• Asian equity markets were mixed as the tailwinds from Friday’s stellar US NFP report were offset by mostly weaker than expected Chinese trade data
• Hong Kong protesters conducted a large-scale march, with organizers claiming a turnout of 800k, protests were largely peaceful
• China ordered government offices and public institutions to remove all foreign computer equipment and software in 3 years
• Heading into election week, polls over the weekend have shown the Conservatives holding onto their lead over Labour with polls ranging from a lead of 15-8 points
• Looking ahead, highlights include German Trade, US 3yr Supply, RBA’s Lowe

ASIA-PAC

Asian equity markets were mixed as the tailwinds from Friday’s stellar US NFP report was offset by mostly weaker than expected Chinese trade data including a surprise contraction in Exports and with some hesitation observed heading into a risk-packed week. ASX 200 (+0.3%) and Nikkei 225 (+0.3%) saw a firm start to the session led by outperformance in energy names following the OPEC+ agreement, although both indices briefly retraced the majority of their gains amid heavy losses in Australia’s gold miners and as recent JPY strength suppressed the effect of a firm upward revision to Q3 GDP. Hang Seng (-0.1%) and Shanghai Comp. (Unch.) traded indecisively after the largely disappointing Chinese trade data and as China continued to voice discontent with US “interference” regarding the Hong Kong protests and Uighur Muslims. Furthermore, China reportedly denied entrance into Macau for the President of the American Chamber of Commerce in Hong Kong and have also ordered government offices and public institutions to remove all foreign computer equipment and software in 3 years. Finally, 10yr JGBs declined on spill-over selling from T-notes and with the pressure also a function of the gains in stocks, firm GDP revisions and tepid BoJ Rinban announcement valued at JPY 180bln.

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set USD/CNY reference rate at 7.0405 vs. Exp. 7.0400 (Prev. 7.0383)

China ordered government offices and public institutions to remove all foreign computer equipment and software in 3 years. (Newswires)

China top diplomat Yang spoke with US Secretary of State Pompeo on Saturday in which he stated the US has seriously violated international relations by passing the Hong Kong and Uighur bills, while he urged the US to correct its mistakes and immediately stop interfering with China’s internal affairs. (Newswires) China’s Xinjiang region Governor said the US bill on Xinjiang is a severe violation of international law, while the Governor added the US bill has no regard for facts and has made groundless accusations against the human rights situation as well as the Chinese government. (Newswires)

Hong Kong protesters conducted a large-scale march which organizers claimed a turnout of 800k but police only estimated 183k, which was largely peaceful although a few fires were set at the entrance of the High Court and Court of Final Appeal. Furthermore, the protests have reached a 6th month milestone, while analysts suggested Hong Kong retail businesses could experience 15% decline in holidays sales and restaurants may suffer 30% drop in sales from the protests. (Newswires)

Chinese Trade Balance (USD)(Nov) 38.73B vs. Exp. 46.3B (Prev. 42.81B). (Newswires) Chinese Exports (USD)(Nov) Y/Y -1.1% vs. Exp. 1.0% (Prev. -0.9%) Chinese Imports (USD)(Nov) Y/Y 0.3% vs. Exp. -1.8% (Prev. -6.4%) Chinese Trade Balance (CNY)(Nov) 274.2B vs. Exp. 294.0B (Prev. 301.3B). (Newswires) Chinese Exports (USD)(Nov) Y/Y 1.3% vs. Exp. 1.9% (Prev. 2.1%) Chinese Imports (USD)(Nov) Y/Y 2.5% vs. Exp. 0.9% (Prev. -3.5%)

Japanese GDP (Q3 F) Q/Q 0.4% vs. Exp. 0.2% (Prev. 0.1%). (Newswires) Japanese GDP (Q3 F) Y/Y 1.8% vs. Exp. 0.7% (Prev. 0.2%)

UK/EU

UK Election BMG Research poll: Conservatives 41% (+2), Labour 32% (-1), Lib Dems 14% (+1), Brexit Party 4% (Unch.), taken December 4th-6th.

Deltapoll poll: Conservatives 44% (-1), Labour 33% (+1), Lib Dems 11% (-4), Brexit Party 3% (Unch.), taken December 5th-7th.

Opinium poll: Conservatives 46% (Unch.), Labour 31% (Unch.), Lib Dems 13% (Unch.), Brexit Party 2% (Unch.), taken December 4th-6th.

Panelbase poll: Conservatives 43% (+1), Labour 34% (unch), Lib Dems 13% (Unch.), Brexit Party 3% (-1), taken December 4th-6th.

Savanta/ComRes poll: Conservatives 42% (Unch.), Labour 36% (+4), Lib Dems 11% (-1), Brexit Party 4% (+1), taken December 2nd-5th.

Survation/Good Morning Britain poll: Conservatives 45% (+2), Labour 31% (-2), Lib Dems 11% (Unch.), Brexit Party 4% (+1), conducted December 5th-7th

UK Election YouGov poll: Conservatives 43% (+1), Labour 33% (unch), Lib Dems 13% (+1), Brexit Party 3% (-1), taken December 5th-6th.

DataPraxis MRP Model suggest Conservatives will win 344 seats (+27), Labour 221 (-41), Lib Dems 14 (+2), SNP 47 (+12).

A leaked Department for Exiting the EU document seen by the FT has revealed warnings that implementing Boris Johnson’s Brexit deal would see Northern Ireland remain as part of the EU customs code, subsequently presenting “major” challenges. (FT)

French Finance Minister says the nation is prepared to go to the WTO to challenge US President Trump’s threat to put tariffs on certain US goods. (CNBC) 

Fitch affirmed Sweden at 'AAA', Outlook Stable. (Newswires)

FX

DXY held on to the majority of its NFP-driven gains, although the greenback has since quietened amid mixed trade in its major counterparts and as participants look towards this week’s risk events including the FOMC, ECB and UK General Election. EUR/USD remained subdued from Friday’s losses but with downside stemmed as the 1.1050 level provided a floor which is also the 200-Hour MA, and GBP/USD extended on its rebound from support at 1.3100 after most of the recent polls showed a wider lead for the Conservatives going into Thursday’s election. Elsewhere, USD/JPY and JPY-crosses traded flat amid the mostly positive risk tone and encouraging Q3 GDP revisions, while antipodeans were kept lacklustre by the soft Chinese data and weaker PBoC reference rate setting.

COMMODITIES

Commodities trade was rangebound which was a sharp contrast to the aggressive moves seen following the US jobs data and confirmation of the OPEC+ agreement to deepen output curbs by 500k bpd with Saudi Arabia also pledging a voluntary cut of 400k bpd on top of the additional 167k bpd of production it agreed to curtail at last week’s meeting. This underpinned WTI although prices have since retraced around half the gains and trickled back below the USD 59.00/bbl level due to a firmer USD and given that the 500k bpd cut was widely telegraphed. Elsewhere, gold languished near last week’s lows after the precious metal was heavily pressured as the USD surged on Friday, while copper prices marginally extended on Friday’s post-NFP momentum but are off their highs after the indecisive tone and weak data from China.

Baker Hughes Rig Count: Oil rigs -5 at 663, Nat gas +2 at 133, total rigs -4 at 799; drillers cut rigs for the 7th consecutive week. (Newswires)

Saudi Energy Minister Abdulaziz suggested the jury is still out on where the oil market will be in March and that there are 2 conditions before raising output which are lower global inventories and price backwardation. Saudi’s Energy Minister also said that they will not unilaterally raise output to punish non-complying nations and wants to see global inventories close to 2010-2014 averages, while he added that Saudi is committed to continued cooperation with Russia beyond March 2020 and expects oil output resumption from the joint fields soon although it will not impact the OPEC cut. (Newswires)

Venezuela government and opposition are reportedly considering providing private oil companies operating rights including Chevron (CVX), Rosneft and CNPC, although PDVSA would hold a majority stake according to sources. (Newswires)

Iron ore options began trading in the Dalian Commodity Exchange today. (Newswires)

GEOPOLITICS

Senior US State Department official Schenker said the US is readying further sanctions over the killing of protesters in Iraq and stated there is a strong chance Iran is behind the attack on Iraq's Balad Air base but more evidence is needed, while the State Department also stated there will be further sanctions on Iran in the future, In related news, there were also Twitter reports of sirens sounding near Baghdad International Airport in Iraq from potential rockets targeting the airport. (Newswires)

White House National Security Adviser O'Brien warned US has many tools to deal with North Korea if it reneges on denuclearization commitments. (Newswires) 

US 

Yields were higher between 4-5bps across the curve with the TPLEX pressured in wake of a solid jobs report for November, where the headline surprised to the upside. Additionally, prelim consumer confidence data from the UoM was firmer than expected. Next week, the Fed is expected to stand pat on rates, and according to market pricing, as derived from the CME's Fedwatch tool, there is a 100% chance of an unchanged decision (which was priced with 99.3% certainty on Thursday). Ahead of the US day, constructive news on the trade front (China plans to implement tariff waivers for some purchases of US ags, and will begin applications for importing soybeans and pork from the US) resulted in some downside for Treasuries. There was also reports of short-covering after remarks from NEC director Kudlow (tariffs are up to the President), while other reports suggested short-covering came ahead of next week's FOMC and ECB confabs. Major curve spreads, however, are little changed, though 2s5s and 2s10s are up by around 1bps at settlement, and 2s30s 5s10s 5s30s and 10s30s a touch narrower). T-notes (H0) settled 13+ ticks lower at 128-28+.

USTR Lighthizer and US Democrats are reportedly nearing a deal for Congress to pass USMCA, although hurdles remain according to reports citing sources familiar with the discussions. (WSJ)

Mexico Foreign Minister Ebrard said Mexico will not accept US labor inspections in USMCA trade pact and will not accept US steel proposal for USMCA without 5-year period to go into effect, while he added that over 90% of USMCA is not open to revision, but there will be an addendum to the deal. (Newswires)

Bank for International Settlements stated that the turmoil in the repo market during September was exacerbated by hedge funds borrowing cash to bolster returns on their trades and also suggested the reluctance of banks to lend was also a key factor. (FT)