• European bourses are bolstered on COVID-19 updates but are off highs at present, Euro Stoxx 50 +0.5%, while US futures remain in proximity to highs with RTY +0.9% marginally outperforming; ES +0.6% & NQ +0.3%
• AstraZeneca/Oxford University COVID-19 vaccine candidate met its primary endpoint; two regimes one with 90% efficacy the other 62%. Can be stored, transported & handled at normal fridge temperatures for at least 6-months
• Regeneron announced that its antibody cocktail REGN-COV2 received Emergency Use Authorization from the US FDA
• Pfizer’s vaccine could receive UK approval in the week ahead with British regulators to begin the formal review of the jabs by Pfizer and BioNTech
• EZ & UK Flash PMIs continue to show the divergence in manufacturing, above exp., and services which deteriorated from the prior
• FX features a depressed DXY with 92.00 the next potential support mark ahead of the YTD low at 91.74, G10 peers broadly outperform the USD with GBP leading amid numerous Brexit updates
• Looking ahead, highlights include US PMIs (flash), BoE's Bailey, Fed's Evans, Daly, ECB's Schnabel, US 2yr and 5yr supply

CORONAVIRUS UPDATE

AstraZeneca (AZN LN) - AZD1222 is effective against COVID-19; met primary endpoint. COVID-19 average efficacy 70.4% when combining data from two dosing regimes. Two different dosage regimes: one has ~90% efficacy. 90% efficacy is the approach which commences with a half dose followed by a full dose administered at least one month apart (2,741 participants). The vaccine can be stored, transported & handled at normal fridge conditions (2-8 degrees Celsius) for at least 6-months. Will now immediately prepare the regulatory submission of data to global authorities. Capacity of up to 3bln doses on a rolling basis in 2021. *Link to full Newsquawk headline*

US CDC reported total COVID-19 cases rose to 12.0mln from 11.8mln the day before and total deaths rose to 255.1k from 253.6k the day before, while a major newswire tally stated US cases rose by at least 168,288 to a total of 12.27mln and deaths rose by at least 1,230 to a total of 257.1k. (Newswires)

Los Angeles County announced to ban all in-person dining effective Wednesday at 10:00pm due to a surge in cases but will not go in to full lockdown as cases remain beneath the threshold. (Newswires)

Regeneron announced that its antibody cocktail REGN-COV2 received Emergency Use Authorization from the US FDA. FDA stated that it authorized monoclonal antibodies for treatment of COVID-19 in which casirivimab and imdevimab are to be administered together by IV infusion and were shown to reduce COVID-19-related hospitalization, but noted benefit of casirivimab and imdevimab treatment has not been shown in patients that were hospitalized for COVID-19. (Newswires)

Pfizer’s vaccine could receive UK approval in the week ahead with British regulators to begin the formal review of the jabs by Pfizer and BioNTech, while NHS was reportedly told to be ready to administer them by December 1st. Subsequently, regulators say they have received the data relating to this. (Telegraph) Seperately for Pfizer, Operation Warp Speed's Slaoui has suggested that the FDA could act on the Co.'s COVID vaccine as early as December 10th. (Twitter)

Roche CEO expects the tens of millions of COVID-19 tests the Co. is producing won’t be enough this winter amid the surge of infections across the northern hemisphere. (Newswires)

UK COVID-19 cases +18,662 (prev. + 19,875) and deaths +398 (prev. +341), France cases +13,157 (prev. +17,881) and deaths +215 (prev. +276), while Italy cases +28,337 (prev. +34,767) and deaths +562 (prev. +692). (Newswires)

UK PM Johnson is to tell MPs on Monday that he will end the lockdown in England on December 2nd and replace it with toughened-up tiers, while the new plan will see more areas enter the stricter tiers although reports added the plan for a new stricter tiered system is under threat after 70 Conservative MPs threatened to veto it in Parliament. There were also reports that PM Johnson is expected to set out ‘major’ testing plans which will form part of stronger tiered local restrictions to replace England’s lockdown. UK PM Johnson is to give a statement at 15:30GMT/10:30EST. There is currently not expected to be a vote in parliament on the measures until next week, according to Politico. (Newswires/Telegraph/Huffington Post)

UK Chancellor Sunak said the government is looking at the 10pm curfew for hospitality and stated that now is the correct time to borrow to fight the crisis, while the Treasury noted that Chancellor Sunak is expected to announce a package valued over GBP 3bln to support the NHS amid the pandemic. (Newswires)

UK will lift blanket quarantine restrictions on December 15th so families can travel to red list countries for Christmas, while the length of time people will need to self-isolate will be cut to 5 days from 14 days if a UK holidaymaker tests negative 5 days after returning. (Telegraph)

UK quarantine for contacts of Covid-19 cases could be halved or eliminated in a pilot scheme which could prevent hundreds of thousands of people from unnecessary isolation. According to reports, emergency service workers will be provided daily tests with new pregnancy-style test kits in the next phase of mass testing set to be launched in Liverpool in the week ahead, while all those that have been instructed to isolate due to contact with an infected person could be offered a test after seven days of quarantine to allow them to leave home faster. (Times)

French President Macron will on Tuesday announce government plans to relax lockdown measures in 3 steps as infections recede with the first easing to take place “around” December 1st, second step before the end-of-the-year holidays and the third will be from January. However, confinement measures and travel limitations will remain in place for some time, while restaurants and bars will still face restrictions, according to government spokesman Gabriel Attal. (Le Journal du Dimanche)

Spanish PM Sanchez said that they will begin a comprehensive vaccine programme in January in which Spain, alongside Germany, will be the first in the EU to have a complete vaccination plan. (Newswires)

Germany’s senior politicians stated that they will have to extend current measures to contain the pandemic into December, while other reports noted that Germany was considering a partial lockdown until December 20th. (Newswires)

South Korea is imposing stricter social-distancing measures including limiting restaurant hours and social gatherings, as a surge in cases threatens to undermine earlier efforts to contain the pandemic, while the alert level for the Greater Seoul area was increased to 2 from 1.5 effective Nov. 24. This will ban gatherings in high-risk venues such as night clubs and karaoke bars, while restaurants are prohibited from serving after 2100 and can only operate takeouts and deliveries. (Newswires)

Hong Kong Health Secretary Sophia Chan stated that Hong Kong will make a payment of HKD 5,000 to anyone in the city that tests positive for COVID-19 in an effort to get people tested. (Newswires)

G20 communique stated they will spare no effort to ensure affordable and equitable access to COVID-19 vaccines, drugs and tests, while they will protect lives and provide support with focus on the most vulnerable. The G20 is will also focus to restore economic growth, as well as protect and create jobs. (Newswires)

ASIA

Asian equity markets began the week on the front boot amid virus treatment hopes after reports the FDA granted EUA for Regeneron’s REGN-COV2 antibody cocktail but with some of the optimism in the region offset by concerns regarding rising infections. ASX 200 (+0.3%) traded higher following upgrades in domestic PMI data and as the energy sector spearheaded the commodity-led push after Ampol surged on reports it will receive a higher amount for the stake in its convenience property portfolio and will conduct a AUD 300mln share buyback. However, the gains in the index were restricted as financials lagged with IAG shares resuming their underperformance for a 3rd consecutive session. KOSPI (+1.9%) outperformed after a surge in exports for the first 20 days in November helped participants overlook the rising COVID-19 infection rates which prompted an increase in the Greater Seoul area social distancing level to 2 from 1.5 effective from Tuesday. Hang Seng (+0.1%) and Shanghai Comp. (+1.1%) were mixed with the mainland kept afloat following a PBoC liquidity injection and with Hong Kong subdued by weakness in casino and property names. Furthermore, the HK-Singapore travel bubble was delayed for 2 weeks which pressured shares in their respective flag carriers, while recent reports also noted the US is very close to declaring that 89 Chinese aerospace and other companies have links to the Chinese military which could stop them from receiving certain US exports. As a reminder, Japanese markets were closed due to Labor Thanksgiving Day.

PBoC injected CNY 40bln via 7-day reverse repos at a rate of 2.20% for a net daily injection of CNY 40bln. (Newswires) PBoC set USD/CNY mid-point at 6.5719 vs. Exp. 6.5717 (Prev. 6.5786)

US Commerce Department document stated that the US is very close to declaring that 89 Chinese aerospace and other companies have links to the Chinese military which could stop them from receiving certain US exports. This follows recent source reports the US was set to designate four more Chinese companies as backed by the Chinese military which would restrict their access to US investors as the Trump administration seeks to cement its hawkish China legacy in its waning days. (Newswires)

US and Taiwan signed an agreement to set up annual economic talks for 5 years despite opposition from China regarding US support for Taiwan. There were also reports that a US Navy Rear Admiral was on an unannounced visit to Taiwan, according to sources. (Newswires)

Chinese President Xi proposed using a global QR code system to facilitate cross-border movement of people amid the coronavirus pandemic, while he told the G20 summit that there needs to be standardised arrangements and opening up fast tracks to help restart movement again. (Newswires)

China Vice Premier Liu He chaired a meeting of the Financial Stability and Development Committee in which they stated that China will demonstrate zero tolerance regarding misconduct following recent bond defaults. (Newswires)

US

Fed Chair Powell stated that the Fed will comply with the Treasury request to return unused CARES Act funds in connection with the year-end termination. (Newswires)

US President-elect Biden agreed with House Speaker Pelosi and Senate Minority Leader Schumer that they need to pass a bipartisan COVID relief package during the current session, according to a spokesperson. (Newswires)

GEOPOLITICAL

Yemen's Houthis' military spokesman said it fired a rocket at an Aramco distribution station and advised foreign companies working in Saudi Arabia to exercise caution as Houthi operations will continue. Subsequent reports indicate no damage to Aramco's facilities or injuries, according to Energy Intel's Bakr citing sources (Newswires)

Germany says that Turkey prevented them from completing a search of a Turkish ship which is suspected of carrying arms to Libya. (Newswires)

UK/EU

BoE's Haskel said the shift towards home working was unlikely to last as most companies had not found it to be productive, while he added remote working is leading to longer hours and could result in jobs being moved abroad. (The Times)

UK Chancellor Sunak is to layout plans for a new national infrastructure bank in the week ahead to provide billions in funding for capital projects. There were also separate comments from Chancellor Sunak that you will not see austerity next and that there will be more money for public services in the spending review with the primary focus of the review to be on fighting the coronavirus. (Newswires/FT)

UK regulators signalled to banks that they will consider easing their stance regarding dividends payouts on a case-by-case basis by early next year, with the Bank of England’s Prudential Regulation Authority likely to consider the wider economic backdrop and will take a final view only after lenders close their fourth-quarter books, according to sources familiar with discussions. (FT)

UK PM Johnson is preparing a significant Brexit intervention as negotiators start their final push for a deal, while PM Johnson is expected to speak with European Commission President Von Der Leyen in an attempt to clear the final hurdles for a deal. (Newswires) UK government source stated that there was increasing expectation for a post-Brexit trade agreement, while reports added that civil servants have started to draw up legislation for a Brexit deal that would need to pass through parliament at breakneck speed. (Times)

EU officials are said to think a post-Brexit agreement is 95% agreed although there is still anxiety regarding the impact if discussion fail, according to reports citing confidential notes. (Sky) There were separate reports citing comments from an EU diplomat that gaps are only slowly shirking in the core areas and there is growing concern there is not enough time left. (Newswires/BBC//Twitter)

Reports of an emergency "temporary Brexit deal" which could be agreed this week to avoid a no-deal happening in midst of COVID-19, Journalist Keating; if this is true, would be important to caveat that this will not be a 'deal' but would essentially serve as an extension. (Twitter)

EU's Chief Brexit Negotiator Barnier states EU-UK negotiations are to continue today, "Fundamental divergences still remain, but we are continuing to work hard for a deal.". (Twitter)

European Parliament is preparing for an extra plenary session between Christmas and New Year’s Eve in order to approve a potential Brexit trade deal, Politico citing EU Officials; likely on December 28th (Monday); MEP's will be prepared to vote on a potential deal at 'any time'. (Politico)

UK and Canada agreed to a post-Brexit trade deal in which the current EU-Canada Comprehensive and Economic Trade Agreement (CETA) will be extended with UK for a short-term transitional agreement. (Newswires)

China Chamber of Commerce in the UK which represents companies including Huawei, ZTE and Air China warned Britain will lose billions of pounds of investment and thousands of jobs unless it reverses its hostility to China, while it added there could be a consumer backlash against British companies such as Jaguar Land Rover and Burberry, which are heavily reliant on China’s middle-class customers. (Times)

ECB’s Lane stated that current lockdowns will result to a drop in activity although the impact would be less severe than in the Spring, while he reiterated that EU emergency bond purchases will continue. (Les Echos)

EZ Markit Manufacturing Flash PMI (Nov) 53.6 vs. Exp. 53.1 (Prev. 54.8); Services Flash PMI (Nov) 41.3 vs. Exp. 42.5 (Prev. 46.9)

• Composite Flash PMI (Nov) 45.1 vs. Exp. 46.1 (Prev. 50.0)
• German Markit Manufacturing Flash PMI (Nov) 57.9 vs. Exp. 56.5 (Prev. 58.2); Services Flash PMI (Nov) 46.2 vs. Exp. 46.3 (Prev. 49.5); Composite Flash PMI (Nov) 52.0 vs. Exp. 50.1 (Prev. 55.0)

UK Flash Services PMI (Nov) 45.8 vs. Exp. 42.5 (Prev. 51.4); Manufacturing PMI (Nov) 55.2 vs. Exp. 50.5 (Prev. 53.7)

• Composite PMI (Nov) 47.4 vs. Exp. 42.5 (Prev. 52.1)

Fitch affirmed Portugal at BBB; Outlook Stable. (Newswires)

ELECTION UPDATE

US President-elect Biden plans to name longtime adviser Antony Blinken as Secretary of State, while former Hilary Clinton aide Jake Sullivan is likely to be named National Security Adviser, while President-elect Biden’s incoming Chief of Staff Klain said Biden will announce his first picks for the Cabinet on Tuesday. (Newswires)

US President Trump tweeted that "In certain swing states, there were more votes than people who voted, and in big numbers.... Stopping Poll Watchers, voting for unsuspecting people, fake ballots and so much more. Such egregious conduct. We will win!". (Twitter)

US President Trump’s campaign appealed the ruling that was issued by judge over the weekend which denied request to halt Biden’s win in Pennsylvania. (Newswires)

EQUITIES

European equities kicked the week off higher across the board amid tailwinds from the APAC region and amid another positive COVID-19 vaccine update, this time from AstraZeneca, whose vaccine candidate reported an average efficacy of 70% across two dosing regiments. One regiment showed efficacy of 90% (half dose followed by a full dose at least one month apart), whilst the second regiment showed 62% efficacy when given as two full doses at least one month apart. Storing conditions are also favourable as the vaccine can be stored, transported and handled at normal refrigerated conditions (2-8 degrees Celsius/ 36-46 degrees Fahrenheit) for at least six months. By way of comparison, Pfizer/BioNTech's candidate showed a 90% efficacy rate with storage temperatures at -70 degrees Celsius, whilst Moderna's candidate showed efficacy of 94.5% with stable storage at standard fridge temperatures (2-8 degrees Celsius) for 30-days and shipping/long-term storage conditions at standard freezer temperatures of -20 degrees Celsius for 6-months. Since the update however, European cash and equity futures have waned off best levels (Euro Stoxx 50 +0.6%) but ES (+0.6%), NQ(+0.4%) and RTY (+1.0%) hold onto gains. The update resulted in flows into cyclicals as opposed to the rotational/reflationary playbook experienced upon the release of the early data from PFE/BNXT and MRNA. This cyclical play is reflected in European sectors as Oil & Gas, Basic Resources, Banks outpace peers whilst defensive sectors Utilities, Healthcare and Staples lag. Interestingly, AstraZeneca shares trade lower by some 1.5% with some citing the average efficacy being sub-par when compared to PFE/BNTX and MRNA, whilst others note of "buy the rumour, sell the fact" play. Nonetheless, losses in the largest FTSE 100 constituent has capped the index which trades with gains of some 0.3%, whilst losses in Healthcare prompted the SMI (-0.1%) to dip into negative territory. Elsewhere, the Travel & Leisure sectors is buoyed by the vaccine news alongside reports that UK will lift blanket quarantine restrictions on December 15th so families can travel to red list countries for Christmas, while the length of time people will need to self-isolate will be cut to 5 days from 14 days if a UK holidaymaker tests negative 5 days after returning. Thus, IAG (+4%) and easyJet (+5.4%) trade with firm gains, whilst Carnival (+2.8%) shrugs off reports that the US CDC escalated its warning for cruise travel to the highest level, alongside separate reports that Carnival's Holland America Line extended cruise pause to include all departures through March 31 2021.

UK CMA has received a complaint about Google (GOOG) regarding online platforms and digital advertising market study; says it will take the matters seriously and asses whether a formal investigation should be opened. (Newswires)

FX

GBP - The Pound is outperforming across the board amidst heightened hopes that UK and EU negotiators can make further progress via videoconference following reports that a trade deal is just 5% away from being completed, albeit with the remaining unresolved issues said to be the core areas of contention. PM Johnson is supposedly working on significant intervention in an effort overcome differences and to this end is expected to speak to European Commission President von der Leyen to tray and clear the remaining obstacles. Cable has cleared several recent highs in response, including a pseudo double top circa 1.3312-14 on the way through September 3’s 1.3359 peak to expose 1.3400 and the 1.3403 September 2 apex, while Eur/Gbp is back below 0.8900 and eyeing 0.8861 from November 11. For the record, not much response to better than expected flash PMIs as services and composite readings both retreated into contractionary territory.

AUD/NZD/CAD/DXY - The non-US Dollars are all revelling in the upbeat and risk-on market tone assisted by more positive COVID-19 vaccine updates, while the Aussie is also acknowledging improvements in PMIs and the Kiwi a healthy rebound in retail sales. Aud/Usd is back on the 0.7300 handle and Nzd/Usd is hovering around 0.6950, while Usd/Cad has retreated to test 1.3050 against the backdrop of buoyant crude prices in advance of comments from BoC’s Gravelle. Conversely, the Greenback has started the new week under pressure with the index hovering within a 92.343-92.072 range after dipping under the low seen on November 11 (92.129) awaiting the US national activity index, preliminary Markit PMIs and further Fed speeches from Daly and Evans.

EUR - Somewhat mixed Eurozone PMIs have not really impacted the Euro, with perhaps more focus on the preliminary surveys that could show more coronavirus contagion given the resurgence in Spain and Italy. Instead, Eur/Usd is holding firmly above 1.1850 and targeting last week’s best levels clustered between 1.1891-94 for another attempt to reach 1.1900 and the 1.1920 pinnacle posted on November 9, but wary that this may well prompt more verbal intervention from the ECB.

CHF/JPY - The traditional safe-havens are floundering alongside the Buck within tight ranges near 0.9100 and 104.00 respectively, with the former probably surprised to see no evidence of SNB action from weekly Swiss sight deposits and the latter devoid of domestic input due to Japan’s Worker’s Day market holiday.

SCANDI/EM - Somewhat mixed impulses for the Sek and Nok in particular given broad risk appetite and the aforementioned rise in oil, but the Norges Bank cutting daily foreign currency sales to Nok 500 mn from Nok 1.6 bn. Hence, Eur/Sek and Eur/Nok are both meandering within 10.2240-2020 and 10.7135-6410 parameters. Elsewhere, the Try continues to unwind post-CBRT recovery gains, but the Zar is holding up relatively well in spite of SA ratings downgrades from S&P and Fitch.

Fitch downgraded South Africa by one notch to BB-; Outlook Negative and S&P cut South Africa to BB-; Outlook Stable. (Newswires)

FIXED

Bunds, Gilts and US Treasuries have pared some declines as stocks ease off best levels and the latest bout of vaccine and Brexit euphoria subsides, but new session lows have been forged for the 10 year bonds in the interim at 175.36, 134.89 and 138-09 respectively (-17, -31 and -7/32 vs +18, +7 and +1/32+ at the intraday highs). Conversely, the Eurozone periphery is holding above parity and above 151.00/166.00 for BTPs and Bonos respectively, perhaps in anticipation of more support from the ECB via the PEPP and TLTROs. Back to the mainstream, US Markit PMIs are scheduled following mixed EU prints and more Central Bank speakers either side of 2 and 5 year note auctions that have been brought forward from usual slots due to Thanksgiving at the end of the week.

COMMODITIES

WTI and Brent Jan futures continue on their upwards trajectory on vaccine euphoria coupled by expectations that OPEC+ will continue current cuts through Q1 2021 irrespective of the recent vaccine updates, which, as things stand provide a rosier price outlook in the medium-term as reflected by the six-month Brent contango being at the shallowest since mid-June. Aside from that, news-flow has been somewhat light throughout early European hours. Overnight there were reports that Yemeni Houthis carried out a missile attack on a Saudi Aramco distribution station, although sources via Energyintel suggested there was no damage to any facilities or personnel. Separately, Abu Dhabi's Supreme Petroleum Council announced new discoveries of 22bln bbls of recoverable unconventional oil resources, although this is unlikely to impact near-term supply to the market as UAE is still constrained by OPEC+ quotas. WTI Jan now back under USD 43bbl (vs. low 42.29/bbl), whilst its Brent counterpart briefly eclipsed USD 46/bbl (vs. low 44.89/bbl) before yielding the handle. Spot gold and silver move in-line with the risk sentiment as the precious metals post mild losses with the former around USD 1870/oz (vs. high 1876/oz) whilst spot silver dipped below USD 24/oz (vs. high ~24.35/oz), whilst copper prices fail to coattail on the risk appetite as a union at the Candelaria mine accepted a wage offer, in turn bringing an end to a month-long strike, albeit "a worker’s union at Antofagasta’s Centinela copper mine is set to reject management’s latest contract offer next week, which could lead to strike action", according to ING.

Abu Dhabi's Supreme Petroleum Council announced new discoveries of 22bln bbls of recoverable unconventional oil resources, while it approved capex of USD 122bln for 2021-2025, according to an ArgusMedia correspondent. (Twitter)

India PM Modi said that the country is set to double oil refining capacity in 5 years which would be earlier than expected. (Newswires)