French CAC on track to notch 7-day winning streak as Macron gives hope for eventual budget

EU mid-market update: French CAC on track to notch 7-day winning streak as Macron gives hope for eventual budget; US job report (and revisions to last one) in focus.

Notes/observations

- Optimism returns to French bond market with French 10-year premium over Germany narrowing to 74bps, from >85bps earlier in week. CAC40 outperforms European peers as well, last seen +1.0%; Although next PM is still unknown, the path has become clearer, with Pres Macron noting he will announce a caretaker PM in coming days (reportedly Macron’s meeting with François Bayrou, potential successor to PM Barnier, went well) and priority of govt is to use special powers to approve next year’s budget urgently; Meanwhile, Socialist Party's first secretary Faure said Socialists are ready to negotiate with the Macron's party, which may potentially return enough power to Macron's centrists alliance to break the country’s political gridlock; Some analysts note that markets not panicking about French political situation because, unlike Greece and Portugal 14 years ago, France doesn’t have a yawning current account deficit.

- Market waits for US Nov jobs report, highlight by Nonfarm Payrolls, expected at +220K vs +12K previously (focus will be on revisions as well). Analyst ranges from +155-275K; Fed futures currently pricing about 70% chance for 25bps cut this month and about 40% chance for another 25bps cut by Mar 2025.

- Press reports citing sources that BOJ's December and any other meetings in coming months likely to be live with BOJ said to have eyes set on hiking rates by around Mar 2025, but likely wants to leave itself a ‘free hand’ on the exact timing.

- Pick up in UK M&A, with Aviva raising offer for Direct Line to £2.75/shr in £4.6B deal, improvement of 10% over prior offer; Separately, Frasers announced a voluntary offer for XXL in Norway at NOK10.0/shr; Reminder Frasers recently abandoned efforts to acquire Mulberry.

- Asia closed mixed with Hang Seng outperforming +1.6%. EU indices are -0.2% to +1.3%. US futures are -0.1%. Gold +0.3%, DXY +0.1%; Commodity: Brent -0.6%, WTI -0.5%; Crypto: BTC -4.8%, ETH -1.8%.

Asia

- South Korea Oct Current Account: $9.8B v $10.9B prior.

- Japan Oct Labor Cash Earnings Y/Y: 2.6% v 2.6%e; Real Cash Earnings Y/Y: 0.0% v -0.1%e.

- Japan Oct Household Spending Y/Y: -1.3% v -2.5%e.

- India Central Bank (RBI) left Repurchase Rate unchanged at 6.50% (as expected) with vote to keep policy steady not unanimous (4-2). Maintained neutral policy stance. RBI cut the Cash Reserve Ratio (CRR) by 50bps to 4.00% (not expected) for its 1st reduction since Mar 2020).

- BOJ said to have its eyes set on hiking rates by around Mar 2025, but likely wanted to leave itself a ‘free hand’ on the exact timing – financial press.

- South Korea Joint Chiefs of Staff noted that not need to worry about a 2nd martial law measure being imposed.

Europe

- France Pres Macron national address stressed that he would carry out full mandate as president and would name a new prime minister in the coming days.

- French far-right leader Le Pen noted that there was no case for Macron to quit under current conditions. Could pass a budget for 2025 in next few weeks.

-Socialist Party's first secretary Faure said Socialist party is ready to negotiate with the Macronists and Les Républicains on the basis of "reciprocal concessions" with a view to forming a new government that would have a "fixed-term contract".

- BOE’s Greene stated that services inflation had remained stubbornly high, underpinned by wage growth. Could be weak consumption in the UK for awhile.

- Confederation of British Industry (CBI) cuts UK 2024 GDP growth from 1.0% to 0.9% and cut 2025 GDP growth from 1.9% to 1.6%.

Americas

- Pres-elect Trump named David Sacks to be "White House AI and Crypto Czar".

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.22% at 520.74, FTSE -0.07% at 8,343.24, DAX +0.39% at 20,445.15, CAC-40 +1.18% at 7,417.08, IBEX-35 +0.08% at 12,128.09, FTSE MIB +0.63% at 34,846.00, SMI +0.01% at 11,778.00, S&P 500 Futures -0.07%].

Market focal points/key themes: European indices opened mixed and failed to gain direction; among sectors inclined to the upside are real estate and industrials; underperforming sectors include technology and communication services; Aviva raises offer price for Direct Line; Encavis to be acquired by KKR; Frasers makes offer for XXL; focus on upcoming US NFP data later in the day; no major earnings expected in the upcoming Americas session.

Equities

- Consumer discretionary: JD Sports Fashion [JD.UK] +0.5% (Lululemon earnings), XXL [XXL.NO] +23.5% (Frasers offer for XXL at NOK10/shr), Moncler [MONC.IT] +4.0% (Goldman upgrade to Buy), QUIZ plc [QUIZ.UK] -50.5% (trading update).

- Financials: Direct Line Insurance [DLG.UK] +7.0% (Aviva raised offer), Aviva [AV.UK] -1.0% (increases offer for Direct Line to £2.75/shr), Berkeley Group [BKG.UK] -1.0% (earnings).

- Industrials: Volkswagen [VOW3.DE] +1.5% (IG Metall union: Workers to go on 4-hour strike at 9 locations in Germany on Monday), BMW [BMW.DE] +1.5% (Jefferies raised to buy), Mercedes-Benz [MBG.DE] +1.0% (Jefferies cuts to hold).

- Utilities: Encavis [ECV.DE] +1.5% (conclusion of delisting agreement with KKR).

Speakers

- Sweden Central Bank (Riksbank) Dep Gov Seim reiterated stance that policy rate could be cut in Dec and into H1 of 2025.

- Germany Fin Min Kukies stated that Germany has very strong trade relationship with the US; Had constructive relationship with Trump in the past.

- Poland Central Bank (NBP) Kotecki stated that the shift of Gov Glapinski might be politically motivated; Gov's outlook was not the MPC stance (**Insight: Glapinski unexpectedly pushed back the outlook for interest rate cuts into 2026, citing concerns inflation would surge again after the government eventually removed energy price caps).

Currencies/fixed income

- USD was slightly softer as focus was on the upcoming US jobs report. Payrolls were expected to bounce higher after the previous month's weak figure due to weather and strikes.

- EUR/USD trading in the upper bound of the 1.05 level as some of the French political tensions subsided for the time being. France Pres Macron national address stressed that he would carry out full mandate as president and would name a new prime minister in the coming days. French far-right leader Le Pen noted that there was no case for Macron to quit under current conditions. Could pass a budget for 2025 in next few weeks.

- GBP/USD higher at 1.2760 by mid-session aided by better UKs property sector data.

- USD/JPY stayed abve the 150 level ahead of US payroll data.

Economic data

- (SE) Sweden Nov Maklarstatistik Housing Prices: 4.7% v 4.4% prior.

- (NL) Netherlands Oct Consumer Spending Y/Y: 0.4% v 2.6% prior.

- (ZA) South Africa Nov Gross Reserves: $65.9B v $63.0B prior; Net Reserves: $60.6B v $61.2B prior.

- (DE) Germany Oct Industrial Production M/M: -1.0% v +1.0%e; Y/Y: -4.5% v -3.3%e.

- (UK) Nov Halifax House Price Index M/M: 1.3% v 0.2% prior; Y/Y: 4.8% v 3.9% prior.

- (SE) Sweden Nov Budget Balance (SEK): +17.9B v -5.7B prior.

- (NO) Norway Oct Industrial Production M/M: +9.8% v -11.2% prior; Y/Y: 2.1% v -0.5% prior.

- (NO) Norway Oct Manufacturing Production M/M: -1.6% v -0.9% prior; Y/Y: 0.3% v 2.7% prior.

- (DK) Denmark Oct Industrial Production M/M: +5.5% v -4.6% prior.

- (RO) Romania Q3 Preliminary GDP (2nd of 3 readings) Q/Q: -0.1%e v 0.0% advance; Y/Y: 1.1%e v 1.1% advance.

- (MY) Malaysia end-Nov Foreign Reserves: $118.3B v $118.0B prior.

- (HU) Hungary Oct Industrial Production M/M: +2.0% v -0.1%e; Y/Y: -3.1% v -5.7%e.

- (TH) Thailand May Foreign Reserves w/e Nov 29th: $237.5Bt v $234.6B prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 97.8K v 108.8K tons prior.

- (FR) France Oct Trade Balance: -€7.7B v -€8.4B prior; Current Account Balance: -€2.6B v -€2.4B prior.

- (CH) Swiss Nov Foreign Currency Reserves (CHF): 724.6B v 718.7B prior.

- (CZ) Czech Oct Retail Sales (ex-auto) Y/Y: 5.5% v 4.9%e.

- 03:00 (RU) Russia Nov Narrow Money Supply w/e Nov 29th (RUB): No est v 18.34T prior.

- (CN) China Nov Foreign Reserves: $T v $3.233Te.

- (HK) Hong Kong Nov Foreign Reserves: $425.1B v $421.3B prior.

- (UN) Nov FAO World Food Price Index: 127.5 v 126.9 prior.

- (IT) Italy Oct Retail Sales M/M: -0.5% v +1.3% prior; Y/Y: 2.6% v 0.7% priorh.

- (EU) Euro Zone Q3 Final GDP Q/Q: 0.4% v 0.4% prelim; Y/Y: 0.9% v 0.9% prelim.

- (EU) Euro Zone Q3 Final Employment Q/Q: 0.2% v 0.2% prelim; Y/Y: 1.0% v 1.0% prelim.

- (EU) Euro Zone Q3 Household Consumption Q/Q: 0.7% v 0.6%e; Govt Expenditures Q/Q: 0.5% v 0.5%e; Gross Fixed Capital Q/Q: +2.0% v -0.5%e.

- (GR) Greece Q3 GDP Q/Q: 0.3% v 1.2% prior; Y/Y: 2.4% v 2.3% prior; GDP NSA (unadj) Y/Y: 2.5% v 2.6% prior.

Fixed income issuance

- (IN) India sold total INR300B vs. INR300B indicated in 2027, 2034, and 2054 bonds.

- (ZA) South Africa sold total ZAR950M vs. ZAR1.0B indicated in I/L 2038, 2043 and 2058 bonds.

Looking ahead

- (DE) Germany Oct Trade Balance: €15.7Be v €16.9B prior(revised from €17.0B) Exports M/M: -2.6%e v -1.7% prior; Imports M/M: -1.0%e v 2.1% prior.

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

- 05:40 (UK) BOE’ s Dhingra.

- 06:00 (IE) Ireland Nov Live Register Monthly Change: No est v +0.7K prior; Live Register Level: No est v 169.0K prior.

- 06:00 (CL) Chile Nov CPI M/M: 0.1%e v 1.0% prior; Y/Y: 4.2%e v 4.7% prior.

- 06:00 (BR) Brazil Nov FGV Inflation IGP-DI M/M: 1.1%e v 1.5% prior; Y/Y: 6.4%e v 5.9% prior.

- 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£1.0B, £2.0B and £2.5B respectively).

- 06:30 (IN) India Forex Reserve w/e Nov 29th: No est v $656.6B prior.

- 06:30 (IS) Iceland switch auction.

- 06:30 (IN) India announces upcoming bill issuance (held on Wed).

- 07:00 (MX) Mexico Nov Vehicle Production: No est v 383.1K prior; Vehicle Exports: No est v 332.4K prior.

- 08:00 (PL) Poland Nov Official Reserves: No est v $215.3B prior.

- 08:00 (PL) Poland Central Bank (NBP) Nov Minutes (2 decisions ago).

- 08:00 (RU) Russia Nov Official Reserve Assets: No est v $631.6B prior.

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

- 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance.

- 08:30 (US) Nov Change in Nonfarm Payrolls: +220Ke v +12K prior; Private Payrolls: +205Ke v -28K prior; Manufacturing Payrolls: +30Ke v -46K prior.

- 08:30 (US) Nov Unemployment Rate: 4.1%e v 4.1% prior; Underemployment Rate: No est v 7.7% prior; Labor Force Participation Rate: 62.7%e v 62.6% prior.

- 08:30 (US) Nov Average Hourly Earnings M/M: 0.3%e v 0.4% prior; Y/Y: 3.9%e v 4.0% prior; Average Weekly Hours All Employees: 34.3e v 34.3 prior.

- 08:30 (CA) Canada Nov Net Change in Employment: +25.0Ke v +14.5K prior; Unemployment Rate: 6.6%e v 6.5% prior; Full Time Employment Change: No est v +25.6K prior; Part Time Employment Change: No est v -11.2K prior; Participation Rate: 64.9%e v 64.8% prior; Hourly Wage Rate Y/Y: 4.7%e v 4.9% prior.

- 09:15 (US) Fed's Bowman.

- 09:30 (TR) Turkey Nov Cash Budget Balance (TRY): No est v -167.3B prior.

- 10:00 (US) Dec Preliminary University of Michigan Confidence: 73.3e v 71.8 prior.

- 10:30 (US) Fed’s Goolsbee.

- 11:00 (EU) Potential sovereign ratings after European close (Moody's on Finland).

- 12:00 (US) Fed’s Hammack.

- 13:00 (US) Fed’s Daly.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 14:00 (AR) Argentina Oct Industrial Production Y/Y: -2.0%e v -6.1% prior.

- 15:00 (US) Oct Consumer Credit: $10.0Be v $6.0B prior.

- 18:00 (CO) Colombia Nov CPI M/M: +0.2%e v -0.1% prior; Y/Y: 5.1%e v 5.4% prior.