• Sentiment is bolstered amid Brexit updates and following the COVID-19 vaccine EUA in the US; Euro Stoxx 50 +1.1% & ES +0.6%
• EU & UK have agreed to continue Brexit talks; Barnier has indicated a fishing compromise could equate to a deal this week and was more upbeat than in his previous appraisals
• GBP is the morning's outperformer to the detriment of the USD with G10 peers benefitting albeit to a lesser extent thus far; debt continues to dip on broader sentiment
• 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
• US FDA authorized Pfizer (PFE)/BioNTech (BNTX) COVID-19 mRNA vaccine for emergency use
• Germany is to take further COVID-19 measures from Wednesday; reports indicate the Netherlands, Italy & London could see restrictions increased shortly
• 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; an announcement could occur as soon as today. (Telegraph/Politico)

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. Officials add the comprehensive removal of such restrictios in early-2021 is unlikely. 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)

Italy is reportedly considering COVID-related restrictions for the holiday period, according to Corriere. (Newswires)

Dutch PM Rutte is tonight to give a speech on new COVID-19 rules given increasing cases; likely to see non-essential shops closing, AFP's Kemp; noting, pressers are normally on a Tuesday so the Monday announcement highlights the severity. (Twitter)

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 (+0.3%) 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 (-0.4%) and Shanghai Comp. (+0.7%) 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)

China and EU have made "positive progress" in the latest round of negotiations for a bilateral investment treaty (BIT) last week, where talks were focused on remaining issues such as text and a list, GT reports. (Global Times)

• 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%)

US

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)

UK/EU

EU Chief Brexit Negotiator tells EU envoys that the UK is backtracking on fisheries; adds there has been limited progress on the enforcement mechanism and disagreements remain on state aid. Sees a narrow path to a Brexit agreement, according to a EU Diplomat and is 'guarded' on the prospects of a deal. Subsequently, a UK source has pushed back on the fisheries backtracking comment. (Newswires)

EU Chief Brexit Negotiator Barnier has told EU envoys that a compromise on fisheries could lead to a deal this week, talks on the level playing field were hard but moving in the direction of an agreement, according to BBC's Beake; adding, UK was being difficult on the idea of “an evolution clause” which would determine the extent to which Britain matches future EU rules and regulations.". (Twitter)

EU diplomat said EU's Brexit Negotiator Barnier was "more upbeat" than in his previous appraisal of Brexit talks. "There seems to be movement but a deal is still far from certain", according to Sky's Parsons. (Twitter)

EU contacts close to Brexit talks say both sides are being constructive. Both sides note tentative progress on the 3 main remaining sticking points. They say political intervention is still be needed, according to BBC's Adler; on fishing, indications are a compromise could be found involcing considerable EU concessions. (Twitter)

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)

A UK official cautioned, on Brexit, that there has been “minimal progress” and “no breakthrough,” a sentiment broadly echoed by the EU side, Politico Playbook reports; UK Negotiator Frost is expected to remain in the EU capital for “at least a couple more days.” If a deal is still a possibility after that, Barnier and his team could then once again return to London, although this is still up in the air. (Politico)

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 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%)

ECB's Panetta says that inflation will remain subdued for a protracted period time. Appreciation of the EUR could significantly affect EZ inflation; there should be no doubt that the ECB will not accept inflation settling at levels that are inconsistent with this aim. (ECB)

EU Industrial Production MM (Oct) 2.1% vs. Exp. 2.0% (Prev. -0.4%, Rev. 0.1%)

• Industrial Production YY (Oct) -3.8% vs. Exp. -4.4% (Prev. -6.8%, Rev. -6.3%)

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)

EQUITIES

Major bourses in Europe mostly kicked off the session on a positive footing (Euro Stoxx 50 +0.9%) following on from a similar APAC performance, as markets caught tailwinds from constructive weekend headlines on the Brexit front and with the PFE/BNTX vaccine being approved State-side. That being said, the recent rise in COVID-19 cases in Europe has prompted some economies to reimpose/reconsider stricter measures during the holiday period, with draft proposals from Germany suggesting more stringent rules as of this Wednesday through to early Jan, whilst Italy and the Netherlands are reportedly set to follow in lockstep. Sticking with this theme, rhetoric has been increasing with regards to London entering Tier 3, with Politico also reporting that "things are so bad in the capital an announcement could come sooner, even today or tomorrow", whilst some reports floated the idea of Tier 3 rules being strengthened. Nonetheless, EZ bourses are propped whilst the UK's FTSE (+0.2%) fails to capitalise on the risk tone given Sterling-dynamics coupled with its largest constituent AstraZeneca (-5%) capping gains after announcing a USD 39bln for Alexion Pharmaceuticals (+35% pre-market) - the transaction values Alexion at USD 175/shr vs Friday's 120.98/shr closing price. Losses in AstraZeneca also weighs on the Health Care sector which lags its peers. The sub-par performance in the sector hinders the SMI (Unch) on account of its large pharma exposure. Delving deeper into the sectors, Travel & Leisure benefits from the FDA vaccine approval, Banks outperform as the constructive Brexit noise bolsters UK names with Barclays (+5.3%), Lloyds (+5.1%) and Natwest (+6.6%) benefitting. In a similar vein, UK housing names are also higher across the board on Brexit euphoria coupled with Rightmove forecasts 4% price growth over the next year as "housing priorities stay high on people’s life agendas, though price rises for newly marketed properties will be at a slower pace than this year." In terms of other movers, Germany's new holiday restrictions has underpinned delivery names Delivery Hero (+1.1%) and HelloFresh (+0.8%).

FX

GBP - It remains to be seen whether the latest extension to a deadline for trade talks between the UK and EU yields any success in terms of resolving outstanding differences, but the fact that both sides are willing to continue efforts in pursuit of a deal has been taken as a positive for the Pound with Cable having another glance at 1.3400 and Eur/Gbp back below 0.9100. Moreover, the latest briefing from Brussels via Barnier suggests that 1 of the 3 major sticking points has been overcome, leaving fisheries and the LPF blocking a narrow path to the holy grail, though he is still said to be guarded about prospects of reaching an agreement, while noises from Paris are apparently ever so cautiously encouraging.

AUD/NZD/EUR/CHF - A constructive start to the new week in terms of overall risk sentiment beyond Brexit is underpinning the Antipodean Dollars in relation to their US counterpart as the Aussie straddles 0.7550 and Kiwi pivots 0.7100, but the Euro is not far behind in percentage terms and keeping the DXY depressed towards the bottom of a 90.907-570 range due to its greater weighting in the index. Eur/Usd is hovering just below 1.2150 and stops purportedly sitting around 1.2163 that could preface a retest of the 2020 high circa 1.2178 if tripped. However, the single currency may be hampered by the ongoing spread of COVID-19 that is hitting Germany especially hard, but also threatening to force Italy into tighter restrictions over the Xmas and New Year period. Elsewhere, the Franc is firm above 0.8900 and 1.0800 vs the Greenback and Euro respectively as weekly Swiss sight deposits suggest that the SNB refrained from direct intervention approaching the December quarterly policy review in favour of some official action or a response to last Thursday’s ECB stimulus. Back down under, RBA minutes may not be as compelling as comments from Kearns or flash Aussie PMIs and NZ current account balances for Q3 may offer the Nzd some independent impetus.

CAD/JPY - Marginal G10 underperformers as the Loonie holds within a 1.2776-44 band despite firm oil prices in the run up to Canadian housing starts, manufacturing sales and a speech by BoC Governor Macklem on Tuesday, while the Yen rotates either side of 104.00 in wake of a somewhat mixed Japanese Tankan survey overnight in advance of trade data tomorrow.

SCANDI/EM - In stark contrast to the lethargic Loonie, WTI caressing Usd 47/brl and Brent comfortably over Usd 50/brl are providing the Nok with enough fuel to outflank the Eur and Sek, but the Rub is struggling to breach 73.0000 and Mxn is meeting resistance at 20.0000, while the Try has not been able to glean any lasting momentum from firmer than forecast Turkish ip given the rise in crude and ongoing diplomatic tensions. Indeed, the Lira is languishing close to 7.9000 in stark contrast to the Yuan circa 6.5200 off a firmer PBoC midpoint fix and even the Rand nestling just beneath 15.0000 irrespective of a retreat in Gold as SA’s Eskom suspended planned power cuts following a recovery in reserves from emergency regeneration.

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

FIXED

Gilts have gapped down further to a fresh 135.18 Liffe low (-65 ticks on the day and further way from last Friday’s 135.99 session best) on latest reports emanating from UK-EU talks on a post-transition trade accord suggesting progress on the LPF and perhaps a compromise on fishing, albeit with Spain and the Netherlands still displeased that London is proposing to repatriate processing practices. Meanwhile, broadly upbeat risk sentiment on pandemic vaccine developments is also weighing on core bonds as Bunds fade from a modestly higher 178.56 recovery high and the 10 year T-note meets resistance around 138-00+ ahead of a busy week including Central Bank policy meetings, tier 1 data, preliminary PMIs and supply.

COMMODITIES

WTI and Brent front-month futures see a firm start to the week as the complex coat-tails on the constructive risk tone coupled with some supply/demand side developments over the weekend, albeit not all bullish. Starting with demand news, US FDA authorized Pfizer/BioNTech COVID-19 mRNA vaccine for emergency use and reports stated that the companies were prepared to deliver first doses immediately. On the flip side, European net crude importers are set to enter more restrictive measures for the holiday period, with Germany announcing tighter rules from Wednesday through to Jan 10th, whilst Italy and the Netherlands are also said to be mulling similar moves. Onto the supply slide, AP reported an explosion hit a ship off Saudi's port city of Jeddah on the Red Sea, 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. Furthermore, 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. Another supply-side story to keep an eye on - 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, to which the Iranian Energy Minister stated that the country does not need permission from OPEC and allies. WTI Jan 21 resides around USD 47/bbl after waning from its USD 47.37/bbl high (vs. low USD 46.47/bbl) whilst Brent Feb 21 meanders around USD 50.50/bbl having had hit an overnight high of USD 50.80/bbl after printing a low at USD 49.88/bbl. Looking ahead, markets will see the release of the OPEC MOMR whereby focus will be on its global demand growth forecast revisions (if any) ahead of the IEA's take tomorrow. Elsewhere, spot gold and silver trade lacklustre despite a softer Buck and as equities and overall sentiment remain propped up. The former resides around USD 1820/oz (vs. high ~USD 1855/oz) at the time of writing and the latter sub-USD 24/oz (vs. high 24.035/oz). Turning to base metals, iron ore futures overnight tumbled from recent highs after China stepped up its push for authorities to investigate the base metal's recent rally. Finally, LME copper prices see modest gains after pulling back from best levels as DXY drifted off its worst levels.

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)