RBNZ’s Breman Expects To Hold Cash Rate At 2.25% For Some Time

Samantha Luan

Forex

Economic

Central Bank

Summary:

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

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Justin

Forex

Commodity

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

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Winkelmann

Forex

Economic

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

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Winkelmann

Political

Economic

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

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Samantha Luan

Political

Economic

South Korea's former president Yoon Suk Yeol allegedly sought to prompt a military confrontation with North Korea to create grounds for declaring martial law a year ago, but the plan collapsed when Pyongyang failed to respond, a special counsel said.

"They attempted to create a pretext for declaring martial law by carrying out abnormal military operations designed to provoke a North Korean armed response, but the effort failed because North Korea did not react militarily," Special Counsel Cho Euk-suk told reporters on Monday, wrapping up a six-month investigation into the botched martial law attempt.

The probe team believes Yoon and his officials sent drones into North Korea in October 2024 in an attempt to trigger a military response from the North. The North Korean military put its border units on full alert after reports of the drones flying above its capital, though at that time South Korea denied it had flown unmanned aircraft over the heavily fortified border.

The special prosecutor said Yoon, who was impeached over his martial law attempt, sought to monopolize power by seizing legislative and judicial authority through mobilizing the military.

Yoon, now jailed and facing an insurrection trial, has denied wrongdoing and defended his move as a desperate bid to counter what he claimed were North Korea sympathizers trying to paralyze his administration. Yoon's fall paved the way for the election of Lee Jae Myung as the new president in June. Lee's administration has sought to improve ties with North Korea in a departure from Yoon's hard-line approach.

In total, 24 people — including the former president, sitting lawmakers and past cabinet members — have been indicted over their alleged involvement in the former leader's political gamble, the special prosecutor said.

Source: Bloomberg Europe

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FastBull Featured

Daily News

[Quick Facts]

1. U.S.–Ukraine delegations to continue discussing peace plan on the 15th.

2. Trump again outlines economic vision: Calls for sharp interest rate cuts.

3. Shifting UK political landscape? Reform UK claims more members than Labour, becoming the largest party.

4. U.S. pressure on Venezuela escalates further, shifting from oil sanctions to the threat of ground operations.

5. Zelenskyy: Russia–Ukraine peace plan may include compromises, but must be fair.

6. Trump: Warsh is at top of Fed Chair candidate list.

7. Trump unsure whether Republicans can retain House control in next year's midterms.

8. Japanese manufacturing confidence hits four‑year high, adding a key reason for BOJ rate hike this week.

[News Details]

U.S.–Ukraine delegations to continue discussing peace plan on the 15th

On December 14th, local time, a Ukrainian presidential adviser said talks between Ukrainian and U.S. delegations on a peace plan lasted more than five hours in Berlin and will continue on the 15th. On the 14th, both sides held closed‑door consultations in the German capital on the "peace plan" proposed by the United States to end the Russia–Ukraine conflict. U.S. representatives included President's Special Envoy Witkoff and President Trump's son‑in‑law Jared Kushner, among others. The Ukrainian side was led by President Zelenskyy and also included Secretary of the National Security and Defense Council Rustem Umerov and Chief of the General Staff Andrii Hnatov.

Trump again outlines economic vision: Calls for sharp interest rate cuts

U.S. President Trump said he hopes to see interest rates fall to 1% or lower within a year, far below the current Federal Reserve policy range. He argued that today's high inflation was inherited from the previous administration and predicted that by election time in a few months, price conditions in the U.S. would be quite favorable. He also revealed he is considering taking stakes in defense companies and noted his promoted U.S. investment plan has not yet fully taken effect. Regarding the upcoming midterm elections, Trump expressed uncertainty, admitting he is unsure if current economic policies can help Republicans win.

Shifting UK political landscape? Reform UK claims more members than Labour, becoming the largest party

According to a December 12th report on the Daily Telegraph website, leaked data show Labour membership has fallen below 250,000, while Reform UK's self‑reported total membership is nearly 269,000, allowing it to claim it has overtaken Labour as Britain's largest party. Reform UK leader Nigel Farage called this a major milestone for the party and declared the era of two‑party politics over. If accurate, this deals another major blow to Keir Starmer's Labour, reflecting how traditional mainstream parties may face challenges from emerging political forces. Reform UK is known for emphasizing sovereignty, immigration controls, and its rising influence could reshape British political issues and electoral dynamics.

U.S. pressure on Venezuela escalates further, shifting from oil sanctions to the threat of ground operations

On December 12th, U.S. President Trump threatened the Venezuelan government again, saying ground operations against drug cartels there will soon begin and stressing land operations are relatively easy to execute. Trump claimed the U.S. has already blocked 96% of drugs attempting illegal entry and that the next focus will shift to ground actions. He had previously warned of expanding strikes against Venezuelan cartels from sea to land. In response, Venezuelan Defense Minister Vladimir Padrino López accused the U.S. of trying to blockade the Caribbean to seize natural resources and said Venezuela is mounting resistance. This marks a new phase in U.S. pressure on Venezuela, moving from primarily economic measures such as oil sanctions toward more direct and public military threats, heightening regional tensions.

Zelenskyy: Russia–Ukraine peace plan may include compromises, but must be fair

On December 14th, local time, Ukrainian President Zelenskyy said the peace plan to resolve the Russia–Ukraine conflict will not satisfy everyone and will inevitably involve various compromises. He noted the plan will not be universally liked and that many compromises exist in its various versions. Ukraine has submitted the latest opinions and revisions on the plan to the United States, stressing that any compromise must be based on fairness. Most importantly, the plan must be as just as possible, especially for Ukraine, and must be effective—not merely a piece of paper—but a significant step toward ending the conflict. He emphasized the plan must ensure Russia cannot launch new military actions against the Ukrainian people after it is signed.

Trump: Warsh is at top of Fed Chair candidate list

Trump said he prefers either former Fed Governor Kevin Warsh or White House National Economic Council Director Kevin Hassett to succeed Jerome Powell as Fed Chair, with Warsh being his first choice. Trump expects to nominate a Fed chair candidate soon.

His remarks were welcomed on Wall Street because another leading candidate, Hassett, might be more inclined to follow the White House's desire for rate cuts, potentially triggering market countermoves and harming Fed independence. Still, Trump stressed the next Fed chair should consult him on interest rate matters and reiterated his hope rates will drop to 1% or lower within a year.

Trump unsure whether Republicans can retain House control in next year's midterms

Trump said he is uncertain whether Republicans can keep control of the House in next year's midterms because some of his economic policies have not yet fully taken effect. In an interview with The Wall Street Journal, Trump noted parts of his economic agenda need time to work, as he strives to attract greater foreign investment in the U.S., which will help transform the economy. However, it is unclear when all measures will be in place or whether they will yield political gains for Republicans in the November 2025 midterms. On the Supreme Court reviewing Washington's global reciprocal tariffs, Trump said if the court opposes them, the U.S. will suffer consequences, and he would consider other tax methods, though less efficient. He believes U.S. inflation is a legacy issue from the previous administration and expects improvement by the time campaigning begins in a few months.

Japanese manufacturing confidence hits four‑year high, adding a key reason for BOJ rate hike this week

The Bank of Japan's quarterly Tankan survey released Monday showed large manufacturers' business sentiment index rose from 14 in September to 15, a four‑year high and in line with market expectations. Meanwhile, the large non‑manufacturing index remained at a strong 34, close to its peak since the early 1990s.

This key data indicates Japanese firms generally view operating conditions as favorable and so far have not been significantly affected by U.S. tariffs. The robust result further strengthens market expectations that the BOJ will raise rates at its meeting this Friday. If implemented, it would be the first hike since January this year, marking an important turning point in Japan's monetary policy.

[Today's Focus]

UTC+8 21:30 Canada November CPI

UTC+8 22:30 Fed Governor Stephen Miran delivers speech

UTC+8 23:00 U.S. December NAHB Housing Market Index

UTC+8 23:30 New York Fed President John Williams delivers speech

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Gerik

Economic

Factory and Retail Growth Lose Steam Despite Stimulus Signals

China’s latest economic data reveals a marked loss of momentum. Industrial output in November rose just 4.8% year-on-year slightly below the 5.0% forecast and down from 4.9% in October indicating stagnation in the country's manufacturing sector. Retail sales, a critical gauge of domestic demand, grew only 1.3%, down sharply from October’s 2.9% and well below the expected 2.8% rise.

The figures, released by the National Bureau of Statistics (NBS), reinforce a broader narrative of weakened consumer confidence, even during peak shopping periods like the Singles’ Day festival, which was extended to five weeks this year but still failed to deliver the expected retail uplift.

Investment and Auto Sales Underscore a Fragile Domestic Economy

Fixed asset investment often a proxy for long-term economic confidence contracted by 1.3% in the first eleven months of 2025, marking a slight improvement over the previous period’s 1.7% decline but still indicating subdued business sentiment. Particularly concerning was an 8.5% drop in car sales, the largest in 10 months, suggesting that big-ticket consumer spending is still being deferred or suppressed by economic uncertainty.

Much of the drag can be attributed to the lingering property sector crisis, which has significantly eroded household wealth and stifled confidence. Reuters forecasts predict continued property price declines through 2026, only stabilizing in 2027 dimming hopes for a quick rebound in consumer-driven sectors.

Policy Promises vs. Structural Reality: Beijing’s Balancing Act

At the recent Central Economic Work Conference, Chinese leaders acknowledged the growing disconnect between strong supply-side output and persistently weak domestic demand. In response, the government pledged to maintain a “proactive” fiscal stance, with increased investment and targeted measures to boost consumption. However, observers remain skeptical that China is ready to fully pivot from its traditional export- and infrastructure-led model to one centered on household spending.

This hesitation is rooted in both ideological preference and economic inertia. While policymakers aim to maintain the 5% annual growth target into 2026 as part of the next five-year plan, international institutions like the World Bank and IMF have offered more cautious forecasts, citing structural headwinds and geopolitical risks.

Global Trade Backlash: Surplus Fuels Diplomatic Friction

China’s hefty trade surplus which continues to exceed a trillion U.S. dollars has become a growing source of friction with key trading partners. French President Emmanuel Macron recently warned of tariffs on Chinese goods, criticizing the country's "unsustainable" trade imbalances. Meanwhile, Mexico has approved sweeping tariff hikes of up to 50% on Chinese and other Asian imports starting next year, aiming to shield its domestic industry.

While exports have been one of the few bright spots in China’s economic data this year buoyed by supply chain resilience and high-tech manufacturing Beijing is now facing a more hostile trade environment that could erode this advantage. U.S. tariffs remain high, and the threat of retaliatory measures from Europe and Latin America could squeeze export margins in 2026.

The November figures act as a warning sign that China's traditional growth drivers factory production and investment are no longer sufficient on their own. With domestic consumption faltering and global backlash intensifying, Beijing must either accelerate its long-promised economic rebalancing or risk entering a prolonged period of low-confidence stagnation. The road ahead will test not only China’s policy agility but also its willingness to redefine the foundations of its economic engine.