That “gamma gravity” at 3,650 we have been discussing for the past three days continued to make its presence known overnight as futures tried another break above all time highs and failed, eventually fading back to unchanged and last trading at 3,665, two points the Wednesday close as European stocks erased an earlier loss, while the dollar selloff continued and 10Y yields were fractionally lower ahead of initial jobless claims data which are expected to show another 775K workers were laid off in the latest week.

S&P 500 futures stalled after the cash index closed at another record high. In notable moves, Splunk tumbled 21% in the pre-market after the data-software company’s revenue forecast missed estimates, while Micron gained after the chipmaker raised its guidance. Waddell & Reed jumped 46% after Australia’s Macquarie Group announced a deal to buy the wealth manager for $1.7 billion. Finally, Nasdaq 100 futures were up 19.5 points, or 0.16% as Tesla rose about 3% premarket after Goldman Sachs raised its rating to “buy” from “neutral” in the run up to the electric-car maker’s addition to the S&P 500.

Risk assets remain buoyed by fiscal stimulus hopes with House Majority Leader Steny Hoyer expressing hope that a fiscal stimulus deal could be reached “in the next few days”, and any legislation would likely need to be supplemented with further aid next year, although even as Democrats scale down their stimulus demands, Mitch McConnell has yet to show any interest in a compromise deal. Democrats backed a bipartisan proposal for a scaled-back $908 billion stimulus package, with Nancy Pelosi and Chuck Schumer saying that should be the baseline for negotiations with Congressional Republicans and the White House as they walked back from pre-election demands. The compromise deal “would be more about stabilizing than stimulating the economy, but increasing the unemployment benefit reduces the fear of people in work and encourages them to spend the savings accumulated during lockdowns,” UBS chief economist Paul Donovan wrote.

On the opposite end, the pandemic’s spread has tempered the buoyant mood that propelled global stocks to a record monthly gain in November on vaccine breakthroughs. The U.S. saw the deadliest day for Covid-19 fatalities, while Los Angeles ordered residents to stay home.

European shares initially edged lower, with chemicals, energy sectors down more than 1% while travel & leisure, consumer products, basic resources are main gainers. However, the Stoxx recovered all losses by 7am ET and was trading flat. The latest PMI data showed U.K. output shrank for the first time since June amid virus restrictions; at the same time the Euro area composite PMI was revised up by 0.2pt from its flash estimate of 45.1 for November to 45.3, as the Service PMI printed at 41.7, above the 41.3 expected. This reflected upward revisions in both France and the periphery, which were partly offset by a modest downward revision in Germany. The Spanish composite PMI declined less than expected, whereas the Italian composite PMI surprised expectations to the downside. The UK composite PMI was revised up significantly on the back of stronger services momentum towards month-end. According to Goldman, “the November PMI readings across the Euro area and the UK indicate a significant near-term contraction in services activity amid continued relative resilience in manufacturing”; the bank looks for a renewed contraction in GDP in Q4 across Western Europe, albeit a much shallower one than in the spring.

Earlier in the session, markets edged up in Asia with the MSCI Asia Pacific Index adding 0.6%. Japan’s Nikkei 225 swung between gains and losses amid an indecisive currency and with participants digesting reports the government will extend the Go To Travel subsidy campaign. Hang Seng (+0.7%) and Shanghai Comp. (-0.2%) traded mixed despite encouraging Caixin Services PMI which printed at its second highest in a decade and added to the recent streak of solid Chinese PMI data, with sentiment in the mainland clouded after the PBoC drained liquidity again and following the US House approval of the China delisting bill which requires foreign companies to comply with US auditing rules or risk being delisted from US exchanges.

The ASX 200 (+0.4%) was positive with broad strength in the commodity sectors led by iron ore miners including Fortescue Metals which rose to an all-time high and Rio Tinto shares also printed their best levels in 12 years amid record Dalian iron ore prices and after Vale recently lowered its 2020 iron ore output guidance.

In rates, treasuries trade near session highs as U.S. trading gets underway, holding small gains after erasing declines. Yields remain within about 1bp of Wednesday’s closing levels, with 10-year’s daily range less than 2bp. Yields are lower across the curve, by as much as 1bp at long end, 10-year by 0.8bp at 0.93% vs Wednesday’s high 0.964%; Treasuries trail bunds after German Markit PMIs were slightly weaker than expected. Still, strong demand failed to emerge during Asia session despite long-end selloff over past two days. The recent spike in Treasury yields should meet resistance as the Federal Reserve puts aside inflation concerns for now, economist Ed Yardeni said. That will contain the recent selloff in Treasuries and keep 10-year yields anchored below 1%, he said.

In FX, the Bloomberg Dollar Spot Index tumbled for a third day to the lowest level since April 2018 ahead of U.S. jobs data due Friday. The pound was the biggest gainer in G10, recouping Wednesday’s drop as traders took in stride France’s threat to veto a Brexit deal; cable was last seen at 1.3448 the highest since May 2018. The dollar plunge sent the Australian dollar and the Korean won to their highest levels versus the greenback in more than two years, and the Swiss franc to its strongest since 2015.

Emerging-market currencies and equities pushed higher to their best levels since the early days of the trade war as investors pinned their hopes on coronavirus vaccines and prospects for U.S. stimulus. MSCI Inc.’s index for developing-nation stocks rose to the strongest level since February 2018, with India’s benchmark trading near a record high. Turkey’s lira led gained in currencies, having initially weakened after a government report showed inflation accelerated in November by more than the highest economist forecast.

In commodities, the front-month Brent crude oil contract fell 0.70% as OPEC and non-OPEC producers edged towards an agreement that would see production cuts gradually phased out in H1 2021. Discussions are now focused on a proposal to gradually roll back output cuts over several months and do month-to-month assessments, instead of a 3 or 6 month extension. Russia is inclined toward easing curbs within the first quarter, a person familiar said. The Kremlin said it was too soon to comment on a pact. It’s not clear yet whether the proposals would return that same volume of production over a longer period, or a different amount. The recent gold surge continued with the yellow metal last trading at $1840.

Looking at the day ahead, To the day ahead now, the global services and composite PMIs for November will be the main data highlight. Otherwise from the US, there’s also the November ISM services index and the weekly initial jobless claims, and from the Euro Area we’ll get October’s retail sales.

Market Snapshot

• S&P 500 futures flat at 3,667.00
• STOXX Europe 600 down 0.3% to 390.47
• German 10Y yield fell 1.9 bps to -0.538%
• Euro down 0.1% to $1.2103
• Italian 10Y yield fell 4.2 bps to 0.521%
• Spanish 10Y yield fell 1.7 bps to 0.086%
• MXAP up 0.5% to 192.58
• MXAPJ up 0.7% to 635.41
• Nikkei up 0.03% to 26,809.37
• Topix up 0.07% to 1,775.25
• Hang Seng Index up 0.7% to 26,728.50
• Shanghai Composite down 0.2% to 3,442.14
• Sensex up 0.03% to 44,629.24
• Australia S&P/ASX 200 up 0.4% to 6,615.27
• Kospi up 0.8% to 2,696.22
• Brent futures down 0.3% to $48.13/bbl
• Gold spot up 0.2% to $1,835.53
• U.S. Dollar Index down 0.1% to 91.01

Top Overnight News from Bloomberg

• One by one, the dollar is dropping to multi-year lows against its peers in December.
• European Union officials are resisting calls from derivatives traders — and even one regulator — to allow access to London’s dominant markets after the Brexit transition ends this month, saying upheaval in the market does not pose a risk to financial stability
• The U.S. House of Representatives approved legislation that could ultimately lead to Chinese companies getting kicked off American exchanges if regulators aren’t allowed to review their financial audits
• The U.S. had its deadliest day ever, with Covid-19 fatalities topping 2,700, according to Johns Hopkins University. Hospitalizations in the country surpassed 100,000 for the first time. Germany extends partial lockdown until Jan. 10 to curb virus
• Oil was steady before an OPEC+ meeting as key powerbrokers in the alliance haggle over output policy after failed talks earlier in the week.
• France warned it could veto a trade deal between the U.K. and the European Union if it doesn’t like the terms, piling pressure on the EU negotiating team not to make further concessions as talks build to a climax.
• U.S. stocks registered a record high for a second consecutive day amid renewed optimism over U.S. stimulus talks and a rebound in crude oil. Treasury yields rose, while the dollar touched a more than two-year low.

A quick look at global markets courtesy of NewsSquawk

In Asia, a tentative mood was seen in Asia-Pac bourses following the flat performance on Wall St where recent vaccine developments and stimulus hopes were offset by weak jobs data in which ADP Employment disappointed ahead of Friday’s NFPs and amid lingering US-China tensions. ASX 200 (+0.4%) was positive with broad strength in the commodity sectors led by iron ore miners including Fortescue Metals which rose to an all-time high and Rio Tinto shares also printed their best levels in 12 years amid record Dalian iron ore prices and after Vale recently lowered its 2020 iron ore output guidance. However, upside for the index was capped by losses in financials, tech and defensives, as well as ongoing tensions with China whereby Australian Treasurer Frydenberg stated they will not give ground on 14 China grievances. Nikkei 225 (Unch) swung between gains and losses amid an indecisive currency and with participants digesting reports the government will extend the Go To Travel subsidy campaign. Hang Seng (+0.7%) and Shanghai Comp. (-0.2%) traded mixed despite encouraging Caixin Services PMI which printed at its second highest in a decade and added to the recent streak of solid Chinese PMI data, with sentiment in the mainland clouded after the PBoC drained liquidity again and following the US House approval of the China delisting bill which requires foreign companies to comply with US auditing rules or risk being delisted from US exchanges. Finally, 10yr JGBs were choppy and oscillated around the 152.00 focal point amid the indecision in stocks and following mostly weaker results at the 30yr JGB auction.

Top Asian News

• Saudi Wealth Fund Seeks Up to $7 Billion Loan for New Deals
• WeChat Deletes Australian PM’s Appeal to Chinese Community
• Turk Inflation Soars, Raising Pressure on New Central Banker

In Europe, major European bourses are choppy (Euro Stoxx 50 -0.1%) following a relatively uninspiring cash open as the region initially took its cue from a mixed APAC handover, whilst US equity futures see little action. That said, the breadth of losses still remain somewhat shallow amid a lack of fresh fundamental drivers, although with a number of risk events developing in the background including Brexit and OPEC heading into tomorrow’s US jobs report. Sector in Europe maintain the mixed picture seen at the open with no clear risk profile to be derived, whilst the sectoral breakdown sees Travel & Leisure topping the charts on the ongoing vaccine optimism following UK’s approval of the Pfzier/BioNTech candidate coupled with some looser lockdown measures for the holiday periods, with Deutsche Lufthansa (+0.4%) also recording a sharp rise in intercontinental and intra-European bookings for the upcoming New Year and Christmas travel season. Elsewhere, Oil & Gas does not fare well given the recent developments in the crude complex on the back of OPEC, whilst Basic Resources piggyback on the surge in iron ore prices (see the Commodities section). Banks meanwhile fail to derive much traction from source reports that the ECB is reportedly mulling allowing banks 15-25% dividends as one of its options. In terms of individual movers, Rolls Royce (+5.7%) stands as the Stoxx 600 leader as it attempts to capitalise on the slower travel market, stating that it is an opportunity to return to narrow-body jets. Meanwhile, Orange (-2.5%) trades lower amid reports that the Co. is mulling a public takeover bid for Orange Belgium (+35%). State-side, WSJ reports that the EU is completing rules on content, competition that are likely to apply to Google, Facebook and Amazon, whereby the Commission plans sanctions for violators that include fines and possible separation of asses – although shares are unreactive pre-market.

Top European News

• Germany Extends Restrictions to Fight Stubborn Virus Spread
• EU ‘Plan B’ Can Cut Poland and Hungary Out of Coronavirus Fund
• U.K. Output Shrinks as Companies Pin Hopes on Recovery Next Year
• Rolls-Royce Sees Chance to Return to Narrow-Body Jet Market

In FX, no new negative catalysts or factors behind the latest bout of almost all round Dollar selling against major counterparts, but the technical backdrop is increasingly bearish and momentum is building to the detriment of the Buck in contrast to its G10 peers. Hence, the index has now extended its decline to 90.834 from 92.000+ at the start of the week after yet another brief bounce and fade below a prior recovery high, albeit trying to keep tabs on the 91.000 handle amidst a downturn in broad risk sentiment ahead of a busy US agenda, including Challenger lay-offs, initial weekly and continuing claims, the final Markit services and composite PMIs and non-manufacturing ISM.

• GBP – Sterling’s Brexit vigil continues, and hopes of a deal have been revived or remain alive into what has been dubbed as the crucial last 48 hours of trade discussions amidst reports that more progress has been made towards resolving at least one of the 3 last bones of contention (level playing field said to be in the final stages of resolving differences between the UK and EU, leaving ‘just’ fishing and state aid to be sorted out). Cable is back up around the 1.3400 handle and Eur/Gbp has retreated through 0.9050, with perhaps some assistance from an unexpected upward revision to the final UK services PMI that pushed the composite closer to the 50.0 threshold.
• JPY – The Yen has recouped some losses vs the Greenback to trade back over 104.50, but faces even stiffer resistance at 104.00 via massive option expiry interest at the strike (3.4 bn) assuming it is not dragged back by expiries between 104.45-50 (1.5 bn) in the meantime. Conversely, the less buoyant risk tone and some retracement in extreme bear-steepening along the US Treasury curve may keep Usd/Jpy capped.
• CHF/AUD/EUR/NZD – All narrowly mixed against their US rival, with the Franc forging more gains beyond 0.8950, Aussie topping 0.7400 in wake of somewhat mixed trade data (surplus wider than forecast and exports encouraging, but imports only just recovering after a sharp slide) and Euro continuing its march to test offers into 1.2150 having breached and closed above a key Fib retracement level. However, the Kiwi has lost a bit more impetus following attempts to reach 0.7100 and more so vs its Antipodean neighbour as the Aud/Nzd cross rebounds further from recent lows to straddle 1.0500 ahead of Aussie retail sales data.
• CAD/NOK/SEK – The Loonie has pulled up within single digits of 1.2900 amidst ongoing pre-OPEC+ uncertainty that is playing out via choppy crude prices and the Norwegian Krona also on the defensive circa 10.7000 vs the Euro awaiting the outcome following latest reports suggesting a 500k bpd increase in output from January 2020. Elsewhere, some traction for the Swedish Crown and protection from 10.3000 via an acceleration in the services PMI.

In commodities, WTI and Brent futures have trimmed some of the losses seen in wake of source reports that OPEC+ is closing in on an agreement to modestly boost their collective oil output by 500k barrels a day starting Jan 2021. Market expectations were leaning towards the second tranche (7.7mln BPD cuts) being extended through Q1 2021, with desks suggesting anything less would be a disappointment. EnergyIntel’s Bakr provided a preliminary breakdown of one of the options considers which would see Jan cuts at 7.2mln BPD (in-line with the WSJ report), Feb at 6.7mln BPD, March at 6.2mln BPD and April at 5.7mln BPD for an average cut across the four months at 6.7mln BPD (vs. Exp. 7.7mln BPD for three months). Meanwhile, Kremlin’s spokesperson noted that it is too soon to comment on OPEC+. In terms of today’s event, the official confab is slated for 13:00GMT/08:00EST (subject to delays) with source reports likely to trickle throughout the day. (REMINDER: the exclusive Newsquawk Twitter Dashboard for the event is available here. The rolling headline feed can be accessed here). The other touted options reported earlier in the week include 1) Extend the current cuts by three months, 2) Raise output from January, but gradually and by less than the 2mln BPD under the current plan, and 3) Raise output as planned from January. WTI Jan hovers around USD 45/bbl (vs. low USD 44.70/bbl), whilst Brent Feb sees itself ~USD 48/bbl (vs. low USD 47.67/bbl). Elsewhere, precious metals have been moving in tandem with the Dollar throughout the European morning, but spot gold holds into USD +1800/oz status (1826-1843 range) and spot silver resides in the low USD 24/oz levels (23.80-24.26 range). Turning to base metals, iron ore prices notched a seven-year high following an output guidance cut by one of its largest producers Vale. Finally, LME copper sees contained price action amid the lackluster tone in the market and caged Dollar.

OPEC and its allies are closing in on an agreement to modestly boost their collective oil output by as much as 500,000 barrels a day starting next month, people familiar with the matter said cited by WSJ. (WSJ) One OPEC+ option being mulled: Jan: 7.7- 0.5=7.2 cut Feb: 6.7 cut March: 6.2 cut April: 5.7 cut Average cut for 3 months will be 6.7 instead of 7.7, according to EnergyIntel.

US Event Calendar

• 7:30am: Challenger Job Cuts YoY, prior 60.4%
• 8:30am: Initial Jobless Claims, est. 775,000, prior 778,000
• 8:30am: Continuing Claims, est. 5.8m, prior 6.07m
• 9:45am: Bloomberg Consumer Comfort, prior 49.6
• 9:45am: Markit US Services PMI, est. 57.5, prior 57.7; Markit US Composite PMI, prior 57.9
• 10am: ISM Services Index, est. 55.8, prior 56.6

DB’s Jim Reid concludes the overnight wrap

I got the most amount of incoming emails yesterday to one of my CoTD’s since it was launched back in early July. It showed that the S&P 500 CAPE ratio (or the cyclically adjusted price-to-earnings ratio) has this week moved above its levels on the eve of the 1929 stock market crash ( link here). The only time higher over the last 140 years being the 1998-2001 period. There are reasons why the CAPE may have structurally shifted higher, with an often-used one being the four-decade decline in yields to what are now close to all-time multi-century lows. That said, the fact that we’re beyond the September 1929 levels is obviously an important milestone, and will only add to concerns that current US equity valuations have become disconnected from real economic performance. As we said in the piece this ratio is heavily skewed towards the mega-cap growth stocks and as the world normalises post pandemic they’ll be the key to valuations over the next few months and quarters. Can they maintain their value even as cyclicals rebound? If you want to get the CoTD daily direct please email jim-reid.thematicresearch@db.com.

Staying on the theme, global equity markets remained near their all-time or recent highs yesterday, as hopes over the likelihood of a fresh US stimulus package edged out concerns over the economic recovery and rising Covid-19 cases. By the close the S&P 500 had eked out a +0.18% gain to a new record high, while tech stocks lagged as the NASDAQ saw a slight dip (-0.05%). Cyclicals once again led the market higher with Energy (+3.34%) and Bank (+1.91%) stocks the best-performing industries, while pandemic outperformers such as software (-1.03%) pulled back.

The moves came as US stimulus talks took a promising turn with Speaker Pelosi and Senate Minority leader Schumer indicating support for a $908 billion bipartisan stimulus proposal,which will set off a fresh round of negotiations with the White House. It is down from their original position of $2.4 trillion, but still significantly above the Majority Leader McConnell’s $500 billion plan. For more on the machinations of any lame-duck stimulus and the transition to the Biden administration, listen to a new podcast with Matthew Luzzetti, Chief US Economist and Frank Kelly, Head of DB Government and Public Affairs where they discuss US political developments and implications for the economic outlook. Listen to it here.

As the S&P 500 reached yet another record yesterday, Fed Chair Powell and Treasury Secretary Mnuchin spoke before the House Financial Services panel. For the second straight day Chair Powell denied any rift between himself and Secretary Mnuchin over the closing of some of the emergency lending programs, saying that committee was “concerned that the public would interpret this as the Fed stepping back — and that’s not the case.” To that end, Mr. Powell also indicated that the Fed was not rushing to taper its sizeable bond buying program. However, he did not give any indication that he and the other central bankers would be looking to increase the rate of purchases when the FOMC meets on December 15-16.

Amidst Mr. Powell’s remarks, there was a further sell-off in sovereign bond markets yesterday, with yields on 10yr US Treasuries up another +1.0bps to 0.936%, raising questions over whether yields will manage to break the 1% barrier for the first time since March. Inflation expectations also rose further, with US 10yr breakevens up a further +4.1bps to 1.87%, their highest in over 18 months. Meanwhile, the dollar index weakened a further -0.21% to a fresh 2-year low, helping the euro to break through the $1.21 mark at one point in trading for the first time since April 2018.

This morning we have seen China’s November Caixin services PMI printing at 57.8 (vs. 56.4 expected) bringing the composite read to 57.5 (vs. 55.7 last month). Similarly, Japan’s services PMI also printed 1.1pts stronger than the flash at 47.8 bringing the composite reading to 48.1 (vs. 47.0 in flash). European data will come out this morning. Despite stronger PMIs, Asian markets are struggling to find clear momentum with the Hang Seng (+0.44%) and Kospi (+0.32%) up while the Nikkei (-0.13%) and Shanghai Comp (-0.20%) are lower. Chinese bourses are likely weighed down by the passage of a bill in the US House of Representatives that could ultimately lead to Chinese companies – such as Alibaba Group and Baidu Inc. – getting delisted from American exchanges if regulators aren’t allowed to review their financial audits. The legislation has now moved to President Trump’s desk, who is expected to sign it. Futures on the S&P 500 are down -0.13%, with a similar picture for their European equivalents.

In other overnight news, Bloomberg reported that OPEC+ is making headway in negotiations with discussions now focusing on proposals for the gradual easing of output cuts over several months while adding that it is unclear whether the tapering would start in January, or would be delayed to later in the first quarter. We should get more clarity after today’s meeting of the group.

Turning to the coronavirus, the main news yesterday was that UK regulators have approved the 95% effective Pfizer/BioNTech vaccine, making the UK the first country to do so. 800,000 doses are expected to arrive this week from Belgium, with care home residents, frontline health and social care workers, and those with underlying health conditions being prioritised. Given the required -70C to store the vaccine, the first vaccinations will probably take place in facilities which already have the necessary infrastructure, such as hospitals. Furthermore, the UK has ordered only enough doses to vaccinate about 30% of British adults, and it remains unclear how long it will take for the remaining vaccines to be delivered, with the country’s Chief Medical Officer reminding us that ‘we can’t lower our guard yet’.

Given that the vaccine rollout in the coming weeks was already priced in, there hasn’t been much market reaction, though along with sterling’s depreciation (more on which below), the moves may have supported the FTSE 100 (+1.23%) to be one of the top-performing indices yesterday, since the UK has been much quicker out of the starting block than other regions. The FDA in the US isn’t expected to make a decision until a meeting on December 10th, while Europe’s EMA has stated that it may give emergency approval on December 29th, since it needs more time to review evidence. Overnight, Germany’s Health Minister Jens Spahn has said that the country is conducting direct negotiations with domestic Covid-19 vaccine developers including BioNTech to obtain more doses than would be allocated through the shared EU plan. Elsewhere, New York Governor Cuomo has said that he expects the state to receive 170,000 doses of Pfizer’s vaccine on December 15 and added that health-care workers in the most high-risk jobs, such as emergency rooms, as well as nursing-home residents and staffers will receive the vaccine first.

In terms of the numbers, sadly the US reported over 2,836 Covid-19 deaths over the past 24 hours marking the deadliest day of the pandemic yet, though record-keeping likely caught up somewhat from the holiday weekend. Weekly deaths have been over 10,000 for two straight weeks, after falling below that threshold back in mid-May. Hospitalisations in the US have been increasing by over 1,000 a day and now Covid-19 accounts for over a fifth of all hospitalised patients in North Dakota and South Dakota, Rhode Island, New Mexico, Indiana, Illinois, Minnesota and Michigan. Overnight, Los Angeles has ordered residents to stay home and businesses that require in-person work to cease operations. While case numbers are declining in Europe there were still two pieces of new news on restrictions. First, German Chancellor Merkel said the country will extend its partial lockdown three more weeks meaning that bars, gyms and cinemas will remain closed until January 10 and the government will discuss all restrictions with regional leaders on January 4. Second, Spain announced that families will be allowed to meet in groups of up to 10 for the Christmas and New Year holidays. Travel will also be restricted between mainland Spanish regions from Dec. 23 to Jan. 6, unless the travel is for family gatherings. Elsewhere, Japan’s Osaka Prefecture will likely issue a red alert today, signaling that the region is in a state of emergency, due to the rising number of seriously ill patients.

On Brexit, sterling weakened by -0.41% against the US dollar and was the weakest performing G10 currency, with the moves following chief EU negotiator Michel Barnier’s reported comments to EU ambassadors that a trade deal is ‘in the balance’. As ever, it was the main sticking points of the level playing field, governance and fisheries that are still unresolved, though we did hear yesterday from a Guardian report that the UK has reduced its demand for fish caught by EU fleets in UK waters from 80% to 60%, though this is still a long way from the EU’s offer of 15-18% of catches. Later in the session, we also got reports from RTE’s Tony Connelly, who said that Mr. Barnier had told EU ambassadors that if the UK government’s Finance Bill contained clauses that breached international law (as happened with the Internal Market Bill), then that would put the talks “in crisis”. So definitely one to watch as this might be released in the coming days. Overnight, Bloomberg is reporting that at yesterday’s EU 27 ambassadors meeting, France warned that it could veto the trade deal if it doesn’t like the terms and the French envoy warned Mr. Barnier against making too many concessions simply because time was running out. The French position was backed by Belgium, the Netherlands and Denmark, and several ambassadors pressed to see draft text so that they could have enough time to scrutinise it properly. A request which Mr. Barnier swerved. Despite the negative headlines, Sterling is up +0.17% this morning mainly due to weakness in the broad US dollar index which is down -0.13%.

Wrapping up with yesterday’s data, the ADP’s report of private payrolls showed only a +307k increase in November (vs. 440k expected), which is the weakest monthly increase since July and doesn’t bode well for Friday’s payrolls. Over in Europe meanwhile, German retail sales rose by a stronger-than-expected 2.6% in October (vs. +1.2% expected), while the Euro Area unemployment rate fell by a tenth to 8.4%.

To the day ahead now, the global services and composite PMIs for November will be the main data highlight. Otherwise from the US, there’s also the November ISM services index and the weekly initial jobless claims, and from the Euro Area we’ll get October’s retail sales.