• European bourses are under modest pressure, Euro Stoxx 50 -0.2%, as the cautious APAC tone continues but with magnitudes limited given the lack of newsflow.
• USD's initial extension faded with the index drifting within 105.23-104.72 parameters, peers mixed but generally rangebound.
• EGBs & Gilts have meandered to fresh intra-day peaks, though newsflow and drivers behind the upside are essentially non-existent.
• Crude benchmarks are under modest pressure, with both volumes and newsflow limited ahead of an action-packed week of macro risk events.
• Looking ahead, highlights include Fed’s Bostic & US supply.
• Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses are under modest pressure, Euro Stoxx 50 -0.2%, as the cautious APAC tone continues but with magnitudes limited given the lack of newsflow.
• Stateside, futures are firmer across the board though again only modestly so, ES +0.2%.
• In Europe, sectors are lower across the board.
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FX

• USD's initial extension faded with the index drifting within 105.23-104.72 parameters, peers mixed but generally rangebound.
• EUR, CHF & GBP outperform and are taking advantage of the Dollar's drift, with EUR/USD above 1.055+ and Cable testing 1.23.
• CAD lags as petro-FX once again takes a hit as the benchmarks slip and ahead of commentary from BoC's Macklem.
• PBoC set USD/CNY mid-point at 6.9565 vs exp. 6.9564 (prev. 6.9588)
• Czech President said he will appoint new members of the central bank board on December 14th, according to Reuters.
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Notable FX Expiries, NY Cut:

• EUR/USD: 1.0380-90 (1.06BN), 1.0420-25 (637M), 1.0500-10 (1.6BN), 1.0550 (381M), 1.0565 (270M), 1.0600-10 (598M)
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FIXED INCOME

• EGBs & Gilts have meandered to fresh intra-day peaks, though newsflow and drivers behind the upside are essentially non-existent.
• Bunds nearing 141, Gilts surpassing 106.00 while USTs are near their respective peak, limiting the concession for upcoming 3 & 10yr supply.
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COMMODITIES

• Crude benchmarks are under modest pressure, with both volumes and newsflow limited ahead of an action-packed week of macro risk events.
• Currently, WTI and Brent are lower by around USD 0.30/bbl and remain in proximity to the YTD lows of USD 70.08/bbl and USD 75.11/bbl respectively.
• Saudi Energy Minister said will insist that all OPEC+ members participate in decisions and that they will not hesitate to act according to their development programs, while he also noted that OPEC+ managed to live with all challenges including geopolitics and that the latest developments proved the OPEC+ decision right, according to Reuters.
• Saudi’s Foreign Minister said OPEC+ have a consistent policy to maintain a stable market and that only they can ensure sufficient investment and capacity is fair prices for consumers and producers, while he also stated that ‘all bets are off’ if Iran gets an operational nuclear weapon and that states in the region will look towards how they can ensure their own security, according to Reuters.
• Russia’s Kremlin said President Putin held a call with Turkish President Erdogan in which they had detailed discussions on expanding cooperation in various fields and discussed joint energy projects, particularly in the gas sector, while they exchanged opinions on the creation of a regional gas hub in Turkey, according to RIA and Interfax.
• Turkish maritime authority said four oil tankers which provided necessary letters will pass the Istanbul strait on Monday and that one Russian oil tanker provide documents which will pass through the Bosphorus strait southbound, while five oil tankers could not provide documents and were removed from Turkish waters via the Dardanelles strait, according to Reuters.
• BofA says Brent could rebound to USD 90/bbl on account of a Fed pivot and China reopening, via Reuters.
• China National Offshore Oil Corp. (CNOOC) sees China energy demand rebounding next year as the rollback of COVID restrictions helps the economy recover, Bloomberg reports
• Spot gold and silver are modestly pressured as the overall tone turns incrementally more constructive, though remains cautious overall.
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NOTABLE EUROPEAN HEADLINES

• UK PM Sunak has put the Northern Ireland Brexit protocol bill on ice until the new year after private talks with Brussels paved the way for a new deal by February, according to The Times.
• ECB says 2023 supervisory priorities include scrutiny of credit risk and funding diversification.
• Fitch affirmed the Bank of England at AA-; Outlook Negative on Friday.

NOTABLE DATA

• UK GDP Estimate MM (Oct) 0.5% vs. Exp. 0.4% (Prev. -0.6%); YY (Oct) 1.5% vs. Exp. 1.4% (Prev. 1.3%)
• UK Rightmove House Prices MM (Dec) -2.1% (Prev. -1.1%); YY (Dec) 5.6% (Prev. 7.2%)

NOTABLE US HEADLINES

• US Treasury Secretary Yellen said there is a risk of a recession but it certainly isn't something to bring inflation down, while she thinks there will be a substantial reduction in inflation in the year ahead and she sees much lower inflation by year-end 2023, according to a CBS 60 Minutes interview.
• Click here for the US Early Morning Note.

CRYPTO

• Apollo held talks on buying claims from FTX clients, according to The Block.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Embassy in London said allegations regarding Iranian military supplies to Russia are unrealistic and said western military aid to Ukraine is used to launch terrorist attacks against civilian targets, according to Al Jazeera.
• UK Foreign Secretary Cleverly said any peace talks regarding Ukraine cannot just be a fig leaf for Russian rearmament and that they are not seeing anything on the Russian side to give him confidence Russian President Putin would enter peace talks in good faith, according to Reuters.
• White House said US President Biden highlighted how the US is prioritising efforts to strengthen Ukraine's air defence during a call with Ukrainian President Zelensky, according to Reuters.
• Turkish President Erdogan said he discussed with Russian President Putin the grain deal, energy and the fight against terrorism, while Erdogan said during the call that efforts should start for exports of foodstuffs and commodities via the Black Sea grain corridor, according to Reuters.
• Senior official in eastern Ukraine claimed that Ukrainian forces attacked a hotel where members of Russia's private Wagner military group were based and killed many of them, according to a report by Reuters which added that it cannot be verified and that some Ukrainian media cited local officials stating that the hotel had been closed for some time.
• EU is to appoint a sanctions envoy to crackdown on the circumvention of measures against Russia, via FT citing sources; to be confirmed on Tuesday, David O'Sullivan reportedly to be appointed.

OTHER

• Serb protesters in northern Kosovo blocked main roads for a second day on Sunday and had exchanged gunfire with police as tension rose following the arrest of a former Serb policeman. Furthermore, Serbian President Vucic said Serbia will ask the NATO peacekeeping mission in Kosovo to allow it to deploy Serbian military and police troops in Kosovo, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks began the week with mild losses following the subdued performance last Friday on Wall Street and with participants bracing for this week’s slew of risk events including US CPI, FOMC meeting and various other central bank rate decisions.
• ASX 200 was led lower by underperformance in utilities, metal miners and the materials sectors although the downside is limited by a slight reprieve in energy.
• Nikkei 225 declined following hot PPI data and a contraction in BSI Large Manufacturing Conditions.
• Hang Seng and Shanghai Comp were pressured despite a further easing of COVID restrictions, which has spurred concerns of a potential jump in cases, while property and tech stocks were the worst hit with the latter not helped by reports of the US asking Japan to join its ban on China chip exports.

NOTABLE ASIA-PAC HEADLINES

• China lifted tough pandemic restrictions on transport workers whereby long-haul truckers will no longer have to work on “closed loop arrangements” which had subjected them to long quarantines, while they will also not have to undergo constant PCR testing, according to FT.
• Global Times’s Hu Xijin said the epidemic in Beijing is severe and many people he knows are infected but with all mild symptoms and it doesn’t matter how many are infected in the next two weeks as the key will be whether there will be many deaths. Hu also stated the number of COVID deaths in China will definitely increase but it should not be around 2mln. Furthermore, Hu noted the vaccination rate in the mainland is high and the death rate will not be as high as in Hong Kong and Taiwan, while he added that the virus is weakening.
• Chinese authorities are cracking down on price gouging of medical supplies and drugs as they seek to ensure supplies flow smoothly amid fears of a large outbreak after the easing of COVID-19 restrictions, according to Reuters.
• China’s Ministry of Finance announced on Friday that they are to issue CNY 750bln of special treasury bonds on Monday to bolster its economy, according to Xinhua.
• China’s Xinjiang region launched measures to boost the recovery of its winter sports and tourism industries, according to Global Times.
• Chinese Commerce Ministry said Vice Premier Hu Chunhua will visit UAE and Iran from Sunday to Wednesday, according to Reuters.
• US announced on Saturday that a delegation of senior officials on Asia-Pacific affairs will visit China soon, according to Global Times.
• US asked Japan to ban China chip exports, according to Kyodo.

DATA RECAP

• Japanese Business Survey Index* (Q4) -3.6% (Prev. 1.7%)
• Japanese Corp Goods Price MM (Nov) 0.6% vs. Exp. 0.5% (Prev. 0.6%)
• Japanese Corp Goods Price YY (Nov) 9.3% vs. Exp. 8.9% (Prev. 9.1%)