MNI ASIA MARKETS ANALYSIS: Stocks Bid on Strong US Data

HIGHLIGHTS

• Treasuries gapped lower after this morning's stronger that expected economic data (Q3 GDP +4.3%) that tempered rate cut expectations through mid-2026 (June '26 the first FOMC date to price in a 25bp cut).
• Information Technology and Communication Services sector shares continued to lead advances in the second half, chip makers buoyed after the Trump administration announced a tariff delay on China until 2027.
• Real GDP was stronger than most expected in the first look at Q3 data, rising 4.3% annualized vs 3.5% in Atlanta Fed’s GDPNow and 3.3% for Bloomberg consensus.
• Markets close early (1315ET) Wednesday for Christmas eve, re-open for electronic trade Thursday evening for Friday's order of business.

US TSYS

MNI US TSYS: Strong Data Weighs on Rate Cut Pricing, Curves Twist Flatter

• Treasuries look to finish mixed, curves twist flatter (2s10s -1.733 at 63.666) with 2s-10s weaker vs. modest gains in Bonds. Futures gapped lower after stronger than expected economic data while projected rate cut pricing in-turn consolidated with the June '26 now the first FOMC date to price in a 25bp cut.
• Real GDP growth was clearly stronger than most expected in the “initial” Q3 release, with the largest upside coming from personal consumption but also with a larger than expected boost from net exports that was only partly offset by a larger than expected drag from inventories. Real GDP increased a strong 4.3% whilst PDFP was also solid at 3.0%.
• ADP employment saw an average week-on-week increase of 11.5k in the four weeks to Dec 6, a moderation after the upward revised 17.5k (initial 16.25k) in the four weeks to Nov 29.
• Durable goods orders fell more than expected in October, but as is often the case the headline reading was distorted by aircraft orders. Not only did core readings beat expectations, but priors were revised up, making for an overall solid report. In this shutdown-delayed report, headline durables orders fell 2.2% M/M (1.5% fall expected, but prior rev up 0.2pp to 0.7%), but fared better ex-transportation (up 0.2% vs the 0.3% expected, with an upward 0.1pp revision to prior to 0.7%).
• Information Technology and Communication Services sector shares continued to lead advances in the second half, chip makers buoyed after the Trump administration announced a tariff delay on China until 2027.
• Markets close early (1315ET) Wednesday for Christmas eve, re-open for electronic trade Thursday evening for Friday's order of business. Tomorrow's shortened session sees MBA Mortgage Applications (0700ET) and Weekly Jobless Claims  (0830ET). Followed by US Treasury supply: US Tsy 4W & 8W bill auctions (1000ET), $44B 7Y Note (91282CPQ8) & 17W bill auctions at 1130ET.

REFERENCE RATES
​​​​​​​
US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.68% (+0.02), volume: $3.253T
• Broad General Collateral Rate (BGCR): 3.66% (+0.03), volume: $1.326T
• Tri-Party General Collateral Rate (TCR): 3.66% (+0.03), volume: $1.292T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $87B
• Daily Overnight Bank Funding Rate: 3.64% (+0.00), volume: $171B

FED Reverse Repo Operation:

RRP usage rebounds to $5.893B with 14 counterparties this afternoon vs. Monday's $1.523B. Compares to December 12 low of $0.838B (lowest level since mid-March 2021); this years highest excess liquidity measure: $460.731B on June 30.

US SOFR/TREASURY OPTION SUMMARY

SOFR & Treasury option volumes remained very limited ahead of the Christmas holiday. Accounts remained sidelined after this morning's strong economic data data while underlying futures retreated in the short end, Tsy curves flatter with 2s-10s weaker vs. Bonds. In that light, projected rate cut pricing cools vs. early morning levels (*): Jan'26 at -3.3bp (-4.4bp), Mar'26 at -11.3bp (-14.8bp), Apr'26 at -17.3bp (-21.9bp), Jun'26 at -30bp (-34.8bp).

SOFR Options:
3,000 SFRZ6 96.25/96.50 2x1 put spds
8,000 SFRU6 99.00/100.00 call spds, 1.25
3,000 0QF6 97.25 calls ref 96.885
3,000 SFRU6 97.00/97.25 call spds ref 96.8945
4,200 SFRM6 96.62/97.00 strangles, 18.5 ref 96.695
4,600 SFRG6 96.50 calls, 6.0 last
-2,000 SFRH6 96.18/96.37/96.43/96.68 put condors, 15.25 ref 96.495

Treasury Options:
5,000 FVG6 109.75 calls 
2,000 TYF6 112.5/112.75 call spds, 2
2,900 FVH6 108.5/110 strangles, 28 ref 109-07
+1,000 TYH6 112.5 calls, 49 vs. 112-14.5/0.45%
+1,700 TYH6 113.5 calls, 27 ref 112-16.5/0.30%
over -4,700 TYG6 110.5 puts, 3 last
2,100 USG6 113 puts, 19 last

MNI BONDS: EGBs-GILTS CASH CLOSE: Pre-Holiday Bull Flattening

European curves bull flattened Tuesday ahead of the holiday period.

• Bunds modestly outperformed Gilts, with some spillover from late Monday's dovishly-received comments on rate hike prospects from ECB's Schnabel, as well as an overnight bounce in JGBs from oversold conditions.
• The rally was interrupted in early afternoon by stronger than expected US Q3 GDP data, but a subsequent recovery into the cash close would ensure bull flattening on the day.
• Periphery/semi-core EGB spreads tightened slightly, as European stocks rallied to/near historic highs in a broader risk-on move.
• A reminder that Wednesday sees a shortened session for Gilts and options/futures contracts and an EGB cash holiday due to Christmas Eve, with the 25th and 26th full day holidays. Normal trade resumes on Monday.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.6bps at 2.142%, 5-Yr is down 2.1bps at 2.464%, 10-Yr is down 3.5bps at 2.862%, and 30-Yr is down 4.4bps at 3.488%.
• UK: The 2-Yr yield is down 0.3bps at 3.742%, 5-Yr is down 1bps at 3.966%, 10-Yr is down 2.7bps at 4.509%, and 30-Yr is down 3.3bps at 5.238%.
• Italian BTP spread down 1.1bps at 69.1bps / French OAT down 1.1bps at 70.4bps  

MNI OPTIONS: Lighter Pre-Holiday Flow More Mixed Compared To Recent Upside Lean

Tuesday's Europe rates/bond options flow included:

• OEG6 115.5p, sold at 14 in 2k
• ERM6 98.0625/98.1875/98.3125c fly, bought for 1 in 3k
• ERU6 97.87/97.75ps, bought for 3.5 in 3k

MNI FOREX: US GDP Prompts Limited Dollar Rebound

• After steadily weakening from the open this week, a much firmer-than-expected US GDP print has stalled the greenback’s downside momentum. Following the USD index printing a fresh pullback low at 97.85 in early trade, the data has sparked only a moderate rebound (owing to some question marks over the release), with the DXY operating around 98.05 as we approach the APAC crossover. Dollar dynamics did produce a notable pullback for spot gold, which had a near $70 pullback to $4,430/oz.
• Across the G10, it was JPY volatility that stole the show once again. Both the finance minister comments on potential intervention and a responsible tone from PM Takaichi provided a supportive backdrop early Tuesday. USDJPY extended its pull lower this week to erase the entirety of the post BOJ rally from Friday. This resulted in session lows of 155.65, before recovering around 85 pips following the US growth figures. Short-term technical parameters are well defined at 154.40 (50-day EMA) and 157.89 (key resistance and bull trigger).
• Continued positive sentiment for equity markets has underpinned solid gains for both AUD and NZD, which top the G10 leaderboard. AUDUSD has traded to within 7 pips of the key 0.6707 level, the Sep 17 high.
• Elsewhere, USDCAD also gathered downside momentum this morning. A break of multiple daily lows at 1.3727 is noteworthy, placing USDCAD at the lowest level since late July with prints below 1.3700. Overall, USDCAD has now extended its one-month selloff to around 3%, with the breach of the bull channel in early December exacerbating declines.
• Both EURUSD and GBPUSD had attempts at breaking the 1.18 and 1.35 levels respectively, although topside momentum certainly dissipated across the US session.
• US jobless claims are scheduled tomorrow, although market liquidity is likely to be heavily impacted by the upcoming holiday period.

MNI US STOCKS: Late Equities Roundup: Tech & Communication Shares Outperforming

• Stocks are drifting near late Tuesday highs, shrugging off this morning's stronger economic data (Q3 GDP +4.3%) that tempered rate cut expectations through mid-2026 (June '26 now the first FOMC date to price in a 25bp cut).
• Currently, the DJIA trades up 101.37 points (0.21%) at 48462.41, S&P E-Mini Futures up 30 points (0.43%) at 6959.5, Nasdaq up 110.2 points (0.5%) at 23536.97.
• Information Technology and Communication Services sector shares continued to lead advances in the second half, chip makers buoyed after the Trump administration announced a tariff delay on China until 2027.
• "A filing from the trade office said the government would impose an initial tariff of zero percent on Chinese semiconductors exports before increasing it in June 2027 by an undetermined amount," the NY Times reported.
  • NVIDIA +2.66%, Broadcom +2.19%, Jabil +1.86%, Motorola Solutions +1.49% and Dell Technologies +1.47%.
  • Meanwhile, Live Nation Ent +1.71%, Alphabet +1.58%, Warner Bros Discovery +1.25%, T-Mobile US +0.81% and AT&T +0.78%.
• Conversely, Health Care, Consumer Staples and Industrials sector shares continued to underperform in late trade:
  • Moderna -6.76%, IDEXX Laboratories -2.81%, Insulet -1.88%, Align Technology -1.77% and Cooper Cos -1.37%.
  • Brown-Forman -4.95%, Campbell's Company -2.64%, Lamb Weston Holdings -2.52%, Dollar General -2.16% and Dollar Tree -2.06%.
  • United Airlines -2.47%, Delta Air Lines -2.23%, Axon Enterprise -1.86%, Southwest Airlines -1.85% and Verisk Analytics -1.15%.

MNI EQUITY TECHS: E-MINI S&P: (H6) Bullish Theme  

• RES 4: 7021.79 0.618 proj Nov 21 - Dec 11 - 18 price swing  
• RES 3: 7014.00 High Oct 30 and the bull trigger
• RES 2: 6988.00 High Dec 11
• RES 1: 6961.25 Intraday high   
• PRICE: 6959.25 @ 1440 ET Dec 23
• SUP 1: 6835.96/6771.50-day EMA / Low Dec 18
• SUP 2: 6737.71 61.8% retracement of the Nov 21 - Dec 11 rally
• SUP 3: 6678.58 76.4% retracement of the Nov 21 - Dec 11 rally
• SUP 4: 6583.00 Low Nov 21  

The recent pullback in S&P E-Minis appears to have been a correction. A key short-term support has been defined at 6771.50, the Dec 18 low. A break of this level would signal scope for a deeper retracement of the recent bull phase between Nov 21 - Dec 11. This would open 6737.71, a Fibonacci retracement. For bulls a continuation higher would refocus attention on key resistance at 7014.00, the Oct 30 high. 

MNI COMMODITIES: Precious Metals at Fresh Record Highs Amid US-Venezuela Tensions

• Precious metals have rallied to fresh record highs on Tuesday amid escalating geopolitical tensions, as the US has continued to ramp up pressure on Venezuela with a further military build-up and oil tanker seizures in the Caribbean.
• Spot gold has risen by 1.1% to $4,492/oz, while silver is up by 3.4% at $71.4/oz.
• The move leaves gold up by more than 10% over the past month, while silver has rallied by over 40% through the same period.
• Unsurprisingly, the trend structure in gold remains bullish, with the latest break higher confirming a resumption of the primary uptrend. Next resistance is seen at the $4,500 handle, ahead of $4,536.0, a Fibonacci projection.
• For silver, the latest fresh cycle high reinforces bullish conditions and maintains the current impulsive nature of the rally. Having cleared the $70.0 handle, next resistance is seen at $73.061, a Fibonacci projection, followed by $75.0 round number resistance.
• Meanwhile, the tensions between the US and Venezuela have also boosted oil markets at a time when the focus is on excess supply.
• WTI Feb 26 is up by 0.7% at $58.4/bbl.
• Despite the move, the trend condition in WTI futures remains bearish and short-term gains are considered corrective.
• A key support and the bear trigger at $56.11, the Oct 17 low, has been breached, opening $53.77, a Fibonacci projection.
• On the upside, first resistance is at $58.70, the 50- day EMA, followed by key short-term resistance at $61.25, the Oct 24 high.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
24/12/2025	1200/0700	**	US	MBA Weekly Applications Index
24/12/2025	1330/0830	***	US	Jobless Claims
24/12/2025	1530/1030	**	US	DOE Weekly Crude Oil Stocks
24/12/2025	1530/1030	**	US	US DOE Petroleum Supply
24/12/2025	1630/1130	**	US	US Treasury Auction Result for 7 Year Note
24/12/2025	1700/1200	**	US	Natural Gas Stocks