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Five Things

China congratulates Biden, California cases pass 1 million, and stimulus talks back on the radar. 

Pushing ahead

President Donald Trump's claims that he won the election are becoming ever more tenuous after three more networks projected he had lost Arizona. Meanwhile, the rest of the world seems happy to move on with President-elect Joe Biden as China became the latest country to congratulate him and Vice President-elect Kamala Harris for their victory. Georgia begins a hand count of all 5 million votes cast there, which will finish by Nov. 20. 


California became the second U.S. state after Texas to see total cases since the pandemic began pass 1 million. The U.S. Centers for Disease Control and Prevention said the tally is currently increasing in 94% of jurisdictions. A study by the University of Washington's Institute for Health Metrics and Evaluation found that the fatality rate has dropped by 30% since April due to improvements in treatment. Tesla Inc.'s Elon Musk tweeted he may have Covid-19 after he did four rapid tests, two of which were positive, and two negative. 


The White House is stepping back from any negotiations over a new stimulus package, leaving it to Senate Majority Leader Mitch McConnell to revive talks. With both Republicans and Democrats in Washington seemingly as far apart as ever, hopes are not high for a breakthrough. Lawmakers are more likely to concentrate on McConnell's moves to agree on funding measures which would avoid a government shutdown on Dec. 11. Fed Chair Jerome Powell said again yesterday that Congress may need to do more to combat the effects of the pandemic on the economy. 

Markets rise

There are little signs of Friday 13th fears in markets so far this morning as investors finish a busy week on an optimistic note. Overnight the MSCI Asia Pacific Index slipped 0.1% while Japan's Topix index closed 1.4% lower. In Europe, the Stoxx 600 Index was 0.4% higher at 5:50 a.m. Eastern Time with banks the best performers. S&P 500 futures pointed to a gain at the open and the 10-year Treasury yield was at 0.896%. Oil dropped on surprising stockpile data and gold was slightly higher. 

Coming up... 

October Producer Price Inflation data is at 8:30 a.m. with the November University of Michigan Sentiment numbers at 10:00 a.m. The latest Baker Hughes rig count is at 1:00 p.m. New York Fed President John Williams and St. Louis Fed President James Bullard speak today. DraftKings Inc. results will be watched after the company's shares rallied in the wake of several states voting to allow sports gambling

What we've been reading

This is what's caught our eye over the last 24 hours.

And finally, here's what Katie's interested in this morning

Goldman made waves this week with its annual year-ahead investment outlook, where it named a steepening U.S. yield curve as one of its key global themes for 2021. The thesis is straightforward: the Fed will keep the front-end anchored, while expectations for growth and inflation will buoy the long-end.

However, for some, the call's magnitude left something to be desired, as laid bare by my Bloomberg Opinion colleague Brian Chappatta. The bank sees roughly 30 basis points of steepening for the 2s10s curve. They expect 10-year yields will top out at 1.3%, while 2-year yields may edge up to 0.25%.

As a markets reporter, the thought that 2021 will bring just 30 basis points of movement paints a fairly bleak picture. But that non-action -- should it materialize -- has important ramifications across asset classes.

Consider the stock market's latest attempt to wean itself off tech and rotate back into value shares -- those that look cheap relative to fundamentals. Like the reflation trade, that was quickly somewhat squashed. But while it was taking root, bank stocks helped power the rebound. In fact, financials are still up about 6.6% this week, even after Thursday's hosing.

It's a basic tenet of the banking business model to borrow at short-term rates and lend out at longer rates -- a tricky proposition with a relatively flat U.S. curve. That's a problem for value strategies, given than financials are the largest sector weighting in the Russell 1000 Value Index.

If the bull case on value is a bearish bet on bonds, just 30 basis points of steepening may not bode well for the strategy's prospects in the new year.

Follow Bloomberg's Katie Greifeld on Twitter at @kgreifeld

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