in Yemen, in recognition that a newly announced maritime task force meant to protect commercial ships in the Red Sea may not be enough to eliminate the threat to the vital waterway. Planning is underway for actions intended to cripple the Houthis’ ability to target commercial ships by hitting the militant group at the source.
• Israel is offering to pause the fighting in Gaza for at least one week as part of a new deal to get Hamas to release more than three dozen hostages, according to Axios sources.
• Malaysia bans Israeli-based shipping firm Zim from its ports, with the ban set to take effect immediately, according to the Malaysian PM.

EU/UK

NOTABLE HEADLINES

• German Finance Minister Lindner said the objective is a 100% agreement between France and Germany on EU fiscal rules; Germany will not agree to rules that are not strict to lead to lower debt levels, according to Reuters.French Finance Minister Le Maire said France and Germany are close to "100%" agreement on EU fiscal rules.
• France and Germany see an EU deal on fiscal rules on Wednesday, according to Bloomberg.

DATA RECAP

LATAM

• Brazil raised to BB from BB- by S&P, Outlook Stable, following tax reform approval.
• Chilean Interest Rate (Nov) 8.25% vs. Exp. 8.5% (Prev. 9.0%); decision unanimous
• Colombian Central Bank cuts rates by 25bps to 13.00%, as expected, marking the first cut in three years, and decision backed by a "majority" of board members