Macron's search for all-embracing caretaker PM could take months

EU mid-market update: Bitcoin punches through 100K as crypto future looks bullish under Trump's SEC Chair choice; Macron's search for all-embracing caretaker PM could take months; OpenAI to tease new products.

Notes/observations

- Focus remains on French politics, with successful no-confidence vote yesterday against PM Barnier, who is expected to hand in resignation officially later today. Pres Macron should now appoint a caretaker PM (last time PM search took him 2 months). French assets unfazed, with CAC-40 moving in line with overall European flows, while bond market unwinding some of the risk premium from previous uncertainty, causing a narrowing of French/German 10-year spread to touch 80bps again; French banks trading higher over optimism that Barnier's proposed tax hikes will not pass after govt fell, but question remains what is the price going to be for this temporary relief, as analysts point out that finding a new French PM who will not face a motion of no confidence directly will be a very difficult mission; French Pres Macron to do national address later on Thurs, 14:00ET (19:00 GMT).

- Fed Chair Powell comments at Dealbook Summit yesterday were mostly non-impactful, failing to disturb markets as SP500, NASDAQ and DOW all hit fresh record closes.

- Pres-Elect Trump’s pick for SEC Chair helped buoy crypto bulls to push bitcoin over $100K. Trump’s pick of Paul Atkins seen as crypto friendly.

- Market now looks towards US Nonfarm Payrolls tomorrow for next major catalyst, after JOLTS beat and ADP miss earlier in week.

- Elon Musk’s xAI reportedly plans a tenfold expansion of its world’s largest Colossus supercomputer to incorporate more than 1 million GPUs; It is said to be currently operating a cluster of 100,000 Nvidia GPUs; The press report comes after OpenAI’s announcement that it plans to unveil new features, products, and demos during next 12 days, which could include video-generation model Sora, new reasoning model, as well as preview of its AI Agents and maybe, GPT-5.

- Asia closed mixed with Hang Seng underperforming -0.9%. EU indices are +0.3-0.8%. US futures are mixed. Gold -0.2%, DXY -0.1%; Commodity: Brent +0.3%, WTI +0.4%; Crypto: BTC +5.9%, ETH +5.1%.

Asia

- South Korea Q3 Preliminary GDP (2nd of 3 readings) Q/Q: 0.1% v 0.1% advance; Y/Y: 1.5% v 1.5% advance.

- Australia Oct Trade Balance (A$) 6.0B v 4.5Be v 4.6B prior; Exports M/M: +3.6% v -4.7% prior; Imports M/M: +0.1% v -2.8% prior.

- Australia Oct Household Spending M/M: 0.8% v 0.3%e; Y/Y: 2.8% v 2.2%e.

- Japan PM Isihba noted that govt should consider what a suitable FX level was.

- BOJ Board member Nakamura (prior dovish dissenter) noted that was not objecting to a rate hike, but decision must be data dependent.

Europe

- French Parliament passed a vote of no confidence in the Barnier govt. Legislators voted 331 out of 574 current members support no-confidence motion; Only 288 votes were needed to pass motion. Macron will now have to select another PM which will prove to be a hard task with a divided parliament.

- German IW economic institute noted that the German economy remained in crisis; Expected 2024 GDP to contract -0.2%.

Americas

- Fed’s Daly (voter) stressed that there was no sense of urgency to lower interest rates; Would wait until the Dec meeting to make decision.

- Fed Chair Powell: US economy in remarkably good shape right now and looked better now than it did when the rate cuts began in September. Fed could move more slowly in lowering rates.

- Fed’s Beige Book noted that economic activity rose slightly in most Districts. Hiring activity was subdued as worker turnover remained low and few firms reported increasing their headcount.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.26% at 518.82, FTSE +0.10% at 8,344.21, DAX +0.33% at 20,283.05, CAC-40 +0.37% at 7,330.21, IBEX-35 +1.11% at 12,064.00, FTSE MIB +0.81% at 34,361.00, SMI +0.11% at 11,792.59, S&P 500 Futures -0.04%].

Market Focal Points/Key Themes: European indices open mixed with an upward bias and advanced through the early part of the session; Ibex outperforming following unexpectedly strong industrial production figures; markets seen buoyed by general risk-on sentiment; among sectors leading the way higher are energy and financials; with sectors such as industrials and technology lagging; Shell and Equinor to merge their UK offshore oil & gas assets into a JV; Neoen sells its Victoria portfolio; reportedly Cellnex looking to sell it Spanish data centers; focus on US trade balance later in the day; earnings expected in the upcoming Americas session include Lululemon, Kroger and Hewlett Packard.

Equities

- Consumer discretionary: Watches of Switzerland [WOFG.UK] +8.0% (earnings), Frasers Group [FRAS.UK] -12.5% (earnings), Puma [PUM.DE] +4.0% (Oddo raises to outperform).

- Energy: Tullow Oil [TLW.UK] -8.0% (CEO to step down) - Financials: Societe Generale [GLE.FR] +3.5% (French-German yields spread narrows; optimism that Barnier's proposed tax hikes will not pass after govt fell).

- Industrials: Aurubis [NDA.DE] +14.0% (Q1 results), Balfour Beatty [BBY.UK] +2.5% (trading update), DS Smith [SMDS.UK] -1.0% (earnings).

- Technology: ASML Holding [ASML.NL] +1.0% (Foxconn monthly sales; Elon Musk’s xAI plans a tenfold expansion of its Colossus data center), Ebiquity [EBQ.UK] -23.5% (trading update), Future plc [FUTR.UK] +14.5% (FY24 results; buyback).

Speakers

- ECB's Kazaks (Latvia, voter, hawk) stated that Council should cut rates next week.

- Bank of England (BOE) Decision Maker Panel (DMP) Nov Survey raised the 1-year ahead CPI from 2.5% to 2.7%while maintaining the 3-year ahead CPI at 2.6%.

- Italy Stats Agency (Istat) updated its Economic Forecasts which cut the 2024 GDP growth forecast from 1.0% to 0.5% and cut 2025 GDP growth from 1.1% to 0.8%.

- Moody's stated that the French no-confidence vote was credit negative.

Currencies/fixed income

- USD was softer against the major pairs.

- EUR/USD rose to test above 1.5040 after German Factory order beat consensus. The pair shrugged off the current French political crisis as the French-German spread narrowed toward the 80 level. Dealers saw some chart resistance around 1.0550 stressing that the region would continue to face weaker economic growth.

- USD/JPY below the 150 level after former BOJ Dove Nakamura stated that he was not objecting to a rate hikes, but decision must be data dependent.

Economic data

- (CH) Swiss Nov Unemployment Rate: 2.6% v 2.7%e; Unemployment Rate (seasonally adj): 2.6% v 2.7%e.

- (DE) Germany Oct Factory Orders M/M: -1.5% v -2.0%e; Y/Y: 5.7% v 1.8%e.

- (SE) Sweden Nov Preliminary CPI M/M: 0.3% v 0.4%e; Y/Y: 1.6% v 1.6%e.

- (SE) Sweden Nov Preliminary CPIF M/M: 0.5% v 0.6%e; Y/Y: 1.9% v 1.9%e.

- (SE) Sweden Nov Preliminary CPIF (ex-energy) M/M: -0.2% v -0.3%e; Y/Y: 2.4% v 2.4%e.

- (FI) Finland Oct Preliminary Trade Balance: -€0.3B v +€0.3B prior.

- (HU) Hungary Oct Retail Sales Y/Y: 3.6% v 3.3%e.

- (HU) Hungary Oct Preliminary Trade Balance: €1.0B v €1.0B prior.

- (FR) France Oct Industrial Production M/M: -0.1% v +0.3%e; Y/Y: -0.6% v -0.2%e.

- (FR) France Oct Manufacturing Production M/M: 0.0% v -0.7% prior; Y/Y: -1.4% v -0.8% prior.

- (ES) Spain Oct Industrial Production M/M: +0.5% v -0.1%e; Y/Y: 1.9% v 0.6%e; Industrial Output NSA (unadj) Y/Y: 6.4% v 0.1% prior.

- (ES) Spain Q3 INE House Price Index Q/Q: 2.8% v 3.6% prior; Y/Y: 8.1% v 7.8% prior.

- (AT) Austria Nov Wholesale Price Index M/M: % v 0.7% prior; Y/Y: %v -1.3% prior.

- (TW) Taiwan Nov CPI Y/Y: 2.1% v 1.9%e; CPI Core Y/Y: 1.7% v 1.8%e; PPI Y/Y: +1.2% v -0.7% prior.

- (TW) Taiwan Nov Foreign Reserves: $578.0BB v $576.9B prior.

- (DE) Germany Nov Construction PMI: 38.0 v 40.2 prior.

- (ZA) South Africa Q3 Current Account (ZAR): -71B v -75B prior; Current Account to GDP Ratio: -1.0% v -1.7%e.

- (UK) Nov New Car Registrations Y/Y: -1.9% v -6.0% prior.

- (UK) Nov Construction PMI: 55.2 v 53.5e (8th month of expansion).

- (EU) Euro Zone Oct Retail Sales M/M: -0.5% v -0.3%e; Y/Y: 1.9% v 1.7%e.

- (GR) Greece Q3 Unemployment Rate: 9.0% v 9.8% prior.

- (CY) Cyprus Nov CPI M/M: -0.4% v 0.1% prior; Y/Y: 1.5% v 0.6% prior

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €2.447B vs. €2.0-3.0B indicated range in 2030 and 2034 SPGB bonds.

- Sold €1.311B in 2.70% Jan 2030 SPGB bonds; Avg Yield: 2.365% v 2.749% prior; bid-to-cover: 2.04x v 1.70x prior.

- Sold €1.136B in 3.45% July 2034 SPGB; Avg Yield: 2.743% v 2.921% prior; Bid-to-cover: 2.59x v 1.74x prior.

- (FR) France Debt Agency (AFT) sold total €4.597B vs. €3.0-5.0B indicated range in 2038, 2040, 2050 and 2072 Bonds.

- Sold €1.056B in 4.00% Oct 2038 Oat; Avg Yield: 3.10% v 1.48% prior; Bid-to-cover: 2.85x v 1.92x prior.

- Sold €1.573B in 0.50% May 2040 Oat; Avg Yield: 3.17% v 3.23% prior; bid-to-cover: 2.31x v 2.78x prior.

- Sold €882M in 1.50% May 2050 Oat; Avg Yield: 3.30% v 0.70% prior; Bid-to-cover: 3.03x v 2.02x prior.

- Sold €1.086B in 0.50% May 2072 Oat; Avg Yield: 2.93% v 3.36% prior; bid-to-cover: 3.43x v 2.99x prior.

Looking ahead

- (IL) Israel Nov Foreign Currency Balance: No est v $216.1B prior.

- (MX) Mexico CitiBanamex Survey of Economists.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR) vs £41.0B prior.

- 06:00 (IE) Ireland Q3 Final GDP Q/Q: No est v 2.0% prelim; Y/Y: No est v -1.2% prelim.

- 06:00 (IE) Ireland Q3 Current Account Balance: No est v €35.5B prior.

- 06:00 (IL) Israel Oct Chain Store Sales M/M: No est v 2.7% prior.

- 06:00 (ZA) South Africa Oct Electricity Consumption Y/Y: No est v 6.1% prior; Electricity Production Y/Y: No est v 8.5% prior.

- 07:00 (CL) Chile Oct Nominal Wage Y/Y: No est v 7.8% prior.

- 07:30 (US) Nov Challenger Job Cuts Y/Y: No est v 55.6K prior; Y/Y: No est v 50.9% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 29th: No est v $614.2B prior.

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

- 08:30 (US) Initial Jobless Claims: 215Ke v 213K prior; Continuing Claims: 1.90Me v 1.907M prior.

- 08:30 (US) Oct Trade Balance: -$75.0Be v -$84.4B prior.

- 08:30 (CA) Canada Oct Int’l Merchandise Trade (CAD): -1.1Be v -1.3B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (PL) Poland Central Bank (NBP) Gov Glapinski post rate decision press conference.

- 10:00 (CA) Canada Nov Ivey Purchasing Managers Index (seasonally adj): No est v 52.0 prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 2-year Bonds.

- 13:00 (BR) Brazil Nov Trade Balance: $7.5Be v $4.3B prior; Exports: $29.3Be v $29.5B prior; Imports: $21.5Be v $25.1B prior.

- 14:00 (FR) France President Macron speech to nation.

- 18:00 (KR) South Korea Oct Current Account Balance: No est v $11.1B prior; Balance of Goods (BOP): No est v $10.7B prior.

- 18:30 (JP) Japan Oct Labor Cash Earnings Y/Y: 2.6%e v 2.5% prior(revised from 2.8%); Real Cash Earnings Y/Y: -0.1%e v -0.4% prior (revised from -0.1%); Cash Earnings (same sample base) Y/Y: 3.0%e v 2.9% prior; Scheduled Full-Time Pay (same sample base) Y/Y: 2.9%e v 2.8% prior (revised from 2.9%).

- 18:30 (JP) Japan Oct Household Spending Y/Y: -2.5%e v -1.1% prior.

- 19:30 (AU) Australia Oct Home Loans Value M/M: No est v -0.3% prior; Owner-Occupier Loan Value M/M: No est v 0.1% prior; Investor Loan Value M/M: No est v 0.1% prior.

- 20:00 (PH) Philippines Oct Unemployment Rate: No est v 3.7% prior.

- 21:00 (VN) Vietnam Nov CPI Y/Y: 3.0%e v 2.9% prior.

- 21:00 (VN) Vietnam Nov Industrial Production Y/Y: No est v 7.0% prior.

- 21:00 (VN) Vietnam Nov Retail Sales Y/Y: No est v 7.1% prior.

- 21:00 (VN) Vietnam Nov Trade Balance: $1.3Be v $2.0B prior; Exports Y/Y: 11.5%e v 10.1% prior; Imports Y/Y: 12.6%e v 13.6% prior.

- 21:35 (CN) China to sell 30-year Bonds.

- 22:00 (ID) Indonesia Nov Foreign Reserves: No est v $151.2B prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 23:30 (IN) India Central Bank (RBI) Interest Rate Decision: Expected to leave Repurchase Rate unchanged at 6.50%.