German ZEW Expectation Survey Improves Aided By Vaccine Approvals

• Continued concerns over a no-deal Brexit; elevated US coronavirus cases weigh on sentiment.
• Quiet session with focus on key events later in the week (2-day EU summit begins on Thursday; ECB policy decision also on Thursday; UK-EU leaders to meet face to face to try to seal a post-Brexit trade deal (either Wed or Fri)
• UK PM Johnson to travel to Brussels to meet EU Commission President von der Leyen to bridge their differences
• German Dec ZEW Expectations Survey increased sharply despite the still high numbers of new coronavirus infections with optimism on vaccines

Asia

• Japan Oct Household Spending registered its 1st annual rise in 13 months ( Y/Y: 1.9% v 2.4%e
• Japan Oct Labor Cash Earnings registered its 8th straight decline (Y/Y: -0.8% v -0.7%e) ; Real Cash Earnings Y/Y: -0.2% v -0.4%e
• Japan Q3 Final GDP data revised higher (Q/Q: 5.3% v 5.0% prelim; GDP Annualized Q/Q: 22.9% v 21.4% prelim)
• Japan Oct Current Account Balance: ¥2.14T v ¥2.117Te
• Australia passes law that will allow them to cancel China Belt and Road accords (as expected)
• Japan PM Suga confirmed that govt to put together ¥73.6T economic package. including ¥40T in fiscal measures (in line with expectations)

Coronaviurs

• Total global cases 67.6M (+0.7% d/d); total deaths: 1.54M (+0.5% d/d)

Europe

• EU-UK joint statement on Brexit noted that conditions for an agreement were not there due to remaining significant differences on three critical issues; asked negotiators to prepare an overview
• Ireland Foreign Min Coveney stated that here had been no progress in last 2 days of Brexit talks; EU mood was starting to shift towards no-deal planning
• UK senior official stated that there had been no tangible progress on Brexit in recent day; there was every chance that Brexit talks could fail
• PM Johnson said to be planning to go to Brussels this week to meet EU Commission President Von der Leyen. Timing of visit was still unclear but Wed or Fri was rumored to be the most likely dates
• UK chief negotiator Frost to meet EU chief negotiator Barnier on Tuesday (Dec 8th) to draw up a list of outstanding differences between the two sides ahead of Thursdays EU leaders meeting
• UK Parliament backed clauses in Internal markets Bill allowing breach of EU agreement, clauses to be removed if Ireland border deal was reached (as expected)

Americas

• US House to vote Wednesday on one-week government funding bill
• Senator Hawley (R-MO) said to told President Trump to veto any Covid-19 relief package that did not include a 2nd tranche of direct payment checks to Americans

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.19% at 392.08, FTSE -0.39% at 6,529.65, DAX -0.18% at 13,247.35, CAC-40 -0.46% at 5,547.82, IBEX-35 -0.41% at 8,242.00, FTSE MIB -0.55% at 21,984.50, SMI -0.29% at 10,345.73, S&P 500 Futures -0.40%]
• Market Focal Points/Key Themes: European indices open modestly lower across the board and slipped further into the red as the session progressed; depressed risk sentiment attributed to rising covid cases in the US and lack of progress on stimulus talks; sectors trading to the upside include utilities and industrials; consumer discretionary and metarials sectors among underperfomers; UK HealthMin says will start lifting covid restrictions once vulnerable people have been vaccinated;EQT raises take in Beijer; earnings expected during the upcoming US session include AutoZone, Brown-Forman and Newmont Goldcorp

Equities

• Consumer discretionary: Ferguson [FERG.UK] +1% (earnings), Ashtead Group [AHT.UK] +3% (earnings), bpost [BPOST.BE] -6% (investor day)
• Healthcare: Qiagen [QIA.DE] +2% (raises outlook)
• Industrials: Hella [HLE.DE] +7% (prelim sales), Airbus [AIR.FR] -1% (deliveries)

Speakers

• UK PM Johnson reiterated view that EU trade deal was looking very difficult and tricky; Reiterated govt stance of limits on how far govt would go in talks as the two sides remained long away apart on fisheries. Always very hopeful of getting deal with EU; but might come a moment where deal will not be possible
• German Fin Min Scholz reiterated stance that Germany’s debt-to-GDP ratio will rise above 70% due to spending in pandemic
• France EU Affairs Min Beaune stated that there was still room to negotiate on Brexit but deadline was getting close. He stressed that EU was united on fisheries
• Hungary Cabinet official said to see little chance of EU compromise on budget
• German ZEW Economists commented that the announcement of imminent vaccine approvals made financial markets more confident about the future
• Japan PM Suga stated that to approve economic measures at Cabinet meeting; package to aid GDP by 3.6%. Details of ¥40T fiscal package: noted that Central govt and local govt spending at ¥32.3T over 15 months. Measures included ¥7.7T of investment and loans. The 3rd extra budget to provide ¥19.2T from general account. National cost of fiscal measures at ¥30.6T over 15 months
• China State Council said to condemn US sanctions against NPC officials for Honk Kong; calls measures political bullying (Reminder: On Dec 7th US placed sanctions on 14 China officials (as speculated), relating to China’s move to disqualify elected lawmakers in Hong Kong)

Currencies/ Fixed Income

• FX markets were subdues for the time being as focus turned to key events later in the week.
• GBP/USD was steady at 1.3350 area after Monday’s spat of volatility due to Brexit concerns. Dealers noted that such volatility would likely to remain elevated as Brexit negotiations go down to the wire. The 1.36 level remained the key medium-term pivot point for directional trends in the pair.
• EUR/USD holding above the 1.21 level ahead of Thursday’s ECB meeting. ECB had previously pledged to add stimulus – only question at this time was what form it would take – Dealers favoring a likely extension to PEPP, TLTRO instruments

Economic Data

• (SE) Sweden Maklarstatistik Nov Housing Prices Y/Y: 11% v 11% prior; Apartment Prices Y/Y: 7% v 6% prior
• (NL) Netherlands Nov CPI M/M: -0.8% v +0.5% prior; Y/Y: 0.8% v 1.2% prior
• (NL) Netherlands Nov CPI EU Harmonized M/M: -1.2% v +0.8% prior; Y/Y: 0.7% v 1.2% prior
• (FR) France Q3 Final Private Sector Payrolls Q/Q: 1.6% v 1.8% prelim; Total Payrolls: +1.6 v -0.8% prior
• (CH) Swiss Nov Unemployment Rate: 3.3% v 3.3%e; Unemployment Rate (seasonally adj): 3.4% v 3.4%e
• (RO) Romania Q3 Preliminary GDP (2nd reading) Q/Q: 5.6% v 5.6%e; Y/Y: -6.0% v -6.0%e
• (FR) France Oct Trade Balance: -€4.9B v -€5.4Be; Current Account Balance: -€3.7B v -€5.6B prior
• (CZ) Czech Oct National Trade Balance (CZK): 33.4B v 20.5Be
• (CZ) Czech Oct Industrial Output Y/Y: -1.3% v -2.8%e; Construction Output Y/Y: -10.5% v -7.9% prior
• (HU) Hungary Nov CPI M/M: -0.2% v +0.1%e; Y/Y: 2.7% v 2.9%e
• (TW) Taiwan Nov CPI Y/Y: +0.1% v -0.1%e; CPI Core Y/Y: 0.5% v 0.5%e; WPI Y/Y: -6.2% v -7.4% prior
• (NO) Norway Nov Region Output Survey (past 3 months): 0.13 v 1.47 prior; Output Survey (next 6 months): 0.10 v 0.19 prior
• (ZA) South Africa Q3 GDP Annualized Q/Q: 66.1% v 54.4%e; Y/Y: -6.0% v -7.5%e (exits recession)
• (EU) Euro Zone Q3 Final GDP Q/Q: 12.5% v 12.6%e; Y/Y: -4.3% v -4.4%e
• (EU) Euro Zone Q3 Household Consumption Q/Q: 14.0% v 13.2%e; Govt Expenditures Q/Q: 4.8% v 5.3%e; Gross Fixed Capital Q/Q: 13.4% v 13.4%e
• (EU) Euro Zone Q3 Final Employment Q/Q: 1.0% v 0.9% prelim; Y/Y: -2.3% v -2.0% prelim
• 0 (DE) Germany Dec ZEW Current Situation Survey: -66.5 v -66.0e; Expectations Survey: 55.0 v 46.0e
• (EU) Euro Zone Dec ZEW Expectations Survey: 54.4 v 32.8 prior

Fixed income Issuance

• (ID) Indonesia sold total IDR6.1T vs. IDR6.0T target in Islamic bills and bonds (sukuk)
• (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2026, 2032 and 2048 bonds
• (UK) DMO sold £3.25B in 0.125% Jan 2024 Gilt; Avg Yield: -0.001% v +0.025% prior; bid-to-cover: 2.28x v 2.41x prior; Tail: 0.3bps v 0.2bps prior

Looking Ahead

• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
• 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.6-2.0B in 3-month and 12-month Bills
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 06:00 (US) Nov NFIB Small Business Optimism Index: 102.5e v 104.0 prior
• 06:30 (UK) DMO to sell £2.0B in 0.625% Oct 2050 Gilts; Avg Yield: % v 0.920% prior; bid-to-cover: x v 2.27x prior; Tail: bps v 0.1bps prior (Nov 17th 2020)
• 07:00 (BR) Brazil Nov IBGE Inflation IPCA M/M: 0.8%e v 0.9% prior; Y/Y: 4.2%e v 3.9% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed);
• 08:30 (US) Q3 Final Nonfarm Productivity: 4.9%e v 4.9% prelim; Unit Labor Costs: -8.9%e v -8.9% prelim
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (over 20-years)
• 10:00 (MX) Mexico Weekly International Reserve data
• 16:30 (US) Weekly API Oil Inventories
• 16:45 (NZ) New Zealand Q3 Manufacturing Activity Q/Q: No est v -11.9% prior
• 18:30 (AU) Australia Dec Consumer Confidence Index: No est v 105 prior
• 18:50 (JP) Japan Nov M2 Money Stock Y/Y: 8.9%e v 9.0% prior; M3 Money Stock Y/Y: 7.4%e v 7.5% prior
• 18:50 (JP) Japan Oct Core Machine Orders M/M: +2.5%e v -4.4% prior; Y/Y: -11.2%e v -11.5% prior
• 20:30 (CN) China Nov CPI Y/Y: 0.0%e v 0.5% prior; PPI Y/Y: -1.8%e v -2.1% prior
• 22:00 (CN) China to sell 2-year and 5-year Upsized Government Bond
• 22:30 (JP) Japan to ell 6-Month bills