• Asia-Pac bourses traded mixed following a similar performance stateside where stock markets stalled after notching fresh record levels
• Pfizer (PFE) cut its vaccine rollout targets for this year due to supply chain issues and it now expects to ship half the doses it had originally planned
• The RBI kept rates unchanged as expected, whilst maintaining its accommodative stance
• An EU source said Brexit talks are 'extremely sluggish', according to BBC’s Kuenssberg
• In FX markets, the DXY remained lacklustre below 91.00, EUR/USD hovers around 1.2150 and GBP/USD trades circa 1.3450
• OPEC+ ministers agreed to increase production by 500k BPD beginning in January and will meet each month to assess market conditions
• US House Speaker Pelosi suggested lawmakers will have a deal on stimulus before House leaves for recess on 11th December
• Looking ahead, highlights include EZ Construction PMI, US and Canadian Labour Market reports, US Durable Goods (R), Baker Hughes Rig Count, BoE's Saunders, Tenreyro, Fed's Evans, Bowman and Kashkari

CORONAVIRUS UPDATE

US COVID cases +196,227 (prev. +152,022); deaths +2,762 (prev. +1,251). California is to impose stay-at-home orders triggered by ICU availability level falling beneath 15% and said that some regions may cross that threshold this week. (Newswires)

Pfizer (PFE) cut its vaccine rollout targets for this year due to supply chain issues and it now expects to ship half the doses it had originally planned after it found raw materials in early production that did not meet its standards, although it still expects over 1bln doses rolled out in 2021. (WSJ)

Moderna (MRNA) said it expects to have 100mln-125mln of vaccine doses available globally in Q1 next year and reaffirmed the view it will have 20mln doses in the US by end-2020, while it also stated that vaccine candidate trial results were consistent across all age groups and that vaccine participants retained high levels of antibodies after 119 days. (Newswires)

ASIA

Asia-Pac bourses traded mixed following a similar performance stateside where stock markets stalled after notching fresh record levels, amid tentativeness heading into today’s NFP data and with a bout of pressure before the Wall St closing bell after Pfizer cut its vaccine rollout targets for this year by half due to supply chain issues, although it still expects over 1bln doses rolled out in 2021. ASX 200 (+0.3%) was positive as financials lead the mild gains across cyclicals but with upside capped after weaker than expected retail sales data and as the mining sectors reversed yesterday’s outperformance. Nikkei 225 (-0.2%) was pressured as exporters suffered from recent currency inflows and with participants awaiting PM Suga’s press conference in which he is expected to discuss measures against the coronavirus, while KOSPI (+1.0%) resumed its outperformance with the index and its largest-weighted constituent Samsung Electronics extend on record levels as the tech giant continued to benefit from the firm outlook for the chip industry. Hang Seng (+0.2%) and Shanghai Comp. (+0.1%) were lacklustre after another consecutive liquidity drain by the PBoC and after the US added four Chinese companies to the Department of Defense blacklist for alleged ties with the Chinese military which include SMIC, CNOOC, China Construction Technology Co. and China International Engineering Consulting. Conversely, the latest reports surrounding Huawei were of a more constructive nature with the US reportedly in talks with Huawei's CFO on resolving criminal charges which would allow her to return home from Canada for admitting wrongdoing and after Japanese chipmaker Kioxia received permission from the US to export some products to Huawei, while Chinese stocks then pared losses in late trade. India's NIFTY (+0.8%) also gained overnight after the RBI rate decision in which the central bank kept rates unchanged as unanimously expected but also maintained its accommodative stance and announced quasi-measures to support stressed sectors. Finally, 10yr JGBs eked minimal gains with initial support after recent upside in T-notes, weakness in Japanese stocks and the BoJ's presence in the market for JPY 540bln of 5yr-25yr JGBs, but with advances limited by a gravitational pull towards the key 152.00 level.

PBoC injected CNY 10bln via 7-day reverse repos at a arate of 2.20% for a net daily drain of CNY 110bln. (Newswires) PBoC set USD/CNY mid-point at 6.5507 vs. Exp. 6.5501 (Prev. 6.5592)

US President Trump's administration said it added four Chinese companies to the Department of Defense blacklist for ties with the Chinese military which were SMIC (981 HK), CNOOC (883 HK), China Construction Technology Co. and China International Engineering Consulting Corp. There were also separate reports that the US Commerce Department is considering blocking cloud companies from countries like China, Russia and Iran. (Axios)

US is reportedly in talks with Huawei's CFO regarding resolving criminal charges which would allow her to return home from Canada for admitting wrongdoing. There were also separate reports that Japanese chipmaker Kioxia received permissions from US to export some products to Huawei. (WSJ/Nikkei)

Japan is to set up subsidies for regional banks that shore up business through mergers and will adopt a powerful economic package to avert a return to deflation, while Japan will also extend no-interest, no-collateral loans for firms and extend the Go To Travel campaign according to the draft stimulus package. (Newswires)

RBI kept the Repurchase Rate and Reverse Repo Rate unchanged at 4.00% and 3.35% respectively, as expected through unanimous vote and maintained its accommodative monetary policy stance which it will continue at least into next FY. RBI Governor Das stated that high inflation constrains monetary policy and they need more efforts to mitigate supply-side inflation pressures, while he added that signs of recovery are far from broad-based but near-term financial stability risks have been contained and economic contractions have begun to ease. Furthermore, the RBI remains committed to preserving financial liquidity and will do whatever necessary to maintain stability in the financial sector. Das also noted they will also use various instruments at suitable time while ensuring ample liquidity available and will continue to use OMOs and on tap TLTRO will be expanded to cover other stressed sectors. (Newswires)

UK/EU

EU Chief Brexit Negotiator Barnier will reportedly update EU27 envoys on Brexit on Friday afternoon, according to an EU source. It was separately reported that EU sources said Brexit negotiations are continuing and nothing was expected on Thursday but there could be something on Friday or the weekend, while the latest for a deal is Monday morning and said it is up to the UK. (Newswires/The Guardian)

An EU source said Brexit talks are 'extremely sluggish', according to BBC’s Kuenssberg who also tweeted that it sounds like Brexit talks have gone worse yesterday afternoon citing a senior government source that suggested the EU is bringing new elements into the negotiation at the 11th hour and although a breakthrough is still possible in the next few days, the prospect is receding. (Twitter)

EU sources had earlier suggested progress on fishing rights and reports added that based around this idea, UK fishermen could get notably increased quota of stocks that are sold to UK customers and EU boats keep similar quotas for fish (like herring, mackerel) that are loved in the EU but rarely eaten in the UK. However, other reports later noted that level playing field issues were causing problems in talks which was an issue both sides thought they had sorted, while EU and UK sources confirmed that the discussions did not go well in the afternoon (Sky/FT)

EU Budget Commissioner Hahn warned the EU is prepared to exclude Poland and Hungary from the recovery fund and proceed without them if they keep opposing the the European budget. (FT)

FX

In FX markets, a lacklustre USD remained the ongoing theme as the DXY languished below the 91.00 handle after mixed data releases, stimulus hopes and cautiousness heading into today’s Non-Farm Payrolls. The greenback’s major counterparts were mixed with EUR/USD partially holding on to yesterday’s gains at the 1.2100 handle but with upside contained overnight by resistance at 1.2150. GBP/USD flatlined around 1.3450 as it took a breather from its recent attempt at the 1.3500 ceiling where it had printed a yearly high, with the currency not helped by the pessimistic tone from Thursday’s Brexit negotiations in which sources noted significant divergences remain and that talks were extremely sluggish. USD/JPY and JPY-crosses attempted to nurse losses after the former recently slipped beneath 104.00, which then acted as resistance and with the subdued mood also contributing to the headwinds, while antipodeans marginally pulled back amid the indecisiveness in stocks and following slightly weaker than expected Retail Sales from Australia.

Australian Retail Sales (Oct) M/M 1.4% vs. Exp. 1.6% (Prev. -1.1%). (Newswires)

COMMODITIES

WTI crude futures were underpinned after the OPEC+ agreement to gradually ease output curbs by 500k bpd to 7.2mln bpd beginning in January and will hold monthly meetings to decide on whether further to conduct further adjustments in maximum increments of 500k bpd, while the upside in oil prices was exacerbated as Brent and WTI breached the 49.00/bbl and USD 46.00/bbl levels to the upside, respectively. Elsewhere, gold traded flat despite the lacklustre greenback with participants tentative heading into today's key US jobs data and copper gained after reclaiming the USD 3.50/lb level and amid continued strength in Chinese commodity prices.

OPEC+ ministers agreed to increase production by 500k BPD beginning in January and will meet each month to assess market conditions and decide on further production adjustments for the following month with further adjustments not to exceed 500k bpd, while they agreed to extend compensation cuts to the end of March. (Newswires)

Saudi Energy Minister said it will be a while before Libyan production will need to be regulated and that the compensation scheme has not gone as well as hoped, but also noted the second wave lockdowns are not hurting demand as badly as the first wave. There were also separate reports that Saudi Arabia Prince Abdulaziz Bin Salman will continue in his capacity as the Co-Chair of OPEC+ and JMMC, while Saudi Arabia had voiced concern over OPEC+ proposal to increase production for three months by 500k BPD. (Newswires/Twitter)

Russia's Novak said there will be a gradual return of production and it will hinge on market conditions which implies that the production adjustment might be in any direction, while he hopes total OPEC+ oil output increase reaches 2mln bpd by April. (Newswires)

Iran's oil minister said the monthly ministerial OPEC+ meetings will not necessarily only take decisions on production increases but could also decide on output decreases if the market requires it. (Newswires)

GEOPOLITICAL

US Envoy Abrams said that Tehran is unlikely to take action between now and Biden's inauguration that would endanger future sanctions relief. However, it was also reported that the Israeli government issued a warning that Israeli institutions abroad could be targeted following Iranian threats. (Newswires)

US House and Senate armed services committees have agreed on a defence legislation that will force the Trump administration to sanction Turkey over the Russian S-400 missile defence systems and scrutinise companies linked to Russia's Nord Stream 2 pipeline. The USD 740bln defence bill is seen passing Congress later this month. (FT)

US

The T-Curve bull-flattened on Thursday after a slew of selling earlier in the week came to a pause amid a mixed bag of data. By settlement, 2s -1bps at 15.5bps, 10s -2.6bps at 92bps and 30s -3.8bps at 166.6bps; T-note futures volumes were lacklustre; TIPS yields were down around 4/5bps. Most of the strength occured around the US equity open, with participants not taking much from the the decent Jobless Claims/Challenger Layoffs data, although the slightly dissapointing ISM Services worked to support the bid for bonds. US 10-Year Treasury yields have been flirting with the psychological 1.0% handle, a level some desks think could sour risk sentiment if it is breached sustainably. The FOMC is mulling measures to ease policy at the 16th December meeting, and while the central bank appears to be cool on adding to the USD 120bln monthly asset purchases, it may feel inclined to beef-up its forward guidance in an attempt to prevent yields rising too quickly, particularly as policymakers highlight the short-term challenges facing the US economy. That 1.0% level remained elusive on Thursday, with yields on 10s largely remaining in a tight 92-95bps range. The Treasury announced it will next week sell a new USD 56bln 3-year note, reopen 10-year notes for USD 38bln, and reopen 30-year bonds for USD 24bln, with all sizes coming in-line with expectations. T-note (H1) futures settled 7+ ticks higher at 137-21.

US President Trump said he would support a COVID relief bill and added lawmakers are getting close to a stimulus deal, while President Trump later tweeted that he will veto the NDAA as it doesn't include termination of Section 230, as he had previously threatened to. (Newswires)

US President-elect Biden said the USD 900bln bipartisan coronavirus relief package should be passed and that he will ask for more once in office. Biden separately commented that he asked Dr. Fauci to stay on in his administration and will issues an order that masks be worn in federal buildings and transportation facilities, while he will call for mask-wearing for the first 100 days of his administration. (Newswires/CNN)

US House Speaker Pelosi suggested lawmakers will have a deal on stimulus before House leaves for recess on 11th December, while she spoke with Treasury Secretary Mnuchin on omnibus spending and Covid relief in which they expressed a shared commitment to completing both as soon as possible. (Newswires)

Politico's Sherman stated sources he had spoken to yesterday felt better about getting a targeted COVID deal than an omnibus spending deal, which he suggested potentially means a small COVID deal and then a stopgap bill till March. (Politico)