COMMODITIES
US COVID-19 cases +217,046 (prev. +186,215) and deaths +2,566 (prev. +1,532). California reported a record 30,851 new cases and its 14-day avg. positivity rate jumps to 8.8% which was the highest since spring. (Newswires)
US official said could have EUA on Pfizer's (PFE) COVID vaccine within days of FDA meeting and that Americans could start receiving vaccinations from next week. (Newswires)
Canada approved the Pfizer (PFE)/BioNTech (BNTX) COVID-19 vaccine. (Newswires/CBC)
Two UKNHS staff members who received the Pfizer (PFE)/BioNTech (BNTX) vaccine on Tuesday suffered an allergic reaction, while regulators issued a warning that people who have a history of "significant" allergic reactions should not currently receive the jab following the incident. (Newswires)
UK Medicine Regulator Chief expects to receive further vaccine data from AstraZeneca (AZN LN)/Oxford University in the coming days but cannot give a firm date on when the regulatory review will be completed. (Newswires)
German Health Minister said it is important to launch additional measures in German regions with over 200 COVID cases per 100k inhabitants over the last seven days. (Newswires)
ASIA-PAC
Chinese New Yuan Loans (CNY)(Nov) 1430.0B vs. Exp. 1400.0B (Prev. 689.8B). (Newswires)Chinese Aggregate Financing (CNY)(CNY) 2130.0B vs. Exp. 2075.0B (Prev. 1420.0B)Chinese M2 Money Supply (Nov) Y/Y 10.7% vs. Exp. 10.5% (Prev. 10.5%)
UK/EU
UK and EU have agreed a trusted trader scheme that would mean exemptions from tariffs for up to 98% of goods flowing between Great Britain and Northern Ireland from January 1, according to RTE's Connelly.
The tariffs would mostly only apply if no free trade agreement is concluded between the EU and UK, while both sides have also agreed that agrifood products coming from GB to Northern Ireland will be exempt from requiring export health certificates for a period of at least three months. (Newswires)
Irish Foreign Minister Coveney said the progress on Northern Ireland is a signal that the UK is in deal-making mode and that EU is seeking certainty, even if this equates to no-deal certainties as the UK has really damaged trust. Furthermore, he stated it is unlikely that the EU would go to great lengths to extend discussions into the New Year. (Newswires)
French European Affairs Minister said EU and UK positions are still far apart at this stage and there is low likelihood of striking a deal tonight, while chances of a no-deal are increasing. (Newswires)
European CouncilPresident Michel said he is confident that EU leaders can find an agreement on a common package to allow for the swift implementation of both the multiannual financial framework and the recovery fund, while other reports stated that the final decision on EU stimulus and budget to be taken by leaders tomorrow. (Newswires)
EU leaders could be debriefed on Brexit during the upcoming EU Council Summit, but there will not be a debate on the matter or a Brexit decision during the summit. There were separate comments by an EU Diplomat that if a new deal with the UK arises by end of the week, they could still proceed with a speedy ratification. (Newswires)
EU Financial Services Commissioner said they will begin preparing narrow/focused no-deal contingency plans and is not very confident following PM Johnson in the House of Commons today, while he added that prospect of discussions continuing into next week is not realistic regarding ratification. (Newswires)
Poland and Hungary reached a deal with Germany on EU budget proposal, which was awaiting approval from the Dutch PM. Furthermore, it was reported that EU budget compromise will only apply rule of law clause to new funding and the budget pact to require ruling via the European Court of Justice prior to penalties being implemented. (Newswires)
EU leaders are to agree to draw up more targeted sanctions on Turkish gas drilling, according to a draft EU summit statement. Furthermore, they would consider further steps at the March summit if there was no improvement with Turkey, although reports added that targeted sanctions do not go far enough for Greece and the statement is still being negotiated. Turkish Presidency later responded that the EU draft summit is disappointing and that they want to achieve a positive atmosphere with the EU. (Newswires)
FX
Bank of Canada Rate Decision 0.25% vs. Exp. 0.25% (Prev. 0.25%). BoC stated it will maintain current level of policy rate until inflation objective is achieved and continues its quantitative easing programme. BoC noted that activity remains highly uneven across different sectors and groups of workers, while economic momentum heading into the fourth quarter appears to be stronger than was expected in October but, in recent weeks, record high cases of COVID-19 in many parts of Canada are forcing re-imposition of restrictions. Furthermore, this can be expected to weigh on growth in the first quarter of 2021 and contribute to a choppy trajectory until a vaccine is widely available. (Newswires)
COMMODITIES
US EIA Weekly Crude Stocks 15.189M vs. Exp. -1.424M (Prev. -0.679M). (Newswires)
Russia Deputy PM Novak said the OPEC+ decision was in line with Russian interests and oil prices have stabilised, while he added that they see partial recovery of oil demand. (Newswires)
US
US Senate Majority Leader McConnell said Democrats are moving goalposts on the aid bill, while he added that they are still looking for a way forward. McConnell also commented that Democrats rejected two more GOP aid proposals in the space of two hours and they now admit they blocked aid all summer and fall because there was an upcoming election. (Newswires)
US Senators King and Graham are close to a deal on liability protections in COVID relief talks and are getting input from congressional leaders now and hope to unveil bill language as soon as today. (CNN)
Bipartisan compromise on COVID-19 relief includes federal supplemental unemployment insurance benefits expanded by USD 300 per week from the end of December into April 2021. There will also be USD 300bln for small businesses with USD 12bln targeted to low income, minority communities through CDFI's and MDI's, while PPP eligibility would be limited to small businesses with 300 or fewer employees that have sustained a 30% revenue loss in any quarter of 2020. (ABC News)
US House voted to pass the one-week stopgap funding measure to avoid a government shutdown as expected, while Senate plans to vote on it tomorrow. (Newswires)
USTR said the US is exercising rights under the USMCA challenging Canada's allocation of dairy tariff-quotes. (Newswires)
17 US states told the Supreme Court that they support an effort by Texas Attorney General to sue to effectively reverse President-elect Biden’s projected win in the Electoral College. Furthermore, it was also reported that the Trump campaign called on the Supreme Court to let it intervene in the Texas lawsuit to halt a Biden election victory. (Newswires)
US Wholesale Sales (Oct) M/M 1.8% vs. Exp. 0.8% (Prev. 0.1%, Rev. 0.4%). (Newswires)US Wholesale Inventories (Oct) M/M 1.1% vs. Exp. 0.9% (Prev. 0.9%)
MARKET RECAP
A tech-led sell-off saw the NDX fall over 2% on Wednesday with mounting stimulus pessimism weighing on the broader risk tone. Desks have been noting that it is not unusual to see profit-taking after record highs, particularly ahead of key risk events (US budget/stimulus, EU Summit/stimulus, ECB on Thursday, Fed next week, year-end rebalancing/quad witching next week). Constructive sentiment about the prospects for further US stimulus were cited for equity gains at the start of the week, and some pessimism in today's headlines may be forcing a more cautious approach. In November, JPMorgan was speculating that end-December rebalancing from pension funds might result in USD 150bln of equity selling - some note that fund managers may start adjusting portfolios ahead of month-end, given the dynamics around holiday trading conditions. Mastercard (MA) boosted its dividend and announced a USD 6bln share repurchase programme, which will start once its current USD 8bln programme has finished. Bank of America (BAC) stated buybacks will climb as soon as it is allowed and expects loan loss reserves to start coming down. Lowe’s (LOW) announced a USD 15bln share repurchase programme and affirmed guidance. Disney (DIS) was upgraded at Wells Fargo, where the analyst was bullish on its Disney+ streaming service. Apple (AAPL) had its PT raised to street high of USD 160/shr at Wedbush after its new product launches. SPX -0.84% at 3,671, NDX -2.15% at 12,365, DJI -0.35% at 30,069.
Treasuries were sold on Wednesday, although a paring in risk appetite in later trade saw yields off their highs. By settlement, 2s +0.2bps at 15.3bps, 10s +2.8bps at 94.1bps, 30s +2.8bps 168.8bps; real yields fell another few bps; T-Note futures volumes were average. The steepening had got off overnight, alongside a modest bid for stocks, after two sessions of duration bidding saw yields back away from their post-COVID highs. Dealers were reportedly supporting the selling pressure in anticipation for the 10- and 30-year auction today and Thursday. The USD 36bln 10-year offering was lacklustre, with a 0.4bps tail, although participation was above average, likely with added foreign players after the recent yield pick-up in the US. There wasn't much price action on the back of the auction, instead, bidders appeared to emerge after Senate Leader McConnell tweeted his dismay with the stubbornness of Dems on stimulus proposals. The rest of trade was rather choppy, with duration almost reversing all its steepening at one point, although by futures settlement the curve was still steeper; preparation for Thursday's USD 24bln 30-year offering is also likely keeping duration pressured. T-note (H1) futures settled 6 ticks lower at 137-20.
(Newswires)
US President Biden doesn’t think his proposal for raising the minimum wage to USD 15 will survive negotiations to pass his broader coronavirus-relief bill. In other news, it was reported that US Democrats are to unveil child benefits of USD 3,000 per child as part of the USD 1.9tln stimulus package on Monday. (Newswires/Washington Post)
US Treasury Secretary Yellen said that the US could return to full employment in 2022 if Congress passed President Biden'sUSD 1.9trln stimulus plan; Yellen also leaned back against concerns about stoking inflation pressures, arguing that the benefits to the economy outweighed inflation risks, and added that policymakers have the toolkit to respond to these pressures if necessary (FT)
US Treasury Secretary Yellen said it is too early to say if fresh regulations are required to address recent volatility and that a decision can be made once the facts behind the market moves are known. (Newswires)
House Democrat lawmaker said that the COVID-19 relief bill will not provide relief to airlines but will provide relief for airline workers. (Newswires)
Fed's Kaplan (Non Voter) says "I'm trained to understand the past, be aware of it, but make decisions based on the future", via Macro Musings; does not see the Fed's new framework as a 'makeup policy' in the context of making up for past inflation misses. Not a fan of negative rates; I haven't seen the offsetting benefits to my satisfaction to offset those risks. On inflation, "when I say moderately above 2%, I mean moderate. So what does that mean to me? There's no exact science, two and a quarter, two and a half, for me means moderate.". (Macro Musings)