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MNI EUROPEAN OPEN: Fresh Cycle Lows For USD/CNH As DC Fiscal Matters Headline



Fig. 1: China CPI Y/Y vs. China Pork Price - CPI Basis Y/Y

Source: MNI - Market News/Bloomberg


BREXIT: EU Commission President Von der Leyen tweeted the following on Tuesday: "I look forward to welcoming UK Prime Minister @BorisJohnson tomorrow evening. We will continue our discussion on the Partnership Agreement." (MNI)

BREXIT: The future of Britain's relationship with the rest of Europe will hang on the success of a dinner between Boris Johnson and Ursula von der Leyen in Brussels on Wednesday, it has emerged, as the EU's chief negotiator warned the chance of a Brexit deal was now "very slim"... A deal is not expected to be sealed at the dinner but Downing Street said if there was progress and goodwill, the troubled negotiations could be expected to resume on Friday after the council summit. EU leaders will be informed of any progress when they meet, or could trigger the bloc's no-deal contingency measures – keeping planes in the sky and borders safe – if the dinner ends in failure. (Guardian)

BREXIT: Boris Johnson has said he hopes the "power of sweet reason" will allow the UK and EU to reach a post-Brexit trade deal this week. The prime minister is to meet European Commission President Ursula von der Leyen in Brussels in the coming days, as a deadline for agreement nears. He told the BBC the situation was "very tricky" but "hope springs eternal". The two sides still disagree on fishing rights, business competition rules and how any deal would be enforced. (BBC)

BREXIT: European Union Brexit negotiator Michel Barnier said on Tuesday he believed a 'no-deal' split in ties with Britain at the end of the year is now more likely than agreement on a trade pact, sources in the bloc said. A diplomat and an official in Brussels, speaking under condition of anonymity, said Barnier made the remark at a meeting with the 27 national European affairs ministers and added that it was time for the bloc to update its no-deal contingency plans. (RTRS)

BREXIT: The Taoiseach has told a meeting of the Fianna Fáil parliamentary party that significant differences remain on the issue of the level playing field in the Brexit talks. Micheál Martin said there is an ongoing risk of a no-deal Brexit, which would be very serious across the regions. He said, however, that there is a route to a resolution on fisheries. Minister for Foreign Affairs Simon Coveney said he believed Britain wants to find a way to strike a post-Brexit trade deal with the European Union, citing conversations with the UK government late today. "Tomorrow is pivotal," he said on RTÉ's Prime Time, referring to a meeting tomorrow between British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen. "Having spoken to the British government this evening, I believe they do want to try to find a way of getting a deal." (RTE)

BREXIT: Political impetus is needed for talks on a trade deal between the U.K. and the European Union to make any more progress, a U.K. official says. Progress at a political level may allow the U.K.'s chief Brexit negotiator David Frost and his team to resume negotiations over the coming days, official says on condition of anonymity. But an agreement may not be possible as the U.K. won't compromise on sovereignty, official says. (BBG)

BREXIT: Senior British minister Michael Gove said on Tuesday he hoped the European Union would move in Brexit trade talks when Prime Minister Boris Johnson meets EU leaders this week, allowing a deal to be struck. "The prime minister is obviously going to Brussels in the next few days and we hope that there will be movement on the EU side," Gove said, adding the principles of British sovereignty had to be respected. "I hope that the EU will recognise that. A deal is in all of our interests, but it can't be a deal at any price." (RTRS)

BREXIT: The EU will have officials stationed in Northern Ireland from January 1 in a major concession that rang alarm bells with Brexiteers ahead of Boris Johnson's make or break trip to Brussels on Wednesday. (Telegraph)

BREXIT: Boris Johnson has set up a secretive unit in Downing Street to co-ordinate the government's response to the "nightmare scenario" of a no-deal Brexit added to a surge in Covid-19 cases and extreme winter weather. The winter control and co-ordination cell, based in No 10, will provide daily confidential briefings to the prime minister on emerging threats. It is part of a wider government contingency operation, known in Whitehall as D20, designed to anticipate and respond to disruption over winter. "We're trying to anticipate what happens if you have no-deal gridlock in Kent, combined with flooding and a massive spike in Covid cases," a Whitehall source said. (The Times)

ECONOMY: MNI BRIEF: UK Redundancies Led To Rise in Candidate Supply

  • The UK saw a further decline in permanent placements in November, while temporary billings saw a sustained uptick, the latest KPMG/REC jobs report showed. Hiring intentions were dampened by uncertainty regarding the pandemic as well as the renewed lockdown, with companies preferring to hire short-term workers to fulfil business needs. The report further noted that demand for staff declined markedly, led by a significant fall in permanent job vacancies - on MNI Main Wire and email now - for more details please contact


EU/FISCAL: There is a good chance for Hungary and Poland to agree with the European Union on passing its $2.2 trillion spending package this week, Hungarian Prime Minister Viktor Orban said. The two sides are "one centimeter" away from an agreement, Orban said in an interview with the Polsat broadcaster during a visit to Warsaw on Tuesday. The two eastern EU members, which have prevented passage of the bloc's multi-year budget and coronavirus relief package over their objections of tying the cash to upholding the rule of law, are aligned in their stance, Orban said. (BBG)

FRANCE: France is mulling "many options" related to to the planned loosening of lockdown measures scheduled for Dec. 15 as the number of Covid-19 cases remains high, Health Minister Olivier Veran said Tuesday in an interview on LCI TV. Options include introducing a new curfew or sticking to the current lockdown for some additional days to observe developments, Veran said, declining to give more details. The government will discuss the Covid-19 situation Wednesday, and an announcement is due before end of the week, he said. The situation is "worrying," as the "level of contaminations is still high," Veran said. "We're not out of the second wave yet." (BBG)

PORTUGAL: Portuguese airline TAP will need more financing during the next four years, Eco reports, citing an unidentified government source. The new financing of as much as EU1.8b between 2021 and 2024 may include injections of public funds or state guarantees for new loans, according to the restructuring plan for the airline. (BBG)

NETHERLANDS: Dutch Prime Minister Mark Rutte dashed hopes Tuesday of large gatherings of family and friends to celebrate Christmas, saying rising coronavirus infections mean that existing restrictions of a maximum of three visitors per day to people's homes will stay in place over the holidays. (AFP)

SWITZERLAND: Switzerland's federal government plans to work with cantons, or states, to unify restrictions to fight the coronavirus pandemic. The proposed new measures, including reducing opening hours for shops and restaurants, would take effect from Dec. 12 and last until Jan. 20. Measures could be tightened further on Dec. 18, when restaurants and shops might shut altogether, if case loads don't come down. The country of about 8.5 million on Tuesday reported 4,262 new infections, up 12% from a week ago. In contrast to its neighbors, the Swiss federal government has thus far shied away from imposing a second round of lockdowns even though case loads were much higher than in Germany. Instead, it has asked cantons to manage the situation as they see fit. (BBG)


ECONOMY: Capital One sees earliest signs of softness in holiday spend. (BBG)

FISCAL: A statement released by U.S. Treasury Secretary Mnuchin on Tuesday noted that "Speaker Pelosi and I spoke today at 5pm, and on behalf of the President, I presented a $916bn proposal, which is a slightly larger package than the bipartisan proposal of $908bn. This proposal includes money for state and local governments and robust liability protections for businesses, schools and universities. As part of this proposal, we will fund it using $140bn in unused funds from the Paycheck Protection Program and $429bn in Treasury funds. Chief Meadows and I have reviewed this proposal with the President, Leader McConnell, and Leader McCarthy. I look forward to achieving bipartisan agreement so we can provide this critical economic relief to American workers, families and businesses." (MNI)

FISCAL: U.S. House Speaker Pelosi tweeted the following on Tuesday: "While it is progress that Leader McConnell has signed off on a $916 billion offer based on the bipartisan framework, the President's proposal, which cuts unemployment insurance by $140 billion compared to the framework, is unacceptable. The President's proposal must not be allowed to obstruct the bipartisan Congressional talks that are underway. The bipartisan talks are the best hope for a bipartisan solution." (MNI)

FISCAL: Senate Majority Leader Mitch McConnell on Tuesday backed off his demand for businesses to get coronavirus-related liability protections as part of a year-end rescue package. The Kentucky Republican urged Congress to pass an aid bill that contains neither legal immunity nor state and local government support, two roadblocks to lawmakers striking a relief deal. "What I recommend is we set aside liability and set aside state and local, and pass those things that we can agree on knowing full well we'll be back at this after the 1st of the year" during the transition to President-elect Joe Biden's administration, McConnell told reporters on Tuesday. (CNBC)

FISCAL: White House officials are asking Senate Republican leadership to include stimulus checks worth $600 in the emergency economic relief package currently being debated in Congress, according to two people granted anonymity to share details of private deliberations. Senate Majority Leader Mitch McConnell (R-Ky.) did not include a second round of stimulus payments in the relief proposal he released last week. Senior Republican leadership in Congress are listening to White House officials push for the inclusion of the stimulus checks, the two people said, a provision also broadly supported by congressional Democrats. President Trump has privately indicated a willingness to send another round of stimulus checks of as much as $2,000, according to one person in direct communication with the president. Congress in March approved a round of $1,200 stimulus checks that the Treasury Department disbursed to more than 100 million American families in a matter of weeks. (Washington Post)

FISCAL: House Minority Leader Kevin McCarthy tells Axios that both he and Senate Majority Leader Mitch McConnell told the White House they would support including $600 stimulus checks in a coronavirus relief deal being negotiated in Congress. The top House Republican said he and McConnell committed to back the amount being sought by the White House during a Tuesday afternoon call with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows, in which Mnuchin walked them through his $916 billion plan. (Axios)

FISCAL: House lawmakers are calling for $1,000 checks to all Americans so they can cope with the economic fallout of the coronavirus, as Democratic progressives use a rare moment of unity to expand their support from moderates. (Axios)

FISCAL: Sen. John Thune (R-S.D.) on Tuesday pushed for tax relief to remote and mobile workers to be included in a coronavirus relief package this year. "One thing that I would argue needs to be on that is a provision that prevents states from taxing health care workers like doctors and nurses who go across state lines [to] provide their services," Thune, who holds the second highest position in Senate GOP leadership, said at a news conference. "That is an act of good will. They shouldn't be faced a surprise tax bill." "I think there ought to be a provision in this legislation that makes it clear that people like that, or people who are frankly working remotely and have tax consequences as a result of that, don't hit get with a big fat tax bill by some state," he added. (The Hill)

FISCAL: MNI BRIEF: US CBO Projects November Budget Deficit Of $146B

  • The nonpartisan U.S. Congressional Budget Office on Tuesday said the November federal budget deficit will be USD146 billion, down USD63 billion compared to the deficit in November 2019. Outlays for the month of November were USD365 billion, up roughly 11% from the same month last year, CBO estimates, and receipts totaled USD219 billion, down 3% percent compared to the same month last year - on MNI Main Wire and email now - for more details please contact

CORONAVIRUS: The seven-day average of US coronavirus cases on Tuesday topped 200,000 for the first time, with 20 states now experiencing their highest rate of daily cases since the start of the pandemic. States reported a further 213,498 cases, according to Covid Tracking Project data, up from 180,193 on Monday and compared to the single-day record last Thursday of 224,831. The country has reported more than 200,000 daily infections four times in the past week, which has pulled the seven-day average to a record 202,171.9 cases a day. (FT)

CORONAVIRUS: President-elect Joe Biden on Tuesday announced a three-part plan to combat the coronavirus pandemic in the first 100 days of his administration. Biden, speaking in his hometown of Wilmington, Del., as he formally unveiled his team of top health officials, emphasized "masking, vaccinations, opening schools. These are the three key goals for my first 100 days." And the president-elect stressed, "I'm absolutely convinced that in 100 days we can change the course of the disease and change life in America for the better." (FOX)

CORONAVIRUS: White House coronavirus task force warned in its weekly report to states that the coronavirus vaccine will "not substantially reduce" the virus' spread, Covid-19 hospitalizations and deaths until the late spring. (CNBC)

CORONAVIRUS: As the Christmas season inches closer, the U.S. has yet to see the worst from the coronavirus outbreaks driven by people traveling and congregating for Thanksgiving, White House coronavirus advisor Dr. Anthony Fauci said on Tuesday. (CNBC)

CORONAVIRUS: The United States could get the coronavirus pandemic under control by the "back half of 2021" if enough people are vaccinated against the disease in the spring once doses are widely available, White House coronavirus advisor Dr. Anthony Fauci said on Tuesday. (CNBC)

CORONAVIRUS: Americans are expected to continue with their travel plans for the Christmas holiday with more than a million air passengers anticipated for the balance of December and into January for the holiday, David Pekoske, administrator of the Transportation Security Administration, said during an aviation event Tuesday. Americans plan to travel despite Center for Disease Control advice to stay at home and celebrate with the people they live with. (BBG)

CORONAVIRUS: Massachusetts has ordered new curbs on indoor activities and social gatherings, rolling back the reopening of its economy, in an effort to curb a second wave of coronavirus across the state and preserve hospital resources. (FT)

POLITICS: "We're going to have to see who the next administration is, because we won in those swing states and there was terrible things that went on. ... But whichever the next administration is will really benefit by what we have been able to do," Trump said. "Hopefully the next administration will be the Trump administration." (RTRS)

POLITICS: Republicans on the Joint Congressional Committee on Inaugural Ceremonies voted against a resolution that would have affirmed the committee was preparing for the inauguration of President-elect Joe Biden, House Majority Leader Steny Hoyer (D-Md.) announced Tuesday. By voting against the resolution, Senate Majority Leader Mitch McConnell (R-Ky.), Sen. Roy Blunt (R-Mo.) and House Republican Leader Kevin McCarthy effectively blocked the committee from publicly recognizing Biden as President-elect. (Axios)

POLITICS: In a single, succinct order, the U.S. Supreme Court late Tuesday rejected one of two 11th-hour attempts by allies of President Donald Trump to reverse the outcome of the 2020. "The application for injunctive relief presented to Justice Alito and by him referred to the Court is denied," the court said. There were no noted dissents or a breakdown of how justices voted. The bid by a pro-Trump Pennsylvania congressman to invalidate the state's 2.5 million mail-in ballots that heavily favored Democrat Joe Biden was one of two long-shot bids to get President Trump's election challenge in front of the U.S. Supreme Court. A second case, filed by the Texas Attorney General, alleges that four battleground states "exploited the COVID-19 pandemic" to improperly loosen election rules and skew the contest's outcome. This latest lawsuit, targeting Pennsylvania, Michigan, Wisconsin and Georgia, arrived at the doorstep of the U.S. Supreme Court Tuesday morning, just as election officials from Pennsylvania filed briefs for Justice Samuel Alito's consideration in the other matter. (ABC)

POLITICS: The Republican National Committee filed a lawsuit Tuesday to ensure Georgia election law is "properly followed" ahead of the Jan. 5 Senate runoff elections, demanding access for GOP poll watchers and more restrictions around the use of ballot drop boxes. The RNC lawsuit, first obtained by Fox News, seeks enforcement of "two vital facets of the Georgia Election Code governing the rights of duly appointed poll watchers and statutory safeguards attending the use of ballot 'drop boxes' as a method of absentee voting." (FOX)

POLITICS: The House of Representatives on Tuesday overwhelmingly approved a sweeping defense bill with a veto-proof majority after a veto threat from President Donald Trump sharply divided Republican lawmakers, forcing them to choose between loyalty to him and legislation that sets defense policy for the country. The vote, which broke down to 335-78, is a major rebuke to the President. The National Defense Authorization Act will next head to the Senate, where it is also expected to pass with bipartisan support, though it is not yet clear if it will similarly reach a veto-proof majority in the chamber. (CNN)

EQUITIES: United Airlines is set to take delivery of a 737 Max jet from Boeing as early as Tuesday, becoming the first carrier to receive one of the planes since regulators lifted a grounding order last month after nearly two years. (CNBC

EQUITIES: More than 40 attorneys general and the U.S. government are preparing to file antitrust lawsuits against Facebook on Wednesday, alleging that the tech giant engaged in unlawful, anticompetitive tactics to buy or kill off its rivals and solidify its dominance in social networking. (Washington Post)


GLOBAL TRADE: The UK government has broken ranks with the EU by disclosing plans to suspend punitive tariffs against the US over aircraft subsidies, in an attempt to pave the way for a post-Brexit trade deal with Washington. (FT)

GLOBAL TRADE: Brazilian President Jair Bolsonaro's government is looking for a legal way to exclude Chinese telecom equipment maker Huawei Technologies Co Ltd from 5G networks in Brazil, two sources familiar with the matter told Reuters. (RTRS)

U.S./CHINA: The U.S. government should expect China to take countermeasures after it applied sanctions on 14 officials in China's legislative body after the passage of Hong Kong's National Security Law, said the Global Times. The Times, which is owned by the Government controlled People's Daily, did not specify what actions China may take. The sanctions were not likely to have a real impact on the 14 officials, who are not involved in U.S. affairs, the Times said. The current U.S. administration should not assume that its malicious moves can be repeated without any retaliation, according to the newspaper. (MNI)

U.S./CHINA/HONG KONG: Jake Sullivan, the incoming US national security adviser, has accused China of attacking freedom in Hong Kong, in a sign that the Biden administration will take a critical stance towards Beijing over human rights and democracy. Mr Sullivan, a former Hillary Clinton aide who will become national security adviser when Joe Biden is inaugurated on January 20, said he was "deeply concerned" about the imprisonment of pro-democracy activists in Hong Kong. "We stand united with our allies and partners against China's assault on Hong Kong's freedoms — and to help those persecuted find safe haven," Mr Sullivan wrote on Tuesday on Twitter. (FT)

GEOPOLITICS: President-elect Joe Biden's national security team plans to conduct a top-to-bottom review of sanctions operations at the U.S. Treasury Department, including an evaluation of current programs, staffing and budgets, according to people familiar with the matter. Adewale "Wally" Adeyemo, chosen by Biden as the No. 2 official at Treasury, will coordinate with other national security agencies to review how the Terrorism and Financial Intelligence unit, or TFI, at Treasury operates, the people said. (BBG)

CORONAVIRUS: Donald Trump has urged US drug regulators to approve the Pfizer/BioNTech coronavirus vaccine within days after they judged the company's data to show that the inoculation is safe and effective within about 10 days of the first injection. (FT)

CORONAVIRUS: The U.S. government's plan to vaccinate most Americans by next summer rests heavily on two Covid-19 shots that U.S. regulators won't get a chance to rule on until early in 2021. AstraZeneca Plc and Johnson & Johnson together would provide 150 million to 200 million shots in the first quarter, said Moncef Slaoui, chief scientific officer of Operation Warp Speed. This could immunize 110 million to 150 million people, if the doses are evenly split between J&J's single-dose vaccine and Astra's two-dose regimen. (BBG)

HONG KONG: Hong Kong officials have discussed limiting air passenger arrivals if there is a shortfall of hotels willing to serve as quarantine centers, the South China Morning Post reported, citing a government pandemic adviser. The cap would only be considered in "extreme conditions." (BBG)

JAPAN: The additional cost from the new package will likely boost new debt issuance for the year ending in March 2021 to over 100 trillion yen ($960 billion) from the current plan of 90.2 trillion yen, the Nikkei reported on Wednesday. Tax revenues during the year will likely fall 8 trillion yen short of initial estimates to around 55 trillion yen, as the pandemic hit corporate profits, the paper said without citing sources. That would be the biggest shortfall since fiscal 2009, when the collapse of Lehman Brothers triggered a global financial crisis. (RTRS)

JAPAN: Japan to spend about 300b yen on Go-To-travel campaign. (Asahi)

JAPAN: Japan's Sapporo to continue to ask people to stay inside. (Kyodo)

AUSTRALIA/CHINA: Chinese trade officials are unlikely to reassess their bilateral free-trade agreement with Australia this month at the five-year review point, a source familiar with the matter in Beijing told the South China Morning Post. (SCMP)

SOUTH KOREA: South Korean government will closely monitor the bond market and take active market stabilization measures as volatility could expand, Vice Finance Minister An Il-whan says in a meeting. Government to sell up to 176.4t won in state bonds next year, similar to this year. Government to try to efficiently allocate bond sales by timing and maturity in order to increase market predictability. South Korea expects stable demand from foreign investors and local financial institutions. (BBG)

NORTH KOREA: North Korean Leader Kim Jong Un's sister Kim Yo Jong condemned South Korea's Foreign Minister's comments on Pyongyang's handling of coronavirus as 'reckless,' KCNA reports, citing a statement from the younger Kim. (BBG)

BOC: BOC Preview - Dec 2020: Holding Lower Bound

  • A subdued finish to 2020 with no Monetary Policy Report or press conference, analysts unanimously agree the Bank of Canada will keep its target rate on hold at 0.25% Wednesday, the sixth time running and likely no changes in QE after extending maturity in October - on MNI Main Wire and email now - for more details please contact

BOC: Canadian Finance Minister Chrystia Freeland on Tuesday admonished her political rivals for questioning the Bank of Canada's independence. (Dow Jones)

CANADA: Alberta, Canada's largest oil-producing province, announced strict new limits on businesses and social events in an attempt to control a surge in Covid-19 cases and hospitalizations. (BBG)

CANADA: The United States is threatening trade action against Canada after U.S. politicians and industry groups complained Ottawa was not making good on its promise to loosen restrictions on dairy imports. U.S. Trade Representative Robert Lighthizer is set to announce an enforcement action under the United States-Mexico-Canada Agreement (USMCA), according to reports this week from Politico and Bloomberg News. In a statement to the Financial Post on Tuesday, the U.S. Dairy Export Council said it expects Lighthizer to take action in response to Canada's "failure to abide" by its commitments under USMCA to allow more U.S. dairy imports into Canada's heavily regulated dairy market. (Financial Post)

BRAZIL: Brazil has signed a letter of intent with Pfizer Inc guaranteeing the delivery of more than 70 million COVID-19 vaccine doses from January next year, Health Minister Eduardo Pazuello said on Tuesday. (RTRS)

IRAN: Iran has arrested several people for involvement in last month's assassination of a top nuclear scientist, the state-run Al Alam TV reported, citing an official. Hossein Amirabdollahian, a top aide to the head of Iran's parliament and a former deputy foreign minister, told Al Alam that Iran's intelligence services made the arrests after identifying a number people who they suspect were involved in the Nov. 27 attack. (BBG)

RATINGS: Fitch Ratings told Reuters on Tuesday that upgrades of any major economy are unlikely in 2021 despite recent developments related to COVID-19 vaccination, and that countries in Latin America, the Middle East and Africa show the highest level of vulnerability to further negative action in the coming year. (RTRS)

EQUITIES: SoftBank Group Corp. is debating a new strategy to go private by gradually buying back outstanding shares until founder Masayoshi Son has a big enough stake he can squeeze out the remaining investors, according to people familiar with the matter. (BBG)

OIL: U.S. crude oil production is expected to fall by 910,000 barrels per day (bpd) in 2020 to 11.34 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, a steeper decline than its previous forecast for a drop of 860,000 bpd. Output next year is expected to slide by 240,000 bpd to 11.10 million bpd, a smaller decline compared to the previous forecast for a slide of 290,000 bpd. (RTRS)


YUAN: China should manage inflation caused by higher prices of imports while containing prices of assets chased higher by inbound capital, the 21st Century Business Herald wrote in an editorial. The higher yuan and the raw material costs may drive down exports and hurt the manufacturing industry, wrote the Herald. China should also be aware that the incoming Biden administration may make the exchange rate an issue of contention, the editorial said. (MNI)

BONDS: China needs a more liquid market for its Government bonds to help participants hedge against volatilities created by the increasing openness of its financial system, with measures such as issuing bonds to purchase a portion of the PBOC's foreign reserves, former Minster of Finance Lou Jiwei said. The PBOC could use government bonds to adjust base currency investments and prevent foreign exchange reserves from affecting monetary policy, Lou said. (MNI)


CHINA NOV CPI -0.5% Y/Y; MEDIAN 0.0%; OCT +0.5%
CHINA NOV PPI -1.5% Y/Y; MEDIAN -1.8%; OCT -2.1%

MNI DATA IMPACT: China Nov CPI Negative First In 11-Years

  • China's inflation fell 0.5% y/y in November, reversing October's 0.5% gain, hitting the lowest level since October 2009 mainly due to declining food prices and the higher comparison base for the same period last year. Analysts had expected 0.0% y/y - on MNI Main Wire and email now - for more details please contact




The surge in the Index continues. It is now 48% above the low in April and has reached its highest level since October 2010 – marking a ten year high. After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession. The behaviour of the Index highlights the difference between this recession; the downturn during the Global Financial Crisis and the recession of the early 1990s. These differences relate to the nature of the shocks; the resilience of the financial system; and the rapid, pro–active responses from authorities which have been critical to containing the economic damage. While the Index reached comparable lows in all three episodes, the recovery in sentiment in the COVID recession has been much more rapid. After eight months following the low in the GFC, sentiment had only recovered by 8.4%. It took a full year before it was clearly signalling that the crisis had passed. (Westpac)




The People's Bank of China (PBOC) injected CNY20 billion via 7-day reverse repos with rates unchanged at 2.2% on Wednesday. This resulted in a net injection of CNY10 billion given the maturity of CNY10billion of reverse repos today, according to Wind Information.

  • The operations aim to maintain the liquidity in the banking system at a reasonable and ample level, the PBOC said on its website.
  • The 7-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.2000% at 09:25 am local time from the close of 2.0555% on Tuesday.
  • The CFETS-NEX money-market sentiment index closed at on 40 Tuesday vs 36 Monday. A lower index indicates decreased market expectations for tighter liquidity.


The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower for a sixth day at 6.5311 on Wednesday, compared with the 6.5320 set on Tuesday.


SNAPSHOT: Fresh Cycle Lows For USD/CNH As DC Fiscal Matters Headline

Below gives key levels of markets in the second half of the Asia-Pac session:

  • Nikkei 225 up 307.83 points at 26774.91
  • ASX 200 up 40.767 points at 6728.5
  • Shanghai Comp. up 1.829 points at 3412.006
  • JGB 10-Yr future unch. at 152.1, yield down 0.3bp at 0.016%
  • Aussie 10-Yr future down 0.3 tick at 98.977, yield down 0bp at 1.023%
  • U.S. 10-Yr future -0-06 at 137-20, yield up 2.15bp at 0.939%
  • WTI crude down $0.08 at $45.52, Gold down $9.73 at $1860.81
  • USD/JPY down 1 pip at Y104.15

BOND SUMMARY: Mixed Performance For Core FI Amid Tight Ranges

T-Notes sit at worst levels of the session, with the contract -0-06 at 137-20, holding to a narrow 0-03+ range in Asia-Pac hours. The proposed fiscal package outlined by the Trump administration has dominated Asia-Pac headline flow, resulting in some bear steepening of the Tsy curve as 30s trade 2.3bp cheaper on the day.

  • JGB futures also held to a narrow range, with the contract last unchanged on the day, while the cash curve twist flattened as the long end continued to benefit from an in line with exp. supplementary fiscal package, which was outlined on Tuesday. Broader headline flow has been light since the Tokyo open.
  • The Aussie bond curve saw some early chop, although futures have returned to little changed on the day, YM -0.3, XM -0.4. Pressure in the space came around the pricing of A$2.0bn of NSWTC supply, which took the form of a new Feb '32 line. Elsewhere commentary from Westpac's Bill Evans, calling into question the longevity of the RBA's forward guidance if unemployment evolves in line with Westpac's exp., also garnered attention. Selling of the XM roll has also been highlighted.

JGBS AUCTION: Japanese MOF sells Y3.1087tn 6-Month Bills:

The Japanese Ministry of Finance (MOF) sells Y3.1087tn 6-Month Bills:
  • Average Yield -0.0882% (prev. -0.1027%)
  • Average Price 100.044 (prev. 100.051)
  • High Yield: -0.0861% (prev. -0.0987%)
  • Low Price 100.043 (prev. 100.049)
  • % Allotted At High Yield: 54.2005% (prev. 83.6926%)
  • Bid/Cover: 3.614x (prev. 3.297x)

EQUITIES: Fiscal Hope

Most of the major regional equity indices traded on the front foot during Asia-Pac hours, with the latest fiscal developments in DC supporting broader risk appetite overnight, even with the Democratic Congressional leadership pushing back against the latest offering from the Trump administration.

  • E-minis also nudged higher, with the S&P 500 contract registering another fresh all-time high during the process, building on Tuesday's marginal Wall St. gains.
  • Nikkei 225 +1.2%, Hang Seng +1.3%, CSI 300 -0.1%, ASX 200 +0.7%.
  • S&P 500 futures +8, DJIA futures +85, NASDAQ 100 futures +7.

OIL: API Inventory Estimates Provide Pressure

WTI & Brent sit $0.20 below their respective settlement levels at typing, after the latest API crude inventory estimates revealed a surprise build in headline crude stocks, alongside a much larger than expected build in gasoline stocks, deepening demand-side worry.

  • Tuesday also saw the EIA trim its '21 forecasts surrounding an expected fall in U.S. crude oil production, to 240K bpd from 290K bpd in its previous estimate.
  • The weekly DoE inventory data and continued focus on the global COVID dynamic will be at the fore on Wednesday.

GOLD: Holding

Spot deals in familiar territory, $5/oz or so softer on the day, printing $1,865/oz at typing, with U.S. real yields and the DXY little changed over the last 24 hours (at least in the grand scheme of things).

  • Technically, bulls now target $1,888.9/oz, the 61.8% retracement of the Nov 9-30 sell-off.
  • It is also worth noting that Tuesday saw total known gold ETF holdings rise for the first time since Nov 20.

FOREX: Risk Remains Firm With All Eyes On Deal-Making

Sentiment was buoyed by U.S. fiscal developments and renewed yuan strength, inspiring risk-on flows across the broader FX space. U.S. Tsy Sec Mnuchin outlined a $916bn economic relief proposal and House Speaker Pelosi welcomed progress, even as she deemed parts of the draft "unacceptable." Hopes that remaining gaps could be bridged provided support to risk appetite, allowing AUD, NZD & NOK to outperform their G10 peers, with USD, JPY & CHF helping bring up the rear in the space. Risk barometer AUD/JPY narrowed in on key cycle high of Y77.57, but fell short of testing the level.

  • Last-ditch attempts to strike a Brexit accord provided another point of note ahead of today's Johnson/von der Leyen meeting aiming to break the current deadlock. Sterling ground higher early on, with cable extending gains as broader USD weakness kicked in. The pair last sits +25 pips, with yesterday's extremes still intact.
  • China unexpectedly posted the first negative CPI reading since 2009, but the redback showed a muted response to the release. PPI deflation moderated slightly more than forecast.
  • The yuan led its regional peers higher vs. the greenback, with USD/CNH, USD/KRW and USD/THB all printing fresh cycle lows. The baht drew support from the approval of Thai gov't's stimulus plan, while liquidity in THB crosses remained thin as Thailand is set to observe another long weekend, starting tomorrow. Indonesia was off for a local holiday.
  • AUD/USD was initially in a holding pattern, but saw a bid as the session wore on last up 29 pips at 0.7440. The pair briefly touched lows of 0.7405 early in the session.
  • Later today, focus moves to the aforementioned Chinese inflation figures, BoC MonPol decision, German trade balance & Norwegian GDP.

FOREX OPTIONS: Expiries for Dec9 NY cut 1000ET (Source DTCC)

  • EUR/USD: $1.2130-40(E567mln), $1.2190-00(E544mln)
  • USD/JPY: Y104.65-80($1.1bln)
  • USD/CAD: C$1.2900($561mln)

UP TODAY (Times GMT/Local)

MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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