MNI US OPEN - SA Study Sees Pfizer Efficacy Wane vs. Omicron

NEWS

CORONAVIRUS (Telegraph): Two shots of the Pfizer coronavirus vaccine provides 70 per cent protection against hospitalisation, according to a major real-world study from South Africa analysing the impact of the omicron variant. The research, which comes amid mounting concern about the spread of the highly contagious variant worldwide, was based on more than 211,000 positive coronavirus test results in the three weeks leading to December 7 – including 78,000 thought to be omicron. In total, 41 per cent of those testing positive had received two Pfizer-BioNTech shots. It found that the effectiveness of two Pfizer shots at preventing severe disease – defined as hospitalisation – has dropped to 70 per cent, substantially lower than the 93 per cent protection offered during South Africa’s delta wave.

EUROPE (MNI): Concerns Said Building Over Pace Of EU Fiscal Reform Talks
Concerns over the pace of talks to reform the EU's fiscal rules are mounting as France's turn in the rotating presidency looms for the new year, officials in Brussels told MNI. The talks have already narrowed in scope given member states' desire to avoid a treaty change, meaning that key Stability and Growth Pact rules such as the 60% limit on debt-to-GDP and 3% annual budget deficit ceiling are certain to remain.

CHINA (Bloomberg): China Property Plunge Worsens as Shimao Deal Raises ‘Red Flag’
Chinese property stocks sank to a nearly five-year low after a deal between two units of Shimao Group Holdings Ltd. heightened corporate governance concerns in an industry already grappling with a liquidity crisis. Shares of Shimao Group and its property-services unit both tumbled by the most ever on Tuesday, while a Bloomberg index of property stocks dropped 4.3% to the lowest level since February 2017. A connected-party acquisition announced by the developer late Monday “not only implies tight liquidity conditions for Shimao, but is also a corporate governance red flag,” JPMorgan Chase & Co. analysts wrote as they downgraded both stocks.

MNI STATE OF PLAY: ECB PEPP Seen Nearing End Of Live Phase
The European Central Bank will likely confirm the March end of the net purchase phase of its pandemic-era emergency bond-buying (PEPP) on Thursday, although with inflation running at multi-decade highs, it is less clear whether it will take other key pending decisions, including setting the scale of future bond buys through the legacy asset purchase program.

DATA

MNI: EZ OCT IND PROD +1.1% M/M, +3.3% Y/Y; SEP -0.2% M/M

MNI DATA BRIEF: UK Nov Payroll Employment Sees Record Jump - UK payroll employment rose by a record-high 257,000 in November, although an Office for National Statistics official cautioned that those data could include those working out notices after the end of the furlough programme on 30 Sept. The official also warned that the series has been subject to heavy revision; the October reading was downgraded to an increase of 74,000 from the initially-reported 160,000.

However, other measures of the labour market raise questions of a potential cooling of the jobs market in months to come. Vacancies declined by 80,000 between October and November, even as the level of openings rose by 185,000 to 1.219 million in the three months to November compared to the three months ending in August.

MNI BRIEF: Earnings Growth Slows in Hot UK Labour Market
UK earnings growth slowed markedly in the three months to October, despite a large increase in employment over the autumn, data released by the national statistics office. Total earnings rose by 4.9% over the same period a year earlier, down from 5.9% in the third quarter, although the outturn exceeded analysts' forecasts of a deceleration to 4.6%.

BONDS: Attention turning to CBs later this week

Core fixed income have been grinding lower off of yesterday's highs through most of the morning session with little in the way of headline drivers. Overall, however, moves have been rather limited.

• Attention is turning to the FOMC decision tomorrow and BOE/ECB meetings Thursday.
• Today the UK parliament's vote on Covid Plan B restrictions will be watched, as will the US Senate's vote on the debt ceiling extension.
• On the data front we have already seen some strong UK labour market data while the data highlight later will be US PPI.
• TY1 futures are down -0-2 today at 130-25 with 10y UST yields up 1.3bp at 1.430% and 2y yields up 1.4bp at 0.649%.
• Bund futures are down -0.19 today at 174.49 with 10y Bund yields up 1.1bp at -0.373% and Schatz yields up 1.1bp at -0.703%.
• Gilt futures are down -0.12 today at 127.42 with 10y yields up 1.5bp at 0.710% and 2y yields up 1.8bp at 0.406%.

FOREX: EUR/USD Back Above 1.13 as Risk Wanes

• Markets trade with a general risk-off tone, as equity indices slip through yesterday's lows and extend the pullback off the week's best levels at 4731 printed on Monday. This has translated into more solid haven currencies - with CHF and JPY among the session's best performers, although the single currency also trades well, with EUR/USD back above the 1.13 handle and eyeing the next resistance level at Monday's 1.1319.
• The broad risk-off follows the release of a further dataset from South Africa's Discovery study into omicron, which showed the effectiveness of the Pfizer jab against omicron waned to 33% from 80% against the prior delta variant.
• Risk and growth proxies including the NOK and AUD are the poorest performers as a result, with USD/NOK rising to touch new weekly highs of 9.0912.
• US PPI data takes focus going forward, with the Y/Y final demand figure seen climbing to a new series high of 9.2%. There are few speakers of note, keeping focus on the key policy decisions due later in the week.

EQUITIES: A little lower on SA Omicron data

• Japan's NIKKEI down 207.85 pts or -0.73% at 28432.64 and the TOPIX down 4.32 pts or -0.22% at 1973.81
• China's SHANGHAI closed down 19.557 pts or -0.53% at 3661.525 and the HANG SENG ended 318.63 pts lower or -1.33% at 23635.95
• German Dax down 17.7 pts or -0.11% at 15613.42, FTSE 100 up 18.77 pts or +0.26% at 7252.49, CAC 40 down 1.13 pts or -0.02% at 6944.71 and Euro Stoxx 50 down 1.99 pts or -0.05% at 4183.59.
• Dow Jones mini down 37 pts or -0.1% at 35586, S&P 500 mini down 15.5 pts or -0.33% at 4655.75, NASDAQ mini down 106.75 pts or -0.66% at 15988.75.

COMMODITIES: Natgas leading commodities lower

• WTI Crude down $0.19 or -0.27% at $71.06
• Natural Gas down $0.07 or -1.9% at $3.723
• Gold spot down $1.71 or -0.1% at $1784.66
• Copper down $1.05 or -0.25% at $427.4
• Silver down $0.12 or -0.54% at $22.2162
• Platinum down $0.76 or -0.08% at $932.06