MNI ASIA OPEN: Fed Speakers Return Friday

EXECUTIVE SUMMARY

• MNI US: CNBC-Bessent To Propose Reform Of Council Monitoring Systemic Financial Risk
• MNI US DATA: Soft Underlying Import Dynamics Underpin Narrowing Trade Deficit
• MNI US DATA: Very Low Initial Claims When Looking Through Thanksgiving Distortion

US

MNI US: CNBC-Bessent To Propose Reform Of Council Monitoring Systemic Financial Risk

CNBC reports that Treasury Secretary Scott Bessent is set to propose an overhaul to the Financial Stability Oversight Council (FSOC). The Council was set up in the wake of the 2008 Great Financial Crisis by the Dodd-Frank Act of 2010 tasked with "identifying risks to the financial stability of the United States; promoting market discipline; and responding to emerging threats to the stability of the U.S. financial system."

NEWS

MNI EUROZONE: Greece's Finance Minister Elected Eurogroup President

Greece's Finance Minister Kyriakos Pierrakakis has been elected to serve as the next president of the Eurogroup following a vote among eurozone finance ministers. Pierrakakis defeated Belgian Deputy PM and Finance Minister Vincent Van Peteghem in the two-horse race to succeed the long-serving Paschal Donohoe of Ireland, who is standing down from the Eurogroup presidency and his role in Irish politics to take up a job at the World Bank. 

MNI UKRAINE: Zelenskyy Floats Referendum On Territorial Concessions

Speaking to reporters in Kyiv, President Volodymyr Zelenskyy stated that “The Russians want the whole of Donbas — we don’t accept that. I believe that the Ukrainian people will answer this question. Whether in the form of elections or a referendum, the Ukrainian people must have a say.” This comes as the US pressures the Zelenskyy administration to accept a deal that sees Ukraine give up territory in exchange for as-yet-unspecified security guarantees. Report in the FT claims that Trump wants Ukraine to agree to the deal "by Christmas". 

US TSYS

US TSYS: Jobless Claims Rise Most Since July 2021, Fed Speakers Return Friday

• Still bid after the bell, Treasuries are well off first half highs - adding to the post-FOMC rally in rates. Currently, TYH6 trades +7.5 at 112-14.5 vs. 112-23 high.
• The bearish theme in Treasuries remains intact and the latest bounce appears corrective. An important short-term support at 112-07, the Nov 5 low and a bear trigger, has been cleared. The breach strengthens a bear theme and signals scope for a move towards 111-19 next a Fibonacci projection. Curves steeper: 2s10s +.658 at 61.320, 5s30s +2.315 at 107.738.
• Treasuries tapped extended gains after higher than expected weekly jobless claims while continuing claims sharply lower than expected. Trade balance declines, as do imports & exports.
• Initial jobless claims ‘surprised’ higher at 236k (sa, cons 220k) in the week to Dec 6, a consensus reading that had looked for surprisingly little rebound considering it followed the 3+ year low of 219k in the week to Nov 29 in what had looked likely down to difficulty in adjusting around the Thanksgiving holiday. Continuing claims meanwhile were also lower than expected at 1838k (sa, cons 1938k) in the week to Nov 29 after a marginally downward revised 1937k (initial 1939k).
• September's goods and services trade deficit came in on the smaller side of expectations, at $52.8B ($63.1B consensus) - the smallest shortfall since June 2020. It's a far cry from the $100+B deficits in the 1st quarter, and came on the back of the smallest goods deficit since September 2020 ($79.0B).
• Look ahead to Friday: Muted data with Business formation statistics from Census Bureau/Commerce Dept at 1000ETR. Otherwise, Fed speakers return:
  • 0800 Philly Fed Paulson economic outlook (text, Q&A) at 0800ET
  • 0830 Cleveland Fed Hammack real estate roundtable (no text, Q&A), 0830ET
  • 1035 Chicago Fed Goolsbee economic outlook symposium (no text, Q&A) 1035ET

OVERNIGHT DATA

MNI US DATA: Very Low Initial Claims When Looking Through Thanksgiving Distortion

We downplay the supposed upside for initial jobless claims as it appears to just be reflecting a reversal of a particularly low week before that under adjustment difficulties around the Thanksgiving holiday. Surprisingly low continuing claims were also likely a factor of this distortion. For now, a two-week average for initial claims remains particularly low and shows no sign of labor market distress, whilst prior trends for continuing claims in payrolls reference periods are broadly in keeping with recent months rather than eyeing further deterioration. 

• Initial jobless claims ‘surprised’ higher at 236k (sa, cons 220k) in the week to Dec 6, a consensus reading that had looked for surprisingly little rebound considering it followed the 3+ year low of 219k in the week to Nov 29 in what had looked likely down to difficulty in adjusting around the Thanksgiving holiday.
• The average of the two is 214k, a still very low figure considering it averaged 218k in 2019, following 220k in the two weeks before that.
• Within the NSA details, California and Texas provided some upside after large declines the week prior (+14.5k after -19.8k for California and +7.7k after -7.8k for Texas) although there was also a notable increase for NY with +10.6k after -3.5k.
• Continuing claims meanwhile were also lower than expected at 1838k (sa, cons 1938k) in the week to Nov 29 after a marginally downward revised 1937k (initial 1939k), but we suspect the same Thanksgiving issue is now at play here.

MNI US DATA: Soft Underlying Import Dynamics Underpin Narrowing Trade Deficit

September's goods and services trade deficit came in on the smaller side of expectations, at $52.8B ($63.1B consensus) - the smallest shortfall  since June 2020. It's a far cry from the $100+B deficits in the 1st quarter, and came on the back of the smallest goods deficit since September 2020 ($79.0B). This should be positive in terms of the readthrough for Q3 GDP and maintains the trend of narrowing deficits as the tariff regime settles in.

• The services surplus was steady at $26.2B, the 21st month in a row that it's printed with a 25/26/27B handle.
• As a percentage of GDP the 3-month moving average of the overall goods and services deficit has edged down to 2.4%, compared with just over 5% in Q1 for the smallest shortfall since before the Covid pandemic.
• Goods exports jumped in September in both nominal (3.0% M/M) and real (4.2%) terms, with volumes now up 3.0% Y/Y. Contrast this with imports which are down 6% Y/Y in real terms, at the same level seen at the start of 2024.
• Consumer goods imports soared 18% M/M in September in real terms - which was due entirely to pharmaceuticals, which nearly doubled M/M even as other categories fell (front-running a 100% tariff on branded pharma products starting Oct 1).

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 660.68 points (1.37%) at 48717.14
S&P E-Mini Future up 9.75 points (0.14%) at 6901.25
Nasdaq down 86.9 points (-0.4%) at 23566.92
US 10-Yr yield is down 1 bps at 4.1371%
US Mar 10-Yr futures are up 7.5/32 at 112-14.5
EURUSD up 0.0049 (0.42%) at 1.1744
USDJPY down 0.46 (-0.29%) at 155.56
WTI Crude Oil (front-month) down $0.75 (-1.28%) at $57.70
Gold is up $45.44 (1.07%) at $4273.92

European bourses closing levels:
EuroStoxx 50 up 45.84 points (0.8%) at 5753.96
FTSE 100 up 47.63 points (0.49%) at 9703.16
German DAX up 164.47 points (0.68%) at 24294.61
French CAC 40 up 63.07 points (0.79%) at 8085.76

US TREASURY FUTURES CLOSE

Curve update:
3M10Y +1.388, 47.976 (L: 43.895 / H: 48.497)
2Y10Y +0.671, 61.333 (L: 57.907 / H: 61.723)
2Y30Y +1.844, 126.501 (L: 122.568 / H: 126.816)
5Y30Y +1.939, 107.362 (L: 104.401 / H: 108.15)
Current futures levels:
Mar 2-Yr futures up 2.125/32 at 104-10 (L: 104-09 / H: 104-11.75) 
Mar 5-Yr futures up 6/32 at 109-7.5 (L: 109-04.75 / H: 109-12.75)
Mar 10-Yr futures up 7.5/32 at 112-14.5 (L: 112-11 / H: 112-23)
Mar 30-Yr futures up 8/32 at 115-20 (L: 115-14 / H: 116-09)
Mar Ultra futures up 4/32 at 118-22 (L: 118-14 / H: 119-16)

MNI US 10YR FUTURE TECHS: (H6) Corrective Bounce

• RES 4: 113-29+ High Oct 17 and a key resistance
• RES 3: 113-23   High Oct 23
• RES 2: 113-07/22+ High Dec 3 / High Nov 25
• RES 1: 112-24  20-day EMA
• PRICE:‌‌ 112-14 @ 11:23 GMT Dec 11
• SUP 1: 111-29   Low Dec 10
• 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 

A bearish theme in Treasuries remains intact and the latest bounce appears corrective. An important short-term support at 112-07, the Nov 5 low and a bear trigger, has been cleared. The breach strengthens a bear theme and signals scope for a move towards 111-19 next a Fibonacci projection. Initial key resistance to watch is seen at 112-24, the 20-day EMA. A break of this average would signal a possible reversal.

SOFR FUTURES CLOSE

Current White pack (Dec 25-Sep 26):
Dec 25 +0.008 at 96.290
Mar 26 +0.025 at 96.460
Jun 26 +0.025 at 96.660
Sep 26 +0.035 at 96.805
Red Pack (Dec 26-Sep 27) +0.040 to +0.055
Green Pack (Dec 27-Sep 28) +0.045 to +0.050
Blue Pack (Dec 28-Sep 29) +0.040 to +0.040
Gold Pack (Dec 29-Sep 30) +0.030 to +0.040

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

• Secured Overnight Financing Rate (SOFR): 3.90% (-0.03), volume: $3.222T
• Broad General Collateral Rate (BGCR): 3.87% (-0.03), volume: $1.326T
• Tri-Party General Collateral Rate (TCR): 3.87% (-0.03), volume: $1.297T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.89% (+0.00), volume: $98B
• Daily Overnight Bank Funding Rate: 3.89% (+0.00), volume: $184B

FED Reverse Repo Operation

RRP usage retreats to $2.874B with 7 counterparties this afternoon from $5.045B Wednesday. Compares to Tuesday November 18: $0.905B - lowest level since mid-March 2021; this years highest excess liquidity measure: $460.731B on June 30.

MNI PIPELINE: Corporate Bond Roundup: $550M Campbell's Bond Launched

• Date $MM Issuer (Priced *, Launch #)
• 12/11 $550M #Campbell's +5Y +90
• $3.3B Priced Wednesday, $8.15B/wk
• 12/10 $3.3B #Asurion LLC 7NC3 8%, upsized from $1.25B after investor calls earlier in week

MNI BONDS: EGBs-GILTS CASH CLOSE: Yields Tick Lower On Fed Relief

EGB and Gilt yields pulled back Thursday, in the wake of the Federal Reserve decision.

• Treasuries led overnight global gains after the Fed's communications proved less hawkish than feared.
• The European short-end saw some relief in an overall steepening move across curves.
• Germany saw outright bull steepening with the short-end outperforming on the curve after recent underperformance; Gilts however outperformed Bunds in absolute terms, with outperformance in the UK belly.
• Gilts held on to early gains better than Bunds, which at one point retraced overnight gains despite little apparent macro/headline driver.
• 10Y Gilt spreads to Bunds set another fresh post-September 2024 low.
• Periphery / semi-core EGB spreads tightened, with gains led by Spain and Portugal.
• Friday's data includes UK monthly economic activity and final French/German/Spanish November inflation.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.7bps at 2.16%, 5-Yr is down 1.2bps at 2.464%, 10-Yr is down 0.8bps at 2.843%, and 30-Yr is down 0.1bps at 3.452%.
• UK: The 2-Yr yield is down 1.9bps at 3.771%, 5-Yr is down 2.4bps at 3.959%, 10-Yr is down 2.2bps at 4.484%, and 30-Yr is up 0.2bps at 5.207%.
• Italian BTP spread down 1.2bps at 68.4bps  / Portuguese down 1.7bps at 31.1bps

MNI FOREX: Greenback Weakness Extends, CHF Continues to Outperform Post-SNB

• Post-Fed dollar weakness had been offset by Oracle-related equity weakness initially on Thursday, however, as the major equity benchmarks steadily recovered throughout the session, the USD index extended to fresh pullback lows. This dynamic was exacerbated by the higher-than-expected jobless claims data, boosting concerns over the US labour market. This has prompted the USD index to extend its three-week selloff to around 2.25%.
• The broad greenback weakness translated to roughly 0.5% rallies for the likes of EUR and JPY, while AUD was a notable underperformer following the weaker-than-expected jobs report during APAC hours.
• For EURUSD, spot grinded steadily higher above the 1.17 handle to narrow the gap significantly to 1.1779, the Oct 01 high. Despite the initial Aussie pressure, AUDUSD has done a good job in rallying back to within striking range of the week’s highs at 0.6686, highlighting the resilient technical profile. 0.6717 remains a key resistance.
• Elsewhere, the Swiss Franc continues to outperform, rising a further 0.7% against the dollar today amid the SNB’s decision to hold rates. Despite downwardly revised inflation forecasts, the SNB’s conviction for a medium-term CPI uptick remains firm. USDCHF weakness picked up momentum through two lows at 0.7992, signalling scope for a move towards 0.7873 and year’s lows at 0.7829.
• In emerging markets, USDMXN continues to erode last year’s post-election rally, sinking to the lowest levels seen since July 2024. The pair now resides just above the psychological 18.00 handle, and technical signals point to a growing likelihood of a move towards 17.4491, as we approach next week’s Banxico meeting.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
12/12/2025	0700/0700	***	GB	UK Monthly GDP
12/12/2025	0700/0800	**	SE	Unemployment
12/12/2025	0700/0700	**	GB	Trade Balance
12/12/2025	0700/0700	**	GB	Index of Services
12/12/2025	0700/0700	**	GB	Index of Production
12/12/2025	0700/0800	***	DE	Germany CPI (f)
12/12/2025	0700/0700	**	GB	Output in the Construction Industry
12/12/2025	0700/0800	***	DE	Germany CPI (f)
12/12/2025	0745/0845	***	FR	HICP (f)
12/12/2025	0800/0900	***	ES	HICP (f)
12/12/2025	0930/0930	**	GB	Bank of England/Ipsos Inflation Attitudes Survey
12/12/2025	-	***	CN	Money Supply
12/12/2025	-	***	CN	Social Financing
12/12/2025	-	***	CN	New Loans
12/12/2025	1300/0800		US	Philly Fed's Anna Paulson
12/12/2025	-		EU	ECB de Guindos at ECOFIN Meeting
12/12/2025	1330/0830	*	CA	Building Permits
12/12/2025	1330/0830	**	CA	Wholesale Trade
12/12/2025	1330/0830		US	Cleveland Fed's Beth Hammack
12/12/2025	1535/1035		US	Chicago Fed's Austan Goolsbee
12/12/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
12/12/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
12/12/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly