GGMA Morning Brief: Australian CPI slows, Oil slides, Trump tariff ruling on Friday, Fed banks voted against change in discount rate, EZ inflation, US ISM non-Mfg & JOLTS in focus
Good morning,
I hope all is well.
Here are the main overnight news and market movers.
Australia’s core inflation slows in November, boosts RBA hold case
Australia’s core inflation slowed in November, supporting the case for the Reserve Bank to keep interest rates unchanged for now as it assesses the impact of earlier policy easing. The closely-watched trimmed mean gauge advanced 3.2% from a year ago, easing from 3.3% and matching economists’ expectations, data from the Australian Bureau of Statistics showed Wednesday. The headline CPI rose 3.4% in the 12 months through November, versus a forecast 3.6% increase. (BBG – Continue Reading)
Meanwhile, building approvals jumped 15.2% in November compared to last month. This should bode well for the construction component of GDP and lift the latter as well.
Australian bond yields declined after the release. AUDUSD initially dipped after the release but then recovered and is slightly in the green this morning.
Oil slides after Trump says Venezuelan oil to be shipped to US
Oil futures fell in the early Asian session after President Trump says on Truth Social that Venezuelan oil is to be shipped to the U.S. “Interim Authorities in Venezuela Will Be Turning Over Between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States,” Trump said on Truth Social. Trump also said that he had asked Energy Secretary Chris Wright to execute the plan immediately. Front-month WTI crude oil futures are 2.3% lower at $55.80/bbl. (WSJ – Continue Reading)
With Trump's tariffs on the line, US Supreme Court plans rulings for Friday
The U.S. Supreme Court is expected to issue rulings on Friday as it weighs cases with significant implications both nationally and globally, including the legality of President Donald Trump's sweeping global tariffs. The court indicated on its website on Tuesday that it could release decisions in argued cases when the justices take the bench during a scheduled sitting on Friday. The court does not announce in advance which rulings it intends to issue. (Nikkei)
The majority of Fed banks voted against a December change to the discount rate
Directors at two-thirds of the Federal Reserve's regional banks voted to leave the interest rate charged to commercial banks for emergency loans unchanged ahead of last month's Fed meeting, minutes of the central bank's discount rate meetings showed on Tuesday. The rate recommendations - overruled when Fed policymakers decided in a 9-3 vote to lower the policy rate by a quarter of a percentage point at their December 9-10 meeting - reveal another dimension to how contested that rate-cut decision was. (RTRS)
Yesterday, Federal Reserve Governor Stephen Miran said the US central bank will need to cut interest rates by more than a percentage point in 2026, arguing that monetary policy is restraining the economy.
Richmond Fed President Tom Barkin said the current level of rates is “within the range of its estimates of neutral,” referring to the projections published in December. Minneapolis Fed chief Neel Kashkari, speaking Monday, said his guess was that “we’re pretty close to neutral right now” given resilient economic growth. (BBG)
Markets
The main equity futures have hardly changed this morning, while bond futures have edged higher, led by Bunds and Australian bond futures. Oil, precious metals, crypto and copper prices declined. The US Dollar traded slightly softer versus the yen and the Australian dollar.
Economic Calendar: German unemployment, Eurozone inflation, US ADP, JOLTS & ISM non-mfg., Fed’s Bowman in focus
In the morning, we get the Eurozone HCPI report for December. Yesterday, Germany’s HCPI release surprised to the downside as mentioned in our chat. A weaker-than-expected number for the Eurozone aggregate is therefore also possible today.
In the US, the ADP report for December will be released at 14:15 CET. Unfortunately, it has a poor track record predicting private non-farm payrolls, which will be released on Friday.
The ISM non-manufacturing survey, to be released at 16:00 CET, is expected to edge lower. Also important to watch are subcomponents such as prices paid, employment, and new orders.
Finally, the JOLTS report for November could attract attention, especially the quits rate, which correlates well with wages.
Good luck today,
Günter