• Indices are largely firmer this morning though magnitudes are modest, Euro Stoxx 50 +0.2% & ES +0.1%, as focus resides on the sessions looming risk events
• US Treasury Secretary Mnuchin says talks between GOP and Democrats are quite constructive but few sticking points remain regarding a deal
• UK PM Johnson and EU's von der Leyen agreed that a firm decision should be taken about the future of talks by Sunday
• China's Foreign Ministry says they are revoking visa exemption treatment for US Diplomat passport holders who are visiting Hong Kong, Macau
• DXY is depressed as antipodeans lead and EUR remains steady amidst GBP losses while fixed remains firm across the board
• Looking ahead, highlights include ECB rate decision & press conference, US CPI, IJC, EU Council Meeting, BoC's Beaudry, FDA EUA meeting, supply from the US

CORONAVIRUS UPDATE

Link: US FDA Emergency Use Authorization (EUA) Meeting

Oxford's Jenner Institute Director said if FDA waits for the end of Oxford University/AstraZeneca(AZN LN) vaccine trial, the vaccine will not be available in the US until mid-2021. (Newswires)

ASIA

Asian equity markets were cautious amid headwinds from the soured mood on Wall St where the major indices pulled back from record levels amid frictions in US stimulus talks and lack of any breakthrough in Brexit negotiations across the pond, with the downturn led by hefty losses in the Nasdaq. ASX 200 (-0.7%) was pressured amid notable weakness in gold miners after recent losses in the precious metal and as tech stocks reflect the underperformance of their stateside peers, with the ongoing deterioration in Aussie-Sino ties also adding to the glum. This was after MOFCOM issued its ruling on anti-subsidies investigation on Australian wine imports and confirmed to collect anti-subsidy deposits from Friday, while Nikkei 225 (-0.2%) traded negative for most the session but with downside cushioned by favourable currency flows on Gotobi day and with SoftBank shares surging double digits which was attributed to paper profits from the DoorDash IPO. Hang Seng (-0.4%) and Shanghai Comp. (U/C) began subdued although the mainland bourse showed resilience and briefly recouped opening losses which also follows the recent jump in lending and financing data, while Hong Kong languished as its Chief Executive Lam faces a freeze-out from Japanese banks with US operations after Tokyo said it will abide by US sanctions. Finally, 10yr JGBs were higher on a rebound from support near 152.00 and following a similar mild recovery in T-notes with prices helped by the cautious tone in stocks, although gains were pared following mixed results and weaker demand at the 20yr JGB auction.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5476 vs exp. 6.5485 (prev. 6.5311)

China's MOFCOM issued the ruling on anti-subsidies investigation on Australian wine and said it will impose temporary anti-subsidies deposits against Australian wine imports beginning December 11th. (Newswires)

China's Foreign Ministry says they are revoking visa exemption treatment for US Diplomat passport holders who are visiting Hong Kong, Macau. (Newswires)

S&P DJI said it will remove 10 Chinese firms' A-shares, H-shares and ADRs prior to December 21st open including Hikvision (002415 CH) and SMIC (981 HK) following US blacklisting. (Newswires)

Asian Development Bank revised its 2020 economic growth forecast for developing Asia to -0.4% from -0.7% and raised 2020 Chinese GDP growth to 2.1% from 1.8%. (Newswires)

US

US Treasury Secretary Mnuchin said stimulus cheques in COVID-19 relief package have bipartisan support and President Trump's backing, while he added talks between GOP and Democrats are quite constructive but few sticking points remain regarding a deal. (Newswires)

There were separate reports that US Senators King and Graham were close to a deal on liability protections in COVID relief talks and were getting input from congressional leaders, while they had hoped to unveil the bill language yesterday. (Newswires/CNN)

US House voted 343-67 to pass the one-week stopgap funding measure to avoid a government shutdown as expected, while Senate plans to vote on it today. (Newswires)

Discussions continue behind the scenes today on Capitol Hill to get a deal on coronavirus relief & overall bill to fund the government, according to Fox's Pergram. (Twitter)

US President-elect Biden is reportedly to nominate Katherine Tai as the next USTR. (Newswires)

UK/EU

UK PM Johnson acknowledged the Brexit situation is difficult but noted they will not leave any route to a fair deal untested, while he added the deal must respect UK independence and sovereignty, while EU Commission President von der Leyen said we gained a clear understanding of each other's positions and that they remain far apart but added we agreed the teams should immediately reconvene to try resolve the issues. (Newswires)

A senior UK source said very large gaps remain and it is still unclear if the gaps can be bridged, while the source added that UK PM Johnson and EU's von der Leyen agreed that a firm decision should be taken about the future of talks by Sunday. There were also comments from an EU official that both sides appear to see a Brexit deal is possible and that PM Johnson and EU's von der Leyen agreed talks were constructive. Seperately, the Irish Foreign Minister Coveney said the fact there was not any sign of compromise last night is a problem. (Newswires)

UK Foreign Secretary Raab says movement on both fisheries and level playing field (LPF) is required by Sunday and the EU would need to move significantly on these points to continue discussions post-Sunday - says the EU has hardened its position on the LPF; cannot accept EU demands on the level playing field. (Newswires)

Dutch PM Rutte says at this moment he is neutral on EU budget compromise. (Newswires)

EU is reportedly to tell large tech firms to police the internet or face substantial fines, according to report citing a confidential draft regulation which involves penalties of up to 6% of annual turnover. (FT)

UK GDP Estimate YY (Oct) -8.2% vs. Exp. -8.3% (Prev. -8.4%); MM (Oct) 0.4% vs. Exp. 0.4% (Prev. 1.1%)

• 3M/3M (Oct) 10.2% vs. Exp. 10.1% (Prev. 15.5%)
• Monthly GDP yet to fully recover from the March/April declines
• Loss of momentum across all main sectors since July

UK RICS Housing Survey (Nov) 66 vs. Exp. 60.0 (Prev. 68.0, Rev. 67). (Newswires)

EQUITIES

European equities (Eurostoxx 50 +0.3%) post mild gains ahead of today’s crunch ECB meeting with policymakers set to unveil another easing package, predominantly by expanding and extending its PEPP and adjusting its TLTRO offerings. Across the pond, US equity index futures have stabilised after yesterday’s tech-induced sell-off in the US which saw the Nasdaq close with losses of -1.9% (vs S&P -0.8%). That said, some of the hangover for IT names can be observed in Europe with the sector near the foot of the pile for the region, with Infineon and STMicroelectronics softer by 2% and 1% respectively. In the states, the US House has come together on passing the one-week stopgap funding measure to avoid a government shutdown and provide more time for discussions on government funding and pandemic relief, which the Senate plans to vote on today. Closer to home, last night’s meeting between UK PM Johnson and European Commission President von der Leyen has had little follow-through to equity markets. Sectoral performance in Europe is mixed with energy and consumer staples faring better than peers, whilst the aforementioned IT sector and beleaguered travel & leisure industry lag with the latter weighed on by Tui (-3.5%) after the Co. posted a EUR 3bln loss. As the session progresses and events in Frankfurt unfold, the banking sector may prove to be the one to watch. Corporate updates are once again on the light side with Ocado (-4.1%) one of the main standouts thus far to the downside despite raising its FY20 outlook with some desk highlighting moderating growth in Q3.

FX

DXY - The Dollar sees another caged session in early European hours and in the run-up to the ECB policy decision (full preview available in the Newsquawk Research Suite), with the index constrained within a current intraday band at 90.973-91.136 ahead of yesterday’s 91.203 peak, Monday’s 91.241 high, the 21DMA (91.807) and the psychological 92.00 mark, whilst immediate downside levels consist yesterday and Monday’s lows at 90.688 and 90.612 respectively ahead of 90.500 and the YTD low at 90.471. Looking ahead to the session, several risk events are present for the Buck including ECB, COVID-relief talks at Capitol Hill, EUCO summit and the FDA EUA meeting (schedule available on the Newsquawk headline feed), whilst the data slate sees November CPI and the weekly IJCs.

GBP, EUR - Another subdued session for the Sterling in the aftermath of the meeting between UK PM Johnson and European Commission President Von der Leyen whereby the sides failed to narrow differences on outstanding issues but have given negotiators until Sunday to bridge the “very large gaps, with the two sides also intimating early morning that LPF remains the most contentious sticking point and the EU reportedly hardening its position on the matter according to Foreign Minister Raab. Cable has yielded its 1.3300 handle (vs. high 1.3412) after tripping reported stops just under its 21DMA (1.3318), to a current base matching Tuesday’s 1.3291 low ahead of Monday’s 1.3223 low. Elsewhere, EUR/USD trades on either side of 1.2100 in relatively contrained 1.2076-1.2108 range ahead of a risk-packed agenda with the ECB and EUCO meetings garnering full attention on both monetary and fiscal fronts. (full preview for both events can be found in the Newsquawk Research Suite). From a technical standpoint, support levels for the pair could include yesterday’s 1.2057 low ahead of 1.2050, the 1.2038 low set on 2nd Dec ahead of 1.2000 and below that the 21DMA at 1.1962. Upside levels consists of the psychological 1.2150, the YTD peak at 1.2177 ahead of 1.2200.

AUD, NZD, CAD - The non-US Dollars post gains to varying degrees, with the Aussie yet again propped as AUD/USD hover around YTD high and just under 0.7500, with NZD/USD also making headway above 0.7000 (0.7014-52 range), but with gains less pronounced vs. its Aussie counterpart as the AUD/NZD cross breached 1.0600 to the upside and resides towards the top of the current 1.0583-0631 range. The Loonie meanwhile meanders on either side of 1.2800 vs. the Buck (1.2791-2829 range) with the currency underpinned by firmer crude prices.

JPY - Notwithstanding the cautious risk tone, the Yen trades on a softer footing as the pair briefly eclipsed 104.50 to the upside to a high of 104.57 (vs. low 104.21) with some player also citing Gotobi demand.

FIXED

A firmer start to the session with risk sentiment generally quite contained as fundamentally new updates throughout the morning have been sparse ahead of the day’s action-packed session; with previews for both the ECB & European Council meeting are available on the Newsquawk site. Price wise, Bunds printed overnight highs for the week of 178.35 which the 10yr has since surpassed to a new peak of 178.45; as such, focus now turns to touted resistance around the 178.69 region. Within Europe newsflow has been minimal ahead of the aforementioned gatherings on which the only notable development being Dutch PM Rutte saying he is ‘neutral’ on the compromise. Moving to the periphery that has featured the last EZ issuance outings of the year from Spain and Italy, both relatively in-line with the prior outing though the associated yields were at notable lows. Separately, the BTP-Bund yield spread remains in focus and hasn’t differed too far from the ~115bps mark in the last few weeks with all eyes on whether the ECB meeting will be a sufficient catalyst to potentially prompt a move below the key 100bps mark; with EZ fiscal updates also likely to influence European debt dynamics this morning. Exiting the EU, Gilts are modestly outpacing their aforementioned peers following the dinner between PM Johnson and Commission President vdL yesterday which has essentially led to a resumption in negotiations and set Sunday as the new deadline for substantial progress; the UK benchmark remains in proximity to session highs with gains of circa 40 ticks. Finally, and crossing to the US where USTs are buoyed alongside their European peers and as the Democrats continue to reject Republican fiscal proposals, but the Senate is set to vote on the stopgap funding bill today.

COMMODITIES

WTI and Brent front-month futures eke modest gains in lockstep with price action seen across European equity future and with no fresh catalysts throughout the European morning ahead of a barrage of risk events including ECB, EUCO Summit, and state-side stimulus talks. Upside in WTI Jan picked up after breaching mild resistance at USD 46/bbl (vs. low 45.52/bbl) whilst Brent Feb makes headway above USD 49.50/bbl (vs. low USD 48.86/bbl). Elsewhere, spot gold and silver trade lacklustre with the former just above1830/oz (vs. high 1842/oz) and the latter south of USD 24/oz (vs. high 24.061/oz). In terms of base metals, Dalian iron ore futures continued to gain as the raw material continues to be propelled by Chinese demand coupled with Aussie-Sino woes, LME copper meanwhile tracks the modest gains seen in stocks.