China kicked off the week with underwhelming retail sales data, disappointing forecasts of a 4.6% year-over-year increase. Instead, sales rose just 3.0%. House prices continued to fall, but industrial output remained steady.
The news sparked a sell-off in Chinese bond markets, with yields hitting record lows. This has prompted the central bank to scrutinize commercial banks’ positions. Meanwhile, the yuan strengthened against other currencies, despite weaker-than-expected Treasury yields.
In related news, South Korea’s President-elect Han Duck-soo took over from impeached President Yoon Suk Yeol, bringing a degree of stability to the country. The Constitutional Court is reviewing his impeachment, which could take up to six months to resolve.
The focus shifts to Wednesday’s Fed meeting, where a rate cut is widely expected. Markets are pricing in a quarter-point reduction and expect only three cuts next year, rather than four. The terminal interest rate could rise above 3.0% for the first time since September.
Other central banks meeting this week include the Bank of Japan, Bank of England, and Norges Bank, with most seen on hold or making minimal adjustments. Bitcoin surged above $106,000 after US President-elect Donald Trump floated a plan to create a strategic reserve for digital currency.
Source: https://www.reuters.com/markets/europe/global-markets-view-europe-2024-12-16