MNI ASIA MARKETS ANALYSIS: Dec Rate Cut Fully Priced In

Dec-01 20:35By: Bill Sokolis

APAC+ 4

HIGHLIGHTS

Treasuries look to finish at/near session lows Monday upon returning from Thanksgiving holiday, trading near lows since late morning.
Rate-locks & speculative selling contributed to Tsy decline, Merck's $8B 8pt debt issuance lion's share of today's $17.75B total corporate issuance on the day
Tsy curves bear steepened, projected rate cut pricing gained (-25bp for Dec 10 fully priced in) after Sunday headlines: Trump has decided who will replace Chairman Powell (but not who or when; Hassett happy to fill chair).
Though Fed entered Blackout late Friday, Fed Chair Powell expected to make opening remarks memorial event this evening (2000ET), panel discussion (text, Q&A) to follow.

US TSYS

US TSYS: Curves Bear Steepen, Trump Yet to Annc Fed Chair Choice

Treasuries reversed early gains, look to finish near session lows Monday, trading sideways since late morning amid decent rate lock hedging/speculative selling ahead $17.75B corporate bond issuance, largely tied to Merck's $8B 8pt debt issuance.
Currently, TYH6 -17 at 112-26 vs. 112-25.5 low, the retreat resulted in a breach of both the 20-day EMA, but more importantly the 50-day EMA at 112-27. A clear breach of this average would undermine a recent bull theme and signal scope for a deeper retracement. A reversal higher is required to refocus attention on the key resistance and bull trigger at 113-29+, the Oct 17 high.
Curves bear steepen after: Trump has decided who will replace Chairman Powell (but not who or when; Hassett happy to fill chair). As such - projected rate cut pricing rises vs. late Friday (*): Dec'25 at -24.7bp (-20.7bp), Jan'26 at -30.6bp (-28.4bp), Mar'26 at -37.8bp (-36.1bp), Apr'26 at -44.1bp (-43.4bp).
Treasuries bounced midmorning after dip in ISM Mfg, New Orders and Employ data, Prices Paid higher than expected: ISM manufacturing index improved marginally to 49.0 in November having dipped 0.4pts to 48.7 in Oct.
The S&P Global US manufacturing PMI was revised up to 52.2 in the final November report vs 51.9 in the flash, although it still dips from 52.5 in October. The press release (link) notes some mixed findings with a “solid rise in production” but also a “considerable slowdown” in demand growth.
Dented risk sentiment only remains seen through the lens of the crypto markets Monday, as the bounce back for equity indices across the US session sees both the e-mini S&P and Nasdaq futures rise back into positive territory.

REFERENCE RATES

US TSYS: Repo Reference Rates

Secured Overnight Financing Rate (SOFR): 4.12% (+0.07), volume: $3.361T
Broad General Collateral Rate (BGCR): 4.08% (+0.06), volume: $1.269T
Tri-Party General Collateral Rate (TCR): 4.08% (+0.06), volume: $1.236T
(rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

Daily Effective Fed Funds Rate: 3.89% (+0.01), volume: $90B
Daily Overnight Bank Funding Rate: 3.88% (+0.00), volume: $167B

FED Reverse Repo Operation

RRP usage slips to $3.240B with 9 counterparties this afternoon from $7.561B Friday. Compares to last Tuesday November 18: $0.905B - lowest level since mid-March 2021; this years highest excess liquidity measure: $460.731B on June 30.

US SOFR/TREASURY OPTION SUMMARY

US Markets back from Thanksgiving holiday, decent option volumes with SOFR put unwinds, call buys. Underlying futures lower/curves bear steepen after: Trump has decided who will replace Chairman Powell (but not who or when; Hassett happy to fill chair). As such - projected rate cut pricing rises vs. late Friday (*): Dec'25 at -24.7bp (-20.7bp), Jan'26 at -30.6bp (-28.4bp), Mar'26 at -37.8bp (-36.1bp), Apr'26 at -44.1bp (-43.4bp).

SOFR Options:
+5,500 SFRF6 96.43/96.56/96.68 call flys ref 96.245
-6,000 0QH6 96.75 puts 0.5 over 3QH6 96.37 puts/covered. 0.5 net cr bear steepener
+15,000 SFRM6 96.43/96.56/96.81/96.93 call condor w/ SFRU6 96.43/96.56/96.87/97.00 call condors, 7.5-7.75 total
Update, appr -33,300 SFRF6 96.25/96.37 put spds .75-1.0 over 96.56/96.68 call spds ref 96.44 to -.43
Block/screen, +17,000 SFRH6 96.37/96.50 call spds, 4.25 ref 96.425 to -.43
Block, 10,000 0QZ5 97.06/97.12 call spds, 0.5
8,000 0QH6/2QH6 96.25/96.50 put spd spd 1.75 net/Green March over
Block, 15,000 SFRF6 96.56/96.68 call spds 2.25
10,000 SFRF6 96.56/96.68 call spds ref 96.45
-5,000 SFRH6 96.25/96.37 2x1 put spds, 3.0 ref 96.44
1,500 SFRZ6 96.87/97.00 put spds vs. 0QZ5 96.75 put
5,500 SFRM6 96.25/96.31 put spds, 0.75 ref 96.69
6,500 SFRZ5 96.06/96.12 2x1 put spds, 0.5 ref 96.2625
4,000 SFRF6 97.00/97.12 call spds ref 96.445
2,000 SFRJ6 96.31/96.43 2x1 put spds vs. 97.75 calls, 0.25 net ref 96.69
+5,000 SFRZ5 96.31/96.37 call spds, 0.5 ref 96.2625
1,000 0QZ5/0QF6 96.87 put spds
2,000 0QZ5 96.50/96.75/96.81/96.87 broken put condors ref 96.95

Treasury Options
2,500 TYG6 109.5 puts, 4 ref 112-27
4,800 TUH6 103.75/104.12/104.37 broken put flys, ref 104-11 to -11.12
1,600 USF6 115 puts, 30 ref 116-27
+1,250 USG6 112 puts 21
2,000 TYF6 113.5/115 call spds ref 113-06
+2,000 TYG6 115.5 calls, 14
+1,500 wk2 TY 112.25/112.75 put spds, 7 ref 113-10
+2,500 wk2 TY 112.25/113 put spds, 12 ref 113-10
+1,500 TYF6 114.5 calls, 12

MNI FOREX: Equity Bounce Prompts Solid Greenback Recovery

USD: Dented risk sentiment only remains seen through the lens of the crypto markets Monday, as the bounce back for equity indices across the US session sees both the e-mini S&P and Nasdaq futures rise back into positive territory. Rather than providing a specific bid to risk-tied currencies in G10, the moves have bolstered a solid recovery for the US dollar. ISM manufacturing data came in a touch below expectations, not garnering any market reaction.
JPY: Given the prior volatility for USDJPY, this has translated in a notable 80 pip bounce for the pair. Earlier, we noted how USDJPY had traded below its 20-day EMA and below the prior breakout point at 155.00. Despite this, the solid recovery may create some false breaks on the chart, keeping bullish conditions intact, for now.
- Many had cited the yen’s outperformance as a reaction to BOJ Governor giving slightly more of a nod to a December rate hike. In our view, the slight adjustment between Jan and Dec pricing should have little impact on short-term yen sentiment, with domestic fiscal developments and China-Japan tensions more likely to drive he narrative.
GBP: Elsewhere, GBPUSD has had a similar sized turnaround, falling sharply from 1.3275 post-budget highs to now edge closer to 1.32. The resignation of the head of the UK OBR, fiscal uncertainties and a likely December rate cut from the BOE remain headwinds for sterling, and could keep a move back towards 1.3010 for cable on the cards. In sympathy EURGBP, has traded in a constructive manner, edging back towards 0.88.
Commodity currencies saw little interest to start the week, allowing NZDUSD to consolidate its recent rally back above 0.5700, still signaling scope for a stronger recovery to the medium-term pivot at 0.5800. For Aussie, Q3 GDP data are due on Wednesday.

MNI OPTIONS: Expiries for Dec02 NY cut 1000ET (Source DTCC)

EUR/USD: $1.1560(E1.1bln), $1.1600(E596mln), $1.1615-25(E1.4bln)
USD/JPY: Y155.00($2.6bln), Y156.00($885mln), Y156.50($951mln)
GBP/USD: $1.3030-50(Gbp2.1bln)
EUR/GBP: Gbp0.8800(E700mln), Gbp0.8830-50(E1.1bln)

MNI US STOCKS: Late Equities Roundup

Stocks remain in weaker territory late Monday, near mid-range for the day with Health Care, Industrials and Utilities sector shares underperforming.
Currently, the DJIA trades down 336.65 points (-0.71%) at 47380.28, S&P E-Mini Futures down 30.5 points (-0.44%) at 6829.25, Nasdaq down 96 points (-0.4%) at 23270.68.
As noted, Health Care, Industrials and Utilities sector shares led declines in the second half:
Moderna -6.51%, Insulet Corp -3.99%, Regeneron Pharmaceuticals -3.53%, Biogen -2.90%, Agilent Technologies -2.68% and Merck & Co -2.45%.
EQT Corp -0.61%, Texas Pacific Land Corp -0.56%, Expand Energy -0.31% Kinder Morgan +0.07%.
LyondellBasell Industries -1.41%, Albemarle -0.98%, Vulcan Materials -0.89%, Corteva -0.88% amd International Paper -0.66%.
Meanwhile Energy and Materials sector shares led advances in the second half: CF Industries Holdings +1.84%, Mosaic Co +1.71%, Newmont Corp +1.11% and DuPont de Nemours +0.80%
Leading advances in the Materials sector: Diamondback Energy +2.35%, Devon Energy +2.24%, Valero Energy +2.18%, Halliburton +2.14% and ConocoPhillips +2.13%.

MNI EQUITY TECHS: E-MINI S&P: (Z5) Holding On To The Bulk Of Its Recent Gains

RES 4: 6953.75 High Oct 30 and bull trigger
RES 3: 6900.50 High Nov 12
RES 2: 6852.56 76.4% retracement of the Oct 30 - Nov 21 bear leg
RES 1: 6863.75 High Nov 28
PRICE: 6817.50 @ 14:18 GMT Dec 1
SUP 1: 6674.50/6525.00 Low Nov 25 / 21
SUP 2: 6500.00 Round number support
SUP 3: 6476.62 23.6% retracement of the Apr 7 - Oct 30 uptrend
SUP 4: 6427.00 Low Sep 2

S&P E-Minis are holding on to the bulk of their latest gains following the recovery from the Nov 21 low. The climb has resulted in a breach of the 20- and 50- day EMAs. This highlights a bullish development and the likely end of the corrective cycle between Oct 30 and Nov 21. A continuation higher would signal scope for a move towards the key resistance and bull trigger at 6953.75, the Oct 30 high. Key support lies at 6525.00, the Nov 21 low.

MNI COMMODITIES: Bullish Corrective Cycle for WTI Still in Play

WTI has risen today amid support from geopolitical developments. Ukrainian drone strikes on Russian energy infrastructure over the weekend and US President Trump’s threats against Venezuela have been supportive. WTI JAN 26 is currently up 1.2% at 59.27$/bbl, countering the recent bearish theme.
It is worth noting that it is still possible a bullish corrective cycle remains in play. The contract has recovered from its latest low, resistance to watch is $61.84, the Oct 24 high. A clear break of this hurdle would signal scope for a stronger correction. On the flip side, a resumption of the bear leg would open the key support and the bear trigger at $55.99, the Oct 20 low.
Talks continued between the US and Ukraine in Florida over the weekend with Secretary of State Rubio saying that they were “productive” but “more work” is needed. White House Press Secretary Leavitt confirmed that Envoy Witkoff is on his way to meet President Putin on Tuesday. The US administration remains "very optimistic" of a deal being reached to end the war.
Re Venezuela, President Trump will hold a senior Cabinet-level meeting at the White House at 17:00 ET 22:00 GMT today to discuss the next steps on Venezuela. The meeting comes after Trump issued a Saturday statement on Truth Social that appeared to suggest military action on Venezuelan soil could be imminent.
Meanwhile, OPEC confirmed that it would pause its production increases in Q1, a time of seasonally low demand while market concern remains over the projected record surplus for 2026.

MNI PRECIOUS METALS: Silver Extends Surge, Gold Rally Stalls amid Dollar Turnaround

Expectations firming up for a likely Fed cut next week have helped gold to reaffirm its bullish overall theme. The strong bounce suggests the bear phase between Oct 20 and 28 appears to have been a correction. Note that the recovery since Oct 28 signals the end of the corrective cycle.
Further USD weakness early Monday allowed the yellow metal to extend gains, reaching as high as $4,264/oz, a fresh recovery high. Intra-day momentum stalled amid the broader recovery for the US dollar, and spot prices have since been consolidating close to unchanged levels on the session. Overall, sights remain on key resistance and the bull trigger at $4381.5, the Oct 20 high.
Meanwhile, spot silver extended its impressive surge to record highs, gaining a further 3.3% as we approach the APAC crossover. It’s mainly projection levels that are used to generate targets for the move at this point, and the next notable level is $59.563, a Fibonacci projection.
“Shortages in the global market as a result of the recent squeeze in London are still being felt,” said one commodity strategist from ANZ. “With gold taking a breather, it appears investors have turned their attention to silver.”
BNP noted that investors will be watching how expensive silver is getting relative to gold. “Key to watch is the fact that the gold-silver ratio has got down close to 70.”

TUESADAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
02/12/2025	0700/0700		GB	BOE Financial Stability Report
02/12/2025	0745/0845		FR	Budget Balance
02/12/2025	0900/1000		IT	Unemployment
02/12/2025	1000/1100	**	EU	EZ Unemployment
02/12/2025	1000/1000	**	GB	Gilt Outright Auction Result
02/12/2025	1000/1000	*	GB	Index Linked Gilt Outright Auction Result
02/12/2025	1000/1100	***	EU	EZ HICP Flash
02/12/2025	1000/1100	***	EU	EZ HICP Flash
02/12/2025	1000/1100	***	EU	EZ HICP Flash
02/12/2025	-	***	US	Domestic-Made Vehicle Sales
02/12/2025	1355/0855	**	US	Redbook Retail Sales Index
02/12/2025	1500/1000		US	Fed Vice Chair Michelle Bowman
03/12/2025	2200/0900	*	AU	S&P Global Final Australia Services PMI
03/12/2025	2200/0900	**	AU	S&P Global Final Australia Composite PMI
03/12/2025	0030/0930	**	JP	S&P Global Final Japan Services PMI
03/12/2025	0030/0930	**	JP	S&P Global Final Japan Composite PMI
03/12/2025	0030/1130	***	AU	Quarterly GDP
03/12/2025	0145/0945	**	CN	S&P Global Final China Services PMI
03/12/2025	0145/0945	**	CN	S&P Global Final China Composite PMI