• Asia-Pac equities mostly rose in tandem with the gains seen on Wall Street
• In FX, the DXY retained 96.00+ status, USD/JPY met sellers at 114.50, others were uneventful
• Data suggests protection against Omicron COVID variant starts to wane 10 weeks after booster vaccination
• Japan will not send top government officials to the Beijing Winter Olympics, but stopped short of calling it a boycott
• Newsquawk desk will close at 13:00GMT and reopen on Jan 3rd at 22:00GMT

CORONAVIRUS UPDATE

Data suggests protection against Omicron COVID variant starts to wane 10 weeks after booster vaccination, via UK Government. (Newswires)

CanSino Biologics (6185 HK) says Phase III trials show its COVID vaccine is 91.7% effective against severe disease 28 days after a single-dose vaccination. (Newswires)

New Year's Eve restrictions in the UK are increasingly unlikely, according to government sources. (Telegraph)

French Health Minister says COVID rules will likely change soon. (Newswires)

Australia reduced its COVID booster interval to four from five months. (Newswires)

United Airlines (AAL) canceled 121 flights for Christmas Eve thus far. (Newswires)

ASIA

Asia-Pac equities mostly rose in tandem with the gains seen on Wall Street, whereby the US majors advanced for a third day with the S&P 500 closing at a record high. US cash and futures markets are closed on Friday for Christmas, but all three cash indices posted gains for the week - and the Nasdaq outperformed with returns of almost 3.2% this week. The ASX 200 (+0.4%) was supported by gains in its IT and Financial sectors. The Nikkei 225 (+0.8%) was underpinned by favourable currency dynamics, while Electricity and Retail names were among the laggards after Japanese Core CPI topped expectations – with many firms still said to be holding out on price rises. The KOSPI (+0.8%) was lifted by Industrials and Consumer Discretionary names, with the index gaining further ground above 3,000. The Hang Seng (+0.2%) and Shanghai Comp (-0.7%) traded mixed with the latter pressured after President Biden signed a law banning goods made in China’s Xinjiang province.

• PBoC set USD/CNY mid-point at 6.3692 vs exp. 6. 3661 (prev. 6. 3651)
• PBoC injected CNY 10bln via 7-day reverse repo and CNY 10bln via 14-day for a net neutral daily injection of CNY 10bln, at maintained rates of 2.20% and 2.35% respectively; weekly net CNY 50bln injection

Japanese Cabinet approves record FY22/23 general account budget spending worth JPY 107.6tln; Japan plans to sell JPY 198tln of JGBs in FY22/23, down JPY 13.6tln from FY21/22. Japan plans to increase issuance of 40yr JGBs by JPY 100bln per auction, to an annual JPY 4.2tln; frequency at every two months. Japan is to reduce sales of bills and 2yr bonds.

• Japanese CPI, Overall Nationwide (Nov) 0.6% (Prev. 0.1%)
• Japanese CPI, Core Nationwide YY (Nov) 0.5% vs. Exp. 0.4% (Prev. 0.1%)

UK/EU

UK Business Secretary is said to be drawing up a rescue package to protect households from surging energy prices. (Telegraph)

FX

In FX, the DXY retained 96.00+ status after dipping to a 95.987 low yesterday, but action was caged to a tight range amid holiday-thinned trade and lack of catalysts. EUR/USD and GBP/USD were contained above 1.1300 and 1.3400 respectively. JPY narrowly lagged for the first half of the session before USD/JPY met sellers at 114.50. Antipodeans were uneventful as catalysts were light. From a technical standpoint, AUD/USD sees its 50 DMA at 0.7290 and 100 DMA at 0.7293, while AUD/NZD sees its 200 DMA at 1.0589. In EM FX, the CNH and TRY were also stable within recent ranges.

Turkish Finance Minister said investors converted TRY 10bln worth of deposits to the new financial instrument as of Thursday morning. (Newswires)

Indonesian Central Bank Governor said they will continue to do "triple intervention" to stabilise the IDR. (Newswires)

COMMODITIES

Brent futures held a downside bias as upward momentum stalled heading into the US close. Prices edged lower towards USD 76/bbl despite the mostly positive tone across stocks. Spot gold traded with mild gains above USD 1,800/oz, whilst Dalian iron ore and coking futures opened higher by over 3% apiece - with participants citing firm demand prospects.

Las Bambas copper mine said the temporary truce with protestors on the key road out the facility does not guarantee conditions to restart operations in a sustainable way and the road is still blocked with huts built there, according to a statement. (Newswires)

GEOPOLITICAL

Senior Biden admin official said the US is continuing to take note of Russia's alarming movements near Ukraine, and are ready for diplomacy with Russia as soon as January but no clear time or place has been made. US welcomes Russia and Ukraine's commitment to July 2020 ceasefire but wants to see follow-through. They are yet to respond meaningfully to Russia's security proposals, and will respond at January talks. US will never agree to some Russian proposals, but other areas they may be able to look into. US partners and allies are preparing their own serious actions should Russia invade Ukraine. (Newswires)

NATO Chief Stoltenberg said NATO never promised not to expand and that it follows from a number of treaties. (Newswires)

Japan is reportedly mulling partnering with the EU and US to limit exports of surveillance technology, according to Nikkei. (Nikkei)

Japan will not send top government officials to the Beijing Winter Olympics, but stopped short of calling it a boycott, according to CNN's Wang. (Twitter)

US

The Treasury curve bear flattened on Thursday with longer end bonds taking a hit to see the 30yr yield above 1.9% with the 10yr hovering around 1.5%. The focus of the day was on the PCE data for November, which followed a hot CPI and PPI report. Core PCE was hotter than expected while the headline was in line with expectations, but nonetheless at elevated levels. There wasn't an immediate reaction to the data, which was coupled with in line jobless claims and strong durable goods, although selling pressures started to pick up c. 1 hour after the data. Perhaps due to thin markets in the final US trading session before Christmas, although IFR noted that the sell off in the long end was driven by asset reallocation trades, from stocks and into bonds. Fresh curve steepening bets were reportedly attributed to hedge funds and to real money accounts, albeit hedge funds were the primary driver. T-Note (H2) futures settled 6 ticks lower at 130-17+