POWER: Germany's 726MW Wilhelshaven 1 Coal Plant Suffers Unplanned Cut

ERU7/Z7 paper paid 6.5 on 6.5K

Reminder - Canadian CPI data for November is out at 0830ET, and while it is expected to show a steady or slightly higher Y/Y headline versus October, core measures are expected to continue moderating overall. MNI and Bloomberg consensus median is for a 2.3% Y/Y headline reading, following from October's 2.16% unrounded, however the skew appears to be toward the downside with several entries at 2.2%. Sequential pressures are seen weaker on an NSA basis (0.0-0.1% after 0.24%).

• More attention will be on the core readings which are seen steady/moderating: the trim/median average is seen dipping to 2.90% from 2.95% prior, which would mark the lowest reading since March and down from 3.1% as recently as September; ex-food/energy CPI is seen steady at 2.7% Y/Y though the seasonally-adjusted M/M reading is seen decelerating notably (to 0.08-0.10% vs 0.26%).
• Core goods inflation is seen firming slightly, but the overriding factor bringing inflation down is expected to continue to be shelter. Headline CPI's continued elevation is seen due to food prices and lessened drag from energy base effects.
• Going into the data, the BOC rate path is seen slightly upward-sloping, though the first full 25bp hike is not cumulatively priced until the very end of 2026.
• While the BOC is done easing, it is likewise likely to look through any upside surprises in these data, having more or less pledged to keep rates on hold for the next few meetings at least. Gov Macklem's press conference statement at the December meeting eyed some potential "choppiness" in inflation ahead but overall confidence that it would return to target in the medium term. "Inflation has evolved largely as expected... In the months ahead, we will see some choppiness in headline inflation, reflecting the temporary GST/HST holiday on some goods and services a year ago. This is likely to push inflation temporarily higher in the near term. Seeing through this choppiness, we expect ongoing economic slack to roughly offset cost pressures associated with the reconfiguration of trade, keeping CPI inflation close to the 2% target."

• In the FI space, Bund futures are in consolidation mode. A bear-mode cycle is intact and the contract is trading closer to its recent lows. Scope is seen for an extension towards the 127.00 handle. Key short-term resistance is 128.75, the Dec 3 high. Note that the contract is oversold. A stronger corrective bounce would allow this oversold condition to unwind. The price pattern on Dec 10 is a doji candle - a short-term reversal signal.
• Recent price action in Gilt futures highlights 90.53, the Nov 25 / 26 low, and 91.93, the Nov 27 high, as two important short-term directional triggers. A breach of 90.53 would signal scope for a deeper retracement towards 89.86, the Nov 19 low and bear trigger. For bulls, a stronger resumption of gains and a breach of 91.93, would instead signal scope for a climb to resistance at 92.55, the Nov 11 high.