MNI ASIA OPEN: Fed Chairman Powell Replacement Ongoing
EXECUTIVE SUMMARY
- MNI UKRAINE: Zelenskyy Tries To Rally Support For Financial Backing Ahead Of EUCO
- MNI US: GOP Moderate Signs Dem Petition As Healthcare Battle Dominates Congress
- MNI FED: Gov Waller: Faster GDP Growth Not Inflationary; Fed Independence Crucial
- MNI FED: Bessent Pushes Back On Latest Criticism Of Hassett As Potential Fed Chair
US
MNI FED: Bessent Pushes Back On Latest Criticism Of Hassett As Potential Fed Chair
- "*BESSENT: ANY CONCERN ON HASSETT AT FED 'IS ABSURD'
- *BESSENT: HASSETT IS EMINENTLY QUALIFIED, WITH VIEWS OF HIS OWN" - bbg
Bessent echoing his stance although this time following Politico late yesterday citing three people familiar with the matter that Trump officials have raised doubts about Hassett. Despite those latest reports, Hassett's probability of becoming next Fed chair is higher on the day at 55%. Waller (23%) has overtaken Warsh (18%, down from almost 50% at one point in the last two days) with the two seemingly vying for the role if Trump wants to go down the route of choosing a previous Fed Governor. (All probabilities from Polymarket)
MNI FED: Gov Waller: Faster GDP Growth Not Inflationary; Fed Independence Crucial
Gov Waller indicates in Q&A that he's forecasting GDP growth of 1.6% this year and 2.5% in 2026 (vs FOMC medians 1.7% / 2.3%), and that supply-side improvements mean that stronger growth will not translate into stronger inflation (an argument advanced by the Trump administration as well as some of Waller's FOMC colleagues such as Gov Miran). As such, rates can come down further in his core view, though he emphasizes that there is "no rush" to ease: "I think inflation is still going to start coming down the first half and year towards our target, and we can continue to cut rates."
NEWS
POLITICO: US, RUSSIA TO HOLD TALKS ON UKRAINE WAR IN MIAMI THIS WEEKEND
BLOOMBERG: BESSENT: "ANY CONCERN ON HASSETT AT FED 'IS ABSURD' .. HASSETT IS EMINENTLY QUALIFIED, WITH VIEWS OF HIS OWN"
MNI US: GOP Moderate Signs Dem Petition As Healthcare Battle Dominates Congress
Rep. Brian Fitzpatrick (R-PA) has signed a discharge petition put forward by House Minority Leader Hakeem Jeffries (D-NY) that seeks to extend Affordable Care Act (ACA, 'Obamacare') tax credit subsidies for another three years. Fitzpatrick's signature, the first among Republicans, gives the petition the backing of 215 representatives, three votes short of the 218 required to circumvent Speaker Mike Johnson (R-LA) and put the measure to a vote on the House floor.
MNI UK: PM Faces Renewed Trade Union Hostility As Unison Elects Far-Left Leader
The election of left-winger Andrea Egan as the next general secretary of Unison, the UK's largest trade union, comes as another political blow to embattled Prime Minister Sir Keir Starmer. Egan won 60% of the vote to 40% for incumbent Christina McAnea, seen as a close ally of Starmer, on a turnout of 7%. Egan will take up a position on the Labour Party's National Executive Committee (NEC), despite her own membership of the party being revoked in 2022 after sharing articles from the extreme-left Social Appeal on social media.
MNI UKRAINE: Zelenskyy Tries To Rally Support For Financial Backing Ahead Of EUCO
Ahead of the 18 December European Council summit in Brussels, Reuters reports comments from Ukrainian President Volodymyr Zelenskyy, who will attend the event in person. Zelenskyy: "Moscow shows clearly [that] it is ready for war in 2026...Russia will undermine diplomatic efforts to end the war...Ukraine counts on the courage of its allies to stand against Russia." Zelenskyy says, "The US says Russia wants to end the war, Moscow sends opposite signals".
MNI US-RUSSIA: RTRS-White House: No Decision From Trump On New Russia Sanctions
Reuters reports comments from a White House official stating that President Donald Trump "has made no new decisions regarding new Russian sanctions at this time". Bloomberg News reported that “The US is preparing a fresh round of sanctions on Russia’s energy sector to increase the pressure on Moscow should President Vladimir Putin reject a peace agreement with Ukraine”.
US TSYS
MNI US TSYS: Focus on Thursday's Data & Four Central Bank Policy Announcements
- Treasuries see-sawed off early Wednesday lows to steady/mixed in late trade, focus on Thursday's heavy data (weekly claims, CPI, regional Fed and Tsy TICS) and Riksbank, Norges, Bank of England and ECB policy announcements. Fed speakers are absent tomorrow.
- We won't get aggregate CPI levels for October tomorrow, but as part of the November report's unprecedented format, the BLS will include data for some but not all subcomponents for October.
- Currently, TYH6 trades -1 at 112-15.5, yielding 4.1509% (+.0059). Curves mildly steeper, 2s10s +.995 at 66.588, still well off yesterday's 69.086% high.
- The short-term technical condition in Treasuries is bearish and near-term resistance points remain. A continuation lower would refocus attention on key support at 111-29, the Dec 10 low. Clearance of this level would confirm a resumption of the bear leg and open 111-19, a Fibonacci projection.
- On the upside, a clear breach of 112-23, the Dec 12 high would instead strengthen a short-term bull cycle.
- Gov Waller indicates in Q&A earlier that he's forecasting GDP growth of 1.6% this year and 2.5% in 2026 (vs FOMC medians 1.7% / 2.3%), and that supply-side improvements mean that stronger growth will not translate into stronger inflation (an argument advanced by the Trump administration as well as some of Waller's FOMC colleagues such as Gov Miran).
OVERNIGHT DATA
MNI US DATA: Mortgage Spreads Continue To Narrow, But MBA Activity Stays Weak
MBA mortgage application activity softened slightly in the latest week, but the more notable trend in recent weeks has been a continued narrowing of mortgage rate spreads. The MBA composite fell 3.8% W/W in the week of Dec 12, partially reversing the 4.8% rise the previous week but keeping activity at the overall subdued levels seen since late 2023 (at 1/3 below pre-pandemic levels). Purchase applications fell 2.8% for a 2nd consecutive fall, while refinancing apps pulled back 3.6% after soaring 14.3% the prior week.
MNI US DATA: Steady Manheim Prices In Dec, Prior Moves Suggest CPI Used Car Downside
- Manheim used vehicle values increased 0.3% M/M on a mix, mileage and seasonally adjusted basis in the first 15 days of December compared to November.
- It leaves them tracking largely sideways over the past year, just 0.6% higher than in Dec 2024.
- The small increase follows 1.2% M/M in Nov, -2.0% in Oct, -0.2% in Sep and 0.0% in Aug.
- These wholesale prices tend to feed through to CPI used vehicle prices with a lag and crudely suggest downside risk for tomorrow’s release, although the fit isn’t great month-to-month – see charts.
- Of the six analysts we have seen CPI used vehicle estimates for, the average looks for a 0.4% M/M increase on average across October and November (i.e. crudely a 0.8% cumulative increase compared to September).
- These are expressed over a two-month basis owing to there not being a full October release but used cars might be one of the few series that does see October values.
- If 0.4% M/M increases are accurate, it would mark a sizeable upswing from the surprisingly soft -0.4% M/M back in September.
- Looking further ahead, recent Manheim values crudely suggest stabilization in CPI used car prices into early 2026.
MNI CANADA DATA: Population Declines In Q3 As Government Curbs Immigration
- Canada's population fell 76,068 or 0.2% in Q3 to 41,575,585, StatsCan said Wed in a preliminary estimate.
- By comparison the population in Q3 2023 grew the fastest since 1957 at +1%, and by +0.6% in Q3 2024.
- Fall led by non-permanent residents -176,479, mainly those on work and student permits. They now represent 6.8% of Canada's population, a share the govt has said is too high.
- Swings in population have pressured housing costs and made it more difficult to assess slack in the economy and job market. Unemployment has declined in recent months as hiring advanced while labor force declined.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 197.93 points (-0.41%) at 47914.67
S&P E-Mini Future down 70.25 points (-1.02%) at 6786
Nasdaq down 362.6 points (-1.6%) at 22751.27
US 10-Yr yield is up 0.6 bps at 4.1509%
US Mar 10-Yr futures are down 1.5/32 at 112-15
EURUSD down 0.0005 (-0.04%) at 1.1742
USDJPY up 0.99 (0.64%) at 155.71
WTI Crude Oil (front-month) up $1.15 (2.08%) at $56.43
Gold is up $37.72 (0.88%) at $4339.59
European bourses closing levels:
EuroStoxx 50 down 36.16 points (-0.63%) at 5681.67
FTSE 100 up 89.53 points (0.92%) at 9774.32
German DAX down 116.28 points (-0.48%) at 23960.59
French CAC 40 down 20.11 points (-0.25%) at 8086.05
US TREASURY FUTURES CLOSE
Curve update:
3M10Y +0.108, 51.9 (L: 49.124 / H: 54.184)
2Y10Y +0.786, 66.379 (L: 64.552 / H: 67.133)
2Y30Y +1.719, 134.114 (L: 131.647 / H: 134.43)
5Y30Y +1.513, 113.003 (L: 111.177 / H: 113.353)
Current futures levels:
Mar 2-Yr futures down 0.375/32 at 104-12.375 (L: 104-10.75 / H: 104-12.625)
Mar 5-Yr futures down 1.25/32 at 109-10.25 (L: 109-06.25 / H: 109-11.25)
Mar 10-Yr futures down 1/32 at 112-15.5 (L: 112-09 / H: 112-17.5)
Mar 30-Yr futures down 5/32 at 115-7 (L: 114-29 / H: 115-17)
Mar Ultra futures down 5/32 at 117-30 (L: 117-17 / H: 118-10)
MNI US 10YR FUTURE TECHS: (H6) Bear Threat
- RES 4: 113-09 76.4% retracement of the Nov 25 - Dec 10 bear leg
- RES 3: 113-00+ 61.8% retracement of the Nov 25 - Dec 10 bear leg
- RES 2: 112-27+ High Dec 5
- RES 1: 112-22+/23 High Dec 16 and 50-day EMA / High Dec 11
- PRICE: 112-13+ @ 1230 ET Dec 17
- SUP 1: 111-29 Low Dec 10 and the bear trigger
- SUP 2: 111-19 1.236 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 3: 111-11 1.382 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 4: 111-00 Round number support
The short-term condition in Treasuries is bearish and near-term resistance points remain. A continuation lower would refocus attention on key support at 111-29, the Dec 10 low. Clearance of this level would confirm a resumption of the bear leg and open 111-19, a Fibonacci projection. On the upside, a clear breach of 112-23, the Dec 12 high would instead strengthen a short-term bull cycle.
SOFR FUTURES CLOSE
Current White pack (Dec 25-Sep 26):
Dec 25 +0.003 at 96.295
Mar 26 +0.005 at 96.485
Jun 26 -0.005 at 96.690
Sep 26 -0.005 at 96.845
Red Pack (Dec 26-Sep 27) -0.02 to -0.01
Green Pack (Dec 27-Sep 28) -0.025 to -0.02
Blue Pack (Dec 28-Sep 29) -0.02 to -0.015
Gold Pack (Dec 29-Sep 30) -0.015 to -0.01
REFERENCE RATES
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 3.69% (-0.06), volume: $3.319T
- Broad General Collateral Rate (BGCR): 3.64% (-0.09), volume: $1.336T
- Tri-Party General Collateral Rate (TCR): 3.64% (-0.09), volume: $1.296T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $95B
- Daily Overnight Bank Funding Rate: 3.64% (+0.00), volume: $169B
FED Reverse Repo Operation
RRP usage rises to $10.361B with 17 counterparties this afternoon, vs. Tuesday's $1.554B. Compares to last Thursday's $0.838B (lowest level since mid-March 2021); this years highest excess liquidity measure: $460.731B on June 30.
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Boosted By Soft UK CPI Ahead Of BOE, ECB
Gilts easily outperformed peers Wednesday as UK CPI came in on the soft side of expectations.
- The UK CPI miss was broad-based, with downside surprises in services, core goods and food inflation contributing to outperformance in the short-end/belly of the curve in early trade.
- Bunds were boosted only briefly by UK developments but weakened throughout most of the session, including a small leg lower on confirmation that the German Bundestag approved a defence procurement package worth E50bln.
- In other data, German IFO Business Climate unexpectedly fell for a second consecutive time in December.
- The UK curve bull steepened on the day, with Germany's bear steepening. Periphery/semi-core spreads closed little changed overall.
- Thursday's focus will be the ECB (MNI preview) and BOE (MNI preview) decisions.
- For the BOE, a 5-4 vote split in favor of a 25bp cut is expected but analysts are split over what happens after December. The ECB is set to hold rates, with attention on the updated macroeconomic projections and the balance of risks to inflation and growth.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.3bps at 2.137%, 5-Yr is up 1.4bps at 2.466%, 10-Yr is up 1.9bps at 2.864%, and 30-Yr is up 1.9bps at 3.485%.
- UK: The 2-Yr yield is down 5.8bps at 3.708%, 5-Yr is down 4.7bps at 3.913%, 10-Yr is down 4.3bps at 4.475%, and 30-Yr is down 3.5bps at 5.223%.
- Italian BTP spread up 0.7bps at 70.5bps / French OAT up 0.5bps at 71bps
MNI FOREX: USDJPY Consolidates 0.5% Gains, Markets Await US CPI
- It was a tale of two halves for the broad dollar index on Wednesday, with early recovery strength slowly dissipating through the US session. Intra-day swings continue to reflect the limited appetite ahead of the busy central bank docket and the key US CPI data release on Thursday. The DXY stands just 0.15% in the green as we approach the APAC crossover.
- Greenback gains have been most notable against the Japanese Yen, with USDJPY consolidating towards the upper end of the day’s range around 155.55. The post-NFP bounce totals around 1.1% as we approach Friday’s BOJ meeting, where a 25bp hike to the policy rate remains priced in.
- GBP also had significant swings on the session following the below-expectation CPI data earlier today. While the data cements the likelihood of a 25bp rate cut from the BOE tomorrow, the figures place particular emphasis for a dovish surprise on the vote split and the potential for dovish developments regarding 2026 pricing.
- GBPUSD briefly extended losses to around 0.8% to 1.3312 before the general dollar turnaround prompted spot to rise back to around current levels of 1.3390. Initial firm support is 1.3290, the 50-day EMA, of which a breach would highlight a possible technical reversal.
- For USDCAD, it is worth highlighting that yesterday’s dip following the US jobs data essentially matched the first primary target for the selloff, trading to within 3 pips of the September lows at 1.3727. Subsequently, price has been consolidating below the 1.38 mark, keeping short-term bearish trend conditions in place following the technical breakdown earlier in the month.
- In emerging markets, mounting political uncertainty is continuing to dominate short-term sentiment in Brazil, with price action today extending the USDBRL bounce from cycle lows to around 5%.
- Interest rate decisions from the Riksbank, Norges Bank, BOE and ECB highlight tomorrow’s docket, alongside the eagerly awaited release of US CPI.
THURSDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 18/12/2025 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 18/12/2025 | 0830/0930 | *** |  SE | Riksbank Interest Rate Decison |
| 18/12/2025 | 0900/1000 | *** |  NO | Norges Bank Rate Decision |
| 18/12/2025 | 1000/1100 | ** |  EU | EZ Construction Output |
| 18/12/2025 | 1200/1200 | *** |  GB | Bank Of England Interest Rate |
| 18/12/2025 | 1200/1200 | *** | GB | Bank Of England Interest Rate |
| 18/12/2025 | 1315/1415 | *** | EU | ECB Deposit Rate |
| 18/12/2025 | 1315/1415 | *** | EU | ECB Main Refi Rate |
| 18/12/2025 | 1315/1415 | *** | EU | ECB Marginal Lending Rate |
| 18/12/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 18/12/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 18/12/2025 | 1330/0830 | * |  CA | Payroll employment |
| 18/12/2025 | 1330/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 18/12/2025 | 1330/0830 | *** | US | CPI |
| 18/12/2025 | 1330/0830 | *** | US | CPI |
| 18/12/2025 | 1330/0830 | *** | US | CPI |
| 18/12/2025 | 1330/0830 | *** | US | CPI |
| 18/12/2025 | 1345/1445 | EU | ECB Press Conference | |
| 18/12/2025 | 1445/1545 | EU | ECB Staff Macroeconomic Projections | |
| 18/12/2025 | 1515/1615 | EU | ECB Lagarde Presents Rate Decision on ECB Podcast | |
| 18/12/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 18/12/2025 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 18/12/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 18/12/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 18/12/2025 | 1800/1300 | ** | US | US Treasury Auction Result for TIPS 5 Year Note |
| 18/12/2025 | 1900/1400 | *** |  MX | Mexico Interest Rate |
| 18/12/2025 | 2100/1600 | ** | US | TICS |
| 19/12/2025 | 2330/0830 | *** |  JP | CPI |
| 19/12/2025 | 0001/0001 | ** | GB | Gfk Monthly Consumer Confidence |
| 19/12/2025 | 0300/1200 | *** | JP | BOJ Policy Rate Announcement |
