JAPAN DATA: Nov CPI Around 3%y/y, Services Inflation Unchanged At 1.6%y/y
Japan Nationwide CPI for Nov was in line with market forecasts and suggested little shift in y/y momentum relative to Oct. The headline was 2.9%y/y (prior 3.0%), while the core ex fresh food was 3.0% (unchanged versus Oct), while core ex fresh food, energy was 3.0%y/y (against 3.1y/y for Oct). The chart below plots these three inflation metrics in y/y terms, with recent trends settling near the 3% y/y, off earlier 2025 highs, but well above the BoJ's 2% inflation target. Still, services inflation, a key BoJ watch point, remained unchanged in y/y terms at 1.6%.
- In m/m terms, headline rose 0.4%, the same as the Oct pace, while the core measures were positive but lower than Oct's pace. Goods prices rose 0.7%m/m, while services were +0.2% higher.
- By sub category, outside of utilities (+3.8%m/m) other segments were mostly softer compared to the Oct outcome. Transport fell 0.3%m/m, entertainment was -0.3%m/m and household goods were down by 0.6%m/m.
Fig 1: Japan CPI Trends Y/Y, Broadly Unchanged In Nov
Source: Bloomberg Finane L.P./MNI
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US STOCKS: S&P(ESZ5) - Finds Bids Eventually Around 6600, Eyes Nvidia Results
The S&P(ESZ5) overnight range was 6594.00 - 6687.50, SPX closed -0.83%, Asia is currently trading around 6645.00. The S&P finally found some demand toward 6600 and the momentum lower seemed to stall in N/Y. The market will be looking toward the release of the upcoming Nvidia results which will heavily impact the direction of markets tomorrow morning. The Crypto space has also found a short-term base with Bitcoin finding demand below the pivotal $90k area. The market has tended to rise into the last few Nvidia earning reports so the set-up going into this one is slightly different but the focus will be no less, options had been pricing a 7% swing either side for the event. This morning stocks opened a little higher, E-minis(S&P) +0.05%, NQZ5 +0.05%.
- Technically the S&P has put in a lower high on the Daily chart and this could be signaling a deeper potential pullback, but a break below the support between 6550-6600 will be needed first to break the bullish trend. On the day look for sellers should we get a bounce back toward the 6725-6750 area.
- Joe Weisenthal pointed to the mood change in AI investment on X, “This chart from the Bank of America fund manager survey perfectly captures the mood. Net 20% of respondents think companies are spending too much money on investment. Not just the highest ever, but also the first time this number has ever been positive in the history of the survey.” See Graph Below
- The S&P 500 Index Average True Range(ATR) for the last 10 Trading days: 95 Points
Fig 1: Are Companies Overinvesting
Source: MNI - Market News/BofA Research/@TheStalwart
MNI: MNI JAPAN SEPT CORE MACHINE ORDERS +4.2% M/M; AUG -0.9%
- MNI JAPAN SEPT CORE MACHINE ORDERS +4.2% M/M; AUG -0.9%
- JAPAN SEPT MACHINE ORDERS POST 1ST M/M RISE IN 3 MONTHS
LNG: Gas Prices Range Trading As Watch Weather Outlook
Gas prices were little changed on Tuesday. Europe rose to EUR 31.99 but then trended lower reaching EUR 31.335 and finished little changed on the day at EUR 31.435. In the end it didn’t find support from colder weather projections or EU foreign minister Kallas calling Russia’s actions against the EU “state-sponsored terrorism” prompting expectations of further sanctions.
- Models are showing a high chance of cold Arctic air hitting Europe later in December.
- European storage levels continue to decline gradually and are currently around 81.7% as LNG and Norwegian flows slow. If this trend continues and temperatures turn materially lower, then gas prices could turn decisively higher again.
- US prices rose 0.2% to $4.370 off the intraday low of $4.235 as projections shifted cooler after a milder forecast drove a sharp sell off on Monday. They are still up 6% this month.
- Vaisala is expecting the middle third of the US now to see lower temperatures in the fourth week of November and the east over month end and into December.
