ECB’s Cipollone Argues Against A Purely Offline Digital Euro

Central Bank

Summary:

European Central Bank Executive Board member Piero Cipollone said an online and an offline digital euro would be needed to reap the full benefits of the electronic money.

"The digital euro's online and offline functionalities will complement one another, combining the convenience of digital payments with the resilience and accessibility of cash – allowing the digital euro to be used in any situation, from e-commerce platforms to remote areas without network coverage," Cipollone said Monday in Brussels.

Speaking at a hearing of the European Parliament, Cipollone said consumers, merchants and banks "all stand to benefit," while reducing the dependencies on non-European providers will also strengthen the continent's resilience, autonomy and economic security.

"The longer we wait, the longer it will take for these benefits to materialize," he said.

The comments can be seen as pushback against a key report last month by the lead European Union lawmaker on the topic. In it, Fernando Navarrete proposed an online version only if the private sector doesn't come up with its own solution to unite the region's fractured payments landscape. Otherwise, it should be limited to an offline — or person-to-person — version.

Last week, Alessandro Giovannini, an adviser in the ECB's directorate for the digital euro, already questioned Navarrete's proposal, speaking out in favor of an initiative by the EU executive in Brussels foreseeing an online and offline version.

Cipollone on Monday also again dismissed concerns over high costs for banks, saying they currently lose fees with international-card systems, fees and data with big-tech mobile payment solutions, and will in the future sacrifice fees, data and retail deposits to stablecoins.

With the digital euro, "the compensation model will ensure that banks benefit whenever a payment via one of these solutions is replaced by a digital euro transaction," he said.

Source: Bloomberg Europe

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Adam

Economic

In early November, markets were moderately confident that a slowing labor market would persuade the Federal Reserve to cut interest rates for a third time at the Dec. 10 policy meeting. But confidence on that bet is unravelling amid concerns that inflation may not be as benign as recently expected.

Fed funds futures are now pricing in a below-50% probability for a rate cut next month, down from roughly 70% earlier this month, based on Fed funds futures.

“What we’ve really seen is that there is a lot of reticence to cutting aggressively given all of the unknowns out there,” said Diane Swonk, chief US economist at KPMG. “There is also some inflation coming from the services sector that has just not been eradicated,” noting that there had been “a lot of wishful hoping.”

It’s not yet clear if the Treasury market is buying into the attitude adjustment. Although the 10-year yield has rebounded from its October low of roughly 3.95% to 4.15% at Friday’s close, the benchmark rate continues to trade in a tight range since September, and a sliding trend year to date is still conspicuous.

Is Wall Street Starting to Rethink Inflation Risk?_1

Meanwhile, the policy-sensitive 2-year yield continues to trade well below the effective Fed funds rate – a market signal that suggests the bond market is still anticipating rate cuts.

Is Wall Street Starting to Rethink Inflation Risk?_2

A modest decline in real (inflation-adjusted) Treasury yields via the TIPS market vs. recent history also suggests that inflation concerns continue to be downplayed.

Is Wall Street Starting to Rethink Inflation Risk?_3

A new paper published by the San Francisco Fed provides cover for the doves, arguing that higher tariffs slow economic growth, raise the jobless rate and lower short-term inflation, based on analysis of 150 years of economic history.

Perhaps the latest reluctance to fully price in more rate cuts is bound up with uncertainty fueled by delayed government data. But the mystery will begin easing as economic reports start flowing again now that the federal offices have reopened. As fresh numbers start arriving in the weeks leading up to the Dec. 10 Fed meeting, markets will be in a better position to reassess the state of the economy and inflation.

This week’s key update: the delayed payrolls report for September from the Labor Department, scheduled for Thursday, Nov. 20. The consensus point forecast sees hiring rebounding modestly, rising 50,000 from August’s sluggish 22,000 advance, based on Econoday.com’s polling.

Even if the forecast is accurate, the news will reaffirm that the labor market has slowed dramatically since the first quarter, when payrolls rose by an average of 111,000.

The question is whether incoming inflation data will be sufficiently above expectations to override the ongoing concern that hiring is downshifting. For the moment, Wall Street is repositioning closer to a neutral view as it awaits new numbers.

Source : investing

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Gerik

Economic

A High-Wire Act: Fiscal Prudence vs Political Popularity

Rachel Reeves, the UK’s Chancellor of the Exchequer, is caught between a rock and a hard place as she prepares to deliver the Autumn Budget on November 26. Facing a public finance gap estimated at up to £50 billion, Reeves must either raise taxes, slash spending, or risk breaking her self-imposed fiscal rules each of which carries significant political and market consequences.

These rules, intended to signal fiscal responsibility, require that all day-to-day public spending be funded through tax revenues (not borrowing) and that public debt declines as a share of GDP by 2029–30. Yet adhering to them amid slowing economic growth and rising public pressure presents a formidable challenge.

Reeves’s political capital and the credibility of Labour’s economic stewardship now hinge on her ability to deliver a budget that satisfies financial markets without alienating voters or sparking intra-party rebellion.

Tax Hikes: Economically Sound, Politically Toxic

While tax increases are economically feasible and potentially market-calming, they are politically dangerous. Reeves is reportedly considering a series of targeted measures, such as increased dividend taxes, rolling back salary sacrifice tax breaks, and levies on specific professions.

Markets have reacted favorably to the idea of tax hikes, interpreting them as a step toward fiscal consolidation. Gilt yields fell earlier in the week in anticipation of Reeves sticking to her fiscal rulebook. Investors like Brian Mangwiro from Barings expect new taxes to support productivity-focused investments, viewing them as long-term growth drivers for the UK.

Yet, public sentiment is far less supportive. Recent YouGov surveys indicate that a large segment of British voters prefers spending cuts or even more borrowing to higher taxes. Any deviation from Labour's manifesto pledge to avoid broad-based tax increases risks damaging public trust and triggering political backlash.

Spending Cuts: Market-Backed, Politically Risky

Many bondholders are calling for Reeves to combine tax increases with serious expenditure reductions. Emma Moriarty of CG Asset Management argues that without deep cuts, the UK risks further eroding investor confidence.

However, political appetite for austerity is weak, especially among Labour’s more left-leaning MPs. Earlier welfare cuts met with internal resistance and were ultimately watered down. A repeat could fracture party unity, undermine policy delivery, and complicate future legislative efforts.

Economically, aggressive cuts could stifle demand and deepen the UK’s structural growth problems. Already, investment levels and household saving rates are low factors that could worsen with tighter fiscal policy.

Markets Eye Rule Integrity: Breaking Them May Backfire

The clearest path to short-term flexibility breaking Reeves’s fiscal rules may be the most damaging in the long run. Despite speculation that the rules might be quietly revised or delayed, Reeves made a surprise pre-budget speech reaffirming their "iron-clad" status.

Bond markets are especially sensitive to perceived fiscal backsliding. Allianz Trade economist Maxime Darmet warned that any rule-breaking could send gilt yields soaring, as investors price in higher risk. This would not only raise government borrowing costs but also ripple into consumer markets through higher mortgage rates and dampened investment.

Recent history supports this fear. Liz Truss’s 2022 mini-budget, which defied fiscal convention, triggered a gilt market meltdown and her swift resignation. Reeves is keenly aware that any hint of improvised or inconsistent fiscal policy could reignite similar turmoil.

Investor Sentiment: A Delicate Balance

Stuart Edwards of Invesco suggests that the UK is entering a more bond-friendly environment, thanks to softening inflation and potential Bank of England rate cuts. However, this optimism is conditional on Reeves maintaining market discipline.

"There’s already a lot of good news priced into gilts," noted Moriarty. If Reeves fails to deliver a credible consolidation plan, the market may be sharply disappointed.

Investors have so far rewarded discipline with lower yields. But should Reeves falter either by breaking her rules or presenting an overly cautious, ineffective package there is little buffer against renewed volatility.

A Budget That Could Make or Break Confidence

The upcoming UK Autumn Budget is more than just an economic document; it is a test of political leadership, policy credibility, and investor trust. Reeves must deliver a delicate blend of tax rises and modest spending restraint, all while preserving Labour’s electoral promises and maintaining market faith.

With the UK now facing the highest long-term borrowing costs among G7 nations, any misstep could have cascading effects from surging bond yields to economic stagnation. A disciplined yet growth-conscious fiscal plan is Reeves’s best shot at navigating this minefield. Whether she can pull it off without sacrificing her political capital or her job remains the defining question of Britain’s fiscal season.

Source: CNBC

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Adam

Economic

Despite ongoing correction on Wall Street, FactSet Research data signals still strong earnings season across the US public companies. Here is the highlight actual as of November 7 (after Big Tech ex-Nvidia earnings reports).

Strong Q3 reporting season: With 91% of S&P 500 companies already out with results, 82% beat earnings expectations, while 77% topped revenue forecasts — a broadly positive quarter.

Earnings growth gaining momentum: S&P 500 profits are on track to grow 13.1% year over year in Q3. If confirmed, this would mark the fourth straight quarter of double-digit earnings growth, showing solid corporate momentum.

Upward revisions across sectors: At the start of the quarter (September 30), earnings growth was estimated at 7.9%. Companies have significantly outperformed since then, lifting the blended growth rate, with 10 sectors now reporting higher earnings thanks to positive EPS surprises.

Guidance remains mixed: Looking ahead to Q4, 42 companies have issued negative EPS guidance, while 31 companies provided positive guidance, suggesting a cautious but not pessimistic outlook.

Valuations above long-term norms: The S&P 500 trades at a forward P/E of 22.7, which is above the 5-year average (20.0) and above the 10-year average (18.6) — signaling elevated valuations relative to historical levels.

US Earnings Season Summary What the Latest FactSet Data Shows_1

82% of Companies Beat EPS Expectations & 77% Beat Expected Revenue

Q3 earnings season is delivering strong results, comfortably beating analyst expectations. A larger-than-usual share of S&P 500 companies is surprising to the upside, and the index is now showing higher earnings than both last week’s levels and the end-of-quarter estimates.

With 91% of S&P 500 companies having already reported, 82% beat EPS expectations — well above the 5-year average (78%) and 10-year average (75%). If this number holds, it would match the best beat rate since Q3 2021.

The magnitude of earnings surprises is also healthy: on aggregate, profits are coming in 7% above expectations, matching the 10-year average (and just slightly below the 5-year trend of 8.4%).

The S&P 500 is now on track for 13.1% year-over-year earnings growth in Q3, marking the fourth consecutive quarter of double-digit profit expansion. This figure has climbed steadily from 7.9% at the end of Q3 and 10.7% just one week ago, boosted by stronger-than-expected results.

Over the past week, companies in the Industrials, Financials, and Health Care sectors delivered the most meaningful earnings surprises, pushing the overall earnings growth rate higher.

Since September 30, the biggest positive contributions to earnings growth have come from Financials, Information Technology, and Consumer Discretionary companies. Weak results from Communication Services partially offset those gains.

Revenue performance is also robust: companies are beating top-line estimates at rates well above historical norms, with many reporting meaningful year-over-year growth.

Strong Earnings Trend Set To Persist?

If the S&P 500 ultimately delivers 13.1% earnings growth for Q3, it would mark the fourth straight quarter of double-digit year-over-year profit growth and the ninth consecutive quarter of positive earnings growth overall — a sign of sustained corporate strength.

Eight of eleven sectors are showing year-over-year earnings growth, with the strongest contributions coming from Information Technology, Financials, Utilities, Materials, and Industrials.Meanwhile, three sectors are posting declines, led by Communication Services.

On the revenue side, 77% of S&P 500 companies have beaten expectations. It's well above both the 5-year (70%) and 10-year (66%) averages. Aggregate revenues are coming in 2.1% above estimates, matching the 5-year norm and exceeding the 10-year average of 1.4%.

Over the past week, stronger-than-expected revenue results across several industries — most notably Financials and Consumer Staples — lifted the index’s overall revenue growth rate.

Since the end of Q3 (September 30), the biggest contributors to rising revenue growth have been companies in Health Care, Financials, and Consumer Discretionary, reflecting broad-based momentum across cyclical and defensive groups.

Revenue Growth Is Rising

The S&P 500’s blended revenue growth rate for Q3 has risen to 8.3%, up from 7.9% last week and 6.3% at the end of Q3. If 8.3% holds, it would be the strongest revenue growth since Q3 2022 (11%) and mark the 20th straight quarter of year-over-year revenue expansion.

All eleven sectors are posting revenue growth compared to a year earlier — with Information Technology, Health Care, and Communication Services leading the charge, showing broad strength across the index.

Looking ahead, analysts expect earnings growth of 7.5% in Q4 2025, 11.8% in Q1 2026, and 12.7% in Q2 2026. For full-year 2025, consensus calls for 11.6% earnings growth.

The S&P 500 currently trades at a forward P/E of 22.7, above both the 5-year (20.0) and 10-year (18.6) averages, though just slightly below the 22.8 level recorded at the end of Q3.

EPS Beats Remain Strong

With 91% of the index having reported Q3 numbers, 82% delivered EPS above expectations, 3% met estimates, and 15% missed.

The 82% beat rate is above the 1-year (77%), 5-year (78%), and 10-year (75%) averages.

If this figure stands, it would match the highest beat rate since Q3 2021.

Sector leaders in EPS beats include:

Health Care – 93%

Consumer Staples – 93%

Information Technology – 92%

Financials – 89%The weakest sector is Communication Services – 62%.

Earnings Surprise Magnitude

On average, companies are reporting earnings 7.0% above estimates — in line with the 10-year average, though slightly below the 1-year and 5-year averages.

The Industrials sector shows the biggest upside surprise, with earnings coming in 15.6% above expectations. Notable contributors include:

Southwest Airlines ($0.11 vs. –$0.04)

Uber Technologies ($3.11 vs. $0.69)

UPS ($1.74 vs. $1.29)

US500 (D1 chart)

Source: xtb

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Adam

Commodity

Russia-Ukraine Conflict

Crude Holds Steady as Traders Eye Russian Supply Risks, Key Technical Levels

Daily Light Crude Oil Futures

Light crude oil futures are treading water early Monday, holding near flat as the market looks for solid footing inside the key retracement zone between $59.27 and $58.49.

Prices are hovering just below the 50-day moving average at $60.79, which has capped rallies for nearly a month. A break above that level—and especially the 200-day moving average at $61.48—could trigger fresh buying and open the door for a run toward the longer-term 50% retracement level at $63.74.

At 13:19 GMT, Light Crude Oil Futures are trading $60.22, up $0.13 or +0.22%.

Oil Pauses After Russian Loadings Resume

Crude prices slipped slightly after loadings resumed at Russia’s Novorossiysk export terminal, following a two-day halt caused by a Ukrainian drone strike. Friday’s rally of over 2% in both WTI and Brent had been driven by concerns over the disruption, which impacted around 2% of global supply. While the immediate risk has eased with loadings back online as of Sunday, the market remains on edge over further strikes.

Ukraine’s military claimed it also targeted the Ryazan and Novokuibyshevsk refineries over the weekend—part of a growing pattern of attacks on Russian infrastructure. Traders are weighing whether these hits will begin to drag more noticeably on Russian crude flows, especially as sanctions pressure mounts.

Traders Watching Sanctions and Supply Chain Risks

Western sanctions are back in focus as the U.S. moves to tighten restrictions on Russian energy trade. Fresh measures kick in after November 21, targeting transactions with companies like Lukoil and Rosneft. There’s also political noise around potential secondary sanctions, with discussions emerging over penalizing countries that continue to do business with Moscow. Iran, already under scrutiny, may also come into play.

Meanwhile, OPEC+ is staying the course, keeping December’s output increase at 137,000 barrels per day and signaling no further hikes in the first quarter of next year. Even so, the supply side remains messy. ING warned of a persistent surplus through 2026, but also flagged rising geopolitical risks—not just from Ukraine, but also Iran, which recently seized a tanker in the Gulf of Oman.

Specs Cover Shorts as Risks Mount

Positioning data from ICE shows speculators added over 12,000 net long contracts in Brent last week, largely through short-covering. That suggests some traders are backing off bearish bets given the growing risk premium. UBS analysts echoed this sentiment, noting that while oil-on-water volumes have increased, there’s been no clear build in on-land inventories—leaving room for price support if physical supply tightens.

Bottom Line: Still Rangebound, But Risks Are Tilting Higher

Crude is still stuck below its 50- and 200-day moving averages, and buyers aren’t chasing this market just yet. But the supply side remains shaky—between Ukraine’s refinery strikes, U.S. sanctions, and Middle East tensions, the market is growing more reluctant to lean short. If WTI can break above $61.48 with conviction, bulls may finally have a level to build on. Until then, expect choppy action with a slight upside tilt.

Source: fxempire

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Devin

Economic

White House economic adviser Kevin Hassett on Monday said there have been mixed signals in the job market, and that the labor market could be slowing down.

"I think that there have been mixed signals in the job market and really, really positive signals in the output markets," Hassett told CNBC in an interview.

"I think that there could be a little bit of almost quiet time in the labor market because firms are finding the AI is making their workers so productive that they don't necessarily have to hire the new kids out of college," he said.

A weakening labor market could prompt the U.S. Federal Reserve to again lower its key interest rate by 25 basis points next month, economists say.

Source: Kitco

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Adam

Commodity

Gold prices are down a bit and silver prices are up a bit in early U.S. trading Monday. Precious metals traders are looking forward to a week in which U.S. government economic data will start to flow again. December gold was last down $8.60 at $4,085.90. December silver prices were up $0.114 at $50.80.

The U.S. Bureau of Labor Statistics has announced it will release the September U.S. jobs report this Thursday, Nov. 20, after it was delayed due to the U.S. government shutdown. The BLS will also issue September inflation-adjusted earnings Friday, Nov. 21, and the reports will come out at 7:30 a.m. CST. The new data will help shed light on the state of the U.S. economy, though the data will be more backward-looking than usual.

Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed to higher openings when the New York day session begins.

Noted big bond trader: stock, financial markets troubles are brewing. In markets awash in “garbage lending” and unhealthy valuations, Jeffrey Gundlach is keeping his strategy simple: load up on cash and stay away from private credit, Bloomberg reports. “One of Wall Street’s bond kings is spotting overpriced assets almost everywhere he looks…. Gundlach called out nosebleed valuations in the equity market and warned investors against ‘incredibly speculative’ bets,” said the report. The DoubleLine Capital founder recommends a 20% cash position to hedge against a market implosion — one he sees brewing in unsafe lending to private companies and overblown hopes for artificial intelligence. “The health of the equity market in the United States, it’s among the least healthy in my entire career,” Gundlach said. “The market is incredibly speculative, and speculative markets always go to insanely high levels. It happens every time.” The veteran debt investor is concerned the $1.7 trillion private credit market is engaging in “garbage lending” that could tip global markets into their next meltdown. “The next big crisis in the financial markets is going to be private credit,” he said. “It has the same trappings as subprime mortgage repackaging had back in 2006,” Gundlach said and as reported by Bloomberg.

The key outside markets today see the U.S. dollar index slightly higher. Crude oil prices are near steady and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.125%.

Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.

Modest price pressure on gold as busier U.S. data week ahead_1

Technically, December gold futures bulls’ next upside price objective is to produce a close above solid resistance at the record high of $4,398.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,000.00. First resistance is seen at the overnight high of $4,107.60 and then at $4,150.00. First support is seen at the overnight low of $4,051.10 and then at Friday’s low of $4,032.60. Wyckoff's Market Rating: 7.0.

Modest price pressure on gold as busier U.S. data week ahead_2

December silver futures bulls have the solid overall near-term technical advantage and their next upside price objective is closing prices above solid technical resistance at last week’s record high of $54.415. The next downside price objective for the bears is closing prices below solid support at $50.00. First resistance is seen at $51.50 and then at $52.00. Next support is seen at $50.00 and then at last week’s low of $49.86. Wyckoff's Market Rating: 7.5.