MNI US MARKETS ANALYSIS - Central Bank, US CPI Bonanza
Highlights:
- Much-delayed US inflation print expected to be messy, preventing any accurate market signal
- Central bank bonanza sees BoE, ECB, Banxico, Czechia decisions today, Japan, Russia, Colombia tomorrow. Sweden, Norway, Taiwan kept rates unchanged this morning
- USD creeping higher despite new weekly low for US 10y yield
US TSYS: TYH6 Starts To Probe Resistance With CPI Eyed
Treasuries have extended yesterday’s second half gains overnight, pushing higher through Asia and European hours with crude oil futures also pulling back 1.5% from late yesterday highs. Today’s docket is headlined by a potentially messy US CPI report with scope for spillover from BOE and ECB decisions beforehand. It will also be followed by the BOJ late tonight with a rare hike expected.
- Cash yields are 1-3bps lower on the day, with declines led by the belly.
- A mixed day so far for curves, with 2s10s dipping to 66.9bps (-0.3bp) vs 5s30s at 114.6bps (+1.5bp) having come close to testing three-month highs of 115.1bps after payrolls on Tuesday.
- Tuesday’s 69.6bps for 2s10s had started to eye the April high of 73.8bp for its steepest since early 2022.
- TYH6 trades close to session highs of 112-22 (+06) as it starts to probe resistance at 112-22+ (Dec 16 snap high on payrolls which also met the 50-day EMA) and 112-23 (Dec 11 high) before 112-27+ (Dec 5 high). Clearance here would strengthen a short-term bull cycle as it moves further away from the bear threat at 111-29 (Dec 10 low).
- Data: CPI Nov w/ partial Oct data (0830ET), Real avg earnings Nov (0830ET), Weekly jobless claims (0830ET), Philly Fed mfg Dec (0830ET), KC Fed mfg Dec (1100ET), Dallas Fed weekly economic index (1130ET), TIC flows Oct (1600ET)
- Fedspeak: Goolsbee on Fox Business (1025ET), Goolsbee on PBS NewsHour (1800ET)
- Coupon issuance: US Tsy $24B 5Y TIPS re-open - 91282CPH8 (1300ET)
- Bill issuance: US Tsy $80B 4W & $80B 8W bill auctions (1130ET)
- Politics: Trump signs executive order (1330ET), Trump signs National Defense Authorization Act (1800ET)
STIR: Next Fed Cut Nears Being Fully Priced For April Before CPI
- Fed Funds implied rates are 0.5-1.5bp lower overnight, with the larger moves coming for the June meeting onwards seemingly helped by Trump reiterating late yesterday the next Fed Chair will be “someone who believes in lower interest rates by a lot […] Early in the new year, you will see this."
- Today’s US CPI report for Nov with its unknown extent of partial details for Oct will be in focus. MNI CPI Preview: https://media.marketnews.com/USCPI_Prev_Dec2025_360a1d05ec.pdf
- Cumulative cuts from 3.64% effective: 6bp Jan, 15.5bp Mar, 22bp Apr, 36bp Jun, 53bp Sep and 61.5bp Dec.
- SOFR futures are up to 3 ticks firmer through 2027 contracts, with the terminal implied yield pushing a little lower to 3.075% (Z6, -2bps). That’s still within recent ranges but comes closer to the ~3% seen after last month’s dovish guidance from NY Fed’s Williams.
- NEC’s Hassett remains a favorite in betting markets at 54% on Polymarket, with Warsh (25%) and Waller (13%) somewhat splitting the case for a former/current Fed Governor. Waller looks for a more measured pace to rate cuts than Trump’s “by a lot”, saying yesterday that "maybe we're 50 to 100 basis points off of neutral. We still got some room” but "We're not seeing a dramatic decline of labor market going off a cliff...I don't think we have to do anything dramatic.”
MNI PREVIEWS
MNI US CPI PREVIEW: Handle With Care
The latest delayed CPI update from the Bureau of Labor Statistics threatens to be messy in several regards, muddying the signal for markets and for monetary policy. The government shutdown precluded October data collection, meaning overall CPI aggregates will not be available for the month, and the inflation recorded for November is on a 2-month change basis from Sept. While the M/M data will never be officially available, MNI's usual aggregation of sell-side analyst expectations points to expectations of an average of 0.24% M/M core CPI monthly across October and November.
MNI BOE PREVIEW: What Follows a Christmas Cut?
Governor Bailey is almost unanimously expected to join the four dovish dissenters and deliver a Christmas BOE 25bp rate cut at tomorrow's meeting (expected unanimously by the sell side and priced over 23bp at the time of writing). The market will be looking for more nuance at this meeting so we look at our top 7 things to watch in the meeting (assuming we do get the expected cut; if we don’t then the market isn’t going to pay much attention to the details!). We also summarise over 20 sellside previews - a 5-4 vote split is expected by the majority but analysts are split over what happens after December.
MNI ECB PREVIEW: Relative Resilience Confirms in a Good Place
The ECB is again fully expected to leave its three key rates on hold on Thursday, including a 2% deposit rate nicely within the 1.75-2.25% neutral rate range estimated by ECB staff. This time though the meeting comes against a backdrop of a very mild hiking bias to end-2026, helped by recent rhetoric from Schnabel, which despite having been pared fairly notably in recent days is still a change from a modest easing bias ahead of recent meetings.
MNI BOJ PREVIEW: Hike Fully Priced
The BOJ is widely expected to raise the policy rate by 25bp to 0.75% at the December 18–19 meeting, with Governor Ueda’s recent remarks signalling increased confidence in the outlook for growth, inflation and wage momentum. Ueda has indicated the BOJ will assess the “pros and cons of raising the policy interest rate,” while Policy Board members say conditions for a hike are “gradually falling into place,” though confirmation of spring wage momentum remains key.
MNI BANXICO PREVIEW: Cut Seen, Hawkish Risks Prevalent
Banxico is expected to deliver another 25bp rate cut to 7.0% on Thursday as it continues to respond to weak activity data, which revealed a contraction of the economy in the third quarter. However, recent stronger-than-expected CPI inflation data have significantly increased the risk of a pause in the easing cycle, if not this week, then more likely early in the new year, keeping focus on the forward guidance.
MNI COLOMBIA CB PREVIEW: Hold Seen, Risk of Hike
BanRep is expected to leave its policy rate unchanged at 9.25% for a fifth consecutive meeting on Friday, in another split decision, although risks of a hike have increased significantly amid mounting concerns over the inflation outlook. Rising inflation expectations, strengthening domestic demand and increasing fiscal pressures have prompted the majority of the BanRep board to strike a more hawkish tone recently, with the market now pricing in over 150bp of rate hikes over the next year.
MNI CNB PREVIEW: Repo Rate to End 2025 at 3.50%
The Czech National Bank will almost certainly deliver a well-telegraphed unanimous decision to keep the two-week reference rate unchanged at 3.50% at the final meeting of this year as concerns about familiar inflationary risks continue to linger. Although headline inflation moderated to +2.1% Y/Y in November, the property market is running hot, wages are still growing at pace, and there is considerable uncertainty about the fiscal outlook under the new government.
MNI CBR PREVIEW: Easing Pace to Be Maintained
The CBR is expected to continue with monetary policy easing following two months of lower-than-expected inflation readings. Governor Elvira Nabiullina has previously advised that further easing is to be approached with caution, and therefore a larger 100bp rate cut is seen only as an outside possibility. According to a poll published by Vedomosti, 17 of 23 analysts expect the central bank to lower its key interest rate by 50bps to 16.00%.
[EGB FUNDING UPDATE] German 2026 Funding Plan Details:
Broadly as we had expected for capital markets although we hadn't pencilled in a new 20-year Bund via syndication (and there will be 4 syndications this year rather than two so the auction issuance at E318bln was marginally below our E320-330bln estimate). Overall, including green and syndications we estimate around E350-355bln of capital market issuance. Bubill issuance at E176bln was higher than we had pencilled in.
- Total capital markets auction issuance: E318bln (exp around E320-330bln, E265.5bln in 2024)
- Quarterly issuance in line with our expectations for Q1/Q3 but around E10bln lower in Q2 and E10bln higher in Q4 than we expected: Q1: E89.5bln (MNI exp E90bln), Q2: E78.5bln (MNI exp E90bln), Q3: E91bln (MNI exp E90bln), Q4: E59bln (MNI exp E50bln)
- Schatz: E92bln in 17 auctions (MNI exp E85-95bln, E75bln in 2025 in 14 auctions).
- Bobl: E73bln in 14 auctions (MNI exp E75-80bln, E63bln in 2025 in 12 auctions).
- 7-year Bund: E22bln in 6 auctions (MNI exp E25bln, E11bln in 2025 in 3 auctions - only launched in August).
- 10-year Bund: E82bln in 15 auctions (MNI exp E80-90bln, E67.5bln in 2025 in 15 auctions).
- 15/20-year Bund: E20bln in 10 multi-ISIN auctions (MNI exp E25bln, E21.5bln in 2025 in 10 multi-ISIN auctions).
- 30-year Bund: E29bln in monthly ex-Dec auctions (MNI exp E30bln, E27.5bln in 2024 in monthly ex-Dec auctions).
- Green: E16-19bln in 9 auctions, new 15-year Green Bund to be launched via syndication (MNI exp E13-15bln, E14.5bln in 2025 from E13-15bln initial target, via 8 auctions - 2 of which single ISIN, 6 multi-ISIN).
- Syndication: 4 transactions: New 20-year Bund, two in the 30-year area and the new 15-year Green (E10.5bln of 2.90% Aug-54 Bund in two transactions in 2025).
- Bubill issuance: E176bln (MNI exp E155bln, E134.5bln in 2025)
US TSY FUTURES: Mix Of Short Setting & Long Cover Seen On Wednesday
OI data points to a mix of net short setting (TU, FV & TY) and long cover (US & WN) as most Tsy futures contracts settled lower on Wednesday.
- UXY settled at unchanged levels, so we cannot provide any real inference around the relatively limited uptick in OI in that contract.
- The net short setting seen in TU through TY futures comfortably outweighed the long cover seen further out the curve, with TU futures seeing the biggest shift in DV01 terms.
| 17-Dec-25 | 16-Dec-25 | Daily OI Change | OI DV01 Equivalent Change ($) | |
| TU | 4,526,486 | 4,454,342 | +72,144 | +2,862,600 |
| FV | 6,675,819 | 6,665,902 | +9,917 | +439,437 |
| TY | 5,446,307 | 5,418,646 | +27,661 | +1,862,428 |
| UXY | 2,518,409 | 2,515,753 | +2,656 | +240,871 |
| US | 1,841,040 | 1,855,855 | -14,815 | -2,058,197 |
| WN | 2,076,915 | 2,080,218 | -3,303 | -599,099 |
| Total | +94,260 | +2,748,041 |
SOFR: Mix Of Positioning Swings In Futures On Wednesday
OI data points to net short cover dominating in the white pack of the SOFR futures curve as contracts in that area of the strip ticked higher.
- Contracts further out the strip were little changed to lower on the day, with net short setting dominating in the reds, before net long cover came to the fore in the greens and blues.
| 17-Dec-25 | 16-Dec-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRU5 | 1,307,409 | 1,307,491 | -82 | Whites | -140,000 |
SFRZ5 | 1,442,109 | 1,572,214 | -130,105 | Reds | +95,847 |
SFRH6 | 1,354,336 | 1,368,501 | -14,165 | Greens | -23,375 |
SFRM6 | 1,154,205 | 1,149,853 | +4,352 | Blues | -10,967 |
SFRU6 | 1,212,738 | 1,190,486 | +22,252 |
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SFRZ6 | 1,158,214 | 1,126,580 | +31,634 |
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SFRH7 | 883,940 | 851,528 | +32,412 |
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SFRM7 | 774,611 | 765,062 | +9,549 |
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SFRU7 | 822,232 | 820,380 | +1,852 |
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SFRZ7 | 838,433 | 842,026 | -3,593 |
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SFRH8 | 466,110 | 475,303 | -9,193 |
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SFRM8 | 404,216 | 416,657 | -12,441 |
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SFRU8 | 379,527 | 383,653 | -4,126 |
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SFRZ8 | 334,123 | 336,817 | -2,694 |
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SFRH9 | 201,156 | 207,285 | -6,129 |
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SFRM9 | 212,290 | 210,308 | +1,982 |
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EUROPEAN COUNCIL: High-Stakes Summit Gets Underway w/Ukraine Funding To Dominate
EU leaders are meeting for one of the most contentious European Council summits in years. The major topic of discussion is how to financially support Ukraine in the months and years ahead, with its funding due to expire as soon as spring 2026. With President Volodymyr Zelenskyy in attendance, leaders are split on whether to use frozen Russian assets held in the EU to fund 'reparations loans' or issue joint debt. European Council President Antonio Costa said, "We will never leave this Council without a final decision to ensure the financial needs of Ukraine." However, it remains difficult to see a path to agreement.
- On his arrival, Hungarian PM Viktor Orban said that the idea of using frozen Russian assets is "dead" as there is a blocking minority against it.
- European High Representative for Foreign Affairs and Security Policy Kaja Kallas says, "I agree with [German Chancellor Friedrich] Merz. It's 50/50", adding that countries would not progress with the idea without Belgium's approval, even if a qualified majority (55% of countries representing 65% of EU population) is reached. She claims that Belgium's concerns about being left financially exposed by legal demands from Russia have been addressed, saying, "We will all take the risk".
The EU-Mercosur trade deal could also feature. It is ostensibly due to be signed on 20 Dec after two decades of negotiation. However, strong opposition from France and Poland, and delaying tactics from Italy, look more likely to scupper the prospect of agreement on the largest trade deal in EU history.
FOREX: USD Tilts Higher Ahead of US CPI, NOK Rises Post-Norges Bank
- Despite the initial downside pressure on the USD this week in the lead up to the US employment report, momentum quickly stalled. Short-term positioning dynamics have assisted a moderate dollar squeeze, tilting the USD index into positive territory on the week. Intra-day sentiment and the lack of momentum continue to reflect the limited appetite ahead of a busy central bank calendar as well as the key US CPI data release later today.
- The 0.2% bump higher for the DXY is seeing similar broad-based declines across the rest of the G10. With the Bank of England a particular focus today, GBPUSD has just slipped back below the 1.3350 mark, however, spot remains comfortably above yesterday’s post CPI lows of 1.3312. Initial firm support is 1.3293, the 50-day EMA, and a breach of this average would highlight a possible technical reversal.
- Overnight, New Zealand GDP data rose above expectations in Q3, however, prior downside revisions more than offset the initial beat. This helped NZDUSD slip further back below the 0.5800 pivot point, and spot currently hovers just above its 20- and 50-day EMA’s.
- NOK is a moderate outperformer on the day after Norges Bank remained on hold as expected but revisions to the rate path pushed back on significant easing expectations ahead. This led EURNOK to see a 11.94 session low. Initial support is the prior breakout level of 11.8612 (Nov 25 high). Conversely for SEK, the lack of endorsement for hawkish market pricing amid the expected Riksbank hold may be having some marginal dovish readthrough.
- USDJPY meanwhile extends yesterday's upside, standing just below the 156.00 handle at typing. This means the post-NFP bounce totals around 1.0% as we approach Friday's BOJ meeting, where a 25bp hike to the policy rate remains priced in. Short-term technical parameters appear well defined at 154-158.
OPTIONS: Expiries for Dec18 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.1550(E1.9bln), $1.1600(E1.3bln), $1.1700(E1.4bln), $1.1735(E1.2bln), $1.1745-50(E3.3bln), $1.1797-00(E1.2bln), $1.2000(E1.9bln)
- USD/JPY: Y155.00($3.4bln), Y156.00($3.1bln), Y156.25($2.3bln), Y157.00($4.2bln), Y158.00($5.0bln), Y158.50($1.9bln), Y159.00($6.5bln)
- GBP/USD: $1.3600(Gbp570mln)
- AUD/USD: $0.6540-50(A$1.6bln), $0.6665-75(A$1.3bln)
- AUD/NZD: N$1.1410(A$1.5bln)
EQUITIES: This Week's Pullback for Eurostoxx Futures Considered Corrective
- A bull cycle in Eurostoxx 50 futures remains intact and the latest pullback is considered corrective. The first key support to watch lies at 5650.52, the 50-day EMA. A clear break of the average would highlight a potential short-term reversal. This would open 5594.00, the Nov 26 low. For bulls, a resumption of gains would refocus attention on key resistance and the bull trigger at 5825.00, the Nov 13 high.
- The pullback in S&P E-Minis has resulted in a breach of both the 20- and 50-day EMAs. This strengthens a short-term bear theme and signals scope for a deeper retracement of the recent bull phase between Nov 21 - Dec 11. Sights are on 6737.71, a Fibonacci retracement. Note that the key support and reversal trigger lies at 6583.00, the Nov 21 low. For bulls a resumption of gains would refocus attention on key resistance at 7014.00, the Oct 30 high.
COMMODITIES: Gold Continues to Trade Just Below Bull Trigger
- A bearish theme in WTI futures remains intact. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. A key support and the bear trigger at $56.11, the Oct 17 low has been breached. Clearance of this level resumes the downtrend and opens $53.77, a Fibonacci projection. Key short-term resistance to watch is $61.25, the Oct 24 high. First resistance is at $58.94, the 50- day EMA.
- The trend structure in Gold remains bullish. The bear phase between Oct 20 - 28 appears to have been a correction and note that the recovery since Oct 28 signals the end of that corrective cycle. Key support to watch is the 50-day EMA, at $4097.5. Clearance of this EMA would signal scope for a deeper retracement. Attention is on key resistance and the bull trigger at $4381.5, the Oct 20 high.
| Date | GMT/Local | Impact | Country | Event |
| 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 | 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 |
| 19/12/2025 | 0700/0700 | *** | GB | Public Sector Finances |
| 19/12/2025 | 0700/0800 | ** |  DE | PPI |
| 19/12/2025 | 0700/0800 | * | DE | GFK Consumer Climate |
| 19/12/2025 | 0700/0800 | ** |  SE | Retail Sales |
| 19/12/2025 | 0700/0700 | *** | GB | Retail Sales |
| 19/12/2025 | 0745/0845 | ** |  FR | PPI |
| 19/12/2025 | 0800/0900 | ** | SE | Economic Tendency Indicator |
| 19/12/2025 | 0830/0930 | EU | ECB Wage Tracker | |
| 19/12/2025 | 0900/1000 | ** | EU | EZ Current Account |
| 19/12/2025 | 0900/1000 | ** |  IT | ISTAT Consumer Confidence |
| 19/12/2025 | 0900/1000 | ** | IT | ISTAT Business Confidence |
| 19/12/2025 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 19/12/2025 | 1200/1300 | EU | ECB Cipollone Remarks, Roundtable at Aspen Institute | |
| 19/12/2025 | 1200/1200 | GB | BOE Market Participants Survey | |
| 19/12/2025 | 1330/0830 | ** | CA | Retail Trade |
| 19/12/2025 | 1400/1500 | ** |  BE | BNB Business Confidence |
| 19/12/2025 | 1500/1000 | *** | US | NAR existing home sales |
| 19/12/2025 | 1500/1000 | *** | US | U. Mich. Survey of Consumers |
| 19/12/2025 | 1500/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 19/12/2025 | 1500/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 19/12/2025 | 1510/1610 | EU | ECB Lane Lecture at Central Bank of Ireland | |
| 19/12/2025 | 1630/1630 | GB | BOE to announce APF Q4 Sales Schedule | |
| 19/12/2025 | 1800/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
