US stocks gained following soft CPI data, but with price action choppy amid a busy day of central bank announcements - Newsquawk Asia-Pac Market Open

• US stocks were higher albeit in a choppy session on Thursday, as upside kicked off overnight, led by the Nasdaq after the stellar Micron (MU) earnings and guidance on Wednesday night, while reports that OpenAI is set to raise billions at a USD 750bln valuation also lifted sentiment, indicating strong investor appetite in the AI space, after some of fresh concerns last week following Broadcom and Oracle earnings. Stocks advanced further after the November US CPI came in notably softer than expected, albeit with some nuances around the government shutdown. The data also led to immediate upside in T-notes and gold, but this swiftly pared as the nuances were digested - stocks held their bid. In the US afternoon, notable pressure was seen in equities, gold, and crypto - albeit on no clear headline driver, with the majority of that downside paring before the closing bell.
• USD was ultimately little changed on the day as participants looked past the softer-than-expected CPI data, while the monthly figures were absent, given the government shutdown, with desks also pointing out BLS assumptions within the report (prices were unchanged in October for most items), leaving the data gauges of both sides of the Fed's mandate somewhat distorted. Core Y/Y eased to 2.6% (exp. 3.0%, prev. 3.0%) and Headline Y/Y eased to 2.7% (exp. 3.1%, prev. 3.0%), while other data points included initial claims, which fell in line with expectations, and continued claims remain at elevated levels, but below the consensus.
• Looking ahead, highlights include Japanese CPI, New Zealand ANZ Business Confidence & Credit Card Spending, Australian Private Sector Credit, BoJ Rate Decision & Governor Ueda's Post-Meeting Press Conference.

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LOOKING AHEAD

• Highlights include Japanese CPI, New Zealand ANZ Business Confidence & Credit Card Spending, Australian Private Sector Credit, BoJ Rate Decision & Governor Ueda's Post-Meeting Press Conference.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were higher albeit in a choppy session on Thursday, as upside kicked off overnight, led by the Nasdaq after the stellar Micron (MU) earnings and guidance on Wednesday night, while reports that OpenAI is set to raise billions at a USD 750bln valuation also lifted sentiment, indicating strong investor appetite in the AI space, after some of fresh concerns last week following Broadcom and Oracle earnings. Stocks advanced further after the November US CPI came in notably softer than expected, albeit with some nuances around the government shutdown (please read CPI review below). The data also led to immediate upside in T-notes and gold, but this swiftly pared as the nuances were digested - stocks held their bid. In the US afternoon, notable pressure was seen in equities, gold, and crypto - albeit on no clear headline driver, with the majority of that downside paring before the closing bell.
• SPX +0.79% at 6,775, NDX +1.51% at 25,019, DJI +0.14% at 47,952, RUT +0.62% at 2,508.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Commerce Secretary Lutnick spoke of Section 232 investigations into semiconductors and pharmaceuticals during a closed-door meeting with the Ways and Means Republicans today, according to Punchbowl citing sources.
• USTR Greer referenced Section 301 as a possible tool to deal with the EU tech dispute and said they need to deal with it quickly, while he is happy to engage with the EU, but added the EU has not been responsive.
• US House Democrats introduced a bill to ban US AI chip sales to China.
• China's Commerce Ministry said regarding steel licences, that they involve some 300 products and are designed to strengthen monitoring and tracking of exports, while it stated that some Chinese licence applications have been approved related to EU rare earth export licenses. Furthermore, it said regarding talks with the EU on EV tariffs that they are still being negotiated.
• Canadian PM Carney said they are unlikely to have sectoral deals with the United States and that talks are likely to roll over into a broader USMCA review.
• European Commission President von der Leyen told EU leaders at their summit on Thursday that the Mercosur trade won’t be signed as scheduled on Saturday and instead would wait until next month, according to Politico, citing two EU diplomats.
• Italian PM’s office said they are ready to sign the Mercosur trade agreement as soon as the necessary responses are provided to farmers.
• India imposed anti-dumping duties on some steel imports from China for 5 years.

NOTABLE HEADLINES

• Fed's Goolsbee (2025 voter, dissenter) said the latest inflation data was favourable, and if clarity arrives that inflation is waning, then rates can come down, but he is uncomfortable about front-loading rate cuts. Goolsbee said he needs to see more sustained progress in cooling inflation and noted that most measures of the job market have shown pretty steady cooling. Furthermore, he said rates can go down a fair bit as long as they know they're heading back to 2% inflation.
• US President Trump said he met with Waller yesterday and he is great, while Trump is talking to three or four people regarding the Fed Chair and said Bowman is also great. Furthermore, he will announce the new Fed Chair over the next couple of weeks, maybe not before the new year.
• US President Trump is looking at declaring a national emergency on housing, while it was also reported that President Trump said there is practically no inflation now.
• White House NEC Director Hassett said core inflation is "only 1.6%", while he added that they have got high growth and core inflation is about where it should be, but not going to declare victory yet on the "price problem". Furthermore, he said CPI was "astonishingly good" and that wages are growing faster than prices, as well as noted a big announcement on housing costs with a meeting on Friday and reiterated there is lots of room for the Fed to cut rates.
• US Democratic lawmakers requested a review of the Commerce Secretary's possible conflicts, according to NYT.

DATA RECAP

• US CPI YY NSA (Nov) 2.7% vs. Exp. 3.1% (Prev. 3.0%)
• US Core CPI YY, NSA (Nov) 2.6% vs. Exp. 3.0% (Prev. 3.0%)
• US Philly Fed Business Index (Dec) -10.2 vs. Exp. 3.0 (Prev. -1.7)
• US Philly Fed Prices Paid (Dec) 43.6 (Prev. 56.1)
• US Philly Fed New Orders (Dec) 5.0 (Prev. -8.6)
• US Philly Fed Employment (Dec) 12.9 (Prev. 6.0)
• US Initial Jobless Claims w/e 224.0k vs. Exp. 225.0k (Prev. 236.0k, Rev. 237k)
• US Continued Jobless Claims w/e 1.897M vs. Exp. 1.93M (Prev. 1.838M, Rev. 1.830M)

FX

• USD was ultimately little changed on the day as participants looked past the softer-than-expected CPI data, while the monthly figures were absent, given the government shutdown, with desks also pointing out BLS assumptions within the report (prices were unchanged in October for most items), leaving the data gauges of both sides of the Fed's mandate somewhat distorted. Core Y/Y eased to 2.6% (exp. 3.0%, prev. 3.0%) and Headline Y/Y eased to 2.7% (exp. 3.1%, prev. 3.0%), while other data points included initial claims, which fell in line with expectations, and continued claims remain at elevated levels, but below the consensus.
• EUR was modestly lower after failing to sustain the initial gains seen following the ECB announcement to keep rates unchanged, which was as expected, but did see the 2026 projections revised up for inflation and growth. Furthermore, Bloomberg sources later stated the ECB officials expected the easing cycle to be most likely finished based on said upward revisions, while sources cited by Reuters noted that policymakers see growth and inflation risks as balanced and expect to keep rates on hold, but had no appetite to take a rate cut off the table on Thursday.
• GBP returned to flat territory with only brief support seen following the BoE's hawkish rate cut, whereby the Bank Rate was lowered by 25bps, as expected, in a 5-4 vote split, which was in line with a previous survey, although there were some expectations for a potentially more dovish vote split after the recent soft UK CPI data. Other hawkish elements expressed were uncertainty over the neutral rate as restrictiveness falls, and as the BoE approaches such a level, there is "more limited space", a point that means "judgements around further policy easing will become a closer call".
• JPY eked slight gains against the dollar in choppy trade as all attention turns to the BoJ meeting, where the central bank is expected to hike rates by 25bps to 0.75%, which would be the highest in 30 years.
• Czech CNB Repo Rate N/A 3.5% vs. Exp. 3.5% (Prev. 3.5%)
• Mexican Interest Rate (Dec) 7.0% vs. Exp. 7.0% (Prev. 7.25%). Banxico stated that looking ahead, the Board will evaluate the timing for additional reference rate adjustments (prev. Board will evaluate reducing the reference rate).
• Norges Bank maintained its Key Policy Rate at 4.00% as expected, while it stated that if the economy evolves broadly as currently projected, the policy rate will be reduced further in the course of the coming year.
• Riksbank maintained its rate at 1.75% as expected, while it reiterated that the rate is expected to remain at this level for some time to come.

FIXED INCOME

• T-notes gained following softer-than-expected US CPI data and a strong 5-year TIPS auction.

COMMODITIES

• Oil prices marginally gained amid fresh sanctions on Russia, with the EU imposing additional sanctions on 41 vessels that are part of Russia's "shadow fleet", while the UK also made 24 designations under the Russian sanctions scheme.

GEOPOLITICAL

MIDDLE EAST

• US official said US Envoy Witkoff will meet with Qatari, Egyptian and Turkish officials in Miami regarding the Gaza peace deal on Friday.
• US issued a general license related to Iran and imposed sanctions on vessels linked to Iran.
• Iranian President Pezeshkian said they do not seek nuclear weapons and are ready for dialogue.

RUSSIA-UKRAINE

• US President Trump said regarding the Ukraine meeting that they are getting close to something and he hopes Ukraine moves quickly.
• Ukrainian President Zelensky said European representatives could take part in talks in the US and that there are no final aligned peace proposals for now, while he is not ready to withdraw troops from Donbas. Zelensky later said there is progress with the US on peace, and security guarantees are needed from both the US and Europe, as well as commented that he would like the US to move from just mediation in talks to pressuring Russia.
• Ukraine's Deputy Foreign Minister met with China's foreign minister's aide in Beijing, talks included Russia's invasion.
• Russia's Kremlin said Russia is preparing contact with the US to understand how much President Trump's plan for Ukraine has changed, according to TASS.
• RIA cited the Kremlin stating that US-Russia ties are "in ruins" but Moscow hopes they can start to be restored as progress is made on the Ukraine issue.
• UK government said it made 24 designations under the Russia sanctions scheme and sanctioned oil and gas companies Tatneft and Russneft, while the EU imposed additional sanctions on 41 vessels, which are part of Russia's 'shadow fleet' of oil tankers and contribute to Russia's energy revenue.
• EU leaders are to ask EU institutions to urgently adopt instruments establishing a reparations loan based on the cash balances associated with Russia's immobilised assets, while the reparation loan is to provide financial support for Ukraine from Q2'26, including its military needs, via Reuters citing a draft.
• German Chancellor Merz plans to comply with Belgium's demand and make available assets held in Germany belonging to Russia's Central Bank to support Ukraine, according to Bild citing dpa.
• Polish PM Tusk said there was a breakthrough at the EU summit on the use of Russian assets, while the other option, of joint borrowing, did not inspire key EU nations. It was separately reported that Tusk said they have made a breakthrough in as far as everyone agrees they need to find a fair way of using Russian assets, and he will meet Ukrainian President Zelensky on Friday afternoon in Warsaw.

OTHER

• US President Trump said he has no problem telling Congress about any possible attack on Venezuela.

ASIA-PAC

NOTABLE HEADLINES

• India's Food Secretary said they are considering raising the minimum sale price of sugar and allowing more exports, while he is in favour of raising ethanol prices.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves said there is more to do on the cost of living.
• BoE cuts its Bank Rate by 25bps as expected to 3.75% (prev. 4.00%), with the vote split at 5-4 (exp. 5-4) as Bailey, Breeden, Dhingra, Ramsden and Taylor voted to cut, while Greene, Lombardelli, Mann and Pill preferred to maintain the Bank Rate at this meeting. BoE stated that on the basis of the current evidence, Bank Rate is likely to continue on a gradual downward path and noted the restrictiveness of monetary policy had fallen as the Bank Rate had been progressively reduced. It also stated that in the absence of new shocks to the economy, judgements for individual members around further policy easing would become a closer call. BoE added that this could simply reflect the more limited scope to reduce rates for a given estimate of neutral, or alternatively that the policy approach should recognise the uncertainty around the level of equilibrium rates itself, as well as noted that further ahead, as restrictiveness falls and with uncertainty around the neutral rate, there could be scope to slow this cadence of easing in due course.
• BoE Governor Bailey said he is very encouraged by the process in returning inflation to target, while he added the stance is still restrictive, but expect the pace of cuts to ease off at some point and expects UK CPI to fall to close to 2% target in April/May 2026.
• ECB maintained its rate settings with the Marginal Lending Rate at 2.40%, Refinancing Rate at 2.15% and Deposit Rate at 2.0%, as expected. ECB maintained a data-dependent meeting-by-meeting approach and said inflation has been revised up for 2026, mainly because staff now expect services inflation to decline more slowly. ECB said the Governing Council is not pre-committing to a particular rate path and interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it. Furthermore, the Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target in the medium term and to preserve the smooth functioning of monetary policy transmission.
• ECB President Lagarde reconfirmed that they are in a good place, but that does not mean that it is static, while she said it was a unanimous decision and they were unanimous on retaining optionality with no set date for any move. Lagarde reiterated a meeting-by-meeting approach and said there is no set path for rates, as well as noted that due to uncertainty, they cannot provide any further on forward guidance and there was no discussion on hiking or cutting at the meeting on Thursday.
• ECB officials expect the cycle of interest-rate cuts to most likely be finished based on the latest outlook for growth and inflation, according to Bloomberg citing sources. Furthermore, it was stated that any talk of rate hikes is premature, and a source had cautioned that further easing is possible in the event that inflation undershot for several months.
• ECB policymakers see growth and inflation risks as balanced, some fear lower growth outcomes, while they expect to keep rates on hold but had no appetite to take a rate cut off the table on Thursday, according to sources cited by Reuters.