• European equity indices are firmer across the board, Euro Stoxx 50 +1.20%, with sectors exhibiting cyclical outperformance; echoed in US futures with RTY +1.6% outperforming ES +0.8% & NQ +0.4%
• Russia's Sputnik V COVID-19 vaccine efficacy at 91.4% on day 28 and over 95% on day 42
• German Ifo business climate & current conditions beat November expectations but all measures fell from prior; Ifo notes that vaccine prospects are yet to be reflected in business expectations
• FX features a downbeat DXY but off lows and the range remains above yesterday's trough with peers broadly firmer and antipodeans outperforming post data and central bank speak
• Looking ahead, highlights include US Consumer Confidence, Fed's Bullard, Williams, ECB's Schnabel, Lagarde, Lane, supply from the US

CORONAVIRUS UPDATE

LA County reported 6,124 new COVID-19 cases which is a record one-day increase of infections. (Newswires)

US HHS Operation Warp Speed chief adviser Slaoui that more analysis is needed on the AstraZeneca vaccine efficacy. (Newswires)

England is to introduce new COVID-19 testing scheme for passengers arriving from high-risk countries that could reduce self-isolation by a week or more and passengers will not need to self isolate if they test negative. (Newswires)

German Lab Association ALM says that 1.25mln COVID-19 PCR tests were conducted in the prior week with a record 9.6% positivity rate. (Newswires)

Russia's Sputnik V COVID-19 vaccine efficacy at 91.4% on day 28 and over 95% on day 42, according to the Russian Sovereign Wealth Fund and Gamaleya National Center; production capacity to next year product over 1bln vaccines (both inside and outside the country), enough for over 500mln people. No adverse side effects during trials and can be stored at +2 to +8 degees Celcius, with customers who recently submitted to receive the first batch starting March 2021, according to the Russian Sovereign Wealth Fund. (Newswires)

Russian Deputy PM says the domestic COVID-19 situation is getting worse. (Newswires)

ASIA

Asian equity markets were mostly positive as the region digested several bullish factors including ongoing vaccine hopes, strong US PMI data and reports that President-elect Biden is to pick former Fed Chair Yellen for Treasury Secretary. In addition, the General Services Administration informed Biden’s team that the transition can formally begin and President Trump’s recommendation for the GSA and his team to adhere to initial protocols, despite his continued legal challenge to the election, also stoked risk appetite. ASX 200 (+1.3%) was led higher by outperformance in energy and its largest-weighted financials sector, with sentiment also helped by preliminary trade data which mostly showed an improvement, as well as the reduced restrictions with Queensland set to reopen its border with New South Wales from December 1st. Nikkei 225 (+2.5%) surged at the open to print its best levels since May 1991 as it played catch up from yesterday’s holiday closure and with exporters cheering a weaker currency, while KOSPI (+0.5%) notched a fresh record high after stronger Consumer Confidence added to the recent encouraging trade data. Hang Seng (+0.4%) and Shanghai Comp. (-0.3%) were less decisive after reports the White House was mulling new actions against China and a new alliance to retaliate against Chinese economic coercion, with the mood in Hong Kong also hindered by the announcement to further tighten social distancing rules and close more indoor entertainment venues. Finally, 10yr JGBs were lower with prices subdued by the outperformance in Japanese stocks and after the bear steepening in USTs, although the downside was cushioned by the BoJ’s presence in the market for over JPY 1.3tln of JGBs with 1yr-10yr maturities.

• PBoC injected CNY 70bln via 7-day reverse repos at rate of 2.20% for a net daily injection of CNY 20bln. (Newswires)
• PBoC set USD/CNY mid-point at 6.5809 vs. Exp. 6.5800 (Prev. 6.5719)

UK is reportedly considering whether to remove its judges from Hong Kong's highest court following Beijing's crackdown. (Newswires)

China's Foreign Minister Wang told EU foreign policy chief Borrell that China is ready to maintain close communication with EU on issues including stepping up efforts to push forward and conclude the bilateral investment treaty. (Global Times)

US

Fed's Evans (non-voter) said he would be surprised if Fed hikes rates before 2023 even if recovery is stronger than expected and that the Fed should not try to fine-tune inflation overshoot. (Newswires)

UK/EU

UK lawmakers are reportedly considering a ban on the installation of 5G equipment from Huawei as early as 2021 in an attempt to appeal to lawmakers who wish for tighter restrictions on the Co. (Newswires)

ECB's Rehn said current financing conditions must be maintained for as long as necessary and may need to consider recalibration of TLTROs, while he added PEPP and bank loans are the top tools for stimulus. (Newswires)

German Ifo Business Climate New (Nov) 90.7 vs. Exp. 90.1 (Prev. 92.7, Rev. 92.5)

• Current Conditions New (Nov) 90.0 vs. Exp. 87.0 (Prev. 90.3, Rev. 90.4)
• Expectations New (Nov) 91.5 vs. Exp. 93.5 (Prev. 95.0, Rev. 94.7)
• Vaccine prospects are yet to be reflected in business expectations; industry has registered the downward trend in the economy but is not so affected by the lockdown
• Expect Q4 GDP to be slightly negative

German GDP Detailed QQ SA* (Q3) 8.5% vs. Exp. 8.2% (Prev. 8.2%); YY NSA* (Q3) -4.0% vs. Exp. -4.1% (Prev. -4.1%)

ELECTION UPDATE

US General Services Administration informed President-elect Biden that the transition can formally begin, while Biden's transition team said he will begin meeting with Federal officials on the pandemic response and national security issues. (Newswires/CNN)

US President Trump tweeted that the case strongly continues and believes he will prevail, but in the best interest of the country, he recommends the GSA do what needs to be done with regards to initial protocols and instructed his team to do the same. Furthermore, President Trump later suggested the GSA being allowed to do preliminarily work has nothing to do with continuing various cases on the corrupt election, while he added we are moving full speed ahead and will never concede to fake ballots and Dominion. (Twitter)

Michigan Board of State Canvassers certified the results of November 3rd election for President-elect Biden, while the Trump campaign's legal team stated that vote certification is simply a procedural step and it will continue its legal battle. (Newswires)

EQUITIES

Major European bourses hold onto gains seen at the cash open (Euro Stoxx 50 +1.1%) as the mostly positive sentiment from the APAC region reverberated into the region, whilst Chinese markets lagged on idiosyncratic factors. Price action thus far has been somewhat contained across European cash/futures alongside US futures amid a lack of fresh catalysts for the complex in this holiday-shortened week. Amid quietened trade, it's worth pondering over potential future bullish/bearish catalysts that could materialise in the coming weeks/months, with upside risks including accelerated vaccine progress, larger fiscal support, fixed income outflows into equities whilst some desks also suggest US investors returning to European stocks amid more favourable EPS growth. Conversely, potential downside catalysts include renewed/re-imposition of lockdown measures, an adverse Brexit outcome and a snag in fiscal responses with eyes on the EU budget/recovery fund developments. Back to Europe, broad-based gains are seen across the most majors, whilst CAC 40 (+1.2%) narrowly outperforms as Total (+4.8%) is propelled by gains in crude prices alongside news that the giant is mulling a voluntary redundancy plan in France whilst also halting operations in its loss-making Donges refinery. Gains in Total also support the broader Oil & Gas sector which stands as the outperformer in the region for a second straight session this week. Delving deeper into sectors, the cyclical vs defensives bias is again experienced as Autos, Banks, Travel & Leisure, and Telecoms are some of the top performers, whilst Healthcare, Staples and Utilities reside as straddlers. The Travel & Leisure sectors sees renewed tailwinds on vaccine optimism alongside reports that England is to introduce new COVID-19 testing scheme for passengers arriving from high-risk countries that could reduce self-isolation by a week or more and passengers will not need to self isolate if they test negative. As such, Tui (+11%), Air France-KLM (+10.5%), Carnival (+10.2%), easyJet (+5.7%) and IAG (+5.0%) post firms gains. Elsewhere, despite the broader losses in Healthcare, Novartis (+0.4%) holds onto mild gains having had seen a firm open as the group announced the initiation of share buybacks of up to USD 2.5bln whilst emphasising confidence in future operations.

FX

NZD/AUD/DXY - The Kiwi is cresting 0.7000 vs its US counterpart in wake of considerably better than forecast NZ deficit and debt outturns for the 2019/20 fiscal year and assertions from Finance Minister Robertson that house prices may be included in the RBNZ policy remit pending consultations. However, Aud/Nzd has rebounded from 1.0475 overnight lows as the Aussie corrects higher and Aud/Usd breaches 0.7350 on the way to circa 0.7365 amidst stops and technical buying after mixed trade data and relatively innocuous comments from RBA Deputy Governor Debelle. Conversely, and only in part due to the exertions of the Antipodeans, Monday’s recovery momentum has all but reversed for the Buck as the index recoils further through 92.500 to 92.138. To recap, the DXY only just survived a test of 92.000 yesterday before rebounding sharply following robust Markit PMIs that appeared to spark a stop-fuelled short squeeze and perhaps some early month end positioning given Thanksgiving at the end of this week and an early close on Thursday when the spot date for currency markets if November 30.

CAD/EUR/GBP - All taking advantage of the Greenback’s fall from grace, with the Loonie back within striking distance of 1.3000 with assistance from strong oil prices rather than remarks from BoC Assistant Governor Gravelle who underlined a willingness to restart QE and reopen liquidity facilities if widespread stress in the financial system reappears. Similarly, the Euro has regrouped to reclaim 1.1850+ status irrespective of a somewhat divergent German Ifo survey against expectations and the Pound is eyeing 1.3400 again on the back of Brexit deal hopes underpinned by reports that the 2 sides could be on the cusp of a trade agreement.

JPY/CHF - Not quite so eager or able to recoup declines vs the Dollar on overall risk considerations, as the Yen hovers below 104.00 and Franc under 0.9100 in the run up to Swiss investor sentiment on Wednesday.

EM/PM - The Lira has wiped out even more of its post-CBRT gains to revisit sub-8.0000 lows with little help from a deterioration in Turkish manufacturing confidence or the Banking Watchdog preannouncing that it will terminate calculating assert requirement ratios for banks from year end. Elsewhere, Gold is also struggling to arrest its relapse towards Usd 1800/oz having suffered stop losses on a break beneath Usd 1850 and several tech levels. However, crude and commodity currencies are doing well to the extent that the Rouble and Rand have not been adversely impacted by the worsening COVID-19 situation of SARB noting that SA’s finances are a source of concern.

Notable FX Expiry, NY Cut:

• USD/JPY: 105.00-10 (1.1BLN)

New Zealand Finance Minister Robertson said they are seeking advice on whether to include stability in house prices as a factor in RBNZ's remit while formulating monetary policy and wrote to Governor Orr seeking advice, while he added that he expects to receive advice by year-end and was not proposing any changes to the RBNZ mandate or independence. (Newswires)

RBNZ Governor Orr said the MPC already gives consideration to asset prices and that monetary and financial policies alone cannot solve property issues, while he added that long term structural issues are at play in the housing market. Governor Orr also stated he welcomes the opportunity to contribute to the affordability of housing and will consider the suggestion of how MPC could take into account house prices, as well as respond to the Finance Minister with considered feedback in due course. (Newswires)

New Zealand FY19/20 operating deficit before gains and losses at NZD 23.1bln vs. budget forecast of deficit at NZD 28.3bln and it sees net debt of GDP at 27% vs. Budget forecast 30.2%. (Newswires)

RBA Deputy Governor Debelle said policy action has lowered borrowing costs and the bond purchase program means AUD is lower than it would otherwise would be, while he added they must be careful not to remove stimulus too early and reiterated that board does not expect to increase the Cash Rate for at least 3 years. Furthermore, Debelle also stated he does not see risk of inflation rising too high in next 3 years and is not convinced negative rates would work. (Newswires)

• Australian Preliminary Trade Balance (AUD)(Oct) AUD 4.8bln (Prev. 5.6B). (Newswires)
• Australian Preliminary Exports (Oct) M/M 6% (Prev. 4%)
• Australian Preliminary Imports (Oct) M/M 8% (Prev. -6%)

Turkish Banking Watchdog says they are to stop calculating banks required asset ratios, decision will commence from end-2020. (Newswires)

FIXED

Gilts are holding up relatively well given a rather lacklustre 7 year auction, more DMO supply to come and the UK Chancellor’s Spending Review tomorrow, with the 10 year benchmark just below Monday’s 134.95 Liffe close within a 134.77-135.02 range, while Bunds are nearer the midpoint of 175.20-44 parameters compared to their 175.41 prior Eurex settlement level. Elsewhere, the 10 year T-note is flat between a 138-12/138-06+ overnight band ahead of US consumer confidence, another raft of Fed speakers and more issuance before the end of a truncated final full week of the month in the form of Usd 56 bn 7 year Treasuries and Usd 24 bn 2 year FRNs.

EU has received over EUR 90bln in demand for 15yr SURE bond, to raise EUR 8.5bln at MS -5bps, lead manager. (Newswires)

COMMODITIES

WTI and Brent front-month futures continue on the upward trajectory seen overnight as the key themes for the complex (i.e. expectations for OPEC cut extension alongside vaccine optimism) continue to feed into prices, with WTI Jan back above USD 43.50/bbl (vs. low USD 42.82/bbl) and Brent around USD 46.50/bbl (vs. low 45.89/bbl). The widening of the WTI-Brent arb reflects expectations surrounding the OPEC/OPEC+ confab at month-end, although it is worth noting that a number of technical meetings will occur prior to this, including the OPEC economic board to meet tomorrow and Thursday, whilst OPEC/Non-OPEC experts will convene on Friday, according to EnergyIntel. On that note, it's also worth flagging some scepticism across participants that the recent crude price rally could translate to several oil producers being reluctant to roll over cuts, albeit this in itself could increase the risk of another price war. Elsewhere, precious metals continue to trend lower despite a softer Dollar, but more-so in lockstep with the constructive risk appetite, with spot gold inching closer towards USD 1800/oz (vs. high 1839/oz) to the downside ahead of its 200 DMA around 1796/oz, whilst spot silver continues to lose ground below USD 23.50/oz (vs. high 23.63/oz). Finally, copper prices are bolstered by Dollar weakness and risk sentiment.

Reports suggest that an explosion has hit a pipeline in Shell (RDSA LN) and ENI (ENI IM) oilfields in Nigeria's Niger Delta, according to a community leader. (Newswires)