• European bourses trade mixed after the initial China-led optimism petered out in early European hours, Euro Stoxx 50 +0.2%.
• US futures are supported but off best levels ahead of Powell on Wednesday and data points thereafter, ES +0.3%
• USD remains underpinned above 106.00 after Monday’s Fed speak, but is softer overall with antipodeans leading
• Crude benchmarks are bid on speculation around China’s COVID controls easing, with participants also eyeing OPEC+
• EGBs bid by German State and Spanish Flash November inflation data, USTs lifted in tandem though magnitudes are more contained
• Looking ahead, highlights include German CPI (Prelim.), US Consumer Confidence, Fed Discount Rate Minutes, Speeches ECB's Schnabel, BoE's Bailey & Mann, SNB's Schlegel.

EUROPEAN TRADE

EQUITIES

• European bourses trade mixed after the initial China-led optimism petered out in early European hours, Euro Stoxx 50 +0.2%.
• Sectors are mostly firmer following choppiness in the European morning, but base metals remain the marked outperformer.
• US equity futures meanwhile remain modestly firmer across the board but off best levels as participants look ahead to Fed Chair Powell tomorrow, followed by US PCE on Thursday and NFP on Friday, ES +0.3%.
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FX

• Antipodean Dollars revived alongside Yuan as Chinese Covid cases dip to provide some respite, AUD/USD and NZD/USD firmly back above 0.6700 and 0.6200, while Usd/Cnh retreats from just shy of 7.2500.
• Buck off Monday's recovery highs, but DXY underpinned between 106.050-750 parameters on hawkish Fed rhetoric.
• Yen rebounds through 138.00 vs Greenback as bond yields recede to offset disappointing Japanese data.
• Euro and Pound bounce against the Dollar towards 1.0400 and over 1.2050 at one stage.
• Loonie pares declines in tandem with WTI as Usd/Cad recoils within a 1.3497-09 range ahead of Canadian GDP metrics.
• PBoC set USD/CNY mid-point at 7.1989 vs exp. 7.2077 (prev. 7.1617)
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Another firm recovery in debt futures, with EGBs encouraged by slowdowns in German state and Spanish national CPI readings.
• Bunds reach 141.74 from 140.08 at worst and Bonos 130.20 vs 129.46.
• BTPs outperform either side of solid month end Italian auctions as the 10 year benchmark tops out at 120.67 for a 169 tick gain on the day.
• Gilts cautious around 106.00 ahead of BoE commentary, but T-note firm on 113-00 handle awaiting US consumer confidence.
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COMMODITIES

• WTI and Brent Jan futures have been trending higher since the APAC session on speculation China could that China could ease its COVID restrictions, although the Chinese health officials instead boosted the vaccination drive for the elderly and stressed they must keep avoiding excessive COVID curbs.
• Spot gold trades in tandem with the Dollar and remains within recent ranges on either side of USD 1,750/oz ahead of key risk events later this week.
• Base metals are lifted by the overnight China COVID optimism alongside support measures announced for China’s property sector, in turn boosting demand for raw materials, with 3M LME copper back on a USD 8,000/t level and extending on gains.
• China's President Xi says China is ready to boost Russian energy cooperation, via CCTV.
• Russian Deputy PM Novak says they are discussing with Kazakhstan and Uzbekistan a gas union for shipments, which would include shipments to China, via Ifx.
• CNOOC is planning a 50-day overhaul at their 240k BPD Huizhou site from March, via Reuters citing sources.
• Euronext has informed clients that due to a technical incident, a failover has occurred on the commodities segment at 09:46GMT; Order Entry on all commodities contracts will be enabled at 10:45 GMT. These contracts will move into continuous tradable phase at 11:00 GMT.
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NOTABLE EUROPEAN HEADLINES

• UK government is abandoning controversial powers from the Online Safety Bill that would have forced internet companies to take down legal but harmful content following backlash from the tech industry and free speech advocates, according to FT.

NOTABLE EUROPEAN DATA

• German North Rhine-Westphalia State CPI YY (Nov) 10.4% (Prev. 11.0%); MM (Nov) -0.8% (Prev. 1.2%). Overall, the State CPIs have dipped from the prior YY, though the magnitude of this is mixed across the states.
• Spanish HICP Flash YY (Nov) 6.6% vs. Exp. 7.5% (Prev. 7.3%)
• EU Consumer Confidence Final (Nov) -23.9 vs. Exp. -23.9 (Prev. -23.9)

NOTABLE US HEADLINES

• Fed's Barkin (non-voter) said their foot is off the gas and is on the brakes, while he added that he is supportive of a path that is slower, longer and potentially higher for rates. Barkin also stated that inflation has been more stubborn than he would like and if inflation stays elevated, the Fed needs to do more. Furthermore, Barkin said the Fed will do what is needed and that they have got to get inflation under control and make sure of it before any talk of loosening.
• US President Biden said a rail shutdown would devastate the US economy and said that a deal between railroad workers and operators would provide a 24% pay raise for rail workers and improved healthcare benefits. Furthermore, Biden said Congress should get the bill to his desk well in advance of December 9th to avoid any disruption, while House Speaker Pelosi noted that the House will consider a tentative agreement this week to help avert a rail strike.

CRYPTO

• CoinDesk tweeted that a record flow of Bitcoin left centralised exchanges this week, citing Cryptoquant data.
• FTX resumed ordinary course payments of employees and certain foreign contractors, while it added that most subsidiaries around the world are resuming ordinary course payment of salaries and employee benefits, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

• US official said Washington will announce significant financial assistance to Ukraine today and the new aid aims to mitigate damage caused by Russian bombing of Ukraine's energy grid, while the official said the Biden administration has allocated over USD 1bln to support the energy sector in Ukraine and Moldova, according to Sky News Arabia.

OTHER

• China's military said a US cruiser illegally intruded into waters near the Spratly Islands in the South China Sea, while it added that it followed the US cruiser and said the US move infringes China's sovereignty, according to Reuters.
• China's ambassador to Britain has been summoned to the Foreign Office following the police "beating" of a BBC journalist in Shanghai, according to the Evening Standard.
• South Korean President Yoon said China can and should influence North Korea's behaviour to stop weapons development and he warned that any new North Korean nuclear test will be met with a joint response not seen in the past. Yoon also stated he is firmly opposed to any attempt to change the status quo unilaterally regarding Taiwan and said that in the event of a Taiwan conflict, South Korean troops' imminent concern would be any North Korean military action, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive with the improvement in risk appetite spurred after China protests were clamped down on by police and after the country also announced support measures for developers, while there was also speculation of a potential easing of COVID controls ahead of a press briefing by China’s State Council.
• ASX 200 pared its early losses after rebounding from a floor around the 7,200 level although gains were contained amid the lack of pertinent domestic catalysts.
• Nikkei 225 was subdued after Unemployment Rate and Retail Sales data disappointed expectations and with automakers Toyota and Honda adjusting or suspending factories in China due to the COVID situation, while Eisai was the worst performer after a second death was linked to the Co. and Biogen's Lecanemab Alzheimer's drug.
• Hang Seng and Shanghai Comp were lifted with outperformance in developers after China resumed approving listed developers' mergers and is also to ease rules on developer bond state guarantees, while hopes of a relaxation of COVID restrictions added to the tailwinds.

NOTABLE ASIA-PAC HEADLINES

• China is aiming to increase the pace of COVID vaccination for those 80 and above, according to the Health Authority, to allow elderly to take a booster three months after vaccine. CDC Official says they will promptly and effectively solve difficult problems reported by the masses; when asked if protests will prompt them to reconsider zero-COVID policy, says they will continue to fine tune policy to reduce the impact on the economy and society.
• Beijing City reports 2,126 (prev. 2,086) COVID infections on November 29th as of 3pm, according to a health official.
• UK PM Sunak called for Britain to evolve its foreign policy approach to China, while he also said the golden era of UK-China relations is over and criticised China's crackdown, according to SCMP and The Mirror.

DATA RECAP

• Japanese Retail Sales YY (Oct) 4.3% vs. Exp. 5.0% (Prev. 4.5%, Rev. 4.8%)
• Japanese Unemployment Rate (Oct) 2.6% vs. Exp. 2.5% (Prev. 2.6%)