Original insights into market moving news

[PODCAST] European Open Rundown 23rd December 2020

  • Asia-Pac bourses gained across the board but US and European equity futures were subdued
  • US President Trump warned he will not sign the stimulus package until Congress amends it
  • Trump wants stimulus payments to be raised to USD 2,000 from the bill's USD 600; Pelosi said Democrats are ready to bring this to the Floor this week
  • A UK source said an agreement on a UK/EU trade deal is again possible today; EU sources stressed that they do not have much room for manoeuvre on fisheries
  • In FX, DXY was firmer for most of the session, Cabled topped 1.3400 and USD/JPY dipped below 103.50
  • Looking ahead, highlights include US PCE, Initial/Continued Jobless Claims, University of Michigan (Final) and US 2yr FRN


Some NYSE trading floor personnel are to return to remote operations, according to CNBC. (CNBC)

US CDC said new COVID strain in UK could already be circulating undetected in the US, reports CNBC. (CNBC)

AstraZeneca (AZN LN) spokesperson said even with these recent mutations we believe the vaccine should still be effective, studies are however underway to fully investigate the impact of the mutation. (Newswires) AstraZeneca vaccine likely to receive approval in India by next week after more data was submitted, according to sources. (Newswires)

US nears deal with Pfizer (PFE) for up to 100M additional doses of its Covid-19 vaccine, a source told CNBC. (CNBC)

UK PM Johnson is mulling shutting down additional parts of England to curb the spread of the new coronavirus variant. (Newswires)


Asia-Pac equities traded firmer across the board after a mixed Wall Street lead, where the Dow and S&P slipped but closed trade well off lows, whilst the Nasdaq ended the session in positive territory with the aid of Apple, Microsoft and Amazon. However, overnight US equity futures where dented after US President Trump warned he will not sign the COVID relief bill until Congress amends it, whilst also asking for stimulus payments to be increased to USD 2,000 from the USD 600 in the bill. Subsequently, White House Speaker Pelosi responded by stating Democrats are ready to bring USD 2,000 in direct checks to the Floor this week by unanimous consent. Furthermore, Fox's Pergram highlighted that Trump did not outright say he will veto the bill, but could prevent it from being law via a "pocket veto" to avoid Senate overriding an official veto - effectively running down the clock until Congressional adjournment before midnight on January 3rd. The President has ten days (excluding Sundays) to either sign or veto a bill, meaning Congress will have to present Trump with the bill by December 23rd to prevent a pocket veto. If Trump fails to respond in the ten-days window, then the bill would automatically become law. That being said, the size and nature of the bill would mean that it could take days to get the bill to Trump - i.e. if Trump sticks to his guns, the US government could shut down on December 29th (assuming no more stopgap bills) and COVID stimulus will be frozen. US equity futures later trimmed losses whilst European equity futures remained subdued with the region tackling the more transmittable COVID-19 variant. Back to APAC, the ASX (+0.6%) was propped up by some of the more defensive sectors, whilst gains were capped by losses in mining names. Nikkei 225 (+0.3%) waned off best levels as a firmer JPY reeled in the index. KOSPI (+1.0%) extended gains whilst South Korea halted flights to and from the UK to avoid importing the COVID variant. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp. (+0.9%) conformed to the broad gains across the region, with the latter seeing more pronounced upside following another PBoC liquidity injection. Finally, 10yr JGB futures trade little changed but the overall curve modestly flatter.

The Department of Homeland Security is set to issue an advisory to U.S. businesses, warning them of data security risks associated with using communications equipment and services from China-linked companies, according to Axios. (Axios)

PBoC set USD/CNY mid-point at 6.5558 vs exp. 6.5548 (prev. 6.5387). (Newswires)

PBoC injected CNY 10bln via 7-day reverse repos and CNY 100bln via 14-day for a net injection of CNY 100bln at maintained rates of 2.20% and 2.35% respectively. (Newswires)

BoJ Minutes (Oct): Most members said the BoJ's range of steps to ease corporate funding strains showing intended effects; members agreed the BoJ should not hesitate to ease further if needed. (Newswires) Note, these minutes were from two meetings ago


US President Trump asked Congress to amend the COVID-19 relief bill and stated it has unnecessary components. Trump wants stimulus payments to be raised to USD 2,000 from the bill's USD 600 and warned will not sign it until Congress amends the stimulus package. (Twitter)

US House Speaker Pelosi tweeted that Democrats are ready to bring USD 2,000 in direct checks to the Floor this week by unanimous consent. House Democrats will try to approve USD 2,000 stimulus checks via unanimous consent on House floor on Christmas Eve Day, according to Fox's Pergram. (Twitter)

Congress would have to get the President the bill by December 23 to prevent a "pocket veto" by US President Trump, according to Fox's Pergram. The President may in effect “veto” a bill by keeping it in his “pocket” and not signing it if it comes too close to the end of a Congressional adjournment. President Trump could run out the clock on the Congressional session, effectively blocking any potential override attempt. The President would have to send it back to Capitol Hill with a veto. If he failed to do so in the ten days/Sundays excluded window, then the bill would automatically become law. (Twitter)

US President Elect Biden reiterated that the COVID relief package is far from perfect and the US needs more money to fight the pandemic. (Newswires)


A UK source said an agreement on a UK/EU trade deal is again possible today. Presumably because, a separate source said, there was movement late tonight on access to the 6-12 mile zone, ocean fishing and the sanctions regime, ITV's Peston tweeted, "So there will either be a deal tomorrow [Wednesday]. Or the following Wednesday." (Twitter)

Earlier reports noted that there are still some issues around the level playing field and governance, areas the UK wants to change, or wants sunset clauses on. Fisheries remain a problem; the UK is proposing to hive off pelagics to the informal independent coastal state forum including Norway, Iceland, the Faroes etc. Chief Brexit Negotiator Barnier told ambassadors the UK was still looking for a three-year transition while the EU would accept six years, although some felt even that was not long enough. Barnier also told ambassadors the UK offer of 35% did not include pelagic stocks, and if it did it was closer to 60%; "It's not 25pc v 30pc, it's 25pc v 60pc", according to RTE's Connelly. (Twitter)

EU diplomat said there is "Still no deal on fishing. The UK rejected the latest offer but the message from Barnier is that he'll keep negotiating until the end, and think about the process later.", according to Sky's Parsons. (Twitter) EU sources stressed that they do not have much room for manoeuvre on fisheries in Brexit talks, according to FT's Brundsen. (Twitter) Senior EU diplomat states EU member states commission's last offer on fishing rights already goes very far and can only be considered, at best, as final. (Newswires)

RTE's Connelly said there is a basic Brexit deadline of Christmas Eve to get a deal so that it can be ratified for January 1st; officials will need four days at a minimum to draft a letter seeking provisional application of the treaty. Diplomats say they're not ruling out a deal by Christmas eve. Michel Barnier said there had been significant progress. Member states expect to convene a meeting of the Working Party (of Brexit coordinators) every day (except Christmas Day). One diplomat said Barnier will publish the text once/if it's agreed, but before it's been legally scrubbed. Member states can approve the text via written procedure (sending a formal letter) as there are no Council meetings foreseen to do it in person between now and Dec 31. (Twitter)

Irish PM Martin said he thinks a Brexit deal is more likely than less likely, would like to see a deal before Christmas but talks could go beyond December 25th, there are a number of ways to deal with fishing issue aside from percentages. (Newswires)

Trucks can re-enter France from UK provided truckers have negative COVID-19 tests, according to the French Transport Ministry. (Newswires)


In FX, the DXY traded on a firmer footing above 90.500 for most of the session, but remained under its 21 DMA (90.881) after printing a 90.055 base in the prior session, with overnight gains in the index exacerbated following US President Trump intimating a veto of the stimulus package Congress passed yesterday - albeit the index ran out of steam heading into the European open. Nonetheless, G10 peers were mostly and modestly firmer against the Buck, with Sterling leading the gains as GBP/USD tested then breached 1.3400 to the upside ahead of its 200HMA (1.3411) following sources reports via ITV's Peston that an agreement on a UK/EU Brexit trade deal is again possible today as there was movement in negotiations. Meanwhile, EUR/USD traded within a tight range after testing 1.2150 to the downside overnight, whilst OpEx sees just under EUR 1bln rolling off at 1.2200 and around EUR 750mln at 1.2150. Elsewhere, Antipodeans also eked gains but the Aussie faring slightly better than its Kiwi counterpart as AUD/NZD probed 1.0700 once again. USD/JPY dipped 103.50 but gains for the pair remained capped following US President Trump's comments on the stimulus bill. Note: USD/JPY sees some USD 1.6bln at strike 103.00.

Israel is to hold snap elections in March 2021 following the dissolution of Parliament in a budget dispute. (Newswires)


WTI and Brent front month futures trickled lower overnight as the complex reacted to US President Trump's dissatisfaction over the Congress-approved COVID relief and government funding combo, whilst a surprise build in Private Inventories (+2.7mln bbls vs exp. -3.2mln bbls) only added to the overnight bearish narrative against the backdrop of COVID-mutation woes. WTI Feb extended losses below USD 47/bbl to trade closer to USD 46/bbl whilst Brent Mar lost further ground under USD 50/bbl. Elsewhere, spot gold and silver eked posted gains but remained contained within narrow ranges above USD 1850/oz and USD 25/oz respectively. In terms of base metals, Shanghai copper futures pulled back amid the firmer Dollar and the dwindling prospect of imminent US stimulus, alongside some potential sympathy play as Dalian iron futures aggressively retraced some of its recent gains.

US Private Energy Inventory (bbls): Crude +2.7mln (exp. -3.2mln), Cushing +0.35mln, Gasoline -0.22mln (exp. +1.2mln), Distillate +1.03mln (exp. -0.9mln). (Newswires)

Venezuela resumed direct oil shipments to China despite US sanctions, according to vessel-tracking data and internal document from PDVSA. (Newswires)


Treasuries modestly bull-flattened on Tuesday in thin liquidity and a choppy risk tone. By settlement, 2s -0.4bps at 11.9bps, 10s -2.5bps at 91.6bps, 30s -3.2bps at 165.2bps; short TIPS yields were lower after a strong 5-year auction; futures volumes were weak. The bid for duration caught legs out of Europe as the broader risk tone deteriorated. There hasn't been anything incrementally that new on the macro front, rather just an extension of concerns on new COVID strains/lockdowns, something that has met a tape more vulnerable to volatility in thinning liquidity conditions just a few days before Christmas. Furthermore, duration also found support from the Fed stepping into the 20-30yr bucket today, the last long-end buyback of the year, ahead of the last scheduled operation in general for Wednesday in the 4.5-7yr bucket. Latter US trade was flat and lacklustre for USTs (TYH1 traded within a 2 tick range for the last few hours pre-settlement). Although, the USD 15bln 5-year TIPS auction saw a 2.5bps stop thru, which put downside pressure in short-end real yields. T-NOTE (H1) FUTURES SETTLED 7 TICKS HIGHER AT 137-31+

Tesla (TSLA) CEO Musk tweeted that during the darkest days of the Model 3 programme he reached out to Tim Cook to discuss the possibility of Apple (AAPL) acquiring Tesla (TSLA) but Cook refused the meeting. (Newswires)

US President Trump administration sues Walmart (WMT), accusing it of helping fuel the opioid crisis, according to WSJ. (WSJ)