After initially tumbling after President Trump shocked the establishment and traders with a surprise tirade against the $900 billion relief package, calling it a "disgrace" and demanded stimulus checks be raised to $2,000 from $600 while demanding that "wasteful and unnecessary items" be eliminated, futures staged a full rebound as analysts said investors shouldn’t worry about Donald Trump’s Tuesday attack on Congress’s coronavirus relief package as the president can only delay passage by about a month, while his prodding might boost checks to individuals.

Trump’s criticism, and implicit veto threat, “won’t alter the macro narrative,” Vital Knowledge founder Adam Crisafulli wrote in a note adding that "even if Trump actually vetoes (unlikely) and Congress fails to override it (also unlikely, given the stimulus/budget passed with veto-proof majorities), this will only delay the inevitable by 27 days (which would be unfortunate, but not material)... The big debate isn’t whether the $900b stimulus gets passed into law but instead if it represents a ‘down payment’ or the last major fiscal response to the pandemic,” with the outcome of Georgia Senate races in early January playing a “big role in answering that question”

At 7:30 a.m. ET, Dow e-minis were up 42 points, or 0.17%, S&P 500 e-minis were up 6.5 points, or 0.18%, and Nasdaq 100 e-minis were flat.

Big banks, which are sensitive to the broader economy, inched higher in premarket trading, with JPMorgan and Citigroup both adding 0.4%. PayPal, which said on Tuesday that it was waiving check-cashing fees for a second round of government-issued stimulus checks, rose 0.8%; Square gained 1.3%. Pfizer rose 0.5% in pre-market trade after a report said it was close to striking a deal with the U.S. government to supply at least tens of millions of additional doses of its COVID-19 vaccine candidate next year. Supernus Pharmaceuticals jumped 24.3% after its experimental drug for attention deficit hyperactivity disorder met the main goal of a late-stage study in adults. Walmart Inc fell 0.5% after the U.S. Justice Department accused the retailer of fuelling the opioid crisis in the United States. American Airlines and United Airlines fell about 0.8% each despite outlining plans to bring back furloughed employees this month after receiving payroll support from a recent bill.

In a video posted on Twitter, Trump said a stimulus bill, agreed after months of wrangling in Congress, was “a disgrace” and that he wanted to increase “ridiculously low” $600 checks for individuals to $2,000. In kneejerk response futures dropped as much as 1% in Asian trade, before recovering the entire drop and even turning green later in the session.

“The market is betting on a fiscal deal coming through even if Trump is making noise about it,” said Peter Garnry, head of Equity Strategy Saxo Bank in Copenhagen. The stimulus bill could be amended if the congressional leadership wants to do so, and if they don’t, Trump’s choices are to sign the bill into law, veto it, or do nothing and let it become law. Despite successful attempts to "bullify" the narrative, Trump’s remarks kept a lid on gains with Mizuho analysts saying “hopes for an unambiguous ‘Santa rally’ have been tragically hijacked”.

The MSCI world stock index rose 0.24%, but was trading more than 1% below record highs struck last week. The index is eyeing gains of over 12% for 2020, as trillions of dollars in stimulus have outweighed pandemic pain this year.

European stocks rose 0.23%, with travel, autos and real estate the best performing sectors, with health care stocks slightly in the red. Britain’s internationally focused FTSE 100 index was down 0.2% as the pound rebounded after trade and transport links between the U.K. and its neighbors reopened and Brexit negotiators worked to forge an 11th-hour deal. Travel firms and automakers led gains, with Daimler rising as much as 3.1% on a report the German carmaker is considering an initial public offering of its truck unit.

Britain and the European Union are nearing a Dec. 31 deadline for a Brexit transition period and have yet to agree on a trade deal. ITV’s political editor said in a late-night tweet that separate sources had raised the possibility that the two sides would strike a deal on Wednesday. “Sterling is off its lows - there’s a little twinkle of optimism around that deal,” said Jane Foley, head of FX strategy at Rabobank.

European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson are expected to hold another call on a trade deal on Wednesday or Thursday, sources with the bloc said. Ireland’s prime minister said enough progress has been made that a deal was likely, though a British minister said serious issues remained unresolved. In a further boost for the pound, Paris lifted its ban on freight coming from Britain because of the coronavirus variant.

Earlier in the session, MSCI’s broadest index of Asia-Pacific shares ex-Japan snapped three days of declines with a 0.6% rise, led by a jump in electric vehicle stocks in South Korea and China after LG Electronics announced a production deal. Japan’s Nikkei rose 0.3%. South Korea’s LG Electronics surged a record 30% on plans to form a venture with Canada’s Magna International to make components for electric cars. Along with Samsung, it was among the biggest boosts to the MSCI Asia Pacific Index, which was set for its first advance in four sessions. As the chart below shows, ASian shares are close to besting the US as the world's top equity market in 2020.

Asian stocks overcame an early dip on U.S. President Donald Trump’s demand for changes to pandemic aid legislation. Trading was light as holidays approached, with volumes at least 20% below 30-day averages in most markets. New Zealand’s main stock index was the strongest performer in the region for a second day, while benchmark gauges also climbed in Malaysia, South Korea, Greater China and Australia

In FX, sterling was the biggest mover, rising 0.49% against the dollar to $1.3427 and strengthened against the euro to 90.82 pence.  The Bloomberg dollar index dropped 0.3%, with the dollar weakening against most majors. NZD outperforms, CHF lags in G-10 although trading ranges are well below recent averages

In rates, Treasury futures continued to fade after gains in Asian and early London sessions, leaving yields cheaper by 1bp across long-end of the curve. Treasury 10-year yields were around 0.925%, outperforming gilts by 1bp with a Brexit deal still in the balance. Early risk-off saw yields grind lower after President Trump asked Congress to amend the latest spending bill to remove some items and increase stimulus checks. Gilts bear steepened with 30y yields ~2bps higher. Bunds and treasuries are sidelined. Peripheral spreads widen slightly

In commodities, oil reversed earlier losses sparked by an unexpected rise in U.S. crude oil inventories. Brent crude futures rose 0.1% to $50.14 a barrel and U.S. crude futures steadied at $47.04. Gold rose 0.2% to $1,864 an ounce. Base metals are in the green with LME zinc outperforming peers

Investors are now looking out for the latest weekly unemployment report due at 8:30 am ET (1330 GMT), which is expected to show a still dismal labor market as widespread business restrictions to curb the spread of new COVID-19 infections kept employers on edge. Consumer spending data for November, which is also due at 8:30 am ET, is expected to show weakness in spending trends because of the softer job market.

Market Snapshot

• S&P 500 futures up 0.2% to 3,686.25
• STOXX Europe 600 up 0.4% to 392.69
• MXAP up 0.8% to 194.69
• MXAPJ up 0.9% to 644.31
• Nikkei up 0.3% to 26,524.79
• Topix up 0.2% to 1,765.21
• Hang Seng Index up 0.9% to 26,343.10
• Shanghai Composite up 0.8% to 3,382.32
• Sensex up 0.9% to 46,418.20
• Australia S&P/ASX 200 up 0.7% to 6,643.14
• Kospi up 1% to 2,759.82
• Brent futures down 0.2% to $50.00/bbl
• Gold spot up 0.6% to $1,871.48
• U.S. Dollar Index down 0.3% to 90.36
• German 10Y yield fell 0.5 bps to -0.6%
• Euro up 0.3% to $1.2196
• Italian 10Y yield fell 1.4 bps to 0.444%
• Spanish 10Y yield fell 0.7 bps to 0.043%

Top Overnight News from Bloomberg

• President Donald Trump’s surprise attack Tuesday on Congress’s historic coronavirus relief package left aid for millions of Americans hanging in the balance as the pandemic continues to batter the nation
• Nine months of talks between the U.K. and European Union over a post-Brexit trade accord are hanging in the balance, with officials trying to bring them to a conclusion as soon as Wednesday
• Vital trade and travel links between the U.K. and continental Europe slowly reopened after France lifted a blockade at Britain’s busiest port that heightened a sense of economic isolation as the pandemic worsened and a high-stakes political drama unfolded over Brexit
• The Bank of England must have a “laser focus” on keeping inflation expectations in check after the pandemic, Chief Economist Andy Haldane said, highlighting the tricky balance the nation faces in managing its massive debt burden

A look at global markets courtesy of Newsquawk

Asia-Pac equities traded firmer across the board after a mixed Wall Street lead, where the Dow and S&P slipped but closed trade well off lows, whilst the Nasdaq ended the session in positive territory with the aid of Apple, Microsoft and Amazon. However, overnight US equity futures where dented after US President Trump warned he will not sign the COVID relief bill until Congress amends it, whilst also asking for stimulus payments to be increased to USD 2,000 from the USD 600 in the bill. Subsequently, White House Speaker Pelosi responded by stating Democrats are ready to bring USD 2,000 in direct checks to the Floor this week by unanimous consent. Furthermore, Fox's Pergram highlighted that Trump did not outright say he will veto the bill, but could prevent it from being law via a "pocket veto" to avoid Senate overriding an official veto - effectively running down the clock until Congressional adjournment before midnight on January 3rd. The President has ten days (excluding Sundays) to either sign or veto a bill, meaning Congress will have to present Trump with the bill by December 23rd to prevent a pocket veto. If Trump fails to respond in the ten-days window, then the bill would automatically become law. That being said, the size and nature of the bill would mean that it could take days to get the bill to Trump - i.e. if Trump sticks to his guns, the US government could shut down on December 29th (assuming no more stopgap bills) and COVID stimulus will be frozen. US equity futures later trimmed losses whilst European equity futures remained subdued with the region tackling the more transmittable COVID-19 variant. Back to APAC, the ASX (+0.7%) was propped up by some of the more defensive sectors, whilst gains were capped by losses in mining names. Nikkei 225 (+0.3%) waned off best levels as a firmer JPY reeled in the index. KOSPI (+1.0%) extended gains whilst South Korea halted flights to and from the UK to avoid importing the COVID variant. Elsewhere, Hang Seng (+0.9%) and Shanghai Comp. (+0.8%) conformed to the broad gains across the region, with the latter seeing upside following another PBoC liquidity injection. Finally, 10yr JGB futures trade little changed but the overall curve modestly flatter

Top Asian News

• Thai Central Bank Holds Key Rate, Cuts 2021 Growth Forecast
• China Pipeline Giant to Buy Kunlun Assets for $6.3 Billion
• India Asked to Pay $1.2 Billion to Cairn After Arbitration
• Asian Stocks Snap Three-Day Losing Streak on Electric-Car Boost

European equities (Eurostoxx 50 +0.8%) have eked gains since the cash open as markets await any further updates on Brexit and ponder US President Trump’s intervention on the US COVID relief package. On the latter, overnight, US equity futures were weighed on after US President Trump warned he will not sign the COVID relief bill until Congress amends it, whilst also asking for stimulus payments to be increased to USD 2,000 from the USD 600 in the bill. Fox's Pergram highlighted that Trump did not outright say he will veto the bill but could prevent it from being law via a "pocket veto" to avoid Senate overriding an official veto – to prevent a pocket veto derailing the legislation, Congress would need to present Trump with the bill by today. This is clearly a potential risk for sentiment heading into year-end, however, equity markets have taken the news in its stride thus far with the e-mini S&P firmer by 0.3% with some investors potentially acknowledging that regardless of any acts of sabotage by Trump, incoming President Biden will be able to sign the bill next month. Sectoral performance in Europe sees more pronounced gains in travel & leisure names with Air France (+2.8%), easyJet (+1.7%) and IAG (+1.5%) with airliners attempting to claw back losses seen at the start of the week after the more transmissive COVID-19 strain in the UK forced countries to restrict travel to and from the nation. Closely following travel & leisure is auto names with Daimler (+2.8%) top of the DAX after reports in Handelsblatt suggested the Co. could separate its Truck unit via an IPO as early as 2021, or, more likely in 2022. To the downside, health care names lag with the likes of AstraZeneca once again lower, extending losses for the week to 3%.

Top European News

• BOE’s Haldane Urges Laser Focus to Avoid ‘Nasty’ Inflation Shock
• Italy Is the Darling of a Bond World Blighted by Negative Yields
• HeidelbergCement Is Said to Explore $1.5 Billion U.S. Sale
• HelloFresh Falls Following Handelsblatt Report on Bottlenecks

In FX, the Dollar has unwound relatively big recovery gains vs so called high beta, risk or pro-cyclical rivals, but the DXY retains an underlying bid having evaded several skirmishes with the 90.000 level and is currently pivoting 90.500 in rather indecisive and low-key market conditions heading into the Xmas break. However, potential impactors and sentiment drivers are still very much in play, like Brexit and the battle to contain COVID-19 that has been made all the more arduous due to new mutations with higher transmission rates. Meanwhile, ‘outgoing’ US President Trump has thrown a spanner in the fiscal relief works via a last minute request for payments to be upped more than 3-fold from Usd 600, and an amended bill is now expected before he puts pen to paper. More immediately, a raft of data has been compressed into Wednesday’s final full session ahead of the long holiday weekend.

• AUD/NZD/GBP - Not quite a case of all change, but as noted above the Aussie, Kiwi and Pound have all clawed back more lost ground against their US counterpart than other G10 currencies, with Aud/Usd rebounding through 0.7550, Nzd/Usd close behind in the high 0.7000 zone and Cable reclaiming 1.3400+ status on lingering expectations rather than any real sense of confidence that outstanding Brexit deal divergences between the UK and EU will be resolved. Indeed, the Eur/Gbp cross has reversed further from well above 0.9100 and as high as 0.9200+ on Monday in the same vein or faint hope of a trade pact as PM Johnson and European Commission President von der Leyen are said to be hot-lining each other in an attempt to reach a compromise on fishing and the level playing field.
• EUR/CAD/JPY/CHF - All firmer vs the Greenback, though still well below recent peaks as the Euro hovers just shy of 1.2200, Loonie above 1.2900, Yen revisits 103.50+ and Franc clings on to the 0.8800 handle. Ahead, Usd/Cad will be keeping tabs on oil prices alongside general risk sentiment, but also Canadian GDP for some additional impetus outside of the aforementioned multiple US releases, while Usd/Jpy has plenty to digest in terms of prime Japanese data on Xmas Eve and few morsels on December 25th.
• SCANDI/EM - No real inclination or rationale to deviate far from familiar ranges for the Nok or Sek given the lack of Norwegian and Swedish specifics, not to mention comparatively contained crude prices. Elsewhere, most EMs are benefiting from the Usd pull-back and steady risk tone, while the Zar may be gleaning extra support/comfort from the fact that
• GOLD - Found a base before Usd 1850/oz. In China, another net PBoC liquidity injection is helping to keep the Cnh and Cny afloat, and both firmer than the overnight midpoint fix, while in Turkey the Try is eyeing a back-to-back hike from the CBRT tomorrow.

In commodities, the crude complex began the session firmly on the back foot as the demand-side woes that have been weighing on performance over the past few days remain broadly unresolved; with the only marginally positive fundamental development the resumption of freight between the UK and France. However, WTI and Brent are now broadly unchanged but with a positive bias as, directionally at least, they have been following the broader equity performance although evidently to lesser effect; most recently, Brent has reclaimed the USD 50.00/bbl handle while WTI pivots the USD 47.00/bbl figure. As mentioned, focus remains on US fiscal developments but any such delay to the proceedings should, in the worst case, see a resolution in the New Year. Explicitly for crude, last nights private inventory report printed a build of 2.7mln in contrast to expectations for today’s EIA report of a 3.18mln draw; note, the weekly Baker Hughes rig count has been brought forward to today’s session on account of the Holiday period. Moving to metals, spot gold is modestly firmer but has been very much rangebound throughout the morning echoing the performance of, and benefiting from, a contained but softer dollar.

US Event Calendar

• 8:30am: Durable Goods Orders, est. 0.6%, prior 1.3%; Durables Ex Transportation, est. 0.5%, prior 1.3%
• 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.6%, prior 0.8%; Cap Goods Ship Nondef Ex Air, est. 0.7%, prior 2.4%
• 8:30am: Initial Jobless Claims, est. 880,000, prior 885,000; Continuing Claims, est. 5.56m, prior 5.51m
• 8:30am: Personal Income, est. -0.3%, prior -0.7%; Personal Spending, est. -0.2%, prior 0.5%
• 8:30am: PCE Deflator MoM, est. 0.1%, prior 0.0%; YoY, est. 1.2%, prior 1.2%
• 8:30am: PCE Core Deflator MoM, est. 0.1%, prior 0.0%; YoY, est. 1.4%, prior 1.4%
• 9am: FHFA House Price Index MoM, est. 0.55%, prior 1.7%
• 10am: U. of Mich. Sentiment, est. 81, prior 81.4; Current Conditions, prior 91.8; Expectations, prior 74.7
• 10am: New Home Sales, est. 995,000, prior 999,000;  New Home Sales MoM, est. -0.4%, prior -0.3%