• European bourses are largely unchanged, Euro Stoxx 50 +0.1%, with cyclicals outperforming (RTY +0.8%) ahead of Biden alongside European tech bolstered by TSMC earnings
• President-elect Biden’s stimulus plan could be valued at USD 2tln which would be USD 700bln greater than what Senate Democrat Leader Schumer had been calling for
• USD has been erring lower after the DXY failed to breach 90.50 with antipodeans bolstered on China trade data while the EUR is capped by Italian coalition conflicts
• Fed’s Clarida (Voter) said we are not going to lift off until we get to 2% inflation for a year; Chair Powell is due to speak at 17:30GMT/12:30EST today
• Looking ahead, highlights include ECB minutes, US weekly jobs data, OPEC MOMR (12:20GMT/07:20EST), President-elect Biden is to unveil his stimulus package, Fed's Powell, Rosengren, Bostic, Daly & Kaplan

CORONAVIRUS UPDATE

US COVID-19 cases +217,393 (prev. +199,793) and deaths +4,131 (prev. +1,957), while a major newswire tally stated that US cases increased by at least 228,082 to 22.92mln and deaths rose by at least 3,957 to 384.5k. (Newswires)

Johnson & Johnson (JNJ) - Reports noted that it's one-shot COVID-19 vaccine was safe and had a promising immune response whereby the interim analysis from the Phase 1/2A trial the showed the vaccine candidate was generally well-tolerated and all volunteers had detectable antibodies regardless of dose or age group by day 57. Furthermore, there were earlier comments from US Operation Warp Speed Chief Slaoui that he expects the Johnson & Johnson COVID-19 vaccine to be 80-85% effective. (Newswires)

UK Transport Secretary Shapps tweeted that passengers will be required to provide proof of negative COVID-19 test prior to travelling to England beginning on Monday. (Newswires/Twitter)

Germany COVID-19 cases increased by 25,164 and deaths rose by a record 1,244. (Newswires)

China COVID-19 cases increased by 138 as of end-January 13th (prev. +115) and it announced 1 new death due to COVID-19, which was the first virus death reported in China for 8 months. (Newswires/AFP)

ASIA

Asian equity markets traded mixed with cautious gains in the major regional bourses after the tech-rebound on Wall St. and better than expected Chinese trade data, although advances were restricted by tentativeness ahead of the upcoming key events stateside including the start of earnings season and President-elect Biden’s stimulus plan announcement. ASX 200 (+0.4%) was higher with outperformance in the tech sector as it drew inspiration from US peers, although Australia's mining stocks were dragged lower in a reversal of yesterday’s fortunes due to weaker underlying commodity prices and lingering tensions with its largest trading partner China which was said to instruct owners of more than AUD 1bln of banned Australian coal to find buyers elsewhere, while Nikkei 225 (+0.8%) outperformed after Machinery Orders and PPI topped estimates. Hang Seng (+0.9%) and Shanghai Comp. (-0.9%) were varied despite the mostly better than expected Chinese trade data which showed USD-denominated exports rose by 18.1%, as the mainland suffered after US President Trump issued an executive order amendment on investments in Chinese military companies which bans Americans from holding securities of blacklisted Chinese firms from November 11th, although the large tech names in Hong Kong were boosted on relief after reports the US government is expected to let Americans continue to invest in Chinese technology giants Alibaba, Baidu and Tencent. Finally, 10yr JGBs were flat with demand sapped by the outperformance in Japanese stocks and pressure in USTs, although the downside was cushioned amid the BoJ’s presence in the market and with the 152.00 focal remaining on the horizon.

PBoC injected CNY 2bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 8bln. (Newswires) PBoC set USD/CNY mid-point at 6.4746 vs exp. 6.4712 (prev. 6.4605)

US President Trump issued an executive order amending the prior order on investments in Chinese military companies, which bans Americans from holding securities of blacklisted Chinese firms from November 11th 2021. (Newswires)

• Chinese Trade Balance (USD)(Dec) 78.17B vs. Exp. 72.35B (Prev. 75.4B)
• Chinese Exports (Dec) Y/Y 18.1% vs. Exp. 15.0% (Prev. 21.1%)
• Chinese Imports (Dec) Y/Y 6.5% vs. Exp. 5.0% (Prev. 4.5%)
• Japanese Machinery Orders (Nov) M/M 1.5% vs. Exp. -6.2% (Prev. 17.1%)
• Japanese Machinery Orders (Nov) Y/Y -11.3% vs. Exp. -15.4% (Prev. 2.8%)

US

Fed’s Clarida (voter) said we are not going to lift off until we get to 2% inflation for a year and stated that when it comes to rate, we won’t have far or long to go to reach neutral. (Newswires)

Fed's Rosengren (non-voter) said the labor market could be more stagnant for upcoming couple of months until there is more widespread vaccinations and economy could face significant weakness in near-term as virus infections increase. However, Rosengren also stated the arrival of vaccines and outlook for further fiscal support are longer run tailwinds and that a fiscal program which gives grants to struggling business may be best method to provide support, while he the future need for Fed emergency lending programs are dependent on what occurs with pandemic and vaccines. (Newswires)

US House voted 232-197 (10 Republicans joined 222 Democrats) to impeach President Trump for a second time as expected, with the Article of Impeachment charging President Trump for inciting insurrection concerning Capitol riot and House leaders will decide when to send charges to the Senate. However, US Senate Republican Leader McConnell later commented that it is best if Congress uses next 7 days to facilitate a safe inauguration and orderly transition, while he added there is no chance a fair and serious impeachment trial can conclude prior to the inauguration and that the Senate impeachment process will start in the first regular meeting after receiving the impeachment article from House. Furthermore, he noted that even if the Senate began the trial this week a verdict will not be reached until after President Trump left office. (Newswires)

US President-elect Biden's aides are reported to have told allies in Congress that Biden's aid plan could be valued about USD 2.0tln which is USD 700bln higher than what Senate Democrat Leader Schumer was calling for earlier, while it was also reported that Biden will outline his stimulus and vaccine plan today at 19:15 ET. (Newswires/CNN)

US President-elect Biden is expected to include a significant new benefit for children in poor and middle-class households in the COVID relief package he will release tomorrow, according to sources. Reports added that while a final decision has not been made, Biden may push for a proposal to provide USD 300 per month to American households for every child under 6, as well as USD 250 per month for every child between the ages of 6 and 17 which would amount to USD 3,600 per year for families with one young child, as well as USD 3,000 per year for families with older children. (Washington Post)

UK Trade Minister Truss says she is seeking an early meeting with the USTR on whisky tariffs. (Newswires)

UK/EU

UK RICS Housing Survey (Dec) 65 vs. Exp. 62 (Prev. 66). (Newswires)

Germany economy likely stagnated in Q4 2020, according to the German stats office; 2020 prelim calendar-adjusted GDP -5.3% Y/Y. (Newswires)

GEOPOLITICAL

UN aid chief is to urge the US to reverse the decision of designating Yemen's Houthis as a foreign terrorist group and will warn that such a designation will result to large-scale famine to an extent not seen in nearly 4 decades. (Newswires)

EQUITIES

European equities trade mostly higher but off best levels (Euro Stoxx 50 +0.3%) after the APAC region posted cautious gains as earning season is about to go underway, and ahead of appearances from US President-elect Biden and Fed Chair Powell at two separate events later today. Overnight repots via CNN noted that Biden aides reportedly told allies in Congress that the President-elect’s stimulus plan could be valued about USD 2.0tln which is USD 700bln higher than what Senate Democrat Leader Schumer was calling for earlier – US equity futures show underperformance in the NQ (-0.3%) vs the RTY (+0.8%) which backs the growth to value rotation from the reflationary playbook. Meanwhile, Morgan Stanley suggested investor sentiment is “very bullish” and remarked that the current risk exposure level is the highest in ten years, although the main risks cited include a quicker-than-expected rise in inflation that would the US 10yr yield toward 2%, alongside vaccine disappointments that would reduce or delay return to normality. Back to Europe, broad-based gains are seen across the major indices with the exception of the SMI (-0.2%), dragged lower by losses in heavyweights Nestle (-0.3%) and Roche (-0.6%) as European sectors portray a pro-cyclical bias. Examining the sectors more closely, auto names drive the gains and benefit from the reflation narrative while a robust Chinese economy (indicated by trade-data overnight) underpins the sector – with PSA also noting that China sales reached the prior year’s levels, albeit Renault (Unch) underperforms after delivering an underwhelming plan but shares nursed losses after the group stated the announced targets are realistic so they can be reached even in the toughest conditions. The IT sector resides among the winners following earnings from TSMC whereby revenue increased 1.4% Q/Q and was mainly driven by strong 5nm demand for smartphone and HPC-related applications. The chip-giant added that the business will continue to be supported by 5G and advanced chips and subsequently, peers ASML (+5.2%),ASM (+5%) and Micro Focus (+2%) see tailwinds. In terms of individual movers, Carrefour (-6.3%) shares retrace a bulk of yesterday’s gains as French Finance Minister Le Maire said the Co. is key for jobs and food security in France and he is not in favour of a takeover by a foreign company and a possible bid would have to be cleared by the Finance Ministry, referring to the friendly takeover approach by Canada’s Couche-Tard for EUR 20/shr.

BlackRock (BLK) Q4 2020 (USD): EPS 10.02/10.18 reported (exp. 9.14/9.09 reported); Revenue 4.48bln (exp. 4.3bln). Assets Under Management: 8.68trln (exp. 8.17trln, prev. 7.81trln). Quarterly Total Net Inflows: +127bln (prev. +129bln)

TSMC (2330 TT) - Q4 net TWD 142.8bln vs exp. TWD 137.2bln (prev. 116.0bln Y/Y), rev. TWD 361.5bln vs prev. TWD 317.2bln Y/Y. Revenue growth was mainly driven by strong 5nm demand for smartphone and HPC-related applications. Co. sees 2021 CapEx of USD 25-28bln. Co. says Business will continue to be supported by 5G and advanced chips. (Newswires/TSMC)

Uber Eats (UBER) – Deliveroo has hired investment banks to assist in a London IPO expected around April that could value the Co. in excess of GBP 5bln. (Sky News)

FX

AUD/NZD/GBP/CAD - The Aussie is back above 0.7750 vs its US counterpart and eyeing 1.0800 against the Kiwi in wake of Chinese trade data surpassing expectations in headline surplus terms to offer Aud/Usd some compensation amidst the ongoing dispute over exports that has seen Beijing instruct owners of banned Australian coal to the vale of Aud 1 bn+ to find alternative buyers. Meanwhile, Nzd/Usd continues to encounter resistance beyond 0.7200 and did not get much in the way of support from a slowdown in NZ building approvals ahead of electric card sales and the food price index. Similarly, the Pound remains top heavy into 1.3700 and through 0.8900 vs the Euro following a record rise in daily COVID-19 fatalities on Wednesday, but the Loonie has extended its recent rebound from sub-1.2800 towards 1.2665 in the run up to Friday’s BoC business outlook and senior loans survey.

USD - After inching a smidge closer to 90.500, at 90.487, the DXY is drifting back down again and it looks like Buck bulls and bears are both biding time for Biden to see whether reports of a larger than anticipated Usd 2 tn fiscal aid package prove to be accurate. In the interim, IJC metrics may provide impetus as the index hovers above 90.235 and the Dollar will also be listening intently to Fed chair Powell for his stance on tapering given more tempering of market perceptions over the timing by several officials yesterday, including Brainard and Clarida.

EUR/CHF/JPY - The Euro, Franc and Yen are still ensconced in relatively tight ranges against the Greenback, around 1.2150, between 0.8900-0.8850 and either side of 104.00 respectively, with Eur/Usd hampered by the latest Italian political fiasco in advance of ECB minutes, which also resulted in some downside pressure in the Eur/Chf cross, while Usd/Jpy has not really responded to a surprise rise in Japanese machinery orders or the BoJ’s broadly improved regional survey.

SCANDI/EM - In contrast to the recent trend, Eur/Sek is lower and Eur/Nok higher as oil prices wane pre-OPEC’s MOMR, while Usd/Zar has reversed from around 15.2900 to 15.1400 or so even though SA’s Eskom is planning stage 2 load-shedding again and Gold has slipped back below Usd 1850/oz again. In fact, EMs are generally firmer on the latest Dollar fade after dovish Fed rhetoric and more UST yield consolidation in wake of solid auction results.

FIXED

Bunds and Gilts have lost momentum after firmer rebounds to 177.62 and 134.36 (+24 and +15 ticks on the day vs -4 and -14 ticks at one stage), while BTPs pared some declines following Italian offerings showing little sign of politics eroding demand. However, the 10 year benchmark is still flagging and extending its reversal to test 151.00 given that the coalition is on the brink of collapse and attention turns towards ECB minutes (preview of the release available via the headline feed at 10.00GMT). Elsewhere, US Treasuries remain defensive and the curve is re-steepening in wake of Wednesday’s strong long bond sale as post-issuance relief switches to the supply and funding side of fiscal support from President-elect Biden that is touted to top estimates at Usd 2 tn. Also ahead, weekly jobless and continuing claims and Fed chair Powell rounds off another busy slate of speakers.

COMMODITIES

WTI and Brent front month futures trade choppy between gains and losses in early European trade. The contracts saw a bout of selling pressure shortly after the European cash open with no immediate catalyst attributed aside from potential technical influence upon breaches of psychological levels. Both benchmarks trade in the red with WTI Feb'21 residing around USD 53/bbl (vs high USD 53.29/bbl), while Brent Mar briefly fell below USD 56/bbl (vs high 56.40/bbl). However, in the grand scheme of things, prices continue to feel underlying support from the inflationary narrative (with reports of a USD 2tln US stimulus bazooka), coupled by the OPEC+ flexibility and voluntary Saudi cuts. News flow for the supply side of the equations has remained light, but further adding to the rosier demand hopes is J&J's COVID vaccine update whereby the one-shot vaccine is reportedly safe and generates promising immune response in early trials. Looking ahead, today sees the release of the OPEC MOMR (12:20GMT/07:20EST), the second of the trio of monthly reports. As a recap, the EIA STEO cut its forecast for 2021 world oil demand growth by 220k BPD and sees 2022 world oil demand to hit 101.08mln BPD, up by 3.31mln BPD from 2021. Further, the EIA forecasts Brent crude oil spot prices to average USD 53bbl in both 2021 and 2022 compared with an average of USD 42/bbl in 2020. Another theme to keep an eye on is the developments in the Middle East amid heightened Iranian tensions – with source reports overnight suggesting Iran appears to have sent drones to its allies in Yemen. Elsewhere, spot gold and silver trade modestly softer around recent ranges and sub-1850/oz for the yellow metal. In terms of base metals, LME copper fluctuates on either side of the USD 8,000/t mark after seeing early pressure from a firmer overnight Dollar. BoFA forecasts copper prices averaging USD 9,500/t in Q4 2021 as the bank suggest the market will likely be flipping into a deficit, with the overall 2021 copper price forecast at USD 8,725/t compared to its prior view of USD 7,588/t. Meanwhile, China’s 2020 iron ore imports hit a record high after rising almost 10% YY due to firm demand in the economy’s recovery phase. Conversely, annual rare earth exports from China fell to a five-year low amid lower pandemic-laden overseas demand .

Russian Foreign Minister Lavrov said Russia and Saudi are working to stabilise the oil market. (Twitter)

Norway 2021 oil output seen at 101.9mcm (prev. view 109.0mcm); 2022 seen at 109.1mcm (prev. view 111.6mcm). (Newswires)

BofA:

• Copper prices averaging USD 9,500/t in Q4 2021 with the market likely flipping into a deficit; 2021 at USD 8,725/t vs prev. USD 7,588/t
• Expects iron ore to stay higher for longer and sees prices averaging USD 135/t in 2021 compared to its prior view of USD 100/t
• 2021 aluminium forecast to USD 2125/t vs prev. USD 2000/t