• Post-Fed minutes, some kind of action seems likely in December; what exact action will be taken remains to be seen, given the minutes had something for everyone
• A non-committal tone was evident for most of Asia-Pac trade following the indecisive lead from the US where stocks were rangebound heading into the Thanksgiving holiday
• In FX markets, the DXY was lacklustre beneath 92.00, EUR/USD held 1.19 status and GBP/USD eyed 1.34 to the upside
• The EU is reportedly weighing holding extra plenary sessions on December 22-23rd or December 27-28th to debate and vote on an EU-UK deal if one materialises, according to FT's Brunsden
• Looking ahead, highlights include the Riksbank policy announcement, ECB minutes, ECB's Lane & Schnabel, US Thanksgiving Holiday
• The desk will operate a normal service on Thursday 26th November until 18:00GMT/13:00CST, upon which the desk will close and then re-open later at 22:00GMT/17:00CST for the beginning of the Asia-Pacific session given the US market closures

FOMC MINUTES

FOMC Minutes stated that some market participants expected the Committee to eventually lengthen the weighted average maturity of the Federal Reserve's purchases of Treasury securities and participants noted that the Committee could provide more accommodation, if appropriate by increasing the pace of purchases or by shifting its Treasury purchases to those with a longer maturity without increasing the size of its purchases. Alternatively, the Committee could provide more accommodation, if appropriate, by conducting purchases of the same pace and composition over a longer horizon.

Minutes stated that several participants noted the possibility that there may be limits to the amount of additional accommodation that could be provided through increases in the Federal Reserve's asset holdings in light of the low level of longer-term yields, and they expressed concerns that a significant expansion in asset holdings could have unintended consequences. Minutes also noted that while participants judged that immediate adjustments to the pace and composition of asset purchases were not necessary and they recognized that circumstances could shift to warrant such adjustments. Accordingly, participants saw the ongoing careful consideration of potential next steps for enhancing the Committee's guidance for its asset purchases as appropriate.

Furthermore, a few participants indicated that asset purchases could also help guard against undesirable upward pressure on longer-term rates that could arise, for example, from higher-than-expected Treasury debt issuance and most participants judged that the Committee should update asset purchase guidance at some point and implement qualitative outcome-based guidance that links the horizon over which the Committee anticipates it would be conducting asset purchases to economic conditions. (Newswires)

CORONAVIRUS UPDATE

US COVID-19 cases +165,282 (prev. +157,531) and deaths +1,989 (prev. +1,058). AFP later tweeted there were more than 2,000 US COVID-19 deaths in 24 hours which is a 6-month high, while a major newswire tally stated US cases rose by at least 178,286 to a total of 12.77mln and deaths rose by at least 2,292 to a total of 262.1k. New York cases +6,265 (prev. 4,881); deaths +41 (prev. +47); positivity rate 3.62% (prev. 2.96%); hospitalisations 2,982 (prev. 2,856). (Newswires)

UK COVID-19 cases +18,213 (prev. +11,299) and deaths +696 (prev. +608). (Newswires) Separately, Whitehall sources have told The Telegraph that London would be in Tier 2 after lockdown, despite signs that infection rates were starting to fall. (Telegraph)

German Chancellor Merkel said Germany will extend November measures through 20th December and will continue afterwards if infection targets are not achieved, while Germany's Hesse state Premier also commented the government and states agree to extend COVID restriction measures and tighten them in some areas. (Newswires)

ASIA

A non-committal tone was evident for most of Asia-Pac trade following the indecisive lead from the US where stocks were rangebound heading into the Thanksgiving holiday and after a deluge of mixed data releases. ASX 200 (-0.7%) was led lower by an unwinding of yesterday’s outperformance in cyclicals and with sentiment clouded by frictions with Australia’s largest trading partner after China alleged there were environmental quality issues concerning Australian coal in which AUD 700mln worth is stuck on ships being delayed from entering and unloading at Chinese ports. Nikkei 225 (+0.9%) shook off the initial caution to outperform its regional peers on supportive measures with the Japanese government to extend its employment subsidy program until end-February and the virus loan application period to end-March, while KOSPI (+0.6%) was kept afloat after the BoK maintained its Base Rate at 0.50% as expected and upgraded its GDP growth forecasts for 2020 and 2021 as it anticipates an export-driven recovery. Hang Seng (+0.1%) and Shanghai Comp. (+0.2%) lacked firm direction with the mainland tentative amid ongoing trade uncertainty after the Trump administration granted ByteDance a new 7-day extension of the divestiture order directing it to sell to TikTok by December 4th, while the Peterson Institute for International Economics also noted that China total purchases of US goods during the first 10 months of the year, were less than half of the annual commitment under the Phase 1 deal. Finally, 10yr JGBs languished with demand subdued amid gains in Japanese stocks and after the uneventful trade seen in USTs heading into Thanksgiving, although the downside was cushioned amid the BoJ presence in the market for nearly JPY 1.1tln of JGBs.

• PBoC injected CNY 80bln via 7-day reverse repos at a rate of 2.20% for a net daily injection of CNY 10bln. (Newswires)
• PBoC set USD/CNY mid-point at 6.5780 vs. Exp. 6.5759 (Prev. 6.5749)

US President Trump's administration granted ByteDance a new seven-day extension of divestiture order, directing it to sell TikTok by December 4th, according to a court filing. (Newswires)

Peterson Institute for International Economics stated that China purchases of US goods was less than half of its annual commitment under the Phase 1 deal after the first 10 months of the year. (Newswires)

Bank of Korea maintained its Base Rate at 0.50% as expected via a unanimous decision. BoK stated that South Korea's recovery is to be led by exports but noted uncertainties to the growth path are high, while it also stated that economic growth may be better than seen before and revised its 2020 GDP growth to -1.1% vs. Prev. forecast of -1.3% and 2021 GDP growth forecast to 3.0% vs. Prev. 2.8%. Furthermore, BoK Governor Lee said recent gains in KRW were bigger than in other major currencies with herd-like behaviour contributing to volatilities and they will act to stabilize FX if needed. (Newswires)

UK/EU

UK October auto manufacturing fell 18.2% Y/Y to 110.2k units and October YTD auto manufacturing fell 33.8% Y/Y to 743.0k units, according to the Society of Motor Manufacturers and Traders. (Newswires)

The EU is reportedly weighing holding extra plenary sessions on December 22-23rd or December 27-28th to debate and vote on an EU-UK deal if one materialises, according to FT's Brunsden. (FT)

Italy PM adviser Fraccaro called on the ECB to consider cancelling public debt and should contemplate rolling over bonds forever. (Newswires)

FX

In FX markets, the DXY was lacklustre beneath the 92.00 level after a slew of mixed data releases failed to plug the recent losses in the greenback. The FOMC Minutes also didn’t result in any major fireworks but reinforced expectations for December action as participants noted the Committee could provide more accommodation, if appropriate, by increasing the pace of purchases or shifting its Treasury purchases to longer maturities, or by conducting purchases of the same pace and composition over a longer horizon. The greenback’s major counterparts were rangebound overnight with EUR/USD holding onto the 1.1900 handle while GBP/USD eyes a test of the 1.3400 level to the upside despite the recent Brexit-related headlines leaning towards a pessimistic tone in which EU sources suggested Brexit talks are not going well and EU Chief Negotiator Barnier noted that European negotiators have little reason to make the trip to London this weekend if nothing happens on the most problematic points. Elsewhere, USD/JPY and JPY-crosses were contained amid the indecisive risk tone across the region and antipodeans conformed to the humdrum picture following in line trade data from New Zealand and mixed Private Capex data from Australia in which the headline showed a wider than expected contraction but the yearly Capex Estimate was upgraded.

• Australian Capital Expenditure (Q3)Q/Q -3.0% vs. Exp. -1.5% (Prev. -5.9%). (Newswires)
• Australian Private Capital Expenditure 2020-2021 (AUD)(Est. 4) 105.0B (Prev. 98.6B)
• New Zealand Trade Balance (NZD)(Oct) M/M -0.5B vs. Exp. -0.5B (Prev. -1.0B)
• New Zealand Exports (NZD)(Oct) 4.8B vs. Exp. 4.8B (Prev. 4.0B)
• New Zealand Imports (NZD)(Oct) 5.3B vs. Exp. 5.3B (Prev. 5.0B)

COMMODITIES

WTI and Brent crude crude futures met resistance at the USD 49.00/bbl and USD 46/bbl respectively. The relevant data releases for the energy complex were mixed with a surprise draw in EIA crude stockpiles and increase in Baker Hughes rig numbers, with focus shifting to next week's OPEC/OPEC+ meetings in which producers are said to still be leaning towards a rollover of current output curbs. Gold prices failed to meaningfully benefit from the recent USD weakness with the precious metal remaining near USD 1800/oz and its worst levels in over 4 months while copper outperformed as it extends on this month's uptrend and break above USD 3.30/lb.

Baker Hughes US rig count: Oil +10 to 241, Natgas +1 to 77; total rigs +10 to 320 (miscellaneous -1). (Newswires)

US

It was a dull day of Treasuries trading, with conditions thinning out ahead of the Thanksgiving Holiday. The T-Note future was patrolling a six tick range up to settlement, respecting recent ranges. There was a heavy slate of US data, much of which was merely window dressing than anything that can directly change the market narrative. The few participants that were sticking around were focussed on the release of the Fed's November meeting minutes, which reinforce expectations of Fed action in December - what form that takes remains to be seen, and as Fed's Williams alluded to earlier in the week, will hinge on how financial conditions evolve between now and the December in three weeks. That said, some desks reported hefty futures buying in wake of the Fed's meeting minutes, with expectations of a WAM extension from the Fed, with hedge funds reportedly adding flatteners; desks also noted that participants have been flirting with both cash and future flatteners, perhaps leaning back against the steepening trend seen of late. It is also worth cautioning against overreading the tape action amid the thin liquidity conditions, and as many participants have already exited for the week. T-note (Z0) futures settled half a tick higher at 138-08+.

US House GOP leader McCarthy is opposed to omnibus spending level agreement between House Appropriations Chairwoman Lowey and Senate Appropriations Chairman Shelby as it violates 2019 budget cap agreement, according to a newswire reporter. (Twitter)

US Senate Minority leader Schumer said they have a plan for President-Elect Biden to immediately cancel student debt. (Newswires)

Fed watchers said that President Elect Biden's selection of Yellen as Treasury Secretary suggests he believes GOP will retain control of the Senate and needs her to negotiate with GOP's on fiscal policy, while it also "puts her in line to replace Powell", according to FBN’s Gasparino. (Twitter)