• Asian equity markets began the week with a mild positive bias and US equity futures were also underpinned following constructive headlines over the weekend
• As expected, the US FDA authorized the Pfizer (PFE)/BioNTech (BNTX) COVID-19 mRNA vaccine for emergency use
• In FX markets, the DXY languished below 91.00, GBP/USD reclaimed 1.33 and EUR/USD trades firmer on a 1.21 handle
• EU and the UK have agreed to continue Brexit talks beyond yesterday's "deadline", adding that it would be responsible to go the extra mile
• EU chief Brexit negotiator Barnier is to brief EU ambassadors on Monday morning at 07:30GMT regarding the state of play of negotiations
• The Senate approved the one-week stopgap measure on Friday which President Trump signed into law
• Looking ahead, highlights include US Electoral College Voting, OPEC MOMR, ECB's Panetta, Schnabel

CORONAVIRUS UPDATE

US CDC reported total COVID-19 cases rose to 15.93mln from 15.72mln and total deaths rose to 296.8k from 294.5k the day before, while a major newswire tally stated that US cases rose by at least 179,279 to a total of 16.29mln and deaths rose by at least 1,391 to a total of 299.5k, according to a major newswire tally. (Newswires)

US FDA authorized Pfizer (PFE)/BioNTech (BNTX) COVID-19 mRNA vaccine for emergency use and reports stated that the companies were prepared to deliver first doses immediately, while CDC’s Advisory Committee on Immunization Practices voted to recommend the use of Pfizer/BioNTech COVID-19 vaccine on people 16 years and older under the Emergency Use Authorization. (Newswires)

US President Trump, VP Pence and other top officials are to be offered the vaccine beginning on Monday, while essential personnel in White House and certain officials in the three branches of government are to be vaccinated within the next 10 days, according to a source. However, President Trump later tweeted that White House workers should receive the vaccine somewhat later in the program unless specifically necessary and he has requested this adjustment be made, while he is not scheduled to take the vaccine but looks forward to it in the future. (Newswires/Twitter)

US Operation Warp Speed Chief Adviser Slaoui said the US expects to have immunized 100mln people against COVID-19 by end of Q1 2021. (Newswires)

Canada’s vaccine logistics chief said Canada expects Moderna (MRNA) vaccine to get regulatory approval reasonably soon, while Canadian PM Trudeau later commented that they received the first vaccines from Pfizer (PFE). (Newswires)

UK COVID-19 cases +18,447 (prev. +21,502) and deaths +144 (prev. +519), France cases +11,533 (prev. +13,947) and deaths +150 (prev. +194), Italy cases +17,938 (prev. +19,903) and deaths + 484 (prev. +649). (Newswires)

UK Health Secretary Hancock suggested that most rural towns and areas that want to be “decoupled” from neighbouring COVID-19 hotspots in higher tiers, will have their hopes disappointed this week, while reports also noted that senior ministers appeared resigned to London being increased to Tier 3 restrictions. (Telegraph)

Germany is planning to shut most shops from this Wednesday until January 10th in an effort to contain the COVID-19 spread, according to a draft government proposal. German Chancellor Merkel later stated that existing lockdowns failed to reduce infections and confirmed that states agreed to close most shops for the aforementioned dates with alcohol consumption in public to be banned during that period. Furthermore, there were comments from German Finance Minister Scholz that they will offer financial support of up to EUR 500k/month for affected businesses to soften blow from the lockdown. (Newswires)

South Korea is reportedly mulling level 3 social distancing restrictions, while it reported a new daily record of 1,030 confirmed COVID-19 cases on Sunday in which over 70% of local infections were in the greater Seoul area. (Newswires)

Sinopharm unit CNBG expects its COVID-19 vaccine output capacity to reach over 1bn doses next year, while it has conducted phase III clinical trials in 10 countries and regions. In relevant news, Peru suspended trials for the Sinopharm COVID-19 vaccine due to a serious adverse event for one of the volunteers. (Global Times/Newswires)

ASIA

Asian equity markets began the week with a mild positive bias and US equity futures were also underpinned following the constructive headlines from over the weekend including the extension of Brexit talks and after US regulators approved the emergency use authorization for the Pfizer/BioNTech vaccine with the first round of inoculations stateside to begin today. ASX 200 (+0.3%) and Nikkei 225 (+0.4%) traded higher with notable strength in tech, financials and consumer sectors front running the gains in Australia but with upside capped as healthcare and mining stocks lagged, while the Japanese benchmark benefitted after a continued improvement to the Tankan survey in which nearly all figures beat expectations including the Large Manufacturers Index which improved at the fastest pace since June 2002 despite remaining in negative territory for a 4th consecutive quarter. Hang Seng (-0.6%) and Shanghai Comp. (+0.4%) were mixed with early indecision seen after the PBoC’s operations resulted in a net liquidity drain and after the announcement late last week by Nasdaq to remove shares of 4 Chinese companies from the indexes it manages following the US blacklisting and similar actions by both FTSE Russell and S&P Dow Jones Indices. Finally, 10yr JGBs were rangebound amid the mostly positive mood in regional stocks and as demand for bonds was contained by a lack of BoJ purchases in the JGB market today with the central bank only seeking Treasury Discount Bills, although it did offer to buy JPY 600bln in commercial paper from Thursday.

PBoC injected CNY 20bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 30bln. (Newswires) PBoC set USD/CNY mid-point at 6.5361 vs exp. 6.5348 (prev. 6.5405)

China's regulator fined Alibaba (9988 HK), China Literature (772 HK) and Shenzhen Hive Box CNY 500k for not reporting deals properly for anti-trust reviews, while the regulator said the punishment signals anti-monopoly supervision will be strengthened in the internet field. (Newswires)

• Chinese House Prices (Nov) Y/Y 4.0% (prev. 4.3%). (Newswires)
• Japanese Tankan Large Manufacturing Index (Q4) -10 vs exp. -15 (prev. -27)
• Japanese Tankan Large Manufacturing Outlook (Q4) -8 vs exp. -11 (prev. -17)
• Japanese Tankan Large All Industry Capex (Q4) -1.2% vs exp. -0.1% (prev. 1.4%)

UK/EU

EU Commission President von der Leyen stated that she had a useful call with UK PM Johnson on Sunday morning and agreed that talks will continue, while both stated that it was responsible at this point to go the extra mile. It was also reported that EU member states are to say that the next days will be important and that they will take steps needed to ensure any agreement reached by negotiators will enter into force ASAP, in a coordinated response to the extension of talks. (Twitter/BBC)

UK PM Johnson said the hope was we could finish by Sunday if there was a deal to be done and that as things stand, we are still very far apart on some key issues but added that where there is life there is hope and we will go the extra mile. PM Johnson also stated it is most likely we will have to get ready for Australia terms and we must get ready with confidence for a no-deal but also stated there is a deal to be done if our partners want to do it. (Newswires)

UK Foreign Secretary Raab said that some of the EU's proposals have been "pretty outlandish", when asked about the three remaining Brexit sticking points and how to resolve any disputes. Furthermore, Raab suggested he cannot close the door on it but thinks it would be quite a high bar when questioned if talks could actually continue towards 31st December. (Sky)

UK PM Johnson was reported on Friday to have placed four Royal Navy patrol ships on standby to stop European fishing vessels if they encroach on British waters in the event of a no-deal Brexit. It was also reported that the government is working on legislation to extend the powers of the navy police so that they can board foreign vessels and arrest fishermen. (FT/Times)

UK Cabinet ministers are drawing up a multibillion-pound bail-out package to support industries impacted the most by a no-deal Brexit, which include resilience deals for sheep farmers, fishermen, car manufacturers and chemical suppliers, while other reports noted ministers were planning a new state-backed loan scheme for SMEs. (Sunday Telegraph/FT)

UK ministers reportedly told supermarkets and other essential goods providers to stock up and prepare for a no-deal as they expect it could take three months to resolve vegetable shortages and panic buying could make COVID-19 seem like child’s play in comparison. (Guardian)

Irish Foreign Minister Coveney said he thinks both sides want to do a deal and want a deal now, while he thinks it can be done and really needs to be done in the next few days in which there will be huge pressure to close it out this week. There were also prior comments from Irish Deputy PM Varadkar on Friday that he would not be surprised if there was a deal over the coming days. (Newswires)

EU chief Brexit negotiator Barnier is to brief EU ambassadors on Monday morning 07:30GMT regarding the state of play of negotiations and then brief the UK coordination group in the European Parliament at 08:30GMT. In separate news, the European Parliament added a debate and vote on UK relations to its plenary session on December 18th, while EU states were being warned not to entertain the idea of side deals with the UK if talks fail and instead force the UK into returning to the negotiating table ASAP after January 1st. (Newswires/FT)

Fitch affirmed Spain at A-; Outlook Stable and affirmed Switzerland at AAA; Outlook Stable. (Newswires)

• UK Rightmove House Price Index (Nov) M/M -0.6% (prev. -0.5%). (Newswires)
• UK Rightmove House Price Index (Nov) Y/Y 6.6% (prev. 6.3%)

FX

In FX markets, the DXY languished below the 91.00 level amid the mixed picture across its major counterparts and with tentativeness in currencies ahead of this week’s plethora of central bank activity including FOMC, BoE, SNB and BoJ. Attention also returns to Congress this week as the bipartisan group of US lawmakers are to unveil their USD 908bln pandemic relief later today, and also to avert a government shutdown after the Senate approved the one-week stopgap measure on Friday which President Trump signed into law. GBP/USD outperformed and reclaimed the 1.3300 handle after EU Commission President von der Leyen and UK PM Johnson agreed that talks will continue beyond the Sunday deadline and that it was responsible at this point to go the extra mile, although PM Johnson still noted it is most likely we will have to get ready for Australia terms. Furthermore, reports stated that Cabinet ministers are drawing up a multibillion-pound bail-out package to support industries impacted the most by a no-deal Brexit and that ministers have told supermarkets to start stockpiling goods on concerns of intense panic buying and shortages which could last three months in the event of a no-deal. EUR/USD gained from an early broad weakening in the greenback although the single currency has since pared some of the gains, while USD/JPY is steady around 104.00 and antipodeans failed to sustain opening momentum amid a lack of pertinent tier-1 data and despite the PBoC setting a mildly firmer reference rate.

South Africa announced to suspend its power cuts on Sunday as emergency generation reserves sufficiently recovered overnight. (Newswires)

COMMODITIES

WTI crude futures edged small gains amid the mostly positive risk tone and with upside facilitated by Middle East supply-related headlines including a pipeline disruption in Iran and after an explosion at an oil tanker at a Saudi port in Jeddah which was caused by an 'external source'. Elsewhere, gold was contained by an uneventful greenback and lack of haven demand, while copper was kept afloat by the mild constructive mood in the region including its largest purchaser China.

Baker Hughes rig count: Total US rigs +15 to 338; oil rigs +12 at 258; natgas rigs +4 at 79. (Newswires)

AP reported an explosion hit a ship off Saudi's port city of Jeddah on the Red Sea although, while shipping company Hafnia later stated its oil tanker was hit by an unidentified external source which caused a fire and explosion while discharging at Saudi's Jeddah port. (Newswires/AP)

Iran's oil ministry plans to increase the country's overall crude and condensate production by almost 70% to 4.5mln bpd next year if the incoming Biden administration lifts the sanctions on the import of its oil. (Argus)

A pipeline carrying crude to Iran's second largest refinery ruptured due to a landslide which caused a fire to breakout, although it was later reported that most of the fire was contained and repairs were being conducted on the damaged section of the pipeline. (Newswires)

GEOPOLITICAL

Armenia and Azerbaijan accused each other of violating the ceasefire agreement as fighting continued on Sunday in the Nagorno-Krabakh region. (Al Jazeera)

A Russian nuclear submarine on Saturday successfully test-fired four intercontinental ballistic missiles in a show of readiness of the country’s nuclear forces. (Newswires)

Russian intelligence is reportedly believed to be behind a cyber attack on multiple federal agencies including the US Treasury and Commerce Department. (WSJ)

Five Eyes nations (Australia, Canada, New Zealand, UK and US) are reportedly in preliminary discussions on how to respond to China's sanctions with one source describing cooperation within the alliance as 'off the charts at the moment'. (Daily Mail)

US

While most markets were sleepy/choppy on Friday, there has been a noticeable pick-up in front-end US rates, with strong buying volumes across Fed Funds, Eurodollar whites and USTs, pressuring the front-end closer to the zero bound. There is growing chatter of the ballooning cash levels in money markets chasing a shrinking supply of bills, particularly with the US government's stimulus impasse and elevated TGA. Those pressures have seen the Treasury 2-year yield fall below 12bps to its lowest levels since August, not too far from its all-time-low of 10.5bps back in May, when chatter of the Fed potentially going negative was widespread. T-notes finished electronic trade higher by 4+ ticks at 138.01.

US Supreme Court rejected the Texas lawsuit that challenged Biden’s election victory in four states, which spurred criticism from US President Trump who stated that the Supreme Court really let us with no wisdom nor courage, while he said that he will fight on. There were also reports that US President Trump is pursuing the appointment of a special counsel to probe the 2020 election and is said to have instructed advisers to seek candidates for the special counsel role. (Newswires/Twitter)

US Senate reached an agreement on the one-week government stopgap funding bill which was passed by voice vote and then signed by US President Trump. There was also said to be discussions of a second stopgap extension of the US government funding next week which means discussions could go past Christmas. (Newswires/Washington Post)

US House Speaker Pelosi and Treasury Secretary Mnuchin spoke for 30 minutes on Sunday afternoon regarding an omnibus bill and COVID-19, while they will speak again on Monday, according to Pelosi's aide. (Newswires)

Bipartisan group of US lawmakers are to unveil their USD 908bln pandemic relief on Monday, although one of the key negotiators stated there is no guarantee Congress will pass it. (Newswires)