STIR: Almost 2 x 25bps Hikes Priced For 2026 Ahead Of CPI

The S&P(ESZ5) Friday night range was 6856.75 - 6905.00, SPX closed +0.19%, Asia is currently trading around 6882. Risk continued its slow grind higher on Friday night. The Bulls will be liking this price action as the market consolidates above 6800 before potentially having another run higher into year-end. I remain wary of getting bullish up here, but it's tough to argue with the price action. This morning the futures opened a little higher, E-minis(S&P) +0.05%, NQZ5 +0.05%. On the day support should again be back toward the 6790-6820 area as the market looks to potentially challenge above 6900 again at some point en route to new highs. Only a break back below 6700-6750 would signal a potential pullback.

• The FOMC will be important this week with the market pricing in rate cuts, how many dissenters are needed to put a dent in this bullish view ?
• Oracle is also releasing results 10/12 and will be watched by those looking for reassurance on the AI sector.
• The S&P 500 Index Average True Range(ATR) for the last 10 Trading days: 68 Points

Fig 1: S&P 500 Index Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The AOFM sells A$300mn of the 4.75% 21 June 2054 Treasury Bond, #TB169:

• Average Yield (%): 5.2512 (prev. 5.0603)
• High Yield (%): 5.2525 (prev. 5.0625)
• Bid/Cover: 3.4333x (prev. 2.8500x)
• Allotted at Highest Accepted Yld as % of Bid at that Yld (%): 80.5 (prev. 90.6)
• Bidders: 47 (prev. 49), successful 13 (prev. 19), allocated in full 6 (prev. 10)

While there is some Q3 data out this week, there are also some monthly data to gauge the progress of the recovery in Q4. Bloomberg includes a media Q&A by new RBNZ Governor Breman for Wednesday at 0810 NZDT.

• Q3 manufacturing activity and volumes print on Thursday ahead of 18 December’s Q3 GDP print. The sector shrank around 3% q/q in Q2 and contributed to the sharp 0.9% q/q contraction in GDP.
• On Friday the Business NZ manufacturing PMI for November is released and Monday 15 December for the performance of services index. In October, manufacturing printed its fourth consecutive month at 50 or above, while services returned to growth for the first time since November 2024.
• Card spending data have remained lacklustre and underperformed the official quarterly retail sales figures. Q3 values rose 1.7% q/q and volumes a robust 1.9% q/q. November card transactions are published on Friday. 
• October net migration is published on Wednesday.