• Asia-Pac stocks lacked firm direction as momentum faded from the record-setting performance on Wall St, where the S&P 500 and Nasdaq printed fresh all-time highs
• US President-elect Biden will not immediately remove phase one tariffs on China according to a NYT Op-Ed citing a phone call with Biden
• In FX markets, the DXY remains sub 91.50, EUR/USD gained a firmer footing above 1.20 and GBP/USD plateaued above 1.34
• Initial reports suggested Brexit talks had entered the tunnel, although sources from both sides later pushed back against this idea
• US Senate Majority Leader McConnell is working with Chief of Staff Meadows and Treasury Secretary Mnuchin on a revised stimulus proposal
• Looking ahead, highlights include German Retail Sales, EZ Unemployment Rate, US ADP National Employment, ECB's Lane, BoE's Haskel, Fed's Chair Powell, Quarles, Williams, supply from UK and Germany

CORONAVIRUS UPDATE

US COVID-19 cases +152,022 (prev. +152,608) and deaths +1,251 (prev. +885). (Newswires)

US President Trump's administration invited leading vaccine manufacturers, drug distributors, and government officials to a “Covid-19 Vaccine Summit” next week. (Stat News)

US CDC said there could be 40mln COVID-19 doses available by the end of December and expects 5mln-10mln doses per week after authorisation, according to an ACIP meeting. Furthermore, US CDC advisory panel voted to make healthcare workers and nursing home residents first inline to receive the vaccine, while the CDC also shortened the self-quarantine period to 7-days for those that test negative for COVID-19 post-exposure as expected. (Newswires)

First shipment of the Pfizer's (PFE) COVID-19 vaccine will be delivered on December 15th and the first shipment of Moderna's (MRNA) vaccine will be delivered on December 22nd contingent upon decision by the FDA which will review the vaccines on December 10th and December 17th respectively, according to reports citing an Operation Warp Speed document. (CNN)

Mesoblast (MESO) received FDA fast track designation for Remestemcel-L in treatment of acute respiratory distress syndrome related to COVID-19 infection. (Newswires)

UK MPs voted to approve coronavirus regulations that implement three tiers of restrictions in England from Wednesday by 291 votes to 78 (56 Tory rebels). (Newswires)

France COVID-19 cases were below the 10k threshold for the third consecutive day, not seen since mid-September. (Newswires)

ASIA

Asia-Pac stocks lacked firm direction as momentum faded from the record-setting performance on Wall St, where the S&P 500 and Nasdaq printed fresh all-time highs after a resumption of COVID-19 relief discussions and weak data spurred stimulus hopes, while US futures pulled back after-hours with DJIA futures retreating further away from 30k. ASX 200 (Unch.) was indecisive after underperformance in healthcare and tech was offset by gains in the mining sectors and with better than expected GDP data failing to spur risk appetite as although Q/Q growth topped estimates at 3.3% vs. Exp. 2.6%, the economy still contracted by 3.8% from the prior year. Nikkei 225 (+0.1%) traded rangebound and ignored a predominantly weaker currency, while KOSPI (+1.6%) outperformed amid strength in chipmakers and with shares in index heavyweight Samsung Electronics rallying to unprecedented levels. Hang Seng (-0.3%) and Shanghai Comp. (-0.1%) conformed to the humdrum mood after the PBoC drained CNY 110bln of liquidity and amid lingering concerns regarding US-China tensions, as well as the worsening COVID-19 situation in Hong Kong. Finally, 10yr JGBs fell below the key 152.00 level as they tracked the downturn in T-notes but with further losses stemmed by the uninspiring mood for regional stocks and with the BoJ present in the market for nearly JPY 1.1tln of JGBs in up to 5yr maturities.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 110bln. (Newswires) PBoC set USD/CNY mid-point at 6.5611 vs. Exp. 6.5618 (Prev. 6.5921)

US President-elect Biden will not immediately remove phase 1 tariffs on China according to a NYT Op-Ed citing a phone call with Biden. (New York Times)

BoJ Deputy Governor Amamiya reiterated the BoJ will not hesitate to take additional easing steps as required and will extend duration of COVID response measures past the March deadline as needed with an eye on the pandemic impact to the economy. (Newswires)

UK/EU

Sources from both UK and EU Brexit teams said they are bemused by idea that talks have "entered the tunnel" and said "negotiations cannot become any more intense", according to Sky's Parsons. A European Commission source also played down talk of a “tunnel” and stated that member states and the European Parliament will still be briefed on progress in the Brexit negotiations, although not perhaps as often as they would like, according to RTE's Connelly. Separately, an EU source suggested the EU would not be able to approve a new deal if UK PM Johnson's taxation bill violates the Withdrawal Agreement, according to ITV's Peston. (Twitter)

EU states told EU Chief Brexit Negotiator Barnier that they want to see the Brexit deal before it is closed as some diplomats are reportedly concerned that European Commission President Von der Leyen may be willing to offer too many concessions in order to enhance her own legacy by sealing a last-minute deal, while other reports also noted that EU Chief Brexit Negotiator Barnier was under pressure not to give too much away as talks go to the wire. (Guardian/Telegraph)

EU officials stated that Chief Brexit Negotiator Barnier has arranged a video conference for this morning (07:30GMT) with ambassadors with the intention of steadying nerves and provide an update on the state of Brexit talks. (FT)

ECB's Lagarde said the ECB will recalibrate some tools to support the economy and that a 2nd wave in Europe is beginning to slow down, while recent PMIs show economy is still suffering. (Newswires)

ECB's Kazaks said would not oppose 12-month extension to PEPP and that EUR 500bln increase to PEPP is not very off the mark, while ECB should could consider other assets in TLTRO collateral and extending TLTRO to 5 years. (Newswires)

UK BRC Shop Price Index Y/Y -1.8% vs. Exp. -1.3% (Prev. -1.2%). (Newswires)

FX

In FX markets, the DXY remained firmly below 91.50 after the prior day’s losses and although the risk appetite has since dwindled in Asia trade, the currency has failed to recover lost ground. There were some renewed stimulus hopes after lawmakers resumed COVID relief discussions with a bipartisan Senate group proposing a USD 908bln stimulus compromise, although Senate Majority Leader McConnell was also working with Chief of Staff Meadows and Treasury Secretary Mnuchin on a stimulus proposal with a lower value of USD 472.4bln. EUR/USD remained at its best levels in more than two and half years with a firm footing on the 1.2000 handle as the latest rhetoric from the ECB continues to reiterate measures this month including ECB's Lagarde who stated the ECB will recalibrate some tools to support the economy, while GBP/USD plateaued above 1.3400 amid mixed signals from Brexit negotiations as initial reports suggested talks may have entered the tunnel, although sources from both sides later pushed back against this idea. Elsewhere, USD/JPY and JPY-crosses traded mostly higher and antipodeans were kept afloat due to the weakness in the greenback and with better than expected GDP data only providing mild tailwinds for AUD.

RBA Governor Lowe said Australia has turned the corner on the economy and GDP will be solidly positive for Q3 and Q4, but noted the recovery will be uneven, bumpy and drawn out, while he stated that wage and price pressures are likely to remain subdued. Lowe also stated a high degree of uncertainty regarding the outlook remains and the Board will continue to review details of the QE package at future meetings, while he still has the view that negative rates in Australia is extraordinarily unlikely. (Newswires)

• Australian Real GDP (Q3) Q/Q 3.3% vs. Exp. 2.6% (Prev. -7.0%)
• Australian Real GDP (Q3) Y/Y -3.8% vs. Exp. -4.4% (Prev. -6.3%, Rev. -6.4%)

COMMODITIES

WTI crude futures extended on the losses following the ongoing lack of consensus between key producers and postponement of the OPEC+ meeting to Thursday, although reports have suggested increasing hopes of reaching a deal for a 3 month rollover of cuts with talks continue today. Furthermore, a surprise build to the private inventories headline crude stockpiles also weighed on prices which briefly tested USD 44.00/bbl to the downside where support eventually held. Gold consolidated after yesterday's reclaim of the USD 1800/oz level owing to the recent USD-weakness and reflation trade amid renewed stimulus discussions, while copper prices stalled as the risk appetite dwindled in Asia trade.

US Private Energy Inventory Data (w/e Nov 27th): Crude +4.1mln (exp. -2.4mln). (Newswires)

Energy Intel tweeted there is lots of hope building towards reaching an agreement to rollover the current cuts for 3 months and that consultations between OPEC and OPEC+ will continue on Wednesday, while it added that a number of OPEC and non-OPEC delegates said they would hope to see Saudi Arabia continue its role as the JMMC’s co-chair and the chairman of OPEC plus. (Twitter)

US

Treasuries were offered hard in a steepening fashion on Tuesday, with the fade of month-end support and renewed stimulus hopes cheapening yields. By settlement, 2s +2.5bps at 17.2bps, 10s +8.7bps at 92.9bps, and 30s +10.3bps at 167.4bps; T-note futures volumes were solid. The selling had begun modestly out of Europe, with a cyclical tilt to stocks hitting duration. Furthermore, with duration-extension for month-end now in the rear-view mirror, there were fewer bids for participants to hit on the way down. The downside in bonds caught traction most noticeably into the US equity open, accompanying reports of Mnuchin and Pelosi getting the stimulus gang back together for the first time since October, reigniting stimulus hopes and seeing reflation trades flourish; 10yr inflation breakevens hit their highest level since May 2019 at over 1.824%. Reports had suggested there were a slew of fast-money/hedge fund types initiating fresh steepeners today, bringing the early November cash yield peaks of 97.5bps and 176.7bps, for the 10s and 30s respectively, back into the spotlight as next support levels. Note, there was also a pick up in the corporate issuance pipeline today, accentuating the pressure. Participants are also likely to begin preparing for Thursday's Treasury refunding announcement too. T-note (H1) futures settled 23+ ticks lower at 137-14.

Fed Discount Rate Minutes stated that directors reported continued improvement in economic conditions and noted that some sectors remain deeply affected by the pandemic, while several directors commented on the strength in residential real estate markets, including significant mortgage refinancing activity. Some directors reported a pickup in retail spending citing strong online sales but also improved foot traffic at stores outside of malls and urban areas and that labor market conditions varied across sectors and districts. Overall, directors were cautious about the pace of future improvements in the economy, given continued uncertainty about the evolution of the pandemic and the potential implications for the outlook. (Newswires)

Fed's Daly (2021 voter) said the Fed is ready to respond with a full range of policy tools until the virus is behind us and that hitting or exceeding 2% inflation goal does not mean victory with sustained moderately above target inflation needed. Daly also commented that providing guidance on asset purchases is the natural next step for the Fed and that QE is a less powerful tool than interest rates and forward guidance, while she stated that policy is in a good place and now is not the time to stimulate the economy aggressively as that would not be safe. (Newswires)

Fed's Evans (2021 voter) said the economic downturn screams out for remedies and that its likely rates will stay near zero into 2023 and perhaps beyond, while he added it is difficult for the Fed to provide more accommodation as it is already doing a lot. (Newswires/CNN)

US Treasury Secretary Mnuchin spoke with House Speaker Pelosi in which he noted the primary purpose of the call was to talk about government funding and avoiding a shutdown, while House Speaker Pelosi said she called for COVID relief to be passed in the lame duck period and both acknowledged the belief that it is essential to significantly fund distribution efforts to get us from vaccine to vaccination. (Newswires)

US Senate Majority Leader McConnell is working with Chief of Staff Meadows and Treasury Secretary Mnuchin on a revised stimulus proposal with the President’s blessing in which the new US Senate GOP targeted relief package would total USD 472.4bln, with USD 140bln of funds repurposed and USD 332.7bln in new cost. The package would extend the emergency unemployment benefits by one month to January 31st followed by a two-month phase-out and package calls for a second round of small business PPP but does not include state and local government funding. (Newswires)

US GOP Senator Thune gave a lukewarm reception to the USD 908bln bipartisan Senate group proposal and noted issues with state and local government funding which makes it a non-starter. (Newswires/Twitter/CNN)

US Senate Appropriations Committee Chair Shelby said it is difficult but not impossible to get a spending deal before end of the week, while it was separately reported that the Senate is to vote to advance Waller's Fed nomination today. (Newswires/Fox)

US President Trump reiterated criticism on Section 230 which shields big tech from liability and stated it is a serious threat to national security and election integrity, while he threatened to veto National Defense Authorization Act if it doesn't terminate Section 230. (Twitter)

US DoJ is investigating a potential crime concerning funneling money to the White House or related political committee in exchange for a presidential pardon, according to reports in CNN citing court records unsealed in federal court. Furthermore, a DoJ official later stated that no government official was or is currently a subject or target concerning investigations on presidential pardoning and President Trump also tweeted that the pardon investigation is fake news. (Newswires/CNN/Twitter)

US President-elect Biden is reportedly mulling appointing a White House Asia tsar in the National Security Council. (FT)