I. Yesterday's News
1. Rising rents lifted underlying U.S. inflation in November, pointing to a steady build-up of price pressures in the economy that could support more interest rate increases from the Federal Reserve next year. The Labor Department said its Consumer Price Index excluding volatile food and energy costs rose 0.2 percent last month after edging up 0.1 percent in October. Rents accounted for most of the increase in the so-called core CPI last month. In a second report, the Labor Department said initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 254,000 for the week ended Dec. 10. It was the 93rd straight week that claims were below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller.

2. Sterling's strong performance over the past month suggests inflation may overshoot the Bank of England's target by less than it forecast in November, the central bank said on Thursday. BoE policy makers agreed unanimously to keep interest rates on hold at a record low 0.25 per cent and left plans for government and corporate bond purchases unchanged after their December policy meeting, as economists polled by Reuters had expected. BoE policy makers said there had been little news over the last month about Britain's economy. The global economy had strengthened, but so too had the risks facing it. “The global outlook has become more fragile, with risks in China, the euro area and some emerging markets, and an increase in policy uncertainty,” the BoE said.

3. Italy's government stands ready to approve on Dec. 22 a package of measures worth 95 billion euros to support the country's ailing banks, including Monte dei Paschi di Siena , la Repubblica reported on Thursday. The state plans to make 15 billion euros available to backstop share issues at Monte dei Paschi and other troubled lenders. The decree will not mention specific banks. The Treasury was not immediately available for a comment. Italy would like to include in the decree measures to cushion losses for investors whose bonds will be converted into shares if the state steps in to prop up the banks.

4. The United States on Thursday launched a challenge to China's use of tariff-rate quotas (TRQs) for rice, wheat and corn at the World Trade Organization, charging that Beijing's administration of the program breached its WTO commitments and hurt U.S. farm exports. The USTR said global prices for the three commodities were lower than China's domestic prices, yet the country did not maximize its use of TRQs. The TRQs for the three commodities were worth more than $7 billion in 2015, according to the U.S. Department of Agriculture. China would have imported up to $3.5 billion more of the crops last year if the quotas had been fully used, the Office of the U.S. Trade Representative said on Thursday.

5. Japan moved past China to become the largest non-U.S. holder of American government debt for the first time in nearly two years, U.S. Treasury Department data showed on Thursday. Japan ended the month with $1.131 trillion in U.S. Treasuries, while China's holdings plunged to $1.115 trillion from around $1.157 trillion. October's drop of $41.3 billion by China was the largest since December 2013. China's Treasury holdings for October were the smallest since July 2010, declining for five straight months, data showed.

6.Rupert Murdoch's Twenty-First Century Fox has struck a $14.6 billion deal to buy European pay-TV firm Sky that unites a media empire across two continents and helps it take on rivals like Netflix in the battle for viewers. Fox said it would pay 10.75 pounds per share - or 11.7 billion pounds - for the 61 percent of Sky it does not already own to control a business with 22 million customers in Britain, Ireland, Italy, Germany and Austria.

II. Market Overview
FX
The U.S. dollar surged to a 14-year high against a basket of major currencies on Thursday, on investor anticipation of a more hawkish Federal Reserve and a boost in U.S. economic growth under President-elect Donald Trump. The dollar index, which measures the greenback against a basket of six major rival currencies, rose to a roughly 14-year high of 103.560. The dollar was last up 0.9 percent against the yen at 118.11 yen after rising as much as 1.4 percent to 118.66 yen, its highest since early February. The euro was down 1.2 percent at $1.0406 after falling as much as 1.6 percent to $1.0367, its lowest since January 2003.

Precious Metals
Gold fell more than 1 percent to a 10-1/2-month low on Thursday after the Federal Reserve sounded an unexpectedly hawkish note on U.S. interest rates, sparking a surge in Treasury yields and sending the dollar to a 14-year high. Spot gold was down at $1,128.34. U.S. gold futures for February delivery settled down 2.9 percent at $1,129.80.

Commodities
1.Crude Oil
Oil settled little changed on Thursday after sliding to its lowest level in a week in volatile trade, but a surging dollar did not pressure prices below technical support levels as OPEC members told customers they would cut crude supplies. U.S. crude lost 14 cents, or 0.3 percent, to settle at $50.90, its lowest close in a week, while Brent futures for February delivery gained 12 cents, or 0.2 percent, to settle at $54.02 per barrel.

2. Base Metals
Copper steadied on Thursday, recovering from early losses triggered by a rising dollar and higher inventories that cast doubt over demand strength and expectations of tighter supply. Benchmark copper on the London Metal Exchange ended the session 0.2 percent up at $5,732 a tonne. The metal used widely in power and construction has fallen more than 5 percent since breaking above $6,000 last month. Three-month aluminium was down 0.6 percent at $1,736 a tonne, zinc rose 0.2 percent to $2,815, lead gained 1.5 percent to $2,350, tin added 0.6 percent to $21,225 and nickel slid 0.9 percent to $11,320.

U.S. Treasuries
U.S. Treasury yields rose on Thursday, boosted by the prospect of more interest rate increases by the Federal Reserve next year, although those on long-dated bonds came off their highs after fairly tame consumer inflation data for November. Benchmark U.S. 10-year yields hit more than two-year highs, while yields on two-year notes touched more than seven-year peak. The belly of the curve also climbed to multi-year peaks, with U.S. five-year notes rising to their highest l in 5-1/2 years and seven-year notes hitting almost three-year peaks. In late trading, 10-year prices were down 19/32 , yielding 2.594 percent. U.S. 30-year bond yield prices were down 6/32, yielding 3.155 percent.

Stock Market
1. U.S. Equities
U.S. stocks rose on Thursday, led by gains in bank shares, a day after the Federal Reserve raised interest rates for the second time in nearly a decade. The Dow Jones industrial average rose 59.71 points, or 0.3 percent, to 19,852.24, the S&P 500 gained 8.75 points, or 0.39 percent, to 2,262.03 and the Nasdaq Composite added 20.18 points, or 0.37 percent, to 5,456.86. The Dow came within 50 points of hitting 20,000 for the first time.

2. Hong Kong Equities
Hong Kong stocks slumped to a four-month low, tracking Asian markets, after the U.S. Federal Reserve raised interest rates and rate-path projections. The benchmark Hang Seng index extended early losses to end down 1.8 percent, at 22,059.40 points. The Hong Kong China Enterprises Index lost 2.3 percent, to 9,479.16 points.