Markets are in a holding pattern, circling, running out of narrative fuel, and the controllers aren't clearing them to land...  

U.S. Bond yields continue to push lower.

Market Snapshot

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Let's start by recapping the overnight releases.

Australia Retail Sales

Oct retail sales (preliminary est): +1.6%mth, +7.3%yr. Victoria posts surprisingly robust gain. Sales soften a touch across other states.
Retail sales posted a stronger than expected 1.6% rise in October to be up 7.3%yr. The main surprise was a 5.2% rise in Victoria, which came despite continued COVID restrictions at the time (sales were still 10% below their pre-lockdown level in the state).

Ex Victoria, sales look to have declined 0.9%mth.
The ABS will release its final estimates and full survey detail on December 4.
Our Westpac Card Tracker data suggests consumer spending accelerated sharply in November on a further reopening in Victoria.
Note that the data looks to have understated the strength in retail segments in October.
All up the result suggests more of Victoria’s ‘reopening rebound’ may come through in Q4 rather than Q1 next year.

Japan's consumer prices fall at fastest pace in decade, reviving deflation fears

* Nationwide Oct core CPI falls 0.7% yr/yr, matches forecast

* Fading impact of tax hike, travel discount campaign weigh on CPI

* Analysts expect consumer prices to keep falling

Analysts expect consumer prices to continue falling in coming months due to sluggish consumption, casting doubt on the central bank’s view Japan will eventually see prices bounce back towards its elusive 2% inflation target.
A resurgence in coronavirus infections also clouds the outlook, as it may hurt consumption and dent the boost to growth from the government’s stimulus measures, they said.
“Even when stripping away one-off factors, the trend of consumer prices is weak,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“If restrictions on dining and travel are reimposed, that could derail Japan’s fragile economic recovery,” he said.
Core consumer prices, which exclude volatile fresh food costs, fell 0.7% in October from a year earlier, government data showed on Friday, matching a median market forecast.
It was the third straight month of declines and the biggest year-on-year drop since March 2011, the data showed.
The decline was largely a result of the high base effect of a boost to inflation last year, following a sales tax hike to 10% from 8%, as well as a more recent government discount campaign for domestic travel aimed at reviving tourism.
Energy costs ranging from gasoline, fuel to utility bills also fell, weighing on overall prices, the data showed.
Some analysts say core consumer prices may suffer annual declines of around 1% in coming months, which could stoke fears of deflation and prod households to put off spending.
Prime Minister Yoshihide Suga has instructed his cabinet to compile a fresh stimulus package, although the renewed rise in infections could affect the fate of government campaigns encouraging households to travel and dine at restaurants.

The Flash PMI's were no cause for cheer either.

Japanese private sector economy struggles to gain recovery momentum

  • Flash Japan PMI signals a faster pace of decline in output during November
  • New business weakens at quicker rate
  • Job shedding continues
  • Business confidence slips
The Japanese private sector economy continued its struggle to gain recovery momentum midway through the fourth quarter, with flash PMI survey data indicating a further decline in business activity during November.
The deterioration sets the scene for a subdued economic performance in the final quarter of 2020.
Demand conditions continued to weaken, with inflows of new busines shrinking further, weighed down by a renewed fall in exports.
Other survey indicators also showed worrying signs.
Operating capacity remained in surplus amid weak sales, leading to further job shedding.
Business sentiment meanwhile slipped to the lowest for three months.
Labour market deteriorates
The labour market meanwhile also deteriorated in November amid weakening sales and rising spare capacity, representing a setback to the recent move towards stabilisation signalled by the PMI's employment index. The decline in overall employment accelerated from October, with the service sector seeing a renewed fall in workforce numbers.
Factory employment continued to shrink, albeit marginally. Anecdotal evidence indicated that factories commonly reduced their headcounts or opted not to replace voluntary leavers in response to falling output.
Deflationary pressures
The PMI data also highlighted how prices continued to fall mid-way through the fourth quarter. Input costs fell for the first time in six months during November, with a stronger yen, lower wage bills and falling fuel prices cited by respondents as reasons for reduced expenses. That said, lower input prices were limited to services firms as manufacturers reported further input cost inflation linked to increased transportation fees.
Amid efforts to fight for sales, firms across both manufacturing and service sectors increasingly offered price discounts. Overall output charges fell for a ninth straight month as a result, with the rate of decrease hitting the fastest since August.

China keeps lending benchmark unchanged for 7th month

China left its benchmark lending rate for corporate and household loans unchanged for a seventh straight month at its November fixing on Friday, matching market expectations.
Traders said the rate decision reflected the central bank's commitment to a hawkish policy stance despite recent bond market defaults that had spurred speculation it could ease its grip.
They said the persistent yield gap between China and other major global economies is expected to continue to attract foreign capital inflows and support the yuan.

Lawmakers to buttress post-Brexit Britain as a financial centre

Britain’s financial services minister John Glen said on Thursday that leaving the EU meant “regulating differently, regulating better”.
“We want to become the most open and competitive financial services centre in the world,” Glen told TheCityUK’s national conference.
The inquiry will build on reforms already outlined by Britain’s finance minister Rishi Sunak last week that include making UK listings rules more attractive, amending insurance capital rules, and a sales tax break worth 800 million pounds on financial exports to the EU.
Lawmakers will consider what skills and immigration policy UK financial services will need as banks worry they will no longer be able to hire talent easily after Brexit promised tighter controls of immigration.
It will also look at how regulators should be funded and whether they should have objectives that include wider public policy issues like consumer interests.

Schumer says McConnell agrees to discuss Covid relief, as aides negotiate government funding

Senate Majority Leader Mitch McConnell, R-Ky., has agreed to resume negotiations with Democrats over a potential new Covid-19 relief bill as cases continue to surge around the country, Sen. Chuck Schumer, D-N.Y., said Thursday.
“Last night, they’ve agreed to sit down and the staffs are going to sit down today or tomorrow to try to begin to see if we can get a real good Covid relief bill,” the minority leader said during a press conference in New York. “So there’s been a little bit of a breakthrough in that McConnell’s folks are finally sitting down and talking to us.”
Republican and Democratic congressional aides, however, told NBC News that Schumer might have oversold the development, as both sides begin negotiations on government funding to stave off a government shutdown on Dec. 11.

I wouldn't be getting my hopes up.

"to try to begin to see"

Not exactly convincing!

Mnuchin pulls plug on some pandemic lending programs that Fed considers essential

U.S. Treasury Secretary Steven Mnuchin said on Thursday that key pandemic lending programs at the Federal Reserve would expire on Dec. 31, putting the outgoing Trump administration at odds with the central bank and potentially adding stress to the economy as President-elect Joe Biden organizes his administration.
In a letter to Fed Chair Jerome Powell, Mnuchin said the $455 billion allocated to Treasury under the CARES Act last spring, much of it set aside to support Fed lending to businesses, nonprofits and local governments, should be instead available for Congress to reallocate.

The Fed responded quickly

In an emailed statement, the Fed said it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

Bloomberg's Brian Chappatta with further detail;

And Exante's Jens Nordvig offers some context in this thread;

California, Ohio order nightly curfews on gatherings as coronavirus surges

The stay-at-home order will go into effect from 10 p.m. until 5 a.m. each day, starting Saturday night and ending on the morning of Dec. 21, covering 41 of California’s 58 counties and the vast majority of its population, Governor Gavin Newsom said.
“The virus is spreading at a pace we haven’t seen since the start of this pandemic, and the next several days and weeks will be critical to stop the surge,” Newsom, a Democrat, said in a statement announcing the measure a week before the Thanksgiving holiday.
A similar 10 p.m.-to-5 a.m. curfew order was issued on Thursday in Ohio and will remain in effect for the next 21 days, Governor Mike DeWine, a Republican, announced separately.
More than 20 states have adopted new mandates this month to confront the mounting crisis.

Covid hospitalisations are at record highs.

Looking ahead, UK retail sales are pretty much the only highlight of an uninspiring calendar.  

Roll on the weekend.