The market meltup just won’t let up, with futures and global stocks reaching new record highs on Wednesday as sentiment was stoked after Treasury Secretary Steven Mnuchin unveiled a surprise $916 billion pandemic-relief package proposal (which was quickly slammed by Pelosi and Schumer) coupled with now daily positive news on COVID-19 vaccines, overshadowing fears about resurgent coronavirus cases while sterling made gains as British and European leaders meet for talks on a Brexit trade deal. Treasuries dropped as did the dollar, while the Chinese yuan surged above 6.50 for the first time in 2 years.

MSCI’s index of world stocks rose to a record 635.65, up 0.23%. The index has been on a roll for weeks, gaining 15% since the beginning of last month. Global equities were “energized” after the White House’s surprise re-entry into pandemic-relief talks with a $916 billion proposal late on Tuesday that opened a potential new path to a year-end deal.

As of 7:30am Dow e-minis were up 76 points, or 0.28%, S&P 500 e-minis were up 5 points, or 0.14% to a new all time high, and Nasdaq 100 e-minis were down 15 points, or 0.08%. U.S. banks JPMorgan Chase and Citigroup as well as industrial bellwethers Boeing and 3M rose about half a percent. Car-battery producer QuantumScape surges 27% in premarket trading, adding to a 31% jump on Tuesday.

Travel stocks including United Airlines and American Airlines Group Inc gained 1.3% and 2.7% amid new covid hopes: the race for a vaccine narrowed on Tuesday after the FDA raised no new issues about the safety or efficacy of Pfizer’s candidate, while Johnson & Johnson reported it could obtain late-stage trial results for a single-dose vaccine earlier than expected. Both drugmakers’ shares gained about 1% in early trading, as did Moderna.  Joe Biden also vowed that his administration would vaccinate 100 million Americans during his first 100 days in office, push to reopen schools and strengthen mask mandates.

“Momentum will be a little bit less than it has been. There are certain questions to be answered about the logistics of the vaccines, and vaccines don’t change the winter picture for the virus, but we are expecting positive returns for next year … there’s a lot going for the global economy,” said Seema Shah, chief global strategist at Principal Global Investors.

Separately, Congress continued to negotiate on a long-awaited coronavirus relief package, but provisions on liability protections for businesses and aid to state and local governments are causing divisions between Republicans and Democrats. Late on Tuesday, the Trump administration proposed a new $916 billion aid package on Tuesday, after congressional Democrats shot down a suggestion for a pared-down plan.

As Bloomberg notes, with little time left before the year-end holiday break and no let-up in Covid-19 cases in some of the biggest economies, investors are clinging to prospects for an 11th-hour stimulus deal and more progress on vaccine roll-outs. Emergency-use authorization for Pizer’s shot in the biggest economy may come as early as Thursday.

The opportunities are “in equities and credit, so we are overweight, we are risk on,” Richard Lacaille, global chief investment officer at State Street Global Advisors, said on Bloomberg TV. “We know that we will be tested again next year in terms of Covid and elsewhere.”

In Europe, equities reached their highest level since February but traded slightly off best levels, fading an early DAX-led rally, with the Stoxx 600 trading 0.5% higher as pro-cyclical mining and chemical firms led gains, and travel, autos and insurance companies also outperformed. The German DAX index gained 0.9% and Britain’s FTSE 100, which has been hardest hit of the main global indexes this year, added 0.36%. However, Britain injected a note of caution into the vaccine euphoria, saying people with a history of significant allergic reactions responded adversely to the Pfizer vaccine.

Earlier in the session, MSCI’s index of Asia-Pacific shares ex-Japan rose 0.6%, touching a record high. Japan’s Nikkei rose 1.3% to approach a 29 1/2-year high. South Korean stocks also jumped by 1.6% to trade near a record high after falling on Tuesday. Shares in China bucked the trend and fell 0.7% on profit taking. SoftBank shares rose almost 6% in Tokyo after Bloomberg reported it’s debating a new strategy to go private (now that the Nasdaq Whale is a distant memory). And machinery orders in Japan jumped at the fastest pace in more than a decade, adding to signs that the global economy is continuing to recover from the pandemic.

In rates, Treasuries retreated and curves steepened as hopes for a U.S. stimulus deal dented demand for havens. Treasury 10-year yields at ~0.94% were 2.2bps higher on day, vs 2.6bp increase for U.K. 10-year, 1.2bp for German bunds. Portugal’s 10-year bond yield, which fell this week to a record low of -0.01%, was trading at zero. “That caps off a remarkable journey from the height of the sovereign debt crisis, when in early 2012 (the yield) was trading above 18% intraday,” Deutsche Bank analysts said in a note. Spain’s 10-year yields could be next to go sub-zero.

Crude futures give back early gains. WTI reverses a move up to $46.24 to trade little changed; Brent fades a similar move to trade near $48.90. Spot gold holds a narrow range near $1,860/oz. Base metals trade in the green with LME aluminum and zinc outperforming.

In FX, the Bloomberg Dollar Spot Index fell, erasing a two-day advance, and the greenback weakened against all Group-of-10 peers amid an advance led by risk-sensitive currencies in the wake of the U.S. relief proposal. The euro advanced, ending a three-day decline, but stayed within recent trading ranges; bunds edged lower, yet outperformed Treasuries. The pound rallied above $1.34, boosted by a broadly weaker dollar, as traders positioned for a meeting between U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen in Brussels. British Prime Minister Boris Johnson heads to Brussels on Wednesday for a meeting over dinner with European Commission President Ursula von der Leyen in a push to avoid a turbulent breakup in three weeks. There was a glimmer of hope on Tuesday after Britain said it would drop clauses in draft domestic legislation that breach the already agreed Brexit divorce settlement, after reaching an “agreement in principle” with the EU over how to manage the Ireland-Northern Ireland border.

Elsewhere, the Aussie dollar pushed toward its strongest close in more than two years, catching the updraft from the highest consumer confidence reading in a decade and hawkish views on the central bank’s likely stance. China’s offshore yuan pared an advance after earlier breaching the key 6.5 per dollar level for the first time since 2018. HUF and PLN were the best EM FX performers, bolstered by positive news on EU stimulus.

In commodities, oil prices rallied as the positive vaccine news lifted investor hopes for a recovery in fuel demand. Brent crude futures rose 15 cents to $48.99 a barrel. WTI futures gained 13 cents to $45.73. Spot gold fell 0.9% as the start of vaccine treatment reduced safe-haven demand for the precious metal.

On today’s calendar, we get data on mortgage applications, wholesale inventories and the JOLTS job openings from the US for October. There are also monetary policy decisions from the Bank of Canada and the Central Bank of Brazil.

Market Snapshot

• S&P 500 futures up 0.2% to 3,711.00
• STOXX Europe 600 up 0.4% to 395.35
• MXAP up 0.8% to 195.03
• MXAPJ up 0.6% to 646.21
• Nikkei up 1.3% to 26,817.94
• Topix up 1.2% to 1,779.42
• Hang Seng Index up 0.8% to 26,502.84
• Shanghai Composite down 1.1% to 3,371.96
• Sensex up 1.1% to 46,107.01
• Australia S&P/ASX 200 up 0.6% to 6,728.47
• Kospi up 2% to 2,755.47
• Brent futures up 1.1% to $49.39/bbl
• Gold spot down 0.6% to $1,860.17
• U.S. Dollar Index down 0.2% to 90.77
• German 10Y yield rose 0.7 bps to -0.6%
• Euro up 0.2% to $1.2125
• Italian 10Y yield fell 2.0 bps to 0.479%
• Spanish 10Y yield rose 0.5 bps to 0.034%

Top Overnight News from Bloomberg

• Global central banks are embarking on fresh waves of bond-buying to fight the fallout from the pandemic, despite mounting claims that the once-mighty policy is losing its power to boost the economy
• Poland and Hungary have agreed on a compromise with Germany to unblock the European Union’s $2.2 trillion budget and pandemic stimulus plan, a senior government official in Warsaw said
• China’s state-backed coronavirus vaccine protected 86% of people against Covid-19 in trials conducted in the United Arab Emirates, state media there reported, giving credence to the quickly developed shot that China intends to distribute around the developing world
• Chancellor Angela Merkel urged Germans to make an additional sacrifice over the Christmas holidays to contain the coronavirus as daily coronavirus-related deaths rose the most since the outbreak began
• About seven weeks before the inauguration, Biden’s picks for top administration slots are making clear that economic restrictions on countries will remain an essential tool, even if they don’t like everything about the way Trump used them
•  
• Norway’s mainland gross domestic product, which adjusts for Norway’s offshore industry, expanded 1.2% in October from the previous month, the Oslo-based statistics office said on Wednesday. That’s three times the bounce expected by analysts surveyed by Bloomberg, strengthening the case for the central bank to be among the first to raise interest rates
• While trial results published Tuesday in The Lancet found that a vaccine developed by the University of Oxford and AstraZeneca Plc is safe and effective, more analysis will be needed to see how well it works in people over 55, among those at higher risk from the pandemic

A quick look at global markets courtesy of NewSquawk

Asia-Pac bourses traded positively as the region took impetus from the record highs on Wall St with sentiment underpinned by ongoing vaccine optimism and amid stimulus hopes which were also spurred after US Treasury Secretary Mnuchin presented a USD 916bln coronavirus relief proposal, although key Democrats have since labelled it as unacceptable as it cuts unemployment insurance from the bipartisan proposal. ASX 200 (+0.6%) was led higher by outperformance in the healthcare sector amid firm gains in Healius following its performance update and share buyback announcement, with an improvement in Westpac Consumer Sentiment contributing to the tailwinds. Nikkei 225 (+1.3%) was lifted after stronger than expected Machinery Orders which jumped 17.1% for the month of October and as exporters found reprieve from a pause in the recent currency appreciation, while SoftBank shares surged on reports that the Co. was said to be in discussions on going private through a slow burn buyout in which it could gradually repurchases shares until its founder can squeeze out other investors. Hang Seng (+0.8%) and Shanghai Comp. (-1.1%) were mixed with Hong Kong conforming to the overall upbeat mood, although the mainland lagged amid currency strength and ongoing tensions after China’s Vice Foreign Minister summoned the US embassy representative over US sanctions on Chinese officials and reiterated to take reciprocal countermeasures. The release of Chinese inflation data was also discouraging as CPI printed in negative territory at -0.5% and its lowest since 2009 which although was mostly due to a 2% drop in food inflation and in particular a 12.5% slump in pork prices, it still highlighted a weak consumer profile given that non-food CPI also contracted by 0.1%. Finally, 10yr JGBs were flat with the prior day’s upside losing steam amid gains in stocks and an overnight pullback in T-notes, with demand also sapped by the lack of BoJ presence in the market today.

Top Asian News

• UAE Says Sinopharm Vaccine Has 86% Efficacy Against Covid-19
• First Electric Air Taxis Set to Fly in Singapore by 2023
• Indonesia Virus Deaths at Record High on Local Election Day
• Stocks Push Higher Amid U.S. Stimulus Wrangling: Markets Wrap
• Central Banks Step Up $5.6 Trillion Bond Binge Despite Doubts

European equities (Eurostoxx 50 +0.5%) are on the front-foot following on from an upbeat Asia-Pac handover and further record highs on Wall St. Sentiment has been underpinned by ongoing vaccine optimism and stimulus hopes with the latter spurred after US Treasury Secretary Mnuchin presented a USD 916bln coronavirus relief proposal which included money for state and local governments, as well as liability protections for businesses. The proposal was later deemed as unacceptable by House Speaker Pelosi and Senate Minority Leader Schumer as it cut unemployment insurance, however, they noted that Senate Majority Leader McConnell agreeing to the White House proposal was progress. Closer to home in Europe, beyond the ongoing Brexit stalemate, attention is firmly fixated on tomorrow’s crunch ECB meeting in which policymakers have set the bar for a “dovish surprise” particularly high (a full preview of the event can be found in the Newsquawk research suite). From a sectoral standpoint all sectors, with the exception of IT names trade firmer with the tech sector hampered by losses in STMicroelectronics (-9%) after the Co. abandoned its EUR 1bln sales target by a year to 2023; Infineon (-0.5%) are seen lower in sympathy. In terms of broader follow-through to equities in the US, the tech-heavy e-mini Nasdaq is flat on the session, lagging the e-mini S&P and Russell 2000 which trade higher by 0.2% and 0.7% respectively. To the upside, energy names are the clear outperformers, supported by modestly firmer crude prices with other cyclically exposed sectors such as autos and banks also near the top of the leaderboard. Corporate updates are once again on the light side with two standouts being German-listed Covestro (+4.6%) after upgrading its FY 20 EBITDA and FCF guidance, whilst Signify (-5.4%) are a noteworthy loser after announcing it expects the COVID-19 pandemic to impair sales by 13-13.5%.

Top European News

• Deutsche Bank’s Loetscher Steps Aside Pending Wirecard Probe
• U.K. Urged to Levy $350 Billion Wealth Tax to Pay for Pandemic
• French Retailer Casino Unveils Debt Plan to Bolster Finances
• UniCredit May Consider Deal With BPER Under a New CEO, Sole Says
• Norway GDP Surprise Shows Pandemic Grip Weaker Than Feared

In FX, all eyes on Sterling as PM Johnson gears up for a make-or-break evening meeting with EU’s von der Leyen (19:00GMT/14:00EST) in the run up to the European Council meeting tomorrow. In terms of the lie of the land, optimistic omens came out of the UK’s Cabinet Minister Gove in early hours intimating scope for compromise on fisheries, whilst Irish Deputy PM Varadkar expressed a similar tone but noted the LPF remains the most difficult outstanding issue. Nonetheless, Cable garnered impetus from the comments whereby the pair rose to a fresh session high at 1.3460 (vs. low 1.3350) surpassing Monday’s peak and the psychological 1.3450 mark. Subsequently, flows into Sterling translated into pressure on the EUR/GBP cross which dipped below 0.9050 from 0.9081 at best to a current base at 0.9035. As such, EUR/USD fails to fully benefit from the softer Buck but retains its 1.2100+ status having had risen to a whisker away from 1.2150 before it side-lined the wider-than-expected German trade data for October.

• DXY, Yuan – The broad Dollar and Index kicked off the mid-week session on the back foot, with some downside pressure seen in light of the Sterling bounce, but with attention remaining on State-side negotiations over government funding and the COVID relief bill. DXY remains sub-91.000 after printing an overnight base around 90.700 with the next immediate downside level comprising of Monday’s 90.612 low followed by the psychological 90.500 mark. Elsewhere, the strengthening Yuan garnered focus overnight whereby the offshore hit the firmest level against the Buck since June 2018 despite a relatively stable PBoC fix and discouraging Chinese CPI figures. USD/CNH printed a base at 6.4975 with bears now eyeing the 76.4% retracement of the 2018 low to the 2019 high at 6.4626.
• AUD, NZD, CAD – The high-beta non-US Dollars see gains across the board amid tailwinds from the positive risk sentiment coupled with follow-through from the firmer Yuan. Sources overnight suggested Chinese trade officials are unlikely to reassess their bilateral free-trade agreement with Australia this month as outlined in the ChAfta deal. The news has seen varying interpretations, with one suggestion being the deal signed with goodwill remains intact despite the ever-deteriorating ties between the countries, whilst others suggests this takes away a platform for negotiations to improve ties. Nonetheless, the Aussie outpaces its peers vs. the USD following a breach of 0.7450 to the upside from its overnight low of ~0.7400 to a current peak at 0.7471 with the next level to the upside around 0.7486 marking the highs set on the 9th and 10th July 2018. NZD/USD meanwhile continues to gain ground above 0.7050 (vs. low 0.7036). The Loonie is also supported as USD/CAD remains sub-1.2800 (vs. high 1.2822) but remains cautious in the run up to the BoC policy announcement (full preview available in the Newsquawk Research Suite).
• JPY – Contrary to its G10 peers, the Yen fails to glean support from the softer Dollar as haven outflows hamper gains. USD/JPY remains contained within a tight 104.07-25 band in early European trade with OpEx seeing USD 704mln rolling off between 104.40-50 and USD 750mln at strike 104.65.

In commodities, WTI and Brent front-month futures have erased overnight losses as the complex piggy-backed on the positive risk tone in broader trade with gains of some USD 0.40/bbl apiece. Losses overnight stemmed from the private sector inventory report which showed a surprise build in headline crude and larger than expected build to gasoline stockpiles at 6.4mln (exp. 2.3mln), whilst the EIA STEO also cut its world oil demand growth forecasts for 2020 and 2021, with the OPEC and IEA’s respective monthly reports due next week. Notwithstanding yesterday’s bearish supply/demand side updates, WTI Jan hovered around USD 46/bbl (vs. low 45.33/bbl) before losing ground below the figure whilst Brent Feb sees itself just south of USD 49/bbl (vs. low 48.54/bbl). Looking ahead, the weekly DoE inventory figures will be released at the usual time, with headline crude stocks expected to see a draw of 1.424mln bbls. Elsewhere, precious metals are relatively uneventful and lacklustre with the former still north of USD 1850/oz, but off its overnight high of 1871/oz, whilst spot silver sees itself under USD 24.50/oz (vs high 24.58/oz). In terms of forecast, Commerzbank anticipates gold will approach USD 2100/oz by end-2021 whilst the German bank sees silver at USD 28/oz in the same timeframe. In terms of base metals, iron ore prices hit the highest level since March 2013 amid firm demand from steel plants coupled with woes surrounding the deteriorating Aussie-Sino relationship, prompting China’s Dalian Commodity Exchange to limit non-future members’ single day open position for iron ore futures for May 21 delivery to 5k lots from Dec 14th. Finally, LME copper is firmer on the day as the red metal sees tailwinds from the softer Buck and constructive risk tone.

US Event Calendar

• 7am: MBA Mortgage Applications -1.2%, prior -0.6%
• 10am: Wholesale Inventories MoM, est. 0.9%, prior 0.9%; Wholesale Trade Sales MoM, prior 0.1%
• 10am: JOLTS Job Openings, est. 6,300, prior 6,436

DB’s Jim Reid concludes the overnight wrap

Yesterday was a landmark day as the first non-trial Covid vaccine was administered to the Developed World population. This happened here in the U.K. to a 91 year old lady called Margaret Keenan. However the first man to be vaccinated was William Shakespeare which is taking prioritising the elderly to new heights as according to Wikipedia he is now 456 years old. On a serious note his name sake was 81 years old and his family suggests they may have been related to the famous playwright. Good publicity for the vaccine.

Anyway to be vaccinated or not to be vaccinated, that is the question. This brings us nicely onto our monthly survey which we launch today and will keep open until this Friday December 11th at 11AM BST. You can fill it in here. The bulk of this month’s survey is covering your views on vaccines, Covid-19 and the impact it’s having on your life and the world around you – including several new questions along with selected ones from prior months to enable us to see trends. We also have a few market-related questions and have added a few 2021-specific questions as well as a fun Christmas one at the end. All help greatly appreciated as ever.

Moving onto markets and risk assets recovered steadily all day yesterday and hit a fresh record high in the US at the close after a tougher early session. The grind higher in equities can be partially attributed to legislative headway on fiscal stimulus in the US as well as news that the UK government dropped controversial parts of the Internal Market Bill. The S&P 500 rose +0.28% even if there was continued rotation under the surface, though not necessarily led by cyclicals. The odd pairing of Energy (+1.57%) and Biotech (+1.26%) helping lead the broad index higher, while Autos (-0.44%) and Consumer Durables (-0.65%) were among the worst performers. Europe rose a similar +0.20%, though the threat of renewed or elongated lockdowns saw a return of cyclical caution. Travel & Leisure (-1.00%), Retail (-0.69%) and Banks (-0.63%) were the worst three sectors, while Personal Care Drug Stores (+1.19%) and Media (+0.96%) were the best.

As noted above, US stimulus talks took a more positive turn with Senate Majority Leader McConnell suggesting that the two parties set aside their top priority demands – State and Local aid for Democrats and business liability protections for Republicans – in order to reach deal to “pass those things that we can agree on knowing full well we’ll be back at this after the first of the year.” He went on to acknowledge that “the new administration is going to be asking for another package.” This may not be suitable for Democrats, as Senate Minority Leader Schumer said that the state and local aid funds were necessary for “thousands of workers, including police and firefighters.” However the conciliatory tone was welcomed by markets, which reached intraday highs shortly after McConnell’s comments. After the market closed, Treasury Secretary Mnuchin presented a new $916 billion bill to Speaker Pelosi, which was the first salvo from the Trump Administration since just before the election. “This proposal includes money for state and local governments and robust liability protections for businesses, schools and universities,” Mnuchin said. It was a joint proposal from the White House, the House minority leader McCarthy and McConnell, and though Pelosi and Schumer put out a statement saying the deal was “progress” they wanted to keep working on the bipartisan framework already making its way through Congress. They also said that “The President’s proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from $180 billion to $40 billion. That is unacceptable”

US 10yr Treasuries yields fluctuated with the stimulus news and were down 3bps shortly after the New York open before ending nearly unchanged (-0.5bps) at 0.918%. They are a further 2bps higher overnight. European sovereign bond markets earlier rallied strongly as the focus turns to tomorrow’s ECB meeting, where it’s anticipated there’ll be a further easing of the monetary policy stance. 10yr bunds fell -2.5bps to -0.607% while gilts fell -2.6bps to 0.26%. A whole array of new records were set, with perhaps the most notable being that Portugal’s 10-year yield closed in negative territory for the first time, at -0.006%. That caps off a remarkable journey from the height of the sovereign debt crisis, when in early 2012 it was trading above 18% intraday. Given the moves yesterday, Spain might be next to join the negative rates club, with its own 10-year yield falling to an all-time low of 0.029%, as Italy’s similarly fell to an all-time low of 0.590%.

On the vaccine, we now have the publication of detailed trial results for the AstraZeneca/Oxford vaccine, which confirm the original findings that giving patients an initial half dose and then a full dose was the more effective method, with an efficacy rate of 90%. Though it’ll require further analysis to see how it affects the elderly, that was because older adults were brought into the studies later so there’s been less time to study those age groups. In the US, the FDA published a report indicating that the Pfizer vaccine is highly effective in preventing Covid-19 and that there are no safety concerns that would prevent it from being granted an emergency-use authorization. This comes ahead of the meeting on Thursday of outside advisers to the agency, after which the FDA can clear the vaccine for immediate use.

Overnight in Asia, markets have largely taken Wall Street’s lead with the Nikkei (+1.00%), Hang Seng (+1.06%), Kospi (+1.54%) and Asx (+0.61%) all advancing. Chinese bourses are trading a bit more mixed with the Shanghai Comp (+0.06%) up while the CSI (-0.12%) and Shenzhen Comp (-0.53%) are down. Meanwhile, S&P 500 futures are up +0.23% while the US dollar index is down -0.16% and yields on 10y USTs are up +2bps to 0.940%. In commodities, spot gold prices are down -0.55% to $1860.31/oz. In terms of data this morning, China’s November CPI fell -0.5% yoy (vs. 0% yoy expected) , making this the first contraction since October 2009 while PPI came in at -1.5% yoy (vs. -1.8% yoy expected). Elsewhere, Japan’s October core machine orders printed at +17.1% mom (vs. +2.5% mom expected), marking a record gain with comparable data going back to 2005. Its worth nothing that the data series is quite volatile though.

Turning to the latest on the virus, it is continuing to spread at an accelerated pace in the US as the country reported 218,310 cases in the past 24 hours. Meanwhile in Europe, Switzerland has said overnight that it will reduce opening hours for shops and restaurants from December 12 to January 20 and has indicated that measures could be tightened further on December 18, when restaurants and shops might be asked to shut altogether, if caseloads don’t come down. France’s Health Minister Veran has also said that the country could introduce a new curfew or stick to the current lockdown for some additional days as the number of virus cases continues to remain high. This comes ahead of further scheduled easing of restrictions on December 15 and the French government is supposed to discuss the situation today with an announcement due before end of the week. For more on the virus spread see the table below.

In terms of the latest on Brexit, UK Prime Minister Johnson and European Commission President von der Leyen will be meeting in Brussels tonight. Not much new has happened in public over the last 24 hours. We did see a report from Sky News’ Europe correspondent that the EU’s chief negotiator Michel Barnier had told ministers yesterday morning that the chances of a deal were “very slim”. This continued nervousness has seen market jitters continue, with sterling weakening by a further -0.19% against the US dollar in its 3rd consecutive move lower, while 1-week sterling/dollar implied volatility rose to its highest level since March.

We did get a positive development yesterday as it was announced that an agreement in principle had been reached on a number of issues relating to the application of the already-reached Withdrawal Agreement, including on arrangements for Northern Ireland. As a result of this, the UK government announced that they’d be withdrawing the contentious provisions from their Internal Market Bill that would have enabled them to break international law. Though this doesn’t resolve the main issues in the trade talks, this does remove a stumbling block from the talks that led to major unease on the EU side.

Staying on EU politics, we got reports yesterday saying that hope for a deal with Hungary and Poland was increasing over their budget standoff, which could see the EU clarify how its rule-of-law mechanism would work. As a reminder, the two countries have vetoed the EU’s long-term budget and recovery fund over the fact that other member states wanted there to be conditions requiring EU countries to adhere to certain rule-of-law requirements in order for funds to be disbursed. However, these have been seen by both Poland and Hungary as unacceptable infringements on their national sovereignty, and in turn there have been threats to remove both countries from the recovery fund altogether if they didn’t lift their vetoes.

In Germany, the ZEW survey showed the expectations reading rising to a stronger-than-expected 55.0 (vs. 46.0 expected), up from the previous 39.0 reading in November. The current situation reading actually fell slightly however, down to -66.5 (vs -66.0 expected). Separately, the Euro Area’s GDP reading for Q3 was revised down slightly to show growth of +12.5% quarter-on-quarter (vs. flash +12.6%). And over in the US, the NFIB’s small business optimism index fell to 101.4 (vs. 102.5 expected).

To the day ahead now, and the data highlights include the JOLTS job openings from the US for October, as well as the German trade balance for that month. There are also monetary policy decisions from the Bank of Canada and the Central Bank of Brazil.