TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 8:30ET Philadelphia Fed Non-Manufacturing Activity; 10:00ET Richmond Fed Manufacturing Index,
Richmond Fed Business Conditions; 11:30ET 5-year note auction; 1:00ET US stock trading closes
Happy holiday season, everyone! Wishing you a very Merry Christmas and Happy New Year
Highlights and News:
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Airlines brace for busiest Christmas season on record
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American Airlines grounded flights nationwide after experiencing a technical issue with all flights
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AMERICAN AIRLINES NATIONWIDE GROUNDSTOP CANCELED, FAA SAYS
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Biden to Decide on US Steel Acquisition After Panel Deadlocks
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SOME BIG US BANKS PLAN TO SUE FED OVER ANNUAL STRESS TESTS:CNBC
Global stocks edged higher, with few major catalysts expected to drive market sentiment. Bourses in Germany, Italy, Denmark, Switzerland and Finland were closed.
French Prime Minister Francois Bayrou said he aimed to reach an agreement with parliament on a 2025 budget that would reduce the country’s deficit to close to 5%. Meanwhile, airlines on both sides of the Atlantic are set for their busiest Christmas season
as tens of millions of passengers take to the skies.
EQUITIES:
US equity futures fluctuated in muted pre-holiday trading ahead of today’s shortened trading session. United States Steel (X) shares were a notable early mover, falling 3.4% premarket
after the Committee on Foreign Investment in the United States failed to reach an agreement on the group’s proposed takeover by Nippon Steel of Japan, leaving the ultimate decision to President Joe Biden who has long opposed the tie-up. Citigroup strategists
recommended investors take a more balanced approach in US stocks over the first quarter, seeing a bigger opportunity in defensive sectors.
Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.2%, Russell 2000 +0.1%, DJI -0.05%.
In pre-market trading, American Airlines (AAL) shares fell 3% after the company grounded all flights nationwide. Shares recovered from those losses after the FAA said the AAL groundstop
was cancelled around 7:55ET. Arcadium Lithium (ALTM) gained 4% after the chemicals company said it obtained all shareholder approvals for a proposed acquisition by Rio Tinto. Chip stocks rise following a strong session for the sector on Monday, and as US President
Joe Biden’s administration launched a probe into Chinese-made chips. NeueHealth (NEUE) shares rally more than 60% after news of the health clinic company’s acquisition by New Enterprise Associates and other investors.
In pre-market trading, American Airlines (AAL) shares fell 3% after the company grounded all flights nationwide. Shares moved higher after the FAA said AAL groundstop
was cancelled around 7:55ET. Arcadium Lithium (ALTM) gained 4% after the chemicals company said it obtained all shareholder approvals for a proposed acquisition by Rio Tinto. Chip stocks rise following a strong session for the sector on Monday, and as US President
Joe Biden’s administration launched a probe into Chinese-made chips. NeueHealth (NEUE) shares rally more than 60% after news of the health clinic company’s acquisition by New Enterprise Associates and other investors.
European gauges are higher in low volume trading with major markets including Germany shut and others, such as London and Paris, scheduled to close early. The Stoxx
600 gains as much as 0.3%, led by gains in real estate and miners, with all sub-sectors in the green. Vistry Group plunged as much as 20% after it lowered its guidance, citing delays to expected year-end transactions. Stoxx 600 +0.2%, CAC +0.25%, FTSE 100
+0.4%. Real Estate +0.55%, Basic Resources +0.5%, Retail +0.45%, Energy +0.45%.
Shares in Asia were mostly higher, with Mainland China and Hong Kong among the best performers. Chinese policymakers are planning to sell 3 trillion yuan ($411 billion)
in special treasury bonds in 2025, an increase from 1 trillion yuan this year, Reuters reported. The MSCI Asia Pacific Index rose 0.3%, with Alibaba and Samsung among the biggest boosts. Taiwan Semiconductor Manufacturing Co. touched a new record high, while
Honda Motor Co. jumped after announcing a share buyback of as much as $7 billion. Most markets will be closed Wednesday except mainland China and Japan. CSI 300 +1.3%, Hang Seng Index +1.1%, Thailand +0.6%, Singapore +0.5%, ASX 200 +0.25%, Taiwan +0.1%, Topix
+0.02%. Kospi -0.05%, Sensex -0.1%, Vietnam -0.2%, Nikkei 225 -0.3%, Indonesia -0.4%.
FIXED INCOME:
Treasuries continue Monday’s bear steepening move with yields cheaper by up to 2.5bp across the long-end. 2s10s roughly flat and 5s30s +0.5bp. 10-year yield is +2bps
at ~4.61%. US session includes early 11:30ET 5-year note auction, which follows a decent 2-year result seen Monday. SIFMA recommend early 2pm New York close for the cash Treasuries market. This week’s auction’s conclude Thursday with $44 billion 7-year note
sale.
METALS:
Gold traded in a narrow band as traders weighed the prospect of a slower pace of interest-rate cuts by the US Federal Reserve next year. Investors are digesting the
latest data on US consumer confidence, which unexpectedly sank amid uncertainty around the policies of the incoming Trump administration. Spot gold +0.05%, Silver -0.5%, Copper +0.6%.
ENERGY:
Oil climbed in subdued trading ahead of the holidays after a three-day selloff, with focus on a strengthening dollar and President-elect Donald Trump’s roiling of
international politics. Meanwhile, President Biden is weighing major new sanctions against Russia’s energy sector in his final weeks in office, the Washington Post reported. Trading volumes slid on Monday and will likely remain muted as markets close for year-end
holidays. WTI +0.7%, Brent +0.6%, US Nat Gas +2.4%, RBOB +0.2%.
CURRENCIES:
In currency markets, the dollar held near the highest levels in two years, as investors treaded cautiously into the final holiday-shortened trading days of the year.
The yen creeps higher after Japan’s Finance Minister warned against speculative yen movements and hinted at potential intervention. US$ Index +0.1%, GBPUSD +0.15%, EURUSD -0.1%, USDJPY -0.02%, AUDUSD -0.35%, NZDUSD -0.2%, USDCHF +0.15%, USDCAD +0.3%.
Spot Bitcoin +0.2%, Spot Ethereum -0.6%.
Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance
Data sources: Bloomberg, Reuters, CQG
David Wienke
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