China’s Consumption Slump Deepens as Retail Sales and Investment Miss Forecasts

Iron ore futures declined, after top buyer China announced it would introduce a licensing system on the export of certain steel products from next year.

The steelmaking ingredient fell as much as 1.6%, after the Ministry of Commerce said Friday that exporters must seek permission from Jan. 1 to ship a broad range of products, including steel used in construction, cars and consumer goods.

The ministry did not give a reason for the new regulations, but the move comes as China's steel exports are on track for a record in 2025. Shipments exceeded 100 million tons in the year through November, according to the most recent trade data, despite rising trade barriers.

China is pushing for its steel to move up the value chain by reducing the proportion of low value-added products in its export mix, industry consultancy Mysteel said in a note. "China's steel industry is facing an unprecedented pressure for transition," it said, adding that the new policy aligns with Beijing's carbon-emission goals.

Producers of low value-added products may shift a proportion of their exports to the domestic market in the short term, Mysteel said, while shipments to markets in Africa and Latin America might also increase. The share of high-end "green" steel products in the export mix would increase gradually, the consultancy said.

Meanwhile, China's crude steel production fell for a sixth straight month. The country produced a little under 70 million tons in November, down 11% from a year earlier, China's statistics bureau said on Monday. That left the year-to-date figure 4% behind last year's.

Iron ore futures fell 1.3% to $100.70 a ton in Singapore as of 11:00 a.m. local time, following a 1.4% drop last week. Yuan-priced futures in Dalian declined 1.3%. Steel futures in Shanghai edged higher.

Source: Bloomberg Europe

New Zealand's central bank expects to maintain the Official Cash Rate at current levels for some time if economic conditions evolve as expected, Governor Anna Breman said. The kiwi dollar fell.

"The forward path for the OCR published in the November MPS indicates a slight probability of another rate cut in the near term," Breman said in a statement Monday in Wellington. "However, if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25% for some time."

The Reserve Bank signaled last month it had likely finished cutting interest rates after 325 basis points of easing. Financial markets have since begun to price a rate hike from the third quarter next year and Westpac Banking Corp. last week raised some home-loan interest rates.

"Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR," Breman said.

New Zealand's dollar fell after the statement, buying 57.8 US cents at 3:20 p.m. in Wellington from 58.08 cents.

Breman said the economy is evolving "broadly in line" with the RBNZ's expectations, and the central bank is confident that inflation will reach the 2% target by mid-2026.

Economists expect gross domestic product grew 0.8% in the third quarter, twice the pace the RBNZ projected in the November statement. The GDP report is due Dec. 18.

Source: Bloomberg Europe

The Middle Eastern oil market has weakened in recent weeks on concern that regional supplies will outstrip demand, adding to signs of a softening global picture that's weighed on benchmark crude futures.

Among widely watched metrics, the premium of Abu Dhabi's flagship Murban over Brent has declined to the narrowest since early October. The shift signals concern too much crude is being offered in the Middle East than can readily be bought by refiners in Asia at a time of higher, competing worldwide output.

Global benchmark Brent is on pace for a third year of declines, as expectations that worldwide supplies will exceed consumption outweigh geopolitical concerns. Members of OPEC, including Mideast shippers such as Saudi Arabia, have added barrels just as rival drillers in the Americas also bolster output.

Reflecting the abundant availability of near-term supplies, state producer Saudi Aramco recently cut the price of its flagship crude grade for Asia to the lowest level in five years. In addition, the Paris-based International Energy Agency forecasts that there will be a record global crude glut next year.

"The surplus in the oil market is set to grow in 2026, following OPEC+'s decision to unwind supply cuts at a quicker-than-expected pace," said Warren Patterson, head of commodities strategy at ING Groep NV. "Non-OPEC supply is also expected to grow at a healthy clip despite this year's price weakness."

Other markers in the Middle East are also flashing weakness. Among them, the Dubai benchmark's discount to Brent, known as the Brent-Dubai EFS, was recently at its widest in about seven weeks.

Within the region, differentials between some spot crudes and the Dubai benchmark have softened, according to General Index. Upper Zakum and Oman had a 50- to 60-cent premium to Dubai at the end of last week, down from about 90 cents at the start of the month.

On a global basis, ING forecasts supply will rise 2.1 million barrels a day next year, while demand expands about 800,000 barrels. The IEA, meanwhile, projects output will exceed consumption by 3.8 million barrels a day in 2026.

"The scale of the surplus and the expected build in inventory should put the forward curve under additional pressure," said Patterson, referring to the pricing of crude over the coming months.

Source: Bloomberg Europe

The Thai baht climbed to the highest in more than four years, heaping pressure on the central bank to stem the rally ahead of its policy decision this week.

The Bank of Thailand tightened gold traders' foreign exchange forward transactions on Monday after the currency edged higher to 31.523 per dollar, holding at the strongest since June 2021. The baht has advanced more than 8% this year, making it the second best performer in Asia amid record gold prices and a weaker greenback.

The currency's persistent strength is putting pressure on the BOT to signal further easing at its meeting on Wednesday as the nation's exporters feel the added pinch from new US tariffs. While officials have managed to weaken gold's influence on the baht, the current peak tourism season is giving the currency fresh tailwinds.

"We see the excessive baht strength as unwelcome given sluggish growth, disinflation, and political uncertainty," Wee Khoon Chong, a senior strategist at BNY, wrote in a note to clients. "Baht strength is one reason we still see easing risk in 2026."

The baht's rally may lose some steam as an ongoing border clash between Thailand and Cambodia undermines investor confidence. Political risk is also set to weigh ahead of an election to be held as early as January.

The baht is likely to continue to benefit from a softer US dollar environment and positive fourth quarter seasonality, Barclays Bank Plc strategists including Audrey Ong wrote in a note to clients. That said, "baht political risk premium could build into the new year should it take time to form the new government."

Source: Bloomberg Europe

Kevin Hassett, one of the frontrunners to replace the current chair of the US Federal Reserve, has downplayed concerns that US President Donald Trump could sway the Fed, asserting that Trump's views will hold "no weight" on agency decisions.

With an announcement of the new Fed chair expected in mid-January, some hold concerns that Trump is looking to spread his influence across the agency by replacing the majority of people in charge at the FOMC.

Speaking with CBS News' Face the Nation on Sunday, Hassett emphasized that the Fed's role is to remain "independent" and let the 12 Board of Governors in the Federal Market Committee (FOMC) have the final say.

"No, no, he would have no weight. It's just his opinion matters if it's good, you know, if it's based on data," he said, adding:

"And then if you go to the committee and you say, well, the president made this argument and that's a really sound argument, I think, what do you think? If they reject it, then they'll vote in a different way." Hassett speaking on the Fed and Trump. Source: Face The Nation

Race for fed chair may be down to 'two Kevins'

On Friday, Trump indicated the race for the next Fed chair is being led by two out of four finalists being interviewed — former Fed governor Kevin Warsh and Hassett.

In an interview with The Wall Street Journal on Friday, Trump said Warsh was at the top of his list.

"Yes, I think he is," he said, adding, "I think you have Kevin and Kevin. They're both—I think the two Kevins are great," he said.

At the start of this month, odds on prediction markets such as Kalshi and Polymarket had Hassett at an 85% chance of becoming the next Fed chair; however, the odds have now dropped significantly following Trump's latest comments.

At the time of writing, Hassett still leads on Kalshi odds at 50%, with Warsh in second at 39%.

Related: Who's Kevin Hassett, Trump's reported crypto-friendly pick for the Fed?

During the WSJ interview, Trump also said the next Fed chair should consult him for advice on setting interest rates.

"Typically, that's not done anymore. It used to be done routinely. It should be done," he said.

"I don't think he should do exactly what we say. But certainly we're—I'm a smart voice and should be listened to," Trump added.

Crypto market flat despite Fed cutting rates

Last Wednesday, the Fed slashed interest rates by 25 basis points to a target range of 3.5% to 3.75%; however, it hasn't been a boon for crypto markets, with prices remaining flat.

Comments from current Fed chair Jerome Powell suggest that while the Fed isn't being hawkish, it's remaining cautious.

"In the near term, risks to inflation are tilted to the upside and risks to employment to the downside, a challenging situation. There is no risk-free path for policy," Powell said at the Wednesday FOMC meeting.

With the next chair, Trump has indicated he wants further interest rate cuts in 2026, which could spur bullish action in crypto markets.

"He thinks you have to lower interest rates," Trump said of Warsh while speaking to the WSJ.

"And so does everybody else that I've talked to," he added.

Meet the onchain crypto detectives fighting crime better than the cops

Source: COINTELEGRAPH