US stocks trickled lower after further soft data releases - Newsquawk Asia-Pac Market Open

• US stocks declined with risk appetite soured as participants digested more soft data releases including a disappointing ADP jobs report and steeper decline in revised Unit Labour Costs, while traders were reticent in pushing Fed rate cut pricing any further for the time being ahead of the NFP report on Friday and the FOMC meeting next Wednesday.
• USD ultimately strengthened and the DXY climbed back above 104.00 after reversing the initial selling that was triggered by softer-than-expected ADP National Employment and Unit Labour Costs data, while the rebound in the dollar coincided with the souring of risk appetite.
• Looking ahead, highlights include Australian Building Approvals & Trade data, Chinese Trade data, Supply from Japan.

More Newsquawk in 2 steps:

1. Subscribe to the free premarket movers reports

2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

• Highlights include Australian Building Approvals & Trade Data, Chinese Trade Data, Supply from Japan.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks declined with risk appetite soured as participants digested more soft data releases including a disappointing ADP jobs report and steeper decline in revised Unit Labour Costs, while traders were reticent in pushing Fed rate cut pricing any further for the time being ahead of the NFP report on Friday and the FOMC meeting next Wednesday.
• SPX -0.39% at 4,549, NDX -0.56% at 15,788, DJI -0.19% at 36,054, RUT -0.21% at 1,852.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Reuters Poll showed the Fed is to wait until at least July 2024 before cutting rates, according to 52 out of 102 economists and 50 said earlier, while 72 out of 102 economists expect the Fed to cut rates by 100bps or less in 2024 and all but five of 102 economists surveyed said the Fed was done hiking in this cycle.
• US President Biden announced the administration approved USD 4.8bln in student debt cancellation for 80,300 people.
• US Senator Warner said he will propose legislation to make some usage of the discount window by banks mandatory. In relevant news, large US banks CEOs all indicated they would be able to meet proposed heightened capital requirements when asked at the Senate Banking Committee.

DATA RECAP

• US ADP National Employment (Nov) 103.0k vs. Exp. 130.0k (Prev. 113.0k, rev. 106k)
• US Unit Labour Costs Revised (Q3) -1.2% vs. Exp. -0.9% (Prev. -0.8%)
• US International Trade (USD)(Oct) -64.3B vs. Exp. -64.2B (Prev. -61.5B, Rev. -61.2B)
• US Productivity Revised (Q3) 5.2% vs. Exp. 4.9% (Prev. 4.7%)

FX

• USD ultimately strengthened and the DXY climbed back above 104.00 after reversing the initial selling that was triggered by softer-than-expected ADP National Employment and Unit Labour Costs data, while the rebound in the dollar coincided with the souring of risk appetite.
• EUR failed to sustain a brief reclaim of the 1.0800 handle and gave way to the buck's recovery.
• GBP was pressured and steadily trickled below 1.2600 which also followed disappointing construction PMI data, while the BoE's FSR noted that the overall risk environment remains challenging and that the full impact of higher interest rates will take time to come through.
• JPY pared early gains against the dollar as USD/JPY rebounded from a brief dip beneath 147.00 but with upside capped by resistance at 147.50 and after recent dovish BoJ affirmations.
• Canadian BoC Rate Decision 5.00% vs. Exp. 5.00% (Prev. 5.00%). BoC dropped its October language regarding inflationary risks increasing and reiterated the Governing Council is prepared to hike if needed.

FIXED INCOME

• Treasuries twisted and flattened as the duration bid extended on soft ADP and Labour Costs while Fed cut pricing hit a near-term limit ahead of the NFP data and next week's FOMC.

COMMODITIES

• Oil prices hit multi-month lows with WTI back beneath the USD 70/bbl level amid mixed inventory data and ongoing global growth woes, while OPEC+ commentary failed to stop the rot.
• US EIA Weekly Crude Stocks w/e -4.6M vs. Exp. -1.7M (Prev. 1.6M).
• OPEC Reuters Survey showed oil production fell by 90k BPD M/M to 27.81mln BPD which was the first decline since July.
• Saudi Finance Minister said they do not currently expect oil output plans to affect the budget and announced numbers.
• Russia's Kremlin spokesman said President Putin and Saudi Arabia's Crown Prince discussed OPEC+ cooperation which will continue, according to TASS.
• Kuwait supports the OPEC+ agreement and is committed to voluntary cuts, according to the state news agency.
• Algeria does not rule out extending voluntary oil cuts beyond Q1 or taking additional measures, according to the energy minister.
• Chile state miner Codelco said it received the copper mark certificate for all its operations.
• First Quantum (FM CA) Panama workers agreed to a severance package with the copper mine remaining halted with 10-20% of staff working, according to the union.
• It was initially reported that navigation in the eastern extension of Egypt's Suez Canal stopped after a container ship collided with a bridge, according to Egypt's Qahera News. However, the canal authority later stated that traffic in the Suez Canal was not affected after the breakdown of a container ship.

GEOPOLITICS

• Israel's military said artillery and armoured forces have been bombing various sites in Lebanese territory since Wednesday morning, according to AJA Breaking.
• Yemeni Houthis said they launched several ballistic missiles towards Israel's Eilat region, according to a statement.
• US defence official said the US Navy shot down a drone from Yemen controlled by the Houthi group on Wednesday.
• Saudi Arabia reportedly asked the US to show restraint in responding to attacks by Yemen's Houthis as Saudi seeks to contain spillover from the Israel-Hamas war, according to Reuters sources. It was later reported that senior Biden administration officials agreed that striking Houthis in Yemen is the wrong course of action for now, according to Politico sources.
• White House's Kirby said they are watching the "worrisome" burgeoning defence relationship between Iran and Russia.
• G7 Leaders statement noted commitment remains to restrict exports of all items critical to Russia's military and industrial base and they will work to further curtail Russia's use of the international financial system to further its war with Ukraine. Furthermore, they are committed to tightening compliance and enforcement of the price cap policy on Russian oil, including by imposing sanctions on those engaged in deceptive practices.

ASIA-PAC

NOTABLE HEADLINES

• China's MOF is to issue yuan sovereign bonds worth a combined CNY 10bln via the central money markets unit of the HKMA.
• China vowed to retaliate against the UK regarding sanctions, according to Bloomberg.
• Italy formally withdrew from China's Belt and Road project, according to AFP citing sources.
• Moody's placed 26 Chinese LGFVs ratings on review for a downgrade, while it affirmed Hong Kong’s Aa3 rating but revised the outlook to negative from stable.

EU/UK

NOTABLE HEADLINES

• BoE FSR stated the FPC is maintaining the UK countercyclical capital buffer (CCyB) rate at its neutral setting of 2% and noted that the full impact of higher interest rates will take time to come through. BoE Governor Bailey also said at the press conference the full effect of higher rates is yet to hit the UK.
• ECB's Kazaks said there is now no need to cut rates in H1, but if the situation changes then ECB decisions might change, according to Econostream.
• ECB's Kazmir said a further rate hike is unlikely to be needed but added that market bets for Q1 rate cuts are "science fiction".
• ECB's Villeroy reiterated that the issue of possible rate cuts could be raised in 2024 but not right now, while he also repeated that disinflation is happening quicker than expected.
• German government spokesperson said talks are ongoing intensively on the 2024 budget and will report news as soon as there is any, while they firmly expect the cabinet to agree on the 2024 budget this year and said priorities must also be set in EU budget talks with Ukraine on the top of the list.

DATA RECAP

• UK S&P Global/CIPS Construction PMI (Nov) 45.5 vs. Exp. 46.3 (Prev. 45.6)
• German Industrial Orders MM (Oct) -3.7% vs. Exp. 0.2% (Prev. 0.2%)
• EU Retail Sales MM (Oct) 0.1% vs. Exp. 0.2% (Prev. -0.3%, Rev. -0.1%)
• EU Retail Sales YY (Oct) -1.2% vs. Exp. -1.1% (Prev. -2.9%)