• European bourses are mixed with catalyst sparse and focus on COVID; US futures firmer with RTY marginally outperforming
• FX is contained, DXY is softer but retaining 96.00; core debt has dipped after initial upside moves failed at key levels in thin volume pre-supply
• PBoC-backed China Foreign Exchange Committee instructed bank traders to limit speculation on the Yuan
• German coalition agreement could be attained as early as Monday or Tuesday this week, according to sources
• Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices
• Looking ahead, highlights include EZ Consumer Confidence (Flash), US Existing Home Sales, ECB’s de Guindos and Holzmann, and supply from the US

CORONAVIRUS UPDATE

Social unrest and violence erupted in Belgium and the Netherlands over the newly imposed COVID restrictions. (Telegraph)

European Commission will on Wednesday issue a set of new recommendations to the member states on the non-essential travel, a senior EU diplomat said, according to journalist Halmai. (Twitter)

German Health Minister says only social distancing and political resolved can break the fourth COVID wave. (Newswires)

The UK is expanding its COVID-19 booster plan to all over the age of 40 years old from today in an effort to avoid imposing new restrictions; additionally, UK PM Johnson says there is nothing in the data, re. COVID-19, indicating we need to move to Plan B. (Newswires)

Australia PM Morrison said fully vaccinated visa holders will be permitted entry into Australia from December 1st and fully vaccinated citizens from Japan and South Korea can enter from December 1st. Elsewhere, New Zealand PM Ardern said the country will move to a traffic light system from December 3rd. (Newswires)

Singapore government relaxed social distancing curbs that were imposed to contain the spread of COVID-19 and will permit gatherings of up to five people to dine out and socialise beginning this Monday. (Newswires)

ASIA

Asia-Pac stocks traded mixed following last Friday's mostly negative performance stateside, where risk appetite was dampened by concerns of a fourth COVID wave in Europe and recent hawkish Fed rhetoric. Weekend newsflow was light and the mood was tentative heading into this week's risk events including FOMC minutes and US GDP data before the Thanksgiving holiday. The ASX 200 (-0.6%) was subdued with declines led by weakness in gold miners and the energy sector. The Nikkei 225 (+0.1%) was lacklustre after last week’s inflows into the JPY but with downside eventually reversed as the currency faded some of the gains and following the recent cabinet approval of the stimulus spending. The KOSPI (+1.4%) outperformed and reclaimed the 3k level with shares in index heavyweight Samsung Electronics rallying as its de facto leader tours the US which spurred hopes the Co. could deploy its USD 100bln cash pile. The Hang Seng (-0.4%) and Shanghai Comp. (+0.6%) diverged with the mainland kept afloat after the PBoC conducted a mild liquidity injection and maintained its Loan Prime Rate for a 19th consecutive month as expected, although Hong Kong was pressured by losses in energy and cautiousness among developers, as well as the recent announcement of increased constituents in the local benchmark. Finally, 10yr JGBs eked marginal gains amid the cautious risk tone in Asia and following firmer demand at the enhanced liquidity auction for 2yr-20yr JGBs, but with upside capped as T-note futures continued to fade Friday’s early gains that were fuelled by the COVID-19 concerns in Europe before the advances were later halted by hawkish Fed rhetoric calling for a discussion on speeding up the tapering at next month’s meeting.

Chinese President Xi said China has, is and will forever be ASEAN's good neighbour, good friend and good partner, while he added that China as a big country will not bully smaller nations. (Newswires)

EU Commission said they do not regard the opening of a representative office by Taiwan in Lithuania as a breach of the EU’s One China policy and they made it clear to Chinese contacts that this is a predominantly bilateral matter between China and Lithuania, while it added that the EU has stood by Lithuania in the face of sustained economic coercive measures from China and it was also reported that China downgraded its ties with Lithuania. (Newswires)

French Foreign Minister Le Drian said Chinese authorities have to allow Chinese tennis player Peng Shuai to talk publicly if they want to clarify the situation and stated that there could be diplomatic consequences if Peng doesn’t speak, while it was separately reported that Peng Shuai held a video call with Olympics boss Thomas Bach in which she stated that she was safe and well. (Newswires/Sky News)

Chinese Financial Regulators told some banks to issue more loans for property projects, sources state; some Chinese banks told to show positive growth in outstanding loans for property projects in Nov vs Oct. Separately, China is reportedly considering strengthening online platform regulation, via People's Daily. (Newswires)

Chinese tech giants including Alibaba Group (9988 HK), Tencent Holdings (700 HK), Baidu (9888 HK) and JD.com (9618 HK) were fined for failing to report corporate acquisitions, involving 43 such instances that occurred up to eight years ago and with a penalty of CNY 500k for each violation. (Newswires/CITY A.M.)

CENTRAL BANKS

US President Biden is expected to make his announcement on the Fed Chair Position before leaving for Nantucket on Tuesday evening (November 23rd). (WSJ) Note, on Tuesday the 23rd Biden is scheduled to "deliver remarks on the economy and lowering prices for the American people".

BoE Governor Bailey justified the BoE's stance and said it is not the Bank’s job to fix supply chain issues hampering economies globally which cause inflation to increase, while he noted that the fear is inflation is elevated for longer but added that there is also a chance inflation does not prove as persistent as feared. Furthermore, Bailey said there are risks both ways and that UK economic activity is slowing and supply-side issues are stoking prices. (Newswires)

PBoC 1-Year Loan Prime Rate (Nov) 3.85% vs Exp. 3.85% (Prev. 3.85%); 5-Year Loan Prime Rate (Nov) 4.65% vs Exp. 4.65% (Prev. 4.65%)

• PBoC injected CNY 50bln via 7-day reverse repos with the rate at 2.20% for a CNY 40bln net injection; set the USD/CNY mid-point at 6.3952 vs exp. 6.3880 (prev. 6.3825)

PBoC-backed China Foreign Exchange Committee instructed bank traders to limit speculation on the Yuan, while there were separate comments from a PBoC adviser Liu Shijin that China’s economy could enter a period of quasi-stagflation and excessively high producer price inflation. (Newswires)

REINZ Shadow Board is overwhelmingly in favour of the RBNZ raising rates amid surging inflation and stated that inflation pressures have surged over past year amid strong demand, disruption from port congestions and containment measures impacting output. (Newswires)

US

US President Biden is said to have informed his inner circle in the Democrat party that he plans to run for re-election in 2024. (Newswires)

A mass casualty event was reported in Waukesha, Wisconsin where five people were killed and over 40 were injured after a vehicle plowed into people at a holiday parade and with gunshots also reported, while the Wuakesha police chief said there is a person of interest in custody and that there were some fatalities from the parade incident, although it was not known if the incident is related to terrorism. (Newswires)

UK/EU

EY Item Club lowered its forecasts for UK economic growth for this year to 6.9% from 7.6% and for next year to 5.6% from 6.5% as it sees rising inflation and supply chain disruption to have an impact on growth. (The Times)

UK shoppers are expected to spend almost GBP 9.2bln during this year’s Black Friday sales, according to experts cited by The Guardian. (Guardian)

EU is planning to crackdown on patchwork of national arrangements which permit non-EU banks to sell services in the block, with the measures to impact London banks that rely on the cross-border permissions. (FT)

German coalition agreement could be attained as early as Monday or Tuesday this week, according to sources. (Newswires)

GEOPOLITICS

US intelligence showed a mass build up of Russian troops near Ukraine and outlined a likely invasion strategy with US intelligence focusing on a possible incursion early next year, although other reports noted that Russian President Putin denied there was any intention of invading Ukraine. Subsequently, the Russian Kremlin dismissed reports about Russia preparing for a possible attack on Ukraine, highlights that Ukraine is building its forces. (Newswires)

Saudi-led coalition stated air defences destroyed a drone that targeted Najran airport in south of the kingdom, while it later warned that it detected indications of imminent danger to navigation and global trade south of the Red Sea. (Newswires/Al Arabiya)

CRYPTO

The Financial Conduct Authority (FCA) is spending half a million Pounds on blockchain data analysis and the training of its staff on spotting criminal activities via crypto. (Telegraph)

EQUITIES

European cash bourses kicked off the new trading week with mild gains (Euro Stoxx 50 +0.3%; Stoxx 600 +0.3%) following a mixed APAC handover. Some have been attributing the mild gains across Europe in the context of the different approaches of the Fed and ECB, with the latter expected to remain dovish as the former moves tighter, while COVID lockdowns will restrict economic activity. News flow in the European morning has however been sparse, as participants look ahead to FOMC Minutes, Flash PMIs and US GDP ahead of the Thanksgiving holiday (full Newsquawk Desk Schedule on the headline feed) alongside the Fed Chair update from President Biden and a speech from him on the economy. US equity futures see modestly more pronounced gains, with the more cyclically-exposed RTY (+0.6%) performing better than then NQ (+0.4%), ES (+0.4%) and YM (+0.4%). Since the European cash open, the initial mildly positive momentum has somewhat waned across European cash and futures, with the region now conforming to a more mixed picture. Spain's IBEX (+0.7%) is the clear regional outperforming, aided by index heavyweight Telefonica (+5.0%), which benefits from the sectorial boost received by a couple of major M&A updates. Firstly, Telecom Italia (+22%) gapped higher at the open after KKR presented a EUR 0.505/shr offer for Telecom Italia. The offer presents a ~45% premium on Friday's close. Second, Ericsson (-3.5%) made a bid to acquire American publicly held business cloud communications provider Vonage in a deal worth USD 6.2bln. As things stand, the Telecom sector is the clear outperformer, closely followed by banks amid a revival in yields. The other end of the spectrum sees Travel & Leisure back at the foot of the bunch as COVID fears in Europe mount. In terms of individual movers, Vestas Wind Systems (-2.0%) was hit as a cyber incident that impacted parts of its internal IT structure and data has been compromised. Looking ahead, it’s worth noting that volume will likely be more muted towards the latter half of the week on account of the Thanksgiving holiday.

Tesla (TSLA) CEO says the Model S Plaid is coming to China "probably around March". (Twitter) Tesla drivers say they have been locked out of their cars after an outage struck the carmaker's app. (BBC)

FX

AUD/NZD - The Antipodean Dollars are outperforming at the start of the new week on specific supportive factors, like a bounce in the price of iron ore and a further re-opening from pandemic restrictions in both Australia and New Zealand, while the REINZ shadow board is ‘overwhelmingly’ behind another RBNZ rate hike this week. Aud/Usd is holding around 0.7250 and Nzd/Usd is hovering circa 0.7000 as the Aud/Nzd cross pivots 1.0350 in the run up to flash Aussie PMIs and NZ retail sales.

DXY - Aussie and Kiwi strength aside, the Greenback retains a solid underlying bid on safe haven and increasingly hawkish Fed grounds after a run of recent much better than expected US data. In index terms, a base just above 96.000 provides a platform to retest last week’s peaks at 96.245 and 96.266 vs 96.223 so far, but Monday’s agenda may not give bulls much in the way of encouragement via data with only existing home sales scheduled. Instead, the Buck could derive more impetus from Treasuries given front-loaded supply ahead of Thanksgiving in the form of Usd 58 bn 2 year and Usd 59 bn 5 year notes.

CHF/CAD/EUR/GBP/JPY - All narrowly mixed against their US rival, as the Franc keeps its head above 0.9300 and meanders between 1.0485-61 vs the Euro amidst some signs of official intervention from a rise in weekly Swiss sight deposits at domestic banks. Meanwhile, the Loonie has some leverage from a mild rebound in crude prices to pare declines from sub-1.2650 and should glean support into 1.2700 from 1 bn option expiries at 1.2685 on any further risk aversion or fallout in WTI. Conversely, 1 bn option expiry interest from 1.1300-05 could scupper Euro recoveries from Friday’s new y-t-d low around 1.1250 against the backdrop of ongoing COVID-19 contagion and pre-ECB speakers plus preliminary Eurozone consumer confidence. Elsewhere, the Pound is weighing up BoE tightening prospects and the impact of no breakthrough between the UK and EU on NI Protocol as Cable and Eur/Gbp straddle the 1.3435-40 zone and 0.8400 respectively, while the Yen has unwound more of its safe haven premium within a 114.27-113.91 range eyeing UST yields in relation to JGBs alongside overall risk sentiment.

SCANDI/EM - The Nok is deriving some traction from Brent back over Usd 79/brl, but geopolitical concerns are preventing the Rub from benefiting and the Mxn is also on a weaker footing along with most EM currencies. However, the Try is striving to draw a line in the sand irrespective of a marked deterioration in Turkish consumer sentiment and the Cnh/Cny are holding up well regardless of a softer PBoC fix for the onshore unit as LPRs were unchanged yet again and China’s FX regulator told banks to limit Yuan spec trades. In CEE, the Pln has plunged on diplomatic strains between Poland and the EU, the Huf has depreciated to all time lows on virus fears and the Czk has been hampered by CNB’s Holub downplaying the chances of more big tightening surprises such as the aggressive hike last time.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.1300-05 (1BLN), 1.1350 (954M)
• USD/CAD: 1.2485-1.2500 (1.3BLN), 1.2540 (270M), 1.2650 (500M), 1.2685 (1BLN)

FIXED

US Treasuries have been more restrained in advance of supply and FOMC minutes given hawkish rhetoric from the Fed, but Bunds and Gilts extended cycle highs before running into offers around some poignant levels it seems and in relatively thin volume on the way up to 172.57 and 127.02 respectively (+25 and +24 ticks on the day). Note, the 10 year German yield briefly dipped through -35 bp, but not convincingly below a Fib retracement level just above, while UK cash did not breach 90 bp clearly in similar vein to the future at the round number. Gilts are now slipping under 126.50 to a new 126.44 Liffe low amidst bullish commentary from PM Johnson on recovery prospects from the pandemic. Ahead, a quite light pm agenda data-wise, but US existing home sales are out alongside flash Eurozone consumer confidence, while 2 and 5 year T-note supply vies with a trio of ECB speakers for attention.

COMMODITIES

WTI and Brent front month futures see some consolidation following Friday’s slide in prices. In terms of the fundamentals, the demand side of the equations continues to be threatened by the fourth wave of COVID, namely in the European nations that have not had a successful vaccine rollout. As a reminder, Austria is in a 20-day nationwide lockdown as of today, whilst Germany, Belgium and the Netherlands see tighter restrictions, with the latter two also experiencing COVID-related social unrest over the weekend. The European Commission will on Wednesday issue a set of new recommendations to its member states on non-essential travel, a senior EU diplomat said, which will be watched for activity and jet fuel demand. Over to the supply side, There were weekend reports that Japan and the US are planning a joint announcement regarding the SPR release, although a key Japanese official later noted there was no fixed plan yet on releasing reserves. Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices. Meanwhile, Iranian nuclear talks are regaining focus as negotiations are poised to resume on the 29th of November – it is likely we’ll see officials telegraph their stances heading into the meeting. Eyes will be on whether the US offers an olive branch as Tehran stands firm. Elsewhere, the next OPEC+ meeting is also looming, but against the backdrop of lower prices, COVID risk and SPR releases, it is difficult to see a scenario where OPEC+ will be more hawkish than dovish. WTI and Brent Jan trade on either side of USD 76/bbl and USD 79/bbl respectively and within relatively narrow bands. Spot gold and silver meanwhile see a mild divergence, with the yellow metal constrained by resistance in the USD 1,850/oz area, whilst spot silver rebounded off support at USD 24.50/oz. Finally, base metals are relatively mixed with no standout performers to point out. LME copper is flat but holds onto USD 9,500+/t status.

Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices and there were also reports that Japan and the US are planning a joint announcement regarding SPR release. However, the Japanese Chief Cabinet Secretary said that there was no fixed plan yet about releasing oil reserves and they continue to pay attention to global energy market trends, as well as the impact on Japan's economy. (Newswires/Yomiuri)

French Finance Minister Le Maire said that France is to work with UAE on renewable and hydrogen projects, while he added that reaching zero carbon emissions by 2050 is an important goal and that they want to work with the UAE on fighting climate change. (Newswires)

Iran and Azerbaijan are eyeing finalising energy deals soon involving development of oil and gas fields in the Caspian Sea. (Platts)