MNI EUROPEAN MARKETS ANALYSIS:

BOND SUMMARY: Tight, With Tokyo Shut For Holidays

Core FI markets continue to operate in narrow ranges given the lack of meaningful macro headline flow evident since the re-open and the Japanese market holiday, looking through a more active Asia-Pac session for the FX space, in which the broader USD has ticked lower. On the news front, generally upbeat Brexit mood music, solid South Korean trade data and focus on the more upbeat vaccine news (with the potential for another positive development on that front in the coming days, via the AstraZeneca trial) headlined over the weekend. T-Notes +0-00+ at 138-16+ on sub-par volume, within a 0-02+ range. Japan observes a holiday on Monday, so cash Tsys will remain closed until London hours. NY hours will bring the flash PMI readings, in addition to Chicago Fed activity data. A heavy supply schedule will see the Tsy auction 3-Month, 6-Month, 2-Year & 5-Year paper on Monday, while Fedspeak will come from Evans, Daly & Barkin.

• Aussie bond futures showed a very modest degree of flattening vs. Friday's Sydney closing levels, after sticking to a tight range during the final SYCOM session of last week. YM finished unchanged, with XM +1.0. Cash ACGBs also flattened. Bills finished -1 to +1 through the reds. Local fiscal matters and PMI data did little to move the needle.

US TSYS: Some Fresh Extremes In Latest CFTC COT Report

The latest CFTC Commitment of Traders report revealed that net short positioning in TU hit the widest levels (at least in outright terms) since early '19 in the week to November 17. Elsewhere, net length in TY grew, hitting the widest outright levels seen since late '17, while FV & US net shorts were pared backed, the latter by a marginal degree.

• In the STIR space, net overall exposure in Fed Funds futures was little changed, although marginal trimming resulted in the narrowest net length seen since September '19, when net positioning flipped long. Net length in Eurodollar futures was also trimmed.

FOREX: GBP Rallies On Techs & Weekend Headlines, NZD Receives Boost From NZ Retail Sales Survey

Sterling showed some strength at the start to the week, racing to the top of the G10 pile on the back of technical and fundamental tailwinds. BBG sources cited positioning for buy-stops above Nov 11 & 18 highs of $1.3312 amid liquidity thinned by a Japanese public holiday. Cable accelerated gains upon the breach of that figure, printing best levels since early Sep. On the fundamental side, the UK and Canada agreed to keep their current trading conditions post-Brexit and enter talks on a broader deal, UK Cll'r was set to announce a boost to spending on public services Wednesday, while the Telegraph reported that UK regulators could give a green light for the Pfizer Covid-19 vaccine within a week. In a separate piece, the Telegraph reported that UK PM Johnson is set to reach out to European Commission Pres von der Leyen in a bid to "clear away the final barriers to a deal which both sides now believe is well within reach", albeit the article pointed to familiar sticking points.

• NZD was another top G10 performer, following the release of a strong quarterly retail sales survey out of New Zealand. Retail sales ex inflation surged 28.0% Q/Q in Q3, easily beating expectations of a 19.0% increase, boosted as the country lifted lockdown restrictions.
• Safe havens traded on the back foot, with USD leading losses amid some positive musings surrounding Covid-19 vaccine/treatment matters. News and data flow in Asia hours was thin, with Japan having a day off, leaving participants to reflect on weekend headlines and familiar risks.
• ZAR took a hit early on, in the wake of Friday's downgrade to South Africa's credit ratings from Fitch & Moody's, but the rand recovered thereafter.
• KRW inched higher after early South Korean trade data showed a continued recovery in shipments, even as local coronavirus worry continued to linger.
• Focus turns to a slew of preliminary PMI readings from across the globe, as well as comments from Fed's Barkin, Daly and Evans, BoE's Bailey, Haldane, Tenreyro & Saunders, ECB's Schnabel & BoC's Gravelle.

FOREX OPTIONS: Expiries for Nov23 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1700(E1.1bln), $1.1800-10(E563mln), $1.1850-60(E792mln)
• USD/JPY: Y105.15-25($540mln)
• GBP/USD: $1.3295-1.3305(Gbp647mln-GBP calls)
• EUR/GBP: Gbp0.8899-8900(E443mln-EUR puts)Gbp0.8990(E659mln)
• USD/CNY: Cny6.65($600mln)

EQUITIES: Generally Higher To Start The Week

Some pressure on the USD, generally upbeat Brexit mood music, solid South Korean trade data and focus on the more upbeat vaccine news (with the potential for another positive development on that front in the coming days, via the AstraZeneca trial) combined to support most of the regional equity markets during the first Asia-Pac session of the week, with liquidity thinned on the back of a holiday in Tokyo.

• Some also chose to look to the potential for the Fed to adjust its monetary policy in December, with a focus on the WAM of its Tsy purchases.
• Some local COVID worry seemingly resulted in pressure on the Hang Seng.
• E-minis ultimately moved higher after edging lower at the re-open.
• Nikkei 225 closed, Hang Seng -0.1%, CSI 300 +1.5%, ASX 200 +0.3%.
• S&P 500 futures +11, DJIA futures +109, NASDAQ 100 futures +44.

GOLD: No Challenge Of Lines In Sand

Spot last deals little changed, just shy of $1,875/oz, as it continues to coil within the confines of the recently established range, some distance away from the established key support and resistance levels. Real yields and the USD continue to be eyed, while a familiar mix of headline risk drivers remains apparent.

OIL: Uptick Into Europe

A downtick for the broader USD and a light bid in e-minis allowed WTI & Brent to add ~$0.40 & $0.50 during Asia-Pac hours, building on the gains seen on Friday, with most of the move coming as we moved towards European hours.

• In terms of weekend news flow, G20 leaders pledged to ensure "a stable and uninterrupted supply of energy," while the UAE pointed to US$122bn in oil and gas investments over the next 5 years, as the country looks to widen its production capabilities, even with the current OPEC+ limitations in play.

RATINGS: Friday's Slate Saw S Africa Move Further Into Junk At Fitch & Moody's

Sovereign rating reviews of note from Friday included:

• Fitch affirmed Portugal at BBB; Outlook Stable
• Fitch downgraded South Africa to BB-; Outlook Negative
• Moody's downgraded South Africa to Ba2, Outlook Negative
• S&P affirmed South Africa at BB-; Outlook Stable
• DBRS Morningstar confirmed Lithuania at A, Stable Trend
• DBRS Morningstar confirmed Latvia at A (low), Stable Trend