Rise and shine everyone.

Risk assets rallied after a softer-than-expected U.S. November CPI report. The Nasdaq climbed to record highs, Bitcoin surged past $100K, and commodities such as gold, copper, and oil gained ground. Market expectations for a 25bps Fed rate cut next week briefly hit 100%. However, the Dow diverged from the trend, closing lower despite the broader risk-on mood.

In Asia, Japan’s Nikkei crossed the 40,000 mark for the first time since October, underscoring investor optimism. In contrast, South Korea’s Kospi gave up its early 1% gains amid political turbulence. President Yoon’s national address added to the uncertainty as he accused the opposition of undermining public trust. Despite polls showing that 75% of South Koreans favor his resignation or impeachment, Yoon vowed to fight on. Meanwhile, speculation of early presidential elections grew as more members of his ruling party signaled support for impeachment proceedings.

Australia’s labor market surprised with stronger November data, pushing 3-year bond yields up by 11bps. This boosted the Australian dollar by 0.7% but weighed on equities. With unemployment at its lowest since March, markets have adjusted RBA rate cut expectations, now pricing the first cut no earlier than May 2025.

In Japan, the BOJ’s recent report signaled a more cautious approach to rate hikes, tempering expectations for a December move. The yen initially weakened past 153 against the dollar before recovering to 152. Meanwhile, 2-year JGB yields edged closer to 0.6%, reflecting persistent rate expectations.

European markets were indecisive, with a focus on U.S. tech, following AI advancements announced by firms like Google and OpenAI. The Nasdaq 100 surged 1.8%, while Dow futures hinted at a sixth straight daily loss. European retail stocks lagged for a second session, weighed down by disappointing results from Inditex.

The Swiss National Bank surprised markets with a 50bps rate cut, citing concerns over services inflation and potential disruptions from President-elect Trump’s proposed tariffs. The Swiss franc weakened against the dollar and euro following the announcement. Attention now shifts to the ECB, which is widely expected to announce a 25bps rate cut. The decision is due at 08:15 ET, with President Lagarde’s press conference to follow at 08:45 ET.

There are a couple of important earnings today - Costco and Broadcom.

Chart of the Day

Interesting chart from GS showing China’s debt build-up is unusual for a country like that in peacetime

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)