MNI EUROPEAN OPEN: Australia & NZ Hike Risks Grow

Nov-27 05:22By: Jamie Grant

Europe

EXECUTIVE SUMMARY

Beige Book gives little new insights into the economy - MNI
Canada to add new tariffs on US steel - BBG
ECB has inflation contained : Chief Economist Lane Says - BBG
British Finance Minister Delivers Deficit Reduction Budget - REUTERS
BoJ's Dovish Member Holds Off On Adding To December Hike Bets - BBG

Fig 1: AU vs NZ Forward Policy Rate Expectations Less Current Rate

Source: Bloomberg Finance L.P./MNI

BUDGET (REUTERS): “British finance minister Rachel Reeves announced a big tax-raising budget on Wednesday that will take more money from workers, people saving for a pension and investors to give herself greater room to meet her deficit-reduction targets.”

GILT ISSUANCE (MNI INTERVIEW): Shifting investor trends at the front-end of the yield curve remains a key factor behind the ongoing shift in issuance to short- and medium-dated gilts, the head of the UK's Debt Management Office told MNI Wednesday.

BUDGET (TIMES): “Employers will pass on the cost of a £4.7 billion tax raid on pension contributions to their workers with lower wages and less generous schemes, Rachel Reeves has been warned.”

E.U ECONOMY (BBG): “The European Central Bank should be able to keep inflation at target thanks to a moderation in non-energy prices, according to Chief Economist Philip Lane. The ECB is expected to leave borrowing costs unchanged for a fourth meeting when it sets monetary policy for the final time this year in December.”

FRENCH BUDGET (ECONOMIST): “The French government’s scramble to get a budget for 2026 through parliament continues on Thursday, when the bill goes to the Senate. On November 21st the lower house overwhelmingly rejected the version that its own legislators had amended with a raft of extra taxes.”

UKRAINE (POLITICO): “Secretary of State Marco Rubio has told European allies that the U.S. wants a peace deal before it agrees to any security guarantees for Ukraine. That condition has underscored American proposals to Kyiv over the past week, according to a European diplomat and a person familiar with knowledge of the conversations.”

NATO (POLITICO): “Russia has no veto over Kyiv’s bid to join NATO, alliance chief Mark Rutte said on Wednesday — rebuffing a peace deal proposal floated by Moscow and Washington that would block Ukraine from the alliance. “Russia has neither a vote nor a veto over who can be a member of NATO,” Rutte said in an interview with El País and German outlet RND.”

ECONOMY (MNI BRIEF): Demand for labor among U.S. employers weakened and consumer spending declined in recent weeks while price pressures appeared to moderate, according to the Federal Reserve's latest Beige Book released Wednesday.

ECONOMY (MNI): The Chicago Business Barometer™, produced with MNI, fell 7.5 points to 36.3 in November. The index is below 40 for the first time since January, and has remained below 50 for twenty-four consecutive months.

CANADA

TRADE WAR (MNI): Canada is providing another CAD1 billion of credit to lumber producers hurt by U.S. tariffs, nearly doubling an earlier aid package as firms warn of permanent mill closures and layoffs. The government also increased steel tariffs again to encourage domestic production.

TRADE WAR (BBG):”Canada will add a new 25% tariff on US steel derivative products, including items such as wind towers and wires, starting Dec. 26”

OTHER

AUSTRALIA

HOUSING SECTOR (BBG): ”Australia's banking regulator will tighten mortgage-lending rules to curb financial stability risks as credit growth accelerates and house prices climb to record highs. From Feb. 1, banks will be limited to issuing up to 20% of new mortgages to borrowers taking on debt at six times their income or higher.”

BUSINESS INVESTMENTS (BBG): "Australian business investment posted its biggest increase since early 2021, driven by major outlays on data centers and aircraft — a welcome boost for an economy that has been struggling to generate momentum."

NEW ZEALAND (BBG): "New Zealand central bank governor Christian Hawkesby said there is now a high hurdle for further interest-rate cuts, reinforcing the signal that the easing cycle has likely come to an end."

NEW ZEALAND (BBG): "Optimism among New Zealand firms about their trading prospects surged to an 11-year high in November, an ANZ Bank survey showed, adding to signs that an economic recovery is under way."

JAPAN

BOJ (BBG): "The Bank of Japan’s dovish board member Asahi Noguchi refrained from adding fuel to growing market speculation over a December rate hike by broadly taking a neutral stance, stressing the importance of acting at the right time."

BOJ (MNI BRIEF): Bank of Japan board member Asahi Noguchi said on Thursday that the bank will return to its basic policy stance of gradually adjusting the degree of monetary accommodation if economic activity and prices develop in line with the bank’s outlook, without elaborating on timing.

CHINA

PROPERTY (MNI): Advisors share their outlook on China's property market. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

ONSHORE PRESS DIGEST (MNI): MNI China Press Digest Nov 27: Profits, Consumption, Nexperia

MNI: PBOC Net Injects CNY56.4 Bln via OMO Thursday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY356.4 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY56.4 billion after offsetting maturities of CNY300 billion today, according to Wind Information

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4033% at 09:26 am local time from the close of 1.4744% on Wednesday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Wednesday, compared with the close of 48 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.0779 Thurs; +2.66% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0779 on Thursday, compared with 7.0796 set on Wednesday. The fixing was estimated at 7.0734 by Bloomberg survey today.

MARKET DATA

NEW ZEALAND RETAIL SALES ex-INFLATION QoQ 3Q 1.9%; PRIOR 0.7% REVISED; SURVEY 0.6%

NEW ZEALAND ANZ ACTIVITY OUTLOOK NOVEMBER 53.1; PRIOR 44.6
NEW ZEALAND ANZ BUSINESS CONFIDENCE NOVEMBER 67.1; PRIOR 58.1

AUSTRALIA Q3 BUSINESS INVESTMENT +6.4% Q/Q; EST. 0.5%; Q2 +0.4%
AUSTRALIA Q3 BUILDING CAPEX +2.1% Q/Q; Q2 +0.3%
AUSTRALIA Q3 PLANT/MACHINERY CAPEX +11.5% Q/Q; Q2 +0.7%

SOUTH KOREA BOK BASE RATE 2.50%; PRIOR 2.50%; SURVEY 2.50%

CHINA INDUSTRIAL PROFITS YTD YOY OCTOBER +1.9%; SEP. +3.2%
CHINA INDUSTRIAL PROFITS YOY OCTOBER -5.5%; SEP. +21.6%

MARKETS

US TSYS: Bond Futures Modestly Down Ahead of Thanksgiving

With cash markets closed in the Asia trading day, bond futures were the only avenue for risk today.
The US 10-Yr is down -01 today at 113-18 on low volumes.
TYZ5 has rallied since November 19 and is now above all major moving averages and at +62 on the 14-day Relative Strength Index; just below 70 that indicates Overbought.

JGBS: Bull-Flattener After Headlines 10-40Y Issuance To Be Unchanged

JGB futures are stronger, +14 compared to settlement levels, after a relatively subdued trading, with cash US tsys out for the Thanksgiving Day Holiday.

BoJ Board Member Noguchi's speech discussed the need to get rate hike timing right, as hiking too early or too late can cause problems. He stated that hiking too early risks derailing the wage/price cycle and sustainably hitting the 2% inflation target, while raising rates too slowly will risk destabilizing price and activity trends (presumably as policy rates have to rise rapidly to bring down inflation).
Cash JGBs are flat to 2bps richer across benchmarks, with a flattening bias. The benchmark 10-year yield is 1.0bp lower at 1.799% versus the cycle high of 1.845%.
Earlier, Reuters reported that the Japanese government will increase issuance of 2-year and 5-year JGBs from January as part of its stimulus-funding plan. Reuters also noted that there are no changes to the planned issuance for 10-40-year tenors.
The cheapening of the 5-year, in terms of the 2/5/10 butterfly, since early Q2 this year is consistent with today's issuance headlines (see chart).
Swap rates are little changed.
Tomorrow, the local calendar will see Tokyo CPI, Retail Sales, IP, Housing Starts, Weekly International Investment Flow and Labour Market data alongside 2-year supply.

Source: Bloomberg Finance LP

AUSSIE BONDS: Richer But Cheaper Than Pre-CPI, 25% Hike Priced For End-2026

ACGBs (YM +3.0 & XM +3.0) are stronger but sit mid-range after a relatively subdued trading, with cash US tsys out for the Thanksgiving Day Holiday.

Q3 private capex volumes soared 6.4% q/q, the fastest since Q1 2012, and are setting up the 3 December GDP release for a solid increase at this stage. Inventory data is out 1 December and the net export and public demand contributions on 2 December.
The jump in investment in the quarter was across both building and plant & machinery and was driven by an 11.5% q/q jump in the latter from spending on aircraft but also data centres.
Cash ACGBs are 3bps richer with the AU-US 10-year yield differential at +51bps (albeit with cash US tsys 10-year at yesterday’s closing level).
The bills strip is flatter, with pricing flat to +3.
RBA-dated OIS pricing is showing a 25bp rate cut in December at a 0% probability, with a cumulative 2bps of easing priced by mid-2026. Notably, the market has now shifted to giving a 25% probability to a 25bps by December 2026.
Tomorrow, the local calendar will see Private Sector Credit data.
The AOFM plans to sell A$900mn of the 3.75% 21 April 2037 bond on Friday.

Bloomberg Finance LP

BONDS: NZGBS: Post-RBNZ Sell-Off Extends Today, Full Hike Priced For Late-26

NZGBs closed showing a bear-flattener, with yields 2-8bps higher. As it stands, yields are 8-14bps higher than pre-RBNZ levels, with the 2/10 curve flatter.

In a relative sense, NZGBs have also underperformed, with the NZ-US 10-year yield differential 3bps wider at +23bps, and the NZ-AU 10-year differential 1bp higher at -27bps.
The recent cheapening in NZGBs, however, didn’t deter buyers at today’s weekly auction, with cover ratios ranging from 3.86x (May-30) to 5.46x (May-34).
Swap rates closed 4-9bps higher, with the 2s10s curve flatter. The curve is around 10bps flatter than yesterday’s pre-RBNZ levels.
RBNZ-dated OIS pricing closed flat to 9bps firmer across meetings today, led by the late-2026 contracts, extending yesterday’s post-policy decision firming. Indeed, relative to pre-RBNZ levels, pricing is 8-20bps higher across meetings, again led by late-2026 contracts.
Notably, as well, November 2026 now assigns a 25bps hike with a 37% probability (see chart). The push into positive territory for 12-month forward expectations for the RBNZ in mid-November was the first time since October 2023.
Tomorrow, the local calendar will see ANZ Consumer Confidence and Filled Jobs data.

Bloomberg Finance LP

JPY: USD/JPY - Consolidates Around 156.00, BoJ Speak No Hints On Dec Hike Risk

The USD/JPY range today has been 155.73 - 156.49 in the Asia-Pac session, it is currently trading around 156.00/05, -0.30%. The pair again found some solid demand toward 155.50 in our session and has stalled the pullback for now. The move in the Yen looks like it is going to force the BOJ into action in December and we now have the market pricing in imminent cuts in the US. This could have an impact or at least slow what looked like a situation that was about to get out hand. Technically USD/JPY continues to look like it wants to test higher with the first big support back toward the 154-155 area which we suspect buying interest may emerge. Look for some consolidation to continue as the market contemplates if these moves by central banks are enough to challenge the weakening Yen trajectory.

MNI AU - Extra Issuance In 2-5yr Tenors, No Change For 10-40yr Per Reuters: Rtrs reports that the Japan government will increase the issuance of 2yr and 5yr JGBs from January next year, as part of its plan to fund the stimulus package. It also notes that there are no changes to planned issuance for 10-40yr tenors. JGBs have been under pressure amid increased scrutiny on the fiscal outlook.
MNI AU - Noguchi -Favours Gradual Hikes As Economy Adjusts To New Price Backdrop : Noguchi spoke about the need to get rate hike timing rate, as hiking too early or too late can cause problems. He stated that hiking too early risks derailing the wage/price cycle and sustainably hitting the 2% inflation target, while raising rates too slowly will risk destabilizing price and activity trends (presumably as policy rates have to rise rapidly to bring down inflation). Note that market pricing has firmed for a Dec move, but is still only just above 50% pricing (or around +13bps).
Options : Close significant option expiries for NY cut, based on DTCC data: 154.00($665m),155.75($750m). Upcoming Close Strikes : 154.00{$1.28b Nov 28), 155.00($744m Dec 1), 155.00($2b Dec 2) - BBG.
The USD/JPY Average True Range(ATR) for the last 10 Trading days: 105 Points

NZD/USD - Correction Extends Above 0.5700-0.5710, First Target 0.5760

The NZD/USD had a range today of 0.5693 - 0.5732 in the Asia-Pac session, going into the London open trading around 0.5730/35, +0.55%. The NZD/USD extended its surge higher moving above the 0.5710 resistance with better NZ data and Hawkesby saying the hurdle is high for more cuts. Positioning still looks to be an issue in the short term. While the risk backdrop remains so constructive this will provide further headwinds for the NZD shorts and I suspect we see more of the weaker hands pressured. On the day dips back toward 0.5680/0.5700 will likely be supported, if this break above 0.5710 is sustained the market will be looking toward 0.5760 first then the more important 0.5800-50 resistance.

MNI AU - Strong Retail Spending Consistent With RBNZ Pause: Q3 retail sales volumes were significantly stronger than expected and rose for the fourth consecutive quarter. They were up 1.9% q/q to 4.5% y/y, the fastest pace since Q4 2021 and consistent with the RBNZ on hold for now as signalled by its revised November OCR path. Governor Hawkesby said in the decision press conference that there were signs easing was supporting consumption and this data is in line with that sentiment.
MNI AU - Business Survey Signals Stronger H2 Growth & Lower Q4 Inflation. The ANZ November business survey is consistent with RBNZ’s Hawkesby’s comment following Wednesday’s rate cut that the recovery “is happening right now through Q3 and Q4”. It is a piece of high frequency data consistent with rates staying at 2.25% for now. Businesses are their most positive since 2014. Activity compared to a year ago, a good indicator for GDP, rose to 21.3 from 4.6 with ANZ saying that only construction remains negative. Thus it appears that growth recovered further in Q4.
“RBNZ’S HAWKESBY SAYS HURDLE IS HIGH FOR ANY FURTHER RATE CUTS, CANNOT KEEP DOOR OPEN TO EASING FOREVER" - BBG
Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5700(NZD356m Dec 2), 0.5940(NZD427m Dec 1) - BBG
The NZD/USD Average True Range for the last 10 Trading days: 47 Points

AUD/USD - AUD Looks To Challenge 0.6540-0.6560

The AUD/USD has had a range today of 0.6517 - 0.6536 in the Asia- Pac session, it is currently trading around 0.6535, +0.25%. The AUD/USD opened very well bid this morning and extended above its overnight highs.The AUD is now firmly back above 0.6500 and is looking to test the pivot toward 0.6540-60 within its wider 0.6350-0.6700 range. I suspect dips on the day back toward 0.6480-0.6500 will remain supported. A sustained break above the 0.6560 area is needed to potentially signal a move toward the top-end of its range, targeting 0.6625 first and then the 0.6700 area.

MNI AU - Very Strong Private Capex To Support Q3 GDP Print. Q3 private capex volumes soared 6.4% q/q, the fastest since Q1 2012, and is setting up the 3 December GDP release for a solid increase at this stage. Inventory data is out 1 December and the net export and public demand contributions on 2 December. The jump in investment in the quarter was across both building and plant & machinery and was driven by a 11.5% q/q jump in the latter from spending on aircraft but also data centres. Annual growth rates are showing an investment recovery is currently taking place.
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6650(AUD578m). Upcoming Close Strikes : 0.6550(AUD521m Dec 1), 0.6800(AUD532m Dec 2) - BBG
The AUD/USD Average True Range for the last 10 Trading days: 42 Points

ASIA STOCKS: US Rates Continue to Drive Optimism; FTSE Malay Below Key Tech

Global market optimism driven by growing expectations of a Federal Reserve interest rate cut is a major driver of Asian equity markets again today. India's Nifty 50 has reached a new record high due to growth optimism and GST cuts starting to filter through to the broader economy. The ever present China property market concerns were highlighted today as China Vanke sought to delay paying the principal on a CNY2bn bon due mid December, risking another default for the sector. In M&A, China's ANTA Sports is said to be considering a bid against Li Ning Co for PUMA SE, employing advisors in Hong Kong. The KOSPI and NIKKEI were up again today with tech stocks leading with Japan's Advantest was up sharply and SK Hynix in Korea.

The NIKKEI is up +1% today and over 3% for the last five trading days. The KOSPI is approaching the 4,000 level again, up +0.45% today yet 5% lower than the November 3 high.
China's have shrugged off the Vanke headlines, despite bond markets worrying about another default. The Hang Seng, CSI 300 and Shenzhen are all up +0.30% whilst Shanghai outperformed its domestic rivals with gains of +0.49% EV battery material producer Anhui Estone Materials up 20% today.
SE Asia's major bourses all fell today as profit takers took over in Jakarta dragging sentiment with it. The JCI is down -0.60% today, the SE Thai -0.05% and the FTSE Malay KLCI down -0.33%. The KLCI declines sees it break below the 20-day EMA. At 1,619 for the index, below is the 50-day EMA of 1,612.
The NIFTY 50 has opened up by +0.20% to reach a new high of 26,259 with almost all sectors up, with metals and oil & gas leading. The market is positioning further for an RBI cut next month following the firming of US rate bets, and comments from the RBI governor coupled with local commentators flagging a rebound in domestic consumption coming following the GST cuts.

OIL: Crude Likely To Finish November Down, Trading May Be Thin Due To US Holiday

Oil prices are lower in Thursday’s APAC trading after rising around a percent yesterday. Trading is likely to be thin with the US closed for the Thanksgiving holiday. WTI is down 0.6% to $58.30/bbl off the day’s trough at $58.27, while Brent is 0.5% lower at $62.80/bbl. Benchmarks have been in a $2 range this week as they react to progress and doubts regarding a Ukraine peace deal. Excess global supply remains its main concern which is likely to limit any upside.

OPEC meets on 30 November to decide January production levels but the group decided at the last meeting to leave quotas unchanged in Q1 given seasonally soft demand. So it seems unlikely to surprise with another output increase, especially given an additional monthly fall in the oil price.
US special envoy Witkoff is to visit Russia next week to present the revised peace agreement. The US also said it won’t include security guarantees for Ukraine in the plan until there is a deal. Disagreements over territory are also unresolved and so an agreement still seems elusive.
Later December German GfK consumer confidence, October euro area M3 and November European Commission economic sentiment print. The BoE’s Greene, ECB’s Cipollone, Tuominen, Machado and de Guindos speak and the October ECB meeting minutes are published.

Gold Lower As US Closed, No New US Information Until Monday

Gold is 0.2% lower at $4153.0/oz in Thursday’s APAC session in what has generally been a positive week for the metal driven by increased Fed rate cut pricing for the 10 December meeting following dovish comments from NY Fed’s Williams. There is now around 22bp of easing priced in. Bullion appears to be stabilizing now as there will be little news from the US until Monday due to the Thanksgiving holiday. The weaker US dollar (BBDXY -0.1%) also hasn’t provided support today.

Technicals suggest that gold’s dominant trend is upwards. Bullion fell to a low of $4142.79 today, holding well above initial support at the 50-day EMA of $3966.8.
Bloomberg estimates that flows into gold ETFs have been flat over the last three weeks.
Silver is down 0.9% to $52.89 after a low of $52.701. It jumped 3.7% to $53.36 on Wednesday.
Equities are mixed with the S&P e-mini and ASX flat but Hang Seng up 0.3% and Jakarta Comp down 0.5%. Oil prices are lower with WTI -0.6% to $58.31/bbl. Copper is steady.
Later December German GfK consumer confidence, October euro area M3 and November European Commission economic sentiment print. The BoE’s Greene, ECB’s Cipollone, Tuominen, Machado and de Guindos speak and the October ECB meeting minutes are published.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
27/11/2025	0700/0800	*	DE	GFK Consumer Climate
27/11/2025	0800/0900	**	SE	Economic Tendency Indicator
27/11/2025	0830/0930		EU	ECB Cipollone Remarks at Euro Cyber Resilience Board
27/11/2025	0900/1000	**	EU	M3
27/11/2025	0900/1000	**	IT	ISTAT Consumer Confidence
27/11/2025	0900/1000	**	IT	ISTAT Business Confidence
27/11/2025	1000/1100	*	EU	Consumer Confidence, Industrial Sentiment
27/11/2025	1100/1200		EU	ECB de Guindos Remarks at CEDE Congress of Executives
27/11/2025	1330/0830	*	CA	Current account
27/11/2025	1330/0830	*	CA	Payroll employment
27/11/2025	1630/1630		GB	BOE Greene Speech at Goodbody Conference
28/11/2025	2330/0830	**	JP	Tokyo CPI
28/11/2025	2330/0830	*	JP	Labor Force Survey
28/11/2025	2350/0850	*	JP	Retail Sales (p)
28/11/2025	2350/0850	**	JP	Industrial Production
28/11/2025	0700/0800	***	SE	GDP
28/11/2025	0700/0800	**	SE	Retail Sales
28/11/2025	0700/0800	**	DE	Import/Export Prices
28/11/2025	0700/0800	**	DE	Retail Sales
28/11/2025	0745/0845	***	FR	HICP (p)
28/11/2025	0745/0845	**	FR	PPI
28/11/2025	0745/0845	***	FR	GDP (f)
28/11/2025	0745/0845	**	FR	Consumer Spending
28/11/2025	0745/0845		FR	Payrolls
28/11/2025	0800/0900	***	ES	HICP (p)
28/11/2025	0800/0900	**	CH	KOF Economic Barometer
28/11/2025	0800/0900	***	CH	GDP
28/11/2025	0855/0955	**	DE	Unemployment
28/11/2025	0900/1000	***	IT	GDP (f)
28/11/2025	0900/1000	***	DE	Bavaria CPI
28/11/2025	0900/1000	***	DE	North Rhine Westphalia CPI
28/11/2025	0900/1000	***	DE	Baden Wuerttemberg CPI
28/11/2025	0900/1000	**	EU	ECB Consumer Expectations Survey
28/11/2025	1000/1100	***	IT	Italy Flash Inflation