A look at the day ahead in European and global markets from Wayne Cole.

China has kicked off the week with some uninspiring data as retail sales in November rose just 3.0% y/y, when median forecasts had been for +4.6% y/y. House prices also continued to fall, though industrial output did at least hold up.

Officials continued to talk of stimulus, including cuts in bank reserve requirements, but credit data showed lower borrowing costs are no help when nobody wants to invest.

Chinese bond yields hit another record low in reaction, which has the central bank checking with commercial banks on their positions. In an ill-timed coincidence for the yuan, 10-year yields there posted their biggest weekly drop since 2018, just as longer-dated Treasury yields suffered the biggest weekly increase this year.

There have been reports Beijing was considering whether to let the yuan fall to buttress its economy, but that only drew a broadside from President-elect Donald Trump’s trade adviser Peter Navarro.

Over in South Korea, the political situation looks somewhat steadier as Han Duck-soo has taken over for impeached President Yoon Suk Yeol and the Constitutional Court began reviewing the impeachment. The court has up to six months to decide whether to remove Yoon from office or to reinstate him.

Authorities repeatedly vowed to stabilise financial markets, which saw the KOSPI hold steady on Monday.

All eyes, of course, are on the Fed meeting on Wednesday where a quarter-point rate cut is 97% priced in, and its vanishingly rare for the central bank to disappoint such an overwhelming market consensus.

More intriguing will be the guidance from Chair Powell and the FOMC dot plots with markets assuming they will now see only three cuts next year instead of four. The terminal rate could also rise to 3.0% or more, from 2.875% in September. Markets are far more hawkish, implying a floor for rates around 3.80%, one reason bonds took such a beating last week.

Of the other central bank meetings, the Bank of Japan, Bank of England and Norges Bank are seen on hold, while the Riksbank is expected to cut and perhaps by 50 bps.

Another mover on Monday was bitcoin which surged above $106,000 after Trump floated a plan to create a U.S. bitcoin strategic reserve similar to its strategic oil reserve.

Key developments that could influence markets on Monday:

• Appearances by ECB President Christine Lagarde, Vice President Luis de Guindos and board member Isabel Schnabel
• PMIs for Europe and U.S.
• Bank of Canada Governor Tiff Macklem speaks
• Empire State Manufacturing Survey for December (By Wayne Cole; Editing by Jacqueline Wong)