Stocks continue to slide on Quad Witching.
USD gives back some of its FOMC-induced gains, JPY gains after the region’s inflation data and overnight jawboning.
USTs and Bunds are incrementally firmer but ultimately contained into PCE and Fed speak.
Crude continues to falter while base metals attempt a recovery.
Looking ahead, US PCE, Canadian Retail Sales, Quad Witching, Fed's Williams, Daly & Hammack.

EUROPEAN TRADE

EQUITIES

European bourses began the morning entirely in the red, and continued to proceed lower as the session progressed; as it stands, indices generally reside at worst levels.
As it stands, all European sectors find themselves in the red; in-fitting with sentiment. Whilst still in the red, Real Estate fares the best vs peers. Banks are by far the clear underperformer, weighed on by Deutsche Bank, which expects a Q4 EUR 300mln hit due to its Polish subsidiary litigation.
US equity futures are in negative territory and drifting lower as the session progresses, following the glum mood seen in European trade.
Foxconn (2354 TT) to pause pursuit of Nissan (7201 JT) as Honda (7267 JT) deal talks unfold, via Bloomberg citing sources
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FX

USD is giving back some of its gains which saw DXY top the 11th November 2022 peak overnight (108.44) to make a 108.48 high. Today will see a slew of Fed speakers on the wires who can help further explain the announcement. Williams, Daly, Hammack are all due on deck with particular interest on the latter given her hawkish dissent at the meeting.
EUR is edging out slight gains vs. the USD but remains on a 1.03 handle after printing a fresh low for the month earlier @ 1.0344 in the wake of comments from US President-elect Trump cautioning that the EU "must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!". It is worth noting that there is some huge option activity in EUR/USD for today's NY cut, detailed below.
JPY is attempting to undo some of the damage seen over the past few sessions as a hawkish Fed cut and lack of a hike from the BoJ has driven the pair from a 153.32 base on Wednesday to a multi-month high overnight at 157.92. Some respite has been granted following hotter-than-expected Japanese CPI overnight and currency jawboning by Japanese officials, who expressed concerns over recent JPY moves.
GBP flat vs. the USD and lagging peers following soft UK retail sales data for November in what has been a generally busy week for UK data as well as yesterday's dovish hold by the BoE. Cable has slipped onto a 1.24 handle for the first time since 22nd November with a current session trough at 1.2476.
AUD unable to make much headway vs. the broadly softer USD in what has been a bruising week for AUD/USD after the pair made a fresh YTD low yesterday at 0.6200 to hit its lowest level since October 2022. Similar price action for NZD/USD which hit a fresh YTD low yesterday at 0.5609 to trade at its lowest level since October 2022.
PBoC set USD/CNY mid-point at 7.1901 vs exp. 7.3086 (prev. 7.1911)
Brazil called an FX credit line auction of up to USD 4bln on December 20th, according to Bloomberg.
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FIXED INCOME

USTs are modestly firmer but yet to significantly deviate from the unchanged mark in 108-19+ to 108-26+ parameters. Docket ahead features monthly PCE data before the docket turns to Central Bank speak with Fed’s Williams, Daly & Hammack scheduled; the latter is set to explain her dissent. The yield curve continues to steepen though action is modest and a function of the short-end continuing to pull back from post-Fed highs.
Bunds are incrementally firmer, but similarly to USTs are yet to deviate lastingly from the unchanged mark but have printed a slightly more expansive 133.81 to 134.10 range. Bunds did come under modest pressure on a much hotter than expected German PPI release; but did since pare alongside peers.
Gilts opened higher by a single tick before slipping to a 92.18 trough and then paring back to unchanged. Since, action has been very limited and choppy in 92.18-48 parameters. Before the open, Retail Sales came in softer than expected but still posted a recovery from the prior.
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COMMODITIES

WTI and Brent are softer, continuing to falter after Thursday’s reports that the G7 could adjust the Russian energy price cap with pressure also stemming from the downbeat risk tone. Brent'Feb 25 currently reside near lows at USD 72.20/bbl.
Gold is firmer and holding around the USD 2.6k/oz mark in a thin range with catalysts for the metal light and after trading flat overnight. XAU is holding in proximity to the 100-DMA at USD 2606/oz.
3M LME Copper is defying the risk tone and holding modestly in the green, though still yet to test USD 9k/handle yet.
India's finished steel imports from China reach all-time high during April-November, according to Govt data.
German Parliament has passed its energy law: will accommodate the waiver of internal gas storage levy at intra-EU border points and virtual trading hubs. This entails the gas levy payable to the operator Trading Hub Europe to apply to domestic customers only from Jan 1st 2025.
Russia's Kremlin says will act to counter the possible new G7 oil sanctions; will act to minimise any consequences and protect Russian companies, measures will backfire on those who take them.
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NOTABLE DATA RECAP

UK Retail Sales MM (Nov) 0.2% vs. Exp. 0.5% (Prev. -0.7%); "For the first time in three months there was a boost for food store sales, particularly supermarkets"
UK Retail Sales Ex-Fuel MM (Nov) 0.3% (exp. 0.0%, prev. -0.9%)
UK Retail Sales YY (Nov) 0.5% vs. Exp. 0.8% (Prev. 2.4%, Rev. 2.0%); Ex-Fuel 0.1% vs. Exp. 0.7% (Prev. 2.0%, Rev. 1.6%)
UK PSNB Ex Banks GBP (Nov) 11.249B GB vs. Exp. 13.0B GB (Prev. 17.354B GB, Rev. 18.217B GB)
German Producer Prices MM (Nov) 0.5% vs. Exp. 0.3% (Prev. 0.2%); YY 0.1% vs. Exp. -0.3% (Prev. -1.1%)

NOTABLE EUROPEAN HEADLINES

UK Chancellor Reeves is posed to visit China in January to revive high-level economic and financial talks, according to Reuters sources.
NIER sees Swedish GDP for 2025 +1.2%. See the Riksbank rate averaging 1.5% in 2025 and 1.5% in 2026

NOTABLE US HEADLINES

US President-elect Trump says "I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!"
US House of Representatives defeated a bill to temporarily fund the federal government and avert agency shutdowns beginning on Saturday; Next steps unclear in avoiding government shutdown following House defeat of spending bill, according to Reuters.
US President-Elect Trump said House Speaker Johnson and the House have come to a very good deal for the American people; urges Republicans and Dems to vote yes. Trump earlier said he would support abolishing the debt ceiling entirely.
US President-elect Trump says "Congress must get rid of, or extend out to, perhaps, 2029, the ridiculous Debt Ceiling. Without this, we should never make a deal. Remember, the pressure is on whoever is President."
FedEx Corp (FDX) Q2 2025 (USD): EPS 4.05 (exp. 4.06), Revenue 22.0bln (exp. 22.1bln); FY EPS view 19-20 (exp. 19.75, prev. 20-21); FY25 capital outlook USD 5.2bln. FedEx (FDX) announced its intent to separate FedEx freight, creating two industry-leading public companies. +7% in pre-market
Nike Inc (N...