In the U.S., the new Department of Government Efficiency will be headed by Elon Musk and entrepreneur Vivek Ramaswamy. This is not a surprise, as they are tasked to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies.” Overnight, equity benchmarks in Japan (-1.66%) and Hong Kong (-0.52%) retreated, touching their weakest levels since September, while the People’s Bank of China set its reference rate for the yuan at 7.1991 per dollar—445 pips stronger than the average estimate in a Bloomberg survey. The gap between the fixing and estimate was the widest since early August, hinting at the strain between market sentiment and official policy.
The day ahead is all about U.S. CPI. Consensus is 0.2% MoM, while YoY it is 2.6%. The risk is a topside surprise, so get ready to buy your 2s/10s flattener, as the potential Santa Rally may be more likely a Santa sell-off. In other markets, we saw some profit-taking in Bitcoin, which fell 2.2% to $86,373.01, while Ether dropped 4.8% to $3,123.56. The yield on 10-year Treasuries opened at 4.44%. West Texas Intermediate crude rose 0.2% to $68.29 a barrel, and spot gold rose 0.3% to $2,605.74 an ounce.
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