Futures Rise Ahead Of Last Inflation Report Of 2023

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by Tyler Durden
Tuesday, Dec 12, 2023 - 01:18 PM

S&P 500 futures were little changed as markets enter the first of the two last big days of 2023, with CPI on deck today and the FOMC decision due tomorrow. As of 7:55am ET, S&P futures were up 0.1% to 4,683, trading in a very tight range overnight as equity traders were reluctant to make big bets ahead of this week’s heavy load of economic data and interest-rate decisions, Nasdaq futures gained 0.3% ahead of the November inflation report; The Bloomberg dollar index slipped 0.3%. Treasuries rose across the curve, with 10-year yields falling four basis points to 4.19%. The latest NY Fed survey showed a decline in year ahead inflation expectations, dovetailing the Univ. of Michigan print on Friday; today is all about the CPI.

In premarket trading, Oracle Corp. fell as much as 9.2% after the software company’s second-quarter revenue disappointed amid slowing cloud sales momentum. Alphabet falls as much as 1.3% as Google lost an antitrust court fight to Fortnite maker Epic Games Inc. The ruling threatens to upend the mobile app economy and could cost the technology giant billions of dollars in revenue. Here are the other notable premarket movers:

  • Amgen Inc. rises 1.4% after RBC Capital Markets upgraded to outperform from sector perform, giving new credit to the drugmaker’s diversification and catalyst setup into 2024.
  • C4 Therapeutics surges 38% after signing a license and collaboration agreement with Merck to develop degrader-antibody conjugates to treat cancer.
  • Gaotu Techedu ADRs soar as much as 8.5%, extending Monday’s gains, after the education firm’s livestream shopping channel gains steam on China’s short-form video platform Douyin.
  • HubSpot Inc. rises 1.8% after being upgraded to overweight from neutral at Piper Sandler, which sees improved growth prospects for the software company.
  • Illumina drops 2% as BofA downgrades the DNA-sequencing company to underperform from neutral, saying in a note there’s “no imminent fix” to a lack of growth.
  • Macy’s shares slip 3% after Citi downgraded the department-store operator to sell from neutral, expressing skepticism that a buyout offer from Arkhouse Management and Brigade Capital Management will actually materialize.
  • RingCentral shares fall as much as 1.5%, set to extend Monday’s losses, as Jefferies cuts the cloud communications firm to hold from buy after the surprise exit of its CEO Tarek Robbiati.
  • Seagen gains 3.3% after Pfizer says it has received all required regulatory approvals to close its acquisition of the biotech firm on Dec. 14.
  • Wyndham shares rise about 2.8% after Choice Hotels starts an exchange offer to buy Wyndham, taking its previous $49.50 in cash and 0.324 shares of Choice common stock per Wyndham share offer directly to Wyndham’s shareholders.

As previewed earlier, CPI data due later this morning is expected to show that price pressures are continuing to subside, with the average of 50 economists expecting a 0.3% increase in core inflation for the month of November, and a 3.1% increase in the CPI from a year ago.

The consumer price index will give Wall Street a sense of whether the disinflation trend is continuing, a day before the last scheduled Federal Reserve decision of 2023. The US central bank is widely expected to hold rates, with most market focus on whether it will try to temper policy easing expectations after investors’ aggressive dovish repricing. And with the Fed expected to keep interest rates unchanged on Wednesday, investors will parse the Summary of Economic Projections, which will be updated for the first time since September, for clues on the rate trajectory next year.

“Central banks will certainly affirm the message this week that they remain data dependant, that they need more confirmation that inflation and core inflation will decelerate further,” said Georgios Leontaris, chief investment officer for Switzerland and EMEA at HSBC Global Private Banking and Wealth. “It’s getting harder to convince markets — and central banks know that — so they will look to maintain that data dependancy mode going forward.”

For those who missed it, here is the JPM Mkt Intel CPI scenario analysis.

Separately, there is a sense of trader exhaustion ahead of the last two big events of the year: as we noted last night, option-straddles imply the S&P 500 will move just 0.67% in either direction Tuesday, almost a third of its realized move in the last inflation day. Meanwhile, the 0.7% expected swing on FOMC Wednesday is about 40% below the actual move in the past 12 rate-decision days, Piper Sandler data show. 

As Bloomberg notes, a sense of torpor has descended on stock market since mid-November, and traders expect more of the same this week. But for some on Wall Street, the elevated stretch of calm bespeaks complacency, especially with few positioning for the wider swings ahead. “Option traders are looking for volatility to remain near ‘baseline’ lows over the coming weeks” said Gareth Ryan, managing director at IUR Capital Ltd. “But any hawkish comments by the Fed this week could quickly see a change in that thinking.”

One reason for this surprising complacency: record dealer gamma that has made the market stuck in a range; however this Friday's record triple witching opex should "unclench" much of this gamma gravity.

There is another reason to be cautious: seasonality. According to BTIG, while December has been a strong month for stocks, in the past 10 years the weakness has concentrated in the week between Dec. 8 and Dec. 14. That said, so far the S&P 500 hasn’t posted a 1% move since mid-November, and if the trend lasts through Friday, the stretch of calm will become the longest since 2021. The S&P 500 Index rose in tandem with the VIX Index on Monday, suggesting investors are now scrambling to buy calls in order to supercharge gains.

Elsewhere, stocks edged higher in Europe, with the Stoxx 50 adding 0.1%. The CAC 40 rises 0.2% and is eyeing a record close. Here are the most notable European movers:

  • Aixtron shares rise as much as 8.6%, hitting highest since June 2001, after Oddo lifts its price target on the chip-tool company, which it describes as one of the sector’s most overlooked growth stories.
  • AstraZeneca shares gain as much as 1.7% in London after the pharmaceuticals company agreed to buy Icosavax, a developer of innovative vaccines for respiratory viruses, for as much as $1.1 billion.
  • Banco BPM shares rise as much as 3.3%, leading gains on the FTSE MIB index, after Italy’s third-largest bank unveiled its strategic plan, with analysts highlighting a higher-than-expected shareholder distribution target.
  • HMS Networks shares gain as much as 19% in Stockholm trading after entering into a binding agreement to buy Red Lion for a cash consideration of $345m on a cash and debt free basis, the company said in statement after market close on Monday.
  • BT shares slump as much as 4.3% after UK regulators proposed banning mobile and broadband operators from increasing customers’ prices mid-contract based on inflation measures. Vodafone falls as much as 1.8%.
  • Genmab shares fall as much as 6.4%, Tuesday’s biggest decliner in the Stoxx 600 Health Care Index, as analysts weighed the Danish cancer treatment company’s presentation of its experimental GEN3014 drug at a hematology conference.
  • Hargreaves Lansdown, AJ Bell and Abrdn shares sink in London trading after the Financial Conduct Authority wrote to investment platforms regarding its concerns about interest earned on customers’ cash balances.
  • Pepco shares fall as much as 9.5% in Warsaw trading, the most since Oct. 19, after the department store chain reported FY2022/23 earnings and provided guidance for current fiscal year.
  • SAP shares fall as much as 1.7% after US peer Oracle reported slowing quarterly sales growth in its cloud computing business. Oracle fell 8.8% in US postmarket trading.
  • Stocks in Nordic forestry, paper and packaging companies slump after Danske Bank reviewed the sector, downgrading all firms in the sector to hold from buy.

Earlier in the session, Asian stocks rose, led by a recovery in Hong Kong-listed shares amid a report that a key meeting of Chinese economic and political leaders is underway. The MSCI Asia Pacific Index climbed as much as 0.7%, with Alibaba and Tencent among the biggest boosts. The MSCI Asia index has treaded water over the past month ahead of the Federal Reserve’s final scheduled policy decision for 2023 due this week along with those of the European Central Bank and Bank of England. US consumer price index data due later Tuesday will be closely watched for cues on the Fed’s next move.

“Investors are almost certain of a ‘no-change’ decision and have already priced that in — and maybe a little extra — during the November rallies,” Olivier d’Assier, head of applied research for Asia Pacific at Axioma, wrote in a note. Market observers “will focus on the language of the press releases, as well as next week’s meeting minutes.”

  • A gauge of Chinese stocks listed in Hong Kong was headed for its first gain in four sessions after Reuters reported on the Central Economic Work Conference, where officials are expected to discuss the 2024 growth target and the State Council issued measures on integrated development of domestic and foreign trade, although the mainland index ultimately lagged and was contained beneath the psychological 3,000 level.
  • Nikkei 225 surged at the open and briefly reclaimed the 33,000 level after a recent dovish BoJ source report although the index then reversed nearly all of its gains as the effects of a firmer currency seeped through.
  • ASX 200 was led by outperformance in tech but with the upside capped following mixed data in which Westpac Consumer Sentiment improved but NAB Business Confidence printed its worst reading since 2012.
  • Key gauges also rose Tuesday in South Korea, Singapore and Australia. Thai stocks fell, with the benchmark nearing a technical correction.

In FX, the Bloomberg Dollar Spot Index drops 0.3%, with the greenback lower versus all its G-10 rivals. The Norwegian krone, yen and kiwi are the best performers.

In rates, treasuries advanced ahead of US inflation data, which is expected to show consumer prices were unchanged again in November. US 10-year yields fall 5bps to 4.18%. Gilts rallied after data showed UK wage growth slowed more than expected. UK 10-year yields fall 10bps to 3.98%.

In commodities, oil prices dropped with WTI sliding 0.8% to trade near session lows around $70.7 despite an attack by Houthi rebels of a Norwegian-flagged tanker as fears of a supply glut continue to dominate. Spot gold rises 0.3%. In crypto, bitcoin, +1.7%, finds a firmer footing below the USD 42k mark; Ethereum, +0.4%, posts gains but to a lesser degree.

To the day ahead now, and the main highlight will be the US CPI release for November. Other data releases include UK labour market data, the German ZEW survey for December, and in the US there’s the NFIB’s small business optimism index. Central bank speakers include the ECB’s Villeroy.

Market Snapshot

  • S&P 500 futures little changed at 4,629.00
  • MXAP up 0.5% to 161.69
  • MXAPJ up 0.5% to 502.29
  • Nikkei up 0.2% to 32,843.70
  • Topix down 0.2% to 2,353.16
  • Hang Seng Index up 1.1% to 16,374.50
  • Shanghai Composite up 0.4% to 3,003.44
  • Sensex down 0.5% to 69,548.15
  • Australia S&P/ASX 200 up 0.5% to 7,235.29
  • Kospi up 0.4% to 2,535.27
  • STOXX Europe 600 up 0.1% to 474.18
  • German 10Y yield little changed at 2.23%
  • Euro up 0.2% to $1.0785
  • Brent Futures up 0.5% to $76.39/bbl
  • Gold spot up 0.1% to $1,983.36
  • U.S. Dollar Index down 0.20% to 103.89

Top Overnight News

  • China’s senior leaders commenced a meeting on Monday to discuss 2024 economic priorities (media reports have suggested the gov’t would adopt a GDP growth target of ~5% for next year, the same as in 2023). RTRS
  • The Chinese military is ramping up its ability to disrupt key American infrastructure, including power and water utilities as well as communications and transportation systems, according to U.S. officials and industry security officials. WaPo
  • Country Garden is set to avoid its first default on yuan bonds after holders of a security agreed not to demand repayment this week, people familiar said. BBG
  • Japan’s BOJ may not hike rates next week, but such a move is coming relatively soon, and Ueda is keen on preparing markets for it to avoid surprises. RTRS
  • UK wage growth cools to +7.2% Y/Y in Oct, down 80bp from Sept and inline w/the Street (wages ex-bonus payments cooled to +7.3% from +7.4%). RTRS  
  • Washington is stepping up its face-to-face military advice for Ukraine and pushing Kyiv to pursue a conservative strategy focused on holding existing territory and ramping domestic weapons production capacity, hoping this compels Putin to enter into negotiations toward the end of 2024 or in 2025. NYT
  • NFLX has been interested in buying PARA (Paramount)’s Paramount movie studio, but conversations have “cooled” (Shari Redstone is “adamant” that the Paramount studio won’t be sold alone – if someone wants it, they will need to acquire the whole company). WSJ
  • ORCL (-9% pre mkt) reported FQ2 EPS that’s essentially inline at 1.34 (the consensus was modeling 1.33) but overall revenue came in light (FXN revenue growth was 4% vs. the Street’s 4.75% forecast) while the rev guide fell short too. RTRS
  • Google lost an antitrust battle with Epic Games, threatening an app store duopoly with Apple that generates $200 billion a year. A federal jury said Google wielded monopoly power through anticompetitive conduct. BBG
  • We expect a 0.27% increase in November core CPI (vs. 0.3% consensus), corresponding to a year-over-year rate of 3.99% (vs. 4.0% consensus). We expect a 0.03% increase in November headline CPI (vs. flat consensus), which corresponds to a year-over-year rate of 3.06% (vs. 3.1% consensus). Our forecast is consistent with a 0.37% increase in CPI core services excluding rent and owners’ equivalent rent and with a 0.16% increase in core PCE in November. (GIR)

A more detailed look at global markets courtesy of Newsquawk

Asi-Pac stocks were mostly positive as the region took impetus from the gains on Wall St where the major indices steadily edged higher in a catalyst-light session ahead of upcoming major risk events. ASX 200 was led by outperformance in tech but with the upside capped following mixed data in which Westpac Consumer Sentiment improved but NAB Business Confidence printed its worst reading since 2012. Nikkei 225 surged at the open and briefly reclaimed the 33,000 level after a recent dovish BoJ source report although the index then reversed nearly all of its gains as the effects of a firmer currency seeped through. Hang Seng and Shanghai Comp were both initially underpinned after China convened the Central Economic Work Conference to discuss the 2024 growth target and the State Council issued measures on integrated development of domestic and foreign trade, although the mainland index ultimately lagged and was contained beneath the psychological 3,000 level. US equity futures (ES unch.) held on to the prior day's spoils as markets awaited the incoming US inflation data. European equity futures are indicative of a slightly higher open with Euro Stoxx 50 future +0.1% after the cash market closed up 0.4% yesterday.

Top Asian News

  • China's government advisers said they would recommend economic growth targets for 2024 ranging from 4.5% to 5.5%, with the majority favouring a target of around 5%, according to Reuters.
  • US Commerce Secretary Raimondo said the US will take the “strongest possible” action to protect its national security when asked how the Commerce Department will respond to Huawei's recent chipmaking breakthrough. Furthermore, she said the Biden administration is in discussions with Nvidia (NVDA) about permissible AI chip sales to China but emphasised that it cannot sell its most advanced semiconductors to Chinese firms, according to Reuters.
  • US judge upheld the ban on state employees and public university faculty using TikTok on state-owned devices or networks.
  • Country Garden (2007 HK) is set to avoid a Yuan-bond default following most holders of a local note agreeing not to seek repayment this week, via Bloomberg citing sources.

European equities, Eurostoxx50, (-0.1%) are trading on a weaker footing despite posting initial gains; outperformance in the FTSE 100 (+0.2%), propped up by strength in Basic Resources and lower UK wage metrics. European sectors are generally firmer, though the overall breadth of the market is fairly narrow. Basic Resources outperform propped up by broker upgrades for both Rio Tinto (+2.1%) and ArcelorMittal (+2.7%) at JP Morgan; Telecommunications lags hampered by OFCOM proposals. US equity futures are trading on a slightly firmer footing, building on gains seen in the prior session and ahead of US CPI later today; the NQ (+0.2%) extends on yesterday's outperformance.

Top European News

  • Catalonia's President Aragones says they will be pursuing their right to an independence referendum in order to resolve the sovereignty conflict, via FT.
  • German Engineering Group VDMA: Expects 2024 production to decline by 4% (prev. -2%); 2023 production expects -1% (prev. -2%); expect Q4 2023 to be weak after drop in Q3 production; investment activity could wane in US and probably stay weak in China


  • The DXY trades on either side of the 104.00 mark but with a softer bias in the run-up to the US CPI metrics.
  • Sterling fails to benefit from the Dollar's softness in the wake of the softer-than-expected wage metrics for October ahead of the BoE confab on Thursday.
  • EUR/USD gains amid the weaker Dollar coupled with EUR/GBP flows whilst the firmer-than-expected ZEW metrics from Germany has little impact on price action, given ZEW caveating the upside as being driven by dovish ECB expectations.
  • The Yen is the top G10 gainer at the time of writing following yesterday’s hefty losses in the wake of the BoJ sources which suggested the bank sees little need to end negative rates in December.
  • Antipodeans trade firmer following yesterday’s rebound coupled with firmer base metal prices, whilst RBA Governor Bullock said she does not think the RBA is falling behind on the inflation fight and stressed data dependency.
  • RBNZ's annual review of the TWI saw the weighting of yuan cut to 22.6% (prev. 25.6%), while USD weighting increased to 14.5% (prev. 13.8%) and AUD weighting rose to 17.7% (prev. 16.5%).
  • PBoC set USD/CNY mid-point at 7.1174 vs exp. 7.1772 (prev. 7.1163).

Fixed Income

  • USTs are firmer having shrugged off Monday’s particularly poor auctions ahead of a 30yr outing today, though for the time being participants are more keenly focused on the November US CPI release.
  • Pre-Liffe open UK employment data saw Gilts gap-up to 98.79 from Monday’s 97.52 close and has sparked some additional dovishness in market pricing for the BoE across 2024.
  • Bunds reside around the 135.00 mark within 134.80-135.38 bounds and as such shy of Friday’s 135.46 best with 65 & 81 potential resistance points thereafter.
  • UK sells GBP 3.75bln 4.50% 2028 Gilt: b/c 2.53x (prev. 2.30x), average yield 4.041% (prev. 4.474%) & tail 0.9bps (prev. 1.0bps)


  • Crude is weaker despite overnight reports that a Norwegian-flagged tanker was hit by a missile that was suspected to be fired by Yemen's Houthi rebels.
  • WTI Jan is off best levels in a USD 71.27-71.96/bbl parameter while Brent Feb sits between a USD 75.94-76.66/bbl parameter.
  • Base metals and spot gold are broadly benefitting from the Dollar pullback; XAU tests USD 1990/oz while silver also experiences some modest reprieve.
  • In APAC hours, Singapore iron ore futures hit a 9-month high with traders citing the revival of Chinese stimulus hopes.

Geopolitics: Middle East

  • Israel's army said supplies will not enter Gaza from Israel but will still enter via crossing with Egypt.
  • Israeli Defence Minister said they are close to the "breaking point" in the campaign in northern Gaza and Gaza City, while he called on Hamas militants and commanders in the field to surrender or be killed. Furthermore, he said Israel has no intention to stay permanently in the Gaza Strip and is open to discussing all alternatives regarding who will control Gaza as long as it is not hostile to Israel, while it is open to a possible agreement with Hezbollah if it includes a safe zone along border and guarantees.
  • UKMTO received a report of an incident affecting a vessel in the vicinity of Bab Al-Mandab west of Yemen's Port Mokha where there was a fire onboard a vessel. Furthermore, a US defence official later stated that a land-based cruise missile launched from Houthi-controlled Yemen hit a Norwegian-flagged vessel causing some damage and a fire, while US Navy ship Mason was on scene to render aid and no casualties were reported in the attack.
  • Hezbollah's military chief vowed to block all Western ships from passing at the ports of Tyre, Saida and Jounieh until the Shebaa Farms are liberated from Zionist control, according to Houthis TV.
  • A source in the Yemeni government said they received an US invitation to participate in a military coalition to protect the Red Sea. "We will participate in the military coalition with a formation of naval forces to confront Houthi operations", Via AJ
  • Israeli PM Netanyahu says "We are preparing for a possible confrontation with the Palestinian Authority (PA) security services in the West Bank", according to Sky News Arabia

Geopolitics: Other

  • Russian Defence Ministry said a Ukrainian-launched tactical ballistic missile was shot down over the Belgorod region in Russia, according to Reuters.
  • China's Embassy in the UK said China firmly opposes and strongly condemns the groundless accusation made by the UK and it urges it to respect China's territorial sovereignty and maritime rights and interests in the South China Sea. This was in response to a UK statement criticising the “unsafe and escalatory tactics deployed by Chinese vessels” against the Philippines, according to Global Times.

US Event Calendar

  • 06:00: Nov. SMALL BUSINESS OPTIMISM 90.7, est. 90.7, prior 90.7
  • 08:30: Nov. CPI MoM, est. 0%, prior 0%
    • Nov. CPI YoY, est. 3.1%, prior 3.2%
    • Nov. CPI Ex Food and Energy MoM, est. 0.3%, prior 0.2%
    • Nov. CPI Ex Food and Energy YoY, est. 4.0%, prior 4.0%
    • Nov. Real Avg Hourly Earning YoY, prior 0.8%
    • Nov. Real Avg Weekly Earnings YoY, prior 0%, revised -0.1%
  • 14:00: Nov. Monthly Budget Statement, est. -$317b, prior -$248.5b

DB's Jim Reid concludes the overnight wrap

Markets mostly got the week off to a decent start, with the S&P 500 (+0.39%) closing at a 20-month high and Europe’s STOXX 600 (+0.30%) reaching a 22-month high. Bonds also pared back their earlier losses, with yields on 10yr Treasuries only up +0.8bps yesterday, and this morning they’ve since fallen another -2.1bps to 4.21%. However, from today we now have a packed calendar of macro events that starts this afternoon and continues for the rest of the week. That includes the US CPI release for November and a 30yr Treasury auction today ahead of decisions from the Fed, ECB and BoE over the rest of the week, along with the flash PMIs for December. So several events that will be critical for setting the direction of markets into year-end.

In terms of today’s events, the first highlight is that US CPI release at 13:30 London time. Last month saw a small downside surprise, which led to growing confidence that the Fed were done hiking rates, as core CPI fell back to a two-year low of +4.0%. That helped propel an incredible market rally, and in response we saw the S&P 500 post its strongest daily advance in months. Those inflation readings are critical to the hard/soft landing debate, as a crucial part of the answer is whether inflation can durably get back to target, which would enable the Fed to ease off from a more restrictive policy stance.

For today’s release, our US economists are looking for monthly headline CPI to come in at just +0.07%, supported by another 8% decline in gas prices since October. In turn, that would take the year-on-year rate down to 3.1%. For core CPI, they’re looking for a stronger +0.27% monthly reading, with the year-on-year measure at 4.0%. Moreover, if their forecasts are right, then that would push the 6m annualised rate for core CPI down to 2.8%, marking the first sub-3% reading since March 2021. See the full preview from our US economists here, along with details for how to sign up to their webinar after the release.

The second highlight will be the 30yr US Treasury auction at 18:00 London time. Last month’s 30yr auction drew a yield of 4.769%, which was 5.3bps above the indicated pre-sale level, and only one other 30yr auction in the last decade has had a tail around those levels. That led Treasury yields to soar in the immediate aftermath, rising by over +21bps on the day at one point, before settling up +15.0bps. Clearly things have moved on since then with the massive bond rally, but it’s one to keep an eye on today.

Yesterday’s 3yr and 10yr auctions were slightly on the weaker side, with tails of 1.7bps and 1.4bps above the indicated pre-sale levels, respectively. But despite this seemingly underwhelming outcome, Treasury yields rallied during the latter half of the US session. That meant the 10yr closed near flat (+0.7bps) by the close at 4.23%, having traded +6bps higher intra-day immediately after the auction results. The 2yr yield was down -1.3bps to 4.71%. Over in Europe, 10yr yields were also largely flat yesterday, with those on 10yr bunds (-0.6bps), OATs (-0.3bps) and BTPs (-0.4bps) all posting a modest decline. Meanwhile, gilts struggled, with the 10yr yield up +3.6bps.

That CPI print and 30yr auction will set the stage for tomorrow’s FOMC decision, where there’ll be plenty of focus on the latest dot plot for where officials see rates heading next year. Much of the speculation in recent weeks has been about rate cuts, but that narrative has lost some steam since the broadly positive jobs report on Friday, which showed unemployment falling back to 3.7%, and nonfarm payrolls growing above consensus at +199k. At one point yesterday, futures even pushed back the timing of a fully priced rate cut into the June meeting, although by the end of the session it was back at the May meeting, where it remains this morning. The likelihood of a March cut is still at 50% as well. In light of all the rate cut speculation, I published a report yesterday outlining five hurdles to cuts, thinking about some factors that could lean in a hawkish direction for upcoming decisions (link here).

Whilst bonds were broadly flat yesterday, equities saw a more robust performance, which saw the S&P 500 (+0.39%) advance to a 20-month high. In fact, that gain now means the index is up by more than +20% YTD for the first time this year. That was echoed in Europe too, where the STOXX 600 (+0.30%) hit a 22-month high, and the DAX (+0.21%) hit an all-time high. But despite the overall gains, the tech mega caps saw a significant underperformance, with Magnificent 7 down -1.44%.

Overnight in Asia, the Japanese Yen has recovered somewhat this morning, strengthening +0.48% against the US Dollar. That comes after it was the worst-performing G10 currency yesterday, having weakened by -0.83% following a Bloomberg report saying that BoJ officials saw little need to end their negative interest rate policy next week. Market pricing has continued to dial down the likelihood of a shift as a result, and overnight index swaps are now pricing in just a 9% likelihood of an end to negative interest rates next week, having hit an intraday high of 45% at one point last week.

Elsewhere in Asia, equity markets are broadly higher this morning, although there has been some divergence between different indices. The Hang Seng (+0.66%) is leading the way as it recovers from its one-year low the previous session, whilst the KOSPI (+0.52%) and the Nikkei (+0.06%) have also risen. By contrast, the CSI 300 (-0.12%) and the Shanghai Comp (-0.03%) have both lost ground. Meanwhile, US equity futures have seen modest gains, with those on the S&P 500 (+0.05%) and the NASDAQ 100 (+0.14%) pointing higher .

When it came to data, there were some positive signs on US inflation expectations from the New York Fed’s latest Survey of Consumer Expectations. It showed that 1yr expectations were down to 3.4%, the lowest since April 2021. Otherwise, the 3yr expectation was unchanged at 3.0%, along with the 5yr at 2.7%. Over in Japan, PPI inflation came in a bit stronger than expected in November, with the year-on-year rate at +0.3% (vs. +0.1% expected), although that was still the lowest since February 2021 .

To the day ahead now, and the main highlight will be the US CPI release for November. Other data releases include UK labour market data, the German ZEW survey for December, and in the US there’s the NFIB’s small business optimism index. Central bank speakers include the ECB’s Villeroy.