• Asian equity markets traded positively as strong data releases helped the region shrug-off the weak handover from US where stocks were pressured by month-end flows
• Chinese Caixin Manufacturing PMI data printed at a decade high of 54.9 vs. Exp. 53.5 and spurred Chinese markets to pick up from the slow start
• The RBA kept policy settings unchanged as expected and provided a balanced view of the economy
• In FX, the DXY pulled back from 92.00, EUR/USD nursed losses after slipping back below 1.20 and GBP/USD broke back above 1.3350
• OPEC+ meeting has been rescheduled to December 3rd as more discussions are said to be needed
• Fed Chair Powell’s testimony at the Senate Banking Committee reiterated that the outlook for the US economy is uncertain and will depend on the virus
• Looking ahead, highlights include EZ, UK and US Markit Manufacturing Final PMI, EZ Flash CPI, US ISM Manufacturing and Construction Spending, OPEC+ meeting, Fed Discount Rate Minutes, US President-elect Biden to unveil economic team, Fed's Powell, Brainard, Daly, Evans, ECB's Lagarde, supply from UK, earnings from Deere

CORONAVIRUS UPDATE

US COVID-19 cases +152,608 (prev. +143,333); deaths +885 (prev. +1,210), New York COVID-19 cases +6,819 (prev. +6,723); positivity rate 4.57% (prev. 4.27%); hospitalisations 3,532 (prev. 3,372); deaths +54 (prev. +55). (Newswires)

California Governor Newsom said we will need to take drastic action including a potential stay-at-home order for certain regions if the coronavirus trends continue and that ICU admissions are on track to exceed capacity state-wide by mid-December. (Newswires)

UK's Labour party will abstain in today's vote on the new tier system meaning it will pass, according to ITV's Brand. (Twitter)

ASIA

Asian equity markets traded positively as strong data releases helped the region shrug-off the weak handover from US where stocks were pressured by month-end flows in which cyclicals underperformed and most major indices finished in negative territory, although the DJIA still notched its best monthly performance in more than 3 decades with a monthly gain of almost 12%. ASX 200 (+1.1%) advanced from the open with broad optimism across its sectors aside from energy following similar underperformance stateside and with the OPEC+ meeting postponed to Thursday to provide additional time for talks amid disagreements regarding extension of current production levels. Nikkei 225 (+1.3%) benefitted from more favourable currency flows which provided reprieve for Japanese exporters, while the KOSPI (+1.8%) was boosted after the upward revision to South Korean GDP for Q3 which was increased to 2.1% Q/Q from the preliminary 1.9% growth. Hang Seng (+1.1%) and Shanghai Comp. (+1.2%) conformed to the upbeat mood following the blockbuster Caixin Manufacturing PMI data which printed at a decade high of 54.9 vs. Exp. 53.5 and spurred Chinese markets to pick up from the slow start after the PBoC drained liquidity and with China’s new export control laws taking effect today, while Hong Kong had also announced further COVID-19 restrictions to curb the latest wave of the virus. Finally, 10yr JGBs saw mild gains despite the positive risk tone and mixed results at the 10yr JGB auction, as prices extended on the rebound from support through the key 152.00 level.

PBoC injected CNY 20bln via 7-day reverse repos with at a rate of 2.20% for a net daily drain of CNY 50bln. (Newswires) PBoC set USD/CNY mid-point at 6.5921 vs. Exp. 6.5900 (Prev. 6.5782)

• Chinese Caixin Manufacturing PMI (Nov) 54.9 vs. Exp. 53.5 (Prev. 53.6); 10-year high
• South Korean Revised GDP Growth (Q3) Q/Q 2.1% (Prev. 1.9%)
• South Korean Revised GDP Growth (Q3) Y/Y -1.1% (Prev. -1.3%)

UK/EU

French Presidency source said priority in Brexit talks is for the UK to clarify its position, while the source added EU has made a clear and balanced offer to Britain on a future partnership. There were also separate comments from a senior diplomat that the EU is to launch no-deal contingency plans if there is no trade deal with the UK by Wednesday or Thursday. (Newswires)

Eurozone Finance Ministers agreed to use their bailout fund to backstop the Eurozone bank resolution fund in an emergency, according to the German EU Presidency. (Newswires)

FX

In FX markets, the DXY gave back some of yesterday’s gains as the improvement in risk appetite forced a pullback from the briefly reclaimed 92.00 level and with focus turning to the upcoming activity data from the US including ISM Manufacturing PMI, while the pre-release text for Fed Chair Powell’s testimony at the Senate Banking Committee didn’t provide much excitement as he reiterated that the outlook for the US economy is uncertain and will depend on the virus. EUR/USD nursed some of the losses after its recent nose-dive from resistance at the 1.2000 level and GBP/USD broke back above 1.3350 in a continuation of the choppy price action amid uncertainty concerning this week’s Brexit talks with both sides showing commitment and are hopeful for a deal, although differences remain on fisheries and the level playing field. Furthermore, German Chancellor Merkel suggested there was little time left with some states getting impatient and a senior diplomat also stated that the EU is to launch no-deal contingency plans if an agreement is not made by Wednesday or Thursday. USD/JPY hovered around yesterday’s highs after bouncing back above 104.00 with the positive risk tone keeping the pair afloat and antipodeans were also lifted after mostly better than expected data from Australia including Building Approvals and Current Account Balance, but with gains limited after Net Exports Contribution to GDP disappointed ahead of GDP data tomorrow and and following the unsurprising RBA policy announcement in which it kept policy settings unchanged as expected with key rates held at 0.10% and provided a balanced view on the economy.

RBA kept the Cash Rate Target and 3yr yield target unchanged at 0.10% as expected and also maintained the parameters of term funding, while it stated the Board is not expecting to raise the Cash Rate for at least 3 years and is prepared to do more if needed with the size of the bond purchase program to be kept under review. RBA commented that fiscal and monetary support will likely be required for some time and addressing high unemployment is a national priority with a further rise in unemployment rate still expected but added that employment growth was strong again in October. Furthermore, the RBA stated that Australia's economic recovery is underway and recent data was generally better than expected but the recovery is still expected to be uneven and drawn out, as well as dependent on significant policy support. (Newswires)

• Australian Building Approvals (Oct) M/M 3.8% vs. Exp. -3.0% (Prev. 15.4%)
• Australian Current Account Balance (AUD)(Q3) 10.0B vs. Exp. 7.1B (Prev. 17.7B)
• Australian Net Exports Contribution (Q3) -1.9% vs. Exp. -1.7% (Prev. 1.0%)

COMMODITIES

Commodities were mixed in which oil prices were slightly pressured to test USD 45.00/bbl after the lack of consensus between OPEC producers on rolling over current production levels with UAE wanting improved compliance by producers and with the OPEC+ meeting postponed to December 3rd to provide more time for discussions, although ministers are to meet again today. Elsewhere, gold prices marginally benefitted from the softer greenback and copper prices were underpinned by the improved risk appetite, as well as the stronger than expected Chinese data.

OPEC+ meeting has been rescheduled to December 3rd as more discussions are said to be needed, while there was no statement issued after the OPEC meeting on Monday but OPEC countries are planning to meet again on Tuesday. It was later reported that OPEC ministers are to meet again today at 1400CET/1300GMT and OPEC doesn't have full consensus yet which is why meeting with OPEC+ has been pushed back, according to energyintel's Bakr. (Newswires/Twitter)

Iranian Oil Minister Zanganeh said the discussions did not end and will see on Tuesday how we get on with non-OPEC, while he added it will be a difficult meeting, according to Argus. Furthermore, he stated it his view that within OPEC, there was a consensus and doesn't believe there was any issue. (Argus)

Russia, Saudi Arabia and the UAE reportedly differ on the mechanism for oil production cuts in the coming months of 2021 but talks, despite all the difficulties, should end with a consensus, according to a source. In relevant news, the UAE was said to turn down the offer of OPEC+ JMMC co-chair. (Tass/Newswires)

GEOPOLITICAL

Foreign policy experts have urged US President-elect Biden to secure an arms control agreement with North Korea. (FT)

US

Treasuries were little changed on Monday amid the dwindling remains of month-end duration extension and a broader subdued risk tone. By settlement, 2s -0.7bps at 14.7bps, 10s-0.1bps at 84.1bps, 30s -0.5bps at 157.2bps; T-note futures volumes were lacklustre, especially with most of the roll completed amid First Notice now in place; inflation breakevens were firmer, with the 30yr BE making post-COVID highs. Most of the strength was seen overnight, while the now routine Monday positive vaccine news dropped as the US returned from the Thanksgiving weekend, which saw yields come off their lows running up into the Wall Street opening bell. However, the downside in stocks after the cash open saw yields retreat back towards their lows, with the disappointing Chicago PMI and Pending Home Sales data supporting the move. ISM Manufacturing and Services on Tuesday and Thursday, respectively, in addition to Friday's US jobs report, are this week's data highlights. Meanwhile, Fed speak will also be on the radar for the week ahead, where members have their last chance to voice their opinions/concerns, particularly around its QE programme, ahead of the December 15/16th FOMC meeting, with the blackout period beginning after Friday. T-note (H1) futures settled half a tick lower at 138-17.

Fed Chair Powell reiterated recent commentary that the outlook for the US economy is uncertain and will depend on the virus, while he stated that the Fed's actions have unlocked almost USD 2trln of funding to support businesses, non-profits and local government. (Newswires)

Fed's Kaplan (voter) sees a very difficult 3-6 months but is optimistic about the next 12 months, while he added that he is reluctant to adjust asset purchases until there is more visibility on the outlook and is open-minded regarding the Fed giving more forward guidance on its asset purchase plan in the December meeting or later meetings. (Newswires)

US Treasury Secretary Mnuchin said based on recent data, he continues to believe targeted fiscal package is most appropriate federal response to pandemic and strongly encourages Congress to use USD 455bln in unused CARES Act funds to pass an additional bill. (Newswires)

US Senate Majority Leader McConnell said there is no reason that we shouldn't deliver another major pandemic relief package, while it was also reported that a bipartisan group of senators have been holding informal discussions seeking a compromise on a COVID-19 relief package, according to NBC citing sources. (ABC/NBC)

Wisconsin Governor Evers certified President-elect Biden as the winner of the state's Presidential election, which followed confirmation by the Wisconsin Election Commission that Biden won in the state after a recount in 2 counties. (Newswires)