• European bourses trade mixed but off worse levels, with sectors not displaying a clear risk profile
• UK has approved the Pfizer (PFE)/ BioNTech (BNTX) COVID-19 vaccine, which will be available across the UK from next week
• 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
• Sticking points in Brexit talks, a deal still hangs in the balance, according to a diplomat
• In FX markets, the DXY remains sub-91.50, EUR/USD hold onto 1.20, Cable lost 1.3400 and spot gold extends gains
• 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 US ADP National Employment, ECB's Lane, BoE's Haskel, Fed's Chair Powell, Quarles, Williams

CORONAVIRUS UPDATE

UK has approved the Pfizer (PFE)/ BioNTech (BNTX) COVID-19 vaccine, which will be available across the UK from next week. UK Health Minister Hancock says the rollout of the Pfizer (PFE)/BioNTech (BNTX) vaccine will be challenging due to specifics on storage. EU lawmakers say the UK's decision to approve the Pfizer (PFE)/BioNTech (BNTX) COVID-19 vaccine is "problematic" because it is too fast (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) Pfizer (PFE)/BioNTech (BNTX) COVID-19 vaccine US FDA and EU EMA decisions on authorisations are expected in December. (Newswires)

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)

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

North Korean hackers have targeted at least six pharmaceutical companies in the U.S., the U.K. and South Korea working on Covid-19 treatments, according to WSJ sources. (WSJ)

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 (-0.1%) and Shanghai Comp. (Unch) 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) Chinese Foreign Ministry, on reports US House backing a bill that could block Chinese firms from US markets, says authorities should enhance dialogue. (Newswires)

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)

US

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 House discussions on government funding and potential COVID-19 stimulus bill behind the scene, according to Fox's Pergram. (Twitter)

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)

UK/EU

EU Chief Brexit Negotiator Barnier has told EU envoys that differences still remain on the three key sticking points in trade talks with the UK, a deal still hangs in the balance, according to a diplomat. (Newswires) EU Chief Brexit Negotiator Barnier was in "good spirits" but he has ‘reached the edges of his mandate’ and has little more room for manoeuvre in talks with U.K. “Only millimetres left”, according to BBC's Adler. Barnier didn’t ask EU countries for more flexibility in negotiating mandate this morning. EU does not want to give UK government the impression it can get ‘mini deals’ for free - without signing up to agreed compromises and overall treaty. “Deal can be done this month .. or next, or next year” said one EU source. Meanwhile, EU sources suggest that they do not think a Brexit deal is imminent, however, if and when things move, it will come quickly, according to Business Insider's Payne. (Twitter) Several member states are open to continue talks after Dec 31st deadline if a good deal cannot be reached by then, according to an EU diplomat. (Newswires)EU Chief Brexit Negotiator Barnier stated that UK and EU were exploring a transitional arrangement for fishing rights, with the aim that a renegotiation and the end of the period will be linked to the two sides' economic arrangement. (FT)

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)

EQUITIES

Major European bourses kicked the session off lower across the board but have since trimmed/nursed losses with the region now seeing a mixed picture (Euro Stoxx 50 -0.2%) following the uninspiring APAC handover. The main news of the morning has been UK's approval of the Pfizer/BioNTech COVID-19 vaccine, a move touted in UK press over the weekend, with the vaccine to be rolled out as soon as next week, with sources over the weekend suggesting the first jab to be administered on December 7th. On this front, it is worth keeping in mind the challenges posed by the logistics of supply and distribution, whereby "The companies have developed specially designed, temperature-controlled thermal shippers utilizing dry ice to maintain temperature conditions of -70°C±10°C. They can be used be as temporary storage units for 15 days by refilling with dry ice", according to the official PFE/BNTX release. Nonetheless, the news sparked little in the way of a sustained reaction across European and US equity futures, with US FDA and EU EMA reviews expected later this month. On that note, EU lawmakers called the UK approval "problematic" as it was too fast - something to keep an eye on to gauge the bloc's risk profile with regards to accelerated approvals. Sectors in Europe are mostly in the red having had had a downbeat open, but energy has recouped lost ground on account of price action in the complex whilst healthcare is supported. Elsewhere, Travel & Leisure was faring well at the open but the optimism has since waned. Overall, a clear risk profile cannot be derived from sectors. Looking at individual movers, G4S (+7%) top the charts following a revised offer from Gardaworld who upped the price to GBP 2.35 per G4S shares vs. the prior offer of GBP 1.90. G4S has until December 16th to digest the terms and respond. Meanwhile, Rolls-Royce (+1.0%) sees tailwinds after signing an aerospace engineering partnership with Indian giant Infosys. Finally, Tesco (-1.5%) shares are on the backfoot as the Co. is to repay the UK govt GBP 585mln of business rates relief received in the wake of the pandemic, whilst adding the latest estimates in October was that COVID would cost Co. GBP 725mln this year, well in excess of the rates relief received.

FX

GBP - The Pound was riding high alongside fellow majors against downtrodden Dollar before an update on Brexit trade talks from chief EU negotiator Barnier pulled the rug from Cable and pushed Eur/Gbp back above 0.9000. In short, far from entering the final phase towards a deal, the 2 sides remain apart on the 3 main sticking points and an agreement is still in the balance. Moreover, his briefing to envoys also conceded that is uncertain whether the gaps can be bridged as EU officials are said to be getting increasingly nervous about the prospect of reaching an accord, albeit with one source in Brussels suggesting that a deal can still be done in December, next month or (presumably) later in 2021. Cable is now a full point down from best levels circa 1.3440 and the cross is hovering near the top of a 0.9045-0.8965 range.

DXY - For all intents and purposes, the Buck appears to have stopped the rot by virtue of the aforementioned relapse in Sterling, as other G10 currencies suffered contagion, like the Euro to lift the index from 91.103 to 91.426. However, the Greenback remains fragile overall ahead of ADP, the 2nd part of Fed chair Powell’s Congressional testimonies and 2 speeches from Williams before the latest Beige Book prepared for next month’s FOMC.

AUD/NZD/CAD - Mixed GDP data and the ongoing rift with China may be keeping the Aussie capped into 0.7400 vs its US counterpart, but Aud/Nzd has bounced from recent lows nearer the 1.0400 mark as the Kiwi stalls in the high 0.7300 zone against its US peer following remarks from RBNZ Governor Orr flagging risks to the economic recovery and outlook, while reiterating that the LSAP, FLP and OCR can all be adjusted to meet the Bank’s mandate. Meanwhile, some stability in crude prices is keeping the Loonie afloat between 1.2915-50 parameters awaiting OPEC+ tomorrow.

JPY/CHF/EUR - Little respite for the underperforming Yen irrespective of fading risk sentiment and bear-steepening in US Treasuries abating somewhat, as Usd/Jpy pivots 104.50 in a moderately firmer 104.23-72 band. Elsewhere, the Franc is straddling 0.9000 against the Dollar, but thankfully for the SNB unable to keep pace with the Euro following its outsized gains yesterday given more deflationary than expected Swiss CPI. Indeed, Eur/Chf is elevated within a 1.0852-71 band even though Eur/Usd has run in to resistance just shy of 1.2100, albeit partly in sympathy with the Pound as noted above. Note also, aside from the obvious psychological factors surrounding the next round number, a prior high from September 2017 (1.2092) may be hampering the single currency in addition to a key Fib retracement level only a few pips above (1.2103 represents a 76.4% correction of the move from 1.2555 to 1.0638 - mid-February 2018 peak to this year’s low).

SCANDI/EM/PM - The Sek and Nok seem more in thrall with Eur excesses than the general risk tone or somewhat confusing Norwegian current account developments as the surplus widened in Q3, but only after a huge downward revision to the prior quarter. Conversely, EMs are trading mixed with the Zar underperforming regardless of Xau extending its recovery rally beyond another chart hurdle in the form of the 10 DMA (after breaching the 200 DMA on Tuesday).

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)

FIXED INCOME

Some consolidation after Tuesday’s bear-steepening rout, an element of risk reversal as stocks stall, and perhaps relief that UK and German debt offerings were comfortably taken down, but Brexit has also been a factor behind the recovery in Gilts after chief EU negotiator Barnier less than promising update on progress (or the lack of) towards a trade deal with the UK. The 10 year UK benchmark has waned just ahead of 134.00 awaiting results of the 2031 DMO sale to see if the recent concession is enough to entice buyers, while Bunds are just below their Eurex best and the T-note midway between overnight session high and low in the run up to ADP, Powell part 2 and Fed’s Williams who is due to speak twice before the Beige Book.

COMMODITIES

WTI and Brent front month futures have recouped earlier losses which were seen in wake of OPEC indecision coupled with a surprise build of 4.1mln bbl (vs. Exp. -2.4mln bbls) in private inventories last night. The recovery in futures commenced in APAC hours but gained traction following the UK vaccine approval announcement, albeit in the context of yesterday's sell-off, the recovery is somewhat tame. In terms of where we stand on OPEC, ministers are to meet again today in an attempt to hash out differences over the producers' next move - with three options reportedly on the table. 1) An extension of current cuts by three months (Saudi's preference), 2) output to be raised from January but by a smaller volume than the 2mln BPD under the DoC (Russia's preference), and 3) hiking output under the original plan. Furthermore, the compliance mechanism seems to be an issue with the UAE, whereby sources noted that kingdom is willing to back the 7.7mln BPD extension but contingent on assurances of improved compliance. Note UAE also reportedly called for an extension of 7.2mln BPD cuts. WTI Jan trades on either side of USD 44.50/bbl (vs. low 43.92/bbl) and Brent Feb on either side of USD 47.50/bbl (vs. low ~ 46.85/bbl). Elsewhere, precious metals have been bolstered post-vaccine approval amid reflationary play and despite the firmer Buck. Spot gold also surpassed the 10DMA (~ 1820/oz) flagged by technicians ahead of USD 1850/oz psychological mark and the 21 DMA at USD 1859/oz. Spot silver meanwhile continues to make headway above USD 24/oz. Elsewhere, Dalian iron ore futures gained as much as 3.5% amid rosy steel demand prospects, whilst LME copper is subdued amid the firmer Buck and mixed equity picture.

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

OPEC+ sources note that UAE would have in principle no problem in supporting the rollover of current cuts as long as it gets assurances of improved compliance, according to Argus. (Twitter)