• European indices are softer with cyclicals marginally underperforming thus far, Euro Stoxx 50 -0.3%; a similar theme is evident in US futures with the RTY -0.4% underperforming the NQ +0.2% thus far
• FX has seen the USD pick-up throughout the morning as equity sentiment continues to slip with major peers mixed/subdued against the USD itself
• China is likely to approve a COVID-19 vaccine by year-end to meet the need of epidemic-stricken countries, Global Times citing experts
• Deere beat on top & bottom lines while Tesla is to recall 9k vehicles
• Looking ahead, highlights include US Durable Goods, GDP (2nd), Core PCE Prelim, IJC, University of Michigan Survey, ECB Financial Stability Review, UK Chancellor Sunak November Update, FOMC Minutes

CORONAVIRUS UPDATE

China's Global Times stated China is likely to approve a COVID-19 vaccine by year-end to meet the need of epidemic-stricken countries, citing experts. It was separately reported that Sinopharm (1099 HK) submitted COVID-19 vaccine application to National Medical Products Administration. (Newswires)

German Chancellor Merkel said she wants further restrictions for the Christmas shopping season and tougher restrictions than what the German states are calling for. (Newswires)

Canada's Alberta province Premier Kenney declared a public health emergency and announced to limit retail outlets to 25% of in-store capacity. (Newswires)

BioNTech (BNTX) and Fosun Pharma have commenced their Phase II clinical trial of lead MRNA COVID-19 vaccine candidate, BNT162B2. (Newswires)

ASIA

Most major Asian equity markets traded positively as the region took impetus from the record-setting session in US where the DJIA broke above 30k for the first time ever and S&P 500 notched a record close after sentiment was bolstered by the start of the transition process and amid a resumption of the rotation into value. ASX 200 (+0.6%) was higher in which energy and financials spearheaded the advances in cyclicals and with sentiment also underpinned by further easing of restrictions after Australia registered another ‘donut day’ of zero new infections and deaths, while Nikkei 225 (+0.5%) continued to outperform in early trade as exporters benefitted from the recent currency weakness and with Kawasaki Heavy among the notable gainers after reports it is to sell its nuclear business to Atox. Hang Seng (+0.3%) and Shanghai Comp. (-1.2%) were mixed with an initial upbeat mood after recent comments from Premier Li that he sees GDP returning to a reasonable range next year and amid anticipation of supportive measures from Hong Kong Chief Executive Carrie Lam’s policy address where she noted support for expanding eligible securities for the connect program and announced to relax investment limits on REITs, as well as relief spending for the tourism sector. However, the mainland later failed to sustain the gains amid lingering tensions with US and concerns regarding recent defaults and crackdown by authorities. Finally, 10yr JGBs were flat following a similar humdrum picture in T-notes as the rally in stocks sapped demand for paper, while mixed results at the 40yr JGB auction also kept price action contained.

• PBoC injected CNY 120bln via 7-day reverse repos at a rate of 2.20% for a net daily injection of CNY 20bln. (Newswires)
• PBoC set USD/CNY mid-point at 6.5749 vs. Exp. 6.5742 (Prev. 6.5809)

Hong Kong Chief Executive Carrie Lam said the aim of policy address is to restore confidence and that urgent priorities are to restore constitutional order and political system from chaos, while she added foreign governments and legislatures have intensified interference in HK affairs which are squarely China's internal affairs. Lam also stated that the government supports expansion of eligible securities under mutual access with eligible biotech companies will be added to the stock connect with China and the central government supports gradual resumption of travel between Hong Kong and Guangdong without need to quarantine. Furthermore, she announced to relax investment limits on REITs, will remove double stamp duty for non-residential property and announced that HKD 600mln is budgeted to launch extra relief measures for the tourism industry. (Newswires)

Japanese government maintains its overall economic view in November from the assessment made in October; economy is showing signs of picking up but remains in a severe condition due to COVID-19.Capex view has been lowered for the 5th time this year, while the output assessment has been upgraded.

US

Congressional negotiators reportedly reach an agreement on spending levels for the 2021 fiscal year spending bills, according to a House Democratic aide. (Twitter)

ELECTION UPDATE

US President Trump questioned why doesn't the Georgia Secretary of State allow us to look at signatures on envelopes for verification and Trump also suggested they will find tens of thousands of fraudulent and illegal votes. (Twitter)

White House Chief of Staff Meadows tweeted that a judge in Nevada allowed state Republicans to present findings of widespread fraud in December 3rd hearing, while he added that Americans will now hear evidence from those who saw firsthand what happened. (Twitter)

UK/EU

UK Chancellor Sunak is to unveil a GBP 4.3bln "New Deal-style package to get one million people back into work at the upcoming spending review. (Telegraph)

On Brexit, US President-elect Biden said we do not want a guarded border in Ireland. (Newswires)

EU Commission President von der Leyen says she cannot say if there will be a deal; will do all in our power to reach a deal - large differences with the UK remain; next few days will be decisive, prepared for a no-deal scenario. (Newswires)

ECB's Mersch reportedly signaled lifting the ban on banking dividends next year in which he suggested that the regulator may not have the authority to extend the restrictions. Separately, expects the ECB to extend the timeframe of PEPP and TLTROs but has pushed back on the idea of purchasing 'fallen angel' bonds. (FT)

GEOPOLITICAL

Israel has reportedly conducted strikes on Damascus suburbs, according to Syria state news. (Newswires)

EQUITIES

Major bourses in Europe now exhbit a mildly mixed performance (Euro Stoxx 50 -0.4%) as the modest gains seen at the cash open waned with the region mimicking a similar performance seen in Asia-Pac. European cash and equity futures started to erase gains shortly after the cash open whilst US equity futures initially remained relatively flat/stable (ES -0.2%, NQ +0.3%, RTY -0.3%) before edging lower despite a lack of fresh fundamental catalysts as newsflow simmers down ahead of US Thanksgiving holiday, although a plethora of Tier 1 data-points are due from the States later in the session. It's also worth keeping in mind month-end factors, with JPM last week pointing to mutual funds having to offload some USD 160bln in equities for rebalancing. Back to Europe, sectors initially posted a pro-cyclical bias but have since reversed with Healthcare, Utilities and Staples now marginally outpacing - whilst the performance in the former also lends support to Switzerland's pharma-heavy SMI (+0.2%) which outperforms the region. Furthermore, Oil & Gas and Banks slipped from their top spots an reside towards the bottom of the bunch. Eurozone banks opened with gains amid comments from ECB's Mersch who signalled a potential lifting of the dividend ban next year suggesting that the regulator may not have the authority to extend these restrictions. However, this optimism subsided alongside the ECB's Financial Stability review which highlighted increased medium-term vulnerabilities for corporates and banks, whilst bank profitability is expected to remain weak. Elsewhere, the Travel & Leisure sectors remains buoyed on continuing vaccine optimism and recent travel support measures. In terms of commentary, Barclays suggests European stocks should reach new highs next year as it set a Stoxx 600 target of 440 (currently ~391). Furthermore, the bank is underweight UK vs. Europe and does not expect a reversal in UK's performance whilst signalling a preference for UK domestic stocks. The analysts also see some 45% EPS growth in Europe citing a gradual return to normalcy, efficient vaccines, fiscal and monetary support and favourable financial conditions.

Deere & Co (DE) Q3 20 (USD): EPS 2.39 (exp. 1.41), Revenue 8.66bln (exp. 7.68bln).

Tesla (TSLA) has filed a recall for 9,136 vehicles, according to the NHTSA

FX

EUR/DXY/GBP - The single currency is outperforming and extended gains through 1.1900 vs the Greenback to set a marginal new high for November around 1.1930, but in truth the Euro’s appreciation may have been cross-driven as Eur/Gbp is back above 0.8900 again and market contacts noted RHS interest in wake of comments from European Commission President von der Leyen that seemed less optimistic on the prospect of a Brexit deal. Indeed, Cable remains capped ahead of 1.3400 even though the index dipped below support protecting 92.000 to extend declines within fresh and lower 92.204-91.941 parameters in the run up to a deluge of US data due to Thanksgiving. Back to Eur/Usd, some subsequent loss of momentum may be attributed in part to Germany’s Ifo reporting a sharp drop in industry export expectations to sub-zero, not to mention the likelihood of verbal intervention from the ECB, while for the Pound Chancellor Sunak’s spending review looms after PMQs (primer posted on the Headline Feed at 8.15GMT) with the PM pre-empting bleak OBR projections due to COVID-19 contagion.

AUD/NZD - It’s not quite all change down under, but the Aussie has faded from the high 0.7300 zone and 1.0550+ against the Buck and Kiwi respectively following another claim by China’s Foreign Ministry that many imports of Australian coal do not meet environmental requirements plus weak Q3 construction data. Meanwhile, Nzd/Usd is holding quite firmly above 0.6950 after a relatively upbeat RBNZ FSR overnight and irrespective of NIRP nuances from Governor Orr who expressed a desire to be operationally ready for negative rates should the need arise to go down that route.

JPY/CAD/CHF - The Yen remains tightly bound around 104.50 and Usd/Jpy should derive support from decent option expiry interest is risk sentiment sours appreciably given 1 bn residing at the 104.00 strike. Elsewhere, the Loonie has lost some impetus having probed beyond 1.3000 at one stage, albeit still supported by oil prices as WTI and Brent extend towards Usd 46/brl and Usd 49 respectively, while the Franc is still keeping tabs on 0.9100 having straddled the round number for several sessions, and will have noted a pronounced improvement in Swiss investor sentiment.

SCANDI/EM - Some mild outperformance in the Nok again, as crude continues to climb and Norwegian unemployment dipped below consensus, according to the Labour Force survey, while the Sek treads a bit more carefully into Thursday’s Riksbank policy meeting (full preview of the event available via the Research Suite and Headline Feed at 8.38GMT). Sticking with the Central bank theme, dovish commentary from the CBR could be undermining the Rub as the Governor retains scope for easing, but firmer than forecast SA inflation data is underpinning the Zar and the Try has pared some losses as Turkish President Erdogan says he has talked to other regional heads, including his Russian peer Putin, about expanding efforts to maintain the Nagorno-Karabakh ceasefire.

Notable FX Expiries, NY Cut:

• AUD/USD: 0.7390-0.7400 (750M)
• USD/JPY: 103.50 (320M), 104.00 (1BLN), 104.60 (376M)

RBNZ Financial Stability Review stated the economy is relatively resilient and that unemployment is lower than expected to date, while it added that the financial system has been insulated from significant stress so far. FSR also noted that high leverage in housing poses risks if house prices fall sharply or unemployment rises sharply and that the RBNZ intends to resume loan-to-value restrictions. (Newswires)

RBNZ Governor Orr said monetary and fiscal support limited the shock to households and low interest rates ensured NZD exchange rate remains competitive, while he added that stimulus will continue and the economy performed as well as possible. Furthermore, Governor Orr stated the RBNZ is committed to meet our remit and want to be operationally ready to implement negative OCR should we need to. (Newswires)

Australian Construction Work Done (Q3) -2.6% vs. Exp. -2.0% (Prev. -0.7%). (Newswires)

Russian Central Bank Governor Nabiullina says the bank still sees scope for a rate cut; if we see risks to financial stability, we will intervene in the market. (Newswires)

FIXED

Debt futures are rebounding a bit further from early lows and the latest leg-up appears more in keeping with traditional asset market correlations as stocks slip a tad deeper into negative territory in what could conceivably be the start of rebalancing for next Monday. However, Bunds, Gilts and** USTs** are not getting too carried away at this stage, as recovery peaks fall short of recent highs, at 175.45, 135.15 and 138-11+ for the 10 year T-note respectively (though still 49 ticks, 43 ticks and 8/32 off worst levels). Ahead, a jam-packed pm docket as US data is front-loaded before the start of the long Thanksgiving holiday weekend, with durable goods and IJC likely to be the highlights.

COMMODITIES

WTI and Brent futures eke mild gains but keep their composure in spite of stocks ebbing lower as the complex fixates its sight on a number of technical/preparatory meetings in the run-up to the OPEC/OPEC+ meeting next week (thus sources cannot be dismissed), whilst the vaccine optimism continues to underpin prices. WTI Jan holds onto its USD +45/bbl status (vs. low USD 44.73/bbl) whilst Brent Feb meanders just above USD 48/bbl (vs. low 47.64/bbl). Elsewhere, spot gold and silver move in tandem with the Buck amid a quiet trade with the former still north of 1800/oz having had tested the level overnight, whilst spot silver failed to sustain a break above 23.50/oz after finding support ~23.00/oz in APAC hours. Finally, LME copper is subdued amid the pullback in stocks whilst also taking cue from a similar performance to Shanghai.

US Private Energy Inventories (bbls): Crude +3.8mln (exp. +0.1mln). (Newswires)