US: Trump Rhetoric Could Drive Shakeup In NATO Defence Spending
Dec-13 17:42
NATO Secretary General Mark Rutte said yesterday that NATO members need to “shift to a wartime mindset,” and significantly increase defence spending – a sign that Trump’s hardline rhetoric on the alliance could compel a shakeup in European defence budgets.
- Rutte argued: “Russia is preparing for long-term confrontation, with Ukraine and with us,” with Semafor noting the comments followed reports that European NATO countries are weighing hiking their defense spending benchmark to 3% of GDP in 2025.
- Semafor adds that Trump’s “criticism of member countries who haven’t met the target, coupled with war on European soil, has created new urgency in the continent’s capitals to take defense more seriously, with Rutte pushing a return to Cold War-era budgets: “The threats to our freedom and security are just as big.””
Figure 1: Annual Defence Spending of NATO Countries
Source: Semafor, NATO
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FOREX: USDJPY Extends to Session Highs, Prints Fresh Recovery Peak of 155.43
Nov-13 17:28
- Despite the lower front-end yields in the US following today’s softer-than-expected supercore inflation data, USDJPY has joined the broader greenback reversal and has printed the highest level since July in the process, reaching a fresh recovery peak of 155.43.
- The yen had been relatively resilient in the aftermath of the data; however, the underlying dollar optimism has prevailed, and the data appears to have merely provided a more attractive entry point for market participants.
- Overall, this week’s climb has resulted in a breach of resistance at 154.71, the Nov 07 high, to confirm a resumption of the technical uptrend and maintain the price sequence of higher highs and higher lows.
- Furthermore, clearance of 155.27 (Fibonacci projection) bolsters this theme and signals scope for a more protracted move to 156.67 and 157.86, the Jul 19 high.
- BoJ policy and the FX approach of the Japanese authorities becomes key here, with markets re-entering levels at which the Japanese authorities intervened in currency markets, however given the sharp gyrations in short-end US rates markets, it's unlikely recent price action meets the criteria for intervention, especially with current expectations for a BOJ rate hike in either December or January.
PIPELINE: $2B China 2Pt US$ Debt Issuance Launched
Nov-13 17:22
- Date $MM Issuer (Priced *, Launch #)
- 11/13 $2B #People's Republic of China $1.25B 3Y +1, $750M 5Y +3
- 11/13 $Benchmark BP Capital PerpNC10 6.375%a
- 11/13 $Benchmark Swedbank 5Y +90a, 5Y SOFR
- 11/13 $Benchmark BNY Mellon 11NC10 +100a
- 11/13 $Benchmark Bank of NY Mellon 11NC10 +100a
- 11/13 $Benchmark Huntington Ingalls Industries 5Y +140a, 10Y +165a
- 11/13 $Benchmark Gilead 5Y +75a, +10Y +95a, 30Y +115a, 40Y +125a
- 11/13 $Benchmark Cardinal Health 2Y +65a, 5Y +90a, 10Y +120a, 30Y +140a
US: Thune Elected Republican Senate Leader
Nov-13 17:12
Senator John Thune (R-SD) has been elected leader of the Senate Republican caucus, defeating senators Rick Scott (R-FL) and John Cornyn (R-TX) in two rounds of secret ballot voting. In January 2025, when lawmakers return to Washington for the 119th Congress, Thune will assume the role of Senate Majority Leader. He will be tasked with rallying support for President-elect Trump's legislative agenda in the upper chamber and setting the agenda for executive and judicial branch nominations.
- Thune will lead a 53-47 majority in the Senate. The three-seat buffer will give Thune strong leverage to work around senators Lisa Murkowski (R-AL) and Susan Collins (R-ME) - two moderate Republicans who may have operated as a centrist block on Republican legislation, as Democrats Joe Manchin and Krysten Sinema did during the first half of Biden's term.
- Thune will assume the role with considerable experience managing Senate proceedings, having acted as proxy leader for Senator Mitch McConnell (R-KY) during his health problems for much of the last year.
- The Hill notes that Thune has, "pledged to hold regular meetings with Speaker Mike Johnson (R-LA) to improve coordination with House Republicans and with Vice President-elect JD Vance to stay in sync with the Trump White House," suggesting a more coherent legislative for Trump during his second term.
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