MNI ASIA OPEN: Risk Appetite Surge After Positive Pfizer Annc

EXECUTIVE SUMMARY

• PFIZER VACCINE PREVENTS 90% OF COVID INFECTIONS IN LARGE STUDY, Bbg
• WHO SENIOR ADVISER BRUCE AYLWARD SAYS COULD BE IN A POSITION TO FUNDAMENTALLY CHANGE DIRECTION OF CRISIS WITH VACCINE ROLL-OUT BY MARCH 2021, Rtrs
• MNI EXCLUSIVE-Fed Officials Fear Job Market 'Scarring'
• MNI POLICY: Job Search Optimism Lowest Since 2014-NY Fed Survey
• MNI EXCLUSIVE: UK Backtracks On State Aid Regulator-EU Source
• MNI SOURCES: EU Bodies Move to Compromise 7-Yr Budget Top-Up
• FED'S BRAINARD SEEN AS CANDIDATE FOR BIDEN TREASURY SECRETARY, Bbg
• EU GIVES GREEN LIGHT TO TRIGGER $4 BILLION TARIFF STRIKE ON US, Bbg

US

FED: Federal Reserve officials are worried the Covid-19 shock, which is devastating some sectors while bolstering others, will make this economic downturn especially prone to lasting labor market damage and require easier monetary policy for longer, current and former officials told MNI. For more see 11/09 main wire at 1313ET.

FED SURVEY: U.S. consumer views of finding a new job fell to the lowest since 2014 last month while measures of spending and household income weakened, the New York Federal Reserve's latest consumer survey showed on Monday.

• The mean perceived probability of finding a job, if one's current job was lost, declined to 46.9% from 49.9% in September, its lowest reading since April 2014 and well below the 2019 average of 59.9%. The decline was broad-based across education and income groups. For more see 11/09 main wire at 1100ET.

EUROPE

EU: Negotiations between the EU Parliament, the Commission and the German Presidency of the EU on the next seven-year EU budget look set for a compromise that tops up the budget by EUR10bn to EUR15bn, a deal that would keep a fiscal rescue for the region on schedule. For more see 11/09 main wire at 1352ET.

UK: The UK has backtracked on an earlier concession to Brussels to establish an independent state aid regulator made in talks over a post-Brexit trade deal, an EU diplomat told MNI. For more see 11/09 main wire at 0914ET.

OVERNIGHT DATA

No relevant economic data Monday

MARKET SNAPSHOT

• DJIA up 1261.83 points (4.46%) at 28323.4
• S&P E-Mini Future up 95.5 points (2.73%) at 3552.25
• Nasdaq down 7.6 points (-0.1%) at 11895.23
• US 10-Yr yield is up 13.6 bps at 0.9542%
• US Dec 10Y are down 31/32 at 137-18.5
• EURUSD down 0.0044 (-0.37%) at 1.1867
• USDJPY up 2.05 (1.98%) at 103.78
• WTI Crude Oil (front-month) up $3.22 (8.67%) at $38.46
• Gold is down $85.02 (-4.36%) at $1954.27
• European bourses closing levels:
• EuroStoxx 50 up 203.86 points (6.36%) at 3258.79
• FTSE 100 up 276.27 points (4.67%) at 5990.85
• German DAX up 615.95 points (4.94%) at 12712.28
• French CAC 40 up 375.44 points (7.57%) at 5038.95

US TSY SUMMARY: Huge Risk-On, Eight Month Yld Highs

Already trading with a risk-on tone following weekend news former VP Biden now President Elect, rates gapped lower/equities surged to new all-time highs before the NY open after Pfizer announced vaccine is 90% effective in combating Covid-19.

• Heavy Tsy volumes (TYZ 175% 20D avg, FVZ 184% 20D avg). Obviously better selling included huge Blocks (-23,500 TYZ 137-19 for example) helped push 10YY to eight month high of 0.9730% midmorning. Curve steepeners back on (+10,865 TYZ vs. -4,553 USZ)
• S&P futures extended rally to new high of 3668.0 (appr +155.0) after the open but scaled back to +85.0 after the close.
• After holding to sidelines do to election uncertainty, corporate issuance returned with a bang w/ $18.5B, lion's share tied to $7B Bristol-Myers Squibb 6pt. US Tsy $54B 3Y Note auction (91282CAW1) stopped through: awarded 0.250% (0.193% last month) vs. 0.252% WI, on a bid/cover 2.40 vs. 2.44 previous.
• The 2-Yr yield is up 2.8bps at 0.1806%, 5-Yr is up 8.3bps at 0.444%, 10-Yr is up 13.6bps at 0.9542%, and 30-Yr is up 14.6bps at 1.7464%.

US TSY FUTURES CLOSE: Risk Appetite Surge After Positive Pfizer Annc

Rates gapped lower ahead the NY open on the back of Pfizer vaccine headlines annc 90% success rate in combatting Covid-19. Equities surged to new all-time highs (S&P eminis paring late, Dec futures +90.0 late vs. +155.0 on the open). Sharp bear steepen in yield curves. Update:

• 3M10Y +13.323, 86.043 (L: 70.283 / H: 87.67)
• 2Y10Y +10.793, 77.167 (L: 64.585 / H: 78.452)
• 2Y30Y +11.857, 156.317 (L: 141.794 / H: 157.636)
• 5Y30Y +6.34, 130.012 (L: 122.198 / H: 132.657)
• Current futures levels:
• Dec 2Y -1.75/32 at 110-11.25 (L: 110-10.75 / H: 110-13.37)
• Dec 5Y -11.75/32 at 125-9.25 (L: 125-06 / H: 125-24)
• Dec 10Y down 30/32 at 137-19.5 (L: 137-13 / H: 138-24.5)
• Dec 30Y down 2-30/32 at 170-12 (L: 169-29 / H: 173-24)
• Dec Ultra 30Y down 5-30/32 at 211-02 (L: 210-07 / H: 218-06)

US EURODLR FUTURES CLOSE: Sharply Lower, Long End Leads On Heavy Volumes

Mirroring Tsy futures, Eurodollar futures sharply lower across the strip, short end outperforming. Lead quarterly held steady much of day since 3M LIBOR set -0.00088 to new all-time low of 0.20500% (-0.00275 net last wk).

• Dec 20 -0.005 at 99.765
• Mar 21 -0.010 at 99.790
• Jun 21 -0.015 at 99.785
• Sep 21 -0.020 at 99.780
• Red Pack (Dec 21-Sep 22) -0.045 to -0.02
• Green Pack (Dec 22-Sep 23) -0.085 to -0.05
• Blue Pack (Dec 23-Sep 24) -0.145 to -0.095
• Gold Pack (Dec 24-Sep 25) -0.18 to -0.15

US DOLLAR LIBOR

Latest settles, 3M Record Low

• O/N -0.00150 at 0.08113% (+0.00125 net last wk)
• 1 Month +0.00213 to 0.12988% (-0.01250 net last wk)
• 3 Month -0.00088** to 0.20500% (-0.00275 net last wk)
• 6 Month -0.00163 to 0.24175% (+0.00125 net last wk)
• 1 Year -0.00088 to 0.33250% (+0.00325 net last wk)
• ** 3M New record Low 0.20500% on 11/9/20 ** (prior 0.20588% on 11/6/20)

US TSYS: Short End Rates

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 0.09% volume: $65B
• Daily Overnight Bank Funding Rate: 0.08%, volume: $164B

• Secured Overnight Financing Rate (SOFR): 0.10%, $888B
• Broad General Collateral Rate (BGCR): 0.08%, $343B
• Tri-Party General Collateral Rate (TGCR): 0.08%, $315B
• (rate, volume levels reflect prior session)

• Tsy 20Y-30Y, $1.733B accepted vs. $4.067B submission
• Next scheduled purchases:
• Tue 11/10 1010-1030ET: TIPS 1Y-7.5Y, appr $2.425B
• Thu 11/12 1010-1030ET: Tsys 7Y-20Y, appr $3.625B
• Fri 11/13 1010-1030ET: Tsy 2.25Y-4.5Y, appr $8.825B
• Fri 11/13 Next forward schedule release at 1500ET

PIPELINE: Bristol-Myers Squibb 6pt Launched; $18.5B Total/Day

• Date $MM Issuer (Priced *, Launch #
• 11/09 $7B #Bristol-Myers Squibb 6pt: $1.5B 3NC1 +30, $1B 5Y +35, $1B 7Y +45, $1.25B 10Y +55, $750M 20Y +65, $1.5B 30Y +85. Last multi-tranche jumbo issue from Bristol-Myers: total $19B in 9-parts on May 7, 2019: $750M 1.5Y +20, $1B 2Y +35, $1.5B 3Y fix +45, $500M 3Y FRN L+38, $3.25B 5Y +73, $2.25B 7Y +90, $4B 10Y +105, $2B 20Y +30, $3.75B 30Y +145.
• 11/09 $4.5B #Morgan Stanley $1.75B 3NC2 +37.5, $2.75B 11.25NC10.25 +85
• 11/09 $2.5B #Westpac 15NC10 +175, 20Y +125
• 11/09 $1.2B #Vereit $500M +7Y +165, $700M 12Y +200
• 11/09 $1.1B #Republic Srvcs $350M 5Y +45, $750M 11Y +80
• 11/09 $1B #Caterpillar 5Y +38, (adds to $2B issued on May 12 and Jan 9)
• 11/09 $600M #Entergy LA $300M 10Y +70, $300M Tap 2.9% +95
• 11/09 $600M #Consolidated Edison 40Y +128
• 11/09 $4B *Fannie Mae 5Y +13.5

FOREX: Risk Gets a Dose of Good News

Equities surged, enjoying their best session for months, as markets digested a release from Pfizer/BioNTech citing a 90% efficacy rate in the early results of their COVID-19 vaccine. The study is yet to report final results, but the 90% effectiveness metric is seen as well ahead of expectations. US equity markets struck all-time highs straight out of the gate, with the S&P 500 adding well over 3% to hit 3645.99.

• Currencies responded by selling haven currencies in size - JPY and CHF were convincingly the poorest performers in G10, with NOK, AUD, and CAD rallying sharply. Commodity-tied FX enjoyed a rally of over 10% in crude prices as markets looked ahead to a vaccine-driven recovery, which pressured USD/CAD to multi-year lows.
• Focus Tuesday turns to UK jobs data, French & Italian industrial production and Germany's ZEW survey. Fed's Kaplan, Rosengren, Bostic, Quarles and others making up a busy speaker schedule.

EGBs-GILTS CASH CLOSE: Big Bear Steepening On Vaccine News

One of the most risk-on days in recent memory saw the German and UK long ends get hit hard, with yields closing just off session highs.

• The trigger was positive Pfizer vaccine news around midday London time, which sent equities soaring, but risk appetite was already rising post-US election.
• The tightening of periphery spreads had impressed prior to the vaccine announcement, with Greece leading the way following a credit ratings upgrade Friday (the short-end went into negative yield territory). But spreads came well off lows, with BTPs/Bunds moving wider.
• Closing Levels / 10-Yr Periphery EGB Spreads:
• Germany: The 2-Yr yield is up 5.1bps at -0.729%, 5-Yr is up 8bps at -0.722%, 10-Yr is up 11.2bps at -0.509%, and 30-Yr is up 13.1bps at -0.071%.
• UK: The 2-Yr yield is up 3bps at -0.004%, 5-Yr is up 5.7bps at 0.025%, 10-Yr is up 9.8bps at 0.372%, and 30-Yr is up 10.5bps at 0.963%.
• Italian BTP spread up 0.5bps at 126.6bps
• Spanish bond spread down 2.3bps at 69.5bps
• Portuguese PGB spread down 4.1bps at 66bps
• Greek bond spread down 5.7bps at 137.9bps

UP TODAY