GLOBAL CAPITAL MARKETS OVERVIEW:  

The Baltic Dry index, which measures the cost of shipping goods globally, rose about 3% to 1,184 on Wednesday, breaking the index's ninth straight decline since Sept. 7, its lowest level. The Capesize index, which tracks 150,000 tonnes of iron ore and coal cargoes, rose 11.6% to hit a one-week high of 1,219; the Supramax index snapped a 22-session losing streak to edge up 3 points to 1,163. Meanwhile, the Panamax index, which tracks coal and grain cargoes of about 60,000 to 70,000 tonnes, fell for a fifth straight day, 2.1% to an 11-week low of 1,464. With the Istanbul Stock Exchange 100 index hitting a record high of 4,865 points in November 2022, investors used the stock market to hedge against surging inflation and a plunging lira in Turkey while residents sought assets to store savings. The Turkish central bank initiated an 850 basis point rate cut cycle in September 2021, after which the lira plummeted more than 100%, and inflationary pressures intensified. Consumer inflation jumped to a 24-year high of 85.5% in October, buoyed by largely negative real interest rates and costly stabilization amid intense pressure from President Tayyip Erdogan's monetary measures. European stocks traded near flatlines on Wednesday, with the pan-European STOXX 600 hovering near its highest level in three months and Germany's DAX 40 near a five-month high. Investors digested the latest PMI survey, which showed that economic contraction in the eurozone eased in November, and price pressures eased but remained elevated. Meanwhile, investors braced for the latest Federal Reserve meeting minutes, which could provide clues about the central bank's tightening plans. The ECB is due to release the minutes of its meeting on Thursday, a day after Vice President Luis de Guindos said the central bank would keep raising interest rates until it brought inflation down to its medium-term target of around 2%. On the corporate front, Credit Suisse expected a fourth-quarter pre-tax loss of as much as 1.5 billion Swiss francs. At the same time, nylon maker EMS Chemie cut its full-year profit forecast amid a worsening economic outlook. On Wednesday, the FTSE MIB index hovered below the 24,530 level, led by utility providers. At the same time, investors refrained from taking risk positions ahead of the FOMC release a few minutes after the closing bell. Enel and Hera both fell about 2 percent as traders weighed on a proposal from the European Union to cap gas prices in case further supply disruptions from Russia widened volatility in the sector. Also, energy producers extended gains from yesterday on the impending announcement of a price cap on the EU's oil embargo against Russia. Meanwhile, Telecom Italia shares rose nearly 1% after a government meeting announced the company's fixed-line network acquisition. The CAC 40 was little changed, around 6,660 on Wednesday, in line with regional peers, as investors monitored key PMI surveys in the eurozone and awaited minutes from the Federal Reserve's latest meeting later in the day. On the domestic data front, the French private sector contracted in November for the first time in 21 months, beating market expectations as the services sector lost key support while manufacturing continued to shrink. On the corporate front, Thales and TotalEnergies were the biggest gainers, exceeding 1%. In contrast, Teleperformance plunged more than 2%. The ruble-based MOEX Russia index hovered above the horizontal line near 2,200 on Wednesday, holding up 1.1% from the previous session, as investors monitored the extent of EU measures against Russian energy exports. The EU will halt sea shipments to Europe and allow the use of European tankers and insured services to Asia below a price cap of $40 to $60 a barrel. Still, Russian authorities have pledged that sales will not be allowed to any country that abides by the cap, jeopardizing much-needed energy revenue for the country. At the same time, the EU has proposed a gas price ceiling of 275 euros for TTF contracts, much higher than the current price. Oil producer and gas giant Gazprom hovered near the flat ground as restrictions were no worse than expected. The latter announced that it would cut off the last gas pipeline to Europe next week, citing a dispute over natural gas storage with Moldova. The Australia S&P/ASX 200 rose 0.8% to around 7,240 on Wednesday, hitting its highest level in nearly six months and tracking Wall Street's overnight gains on upbeat corporate earnings and the U.S. Federal Reserve. ) have supported stocks on bets on looser and tighter policies. Energy and mining stocks led gains in commodity prices, with Woodside Energy (1.7%), Whitehaven Coal (6.7%), BHP Billiton Group (1.6%), Rio Tinto (1.1%), and South32 (1.8%) gaining notably. Lithium and gold stocks also rose, including Pilbara Mining (1.1%), Core Lithium (3.2%), and Newcrest Mining (2%). Elsewhere, Qantas shares rose 5.1 percent after it raised its pre-tax profit guidance for FY23 to A$1.45 billion from A$1.35 billion as travel demand continues to recover.New Zealand shares fell 15 points, or 0.11%, to close at 11,405 around midday on Wednesday, a day of losses ahead of the Reserve Bank of New Zealand's monetary policy decision later today. The central bank is expected to raise the cash rate by 75 basis points, the largest hike on record, as policymakers step up efforts to rein in inflation, bringing borrowing costs to a 14-year high of 4.25%. Traders were also cautious as they awaited the release of the Federal Reserve meeting minutes later in the day. Meanwhile, the OECD said on Tuesday that central banks worldwide must keep raising interest rates even as the global economy plunges into a severe slowdown. In China, COVID-19 containment is still weighing on investors, as shutdowns could negatively impact supply chain dynamics and potentially lead to inflationary concerns. Among the large caps, Ryman Healthcare fell 7.1 percent, Mercury NZ fell 3.9 percent, Auckland International Airways fell 2.3 percent, and Air New Zealand fell 0.6 percent. Canada S&P/TSX Composite rose 1.2% to close above 20,200 on Tuesday, rebounding from yesterday's sluggish session on the back of Toronto's heavyweight commodity-linked stocks, while investors digested a batch of macroeconomic data. Advance estimates showed retail sales rose 1.5% in October as gasoline prices rose sharply. As gold prices rose, mining stocks led gains in the corporate sector, gaining more than 2% intraday. Meanwhile, new home prices fell for a second straight month, the biggest drop since 2018, a sign that tightening monetary policy is starting to affect the housing sector. Meanwhile, technology stocks underperformed the broader market index, falling 0.5%. The Dow rose nearly 400 points on Tuesday, while the S&P 500 and Nasdaq rose about 1.4% each as investors digested a slew of corporate earnings and speeches from the Federal Reserve. Best Buy jumped more than 12% after it raised its financial outlook for 2023 and beat its earnings forecast. Abercrombie & Fitch and American Eagle Outfitters also got some respite after reporting results that topped Wall Street expectations. Conversely, Zoom Video Communications fell nearly 4% after the company cut its annual revenue forecast, with shares now down about 90% from their October 2020 pandemic highs. On the policy front, the Fed recently poured cold water on expectations that it is about to pause its aggressive tightening. San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester are among the latest officials to echo that view. However, it shows support for December was slightly raised by 50 basis points. 

 

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- US: In the week ended November 12, the number of Americans filing for unemployment benefits rose for the sixth week to 1.551 million, well above the market forecast of 1.517 million. It was the largest amount of consecutive unemployment benefits paid out since the first week of March. The results show that unemployed Americans are staying out of work for longer, consistent with an economic slowdown brought on by the Federal Reserve's aggressive interest rate hikes.

- US: The number of new U.S. jobless claims rose by 17,000 to 240,000 in the week ended Nov. 19, the highest level since August and well above the 225,000 expected by technology layoffs expectations. Also, last week's rise could be technical, as the government's models used to adjust data for seasonal fluctuations typically expect an increase in filings due to temporary holiday-related business closures. On a non-seasonally adjusted basis, first-time filings jumped 47,909 to 248,185, with big gains in Illinois (+7,306), California (+5,024), and Georgia (+3,344). The four-week moving average, which smooths out week-to-week volatility, rose 5,500 points to 226,750.

- US: The revised data showed that in October 2022, U.S. building permits fell 3.3% year-over-year to a seasonally adjusted annual rate of 1.512 million, below the initial estimate of 1.526 million. Permits, a proxy for future construction, hit their lowest level since June 2020 as soaring prices and higher mortgage rates weighed on demand and activity. In addition, single-family authorizations fell 3.3 percent to 841,000, while volatile multi-sector authorizations also fell 3.3 percent to 671,000.

- US: In October 2022, U.S. durable goods orders rose by 1% month-on-month after being revised by 0.3% in September, exceeding the market forecast of 0.4%. It was the biggest gain in four months, led by gains in transportation equipment (2.1 percent) and military aircraft (21.7 percent). The figures are not adjusted for inflation. Excluding transportation, new orders edged up 0.5%. Other gains were also seen in electrical equipment and appliances (0.4 percent); machinery (1.5 percent); capital goods (2.1 percent); and computers and related (4.7 percent). Meanwhile, nondefense capital goods orders excluding aircraft, a proxy for equipment investment, rose 0.7%, rebounding from a 0.8% decline in September and beating expectations for a flat change.

- US: The average contract rate on a 30-year fixed-rate mortgage in the U.S. fell 23 basis points to 6.67% in the week ended Nov. 18, after falling 24 basis points the previous week, according to the Mortgage Bankers Association (MBA). It was the biggest drop since the last week of July. In addition, it was the first two-week run of declines in four months, and borrowing costs are now at an eight-week low, tracking a pullback in bond yields. Still, mortgage rates remain close to levels not seen since 2001 and have more than doubled from 3% a year earlier.

- US: U.S. mortgage applications rose 2.2% in the week ended Nov. 18, after rising 2.7% in the previous week, according to the Mortgage Bankers Association (MBA). It was the first time in three months that mortgage applications rose for two straight weeks amid further declines in borrowing costs. The purchase index rose by 2.8%, and home loan refinancing applications increased by 1.8%. Meanwhile, the 30-year mortgage rate fell 23 basis points to 6.67%, the lowest in eight weeks. MBA economist Joel Kan said: "Falling mortgage rates should boost the purchasing power of would-be homebuyers, who are largely locked out as mortgage rates have more than doubled over the past year. ". However, refinance applications were still down 86% compared to the previous year, while mortgage applications to buy a home were down 41%.

- AU: Preliminary data showed that in November 2022, the S&P Global Australia Services PMI fell to 47.2 from 49.3 in the previous month. It was the lowest reading since January and the second straight month of contraction in the services sector, with business activity and new orders falling further amid a lackluster growth outlook and weak demand at home and abroad. Still, companies continue to hire new workers to restore their workforce capacity to pre-pandemic levels. Moreover, in terms of price, input costs increase when companies pass them on to customers. Finally, business confidence has deteriorated.

- EU: Preliminary estimates show that in November 2022, the S & P global euro zone services PMI will be 48.6, unchanged from October's 21-month low and higher than market expectations of 48. The latest data showed that the services sector shrank for the fourth straight month, the biggest drop since 2011, excluding the months of the COVID-19 lockdown. New orders fell faster, and the backlog of work continued to shrink while job creation slowed. On the price front, input cost inflation moderated to the second-lowest level in the past nine months, although still high by historical standards, while selling price inflation also eased. Finally, business expectations for the year ahead remain subdued.

- EU: The S&P Global Fast Eurozone Manufacturing PMI rose to 47.3 in November 2022 from 46.4 in October, beating market forecasts of 46. The reading showed factory activity fell for the fifth straight month, and the pace of decline in production slowed but was still the second strongest in the past decade when the severity of the pandemic is not taken into account. Chemicals and plastics saw the worst downturn again, and basic resources also saw sharp declines (partly due to high energy costs). New orders fell at a lesser pace, the backlog of work continued to shrink, and wage growth remained subdued. Meanwhile, sales price inflation also eased as input prices rose at the slowest rate since December 2020 amid an improving supply situation and weak demand. Finally, pessimism eased compared with historical levels seen in September and October amid hopes of reducing energy-induced constraints and improving parts supply chains.

- EU: Preliminary estimates show that the S&P Global Eurozone Composite PMI rose to 47.8 in November 2022 from 47.3 in October, above market expectations of 47. While the rate of decline in production remains the second-highest since 2011, the intensity of the contraction has eased as demand slowed and supply constraints eased. Business confidence picked up in the months of lockdowns, excluding the COVID-19 pandemic. By industry, manufacturing production fell for the sixth straight month, albeit slower, while services output also fell for the fourth consecutive month. New orders fell for the fifth straight month at the second-fastest rate in the past two years, while the backlog of work fell by the most in two years and job creation was at the slowest pace since March 2021. On the price front, input cost inflation fell to its lowest level since September 2021, while sales price inflation fell to its lowest level in three months.

- GE: Preliminary estimates show that in November 2022, the German Standard & Poor's global services PMI was 46.4, little changed from 46.5 in the previous month and slightly lower than market expectations of 46.2. The latest data showed a fifth straight month of contraction as new business fell at the fastest rate since May 2020. On the price front, input costs continued to rise rapidly on record, driven partly by higher wages, although they also fell from the previous month to the lowest level since August. Finally, service providers were less pessimistic about the 12-month outlook.

- FR: A quick estimate shows that the S&P Global France Composite PMI fell to 48.8 in November 2022 from 50.2 in October, below market expectations of 49.5. The print noted that the private sector contracted for the first time since February 2021, mainly as high inflation hit new orders. Firms indicated that high energy costs hurt customer purchasing power, and key services fell again (49.4 in October than 51.7). Also, manufacturing activity declined in the sixth month (49.1 vs. 47.2). New jobs fell for a fourth month as challenging economic conditions continued to weigh on demand. However, the decline in production was less than that explained by the backlog of new orders. Also, the employment rate slowed to a 1-1/2 year low, despite rising for the 23rd straight month. On the price front, input cost and output price inflation were at their lowest levels in nine months, although still high by historical standards.

- AU: The S&P Global Quick Australian Manufacturing PMI came in at 51.5 in November, down from 52.7 in October. It marked the 30th straight month of strengthening in manufacturing conditions, but the latest improvement was the weakest since June 2020. Production growth was supported by an increase in new orders in November. Anecdotal evidence suggests that new customer wins and improved demand underpinned the expansion of activity. Manufacturers continue to increase workforce capabilities.

- NK: The November 2022 Manufacturing Business Conditions Business Survey Index (BSI) was 74, up two percentage points from the previous month, but the outlook for next month fell four percentage points to 69. In non-manufacturing, the BSI for business conditions in November 2022 was 76, down three percentage points from the previous month. The economic outlook index for the following month also fell by one percentage point to 77. The economic sentiment index for November 2022 (ESI) is 91.4, a decrease of 4.1 percentage points from October 2022. Note that readings below 100 indicate more pessimists than optimists.

- AR: Argentina's monthly GDP fell to 4.80% YoY in September from 6.40% in August 2022. In September 2022, the monthly economic activity (EMAE) estimates increased by 4.8% on a year-to-year comparison (year-over-year), down 0.3% from the seasonally adjusted August. The wholesale, retail, and repair trade sector (+7.0% y-o-y) is the sector with the highest incidence of interannual change in EMAE, followed by manufacturing (+4.1% y-o-y) and real estate, commercial, and leasing activities (5 .1%, etc.). Among the three major sectors, they contributed 2.2 percentage points to the year-on-year increase of the index.

- RU: In October 2022, Russia's industrial production fell by 2.6% year-on-year, down by 3.1% in the previous month, and the market expected a drop of 3.8%. It was the seventh straight month of declines in industrial activity, as output fell in mining (-2.7% vs. -1.8% in September); electricity, steam, and air conditioning (-2.4% vs. -1.5%); % vs. -4%) and water supply, wastewater treatment, and waste collection and organization (-7.4% vs. -7.5%). On a monthly basis, industrial production rose 5.3% after increasing 0.5% in September.

- RU: In October 2022, Russian producer prices rose by 0.8% year-on-year, the lowest level since October 2020, down from 3.8% in the previous month. Producer prices fell sharply in mining (-6.3% vs. 0.7% in September) and rose more slowly in manufacturing (2.5% vs. 4.7%) and electricity, gas, steam, and air conditioning (4.8% vs. 5%). Meanwhile, the water and sewer sector's inflation (4.9 percent) was unchanged from the previous month. On a monthly basis, producer prices fell 2.5%, the biggest drop since June.

 

LOOKING AHEAD:   

Today, investors will receive the following:

- GBP: MPC Member Ramsden Speaks, MPC Member Pill Speaks, CBI Industrial Order Expectations, and MPC Member Mann Speaks.

- EUR: German IFO Business Climate, ECB Monetary Policy Meeting Accounts, and Belgian NBB Business Climate.

- NZD: Retail Sales q/q, and Core Retail Sales q/q.

- JPY: Tokyo Core CPI y/y, and SPPI y/y.

- USD: Bank Holiday.

 

KEY EQUITY & BOND MARKET DRIVERS:

- FR: In November, France's 10-year OAT yield hovered below 2.5%, the lowest level in two months, as investors continued to assess the monetary policy outlook of eurozone members amid signs of a continued economic slowdown. Flash PMI data showed that private sector activity in the eurozone shrank for the fifth time in a row, while domestic activity contracted for the first time since February 2021. Nonetheless, ECB board members stressed that interest rates would continue to rise to contain record-high inflation in the eurozone even as the economy heads toward recession. Policymakers said rates would be raised by at least 50 basis points at the central bank's December meeting, leaving room for a more aggressive 75 basis point hike.

- US: Stock futures contracts tied to the three major indexes traded near the horizontal line on Wednesday, as investors were very reluctant to open positions ahead of the release of the Federal Reserve policy meeting minutes. Recent comments from Fed officials, including Cleveland President Loretta Mester and Kansas President Esther George, have given various hints about the central bank's rate path but also reiterated that a pause is too early morning. Money markets are pricing a 75% chance of a 50 basis point hike in December. Deere & Co jumped 4% in premarket trading on the corporate front after the company reported a better-than-expected quarterly profit. Conversely, Nordstrom fell nearly 8% as the fashion retailer provided weaker guidance.

- IT: Italy's 10-year BTP yield fell below 3.9% in the fourth week of November, the lowest level in more than two months, in contrast to European bond yields, as investors digested the new Italian government's budget papers. Prime Minister Meloni's cabinet approved a 35 billion euro increase in spending aimed at reducing Italy's budget deficit from 5.6 percent this year to 4.5 percent in 2023, well below the limit set by the European Union and easing fears of political instability in Italy. That could exacerbate concerns about the country's high debt and weak fiscal position. Meanwhile, bond markets continued to brace for another ECB rate hike, even as PMI data provided further evidence of a slowdown, as bringing inflation down remains a top priority for board members. The spread between the 10-year BTP and German bunds narrowed to below 190 basis points, the lowest since July, suggesting that Italian debt is less credit risk.

- UK: Preliminary data showed that in November 2022, the S&P Global/CIPS UK services PMI remained at 48.8, unchanged from the previous month, while analysts expect a further drop to 48. Service sector activity and new jobs continued to decline amid weak domestic demand amid rising costs and subdued economic conditions. Still, service providers said new jobs from overseas were down only slightly, thanks to a weaker pound and strong demand from U.S. clients. On employment, companies said the number of employees rose slightly. At the same time, input cost inflation in services is much higher than in manufacturing. However, the output charge showed further signs of cooling.

- TW: In October 2022, Taiwan's retail sales increased by 2.1% year-on-year, a sharp slowdown from the 7.8% increase revised last month. This was the slowest growth in retail activity since February, mainly driven by lower sales of cultural and entertainment products (-7% vs. 11.5%), information and communication equipment and household appliances (-7.4% vs. 5.2%); Fuels and related products (-3.4% vs. 3.3%); construction materials (-7.6% vs. -3%). Meanwhile, trade growth slowed in textiles and clothing (4.7% vs. 21.7%); other retail sales (2.9% vs. 18.9%); general merchandise stores (1.5% vs. 11.9% in September); medical supplies and cosmetics ( 1.7% vs. 12.7%); non-store retail trade (6.2% vs. 12.7%); household appliances and goods (0.6% vs. 5%); and online transactions (8.2% vs. 11.4%).

- TW: In October 2022, Taiwan's industrial output fell by 3.56% year-on-year after falling by 4.49% in the previous month. It was the second month of contraction in a row, dragged down by further declines in electricity and gas supplies (-6.36% vs. -4.69% in September) and a slowdown in manufacturing activity (-3.40% vs. -4.52%). Meanwhile, output growth slowed in mining and quarrying (6.84% vs. 7.67%) and water supply (2.52% vs. 3.98%). Nevertheless, on a seasonally adjusted monthly basis, industrial activity rose 1.65%, rebounding from 5.19% in September.

- NZ: The Reserve Bank of New Zealand raised its official cash rate (OCR) by 75 basis points to 4.25% at its November meeting, the highest level since January 2009, in line with market consensus. Wednesday's decision was the biggest rate hike ever by the central bank, as it continues to contain surging inflation ahead of a three-month break. This is also the ninth consecutive rate hike, which means that since October 2021, the OCR has risen by 400 basis points, and it is the most aggressive tightening measure by the central bank since the OCR was introduced in 1999. The board said core consumer price inflation was too high, employment was above its maximum sustainable level, and inflation expectations had risen in the near term. In addition, the committee also said that there will be more interest rate hikes, while the OCR is expected to peak at 5.5% in September 2023, and a recession is expected in mid-2023.

- CA: The yield on Canada's 10-year government bond fell to 3%, the highest level since late August, as investors have been adjusting their portfolios in response to slower growth and a less aggressive stance from the central bank. In October, the Bank of Canada surprised markets by raising its benchmark interest rate by 50 basis points less than expected while saying its historic tightening was coming to an end and the economy was expected to stall for the next three quarters. In the U.S., similarly weaker growth and less aggressive rhetoric from the Federal Reserve also contributed to a recent sharp drop in U.S. Treasury yields.

- US: U.S. 10-year Treasury yields fell to 3.7%, the lowest level in a week, after minutes from the latest Federal Reserve meeting suggested that the central bank would raise interest rates less aggressively ahead. Money markets are betting the US central bank will raise the federal funds rate by 50 basis points in December, following four consecutive 75 basis point hikes. However, minutes of the Fed's November meeting showed that an overwhelming majority of policymakers agreed that a slowdown in rate hikes "may soon be appropriate." Meanwhile, the terminal rate for June is now forecast at 5.03%.

- US: Minutes from the Nov. 1 meeting showed that an overwhelming majority of Fed officials believed that a slowdown in the pace of federal funds rate hikes might soon be appropriate because it would better allow the committee to assess progress toward its maximum employment and price stability goals -2 FOMC meeting showed. Policymakers also noted that with inflation showing little sign of abating so far and persistent supply-demand imbalances in the economy, the final level of the federal funds rate needed to meet the committee's target was slightly higher than they had previously expected. The Fed will meet at its November 2022 meeting. During the period, the target range of the federal funds rate was raised by 75 basis points to 3.75%-4%, marking the sixth consecutive rate hike and the fourth consecutive three-quarter rate hike,

- RU: Yields on 10-year OFZ bonds rose to 10.1% in November, the highest in two weeks, as investors priced in the country's credit risk after the federal government amended budget laws to deal with increased military spending. The amendment signed by President Putin allocates 8 trillion rubles from the 2023-25 ​​tax hike on oil and gas revenues, which is in line with estimates assuming the ruble should remain at 65-75 against the dollar. Still, triggers call for stabilization financing Depends on the rigid concerns of the West's energy embargo. The budget assumes a deficit of 2 percent of GDP in 2023 and 1.4 percent in 2024, eliminating the strong surplus observed in the first three quarters of 2022. The document also assumes that 2.9 trillion rubles will be drawn from Russia's rainy-day state welfare fund, an unprecedented move that highlights the unsustainability of increased spending. Finally, yields were supported by increased OFZ auctions for further financial support ahead of the start of the EU oil embargo.

 

STOCK MARKET SECTORS:

- High: Consumer Discretionary, Information Technology, Industrials.

- Low: Energy, Real Estate.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- USD: The U.S. dollar index fell below 107 on Wednesday, extending losses for a second session, as investors await minutes from the Federal Reserve's latest meeting, which could provide clues about the central bank's tightening plans. Traders have been parsing comments from Fed officials who have largely maintained their commitment to lowering inflation but expressed support for slower rate hikes if necessary. In the latest comments, San Francisco Fed President Mary Daly warned against overtightening. At the same time, Cleveland Fed President Loretta Mester said she would not support a pause before Wanting to see inflation continue to fall. On the macro front, the latest data showed weekly claims rose more than expected last week to a 3-month high, while durable goods orders beat expectations in October.

- GBP: Sterling rose above $1.19, its highest level in three months, as investors digested recent economic data and welcomed the financial plans of Rishi Sunak and Jeremy Hunt. While the latest PMI data pointed to a continued slump in business activity, data from both services and manufacturing came in better than market expectations. Earlier in November, Chancellor of the Exchequer Jeremy Hunt outlined £55bn of tax hikes and spending cuts in his Autumn Budget statement. Meanwhile, the Bank of England is expected to raise interest rates by 50 basis points next month, down from 75 basis points in November.

- NZD: On Wednesday, the New Zealand dollar jumped to $0.62, near its highest level in almost three months, after the Reserve Bank of New Zealand announced a massive 75 basis point rate hike to get ahead of inflation. It was the biggest increase since the RBNZ introduced the OCR in 1999, bringing the policy rate to a 14-year high of 4.25%. Based on its latest forecasts, the Reserve Bank of New Zealand expects the cash rate to peak at 5.5% in September 2023. New Zealand's persistently high inflation and near-record-low unemployment supported the case for more aggressive action. At the same time, other major economies began to slow the pace of tightening amid growing risks of a global recession. However, Finance Minister Grant Robertson also said the country was well-positioned to weather a global recession thanks to strong growth and a stable financial system.

- CAD: CAD/USD was flat at 1.34 as the greenback eased. Its losses from an eight-week high of 1.325 hits in November slowed as investors pulled out of risky assets as new COVID-19 restrictions in China sparked renewed tensions. Concerns about the global economy look. To add insult to injury, crude oil, Canada's main export, hit a nine-month low, putting additional pressure on the currency. Meanwhile, the latest CPI data showed inflation remained close to 7%, not far from the 39-year high of 8.1% in June, suggesting the Bank of Canada will keep raising rates. Money markets were divided between a 25 basis point and 50 basis point hike at the Bank of Canada's December meeting.

- EUR: The euro extended gains on Wednesday to near $1.04, its highest level since early July, boosted by a drop in the dollar after FOMC minutes suggested the Federal Reserve would start slowing the rate hikes soon. In early trade, the euro had already benefited from new economic data while investors awaited further clues on the European Central Bank's next move. The contraction in business activity in the eurozone eased slightly in November, with recent purchasing managers' indices beating market expectations but continuing to point to falling demand, suggesting a recession is imminent. Meanwhile, the ECB's monetary policy meeting report is due on Thursday, with investors now betting on a smaller 50 basis point rate hike next month despite mixed signals from ECB policymakers in recent days.

- GAS: US natural gas futures pared gains to $7.3/MMBtu after the latest EIA data showed a smaller-than-expected draw in inventories. Still, prices are at their highest level in two months on the back of a stronger outlook for domestic and international demand ahead of the upcoming winter. The Freeport LNG export plant in Texas, which was forced to shut down in June following a fire, is expected to resume operations in mid-December. Meanwhile, Europe is clamoring for U.S. exports after Russia threatened to cut supplies further. On top of that, workers at the largest U.S. railroad union voted against a tentative contract agreement in September, raising the prospect of year-end strikes that could disrupt coal shipments and force generators to burn more natural gas.

- WTI: WTI crude oil futures tumbled nearly 5% to below $77 a barrel, closing at their lowest level since January, as investors weighed in on persistent demand concerns while monitoring the G7's progress on Russia's oil price cap. A deteriorating global demand outlook has rattled markets, with activity in advanced economies, mainly the U.S. and Europe, falling as financial conditions tighten. At the same time, top crude importer China could face tougher coronavirus-induced restrictions. Infect. At the same time, the G7 is considering setting a price ceiling for Putin Oil above the level at which crude grades are currently trading, making it profitable for Russia to sell crude and preventing a shortage in the international market. In addition, it is hoped that OPEC will intervene further in the market to deal with the depressed demand caused by the recession, thus providing support for prices. The EIA data also showed that U.S. inventories fell more than expected last week.

 

CHART OF THE DAY:

Gold spot climbed to fresh intraday highs near $1,750 an ounce, buoyed by falling U.S. Treasury yields, while negative sentiment surrounding the dollar further boosted optimism among bulls. The market volatility comes as investors digest minutes from the last Federal Reserve meeting, which showed policymakers saw a case for slower rate hikes while acknowledging that the balance of risks to the economy is now skewed to the downside. 

 

 

- SPDR GOLD TRUST ETF (GLD)  - D1, Resistance (consolidation) around ~ 166.43, Support  around  ~ 151.16

GLOBAL CAPITAL MARKETS OVERVIEW:   The Baltic Dry index, which measures the cost of shipping goods globally, rose about 3% to 1,184 on Wednesday, breaking the index's ninth straight decline since Sept. 7, its lowest level. The Capesize index, which tracks 150,000 tonnes of iron ore and coal cargoes, rose 11.6% to hit a one-week high of 1,219; the Supramax index snapped a 22-session losing streak to edge up 3 points to 1,163. Meanwhile, the Panamax index, which tracks coal and grain cargoes of about 60,000 to 70,000 tonnes, fell for a fifth straight day, 2.1% to an 11-week low of 1,464. With the Istanbul Stock Exchange 100 index hitting a record high of 4,865 points in November 2022, investors used the stock market to hedge against surging inflation and a plunging lira in Turkey while residents sought assets to store savings. The Turkish central bank initiated an 850 basis point rate cut cycle in September 2021, after which the lira plummeted more than 100%, and inflationary pressures intensified. Consumer inflation jumped to a 24-year high of 85.5% in October, buoyed by largely negative real interest rates and costly stabilization amid intense pressure from President Tayyip Erdogan's monetary measures. European stocks traded near flatlines on Wednesday, with the pan-European STOXX 600 hovering near its highest level in three months and Germany's DAX 40 near a five-month high. Investors digested the latest PMI survey, which showed that economic contraction in the eurozone eased in November, and price pressures eased but remained elevated. Meanwhile, investors braced for the latest Federal Reserve meeting minutes, which could provide clues about the central bank's tightening plans. The ECB is due to release the minutes of its meeting on Thursday, a day after Vice President Luis de Guindos said the central bank would keep raising interest rates until it brought inflation down to its medium-term target of around 2%. On the corporate front, Credit Suisse expected a fourth-quarter pre-tax loss of as much as 1.5 billion Swiss francs. At the same time, nylon maker EMS Chemie cut its full-year profit forecast amid a worsening economic outlook. On Wednesday, the FTSE MIB index hovered below the 24,530 level, led by utility providers. At the same time, investors refrained from taking risk positions ahead of the FOMC release a few minutes after the closing bell. Enel and Hera both fell about 2 percent as traders weighed on a proposal from the European Union to cap gas prices in case further supply disruptions from Russia widened volatility in the sector. Also, energy producers extended gains from yesterday on the impending announcement of a price cap on the EU's oil embargo against Russia. Meanwhile, Telecom Italia shares rose nearly 1% after a government meeting announced the company's fixed-line network acquisition. The CAC 40 was little changed, around 6,660 on Wednesday, in line with regional peers, as investors monitored key PMI surveys in the eurozone and awaited minutes from the Federal Reserve's latest meeting later in the day. On the domestic data front, the French private sector contracted in November for the first time in 21 months, beating market expectations as the services sector lost key support while manufacturing continued to shrink. On the corporate front, Thales and TotalEnergies were the biggest gainers, exceeding 1%. In contrast, Teleperformance plunged more than 2%. The ruble-based MOEX Russia index hovered above the horizontal line near 2,200 on Wednesday, holding up 1.1% from the previous session, as investors monitored the extent of EU measures against Russian energy exports. The EU will halt sea shipments to Europe and allow the use of European tankers and insured services to Asia below a price cap of $40 to $60 a barrel. Still, Russian authorities have pledged that sales will not be allowed to any country that abides by the cap, jeopardizing much-needed energy revenue for the country. At the same time, the EU has proposed a gas price ceiling of 275 euros for TTF contracts, much higher than the current price. Oil producer and gas giant Gazprom hovered near the flat ground as restrictions were no worse than expected. The latter announced that it would cut off the last gas pipeline to Europe next week, citing a dispute over natural gas storage with Moldova. The Australia S&P/ASX 200 rose 0.8% to around 7,240 on Wednesday, hitting its highest level in nearly six months and tracking Wall Street's overnight gains on upbeat corporate earnings and the U.S. Federal Reserve. ) have supported stocks on bets on looser and tighter policies. Energy and mining stocks led gains in commodity prices, with Woodside Energy (1.7%), Whitehaven Coal (6.7%), BHP Billiton Group (1.6%), Rio Tinto (1.1%), and South32 (1.8%) gaining notably. Lithium and gold stocks also rose, including Pilbara Mining (1.1%), Core Lithium (3.2%), and Newcrest Mining (2%). Elsewhere, Qantas shares rose 5.1 percent after it raised its pre-tax profit guidance for FY23 to A$1.45 billion from A$1.35 billion as travel demand continues to recover.New Zealand shares fell 15 points, or 0.11%, to close at 11,405 around midday on Wednesday, a day of losses ahead of the Reserve Bank of New Zealand's monetary policy decision later today. The central bank is expected to raise the cash rate by 75 basis points, the largest hike on record, as policymakers step up efforts to rein in inflation, bringing borrowing costs to a 14-year high of 4.25%. Traders were also cautious as they awaited the release of the Federal Reserve meeting minutes later in the day. Meanwhile, the OECD said on Tuesday that central banks worldwide must keep raising interest rates even as the global economy plunges into a severe slowdown. In China, COVID-19 containment is still weighing on investors, as shutdowns could negatively impact supply chain dynamics and potentially lead to inflationary concerns. Among the large caps, Ryman Healthcare fell 7.1 percent, Mercury NZ fell 3.9 percent, Auckland International Airways fell 2.3 percent, and Air New Zealand fell 0.6 percent. Canada S&P/TSX Composite rose 1.2% to close above 20,200 on Tuesday, rebounding from yesterday's sluggish session on the back of Toronto's heavyweight commodity-linked stocks, while investors digested a batch of macroeconomic data. Advance estimates showed retail sales rose 1.5% in October as gasoline prices rose sharply. As gold prices rose, mining stocks led gains in the corporate sector, gaining more than 2% intraday. Meanwhile, new home prices fell for a second straight month, the biggest drop since 2018, a sign that tightening monetary policy is starting to affect the housing sector. Meanwhile, technology stocks underperformed the broader market index, falling 0.5%. The Dow rose nearly 400 points on Tuesday, while the S&P 500 and Nasdaq rose about 1.4% each as investors digested a slew of corporate earnings and speeches from the Federal Reserve. Best Buy jumped more than 12% after it raised its financial outlook for 2023 and beat its earnings forecast. Abercrombie & Fitch and American Eagle Outfitters also got some respite after reporting results that topped Wall Street expectations. Conversely, Zoom Video Communications fell nearly 4% after the company cut its annual revenue forecast, with shares now down about 90% from their October 2020 pandemic highs. On the policy front, the Fed recently poured cold water on expectations that it is about to pause its aggressive tightening. San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester are among the latest officials to echo that view. However, it shows support for December was slightly raised by 50 basis points.    REVIEWING ECONOMIC DATA:  Looking at the last economic data: - US: In the week ended November 12, the number of Americans filing for unemployment benefits rose for the sixth week to 1.551 million, well above the market forecast of 1.517 million. It was the largest amount of consecutive unemployment benefits paid out since the first week of March. The results show that unemployed Americans are staying out of work for longer, consistent with an economic slowdown brought on by the Federal Reserve's aggressive interest rate hikes. - US: The number of new U.S. jobless claims rose by 17,000 to 240,000 in the week ended Nov. 19, the highest level since August and well above the 225,000 expected by technology layoffs expectations. Also, last week's rise could be technical, as the government's models used to adjust data for seasonal fluctuations typically expect an increase in filings due to temporary holiday-related business closures. On a non-seasonally adjusted basis, first-time filings jumped 47,909 to 248,185, with big gains in Illinois (+7,306), California (+5,024), and Georgia (+3,344). The four-week moving average, which smooths out week-to-week volatility, rose 5,500 points to 226,750. - US: The revised data showed that in October 2022, U.S. building permits fell 3.3% year-over-year to a seasonally adjusted annual rate of 1.512 million, below the initial estimate of 1.526 million. Permits, a proxy for future construction, hit their lowest level since June 2020 as soaring prices and higher mortgage rates weighed on demand and activity. In addition, single-family authorizations fell 3.3 percent to 841,000, while volatile multi-sector authorizations also fell 3.3 percent to 671,000. - US: In October 2022, U.S. durable goods orders rose by 1% month-on-month after being revised by 0.3% in September, exceeding the market forecast of 0.4%. It was the biggest gain in four months, led by gains in transportation equipment (2.1 percent) and military aircraft (21.7 percent). The figures are not adjusted for inflation. Excluding transportation, new orders edged up 0.5%. Other gains were also seen in electrical equipment and appliances (0.4 percent); machinery (1.5 percent); capital goods (2.1 percent); and computers and related (4.7 percent). Meanwhile, nondefense capital goods orders excluding aircraft, a proxy for equipment investment, rose 0.7%, rebounding from a 0.8% decline in September and beating expectations for a flat change. - US: The average contract rate on a 30-year fixed-rate mortgage in the U.S. fell 23 basis points to 6.67% in the week ended Nov. 18, after falling 24 basis points the previous week, according to the Mortgage Bankers Association (MBA). It was the biggest drop since the last week of July. In addition, it was the first two-week run of declines in four months, and borrowing costs are now at an eight-week low, tracking a pullback in bond yields. Still, mortgage rates remain close to levels not seen since 2001 and have more than doubled from 3% a year earlier. - US: U.S. mortgage applications rose 2.2% in the week ended Nov. 18, after rising 2.7% in the previous week, according to the Mortgage Bankers Association (MBA). It was the first time in three months that mortgage applications rose for two straight weeks amid further declines in borrowing costs. The purchase index rose by 2.8%, and home loan refinancing applications increased by 1.8%. Meanwhile, the 30-year mortgage rate fell 23 basis points to 6.67%, the lowest in eight weeks. MBA economist Joel Kan said: "Falling mortgage rates should boost the purchasing power of would-be homebuyers, who are largely locked out as mortgage rates have more than doubled over the past year. ". However, refinance applications were still down 86% compared to the previous year, while mortgage applications to buy a home were down 41%. - AU: Preliminary data showed that in November 2022, the S&P Global Australia Services PMI fell to 47.2 from 49.3 in the previous month. It was the lowest reading since January and the second straight month of contraction in the services sector, with business activity and new orders falling further amid a lackluster growth outlook and weak demand at home and abroad. Still, companies continue to hire new workers to restore their workforce capacity to pre-pandemic levels. Moreover, in terms of price, input costs increase when companies pass them on to customers. Finally, business confidence has deteriorated. - EU: Preliminary estimates show that in November 2022, the S & P global euro zone services PMI will be 48.6, unchanged from October's 21-month low and higher than market expectations of 48. The latest data showed that the services sector shrank for the fourth straight month, the biggest drop since 2011, excluding the months of the COVID-19 lockdown. New orders fell faster, and the backlog of work continued to shrink while job creation slowed. On the price front, input cost inflation moderated to the second-lowest level in the past nine months, although still high by historical standards, while selling price inflation also eased. Finally, business expectations for the year ahead remain subdued. - EU: The S&P Global Fast Eurozone Manufacturing PMI rose to 47.3 in November 2022 from 46.4 in October, beating market forecasts of 46. The reading showed factory activity fell for the fifth straight month, and the pace of decline in production slowed but was still the second strongest in the past decade when the severity of the pandemic is not taken into account. Chemicals and plastics saw the worst downturn again, and basic resources also saw sharp declines (partly due to high energy costs). New orders fell at a lesser pace, the backlog of work continued to shrink, and wage growth remained subdued. Meanwhile, sales price inflation also eased as input prices rose at the slowest rate since December 2020 amid an improving supply situation and weak demand. Finally, pessimism eased compared with historical levels seen in September and October amid hopes of reducing energy-induced constraints and improving parts supply chains. - EU: Preliminary estimates show that the S&P Global Eurozone Composite PMI rose to 47.8 in November 2022 from 47.3 in October, above market expectations of 47. While the rate of decline in production remains the second-highest since 2011, the intensity of the contraction has eased as demand slowed and supply constraints eased. Business confidence picked up in the months of lockdowns, excluding the COVID-19 pandemic. By industry, manufacturing production fell for the sixth straight month, albeit slower, while services output also fell for the fourth consecutive month. New orders fell for the fifth straight month at the second-fastest rate in the past two years, while the backlog of work fell by the most in two years and job creation was at the slowest pace since March 2021. On the price front, input cost inflation fell to its lowest level since September 2021, while sales price inflation fell to its lowest level in three months. - GE: Preliminary estimates show that in November 2022, the German Standard & Poor's global services PMI was 46.4, little changed from 46.5 in the previous month and slightly lower than market expectations of 46.2. The latest data showed a fifth straight month of contraction as new business fell at the fastest rate since May 2020. On the price front, input costs continued to rise rapidly on record, driven partly by higher wages, although they also fell from the previous month to the lowest level since August. Finally, service providers were less pessimistic about the 12-month outlook. - FR: A quick estimate shows that the S&P Global France Composite PMI fell to 48.8 in November 2022 from 50.2 in October, below market expectations of 49.5. The print noted that the private sector contracted for the first time since February 2021, mainly as high inflation hit new orders. Firms indicated that high energy costs hurt customer purchasing power, and key services fell again (49.4 in October than 51.7). Also, manufacturing activity declined in the sixth month (49.1 vs. 47.2). New jobs fell for a fourth month as challenging economic conditions continued to weigh on demand. However, the decline in production was less than that explained by the backlog of new orders. Also, the employment rate slowed to a 1-1/2 year low, despite rising for the 23rd straight month. On the price front, input cost and output price inflation were at their lowest levels in nine months, although still high by historical standards. - AU: The S&P Global Quick Australian Manufacturing PMI came in at 51.5 in November, down from 52.7 in October. It marked the 30th straight month of strengthening in manufacturing conditions, but the latest improvement was the weakest since June 2020. Production growth was supported by an increase in new orders in November. Anecdotal evidence suggests that new customer wins and improved demand underpinned the expansion of activity. Manufacturers continue to increase workforce capabilities. - NK: The November 2022 Manufacturing Business Conditions Business Survey Index (BSI) was 74, up two percentage points from the previous month, but the outlook for next month fell four percentage points to 69. In non-manufacturing, the BSI for business conditions in November 2022 was 76, down three percentage points from the previous month. The economic outlook index for the following month also fell by one percentage point to 77. The economic sentiment index for November 2022 (ESI) is 91.4, a decrease of 4.1 percentage points from October 2022. Note that readings below 100 indicate more pessimists than optimists. - AR: Argentina's monthly GDP fell to 4.80% YoY in September from 6.40% in August 2022. In September 2022, the monthly economic activity (EMAE) estimates increased by 4.8% on a year-to-year comparison (year-over-year), down 0.3% from the seasonally adjusted August. The wholesale, retail, and repair trade sector (+7.0% y-o-y) is the sector with the highest incidence of interannual change in EMAE, followed by manufacturing (+4.1% y-o-y) and real estate, commercial, and leasing activities (5 .1%, etc.). Among the three major sectors, they contributed 2.2 percentage points to the year-on-year increase of the index. - RU: In October 2022, Russia's industrial production fell by 2.6% year-on-year, down by 3.1% in the previous month, and the market expected a drop of 3.8%. It was the seventh straight month of declines in industrial activity, as output fell in mining (-2.7% vs. -1.8% in September); electricity, steam, and air conditioning (-2.4% vs. -1.5%); % vs. -4%) and water supply, wastewater treatment, and waste collection and organization (-7.4% vs. -7.5%). On a monthly basis, industrial production rose 5.3% after increasing 0.5% in September. - RU: In October 2022, Russian producer prices rose by 0.8% year-on-year, the lowest level since October 2020, down from 3.8% in the previous month. Producer prices fell sharply in mining (-6.3% vs. 0.7% in September) and rose more slowly in manufacturing (2.5% vs. 4.7%) and electricity, gas, steam, and air conditioning (4.8% vs. 5%). Meanwhile, the water and sewer sector's inflation (4.9 percent) was unchanged from the previous month. On a monthly basis, producer prices fell 2.5%, the biggest drop since June.   LOOKING AHEAD:    Today, investors will receive the following: - GBP: MPC Member Ramsden Speaks, MPC Member Pill Speaks, CBI Industrial Order Expectations, and MPC Member Mann Speaks. - EUR: German IFO Business Climate, ECB Monetary Policy Meeting Accounts, and Belgian NBB Business Climate. - NZD: Retail Sales q/q, and Core Retail Sales q/q. - JPY: Tokyo Core CPI y/y, and SPPI y/y. - USD: Bank Holiday.   KEY EQUITY & BOND MARKET DRIVERS: - FR: In November, France's 10-year OAT yield hovered below 2.5%, the lowest level in two months, as investors continued to assess the monetary policy outlook of eurozone members amid signs of a continued economic slowdown. Flash PMI data showed that private sector activity in the eurozone shrank for the fifth time in a row, while domestic activity contracted for the first time since February 2021. Nonetheless, ECB board members stressed that interest rates would continue to rise to contain record-high inflation in the eurozone even as the economy heads toward recession. Policymakers said rates would be raised by at least 50 basis points at the central bank's December meeting, leaving room for a more aggressive 75 basis point hike. - US: Stock futures contracts tied to the three major indexes traded near the horizontal line on Wednesday, as investors were very reluctant to open positions ahead of the release of the Federal Reserve policy meeting minutes. Recent comments from Fed officials, including Cleveland President Loretta Mester and Kansas President Esther George, have given various hints about the central bank's rate path but also reiterated that a pause is too early morning. Money markets are pricing a 75% chance of a 50 basis point hike in December. Deere & Co jumped 4% in premarket trading on the corporate front after the company reported a better-than-expected quarterly profit. Conversely, Nordstrom fell nearly 8% as the fashion retailer provided weaker guidance. - IT: Italy's 10-year BTP yield fell below 3.9% in the fourth week of November, the lowest level in more than two months, in contrast to European bond yields, as investors digested the new Italian government's budget papers. Prime Minister Meloni's cabinet approved a 35 billion euro increase in spending aimed at reducing Italy's budget deficit from 5.6 percent this year to 4.5 percent in 2023, well below the limit set by the European Union and easing fears of political instability in Italy. That could exacerbate concerns about the country's high debt and weak fiscal position. Meanwhile, bond markets continued to brace for another ECB rate hike, even as PMI data provided further evidence of a slowdown, as bringing inflation down remains a top priority for board members. The spread between the 10-year BTP and German bunds narrowed to below 190 basis points, the lowest since July, suggesting that Italian debt is less credit risk. - UK: Preliminary data showed that in November 2022, the S&P Global/CIPS UK services PMI remained at 48.8, unchanged from the previous month, while analysts expect a further drop to 48. Service sector activity and new jobs continued to decline amid weak domestic demand amid rising costs and subdued economic conditions. Still, service providers said new jobs from overseas were down only slightly, thanks to a weaker pound and strong demand from U.S. clients. On employment, companies said the number of employees rose slightly. At the same time, input cost inflation in services is much higher than in manufacturing. However, the output charge showed further signs of cooling. - TW: In October 2022, Taiwan's retail sales increased by 2.1% year-on-year, a sharp slowdown from the 7.8% increase revised last month. This was the slowest growth in retail activity since February, mainly driven by lower sales of cultural and entertainment products (-7% vs. 11.5%), information and communication equipment and household appliances (-7.4% vs. 5.2%); Fuels and related products (-3.4% vs. 3.3%); construction materials (-7.6% vs. -3%). Meanwhile, trade growth slowed in textiles and clothing (4.7% vs. 21.7%); other retail sales (2.9% vs. 18.9%); general merchandise stores (1.5% vs. 11.9% in September); medical supplies and cosmetics ( 1.7% vs. 12.7%); non-store retail trade (6.2% vs. 12.7%); household appliances and goods (0.6% vs. 5%); and online transactions (8.2% vs. 11.4%). - TW: In October 2022, Taiwan's industrial output fell by 3.56% year-on-year after falling by 4.49% in the previous month. It was the second month of contraction in a row, dragged down by further declines in electricity and gas supplies (-6.36% vs. -4.69% in September) and a slowdown in manufacturing activity (-3.40% vs. -4.52%). Meanwhile, output growth slowed in mining and quarrying (6.84% vs. 7.67%) and water supply (2.52% vs. 3.98%). Nevertheless, on a seasonally adjusted monthly basis, industrial activity rose 1.65%, rebounding from 5.19% in September. - NZ: The Reserve Bank of New Zealand raised its official cash rate (OCR) by 75 basis points to 4.25% at its November meeting, the highest level since January 2009, in line with market consensus. Wednesday's decision was the biggest rate hike ever by the central bank, as it continues to contain surging inflation ahead of a three-month break. This is also the ninth consecutive rate hike, which means that since October 2021, the OCR has risen by 400 basis points, and it is the most aggressive tightening measure by the central bank since the OCR was introduced in 1999. The board said core consumer price inflation was too high, employment was above its maximum sustainable level, and inflation expectations had risen in the near term. In addition, the committee also said that there will be more interest rate hikes, while the OCR is expected to peak at 5.5% in September 2023, and a recession is expected in mid-2023. - CA: The yield on Canada's 10-year government bond fell to 3%, the highest level since late August, as investors have been adjusting their portfolios in response to slower growth and a less aggressive stance from the central bank. In October, the Bank of Canada surprised markets by raising its benchmark interest rate by 50 basis points less than expected while saying its historic tightening was coming to an end and the economy was expected to stall for the next three quarters. In the U.S., similarly weaker growth and less aggressive rhetoric from the Federal Reserve also contributed to a recent sharp drop in U.S. Treasury yields. - US: U.S. 10-year Treasury yields fell to 3.7%, the lowest level in a week, after minutes from the latest Federal Reserve meeting suggested that the central bank would raise interest rates less aggressively ahead. Money markets are betting the US central bank will raise the federal funds rate by 50 basis points in December, following four consecutive 75 basis point hikes. However, minutes of the Fed's November meeting showed that an overwhelming majority of policymakers agreed that a slowdown in rate hikes "may soon be appropriate." Meanwhile, the terminal rate for June is now forecast at 5.03%. - US: Minutes from the Nov. 1 meeting showed that an overwhelming majority of Fed officials believed that a slowdown in the pace of federal funds rate hikes might soon be appropriate because it would better allow the committee to assess progress toward its maximum employment and price stability goals -2 FOMC meeting showed. Policymakers also noted that with inflation showing little sign of abating so far and persistent supply-demand imbalances in the economy, the final level of the federal funds rate needed to meet the committee's target was slightly higher than they had previously expected. The Fed will meet at its November 2022 meeting. During the period, the target range of the federal funds rate was raised by 75 basis points to 3.75%-4%, marking the sixth consecutive rate hike and the fourth consecutive three-quarter rate hike, - RU: Yields on 10-year OFZ bonds rose to 10.1% in November, the highest in two weeks, as investors priced in the country's credit risk after the federal government amended budget laws to deal with increased military spending. The amendment signed by President Putin allocates 8 trillion rubles from the 2023-25 ​​tax hike on oil and gas revenues, which is in line with estimates assuming the ruble should remain at 65-75 against the dollar. Still, triggers call for stabilization financing Depends on the rigid concerns of the West's energy embargo. The budget assumes a deficit of 2 percent of GDP in 2023 and 1.4 percent in 2024, eliminating the strong surplus observed in the first three quarters of 2022. The document also assumes that 2.9 trillion rubles will be drawn from Russia's rainy-day state welfare fund, an unprecedented move that highlights the unsustainability of increased spending. Finally, yields were supported by increased OFZ auctions for further financial support ahead of the start of the EU oil embargo.   STOCK MARKET SECTORS: - High: Consumer Discretionary, Information Technology, Industrials. - Low: Energy, Real Estate.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - USD: The U.S. dollar index fell below 107 on Wednesday, extending losses for a second session, as investors await minutes from the Federal Reserve's latest meeting, which could provide clues about the central bank's tightening plans. Traders have been parsing comments from Fed officials who have largely maintained their commitment to lowering inflation but expressed support for slower rate hikes if necessary. In the latest comments, San Francisco Fed President Mary Daly warned against overtightening. At the same time, Cleveland Fed President Loretta Mester said she would not support a pause before Wanting to see inflation continue to fall. On the macro front, the latest data showed weekly claims rose more than expected last week to a 3-month high, while durable goods orders beat expectations in October. - GBP: Sterling rose above $1.19, its highest level in three months, as investors digested recent economic data and welcomed the financial plans of Rishi Sunak and Jeremy Hunt. While the latest PMI data pointed to a continued slump in business activity, data from both services and manufacturing came in better than market expectations. Earlier in November, Chancellor of the Exchequer Jeremy Hunt outlined £55bn of tax hikes and spending cuts in his Autumn Budget statement. Meanwhile, the Bank of England is expected to raise interest rates by 50 basis points next month, down from 75 basis points in November. - NZD: On Wednesday, the New Zealand dollar jumped to $0.62, near its highest level in almost three months, after the Reserve Bank of New Zealand announced a massive 75 basis point rate hike to get ahead of inflation. It was the biggest increase since the RBNZ introduced the OCR in 1999, bringing the policy rate to a 14-year high of 4.25%. Based on its latest forecasts, the Reserve Bank of New Zealand expects the cash rate to peak at 5.5% in September 2023. New Zealand's persistently high inflation and near-record-low unemployment supported the case for more aggressive action. At the same time, other major economies began to slow the pace of tightening amid growing risks of a global recession. However, Finance Minister Grant Robertson also said the country was well-positioned to weather a global recession thanks to strong growth and a stable financial system. - CAD: CAD/USD was flat at 1.34 as the greenback eased. Its losses from an eight-week high of 1.325 hits in November slowed as investors pulled out of risky assets as new COVID-19 restrictions in China sparked renewed tensions. Concerns about the global economy look. To add insult to injury, crude oil, Canada's main export, hit a nine-month low, putting additional pressure on the currency. Meanwhile, the latest CPI data showed inflation remained close to 7%, not far from the 39-year high of 8.1% in June, suggesting the Bank of Canada will keep raising rates. Money markets were divided between a 25 basis point and 50 basis point hike at the Bank of Canada's December meeting. - EUR: The euro extended gains on Wednesday to near $1.04, its highest level since early July, boosted by a drop in the dollar after FOMC minutes suggested the Federal Reserve would start slowing the rate hikes soon. In early trade, the euro had already benefited from new economic data while investors awaited further clues on the European Central Bank's next move. The contraction in business activity in the eurozone eased slightly in November, with recent purchasing managers' indices beating market expectations but continuing to point to falling demand, suggesting a recession is imminent. Meanwhile, the ECB's monetary policy meeting report is due on Thursday, with investors now betting on a smaller 50 basis point rate hike next month despite mixed signals from ECB policymakers in recent days. - GAS: US natural gas futures pared gains to $7.3/MMBtu after the latest EIA data showed a smaller-than-expected draw in inventories. Still, prices are at their highest level in two months on the back of a stronger outlook for domestic and international demand ahead of the upcoming winter. The Freeport LNG export plant in Texas, which was forced to shut down in June following a fire, is expected to resume operations in mid-December. Meanwhile, Europe is clamoring for U.S. exports after Russia threatened to cut supplies further. On top of that, workers at the largest U.S. railroad union voted against a tentative contract agreement in September, raising the prospect of year-end strikes that could disrupt coal shipments and force generators to burn more natural gas. - WTI: WTI crude oil futures tumbled nearly 5% to below $77 a barrel, closing at their lowest level since January, as investors weighed in on persistent demand concerns while monitoring the G7's progress on Russia's oil price cap. A deteriorating global demand outlook has rattled markets, with activity in advanced economies, mainly the U.S. and Europe, falling as financial conditions tighten. At the same time, top crude importer China could face tougher coronavirus-induced restrictions. Infect. At the same time, the G7 is considering setting a price ceiling for Putin Oil above the level at which crude grades are currently trading, making it profitable for Russia to sell crude and preventing a shortage in the international market. In addition, it is hoped that OPEC will intervene further in the market to deal with the depressed demand caused by the recession, thus providing support for prices. The EIA data also showed that U.S. inventories fell more than expected last week.   CHART OF THE DAY: Gold spot climbed to fresh intraday highs near $1,750 an ounce, buoyed by falling U.S. Treasury yields, while negative sentiment surrounding the dollar further boosted optimism among bulls. The market volatility comes as investors digest minutes from the last Federal Reserve meeting, which showed policymakers saw a case for slower rate hikes while acknowledging that the balance of risks to the economy is now skewed to the downside.      - SPDR GOLD TRUST ETF (GLD)  - D1, Resistance (consolidation) around ~ 166.43, Support  around  ~ 151.16