• Asian equity markets were higher as the recent US-China trade optimism reverberated in the region, but with gains capped by uncertainty from OPEC and ahead of key US data
• US President Trump said something could happen with regards to tariffs on December 15th but we are not discussing that yet
• OPEC delegates suggested a 350k cut for OPEC and a 150k cut Russia and Non-OPEC
• OPEC official announced the press conference was cancelled for Thursday and sources noted the OPEC meeting was prolonged over issues including Iraq
• Looking ahead, highlights include German Industrial Output, OPEC+ meeting, US and Canadian Jobs Reports, Uni. Of Michigan, Baker Hughes Rig Count, UK General Election Debate

ASIA-PAC

Asian equity markets were higher across the board as the recent US-China trade optimism reverberated in the region, but with gains capped as the OPEC/OPEC+ meetings stole much of the limelight and as looming US NFP jobs data kept participants tentative. ASX 200 (+0.4%) and Nikkei 225 (+0.3%) traded positively in which gold miners outperformed the broad but mostly tepid gains for Australia’s sectors, while upside in Tokyo was also limited by recent currency strength and after Household Spending contracted by the most in over 5 years. Hang Seng (+0.7%) and Shanghai Comp. (+0.1%) were kept afloat after the PBoC conducted a CNY 300bln MLF operation which was larger than the prior operation of CNY 200bln and the CNY 187.5bln of maturing loans, while the trade rhetoric continued to suggest talks are going well and are on track with a phase 1 deal said to be close, although other reports were less optimistic and noted the sides were still at odds on agriculture purchases. Finally, 10yr JGBs were lower which was initially the aftermath of the prior day’s pullback amid gains in riskier assets, while prices remained subdued ahead of the December 2019 futures contract rolling over this weekend and with the BoJ’s presence in the market for JPY over 1.1tln of JGBs in 1yr-10yr maturities doing little to spur a rebound.

PBoC conducted CNY 300bln 1-year Medium-term Lending Facility operations at 3.25% vs. Prev. 3.25%. (Newswires) PBoC set USD/CNY reference rate at 7.0383 vs. Exp. 7.0368 (Prev. 7.0521)

US President Trump said something could happen with regards to tariffs on December 15th but we are not discussing that yet and that the US is holding discussions with China which are going well, while he also commented the US may do trade related things to countries who are not contributing enough to NATO. (Newswires)

US National Security Advisor O'Brien suggested the sides are close on a phase 1 deal and that he spoke with Treasury Secretary Mnuchin as well as USTR Lighthizer earlier, while he added the US is monitoring Hong Kong situation closely. (Newswires)

China reportedly provided official reassurance that negotiations with the US remain on track. In related news, China Global Times tweeted that contradictory statements by US officials over the phase one deal might just be Washington testing the waters, while it also stated that trade talks remain on track citing an expert. (Newswires/Twitter)

Hong Kong Police Commissioner urged protesters to reject violence ahead of Sunday’s major demonstration from the Civil Human Rights Front which was approved by authorities. (Newswires/SCMP)

Japanese All Household Spending (Oct) M/M -11.5% vs. Exp. -9.8% (Prev. 5.5%); largest decline since April 2014. (Newswires) Japanese All Household Spending (Oct) Y/Y -5.1% vs. Exp. -3.0% (Prev. 9.5%); largest decline since March 2016.

UK/EU

UK Election Britain Elects/New Stateman tracker of polls showed Conservatives at 42.4% (+0.1), Labour 32.8% (+1.4), Lib Dems 13.1% (-1.0) and Brexit Party 3.4% (-0.4). (Newswires)

FX

DXY was subdued after a continuation of the December retreat to below the 97.50 level with the greenback eyeing a 7th consecutive daily loss as it consolidated at the lowest in just over a month, with participants now looking ahead to the US jobs data. This has kept EUR/USD and GBP/USD above the recently reclaimed 1.1100 and 1.3150 levels respectively, with the latter having been underpinned as polls pointed to a strong lead for the Conservatives including the Britain Elects poll tracker which showed the ruling party remains nearly 10 points ahead of Labour a week away from the elections, despite a slight narrowing in the margin. Elsewhere, USD/JPY was subdued by the recent dollar woes, while antipodeans edged marginal gains on the mostly positive risk appetite and firmer PBoC reference rate, as well as comments from RBNZ Deputy Governor Bascand who reiterated that the economy looks close to a turning point.

RBNZ Deputy Governor Bascand reiterated the economy looks close to turning point and that downside risks persist but are more balanced, while he added strong commodity prices are supporting the economy and fiscal stimulus could boost growth next year. (Newswires)

Canadian PM Trudeau promised tax cuts, housing investment and infrastructure, while he will pursue a sensible fiscal plan and will work to get Canadian resources to new markets as well as support workers in the natural resources sector. (Newswires) 

COMMODITIES

Commodities were uneventful overnight with WTI crude futures subdued after its recent pullback from resistance at the USD 59.00/bbl level and as participants await the official announcement from OPEC in which the group is said to have reached an agreement in principal for an additional 500k bpd cut although still have to work out the details with Non-OPEC producers at today’s meeting. In addition, OPEC had cancelled yesterday’s press conference as the meeting was prolonged reportedly due to issues with Iraq, while members agreed to exclude numbers on gas condensate volumes on Russia and all Non-OPEC output which is used to determine the baseline for cuts and in turn, resulted to some mild pressure for oil. Elsewhere, gold flatlined with participants await the upcoming key US jobs numbers and copper only marginally benefitted from the tepid gains in stocks.

OPEC official announced the press conference was cancelled for Thursday and sources noted the OPEC meeting was prolonged over issues including Iraq. In related news, Angola reportedly left the meeting and wants to quit while delegates suggested a 350k cut for OPEC and a 150k cut Russia and Non-OPEC. (Newswires/Twitter/Energy Intel) OPEC+ plus committee reportedly recommended excluding numbers on gas condensate on Russian crude output and all Non-OPEC members, in which all OPEC+ members reportedly agreed with the recommendation. Furthermore, Russia Energy Minister Novak commented the quota split is to be decided on Friday and confirmed that gas condensate output of 760k BPD is now excluded from Russia's quota. (Newswires)

Saudi Oil Minister Abdulaziz said we cannot say we have an agreement until we meet Non-OPEC, while other reports noted that Saudi Arabia's new target is likely to be above 10.1mln bpd vs. current 10.31mln bpd citing delegates. (Newswires)

Kuwait Oil Minister stated OPEC is in agreement but did not comment on what was agreed, although several twitter reports suggested a quota adjustment of 500k bpd was agreed in principle although the details still need to be discussed with OPEC+. (Newswires/Twitter)

GEOPOLITICS

US President Trump tweeted that the story regarding US sending 12k troops to Saudi Arabia is false and called it fake news, while Defence Secretary Esper had earlier commented that the US is not considering sending 14k additional troops to the Middle East at this time. (Newswires) Iran is determined to continue its ballistic missile programme the country said in a letter to the UN, while it was also reported that Iran is reportedly working on nuclear-capable missiles according to European Powers. (AFP)

US 

T-notes continued to sell-off on Thursday, albeit less pronounced than Wednesday, with the prior session’s trade optimism reducing demand for the haven. Prices found some support close to the US cash equity open, where major equity bourses were offered in lack of immediate news flow, with some desks noting profit taking, bringing the TPLEX off lows into settlement, where the curve steepened slightly, mainly in the front to belly; the 2-year yield was little changed, 5-year yield up by 1.8bps and the 10- and 30-year yields both up by 1.5bps. T-note (z0) futures settled 3 ticks lower at 129-10.

US House Speaker Pelosi said she doesn't think the US is heading for a shutdown, while she also commented that USMCA issues relate to workers' rights and pharmaceuticals. In related news, Canadian Deputy PM Freeland said USMCA signatories face difficult challenge to get the treaty ratified by US. (Newswires)