The most critical data for US comes on 11th Dec which is the CPI data for Nov’24. We expect Core CPI inflation likely remained elevated at 0.33% m-o-m in November’24. This seems to have been driven by core goods which likely accelerated in Nov. If our assumptions are correct, we see a hold in the Fed's 18th Dec meet than the currently market priced 85% probability of a 25 bps cut. We find the current market pricing surprising because in Sep SEP, Fed projected that UR (unemployment rate) by end of CY24 will be at 4.4%, GDP for CY24 will be at 2%, headline PCE will finish CY24 at 2.3% & core PCE will finish CY24 at 2.6%. 10 officials voted for 4 cuts in CY24 & 9 officials voted for 3 cuts in CY24. Coming to present, UR stands at 4.2%, GDP growth for entire CY24 is likely at 2.5%+ & core PCE is likely to be at 2.9% by end of CY24. Except Governor Waller and Chicago president Goolsbee, no Fed officials have advocated for a December cut. So we believe if the CPI no comes as per our expectations, we see significant risk of media reporting during the blackout period or CPI/PPI next week delivering a hawkish surprise, pushing market expectations back toward a December skip. In RoW, we expect ECB to go for a 50 bps cut against current market pricing of 25 bps cut only. If it is a 25 bps cut, it might be a dovish cut with removal of the phrase "sufficiently restrictive". PMI data for Eurozone is getting worse and inflation profile in Eurozone is far well behaved than US. We expect BoC (Bank of Canada) to ease further, delivering another 50bp cut at its 11th December meeting next week. Loosening labor markets, slowing wage growth, and cooling price pressures are likely to lead to another 50bp cut by BoC. SNB in it's 12th Dec meeting is likely to cut by 25 bps again and signal more cuts are in offing. UK GDP due on 13th Dec is likely to have increased by 0.2% MoM in Oct. We expect the possibility of 0.1% is stronger than 0.3%. In UST auction supply, we have 58 BN USD of 3 yr, 39 BN USD of 10yr & 22 BN USD of 30 yr USTs.
