• Asian equity markets began the week mixed amid tentativeness heading into month-end and upcoming key risk events
• The region also digesting a slew of data including better than expected Chinese Manufacturing and Non-Manufacturing PMI data
• UK is set to become the first western country to approve a COVID-19 vaccine in which the regulator could grant approval to Pfizer and BioNTech's vaccine within days
• The DXY extended its retreat below 92.00 to print its weakest level in more than two and a half years, EUR/USD printed 3-month highs, GBP leads G10 FX
• European Commission is reportedly leaning on EU Chief Brexit Negotiator Barnier to get a deal, although Downing Street warned that a no-deal Brexit is underpriced
• OPEC+ talks on Sunday failed to reach an agreement on an output cut extension
• Looking ahead, highlights include regional and national German CPIs, US Chicago PMI, OPEC meeting, ECB's Lagarde, BoE's Tenreyro

CORONAVIRUS UPDATE

US COVID-19 total cases rose to around 13.14mln from a previous of around 13.00mln and total death rose to around 265.2k from around 264.0k. (Newswires)

New York City Mayor De Blasio announced that the city’s public schools will begin to resume in-person classes from December 7th. (Newswires)

Canada extended its travel restriction for arrivals from US until at least December 21st, while it will extend mandatory isolation order and temporary travel restrictions from other countries aside from US to January 21st. (Newswires)

UK COVID-19 cases +12,155 (prev. +15,871) and deaths +215 (prev. +479), while Italy cases +20,648 (prev. +26,323) and deaths +541 (prev. +686). (Newswires)

UK PM Johnson said the tiered virus system would have a sunset of February 3rd in which he promised to give parliament another chance to vote on the system in early February to avoid a mass Tory rebellion. It was separately reported that UK PM Johnson appointed Junior Business Minister Nadhim Zahawi as the minister in charge of vaccine distribution. (Newswires/Telegraph/Sky News)

UK is set to become the first western country to approve a COVID-19 vaccine in which the regulator could grant approval to Pfizer and BioNTech's vaccine within days, while reports added that deliveries would start within hours of the approval and first injections could begin from December 7th. (FT) European Medicines Agency is set to consider approval of Pfizer/BioNTech vaccine next month and will also consider Moderna’s vaccine. (FT)

Moderna (MRNA) announced amendment of current supply agreement with the UK government for an additional 2mln doses of its COVID-19 vaccine in which the UK government has now secured 7mln doses of MRNA-1273. (Newswires)

WHO's O'Brien said WHO needs to evaluate Astrazeneca (AZN LN) COVID-19 vaccine data based on more than just a press release and evaluate the immune response in the trial. Furthermore, it is too early to say what it will make of the data and WHO chief scientist Swaminathan said the number of trial participants was too small to come to definitive conclusions. (Newswires)

German Economy Minister Altmaier stated that the partial shutdown could be extended until early spring 2021. There were separate reports that Italy was reported to loosen COVID restrictions in Lombardy, Piedmont, Calabria, Milan, Turin from Sunday, while Ireland PM Martin unveiled a plan to lift the lockdown and stated that they are encouraged by falling virus numbers. (Newswires)

ASIA

Asian equity markets began the week mixed amid tentativeness heading into month-end and this week’s key risk events, with the region also digesting a slew of data including better than expected Chinese Manufacturing and Non-Manufacturing PMI data. ASX 200 (-1.3%) underperformed as gold miners led the broad retreat seen across sectors after the recent slump in the precious metal and with Treasury Wine Estates hampered again by China’s anti-dumping measures on Australian wine, while Nikkei 225 (-0.8%) was initially kept afloat after Industrial Production data topped estimates but later succumbed to the headwinds from a firmer currency. Hang Seng (-1.1%) and Shanghai Comp. (+0.5%) diverged with the mainland bourse outperforming after Chinese official Manufacturing PMI printed its highest reading in more than 3 years and amid PBoC efforts in which it injected funds through Reverse Repo operations and the Medium-term Lending Facility. Conversely, the mood in Hong Kong was subdued with CNOOC and other blue-chip oil peers pressured after reports US President Trump is to add CNOOC and chipmaker SMIC to the defense blacklist, while Alibaba was also among the laggards amid suggestions the Ant Financial IPO faces narrow chances of going through next year. Finally, 10yr JGBs were lacklustre and attempted a breakdown of the psychological 152.00 level with price action failing to take impetus from the bull-flattening last Friday in USTs and the BoJ presence in the market today, while the central bank also recently announced its bond purchase intentions for December whereby it maintained the value amounts but reduced the frequency of buying in 1-3yr and 3-5yr maturities to 5 times from 6 times a month.

PBoC injected CNY 150bln via 7-day reverse repos at a rate of 2.20% for a net daily injection of CNY 110bln and announced a CNY 200bln 1-year MLF operation at a rate of 2.95%, while it will also conduct an MLF operation on December 15th with the amount to be determined. (Newswires) PBoC set USD/CNY mid-point at 6.5782 vs. Exp. 6.5787 (Prev. 6.5755)

• Chinese NBS Manufacturing PMI (Nov) 52.1 vs. Exp. 51.5 (Prev. 51.4); highest since September 2017
• Chinese Non-Manufacturing PMI (Nov) 56.4 vs. Exp. 56.0 (Prev. 56.2)
• Chinese Composite PMI (Nov) 55.7 (Prev. 55.3)

US President Trump is to add SMIC (81 HK) and CNOOC (883 HK) to the defense blacklist according to sources, while there were reports that US House is to vote on bill on Wednesday which could threaten future of Chinese firms on US stock exchange. (Newswires/SCMP)

China’s Global Times tweeted that China urges the US to respect existing international rules and multilateral trading system, as well as stop its anti-subsidy investigation into the alleged undervaluation of the Chinese currency. There was also a separate tweet from Global Times Editor Hu Xijin that the Trump administration has repeatedly showed hostility and ambitions to contain China, while he added that Chinese people generally hold little hope that Sino-US relations will substantially improve under Biden and that surely any improvement is welcome, but people are mentally prepared for continuous tension. (Twitter)

UK/EU

UK PM Johnson and European Commission President Von der Leyen were reportedly expected to speak within 48 hours (as of Saturday) and the European Commission was said to lean on EU Chief Brexit Negotiator Barnier to get a deal, although other reports noted there was no call scheduled citing a UK source. (Newswires/Times)

UK’s Downing Street warned that a no-deal Brexit is underpriced and that the UK could be just 7 days away from leaving without an agreement (Telegraph)

EU’s Chief Brexit Negotiator Barnier told MEPs that he would work during the weekend and then “maybe one or two more days” in a last-ditch effort to bridge the large gaps, while EU sources said there was an increasing feeling that a lack of breakthrough and need to prepare businesses for a no-deal made it unwise for negotiations to continue beyond then. (Guardian) EU Chief Brexit Negotiator Barnier commented that talks were to continue even on Sunday and discussions are in their last week, while he added talks are an ongoing process and called for the sides to do the work. (Newswires)

EU and UK officials were said to express confidence that an overarching agreement on the outstanding issues of the Northern Ireland Protocol can be agreed in the coming weeks and EU Member states will have to approve a series of formal legal decisions, mandated under the Protocol, so that the system will have a proper legal base under EU law on January 1st. Reports added it is understood that the UK is being appraised of these legal texts and a meeting of the Joint Committee was scheduled last Friday but was postponed and is now expected to take place in the week ahead with a final JC meeting happening by mid-December. Furthermore, it is thought that at that point the overall package could be formally signed off by both the EU and UK, although sources said there is still some way to go before all the details are finalised. (Newswires)

UK Foreign Minister Raab stated we’re in a reasonable position and there is a deal to be done, while he feels there is progress on the level playing field but significant issues remain on fishing. Raab also commented that this is a very significant week and we’re in the last week or so on substantive negotiations, while he also suggested the EU shifts goalposts on when the deadline for a deal is and that we’re down to the last two basic issues. (Newswires)

BoE Chief Economist Haldane commented that inflation could increase more than expected citing COVID-19 vaccine progress and the large amount of stimulus seen this year. Haldane also stated that the extraordinary expansion in central banks’ balance sheets over the past decade poses a challenge to the independence of monetary policy. (Newswires)

UK Treasury is hoping that a speedy economic recovery in the middle of 2021 could result to consideration of significant tax increases being delayed until 2022. (Telegraph)

UK government said telecoms providers must stop installing Huawei equipment in the UK's 5G mobile network from September. (BBC)

ECB’s De Guindos stated that ECB sees lower inflation to persist this year and then rebound slower than anticipated next year, while he added that negative Q/Q growth is the most realistic scenario for the end of the year but added that medium-term outlook is more brighter amid vaccine hopes. (Newswires)

EU is reportedly seeking a new alliance with US to bury the tensions experienced during the Trump administration and to meet the new challenges related to China. (FT)

Brussels is reportedly planning a slate of proposals to make it easier for EU banks to offload soured loans as it anticipates risk of a pandemic-related wave of corporate distress. Furthermore, a paper due to be published next month will discuss ideas such as boosting secondary markets for buying and selling NPLs, as well as the creation of a network of bad banks across the bloc. (FT)

Spain is poised to approve a budget which will translate to an increase in tax take, high social services spending and use of the EU recovery fund, according to Spain's Finance Minister. (FT)

Brussels will next week publish proposals to allow regulators to target fast growing companies before they are able to achieve the market dominance seen by Google (GOOG) and Facebook (FB). The EU has yet to reveal how it plans to measure company growth, according to Competitions Commissioner Vestager. (FT)

Switzerland voted to reject a proposal that would have banned the Swiss National Bank from investing in defense firms and also voted against the Responsible Business Initiative that would’ve held multinational corporations accountable for human rights and environmental lapses abroad. (Newswires)

UK Lloyds Business Barometer (Nov) -21 (Prev. -18). (Newswires)

FX

In FX markets, the DXY extended its retreat below 92.00 to print its weakest level in more than two and a half years, with the greenback failing to pick up from the Thanksgiving holiday lull and amid month-end flows with several investment bank models pointing to higher than average USD-selling in month-end rebalancing. As such, EUR/USD initially made further headway at the 1.1900 handle to print a 3-month high but was then stalled by resistance at 1.1975 and GBP/USD continued its rebound from support near 1.3300 as focus remained centred on this week’s crunch negotiations with the European Commission reportedly leaning on EU Chief Brexit Negotiator Barnier to get a deal, although Downing Street warned that a no-deal Brexit is underpriced and that the UK could be just 7 days away from leaving without an agreement. USD/JPY was subdued after giving up the 104.00 status and antipodeans notched marginal gains with NZD/USD underpinned in early trade after an improvement in business survey data, while upside in AUD/USD was capped by resistance at 0.7400 and alongside Australia’s ongoing spat with China.

• New Zealand NBNZ Business Outlook (Nov) -6.9% (Prev. -15.7%). (Newswires)
• New Zealand NBNZ Own Activity (Nov) 9.1% (Prev. 4.7%)

COMMODITIES

Oil prices were pressured at the open after informal OPEC+ talks on Sunday failed to reach an agreement on an output cut extension as although most supported rolling over current production levels into Q1, there was opposition from UAE and Kazakhstan, while participants now look ahead if a breakthrough can be made at the formal OPEC/OPEC+ meetings beginning today. Gold extended on Friday's slump after taking out technical levels including support at the USD 1800/oz level and nearby 200DMA despite the lacklustre greenback, while silver prices underperformed in sympathy and declined beneath USD 22/oz. Conversely, copper continued this month's hot streak with the red metal underpinned after the stronger than expected Chinese PMI data but was then capped by resistance at USD 3.50/lb.

OPEC+ panel of ministers failed to reach an agreement on delaying output hike ahead of the meeting although most participants in an informal discussion on Sunday supported extension of the current output levels into Q1 but UAE and Kazakhstan opposed the idea, while it was separately reported that OPEC delegates stated there are no talks of deeper cuts. (Newswires/energyintel)

Russia and Saudi Arabia reportedly generally adhere to a consolidated stance regarding an extension of the current level of oil production curbs for the first months of 2021, according to two sources. (TASS)

Iraq's Oil Minister said that they will not seek an exemption from the output cut agreement. There were also separate reports that Iraq halted operations at a small refinery (30k bpd) after a fuel storage tank was hit by a rocket attack which the Islamic State claimed responsibility for. (Newswires)

Citi Research sees spot gold markets supported at mid-USD 1700/oz level and anticipates the sell-off to taper in December, while it added a renewed push to above USD 2000/oz in the next 3-6 months is likely but may then trade lower. (Newswires)

Goldman Sachs sees additional upside to its USD 65/bbl forecast in Brent crude through 2021 as the oil market rebalances and stated that in the short-term, oil market faces increasing coronavirus-led lockdowns and a winter wave of the virus will likely generate a 3mln bpd hit to global demand which it expects to delay the rebalancing of the oil market but not derail it. (Newswires)

GEOPOLITICAL

Iranian President Rouhani accused Israel of an act of terrorism for the killing of Iran’s top nuclear scientist and vowed to respond at the right time. Furthermore, Iran's Supreme Leader’s adviser Hossein Dehghan pointed the blame on Israel which he claimed seek to intensify and increase pressure on Iran to wage a full-blown war in the last days of their gambling ally's political life, which was seen as a reference to US President Trump, while he threatened that Iran will descend like lightning on the killers of this oppressed martyr and make them regret their actions. Furthermore, a spokesman said that Iran lawmakers will pass a bill which targets boosting nuclear activity following the recent killing of their physicist. (Newswires/Sky News)

White House senior adviser Kushner and his team is headed towards Saudi Arabia and Qatar this week for discussions amid tensions in the region following the killing of the Iranian nuclear scientist. (Newswires)

US

The Treasury curve was bull-flattening as US players arrived for the holiday-shortened session. Price action was respecting recent trends, and the Treasury complex may have been taking cues from the broader macro narrative (there is a hefty +0.16 year Treasury index extension for the end-Nov rebalance). T-note futures finished electronic trade higher by 9 ticks at 138.17+.

US President-elect Biden is to nominate Neera Tanden as OMB Director and will nominate Pete Rouse to head council of economic advisers, while he will nominate Adewale Adeyemo as Deputy Treasury Secretary. However, US Senator Cornyn's Communications Director later tweeted that Neera Tanden has zero chance of being confirmed citing a stream of disparaging comments about GOP Senators whose votes she will need. (Newswires)

President-elect Biden reportedly twisted his ankle while playing with a dog and will be examined by an orthopaedist out of an abundance of caution, according to his office. (WSJ/Newswires)

US President Trump tweeted that there are some big things happening in various litigations on the election hoax and suggested that everyone knows it was rigged. Furthermore, President Trump added that Biden didn’t get more votes from the Black community than Obama and certainly didn’t get 80mln votes, while he later added "NO WAY WE LOST THIS ELECTION!". (Twitter)