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Good morning. Brexit trade talks continue, the U.S. is preparing new sanctions on China and a U.K. High Street magnate is in talks about a Debenhams takeover. Here's what's moving markets.

Knife Edge

The pound is slipping as traders who had speculated on a weekend Brexit trade deal were left disappointed. There are signs of hope, though, as the U.K. and European Union strive to finalize a deal before Monday evening. A compromise on the longstanding stumbling block of access to British fishing waters is starting to emerge, two people with knowledge of the discussion on both sides said, though Irish Prime Minister Micheal Martin warned that "things are on a knife edge, and it's serious." From passports to booze and cigarettes, here's what's at stake if talks break down. 

China Sanctions

President Donald Trump continues to pile pressure on China's Xi Jinping and the ruling Communist Party in his final weeks in office, with a report saying the U.S. is preparing to sanction at least a dozen more Chinese officials over their role in the recent disqualification of Hong Kong legislators. The latest round of sanctions could be rolled out as soon as Monday, according to people familiar with the matter, who asked not to be identified because the measures haven't been formally announced. Hong Kong stocks slid. European futures are lower, too.

Giuliani Has Virus

President Trump said his attorney Rudy Giuliani, who has been leading efforts to overturn the results of the Nov. 3 general election, has tested positive for the coronavirus. The 76-year-old former New York mayor was admitted to Georgetown University Medical Center on Sunday, the New York Times reported, citing a source who wasn't identified. "We will carry on!!!," Trump tweeted while Giuliani's son said his father is "resting, getting great care and feeling well."

Ashley Eyes Debenhams

U.K. High Street magnate and self-declared "power drinker" Mike Ashley is on the prowl again, with the billionaire in talks about a takeover deal that could see Ashley's Frasers Group operate Debenhams' 124 stores under 12-month licenses and potentially save up to 12,000 jobs. Frasers confirmed a Sunday Times report, saying it aims to "save as many jobs as possible." This isn't the first time Sports Direct founder Ashley has shown an interest in Debenhams, which rejected rescue offers last year.

Coming Up…

Fashion brand Ted Baker reports earnings and we'll get German industrial production numbers. These are the main events for the global economy in the coming days. Meanwhile, the EU's budgetary dispute is still simmering ahead of a key summit and a European Central Bank policy meeting later this week. In Washington, there's hope President Trump and Senate Majority Leader Mitch McConnell will come "on board" with a package to provide pandemic relief.

What We've Been Reading

This is what's caught our eye over the weekend. 

And finally, here's what Cormac Mullen is interested in this morning

With traders' eyes glued to the benchmark Treasury yield, almost willing it to breach the psychological 1% level, fund managers are scouring their portfolios for equity duration risk looking for those stocks most exposed to a rise in yields. European investors will be pleasantly surprised to find they should fare better than their U.S. counterparts if Treasury yields continue to grind higher. The three-month beta of the Nasdaq 100 Index to the 10-year benchmark -- a measure of their relationship -- has turned negative, a bearish sign for growth stocks if yields continue to rise. Conversely, the measure has increased for the Euro Stoxx 50. High valuations and investor concentration in U.S. growth stocks have increased their sensitivity to bond prices, leaving them vulnerable and therefore international shares a better prospect in a rising yield environment, strategists at Goldman Sachs wrote in a note Friday. The Euro Stoxx 50 Index has surged 12% over the last month, outperforming the tech-heavy Nasdaq by almost 6 percentage points.

Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo. 

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