Concern with Germany for other skeletons in the budget closet

Concern with Germany for other skeletons in the budget closet


EU mid-market update: Concern with Germany for other skeletons in the budget closet; Mid-East ‘truce’ seen to be extended slightly.


– Europe started flat to mixed and pivoted marginally lower as session wore on. US futures are soft, as US returns from Thanksgiving holiday, with record number of online sales for Black Friday and VIX closing on Friday at a low not seen since before pandemic. Traders try to gauge the validity of a ‘Santa Claus’ rally on lead up to Christmas.

Israel/Hamas 4-day pause in conflict expected to be extended by 1 further day despite Israel Defense Min initially stating ‘we would resume operating with full military force’.

German 2024 GDP seen to contract due to significant impact from recent court ruling which has revealed a cloudy budget that has spiked concern over its use of ‘special funds’.

– Asia closed lower with ASX200 under-performing at -0.8%. EU indices are +0.1% to -0.5%. US futures are -0.2%. Gold +0.6%, DXY -0.1%; Commodity: Brent -1.3%, WTI -1.5%, TTF -5.2%; Crypto: BTC -1.1%, ETH -2.2%.


– Australia named Andrew Hauser [Bank of England official] as Deputy RBA Gov; effective from the first RBA board meeting of 2024.

– China was expected to increase liquidity at the end of Nov; ~CNY2.2T in reverso repo agreements mature this week.

– China govt said to consider ‘unprecedented’ support for homebuilders with unsecured short-term loans to qualified developers for the first time; Chinese banks might offer working capital loans.

– North Korea confirmed placing troops and heavy weapons back at border, follows suspension of military agreement.

Global conflict/tensions

– Reminder: 4-day pause in the Israel-Gaza war which began on Friday is due to end after today, Nov 27th. Hamas announced that was seeking to extend its four-day truce with Israel should serious efforts be made to increase the number of Palestinian detainees released from Israel.

– Russia launched its largest drone attack of the war Saturday targeting Kyiv.


– ECB’s Nagel (Germany) reiterated view that inflation was slowing but not yet at desired level.

– ECB’s Muller (Estonia, hawk) noted that inflation was clearing showing a slowing trend and that probably did not need to raise rates again.

– SNB President Jordan noted that was evaluating to raise banks’ reserve requirements.

– UK PM Sunak announced £29.5B of private-sector investments ahead of FDI summit. Reports circulated that he was considering further tax cuts in Spring ahead of 2024 General Election.

– UK House of Lords said to have called for Bank of England (BoE) reforms following inflation failures.


Mastercard SpendingPulse: US retail sales on Black Friday (ex auto) +2.5% y/y.

Speakers/fixed income/FX/commodities/erratum


Indices [Stoxx600 -0.19% at 459.10, FTSE -0.42% at 7,456.40, DAX -0.26% at 15,987.35, CAC-40 -0.19% at 7,278.66, IBEX-35 +0.13% at 9,951.97, FTSE MIB -0.58% at 29,263.00, SMI -0.35% at 10,841.60, S&P 500 Futures -0.26%].

Market focal points/key themes: European indices opened generally lower; among sectors avoiding losses are health care and real estate; while sectors leading to the downside include energy and materials; oil and gas subsector under pressure after Brent dipped below $80/bbl; Casino confirms has received interest in its hypermarket and supermarket stores, increase stake in Cnova; Aviva to acquire Optiom; Schaeffler increases offer price for Vitesco; no major earnings expected in the upcoming US session.


Consumer discretionary: Elior [ELIOR.FR] +5.5% (analyst upgrade), JDE Peets [JDEP.NL] -3.5% (analyst downgrade).

Consumer staples: Casino Guichard-Perrachon [CO.FR] +2.5% (confirms received preliminary expressions of interest for the acquisition of hypermarket and supermarket stores).

Healthcare: Sanofi [SAN.FR] +1.5% (trial results), Novo Nordisk [NOVOB.DK] -0.5% (n talks with healthcare systems about innovative pricing deals for its weight-loss drug Wegovy)

Industrials: BASF [BAS.DE] -2.5% (analyst downgrade).

Technology: Infineon Technologies [IFX.DE] +1.0% (TSMC said to offer discounts of ~2.0% for certain products in 2024, would be 1st such discount in 4 years), Frontier Developments [FDEV.UK] -22.5% (business update; cut outlook).

Telecom: Rightmove [RMV.UK] +5.5% (trading update – raised guidance; analyst upgrade).


BOE Gov Bailey reiterated in a press interview that was too soon to have discussion on rate cuts; getting inflation down to 2% would be hard work. Most of inflation’s recent decline was due to unwinding of energy costs.

Germany Econ Min Habeck noted that the recent Constitutional court ruling on budget threatened to crimp domestic growth. Coalition was looking for solutions.

Romania Treasury Chief Nanu stated that was increasing its 2023 gross funding needs plan to RON200B.

BOJ Gov Ueda testified in Parliament and reiterated overall assessment that domestic economy was recovering moderately and that he did not have enough certainty on attaining price target yet. Saw some positive signs seen in wages and inflation but there was high uncertainty on whether this cycle strengthened.

Currencies/fixed income

– USD continued to be carved up in the post-Thanksgiving dealings and on track for its biggest monthly drop in a year. Greenback has been on the defensive after several data points suggested that US rates have peaked. Dealers noted that sentiment now pre-occupied about betting on the timing and pace of rate cuts next year.

EUR/USD approaching the 1.10 level; GBP/USD above 1.26 while USD/JPY was hovering around the 149 handle.

Economic data

– (JP) Japan Oct Final Machine Tool Orders Y/Y: -20.6 v -20.6% prelim.

– (FI) Finland Nov Consumer Confidence: -12.4 v -12.6 prior; Business Confidence: -21 v -21 prior.

– (SE) Sweden Oct Household Lending Y/Y: 0.6 v 0.6% prior.

– (NO) Norway Oct Retail Sales M/M: +0.6% v -0.2%e.

– (HU) Hungary Oct Consumer Confidence: -36.7 v -35.6 prior; Business Confidence: -7.9 v -10.5 prior; Economic Sentiment: -15.4 v -17.0 prior.

– (TW) Taiwan Oct Monitoring Indicator: 16 v 17 prior.

– (HK) Hong Kong Oct Trade Balance (HKD): -25.8B v -46.5Be; Exports Y/Y: +1.4% v -2.9e; Imports Y/Y: 2.6% v 2.5%e.

– (CH) Swiss weekly Total Sight Deposits (CHF): 473.7B v 476.9B prior; Domestic Sight Deposits: 465.3B v 467.7B prior.

Fixed income issuance

– None seen.

Looking ahead

– 05:25 (EU) Daily ECB Liquidity Stats.

– 05:30 ((DE) Germany to sell combined €4.0B in 3-month and 9-month BuBills.

– 05:30 (EU) European Union to sell combined €4.0B in 2027 and 2033 Bonds.

– 06:00 (UK) Nov CBI Retailing Reported Sales: No est v -36 prior; Total Distribution Reported Sales: No est v -21 prior.

– 06:00 (BR) Brazil Nov FGV Construction Costs M/M: 0.3%e v 0.4% prior (revised from 0.2%).

– 06:00 (IS) Iceland to sell 3-month and 6-month Bills.

– 06:00 (IL) Israel to sell combined ILS3.3B in 2026, 2028, 2029, 2031, 2032, 2037 and 2051 bonds.

– 06:00 (RO) Romania to sell RON600M in 7.20% May 2027 bonds.

– 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

– 07:00 (MX) Mexico Oct Trade Balance: -$1.5Be v -$1.5B prior.

– 08:00 (UK) Daily Baltic Dry Bulk Index.

– 08:30 (BR) Brazil Oct Tax Collections (BRL): 212.3Be v 174.3B prior.

– 09:00 (FR) France Debt Agency (AFT) to sell €5.1-6.7B in 3-month, 6-month and 12-month bills.

– 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.75%.

– 10:00(US) Oct New Home Sales: 723Ke v 759K prior.

– 10:30 (US) Nov Dallas Fed Manufacturing Activity: -16.0e v -19.2 prior.

– 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

– 11:30 (US) Treasury to sell 2-Year and 5-year Notes.

– 12:30 (BR) Brazil Oct Federal Debt Total (BRL): 6.139Te v 6.076T prior.

– 16:00 (US) Weekly Crop Progress Report.

– 16:00 (KR) South Korea Nov Consumer Confidence: No est v 98.1 prior.

– 19:01 (UK) Nov BRC Shop Price Index Y/Y: No est v 5.2% prior.

– 19:30 (AU) Australia Oct Retail Sales M/M: 0.1%e v 0.9% prior.

– 21:00 – 21:00 (KR) South Korea Oct Retail Sales YoY: No est v 9.5% prior; Department Store Sales YoY: No est v 3.1% prior; Discount Store Sales YoY: No est v 10.0% prior.

– 22:00 (TH) Thailand Central Bank to sell THB55B in 3-month bills.

– 22:35 (JP) Japan to sell 40-Year JGB Bonds.

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